17 October 2008
A foray into economics
More often than not, I shy away from discussions of anything beyond basic economics. I am a competent bank teller so I'm a whiz at counting and doling out cash, but beyond those and similarly simple financial transactions I am typically woefully ignorant. I have decided to try my hand at economics this morning because it's an important part of our cultural landscape and it's something I want to better understand.
To make matters easier, Paul Krugman, the most recent winner of the Nobel Prize in Economic Sciences, has written a fantastically lucid op-ed outlining his best plan to pull up on the levers of our steadily sinking airplane of an economy. Krugman is a self-professed liberal (his NYT-hosted blog is called "The Conscience of a Liberal") so his political bent aligns with mine and he has disagreed with most of the Bush fiscal policy and hasn't shied away from letting that be known. But more importantly, he's a brilliant economist.
The basic gist of his plan follows:
1.) The Fed should continue to cut the rates, but that won't be enough. Increased government spending is necessary to turn this economic ship around.
2.) The government should work to buy up existing mortgages and restructure the terms. Krugman disagrees with McCain on the notion that they should be purchased at face value.
3.) It is now more important than ever to boost the economy by investing in rebuilding our infrastructure.
These solutions seems almost too easy to be true because most of what it seems to be only throwing money (probably imaginary money, at that) at problems hoping that they go away. I don't believe, though, that that is the solution Krugman is calling for. He believes that this downturn is worse than the technological bubble burst because there is no foreseeable bubble on the horizon.
I don't believe that we should take any one person's opinion, but I tend to take the opinions of people with awesome beards more seriously.