19 Jul 2010

A Secret Critic of James Galbraith

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I have a Mises.org on deck, pointing out the absurdity of James Galbraith’s what-me-worry? attitude toward federal budget deficits. But I have an ally in the geeconosphere, who recently blogged:

OK, I don’t think that’s right. To spend, the government must persuade the private sector to release real resources. It can do this by collecting taxes, borrowing, or collecting seignorage by printing money. And there are limits to all three. Even a country with its own fiat currency can go bankrupt, if it tries hard enough.

Who said it?

6 Responses to “A Secret Critic of James Galbraith”

  1. DD says:

    Krugman, obviously 😉

  2. Mark says:

    Yes, it’s obviously Krugman. The “OK” is a dead giveaway. The only thing that would have made it more obvious would have been a condescending Krugman “um.”

  3. Anon73 says:

    The “um” is condescending?! Yikes!

  4. Piper says:

    Our government has discovered another way to, ahem, “persuade” the productive sector to part with real resources: regulation. Do you think the productive sector would hire “affirmative action compliance reporting officers” if it had a choice?

    (Yes, I realize “regulatory mandates” could be subsumed under the heading of “taxes,” but note that regulation both disguises and diffuses government spending, making it harder to quantify and analyze.)

  5. Not an Economist says:

    “the government must persuade the private sector to release real resources”

    So govt is not about force or compulsion. There is no threat of violence or incarceration if you refuse to abide by its laws. No. Its all about persuasion. So if they don’t persuade me to pay taxes I can just say no and go about my business.

    I am not even a libertarian but I find that a rather ridiculous statrement. I guess he means once evey 5/4 years we can exercise a vote and thats when govts try to persuade us but what if we change our mind the next day/month year?