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Friday, March 20, 2009


galbraith on financial services

via mark thoma:

A brief reflection on this history [of the Great Depression] and present circumstances drives a plain conclusion: the full restoration of private credit will take a long time. It will follow, not precede, the restoration of sound private household finances. There is no way the project of resurrecting the economy by stuffing the banks with cash will work. Effective policy can only work the other way around.

That being so, what must now be done?

The first thing we need, in the wake of the recovery bill, is more recovery bills. ...

Second, we should offset the violent drop in the wealth of the elderly population as a whole. ...

Third, we will soon need a jobs program to put the unemployed to work quickly. ...

... [A] payroll tax holiday would help restore the purchasing power of working families, as well as make it easier for employers to keep them on the payroll. ...

Finally, there is the big problem: How to recapitalize the household sector? ... This cannot be made to happen over just three years, as we did in 1942–44. But we could manage it over, say, twenty years or a bit longer.

shades of richard koo, and reconfirming jamie galbraith's observational genius.

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"Most men love money and security more, and creation and construction less, as they get older."

J.M.K. "The Future", Essays in Persuasion (1931)

With the demographic tidal wave drawing closer, "the future" is now I guess...

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there's a lot more to write about america's demographic decline, anon, but at leat from what i've seen our ageing problems are not nearly so bad as those of, say, europe.

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