Article;
http://krugman.blogs.nytimes.com/2011/07/18/herbert-hoover-was-hooveresque/
Comment;
Resorting to printing press, as Hoover said, will devalue the dollar and will decrease the purchasing power of $. But, that would happen also when we will improve money supply in any form. Its basic economics when money supply is increased it devalues the purchasing power of $. Actually, it devalues $ in terms of other currencies in international arena. Today, the situation is different. Inflation has been properly anchored and prices were in a deflating mode, not long ago, and, we can bear inflation some more if it comes with recovery. Devaluing dollar at this point of time will help increasing exports for the country. If wages and salaries increase this time it will affect the prices only marginally and increase in wages would and should also mean increase in real wages. The government has not used fiscal policy in any real sense. Keynes said that if there is no work for the government to do which can boost effective demand then the government can simply dig pits and re-level them. But i do not think the government has no real work to do in the US. Fiscal policy at this point of time is expected to do two things. It will increase employment and will infuse demand, internally. Fiscal stimulus used so far has been of a different nature and were aimed at improving balance sheets of the banks. We need fiscal policy is some real sense…
http://krugman.blogs.nytimes.com/2011/07/18/herbert-hoover-was-hooveresque/
Comment;
Resorting to printing press, as Hoover said, will devalue the dollar and will decrease the purchasing power of $. But, that would happen also when we will improve money supply in any form. Its basic economics when money supply is increased it devalues the purchasing power of $. Actually, it devalues $ in terms of other currencies in international arena. Today, the situation is different. Inflation has been properly anchored and prices were in a deflating mode, not long ago, and, we can bear inflation some more if it comes with recovery. Devaluing dollar at this point of time will help increasing exports for the country. If wages and salaries increase this time it will affect the prices only marginally and increase in wages would and should also mean increase in real wages. The government has not used fiscal policy in any real sense. Keynes said that if there is no work for the government to do which can boost effective demand then the government can simply dig pits and re-level them. But i do not think the government has no real work to do in the US. Fiscal policy at this point of time is expected to do two things. It will increase employment and will infuse demand, internally. Fiscal stimulus used so far has been of a different nature and were aimed at improving balance sheets of the banks. We need fiscal policy is some real sense…
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