A man for any season: Before it was about “expansionary austerity”. Now it´s convenient to call for “self-financing fiscal stimulus”: In a “Man for all seasons”, we get the story of Thomas More who stood up to King Henry VIII when the King rejected the Roman Catholic Church to obtain a divorce and remarriage. Now we have a duo – Larry Summers and Brad Delong – that “adapt” to the season at hand. In their just released paper – Fiscal Policy in a Depressed Economy – they say that in the “liquity trap” situation America is in today temporary stimulus “may actually be self-financing”. Interestingly, when he was number two to Rubin (and later top Treasury honcho) during the Clinton Presidency (1993 – 2000), Larry Summers peddled “stimulative austerity”, the idea that to cut deficits would lower interest rates by enough to produce stronger growth…
Now this really isn't fair to Larry.
So I wrote, asking whether Nunes had actually read the paper.
It certainly did not sound like it.
I asked if I understood that we had explicitly argued in our paper that back in 1993 (when Alan Greenspan was very worried about long-term fiscal stability, and promised to make monetary policy easier in order to hold aggregate demand harmless if the Clinton administration undertook deficit reduction) the benefit-cost calculation was very different from what it is today (when Ben Bernanke is saying that he really would like some help from other branches from government).
What the benefit-cost calculation is depends on what the monetary-policy reaction function is, and different monetary-policy reaction functions lead to different appropriate fiscal policies.
Apparently the answer is no. Here's what I got back, via email:
Given the quality of your comment I have to assume YOU are the bullshit artist impersonating someone else.
You have been exclude
The whole point of weblogging--if it has a point--is to create a more informed public sphere than the journalistic filter allows, not a less informed one.