Page 3 with Photo of Nobel Prize in Economics,Paul Krugman and Robert Samuelson,WashPost and Newsweek columnist. Reviewed by David Smick,Chairman of the financial advisory firm and author of "The World Is Curved: Hidden Dangers to the Global Economy.": Attempts to fix the US Economy have repeatedly backfired.
Krugman's book, an updated version of his 1999 volume "The Return of Depression Economics," contends(asserts to be exact) that the Federal Reserve is now mired in a liquidity trap in which interest rates are so low that cutting them has little impact. We also have an essentially unregulated banking system - the root of the credit crisis - that is unable or unwilling to lend. (The system has political and economic clout) While a depression is not likely, Krugman concludes,"depression economics - the kinds of problems that characterized much of the world economy in the 1930s but have not been seen since." - has returned. The value of virtually every asset in the world from corporate shares to real estate to oil reserves, has fallen. This is destroying demand, making it harder to get lenders to lend and spenders to spend. I added my notes with parentheses above.
My comment: It is a mindset but we do have human capital to be able to earn income with marketable skills to supply the demand of a changing society in the days to come. "Keys for Economic Understanding" listed at www.Amazon.com online book catalog may be considered as a useful reference.
The Krugman and Samuelson's books suggest that economics should be viewed less as a science than as a social art. I agree and such an art to serve the needs of any society. Economics is Socio-Economics to be relevant to the global economy.
"The recovery of global economy will depend on psychology i.e. restoring confidence and optimism." I have reiterated my belief with faith,hope and charity with upbeat+ verve. The conclusion of the reviewer: "The age of hubris is ,or should be,over." My rationale: We do need to be humble and modest in our lifestyle to gain happiness as ultimate goal in economics apropos of my past blogs re Sino-American Economics.
Francis Shieh a.k.a. Xie Shihao on Sunday,January 4, 2009 at 10.42 a.m.
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