Upload
ashlyn-elliott
View
219
Download
2
Embed Size (px)
Citation preview
The Causes and Cures of the Economic Crisis
Dean Baker, Co-DirectorCenter for Economic and Policy Research
September 14-15, 2011
Key Points on the Economic Crisis
1) The main cause was the collapse of the $8 trillion housing bubble
2) The financial crisis was secondary3) In the short-term the government must
fill demand gap, in the longer term the dollar must fall to reduce the trade deficit.
The Financial System is Not the Problem
1) Homebuyers are able to get mortgages (Mortgage Application Index).
2) Firms can borrow on credit markets at unusually low interest rates (we are not Japan).
3) Even small firms do not consider credit a problem.
4) Investment in equipment and software is close to pre-recession levels.
Ways Out of Current Downturn
1) Stimulus – spend moneya) youth jobs programsb) aid to state and local governmentsc) infrastructure projects
2) Federal Reserve Board3) Work Sharing – fewer hours per job,
more jobs4) Lower valued dollar – move toward
balanced trade