Smug Conventionality

Here is a debate between Brad DeLong and Jim Grant over "quantitative easing". Grant is convinced that such monetary manipulation debases the currency and threatens runaway inflation. DeLong points out that without using every tool in the toolbag the current Great Recession will be prolonged, the unemployed will suffer, and the return to traditional growth rates delayed.

I like Brad DeLong's statement that Grant is "crying 'Fire! Fire!' in the midst of the waters of Noah's Flood".



I see a person like Grant as shedding crocodile tears. He claims to be worried about savers. But in my mind, if you grow the economic pie, we all get bigger pieces. Leaving the economy stuck in a rut only hurts "the little people" while the rich continue to reap great wealth. You can see this in the fact that corporations have record profits while incomes are stagnant.

To underline DeLong's point, here is an interview with Robert Shiller who is seriously worried about a "double dip" recession, i.e. that the economy is so weak and the recovery so poor, that it is likely to slide back into recession, shrink, more jobs be lost, more bankruptcies, etc.



In the face of these risks, the kind of "smug conventionality" of Jim Grant is dangerous.