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Listen, I'd like to help Europe solve its problems. May I suggest a policy of "export led growth" whereby all exports of goods and services can be delivered to my home address (I will offer, in payment, receipts that can be stored as wealth--but this is completely unnecessary, of course). I am happy to let the whole world (apart from myself) run a trade balance surplus. It is feasible, Paul.

Oh, and here we have Richard Koo who, Explains How in the End, It Really is All Germany's Fault. That is, European bubbles were evidently caused by low interest rates on the part of the ECB designed to save a (then) faltering German economy.

Thanks for this, Richard. Thought experiment: ECB raises interest rates to squelch an emerging Spanish real estate price bubble. Now, go out an interview Spaniards and record their feelings. What do you think you would have found? (And if the price bubble really was a problem detected in real time, what would have prevented Spanish fiscal policy to deal with it directly? Why rely on the ECB to do the dirty work?)

Hmm, oh dear...and here is Paul Krugman again: A Structural Blast from the Past. Paul seems to think that increasing G in the form conscripted labor can increase employment. Duh.

Of course, the issue is not how to increase employment, but how to employ resources efficiently. (There is also a redistributive issue involved, but this is conceptually separate.) WW2 marked a sudden change in society's preferences for resource allocation (toward national security activities). The government acted in a manner that reflected society's preferences in light of the war shock. But that doesn't mean the same sort mass government conscription of labor is what society wants or needs now. See here: Fiscal Multipliers in War and in Peace.

Btw, interesting tidbit here for those of you who have preferences defined over the unemployment rate (from Time magazine, 1965):

Unemployment has not existed in the Soviet Union since 1930—officially.  

Ah, the good ol' days.

Speaking of strange preferences, here are Scott Sumner's preferences U(NGDP), where U(.) is strictly increasing and possibly convex. This tireless advocate of NGDP targeting has another post today on the subject: It's not about Credit, It's about NGDP.

Of course, to Scott, everything seems to be about NGDP. Reminds me of Robert Solow's famous quip regarding Milton Friedman's obsession with the money supply:

With respect to Scott's remarkable assertion

OK, enough silly thoughts for one day. Time to get working!

PS. One final thing. Just came across this on Ronald Coase, who is 101 years old! Nobel Laureate: I've Been Wrong So Often, I Don't Find it Extraordinary at All. Good for you, Ronnie.