Larry Summers was the architect of the policies that laid the basis for the crisis in the first place. In the Clinton years he was a strong proponent of deregulating finance. He also pushed the high dollar policy that led to the country’s enormous trade deficit. This created a hole in demand that was filled by the stock bubble in the 1990s and by the housing bubble in the last decade. President Obama seems to think that the country should be thankful to Larry Summers that we didn’t have another Great Depression. This is like telling little kids that if they don’t eat their spinach the bogeyman will get them.There never was a reason to fear another Great Depression. We have known how to avoid one since Keynes wrote the General Theory in 1936. While we needn’t worry about a Great Depression, there is good reason to fear a prolonged period of stagnation in which unemployment is high and income is redistributed upward because workers have no bargaining power. In fact, this is what we are now seeing and Larry Summers is among the people at the top of the list for blame.
Posted on: Mon, 05 Aug 2013 18:50:18 +0000
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