Re: Taking one scenario with another, a seer's lot is not a happy one

["John M. Legge" <jlegge@xxxxxxxxxxxxxx>]

A bit incoherent, but on the ball nevertheless

JML

>  John Gelles
> Sent: Wednesday, 15 October 2003 11:26 PM
> Subject: Taking one scenario with another, a seer's lot is not a happy one
>
>
> Our most popular pundit-economist writes:
>
>     What will eventually follow failure to raise
>     taxes, cut spending and cut imports? Answer:
>     "a sharp fall in the dollar and a sharp rise in
>     interest rates. In the worst-case scenario, the
>     government's access to borrowing will be cut
>     off, creating a cash crisis that throws the nation
>     into chaos."
>
> Paul Krugman, describing the worst above, fails
> to say what the best-case scenario looks like. So
> let me paint my own:
>
>     A sharp fall in the dollar compels congress and
>     our central bank to finance with low interest (and
>     no interest) credit to maintain domestic produc-
>     tion, employment and growth.  Tax cuts reduce
>     stress on business and ordinary people whose
>     productive energies are needed -- not their
>     money (which will be will be withheld for
>     them as savings if production is too low to
>     allow spending at will). There is no cash crisis,
>     but there is a general increase in commodity
>     prices that brings on general prosperity, especially
>     in third world nations. The era of low effective
>     demand in the face of technology's power to raise
>     supply will be over. World supply of economist-
>     accountant-lawyer-bankers, charged to match
>     demand to supply and supply to need (or take a
>     job in a fast food eatery) will have removed from
>     view economist-pundits whose ideas are truly
>     half-baked.
>
> John gelles