Last night I attended a panel on the future of progressivism in America to hear a number of smart people talk. One of them was Dean Baker, Co-Director of the Center for Economic and Policy Research and blogger at the American Prospect. Anyway, addressing the concern that even if Obama is elected, the deficit and bailout potentially hamstringing a liberal government, Dean said: bullshit. In the first, “fiscal conservatism” has been a joke, so there’s no reason to abandon a progressive agenda, even from a moral standpoint, when conservatives haven’t made good on this count (though they have made money). In the second, the reason we shouldn’t worry about spending is that interests rates are absurdly low. Matt Yglesias, who apparently also enjoyed Dean’s point, expands as it relates to the financial crisis:
Any one bet might go terribly awry, but given the incredibly low interest rates that are available to us right now the key is to bet widely — the odds are overwhelming that the US financial sector is not, in fact, collectively worthless. Issuing bonds and buying equity and then doing it again and again and again until people become unwilling to keep lending us free money — at which point we can start selling some stuff back to investors, once investors have once again gotten interested in investing in things other than treasuries — seems like a smart play to me.
This seems like a smart play to me too.