The monetarists are arguing that Krugman is applying a double standard. Stimulus was tried, then failed to do enough. PK says it's because the stimulus was not big enough. Monetarism was tried and is failing to do enough. The market monetarists are saying it's because the Fed is not doing enough. They are most likely wrong about the efficacy of fiscal policy, and we certainly need to do more on that front, but the argument that Keynesians are applying a double standard is not without some force.

Causation and correlation. Check. Adequate sample size. Check.

They were thinking that deficits and super low inflation are more important than jobs, economic growth and a bright future.

Another way to look at it is that the government should engage in deficit spending for the usual Keynesian reasons, but refuses to do so for political reasons. Instead, of borrowing and spending directly, it acts indirectly. It guarantees some household debt, which leads to increased spending and the usual Keynesian benefits.

Our overwhelming problem today is jobs and economic growth. We might want to focus on those issues. With a better economy, deficits would be much less of an issue. In the longer term, if we fix healthcare spending, we don't have a deficit issue. If we don't fix healthcare, we have major problems, whether it's paid for by individuals directly or indirectly through government programs.

Let's not forget the debt ceiling, which will ensure another round of hostage taking in about a year.

We can only hope this deal falls apart, and pressure our representatives to vote against it. It doesn't appear that we're getting anything we wouldn't automatically get on Jan 1. Once again, Obama pursues a deal for the sake of a deal.

>>restructuring entitlements to curb the continued growth of federal spending, particularly for health care>> I wouldn't consider anyone who concurs with this a serious analyst. Entitlements are Social Security, Medicare and Medicaid. Social Security is fine. No need to curb growth, perhaps a bit of tinkering with funding if necessary. The issue with Medicare and Medicaid is that healthcare is too expensive. Curbing federal spending means shifting the costs from the feds to individuals. This is counterproductive because it will raise overall costs (largely because of gov't bargaining power and lower overhead than private insurance). These programs are vital to the survival of a large part of the population. Cutting them is false economy. It would be wrong from both political and policy perspectives.

If he can amend today to make his taxes look good, what's to stop him from amending again after the election to get it all back?

Another line of thinking is: policy might increase returns generally, but I'm not sure they'll increase the returns for my company and could easily hurt my returns. Therefore I won't push that policy.

Nick, I believe the capitalists regard higher interest rates as a higher net cost and don't believe higher NGDP would necessarily lead to higher overall investment returns. In the US, at least, pension plans are moving to defined contribution, making pension returns less important for most capitalists. My sense is they mainly look at a trade-off between increased costs and the possibility of increased revenues. I agree with you, but the moneyed interests do not appear to. They do not seem to realize what would be in their best interests. If they did, we'd see different policy. How to educate them is far from clear.

Powerful moneyed interests are seeing high business margins due to low labor costs (aided by high unemployment), low materials costs (aided by low inflation) and low borrowing costs. Higher NGDP would likely increase revenues, but whether that would be enough to offset higher costs is not entirely clear. Given the uncertainty, why should they push for NGDP growth?

Best outcome - ECB does the right thing, guaranteeing sovereign debt and increasing inflation (or targeting NGDP) to the degree that countries in the Eurozone can grow out of their problems. Throw in a good measure of stimulus spending until the economies recover. Otherwise, just kill it quickly.

The securities lawyer he consulted with is wrong. Romney was clearly a "control person" owing to his ownership and position and, as such, would be responsible under the securities laws for violations at Bain. Where's the evidence he knew nothing? Where's his condemnation of Bain's actions? It was not long ago he was taking credit for employment growth at Staples during this period.

It's an extraordinary failure of monetary and fiscal policy.

The idea of the Supreme Court is to be non-democratic. The idea is to enforce certain rights against the will of the majority. Given its druthers, the majority would trample on free speech, discriminate based on race, send Japanese Americans to concentration camps, outlaw abortion, etc. The court is supposed to stop that. Of course the problem is that it could easily go the other way. As Justice Jackson famously said, we're not final because we're infallible, we're infallible because we're final. Do you have another suggestion for enforcing necessary but unpopular rights? Is it worth the possibility that the court will do the wrong thing?

>> charge each member of a health exchange the same price for a policy >> Premiums can vary based on age, tobacco use (also family size and geographic location), within limits set by the Affordable Care Act.

"We are not final because we are infallible, but we are infallible only because we are final." - Justice Robert H. Jackson

There are worse things in life than being a tenured professor at Yale Law School. Even legal realists need to coat their preferred outcomes in a patina of somewhat coherent words. Constitutional law helps provide that patina.

I've discussed the situation with a number of Germans on a number of internet boards and they are unanimous as viewing the situation as a morality play in which Germany is the unsullied good guy, providing selfless benefits to its irresponsible neighbors. This mirrors the statements from government officials. They don't see any reason, including self interest, to do more.

>>Instead, the problem was that the losses caused by the bursting of the US housing bubble were concentrated among a few organization who - we now know - were unable to bear them. Had the losses been more dispersed - as the tech burst's losses in 2000-03 were - the macro effects would have been much less nasty.>> The housing bubble was a case with a small number of lenders and a large number of borrowers. It hit many homeowners and people in housing related industries. The tech bubble was a case with many more investors and many fewer in related industries. >>I have this suspicion that the nature of macroeconomics - with its emphasis upon mathematical tractability rather than complexity - is influenced more by what can be safely inflicted upon students than by what best describes the real world.>> A frequent claim is that the RBC types love elegant math and don't care about empirical evidence (how well theory describes the real world), while the Keynesians insist on evidence even if theory isn't as neat.

Many prominent Republican politician's are attacking the Fed for doing too much. Where are the Democratic politicians attacking the Fed for doing too little? Having a president who adopts the framing the government must tighten it's belt in a depression and who ignores monetary policy (e.g., leaving Fed seats open) hasn't exactly helped. The GOP and its masters have put massive effort into convincing the country that the cure for every problem is cutting taxes on the best off. Where's a similar effort by the good guys?

Is monetary policy endogenous or exogenous? A central bank, especially a rule based bank or the like, is responding to the conditions it influences

Is inflation or *unexpected* inflation the issue? Contracts (e.g., loans, employment terms) may include an inflation component (implicit or explicit). If inflation is in line with expectations, the parties get what they bargained for. Only if inflation is higher or lower than expectations do we have an issue.

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