http://online.barrons.com/article/SB126228908317212353.html#articleTabs_panel_article%3D1
Sometimes, my opinion of the human race goes down a notch.
" In 1997, Japan made that stupid mistake of cutting our deficit, and that lengthened our suffering by five years, if not more. I see a similar danger in the U.S. and Europe."
"Q: Has the U.S. government done enough to offset the crisis?
A: They are a bit too cautious. In this type of recession, government has to be in there in a sustained fashion to take this entire excess savings in the private sector and put that back into the income stream. It has to be sustained until private sector deleveraging is over. Individually, everybody is doing the right thing. I can’t tell you to stop paying down debt. But when everybody does it at the same time, who is going to borrow and spend?"
"Q: What do we need to see?
A: A three- to five-year program, minimum, where President Obama comes out and tells the American people: “Look, we have a different type of disease now.” That kind of explanation is essential to get Democrats and Republicans to understand why you need fiscal stimulus. I can assure you if the government doesn’t spend much more, your budget deficit will continue to increase. [note: this makes no sense… deficits will increase with more government spending] During the past 15 years, we in Japan tried to cut the budget deficit twice. On both occasions, the economy collapsed, and tax revenue dropped. "
“But increased issuance of government debt during a balance-sheet recession is a positive. Unless the government issues a sufficient amount of debt and boosts fiscal expenditures, the economy will fall into a deflationary spiral.”
"Q: Is Japan’s recent 7.2 trillion yen ($78.3 billion) stimulus enough to pull it out of its current slump?
A: It’s far better than nothing, but this time around, I’d like to see a long-term vision, which is completely missing from this government at the moment."
Comments on the article are mixed: http://online.barrons.com/article/SB126228908317212353.html#articleTabs_comments%26articleTabs%3Dcomments
For immunity against this type of nonsense:
http://www.economicthought.net/2009/12/the-dangerous-“lessons”-of-1937/