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The elephant in the room, of course, is Mr. Summer's object of desire, the Fed. Until the Fed is dealt with and the financial sector is subject to true market

The elephant in the room, of course, is Mr. Summer's object of desire, the Fed. Until the Fed is dealt with and the financial sector is subject to true market forces, it will continue to dominate the economy and produce destructive malinvestment.

panarky 12y ago
This seems to be the prevailing ideology, that all would be solved if only we could achieve perfectly free markets, stripped of regulation, politics and government influence. This is a thought-terminating cliché[1] that either ends rational argument or results in an evidence-free opinion war. Naturally, ideology trumped argument here again, as a thread about inequality gets hijacked by utopian economic balderdash. [1] https://en.wikipedia.org/wiki/Thought_Reform_and_the_Psychology_of_Totalism https://en.wikipedia.org/wiki/Thought_Reform_and_the_Psychol...
- carsongross 12y ago
  You are projecting: I don't think we need perfectly free markets. I do think, however, that the Fed is the primary engine of economic inequality and malinvestment, via a fairly straight forward mechanism: early receivership of newly created money and allowing "too big to fail" banks to keep upside while the public pays for the downside.
QuantumChaos 12y ago
Actually, Dr. Summers does implicitly mention the Fed, when he says "Probably the two most important steps that public policy can take with respect to wealth inequality are the strengthening of financial regulation to more fully eliminate implicit and explicit subsidies to financial activity, and ..." When he refers to implicit subsidies, I believe he is referring to some actions of the Fed in bailing out banks. Apart from direct bailouts, the monetary policy of the Fed was a bailout of a financial sector that was "too big to fail". So I don't think Dr. Summers is skirting around this issue. I would further guess that the author would advocate a return to more conventional neo-Keynsian monetary policy, as opposed to the highly interventionist policies pre and post financial crisis. Which might still not satisfy your desire for "true market forces", depending on what you meant.

panarky 12y ago

This seems to be the prevailing ideology, that all would be solved if only we could achieve perfectly free markets, stripped of regulation, politics and government influence. This is a thought-terminating cliché[1] that either ends rational argument or results in an evidence-free opinion war. Naturally, ideology trumped argument here again, as a thread about inequality gets hijacked by utopian economic balderdash. [1] https://en.wikipedia.org/wiki/Thought_Reform_and_the_Psychology_of_Totalism https://en.wikipedia.org/wiki/Thought_Reform_and_the_Psychol...

carsongross 12y ago
You are projecting: I don't think we need perfectly free markets. I do think, however, that the Fed is the primary engine of economic inequality and malinvestment, via a fairly straight forward mechanism: early receivership of newly created money and allowing "too big to fail" banks to keep upside while the public pays for the downside.

QuantumChaos 12y ago

Actually, Dr. Summers does implicitly mention the Fed, when he says "Probably the two most important steps that public policy can take with respect to wealth inequality are the strengthening of financial regulation to more fully eliminate implicit and explicit subsidies to financial activity, and ..." When he refers to implicit subsidies, I believe he is referring to some actions of the Fed in bailing out banks. Apart from direct bailouts, the monetary policy of the Fed was a bailout of a financial sector that was "too big to fail". So I don't think Dr. Summers is skirting around this issue. I would further guess that the author would advocate a return to more conventional neo-Keynsian monetary policy, as opposed to the highly interventionist policies pre and post financial crisis. Which might still not satisfy your desire for "true market forces", depending on what you meant.