Monday, August 3, 2015

3/8/15: Secular Stagnation: Some [Still] Ask if It is Monetary or Technological...

So, is "Secular Stagnation" a Monetary-Financial Problem or a Fundamental-Technological Problem? asks Brad DeLong in his post for Washington Center for Equitable Growth @equitablegrowth.

Of course, I already tried to answer that question and it is... both. Read here:

The reason why this makes things uncomfortable for normal economists is that admitting that the problem is two-sided makes it impossible to suggest a solution for dealing with it, except a default one of "let the time heal". And the problem with that is the pesky, nagging suspicion that time can both heal and hurt: if (or when) the next recession, however mild, strikes, in the dual demand- and supply-side secular stagnation scenario, there won't be any bullets left in the Central Banks and fiscal authorities policy 'guns' to fire at the approaching bear. The perceived omnipotence of either 'borrow to spend', 'borrow to invest' and 'print to stimulate' schools of economic thought will be going nowhere.

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