April 30, 2005

WRONG AND WRONGER (David Hill, The Bronx):

Germany puts its faith in Keynesian (Ambrose Evans-Pritchard, 30/04/2005, Daily Telegraph)

Germany is backing a 1970s-style Keynesian to take over the crucial job of chief economist at the European Central Bank, marking a dramatic shift in Berlin's economic thinking and horrifying the guardians of orthodoxy in Frankfurt.

The post has been held for the last eight years by Dr Otmar Issing, a monetary hawk who has fought off political pressure for lower interest rates and sought to uphold the low-inflation traditions of the former Bundesbank.

Chancellor Gerhard Schroeder now hopes to replace him early next year with Professor Peter Bofinger, the leading advocate of a ''New Deal'' spending blitz to cut unemployment and lift the country out of protracted slump.


Given the global deflationary cycle European rates are obviously too high while the Hoover/FDR spending blitz did nothing to end the Depression. Forget spending, just cut rates.

Posted by Orrin Judd at April 30, 2005 11:52 PM
Comments

"The definition of insanity is doing the same thing over and over again and expecting different results." - Albert Einstein

Posted by: erp at May 1, 2005 9:30 AM

"The definition of insanity is doing the same thing over and over again and expecting different results." - Albert Einstein

Posted by: erp at May 1, 2005 9:44 AM

Very meta commenting technique there, erp.

Posted by: Annoying Old Guy at May 1, 2005 10:14 AM

Regulating enterprise to the point of impracticality while taxing labor and capital which only adds to the costs of hring and investing in order to maintain alternatives to working for a living can only expand so far. The 'mixed economy' paradigm produces a less mixed economy over time. The idea that one can balance the needs of the state with neeeds of private industry within a democratic system with minimal constitutional limits on the growth of the state will eventually fail. The adjustments made by central banks, tinkering with short term interst rates, are band-aids. The continual rise in the cost of the 'public sector' regardless of economic or demographic conditions is a fundamental problem which is never addressed since it is not in the interest of the state to address it. Keynesian economics is just a further rationalization for an unworkable, counterproductive state induced distortion of costs which serves the interests no one other than those on the state payroll or live through state 'benefits'. Japan is a perfect example. The US is growing relative to Europe and Japan, attracting immigrants and such, only becasue our system is the lesser of two evils in terms of encouraging the productive sector over the public sector.

Posted by: Tom C., Stamford, Ct. at May 1, 2005 10:37 AM

1923, here we go again; are they insane, I know the last big pre-monetarist was Schacht, who sold
his soul to Hitler, but really now

Posted by: narciso at May 1, 2005 10:39 AM

Thanks AOG.

Posted by: erp at May 1, 2005 11:26 AM

Obviously their gas taxes are too low.

Posted by: joe shropshire at May 2, 2005 2:35 AM
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