On Sun, 23 Jul 2000, Doug Henwood wrote:
> Godley predicted the ugly end of the Thatcher boom, one of the few
> economists to do so. Maybe that gives him some extra credibility, or
> maybe it's a coin toss.
One of the things I liked is that in the very last paragraph of his article, he provides the most plausible way out -- not a perfectly timed fall in the dollar (which he says happened to the UK in 1992 -- after two years of recession) but a reversal of the US fiscal stance: if we started running up the debt again when the savings flow reversed and the dollar started dropping, theoretically the economy wouldn't need to die. So in his eyes, if there's a crisis, it's pilot error.
> The other night on my radio show, Ellen Frank, an economist, said that
> "we don't really understand how the economy works." I saw a piece by
> Brad De Long the other day that said almost the same thing. What a
> funny business, economics.
It's funny, I was going to say that's truer now than ever before. But every time economists compare monetary policy to what we were doing 40 or 50 years ago, they say it's amazing how little we understood then. Maybe the scientific model should be meteorology -- where knowledge and sophistication has grown exponentially, but in the core of it is something still unknown and unpredicatable -- especially when it comes to timing.
Michael
__________________________________________________________________________ Michael Pollak................New York City..............mpollak at panix.com