There have been a number of articles lately about the efficacy of Keynesian theory. You see this discussed in the mainstream media because they, for the most part, have no real understanding of other economic theories so they have no larger frame of reference from which to compare Keynes.
Today’s Wall Street Journal has yet another article by reporter Jon Hilsenrath that attempts to raise the central question about whether or not Keynesian fiscal stimulus works. I discussed his last article on deflation in “Economists ‘Don’t Understand Deflation.’”
I suggest you read the Journal article to get an idea of what the controversy is. I have written about Keynesian economics many times and I do not wish to repeat myself again. But the main points are that: it has never been proven to work in any crisis, it fails as a theory under analysis, and it causes long-term harm to the economy. Hilsenrath makes many errors in his analysis. Further he fails to grasp what Keynesian theory is, what Monetarism really is, and he has no understanding of Austrian theory.
Whatever.
I recently read an article entitled, “The Self-Defeat of the Keynesian Cross” by Pedrag Raysic, a Ph.D candidate in economics. It is a devastating critique of Keynesian theory based on testing its internal logic. He concludes that if you take it to its logical conclusion, it is self-defeating. … Continue reading Why Keynesian Economics Is Internally Inconsistent
I’ve noticed more articles expressing concern about deflation. In addition to this article today from the Wall Street Journal (Deflation Defies Expectations—and Solutions), there was another one today from the L.A. Times. The Journal piece was written by a good reporter, Jon Hilsenrath, but it demonstrates no real understanding of what deflation is. In fact this is the premise of the article that “economists” don’t really understand deflation:
The old bogeyman of deflation has re-emerged as a worry for the U.S. economy. Here’s something else to fret about: After studying more than a decade of deflation in Japan, economists have slowly realized they have no idea how it works. …
Economists don’t have good answers. “We don’t know how deflation works,” says Adam Posen, a member of the Bank of England’s monetary policy committee who has been studying Japan since 1997. “We don’t have a way of rationalizing steady, several-year flat deflation,” he says.
Actually some economists do understand deflation. Keynesian economists don’t understand business cycles in general, inflation or deflation. Inflation and deflation are monetary phenomenon. If money supply increases, that is inflation. The ensuing and inevitable rise in prices is one of the results of inflation, not the cause. Inflation decreases the value of the currency which most people see as rising prices. It does a lot of other bad things as well.
Deflation is the opposite: it is a decline in money supply. The result is that the purchasing power of the currency goes up. In a deflation, creditors are at an advantage as loan payments don’t go down, but the debtor has to pay in dollars that are more valuable, leaving him in a worse position; in inflation debtors are favored because they can pay creditors with cheaper dollars.
Hilsenrath brings up the quandary of the Phillips Curve which says you can’t have inflation with excess industrial capacity: until industrial capacity is near full utilization, manufacturers can’t raise prices. The only problem is that this isn’t true. Stagflation in the 1970s showed that you could have excess capacity and inflation. This is because it doesn’t have anything to do with prices, but rather money supply. … Continue reading Economists ‘Don’t Understand Deflation’
President Obama is off pitching his stimulus plan today in Michigan:
The trip, part of a campaign dubbed “Recovery Summer” by the White House, is intended to reassure Americans the U.S. economy is returning to a sound footing in advance of the fall elections. …
On Wednesday, the White House released new data saying a surge in Recovery Act funding had raised economic growth in the second quarter of 2010 by as much as 3.2% and boosted employment by as many as 3.6 million jobs, compared to estimated levels in the absence of the stimulus. http://dailycapitalist.com/2010/07/14/how-to-start-an-economic-recovery/
I wonder if President Obama reads the same data as I do? Aside from the fact that the numbers the White House presented are false, the data are revealing the beginning of an economic slowdown which are clearly contra to the Administration’s claims that the economy is growing. The Fed is clearly worried as shown below in the minutes of its June meeting. In fact they expect years of slow growth. I wonder if Mrs. Romer talked to Chairman Bernanke before she boasted about her fake numbers?
Here is an overview of data that came in just this week that reveals a slowing economy:
… Continue reading Obama Says It’s The “Recovery Summer” But The Fed Says It Will Take 5 or 6 Years
UPDATED
Regular readers of The Daily Capitalist know I think we are headed for a decline in economic growth in 2010 and that the data is starting to show this.
