Odličen komentar Cliva Crooka glede možnosti trajne depresije (sekularne stagnacije), ki jo je pred dvema dvema tednoma odprl Larry Summers.

But Summers then asks, what if this isn’t temporary? Maybe there’s a chronic shortfall of demand, beyond what’s due to the crash. Maybe we face an age of secular stagnation, in which the zero lower bound is normal. If so, short-term fiscal easing can’t be the answer. Permanent fiscal stimulus may be necessary to maintain demand. And if that can’t be done because politics makes it impossible, what’s left? Bubbles. Summers doesn’t advocate them, mind you, he just poses the question.

To deal with secular stagnation, could we need reckless lending and borrowing, facilitated by negligent regulation? You’ve heard of the paradox of thrift — the idea that saving is an individual virtue but (under certain circumstances) a collective menace. Now we have the paradox of prudence. Those ninja loans might have been a dumb thing from the point of view of individual lenders and borrowers, but the economy as whole needed them to keep output growing and people employed.

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Moreover, it’s plausible that bubbles do more to destroy jobs and output when they burst than they do to support jobs and output as they inflate. The process isn’t likely to be symmetrical. So this isn’t just a matter of choosing, for any given level of employment over time, more volatility or less. Crash-bubble-crash probably means higher average unemployment than secular stagnation.

Bubbles have other dire consequences, too. They draw resources into financial services and pump up pay and profits in that sector, and the subsequent crashes don’t fully reverse those changes. So crash-bubble-crash feeds an ongoing misallocation of resources and worsens inequality. One could go on. Altogether, the bubble cure — if we’re being asked to take it seriously as a cure — is worse than the stagnation disease.

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So there were signs of overheating. Action to gently deflate the housing bubble before it burst might have left the economy at or close to full employment with consumer-price inflation nearer to 2 percent than 4 percent; house prices wouldn’t have had so far to fall; and the subsequent crash might have looked more like an ordinary recession than the cataclysm that transpired.

Secular stagnation isn’t impossible. It’s a disturbing possibility, worth thinking about. But there’s no strong evidence it’s upon us, and even if it were, bubbles wouldn’t be the answer.

Vir: Clive Crook, Bloomberg