Comments are in response to the following KrugCol:
Bradenton 6 hours ago
The American Society of Civil Engineers has estimated that America needs to spend $3.5 trillion on our infrastructure to bring it back to good condition. That works out to about an increase of 1.5% of GDP a year for 10 years. With a conservative multiplier of 1.5%, that should get the economy humming along.
Because interest rates are low, unemployment in construction is high, and infrastructure costs increase if we wait, the responsible thing would be to have a plan to fix it all now. (Even that crazy Socialist Bernie Sanders only has a plan to spend $1 trillion or less than a third of what we actually need.)
A truly responsible government would include our infrastructure debt in our national deficit so fixing infrastructure would lower our deficit.
Tax Wall Street to Fix Main Street. If you’re worried about printing $3.5 trillion to fix our roads, bridges, water systems, power grids, airports, levees, etc.. than a 0.1% financial transactions tax could raise around $100 billion a year and if used as a basis for a national infrastructure bank that issued bonds, could leverage that $1 trillion over 10 years to get most of the work done.
And from Socrates:
At least the Japanese haven’t been crippled by conservative con artists picking citizen pockets for billionaire sugar daddies that has literally destroyed America’s nation’s roads, bridges, airports and education system.
A great and simple debunking of Voodoo Econ 0.0:
Henderson, Texas 5 hours ago
Taking money from people with a low marginal propensity to consume and giving it to people with a high marginal propensity to consume will rapidly end a depression, as happened in ’40.
Taking money from people with a high marginal propensity to consume and giving it to people with a low marginal propensity to consume will cause a contraction in the economy and a reduced median income, even as the average GDP increases.
Guess which one the US has been doing since 1981.
North Florida 5 hours agoCash for Clunkers was ok, but massive spending on aging infrastructure would have been better. Imagine the jobs and the resulting improvement in all of our lives with a modernized power grid, increased train service, replaced bridges, regional stormwater treatment systems, updated potable water systems, and highway and street improvements. I realize the necessity of the shovel-ready requirement imposed by Obama when he was looking for some projects–as I recall, mostly heavy rail–but we have so long neglected these long-term infrastructure needs that there were none in the pipeline. And I’ll bet there still aren’t.
NYC 2 hours ago
For the life of me I don’t understand why these low interest rates weren’t the perfect catalyst to finance the repair of our crumbling infrastructure. Create millions of jobs replacing dilapidated bridges and highways. Real jobs all across the country updating our outdated electrical grid, and water treatment plants.
All of that financed at nearly no interest, creating thousands of jobs, all across the land, and yet no action. Meanwhile the GOP is still whining about the handful of localized jobs the Keystone Pipeline would temporarily create.
As Mary Astor said, "money doesn’t do any good unless you spread it around." Repairing our crumbling infrastructure would do that in a very productive way. I guess it just makes too much sense for today’s political environment.
Etna, NH 3 hours agoThe Republicans have done an admirable job of convincing the American public that our newly minted money and tax dollars are helping "lazy people buy stuff". At the same time the Democrats are doing nothing to remind voters that we need newly mint money and our tax dollars to helping hard working people get to work on time (e.g. fix roads and railways), educate their children, and provide safe communities. Both parties have reinforced the "magic of the markets" while neglecting the responsibility of government to provide baseline services.
Brooklyn, NY 3 hours ago
Yes, foolish convention is hobbling economies (courtesy especially of the Harvard and Chicago economics departments). But Paul Krugman is leaving (in this essay at least) the determination of a wide spectrum of politicians from right-wing to center to annihilate social programs. Despite hand-waving over inequality, nearly all Republicans and a large number of Democrats (or Tories and Labour in Britain, to name one other example) are hellbent on making the poor and middle class poorer — the better to control them, unable to demand anything of bosses, and to exhausted and troubled to vote for a substantive change.
How many in elite American circles still dream of privatizing Social Security? Or eliminating public education (or at least teachers’ unions)? Have Gregory Mankiw, Robert Barro, Casey Mulligan, Robert Lucas, Glenn Hubbard, or Thomas Sargent altered their song and dance at all?
The political crusade still dominates much of economic policy, and the theory behind it coming out of economics departments.
orlando, fla. 5 hours agowhat about sending out refund checks to consumers instead of this stupid bank reserve system. In a consumer spending based economy this would be the most efficient way to inject money into the economy as opposed to have it sitting in banks. people could buy products or pay down debt and shore up their savings all would be better options than giving money to banks. We have had the tail wagging the dog for a long time in this country, time for a little trickle up economics where banks and business compete to get workers money.
Dallas 3 hours ago
When money is distributed below the median income scale, the money comes right back into the economy. Those folks spend it on "stuff" that’s needed!
At times, folks at the upper end go for "Retail Therapy" but much of the money is sitting in banks. Now with trading on Wall Street out of control, the situation has exacerbated. Investment monies are stuck more and more, as trust in investing fades.
We need to regulate the Casino operators on Wall street. We need to raise the minimum wage!!!
is a trusted commenter Portland, OR 3 hours agoOne of the critical problems we face is the consequence of economic policies of the last 30 years having the net effect of transferring a trillion dollars annually from the working and middle classes to the top 1 percent. The loss of that trillion dollars each year is few durable goods being purchased, fewer restaurant meals out, fewer computer classes for the kids, etc. Meanwhile the trillion dollars goes to reinforce conspicuous consumption (condos overlooking Central Park and art work) or reinforcing a casino economy. Hugh Sansom below notes the important effect of deliberate disinvestment in the middle class justified by pronouncements from the seers from departments of secular theology, once known as departments of economics. As economists have shifted from practitioners of economic analysis to theologians justifying the outcomes sought by those who pay them we find the embrace of neo-liberal visions of the market sold to us as a rationale and cure for everything. In an era when we need far more investment in research and development, infrastructure, human capital, and dealing with the ravages of global warming we see a studied refusal to adopt investment-focused policies in favor of facilitating speculation, capital accumulation, and an economic system that both requires unfocused consumption for continued viability (a dubious basis for an economy to begin with, see David below) yet negates efforts at addressing its greatest deficiencies thanks to priests and theology
NY 4 hours ago
The problem is that in order for people to understand this, you have to overcome two huge myths that are deeply ingrained in people.
The first is that printing money is inflationary. There is never enough room to explain this so I will simply reference this link
The second myth is that governments with their own floating currencies still need to "borrow" in order to get the money to spend. It should be obvious that this is not the case. If a country can create its own money then obviously it doesn’t need to borrow in order to get it.
What confuses people is that even though they know the US and Japan create their own money, they still issue bonds. Why would they do that if they didn’t need to borrow the money in order to spend it?
The answer is complex. Originally, it was a way to pay people not to convert their dollars to gold. Now it is used to drain reserves from the banking system. Interest rates would go to zero unless the Govt offered bonds to drain the reserves. One can debate whether they need to do that or whether it’s a good thing. But it’s just a way for the Fed to maintain control over interest rates.
But the point is that the Govt does not issue bonds in order to get money. Govt bonds are better though of as the savings accounts of a big bank (the US Govt) that can create any amount of money it wants.