“America Needs Stimulus Not Virtue”
Financial Times, October 4, 2010
The Obama administration’s insistence on fiscal rectitude is dictated not by financial necessity but by political considerations. The US is not in the position of Europe’s heavily indebted countries, which must pay hefty premiums over the price at which Germany can borrow. Interest rates on US government bonds have been falling and are near record lows, which means that financial markets anticipate deflation, not inflation.
President Barack Obama is under political pressure. Americans are deeply troubled by the accumulation of public debt. The Republican opposition has been extremely successful in blaming the crash of 2008 and the subsequent recession and high unemployment ...