The Obummer admin. doesn't give a shit about massive unemployment. One look @ Larry Summers fat smug face tells you all you need to know about this odious lying regime.

IMHO continuous economic growth on a finite planet is the ultimate Ponzi scheme. At some point it has to stop. We can't continue to pull ever more resources, at an ever increasing rate from the home world.

I wonder if we have already started to bump into the planetary limits for natural resources and that is why the economy was switched over to one of a financial fantasy land. Who knows for sure, but I figure at some point as all these countries debts grow out of control, they are going to try sell bonds to fund that debt and there just wont be any more buyers for it. IMHO, it seems inevitable to me that this has to happen at some point.

An article of utter drivel, a not unexpected item considering the nature of our criminal institutions. Director of economic and policy research?

Yet another blatherer in the wilderness.

Do yourself a favor don't be taken in by these snake oil solutions of "people in the know".
Economic growth and it's ugly sister called profit are distractions designed to facilitate the illusion. Since no enterprize now existant accounts fot the bulk and most dangerous of costs not accounted for.

Profit and growth are the dillusions that create economic growth today.

Get real folks.

Growth, profit, power.

The new opiate of the masses.

For lifes sake kick the habit now!

Part of the problem is that peoples income can no longer support their level of debt. And, their are no longer borrowing at the rate they were during the height of the boom. The problem is not only that banks aren't willing to lend but that perhaps people over burdened with debt are no longer willing to borrow more debt.
That scares the hell out the powers that be, seeing how about 70% of our economy is consumer driven.
The powers that be decided long ago that debt was the way to wealth. And by holding down real wage growth, they pushed people into debt to maintain their standard of living.

That should be clue Sherlock! The last 10 years of growth was a debt driven aberration.But wall street made huge amounts of money on it, at expense of the real economy.
Now the system is coming back down to reality..A painful one!

One clue to perhaps a fatal flaw in the system.
Debt is not wealth!
Debt is debt!

Living on borrowed money is not a good idea, you can't create wealth from debt, if it were possible it would have been done centurys ago and we would have opulence.

In terms of public perception the Keynesian stimulus which Obama put in place is a failure because times are still hard and unemployment still hovers at 10%. Conservatives argue that it is just money down a rat hole. It is hard to argue that the stimulus was a success because it kept unemployment below 10%. It is easy to criticize as an ineffective measure because it has not made things better. To argue that we need another stimulus or that the first one did not work because it was not big enough, (which I believe is the actual truth of the matter) strains the credulity of the average citizen. In his life there is no stimulus, no direct infusion of cash to spark his demand side so he cannot see in macro terms how it can work for the country at large. Instead the concept of bankruptcy, of clearing debt seems more plausible. Using that reasoning conservative supply-siders argue that if the banks had been allowed to fail debt would clear and money in the side lines would flood back in to restart the economy. This is foolishness in my opinion. Why would investors put their money in a failing economy but it is in suburban America the conventional wisdom. That view has not been discredited by recent economic events. There are only two ways the Keynesian solution can succeed. Either the stimulus has to be great enough to really move the economy toward full employment or the other side's position, laissez faire--let it go down, has to fail grandly enough that in desperation people will turn to the government for FDR New Deal like measures that will show success. Obama's timid half way measure has only staved off the depression to come. It has not vindicated Keynesian economics. We now have to go through the profound pain of devaluation and really high unemployment under Republican auspices, have our noses rubbed in laissez faire for 5-10 years, have former believers face real deprivation before the supply side theory is in turn rejected also and a real Keynesian solution is undertaken. The smirk on my Republican neighbors faces will not be wiped away without suffering. Debt will be cleared away, just as the supply siders predict but so will their pride and pretense. As Lincoln said, "We must disenthrall ourselves, and then we can save the country." After all this turmoil, (10 years or so of it I predict) we will move forward again--at least I hope so for by that time I will probably be dead.