Why isn’t our economy recovering? I ask that question often and have written about it many times. Perhaps a better question is: what needs to happen in order to make our economy grow? I offer some solutions.
There are many problems seen as hindering recovery. Here are the common ones I wish to examine:
- Too much debt encumbering consumers;
- The lack of consumer demand to fuel growth;
- Too much debt encumbering banks; and
- The government’s interference in the economy.
There are a host of other issues that are also important but let me focus on these points and show what can be done to fuel a recovery.
Numbers 1 and 2 (debt/demand) are related.
Our economy is consumer driven and we are reminded over and over again that consumer consumption is 70% of our economy. To put this in perspective, for Germany it is about 57% of GDP.
Our economy is built on consumption which is fine as long as it is supported by real savings, productivity growth, and wage growth. The data reveal that most of the consumption binge of the boom phase of this current cycle was financed directly or indirectly by debt related to rising home values. Personal savings declined to almost zero. Now savings are back up to 4%.
Here is why this is seen as a problem for recovery: PCE will decline as consumers pay down debt and increase savings. Spending drives the economy and the economy will decline.
Is this really a problem?
Saving is a process necessary for a recovery. Consumers are acting rationally to uncertainty and they will give us the signal when they are ready to spend again. About $10 trillion in household net worth was wiped out during the bust. Until consumers see unemployment decrease, wages go up, and their debt go down, they aren’t going to spend anyway.
But savings is never bad for an economy. Economists often fail to look at the other side of savings which is an increase in capital necessary to fuel future growth. In a normal cycle, increased savings reduces interest rates, which sends a signal to producers of capital goods that consumers don’t want to buy consumer goods right now, and that there is opportunity for them to increase production of durable goods such as machines, homes, and basic equipment. They use the loan funds to pay workers who will spend which, as this capital works its way through the economy, will create new and real economic activity.
While manufacturers have been increasing production in response to normal business cycle activity (inventory recovery; weak dollar advantages), they are just utilizing current capacity. If they wanted to expand, unless they are a large company with access to money center capital, they now report they are having trouble getting a bank loan.
What does this mean? It means they can’t expand and hire new workers whose spending will take up the slack from consumers who save. The government and the Fed have confused our ability to make economic decisions because they are artificially lowering interest rates.
What can we do to fix this? Savings is the fix. There is nothing that should be done to prevent this from occurring. In the longer term it will prepare the economy for new growth. See No. 4 for why flogging a dead horse is harmful to recovery.
The question is: why can’t we get loans?
… Continue reading How To Start An Economic Recovery
This Wall Street Journal article by Gerry O’Driscoll at Cato reveals a fascinating bit of history where Keynes and Hayek actually duked it out through the page of the Times of London in 1932. I think you will enjoy this. I, of course, stand with Hayek.
Newly discovered letters from two great economists shed light on today’s discussion of economic ‘stimulus.’
By GERALD P. O’DRISCOLL JR.
The debates raging over what policies will pull the U.S. economy out of its Great Recession replicate one that occurred during the Great Depression. Thanks to the efforts of Richard Ebeling, a professor of economics at Northwood University, we have compelling and concise documentary evidence. He has unearthed letters to the Times of London from the two sides that mirror today’s debates.
On Oct. 17, 1932, the Times published a lengthy letter from John Maynard Keynes and five other academic economists. Keynes, et al. (Keynes for short), made the case for spending—of any kind, private or public, whether on consumption or investment.
“Private economy” was the culprit that impeded a return to prosperity. If a person decides to save, there is no assurance that the funds “will find their way into investment in new capital construction by public or private concerns.” They cite a “lack of confidence” as the reason that savings is not intermediated into investment. Accordingly, “the public interest in present conditions does not point towards private economy; to spend less money than we should like to do is not patriotic.” They conclude by endorsing public spending to offset unwise private thrift.
The views in this letter came to be known as Keynesian economics. Depressions are caused by a spending deficit, which can be made up by government spending. Keynesian economics (which predates Keynes) is easily identifiable in speeches given by President Obama and his economic team.
Two days later, on Oct. 19, 1932, four professors at the University of London responded to the Keynes letter, and one of the signers was Friedrich A. Hayek who more than 50 years later would win the Nobel Prize in Economics. … Continue reading Keynes vs. Hayek: The Great Debate Continues
This recent video from Dan Mitchell at the Cato Institute deals with a very serious issue: the level of government spending and the impact on economic growth. I don’t think I’ve dealt with this enough, although it is implied in much of my work. In this video, Dan discusses the Rahn Curve, which says [...]
