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Pete Peterson, you hyena

Sacrificing humans on the altar of austerity does. Not. Work. Check the historical record:

[James Macdonald] has an economic historian’s view of the current austerity debate, and he was very clear: if you look at the history of countries trying to cut and deflate their way to prosperity while keeping their currencies pegged, it’s pretty grim — all the way back to Napoleonic times. Sometimes, the peg is gold. For a good example of the destructive abilities of that particular peg, look at the UK in the 1920s, which Macdonald says was arguably worse than the US in the 1930s: shallower, to be sure, but substantially longer. The devaluation of the pound, when it finally came, was very long overdue.

At other times, the peg is simply political: Macdonald gives the example of southern Italy being locked into what was essentially the Piedmontese monetary system at the time of the Risorgimento. ....

So from a historical perspective, the prospects for countries like Portugal, Ireland and Greece are pretty grim. They can cut their budgets drastically and stay pegged to the euro, but most of them would be better off in the position of Iceland, which can and did devalue in a crisis (and allowed its banks to default, too). ....

All of this is relevant for the US states, of course, which are also locked into a currency union and facing very tough fiscal cuts....

“The historical lesson of postcrisis austerity movements,” writes [David Leonhardt, “is a rich one,” and also clear: they don’t work, even if they’re “morally satisfying.” [To whom? The DISemployed?]

The answer, it seems, would be for crisis-hit countries to do the equivalent of what Macdonald and I did at lunch yesterday. I was coming off a slightly feverish and bed-ridden Monday, but we still went ahead and ordered the macvin, a spectacular fortified late-harvest white (yellow, really) pinot noir from the Jura. It goes very well indeed with mangalitsa ham. And I feel much better today, thanks.

Would that we all did. If only we'd elected a Democrat as President, instead of a High Priest of austerity! Oh, wait....

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rapier's picture
Submitted by rapier on

Off into the weeds, the weeds of mechanisms. How is America supposed to avoid deflation? Keeping in mind the biggest asset class in the entire world, American residential real estate, has been deflating for over 4 years with no end in sight. Also being sure to differentiate between fiscal and monetary policy.

(New home sales in January were 19,000. The lowest ever measured since measurement started in 1963 and down 78% from the peak)

Submitted by lambert on

"slut" was not gender specific? Like "guy"? I'd say Peterson's ... Well, what' that song about a "small circle of intimate friends"?

Submitted by hipparchia on

for many it it, but it's not nearly as universally ungenedered as 'guy' is.

thanks for changing the headline.

quixote's picture
Submitted by quixote on

There's a glaring difference. Austerity hits the poor, not the rich who ask for it. Bank failures hit the rich.

So, even when bank failures are the solution ...

(Also, have to agree with hipparchia. "Ignorant" is accurate, but where does "slut" even apply? His promiscuity isn't the issue. "Toady" perhaps? Or is that too archaic by now?)