Comments on economics, mystery fiction, drama, and art.

Tuesday, September 30, 2008

Liquidate everything

Why, in a lot of blog comments on the bailout package, do I keep reading things that read a lot like this:

“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.”


“It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people”... (Andrew Mellon)

Seems to me we should be reading stuff like this:

Some austere and puritanical souls [like Mellon] regard it both as an inevitable and a desirable nemesis on so much overexpansion, as they call it; a nemesis on man's speculative spirit. It would, they feel, be a victory for the mammon of unrighteousness if so much prosperity was not subsequently balanced by universal bankruptcy. We need, they say, what they politely call a 'prolonged liquidation' to put us right. The liquidation, they tell us, is not yet complete. But in time it will be. And when sufficient time has elapsed for the completion of the liquidation, all will be well with us again..." (J.M. Keynes)

(Stolen from Brad deLong.)


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