Thursday, July 29, 2010

Stimulus Truth

From the New York Times, via Americablog:

"In a new paper, the economists argue that without the Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration’s fiscal stimulus program, the nation’s gross domestic product would be about 6.5 percent lower this year.

In addition, there would be about 8.5 million fewer jobs, on top of the more than 8 million already lost; and the economy would be experiencing deflation, instead of low inflation.

The paper, by Alan S. Blinder, a Princeton professor and former vice chairman of the Fed, and Mark Zandi, chief economist at Moody’s Analytics, represents a first stab at comprehensively estimating the effects of the economic policy responses of the last few years.

“While the effectiveness of any individual element certainly can be debated, there is little doubt that in total, the policy response was highly effective,” they write. "

Yes, the stimulus averted a total depression. Go read the whole article- I think it's one of the most important things I have read recently.

Of course, the usual voices are out there lying their asses off already about this:

"Told about the findings, another leading economist was unconvinced.

“I’m very surprised that they find these big impacts,” said John B. Taylor, a Stanford professor and a senior fellow at the Hoover Institution. “It doesn’t correspond at all to my empirical work.”

A "leading economist" who is a "senior fellow at the Hoover Institution," i.e. a paid corporate liar, whose "empirical work" undoubtedly starts and ends with a calculation of how much less he will get paid if he dares to tell the truth.

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