Of course, the cause of the trouble was the fact that the government was rapidly expanding the supply of dollars -- with a predictable result. Flash forward to 40 years later and we see Washington still trying to claim that the government wants to protect our money and our lives.[End Update]
The editors at the NY Times believe that they have discovered something that apparently no one else notices: a lot of people are out of work. Of course, the Grey Lady's perception that in the past year "Congress and the Obama administration have spent the year focused on budget cuts" is a pretty sick joke, considering that the government continues to spend and borrow into oblivion.
Now, the editorial is worth reading if only for its huge leaps in logic. First, the "serious" stuff: "Without more jobs, both the economy and the budget will deteriorate further."
Notice the causality here; the NYT is claiming that "jobs" help create an economy. So, we are supposed to believe that the economy is bad because people are out of work instead of dealing with the logical point that unemployment is high because the economy is bad. This is simple economic logic, something that always seems to escape the people in the august NYT offices.
But, it gets even better, as all of these grandiose jobs projects ("Let's rebuild this and that....") need to be funded, of course. How to do that?
Washington, in thrall to austerity, has abandoned one of the most immediate and powerful tools for supporting growth and jobs, namely, borrowing at today’s low rates to provide direct fiscal aid to states. But Mr. Obama can and should make the case for targeted new jobs today, to be paid for over time by closing tax loopholes.This is hilarious (unfortunately). First, Washington is not "in thrall to austerity" by any stretch, given the explosion not only in government spending, but also in government obligations over the past four years. Washington might be delusional, but "in thrall to austerity" is a product of a fertile imagination.
Second, while the suggestions are couched in the language of capital spending, it is clear that what the editors mean is that the government needs to continue its record borrowing simply to funnel it to certain favored political groups. This basically is the government using the bond markets as a giant credit card to continue a spending spree.
The last one -- "closing tax loopholes" -- also demonstrates utter delusion at the Grey Lady. What constitutes a "loophole"? While the NYT and Paul Krugman seem to believe that the government can balance the budget and end the recession by raising the top rates to, perhaps, 70 percent (a rate Krugman tool me seven years ago was "insane," but I guess Krugman now is re-defining "inanity").
For the past four years, the NYT has shown utter hostility to those industries that are profitable and can lead us out of a recession. Instead, we get the incomprehensible nonsense that if the government borrows at even higher rates, jacks up taxes, and props up favored "green industries" with huge subsidies, that this mishmash will result in a recovering economy.
It seems to me that the editors of the NYT need to spend some time in "recovery" from the delusion of Keynesian thinking. These are people who are laying out the very path to depression and are calling it prosperity. I don't think so.