The American public doesn’t understand the economics of spending and debt and debt ceilings very well. That’s why the public can simultaneously be opposed to any substantive cuts in anything, but in favour of holding the debt ceiling steady.And unfortunately, explaining this stuff to the public seems like a lost cause. Politicians only talk in rhetoric, not suited towards actual illumination of the task at hand.
But amazingly, it wasn’t always like this.
Check this out:
Finally, I repeat what I have said on many occasions, that ever since last March the definite policy of the Government has been to restore commodity price levels. The object has been the attainment of such a level as will enable agriculture and industry once more to give work to the unemployed. It has been to make possible the payment of public and private debts more nearly at the price level at which they were incurred. It has been gradually to restore a balance in the price structure so that farmers may exchange their products for the products of industry on a fairer exchange basis. It has been and is also the purpose to prevent prices from rising beyond the point necessary to attain these ends. The permanent welfare and security of every class of our people ultimately depends on our attainment of these purposes…
When we have restored the price level, we shall seek to establish and maintain a dollar which will not change its purchasing and debt paying power during the succeeding generation. I said that in my message to the American delegation in London last July. And I say it now once more.
It’s almost unbelievable that an American President said things about restoring “a balance in the price structure.”
You should be able to appreciate this, even if you think FDR was an evil socialist, and that the New Deal only extended The Great Depression. He’s at least talking about real issues, and not talking in vague generalities about “getting the car out of the ditch” (though he probably said nonsense like that elsewhere).
So maybe Obama should try this out: Go on TV one night, and bring up a bunch of Richard Koo slides about the deleveraging cycle, and the analogue experience in Japan.
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