Tuesday, July 26, 2011

James K. Galbraith on Obama, Social Security and the Debt Ceiling

This is an interesting interview with James Galbraith, and covers quite a few issues. With the debt ceiling issue now becoming a looming disaster if Republicans have their way, Galbraith alerts us to the fact that Obama’s Democratic party and especially its leadership have long since ceased to be progressive on economics.

An important point is that the US financial sector will also suffer badly if the debt ceiling is not raised, and they will probably pressure the Republicans to make some deal: will the Republicans bow to the same powerful interests who fund them and the Democrats?


  1. Same as after WWII, such drastic cut in government spending would, after a short slump of malinvestment purge, generate a multi year boom. At least according to Austrian School. I wonder how Keynesians would explain away that boom. One idea along the lines presented by LK recently:

    Barack's Obama election for president has made people more confident in the future so they could decrease their private savings ;)

  2. "I wonder how Keynesians would explain away that boom. "

    What boom? The Post WWII boom? It's already been explained here, with absurd objections refuted in the comments, and is completely consistent with Keynesian economics:


  3. If the private sector has good savings compared to debt levels, they're likely to spend (and invest), thus maintaining demand. If the opposite is true (the great depression and today), they won't, thus hampering growth. It's a matter of confidence.