David Wessel, I have five words for you: post hoc, ergo propter hoc.
Mr. Wessel is the Wall Street Journal’s chief economics commentator, and is often the face of the Journal on television. He wrote an article recently (“Bailouts Save Day, Win Scorn“) that laments the fact that, despite the fact that the bailouts saved the world, Mr. and Ms. America don’t believe it. In fact, he points out that Americans’ distrust of government and large corporations has grown as a result of the bailouts, something they see as unfair, and an example of cronyism between Wall Street and Washington.
He says in the article:
The world has had a terrifying brush with another Great Depression. Although the recent scare in Europe is a reminder that this isn’t over yet, it looks like we’ve escaped that—in no small measure because of taxpayer-financed bailouts and fiscal stimulus, as maligned and imperfect as they were.
Mr. Wessel is a bright guy, a star of a pro-capitalism newspaper. Yet he makes serious economic and logic errors that are not based on theory or the record. He needs a lesson in economics and epistemology (the science of how we know what we know).
Post hoc, ergo propter hoc is a Latin phrase describing a logical fallacy. The fallacy is: because A occurred and then B occurred, then A caused B. In modern behavioral economics this also coincides with the principle of “confirmation bias,” where you look for data that coincides with your desired conclusion.
There are two fallacies here. … Continue reading Bailouts Didn’t Save Day, Deserve Scorn
Another unexpected event rocks the hallways of the Treasury, the Fed and Academia as the Bureau of Labor Statistics reported today that the consumer price index unexpectedly fell 0.1% in April, the first time since March, 2009. You may recall that Bernanke, Summers, Geithner, Christina Romer, and Krugman believe that modern economics can easily [...]
The Federal National Mortgage Association, fondly known as Fannie Mae, lost another $11.5 billion in the first quarter, its twelfth quarterly loss in a row, and is asking the taxpayers for another $8.4 billion to bail it out. According to the Wall Street Journal article, the company has lost $148 billion or about double the profits it has made in the last 35 years. This cute couple, Fannie Mae and Freddie Mac (the Federal Home Loan Mortgage Corporation), have cost taxpayers about $145 billion from the collapse of the housing bubble.
As you know the government has agreed to backstop these companies by guaranteeing their losses. What were quasi-governmental entities are now clearly labeled as government enterprises which is what they always were. Fannie, Freddie, and the Federal Housing Administration, which isn’t given a cute nickname, guaranteed 96.4% of all mortgages made in America in Q1 2010. Fannie and Freddie have about $5.5 trillion in mortgage assets.
Despite their losses, the firms are helping to stabilize the housing market. … The companies also play a central role in the Obama administration’s loan-modification effort designed to avert foreclosures.
But, as the Bloomberg article on this story points out, foreclosures have increased:
Even with the assistance, Fannie Mae increased foreclosures to almost 62,000 homes from about 47,000 in the prior quarter, according to the filing. The company’s foreclosure rate increased and its inventory of homes grew from $8.5 billion to $11.4 billion during the first quarter.
Please see my earlier article today on “Mortgage Problems Remain High” which shows the latest foreclosure related data. It remains high and is growing. The government’s attempts to “stabilize” the housing market have failed and taxpayers will be stuck with the bill. Both companies are in “conservatorship” with the new Federal Housing Finance Agency (FHFA) which essentially means “nationalization.”
Is it not clear that these government programs have been a colossal failure. … Continue reading Fannie and Freddie: Can We Finally Admit the New Deal Failed?
Christina Romer seems like such a nice lady but I think she is actually dangerous. It is frustrating to see those at the top of the Administration keep spouting the same old policies that have failed time and time again. Read this speech and you will see that she is channeling J. M. Keynes:
Christina Romer, chair of the president’s Council of Economic Advisers, says the reason unemployment remains so painfully high is clear: It’s not the inadequacy or laziness of the workers or the long-standing mismatch between workers’ skills and employers’ needs. It’s the old-fashioned Keynesian diagnosis: Too little demand in the economy.
