Recession Revisited

In the 2 Nov W. Post,Matt O’Brien reviews an article by Lawrence Summers and Olivier Blanchard comparing the recessions of 1930 with 2008. One point is that the recovery has been slower this time. Recovery in 1930 was prompted by two factors:
1. We retreated from the gold standard. The dollar was allowed to float, and inflation increased. People who had money spent it quickly before it lost value. Others paid off debt with cheaper dollars. A little inflation can be a good thing, but 2% is too little.
2. The federal government began spending huge amounts of money in the buildup to WWII. This increased the debt (remember war bonds?) but stimulated the economy.
Today, the federal reserve has worked hard to contain inflation below 2%. That may not be a good thing. Also, Republicans are working hard to decrease government spending. Also not a good thing. We certainly have things that need money! Infrastructure, healthcare, energy, and research come to mind, but there are other prorities. How about restoring the budget for the National Park Service.
True, we had some stimulus funding after 2009, but not nearly enough.

Published by

Robert

Retired: physician, civil service employee, consultant.

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