Economic literacy question

[Politico]

What is, "negative real GDP growth," Alex?

Here is the follow-up question: How prevalent is "hidden inflation" right now, both in the US and abroad?

[Politico]

What is unusual about all of this, is that it seems to me much of it is generated by a lack of confidence as opposed to the usual tools really being out of whack. What the economy really needs to do is see a real good therapist, who can convince it that this too shall pass - eventually.

Very good post. I would just add that, unfortunately, Obama is clearly not that therapist.

[Politico]

What is unusual about all of this, is that it seems to me much of it is generated by a lack of confidence as opposed to the usual tools really being out of whack. What the economy really needs to do is see a real good therapist, who can convince it that this too shall pass - eventually.

Torie, I'm afraid the master himself, John Maynard Keynes talked about the animal spirits.. it is in the nature of capitalism that panic, irrationality, and fear rules the day.  We need the State to take over the economic function in order to provide confidence and reduce the deleterious influence of the market.

How has that worked out over the past three years? Oh, I get it: The Stimulus Package was just not big enough. My mistake. Let's borrow two or three trillion from the Chinese this time around. That ought to do it, right?

[Politico]

How has that worked out over the past three years? Oh, I get it: The Stimulus Package was just not big enough. My mistake. Let's borrow two or three trillion from the Chinese this time around. That ought to do it, right?

Well, Politico, it is not unlike when you have an infection - you have to take all your medicine, not just set your own dose.  The stimulus was like giving an aspirin to an elephant.

What we need is massive takeover of the economy by the State, as in World War II.   This is the only way that these deflationary depressions can be solved.

Deflation can be combated by dropping cash from helicopters if necessary. Just go ask Bernanke. That is not the problem (our problem: in short, a crisis of confidence). Government is not the solution to our problem.