Sunday, May 31, 2009

I Hope Mario Rizzo Has His Tongue in His Cheek

I have been puzzling over a Mario Rizzo post for a few days. Rizzo is generally a pretty solid economist. He's not Hayek, but who is?

In the puzzling post, he asks the question, What Ended the Great Recession?

He lists three possibilities:

1. Fiscal Stimulus

2. TARP Lending to Banks

3. TALF and Securitized Lending

Is Rizzo saying that one of these government actions is what commentators will say ended the recession? Does he actually think one of these ended the recession?

Rizzo doesn't really say. Maybe there is some kind of inside joke I'm missing. To me, Rizzo's post is very poorly worded, at best. At worst, he's about as Austrian as Paul Krugman.

For the record, the "recovery" is a result of the Fed reversing monetary policy in late September 2008. From M2nsa money growth under 2.0% in the summer of '08, Bernanke completely reversed engines with money growth at double digit rates for months.That'll goose any economy.

Rizzo does mention the coming inflation, so may be he gets the money printing and just assumes it is understood.

I'm baffled.


  1. I was left a bit nonplussed by his post at first, too, but if you go back and re-read it, he's merely saying:

    (A) Let's assume the commentators are right and the recession will end this year,

    (B) The public will thank Team Obama,

    (C) We are getting stagflation.

    You agree with everything he says, I believe, in the post. I think the confusion is that you wanted him to take a stand on whether those particular things the commentators will discuss, really are "cures" or not. But Rizzo doesn't talk about that.

  2. But Rizzo doesn't talk about that.I see.

  3. I admit that I was unclear. I am saying that although people will credit Team Obama for a recovery, it is hard to see how their policies could be responsible.

    Let us assume *for the sake of argument* that recovery is beginning now, none of their policies as of now can be claimed to have had much effect. So although people may say Obama's policies saved us, it doesn't make much sense.

    However, what is more likely is that these policies will cause stagflation. With a little luck, people will blame Team Obama for that when it comes.