Robert Waldmann summarizes Mr. Lewis here, lets take the first point:
First professor Wren-Lewis argues that monetary policy would not have offset less contractionary fiscal policy in the past 6 years, because short term safe nominal interest rates were stuck at the zero lower bound. -
Short term rates are stuck at Zero? No, Mr. Lewis, the short end of the curve is flatter than a pancake, because there is no banking going on in the retail sector. Why? Because the US government cannot keep its interest rates stable and most of banking is concerned with making money stable. Banking is all about looking at this graph, Mr. Lewis.
Mr Lewis fails probability and statistics. We have this growing and dangerous instability because tax variance is not at all matched to interest cost variance. If Mr. Lewis were capable of reading an XY graph, he would take a look at this graph and have a hysterical attack. In fact, I am quite curious as to how these bonehead Keynesians can spend the last 6 years not noticing this obvious instability.
Where did this all start?
Why with lil Bush, naturally. Notice we started the bankruptcy process half way into his term.
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