During the next year of campaigning, we are going to hear lots of uplifting slogans about America’s can-do spirit and the bright prospects for our national future. That is the way politicians talk, and there is nothing wrong with that. But such optimistic rhetoric should not fool anyone about the underlying reality: Unless there is a fundamental—and difficult-to-imagine—change in the way our politics interacts with our economy, the United States and much of the world are headed for a very grim future.Go read the article, it's an excellent analysis of the lead up to the Great Depression and how many parallels there are to our circumstances today. And why we're so screwed by our ignorant and feckless political elites.
During the typical recession, a country suffering a downturn might hope to revive itself by cutting its spending. That might temporarily increase unemployment, but it would also depress wages and prices, simultaneously cutting the demand for imports and making a country’s exports more competitive against those of its rivals. But, when the recession is global, you get what John Maynard Keynes called the “paradox of thrift” writ large: As all nations cut their spending and attempt to devalue their currencies (which makes their exports cheaper), global demand shrinks still more, and the recession deepens.
Tuesday, September 20, 2011
The New Republic this week.