Wednesday, July 28, 2010
When Stimulus Does Not Stimulate
The problem is getting runaway. It's becoming a pure Ponzi scheme. It's very nonlinear: You need more and more debt just to stay where you are. And what broke [convicted financier Bernard] Madoff is going to break governments. They need to find new suckers all the time. And unfortunately the world has run out of suckers.-Nassim Taleb
He [Niall Ferguson] identifies Krugman as a Keynesian who fails to understand that fiscal deficits change people's expectations. They figure out what has been done to them by Keynesian politicians. Then they figure out what is going to happen to their futures.
According to a recent poll published in the FT, 45 per cent of Americans "think it likely that their government will be unable to meet its financial commitments within 10 years." Surveys of business and consumer confidence paint a similar picture of mounting anxiety.
He believes that we are fast approaching the end game. What is needed is a change of policies that restores private-sector confidence. While he did not say so here, he thinks the West is running out of time to adopt such new policies.-Economic Warnings From Two Respected Analysts
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