Forget Spending Cuts, the U.S. Economy Really Needs a $2 Trillion Stimulus

[Bill USA]

... more testimony - to be ignored by Joe Scarborough - that backs up Paul Krugman's position - among true economists the overwhelming majority feel that austerity is the last thing you want to engage in when in the midst of a recession (or depression). .. In other words - NO Paul Krugman is NOT out in left field by urging more spending in the short run to stimulate economic activity and job growth.


http://www.thefiscaltimes.com/Columns/2013/03/05/Forget-Spending-Cuts-the-US-Economy-Needs-a-2-Trillion-Stimulus.aspx#page1

More than five years after the start of the Great Recession in December 2007, the U.S. economy is still mired in a depressed state of output, and economic growth has decelerated below rates needed to bring us out of this slump. But our current macroeconomic policy — driven entirely by a contractionary fiscal approach — is poised to further slow near-term growth and delay recovery. What is needed at the moment is renewed pursuit of an expansionary fiscal policy in order to restore full economic health. The signs calling for additional targeted stimulus and cautioning against austerity are all there, if only policymakers would recognize them.

History and international experience teaches that policymakers must fight deep economic slumps until they are ended. We cannot afford to repeat the “Mistake of 1937,” when policymakers prematurely withdrew fiscal and monetary support, pushing the economy into a steeper contraction than experienced during the Great Recession.

This lesson has not been heeded on the other side of the Atlantic, and the results of prematurely pulling back fiscal support have become unambiguous. Austerity measures pushed the United Kingdom back into recession in late 2011, and the U.K. economy has contracted in five of the nine quarters through the end of 2012. Japanese Prime Minister Shinzo Abe, on the other hand, recently announced a large infrastructure stimulus program and is pressuring the Japanese central bank to loosen policy to get the economy out of its prolonged slump. But Japan is trying to exit from an adverse equilibrium of slow, saw-toothed growth, big deficits, disinflation, and low interest rates that has lasted roughly two decades — and which is widely attributed to past self-induced macroeconomic policy failures.

Since emerging from recession in July 2009, the United States has outperformed our austerity-infatuated peers in the advanced world. Regrettably, though, many U.S. policymakers are increasingly turning a blind eye to the mounting international evidence and historical experience — [font color="red"]as well as an overwhelming consensus of economic research— that austerity wreaks havoc on depressed economies[/font] . And the opportunity costs of prolonging this depression are staggering.
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Read more at http://www.thefiscaltimes.com/Columns/2013/03/05/Forget-Spending-Cuts-the-US-Economy-Needs-a-2-Trillion-Stimulus.aspx#UwlZZm0PBLmYblJV.99

[babylonsister]

1. Rec'd! It just has to be willful ignorance we're witnessing.