Saturday, November 28, 2009

Why Are Good Policies Bad Politics?

As many of you know--we're trying to change this... but...
 
Economist Brad Delong on good policy as bad politics

Those who claim that America has a debt problem, and that a debt problem cannot be cured with more debt, ignore (sometimes deliberately) that private debt and US Treasury debt have been very different animals – moving in different directions and behaving in different ways – since the start of the financial crisis.

What the market is saying is not that the economy has too much debt, but that it has too much private debt, which is why prices of corporate bonds are low and firms find financing expensive. The market is also saying – clearly and repeatedly – that the economy has too little public US government debt, which is why everyone wants to hold it.

To see more on this problem...

Posted via email from Jim Nichols

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