The New Marxist Economics

The rhetoric from the right, which is all to often echoed by the maintream media, is that the Obama administration has moved policy so far to the left that it produced a backlash from a traditionally right-of-center populace. The latest object of right-wing scorn is the Federal Reserve’s program of Quantitative Easing, meant to fight the growing specter of deflation while hopefully promoting employment. This policy has been roundly criticized by right-wing luminaries as varied as Ron Paul, William Kristol and Sarah Palin. So how far to the left is this policy? It is so leftist that in 2000 the policy was promoted, in an almost identical economic circumstances, as a way of helping Japan out of its economic malaise by no less prominent and raging a leftist than Milton Friedman:

David Laidler: Many commentators are claiming that, in Japan, with short interest rates essentially at zero, monetary policy is as expansionary as it can get, but has had no stimulative effect on the economy. Do you have a view on this issue?

Milton Friedman: Yes, indeed. As far as Japan is concerned, the situation is very clear. And it’s a good example. I’m glad you brought it up, because it shows how unreliable interest rates can be as an indicator of appropriate monetary policy.
During the 1970s, you had the bubble period. Monetary growth was very high. There was a so-called speculative bubble in the stock market. In 1989, the Bank of Japan stepped on the brakes very hard and brought money supply down to negative rates for a while. The stock market broke. The economy went into a recession, and it’s been in a state of quasi recession ever since. Monetary growth has been too low. Now, the Bank of Japan’s argument is, “Oh well, we’ve got the interest rate down to zero; what more can we do?” It’s very simple. They can buy long-term government securities, and they can keep buying them and providing high-powered money until the high powered money starts getting the economy in an expansion. What Japan needs is a more expansive domestic monetary policy. The Japanese bank has supposedly had, until very recently, a zero interest rate policy. Yet that zero interest rate policy was evidence of an extremely tight monetary policy. Essentially, you had deflation. The real interest rate was positive; it was not negative. What you needed in Japan was more liquidity.

All that’s missing is a quote from Das Kapital, wouldn’t you agree?

(David Beckworth via Brad DeLong)


GOPer think: Anything proposed by a Demrat is lefty even if it is not.

I love it that the Pilgrims were communists.


America was actually the world’s first Anarcho-syndicalyst commune.

@Serolf Divad: And Plymouth its first attempt to live in the past.

Don’t forget the bit where the EVIL GUBMINT wants to starve everybody to death.

After all, it’s totally unreasonable to spend $300 million/yr on food safety – only 5000 or so Americans die from foodborne illness every year. Now, if those 5000 should happen to die in a one-off terrorist attack, the sky’s the limit on spending…

@al2o3cr: I take it you’re not including the thousands Americans who die from the amount of crappy food we stuff into our bellies every day. Thankfully the Talibunny has jumped right on top of Mrs. Obama’s efforts to cut back on the Big Macs and Snickers we inhale. Lucky for us we have the Fox News corps of “conservatives” to save us from the government terrorizing our bulging waistlines.

Gates/McMullen on TV now kicking DADT can down the road – “take your time, legislature!”

@al2o3cr: The really irritating part about the food bill? It will probably keep us “safe” from the eggs, dairy, meat and produce raised and sold locally by small farmers while basically doing nothing to protect us from the Tysons of the world, whose lobbying associations were all over it. Jon Tester’s amendment exempting farms selling less than $500K per year didn’t make it, thanks to their efforts. Yes, a Democrat was trying to protect real small businesses from excessive government regulation but no Republicans (other than Crazee Coburn) would get on board.

Oooo. Zapf Dingbat.

Yes I am that shallow. You only just noticed?

I suspect that Miltie had his motives that would have included his friends and family getting rich on some scheme here. Maybe having to do with borrowing in Japan to invest/lend elsewhere at more interest, if that is possible.

I seem to recall him advising some Latin Amirican countries whose central banks were taken over by some of his cronies. They were eventuially booted out but not until the banks were bankrupt. (The root of that word seems so appopriate/ironic.)

@Mistress Cynica: They couldn’t exempt farms under half a million? Jesus H. I guess they deserve their lot by not being rich like the agri-corp.

Went on a jaunt to the Central Valley today. Drove by so many ginormous agri-corp farms. Not so many family farms.

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