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+--- Thread: Greenspan and the 'crazies' (/thread-1415.html)
Greenspan and the 'crazies' - stpioc - 09-15-2016
After Romney's 47%, Clinton's basked of deplorables we now have Greenspan and the 'crazies.' It's not quite clear to whom Greenspan was referring as 'crazies,' here is the quote:
Quote:On the economic front, the U.S. is headed toward stagflation -- a combination of weak demand and elevated inflation, according to Greenspan. “Politically, I haven’t a clue how this comes out.” “We’re not in a stable equilibrium,” he said. “I hope we can all find a way out because this is too great a country to be undermined, by how should I say it, crazies.”Greenspan Worries That 'Crazies' Will Undermine the U.S. System
But perhaps the more interesting is this
Quote:Greenspan repeated his concern on Tuesday that increased government spending on social security and healthcare are crowding out private investment and leading to slower economic growth. He bemoaned the fact that neither presidential candidate was talking about reining in those expenditures.
Crowding out?? How is that working?? This really is crazy.
There is a notion that in an economy operating at full capacity, increase in public expenditure could 'crowd out' private expenditure, through demand for credit and/or claims on scarce resources. But:
- The economy is not operating at full capacity.
- Interest rates are extraordinarily low, not high and/or rising as they would be if both the public and private sector would be competing for the same credit, which then could lead to private sector credit demand being crowded out through higher interest rates.
- We don't really see a rise in inflation either, which we would see if public and private sector demand would exceed available resources..