By Tim Price, originally published on Next New Deal
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What Markets Will (NYT)
Many economic analysts talk about the market as a kind of divine force, writes Paul Krugman, but they’re only using it as an excuse to justify their own desire for more human sacrifice.
To get more specific: We have been told repeatedly that governments must cease and desist from their efforts to mitigate economic pain, lest their excessive compassion be punished by the financial gods, but the markets themselves have never seemed to agree that these human sacrifices are actually necessary. Investors were supposed to be terrified by budget deficits, fearing that we were about to turn into Greece — Greece I tell you — but year after year, interest rates stayed low. The Fed’s efforts to boost the economy were supposed to backfire as markets reacted to the prospect of runaway inflation, but market measures of expected inflation similarly stayed low.
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