Well, we have an interesting group of comments to an excellent article. A nation that controls its own currency and has a history of relative stability, such as the US, is definitely better off to attempt to keep people working with deficit spending in a period of severe recession. This is far different than the average Joe piling on more unproductive debt. Investors are always looking for safe investments, and the US has an excellent track record of always paying its debts. Not since the Hoover era have our leaders made horrendous mistakes with the economy. Keynes helped guide us out of that mess. We are free to ignore Keynes words at our peril.

Remember how the Clinton years were often touted as an exceptional period of economic growth? Well, where is the green economy that came out of it? It didn't happen, just more consumption driven mania and more financial "gains" predicated on speculative bubbles. What makes these economists think that merely with a reshuffling of flow charts of supply and demand models we can avoid the deleterious physical consequences of pillaging and plundering the planet to death with more miraculous growth elixirs touted as the cure all for our economic pain? We cannot grow our way out of the destruction of our natural habitat, a living earth. No amount of economic tinkering can alter this fundamental reality.

I would prefer a local approach to keep money at home ...

Michael Unterguggenberber was mayor of the Tyrolean town of Woergl during the 1930s. He was faced with a decaying town and an empty treasury, like many another in those hard times. There being no money, he printed some 'labor certificates' to a value of 5000 Austrian schillings and deposited that amount in the bank to cover the certificates.

The certificates bore a negative interest. Every month, they had to be revalidated by affixing a stamp to them, of a value of one per cent of the face value. This money the mayor put into a relief fund.

The mayor put his money into circulation by paying it to his workers. The workers spent it in town, where the businesses found that they could use the money to pay taxes and other dues.

Nobody wanted to keep the money -- they spent it as soon as they could, rather than have to pay the fee. They paid their taxes with it promptly, even trying to pay them in advance. Within a year, the 5000 schillings had circulated 463 times, creating goods and services worth over 2.3 million schillings. Government schillings only circulated 213 times. Unemployment fell by a quarter and the town had repaired streets, a new drainage system, street lighting, a ski jumping platform, and a new water reservoir.

Over 300 other Austrian communities became interested, but two powerful enemies, the Tyrol Labor Party (one wonders why?) and the Austrian State Bank (well understood!) appeared. The bank threatened to start legal proceedings and the experiment stopped.

The Province of Alberta, Canada, heard of the experiment and duplicated it. It issued 'Prosperity Certificates,' which had to be validated with 104 one-cent stamps within two years to retain their value. The central government considered it a danger and banned it.

Regional currencies exist today in Argentina, in the provinces of Salta, Tucuman, Jujuy and Catamarca. The bonds have become the prevailing currency in regular daily use (1995) for purchases, transportation, the payment of local taxes, the wages and salaries of all provincial employees and most of the private sector.

What am I missing? Baker's saying that, "Countries such as the United States and the United Kingdom that control their central banks can simply have the central banks buy up the bonds used to finance the deficits. In this story, the interest payments on the bonds are paid to the central bank, which is in turn refunded to the government. This means that there is no interest-burden created by these deficits." sounds bizarre - rather like my saying that because I spent too much this month I can just borrow the money from myself add the sum to my total debt, and pay myself the interest. No problem??? Well, for 2009 the central banks would have to come come up with $1.9tn (total 2009 deficit). Where they gonna get it, borrow it from the government? OK, then where does the gov't get it - borrow it from the central banks?... Madoff was a piker!

Of course Keynes assumed a fairly strong state, a condition in little question during his lifetime. But he wrote about what to do when a capitalist economy was fast and employment high as well.

Nixon said, "We are all Keynesians now." But that has been equally true of others who do not admit it. Friedman does not really describe another mechanism of markets; he only advocates a different handling, a handling for another end.

The core of these complex problems has a simple dynamic of operation: the people who own things decide to maintain their ownership and their profit above all else. They consider widespread subservience to be "order" and "civilization," well worth killing masses of people to preserve.

