Wednesday, June 22, 2011

Words I never expected to read from Bill Gross

Wow (HT Krugman):

"Both parties, in fact, are moving to anti-Keynesian policy orientations, which deny additional stimulus and make rather awkward and unsubstantiated claims that if you balance the budget, "they will come." It is envisioned that corporations or investors will somehow overnight be attracted to the revived competitiveness of the U.S. labor market: Politicians feel that fiscal conservatism equates to job growth. It's difficult to believe, however, that an American-based corporation, with profits as its primary focus, can somehow be wooed back to American soil with a feeble and historically unjustified assurance that Social Security will be now secure or that medical care inflation will disinflate. Admittedly, those are long-term requirements for a stable and healthy economy, but fiscal balance alone will not likely produce 20 million jobs over the next decade. The move towards it, in fact, if implemented too quickly, could stultify economic growth. Fed Chairman Bernanke has said as much, suggesting the urgency of a congressional medium-term plan to reduce the deficit but that immediate cuts are self-defeating if they were to undercut the still-fragile economy."

Clearly he hasn't gotten around to reading Steve Horwitz's post yet.

This is even more impressive than Richard Posner. The more I look into the Posner move to Keynesianism, the less surprised I am by it. You almost get the sense that if Posner ever took up thinking seriously about macroeconomics, he was bound to have an affinity for Keynes. This is more surprising, though.

What's interesting is that Gross seemed to be betting directly against this recently, which really makes me wonder what he's been thinking through in the last couple months.

1 comment:

  1. "To undertake the direction of the economic life of people with widely divergent ideals and values is to assume responsibilities which commit one to the use of force; it is to assume a position where the best intentions cannot prevent one from being forced to act in a way which to some of those affected must appear highly immoral." - F.A. Hayek, _The Road To Serfdom_


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