Here’s the interesting and very Keynesian part of her speech [my emphasis]:
“The usual postwar recession has a fairly simple narrative. The groundwork is laid when for some reason policy is overly expansionary and so generates inflation. The recession occurs when the Federal Reserve realizes that things have gone awry. It raises interest rates, slows the economy, and so brings inflation down—at the cost of a recession. That type of recession is easy to end: once the Federal Reserve is satisfied with the behavior of inflation, it can slash interest rates and provide the economy with a large jolt of stimulus. …
The recent recession was obviously not caused by tight monetary policy. Interest rates were not especially high when it began, and so the Federal Reserve had only limited room to cut them. It has brought short-term rates down to virtually zero, but it cannot push them below that. The result is that we have not had the strong monetary stimulus that we would normally have in these economic circumstances. …
She comes to the startling conclusion that our high unemployment rate is due to the severity of the recession. To correct that we need loosen credit, bail out states and municipalities, and improve exports. Gosh, that is so easy to fix.
She went on to say:
“We have the tools and the knowledge to counteract a shortfall in aggregate demand. We should be continuing to use them aggressively.”
Here is a translation of what she is saying: … Continue reading Romer Channels Keynes
Here is a great post from Dan Mitchell at the Cato Institute. This is why the Rags-to-Riches-to-Rags saying is so true. If only their great-grandfathers knew how their progeny would turn out.
I wonder if any of these people can explain what “fair taxation” or the “common good” means?
Ultra-Rich Leftists Want to Atone [...]
A private jobs survey came out this morning from ADP which said the private economy lost another 23,000 in March. This was the smallest loss of jobs since February, 2008. Jobs in construction (-43,000) and goods manufacturing (-51,000) were hard hit. Gains came from the service sector (+28,000). ADP’s survey has a base of 22 million workers.
This contrasts with the Wall Street Journal’s survey of economists forecast of a 50,000 job gain. Bloomberg’s survey expects 184,000 jobs, including government jobs, with a big boost coming from temporary Census hiring. The Bureau of Labor Statistics report comes out this Friday. Stay tuned.
This made me think about jobs–what they are and how they can be increased.
I read an excellent op-ed piece on Real Clear Markets about the failure of the American Recovery and Reinvestment Act, the $787 billion orgy of Keynesian stimulus. It was written by econ professors, George Bittlingmayer (Kansas), Arthur Havenner (UC Davis), and Thomas Hazlett (GMU–econ and law). Their point is that the bill did nothing to stimulate employment, as advertised, and the new “Jobs Bill” is an admission of their failure.
Counter to the predictions put forward a year ago by the Administration, when it claimed that “more than 90 percent of the jobs created are likely to be in the private sector,” U.S. companies employed 3.9 million fewer workers in January 2010 than they did one year earlier. Public employment bucked the trend, staying constant even as governments contended with sharply reduced tax revenues. While the jobs held by those 22 million public workers helped support many families, the “stimulus” failed to trigger private sector employment growth. …
This implies a price tag, at the median estimate, of about $800,000 per job. These forecast job gains are not permanent, but temporary. The Administration’s January 2009 forecast was that the A.R.R.A. was needed to reduce the path of unemployment for five years, when the unemployment rate – if we did nothing – would decline to the level projected with the “stimulus.” Using this five-year time horizon projects annual costs of approximately $160,000 per job.
Nice work if you can get it.
 Dig a hole and fill it
One would think that the advocates of Keynesian stimulus would admit failure, but like most fundamentalists, they are more interested in doctrine than results. We now see that they are panicking because their policies aren’t working. Paul Krugman recently recommended that we erect a tariff wall against Chinese goods in order to force them to devalue to yuan and make U.S. exports more competitive in the world market. In effect, he is asking us to declare the economic equivalent of WW III. The devastation to the world’s economies would be catastrophic. Wow. But that’s another economic fallacy.
The bills to stimulate the economy are all based on a fundamental economic error and we, our children, and generations of grandchildren will have to pay for it.
Keynesians have a talent for giving a name to things that are often the opposite of what they mean. “Job” is a good example. To Keynes and his followers a job was something that you paid someone else to do. Simplistic and correct, until you think about it. It’s more complicated than that. Keynesian stimulus actually suppresses economic activity and thus employment. … Continue reading Jobs, Recovery, and the Barrista
February results showed that flat income growth caused consumers to tap into their savings to finance purchases of goods and services, which were up only 0.3% MoM. This means that personal savings decreased. These are negative indicators for the economy.
