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[randomness]

"[E]very person in this country of super-asinine propensities, everyone who hates social progress and loves deflation, feels that his hour has come and triumphantly announces how, by refraining from every form of economic activity, we can all become prosperous again.” --John Maynard Keynes, reacting to the British emergency budget of September 1931, quoted by his biographer Lord Skidelsky in the Financial Times.

via a post in Prof. Brad DeLong's blog

Comments

[achinhibitor.livejournal.com]

Conversely, Milton Friedman worked out that what lowers unemployment isn't inflation but rather increasing inflation.

But I suspect the big difference is that the credit markets are being harder on European countries than they are on the US. Everyone believes that if the US gets too far in debt, we have the political and social will to truly buckle down and sweat, er, increase productivity. But many European countries have a long history of using government borrowing to raise standards of living in the absence of productivity increases. You don't want to be the last buyer of 10 year bonds from a country like that.

Which puts many of these countries in a bad way; they have to cut their defecit while they've got a recession on. The US can borrow insanely for a couple more years before the credit markets get spooked, and by that time unemployment will be dropping significantly.