Wednesday, April 27, 2011

What to think about Quantitative Easing (QE2, etc)

I disagree with this analysis by Marshall Auerbach crossposted at naked capitalism.  I posted this reply:

I’m not sure I understand QE, but it seems like many of my favorite progressive economists such as Paul Krugman and Brad DeLong favor it (though might have favored expansionary fiscal policy even more), and would in fact have favored far more aggressive QE. OTOH, it seems most who oppose it are deficit hawks, inflation hawks, and goldbugs, the very people who care far more about inflation or the remote possibility of inflation rather than the 20% underemployment we now suffer from most. On tribal basis, I go with the progressives, and I think left populists are mostly confused
I think it was well intended but largely ineffective. My solution to the Great Recession is huge new public investment in the development of renewable energy and transportation based on it. The macroeconomic part of that would be even more deficit in the short term. But the cure is not simply in the numbers, but in the DIRECTION. We’ve been leaving the ultimate direction of our economy to the wall street casino for the last 30 years, and it has done no good for most, only for the super rich, and to the long term destruction of everyone. A people’s government needs to set the direction, which ought to be as I just described, toward a renewable energy based sustainable society. Unfortunately, the people are woefully misinformed about peak everything and global warming, the true natures of our present reality. And the government mostly operates in coin operated mode nowadays, which works to make the rich ever richer, everything else be damned.

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