According to the release by the Bureau of Economic Analysis:
Personal income increased $1.2 billion, or less than 0.1 percent, and disposable personal income (DPI) increased $1.6 billion, or less than 0.1 percent, in February …
Personal consumption expenditures (PCE) increased $34.7 billion, or 0.3 percent. In January, personal income increased $30.4 billion, or 0.3 percent, DPI decreased $26.0 billion, or 0.2 percent, and PCE increased $38.5 billion, or 0.4 percent, based on revised estimates.
Real disposable income [i.e., adjusted for inflation] increased less than 0.1 percent in February, in contrast to a decrease of 0.4 percent in January. Real PCE increased 0.3 percent, compared with an increase of 0.2 percent.
Of all the economic analysts that I follow (about a half dozen) only David Rosenberg got the analysis of these numbers right, which is a roundabout way of saying that my analysis coincides with his analysis. My thesis as most of my readers know is that there are long-term trends in the economy and significant among those is increased savings as a result of financial uncertainty and the lack of sufficient savings by Boomers for retirement.
If savings are a main motivation of consumers, and because wages are flat to declining, then a reduction in savings to fund consumer purchases is not a good thing for the economy. It means that as soon as consumers feel they have sufficient income to continue to save, they will do so, and PCE (personal consumption expenditures) will remain flat for an extended period of time.
Look at what drove PCE in February. The largest component was purchases of non-durable goods which is food and clothing (up 0.9%). Without the component of food and fuel (which has been rising in price), PCE was flat. People need food and clothing. And they have to drive and heat their homes. These aren’t exactly elective purchases. The fact that they are dipping into savings is not healthy organic growth of PCE. … Continue reading Consumers Draw Down Savings For Personal Consumption
OK. Here is the opportunity. Reader Dylan reads this blog, obviously interested in ideas that run counter to what he has learned. He is very critical of capitalism. Can we win his heart and mind? That’s my goal and, because of his background (see below), I think he could be convinced that capitalism is, well … good. Let’s give him a try. I apologize in advance for the length of this piece. Now that I’ve written it, I see that Dylan and I are quite windy.
For those of you joining us late, Dylan commented on my article “Health Care in America: We Now Join Europe,” my lament over the passage of the health care bill. Dylan thought I should be more willing to accept these government programs as a social safety net. I took his comment and made it into an article, “A Comment on Health Care Reform: Winning Hearts and Minds.”
Here is Dylan’s response to my answer to his original comment. I’ve taken the liberty to highlight some of the key terms and ideas in his response:
Jeff
Thanks for the response.
And yes this is a debate i’d like to have with you.
First to your questions:
“If there was a better system of distributing wealth and bringing the most economic benefits to the most people at the least cost, [and the most freedom] would you be in favor of it?” – Yes as long as it was sustainable.
“If I told you that your assumptions about capitalism were wrong and that everything you were taught about capitalism was wrong, would you believe me?” – Maybe put you’d have to do more than tell me. Youd need to explain this to me. I like [Marx's] Capital Vol.1 but im sure you would rather i read the book you mentioned, which in the spirit of fairness i shall go and look at.
“If I told you that almost everything you read in the popular press and what you see as commentary on TV was faith-based economics, would you be willing to question them?” Most definitely (btw i already think this so score one for common ground!)
“If I told you that your views would achieve exactly the opposite of what you intended, would you blindly follow them regardless of the consequences?” No. Im not against capitalism, im against the zero sum mechanics of it. You i am led to believe believe in free market capitalism, i would prefer a capitalism with more of a social conscious and hence direct state intervention such as free education and healthcare which i believe are fundamental human rights.
You then go on to say – quite condescendingly [JH: mea culpa, but you started it with "fundamentialist"] i must add because we can compare letters after our names whenever you want – that i have not studied economics and that I unquestioningly accept everything i was told. If that isnt a playground put down im not quite sure what to call it.
To be most correct i am an social anthropologist (you know, one of those public academics trained to think critically). My background is in social justice so granted i am coming from a different point of view than most economics Phds. Added to which I do not have a full economics background as you do. However that does not mean i cant cite academics such as Gillian Tett who now writes for the FT who have shown that much of the belief of free market economists have many of the same cultural qualities as other fundamentalisms. Yup, you got it, those religious ones. Some people say that sort of fundamentalism and faith in free market capitalism since the late 1970s is how we got into the economic mess were currently in, i prefer to think of it in terms of blatant ponzi inspired theft.