Keynes describes the functioning of capitalistic markets well enough to allow for their conscious manipulation. These people have read Keynes or can hire people who have.

They do not want their minions to be happy and educated and independent and healthy. They want them healthy enough to work, content enough to submit, educated enough to complete necessary tasks, but neither content enough nor enraged enough to revolt.

The point is not to educate our politicians, but to learn them a thing or two.

The problem is that the people who make the policy decisions are affluent (to say the least) and in no danger of losing their jobs. So why should they worry about being logical and why should they bother to read Keynes, who was not the clearest writer?

I'd rather they recinded the Bush tax cuts and end the wars. That will close most of the deficit permanently. The raise in taxes will reduce investment, so the Fed will have to take other measures to sweeten that pot for growths sake.

"Cutting deficits means raising taxes and/or cutting spending."

Right.

Since the self-styled "deficit hawks" (who squander trillions on illegal wars) are categorically against all taxes, cutting spending will be their constant refrain.

"Unfortunately, our political leaders don't give a damn about mundane issues such as unemployment and economic growth."

Right again.

"Their main concern is pushing policies that keep the financial industry happy."

Only half-right.

Their main concern is also to destroy Social Security, Medicare, Housing Assistance and any other government program that helps the non-rich. They are happy to ignore Keynes and endure slow GDP growth (they're already filthy rich) if it gives them the chance to wipe out the legacy of FDR. After that, they can rediscover the value of deficit spending while rebuilding the US along more fascist lines.

Cicero: "Freedom is participation in power."

These neo-libs running the EU and US economy ever deeper and deeper into a slit trench seem to be itching for another World War, which is what may very well happen. Only it won't be a war between nations like WWI, but a revolution between classes and racial groups. I always expected capitalist Western Civilization to go out with a quiet fading whimper. But it may go out with a very red bang after all.

Why borrow our money at all? Just print it ...

We need to have a bank holiday to sort out the still insolvent Wall Street Banks and nationalize the privately owned and operated Federal Reserve and place it under the Treasury Department.

The Treasury prints our money and the banks borrow from the treasury or from savers. We reduce all leverage in the economy so that only the Treasury can create money. In this way the people garner the profit and the prerogative of currency and credit creation.

The bubble has popped ... the jobs it created are not coming back. We need to reduce the work week from 40 to 32 hours over two years while leaving wages the same. Companies would be recompensed with the USG implementing Medicare for All.

Baker wants to borrow our own money ... I say let's take back that which is granted to us in Our Constitution, the right, responsibility and duty of creating our own money without debt to be used for the benefit of the people ...

On the one hand the author says there's no relation between money supply and inflation and then goes on to say prices are based on supply and demand. This makes no sense and he completely contradicts himself. Just look at this idiotic logic:

"The idea that there is a direct link between the money supply and inflation is absurd. Do any businesses raise their prices because the Fed has put money into circulation? How many businesses even have a clue as to how much money is in circulation? In the real world, prices are set by supply and demand."

To put it more concisely the author says... "Supply doesn't matter, it's supply that matters."

When there is more of something, it's value is diminished. When there are more dollars, the dollars have less value and that is inflation. This is basic economics.

This is just bullshit from a pro big gov centralization intellectual, a shill for powers that ruin people's lives and rob them and send them off to war to die.

Progressives listen to this kind of charlatan at their own peril. What got us out of the depression was war. The most Keynesian leader in history was Hitler. Keynesian economics like all policies that lead to greater central government power will eventually lead to more militarization and war, which is central government's number one "service." Sure there will be some new jobs and roads built at first, like in Nazi Germany, but it is guaranteed that in the end it will lead to more military spending and perforce more use of that military. After central banking we had World War One, after the Keynesian policies of Hitler and FDR, we had World War Two. If you want World War Three, by all means support increasing the central government's economic power.