Thursday, January 22, 2009
The main source of the economic crisis is the infantile belief of US policymakers that an economy could be based on debt expansion. As offshoring moved jobs, incomes, and GDP out of the country, debt expanded to take the place of the missing income. When the offshored goods and services were brought back to be sold to Americans, the trade deficit rose, adding another level of financing for an economy that consumes more than it produces.
Isn't it rather curious that a right wing economist like Paul Craig Roberts agrees with a leftist academic like Robin Blackburn, at least on this foundational question?