Also i’d like to hope youd know that a persons’ background on theory and history might be far more solid than one emotional post about health care could reveal (especially as i’d just woken up and had my coffee). In fact in my personal work I have written much on the collision between colonialism and capitalism, how the two are related and the conduits, mechanisms, motives and personalities between both. My theoretical is not Marxist, but it does refer often to Marx, David Harvey, Antonio Gramsci, Rosa Luxembourg – all intellectuals who could take your position to task quite easily. It doesnt mean they are right and you are wrong, or vice versa, it means you and I both think there are different answers to the questions of the times. … Continue reading Winning Hearts and Minds: Part II
I received this comment on my article lamenting the passage of the health care bill, “Health Care in America: We Now Join Europe.” The person who wrote it has been following this blog for a while and he has added good commentary in the past. I don’t mean to pick on him, but it [...]
 Dr. (Oh) No
I used to rail regularly against Paul Krugman, our “liberal conscience,” but I became bored. His ideas are so silly and wrong that it was like the proverbial shooting fish in a barrel. Or is it shooting monkeys? Whatever. But a column of his on March 14 really had me concerned because the fellow is so dangerous.
This will just amaze you: In the middle of the Great Recession he is calling for retaliatory trade tariffs against China to force them to revalue the yuan.
Here’s how he frames the question:
China’s policy of keeping its currency, the renminbi, undervalued has become a significant drag on global economic recovery. Something must be done. …
To give you a sense of the problem: Widespread complaints that China was manipulating its currency — selling renminbi and buying foreign currencies, so as to keep the renminbi weak and China’s exports artificially competitive …
And it’s a policy that seriously damages the rest of the world. Most of the world’s large economies are stuck in a liquidity trap — deeply depressed, but unable to generate a recovery by cutting interest rates because the relevant rates are already near zero. China, by engineering an unwarranted trade surplus, is in effect imposing an anti-stimulus on these economies, which they can’t offset.
The foundation of his idea is based on Keynesian fundamentalism. What Keynesians suggest as a cure-all of the world’s malinvestment created during the fake money credit boom is to inflate our way out of the problem. This hasn’t worked. The last thing they think we should do is to actually liquidate the bad debt and overvalued assets on the books of financial institutions which are tying up credit. Yet until that happens, we’ll be stuck in the “liquidity trap” that government policies created in the first place. (See my articles, “It’s Supposed To Work,” parts I and II.)
It boggles the mind.
Krugman says that arguing with the Chinese will no doubt be futile because they won’t revalue. His solution, referring to a policy of the Nixon Administration in 1971 to erect trade barriers against trade partners:
At this point, it’s hard to see China changing its policies unless faced with the threat of similar action [as in 1971]— except that this time the surcharge would have to be much larger, say 25 percent.
Yikes! What he is saying is that we should erect a trade barrier against Chinese goods.
Our government did this in 1930 and it was one of the causes of the Great Depression as international trade collapsed because of retaliation by other governments. … Continue reading Paul “Smoot Hawley” Krugman
March 1 (Bloomberg) — The U.S. Transportation Department will lay off 2,000 employees today, halting construction projects, reimbursements to state governments and highway safety programs, according to a statement.
Employees will be furloughed without pay because a funding measure stalled in Congress, the department said in a statement today. The affected workers are in [...]
Somehow Comptroller of the Currency John Dugan didn’t get the message from Team Obama about encouraging consumers to spend. As you know the Administration’s economic advisers see vigorous consumer spending as the solution for overcoming our recession. Consumer spending formerly represented 70% of the economy.
Apparently the consumers are getting the message without Mr. Dugan’s help since [...]
Even the Congressional Budget Office is conceding that things aren’t turning out as expected:
The Congressional Budget Office hiked its forecast Tuesday for how much the stimulus bill will add to the nation’s deficit, raising its estimate by $75 billion to $862 billion.
The American Recovery and Reinvestment Act, passed in February 2009, was [...]
The U.S. and Japan face similar economic problems and they are trying to solve them in the same way: fiscal and monetary stimulus. It hasn’t worked for Japan and it won’t work for the U.S. Japan just received a downgrade warning from S&P over their credit rating and the U.S. [...]
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