Monday's WSJ Front Page and pg 15-triumph of the GT?

[Clifford Poirot <cpoirot@xxxxxxxxxxx>]

The front page and page 15 of Monday's WSJ are well worth a look and of some
considerable interest to Post-Keynesians. Here is a brief synopsis:

"Caution: Tax Cuts Are Bigger Than They Appear in Budget" : While there is
some disagreement on this list over the desirability of tax cuts and
deficits, I don't think anybody on this list would approve of Bush's long
held strategy of using mirrors and gimmicks to redefine the size of the tax
cuts. This article pretty much directly accuses Bush of lying and hypocrisy.

"Newly Defined "strong dollar" Signals U.S. Shift": Now this one made me
almost burst out into raucous laughter and roll on my office floor-a "strong
dollar" policy is no defined by Treasury Secretary John Snow as "general
public confidence" and "difficulty to counterfeit". Perhaps it can be used
in Bounty commercials too-a comparison test between the dollar and the Euro?
Which one will hold up when wet...?. Again, clearly we have some differences
on this list about the advisability and meaning of the current dollar
devaluation. And again, regardless of what one thinks about this (I'm in
favor) I wonder why is the Bush administration resorting to redefining terms
rather than admitting what is going on?

I think it is significant politically that a paper that has practically
become the Republican Party propaganda page, takes Bush to task (far more
than the NYT has been willing to do) for his verbal sleight of hand on two
significant economic issues.

More interesting from a theoretical point of view is the FED's new found
concern on the problems of deflation "Having Defeated Inflation, FED girds
for New Foes: Falling Prices". Follow the story to page 8 where the IMF now
says we need to prevent deflation, rather than fighting it.

So there we have it-the WSJ, the FED and the IMF warning us against the
dangers of deflation and frank admissions that falling prices don't bring
the economy back to full employment. It's as if I woke up on some bizarre
parallel universe where the WSJ excoriates Bush and the FED and the IMF take
the GT seriously. There's got to be a catch somewhere.