Saturday, February 14, 2009

Use, delay, and obsolescence

Per this op-ed post, from Paul Krugman - this is not your dad's quickie-recession:
So let’s look at the NBER business cycle data. What we see is that some of those prewar slumps were really, really long: the Panic of 1873 was followed by a recession that lasted 5 1/2 years.

And Keynes explained why: in the absence of an effective monetary or fiscal policy, a recession would have to go on until

the shortage of capital through use, decay and obsolescence causes a sufficiently obvious scarcity to increase the marginal efficiency

So this could go on for a long, long, long, long time.

Oh. Shit.

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