Re: Re: Re: Re: RE: saving and aggregate demand

[Jim Devine <jdevine@xxxxxxxxxxxxxxx>]

At 02:35 PM 10/5/00 -0700, you wrote:
> What's conservative about a high rate of investment? What's conservative
> about recognizing that--in normal times--the decision cycle of the Federal
> Reserve in making monetary policy is much shorter than the decision cycle
> of the President-plus-Congress in making fiscal policy?

I don't know about conservative (vs. liberal), since those are pretty
slippery terms. Is Pat Buchanan a "conservative"? yes -- and no.

One thing I know is that the Fed has very specific political interests,
ones that typically align with Wall Street and the banks. It's against
democratic values to give all sorts of power to an agency such as the Fed
which is not held responsible to the electorate. The power of the Fed
should be reduced unless it is to be held responsible. Otherwise, we're
into the old theory of the "benevolent" dictator, which ignores the fact
that "power corrupts." Methinks its a sign of the decline of "New Deal"
liberalism to see the move toward this theory.

Further, it's a _basic economic mistake_ to use the term "investment" as
short-hand for "private domestic (real) investment," since the government
also does real investment, as in education, public health, basic science,
and infrastructure. (This was something that showed up in the early Clinton
years, where anything good had to be justified as an "investment." Hillary
C. talks about "investment in children" instead of nurturing in her IT
TAKES A VILLAGE.) The government should be doing more of this investment
(though of course the elite communities can do most of this for themselves,
excluding us, and so use their influence to prevent this kind of policy).

Jim Devine jdevine@xxxxxxx &  http://bellarmine.lmu.edu/~jdevine