Back in the ’80s and ’90s the big argument I remember hearing on the fiscal policy front was that using fiscal policy (ie., spending) to dig the country out of a recession was inefficient since by the time you could get productive spending online (as opposed to the shock-absorber effect of unemployment insurance, etc.) the business-cycle would be pulling the country out of recession. So the spending would be unneeded, possibly inflationary and just add to the debt. With a normal cyclical downturn there may be some logic to that. After all, Keynes never figured you do away with the business cycle entirely. Read More
Lawrence Summers says we’re facing a 1 in 3 chance of a double dip recession.
With congressional Republicans inflexible on starving the economy of any fiscal strategies to create jobs, this looks very bad, both economically and politically.
I think this is the image I’ll remember from the debt ceiling trainwreck of 2011.