Kling says the ten year rate dropped, plunged, right as Reagan deficits rose. Krugman says we have negative real rates, today, right after the deficit thing. The two episodes seem similar but Krugmam calls the later a liquidity trap but not the former. Krugman wants the absolute level to go to zero. Kling says it is a relative drop.
Krugman is right, we are hitting pavement. Kling is right it is a relative drop. But they are both right, we are taking the last 40 feet of a 200 foot drop done in relative amounts ever since Reagan.
We don't have any more capacity for Congress to bail any of us out, we spent the debt allocation. That is why Congress works on a three week scheduling basis, no more debt capacity. It is hard to do, but the economist has to put government back inside the model. Why do we have Tea party, Three Week Budgets, and, for Christ Sake, Congress has given up Earmarks.
Does the economist need any more clues that Congress is not in a borrowing mood?
No comments:
Post a Comment