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I know that I’m not alone in hoping that the terror and turmoil of recent history can be seized upon to launch a new, extended era of prosperity, security and justice. /1
The rising cacophony of reactionary narratives and the drive toward authoritarian hierarchy and patriarchy - a trend that has had at least a 50-year run - could be at an end. /2
America could be on the threshold of being a global leader, addressing climate, corruption, authoritarianism, and promoting good governance, innovation, human rights and broad prosperity. /3
Some understandably see the greatest obstacles to that re-birth of America as political and social. /4
However, our misunderstanding of economics - and the political use of that misunderstanding - has and will continue to be the single greatest impediment to a New New Deal. /5
I have long been puzzled at the dire warnings wrt rising national debt, despite the fact that our prosperity seemed to be independent of the size of annual deficits, or the size of the debt. /6
I have also been puzzled that historically, deficit spending has in general risen during Republican (fiscal “hawk”) administrations, and fallen under Democratic (“tax & spend”) administrations. /7
Further puzzling - the unprecedented fiscal & monetary moves by western economies in response to the fiscal crisis of ‘08, and the twin anomalies of low unemployment and persistent low inflation since then. /8
These recent phenomena also had economists puzzled as discussed in this briefing from last year: /9 https://www.economist.com/special-report/2019/10/10/inflation-is-losing-its-meaning-as-an-economic-indicator
A briefing this week acknowledges that the field of macroeconomics may be starting to go through another major shift - one that has huge implications for the future we hope to see for both the US and the rest of the world: /10 https://www.economist.com/briefing/2020/07/25/the-covid-19-pandemic-is-forcing-a-rethink-in-macroeconomics
If you’re interested in learning more about this shift, and are ready to wrap your head around some ideas that go seriously against the “conventional wisdom” that has been fed to us for 40 years... /11
...this is a clearly written (and amazingly brief) work that deserves your attention: /end https://www.goodreads.com/book/show/45731395
“The new consensus that government borrowing and spending is indeed an important part of stabilising an economy, and that interest rates are generally low enough to allow governments to manage this task at minimal cost, represents progress.” https://www.economist.com/schools-brief/2020/09/12/governments-can-borrow-more-than-was-once-believed
