Read time: 1 minute

'The Parasites Are Eating The Host'

Well, now I'm really depressed. From Naked Capitalism, a disturbing piece (via Corrente): Willem Buiter, who has some expertise in dodgy debtor natio

Well, now I'm really depressed. From Naked Capitalism, a disturbing piece (via Corrente):

Willem Buiter, who has some expertise in dodgy debtor nations, has a typically insightful post today, "Fiscal expansions in submerging markets; the case of the USA and the UK."

Despite the dry title, what is noteworthy is that Buiter discusses in some detail how corruption, both in the government and society, limits policy choices. Put simply, diseased leadership has trouble pulling a country out of a debt crisis because no one trusts that they will do the right thing (and frankly, why should they?).

Buiter makes a compelling case that lack of credibility has real costs, and uses it to bolster his argument that the US and UK should not go on the kind of whole hog spending spree that most orthodox economists are demanding right now. He thinks a currency collapse, a scenario that most would dismiss as impossible for the dollar, is in fact probable at higher deficit levels in part because creditors and investors know the US and UK lack the discipline to trim the sails soon enough.

While Buiter does not frame it this way, in effect he is saying that the downside of doing too little (deep recession and/or very sluggish growth) is preferable to doing too much (high inflation and the risk of collapses in major currencies.

But the most important aspect of the post is not the policy implications, but the fact that a Serious Economist has finally said that the lack of scruples in America and Britain has gone beyond the tipping point, and is going to exact high societal costs. The parasites are eating the host. I hope someone out there is taking notice.

Can you help us out?

For 17 years we have been exposing Washington lies and untangling media deceit, but now Facebook is drowning us in an ocean of right wing lies. Please give a one-time or recurring donation, or buy a year's subscription for an ad-free experience. Thank you.

More C&L Coverage

Discussion

New Commenting System

Our comments are now powered by Insticator. In order to comment you will need to create an Insticator account. The process is quick and simple. Please note that the ability to comment with a C&L site account is no longer available.

We welcome relevant, respectful comments. Any comments that are sexist or in any other way deemed hateful by our staff will be deleted and constitute grounds for a ban from posting on the site. Please refer to our Terms of Service (revised 3/17/2016) for information on our posting policy.

Please Do Not Use the Login Link at the Top of the Site.

In order to comment you must use an Insticator account. To register an account, enter your comment and click the post button. A dialog will then appear allowing you create your account.

We will be retiring our Crooks and Liars user account system in January, 2021.

Thank you.
C&L Team