Patrick wrote: The US economy is quite strong because the 20 year crisis from 1973 to 1992. The weakest sectors of the American economy were obliterated. _________ Yes, I think Brenner for example underestimates not only how much elimination there was excess capacity within branches in the US but how much elimination there was of weak branches altogether--early on this list Paul C noted how important the restructuring caused by high interest rates was to the profitability of US industry in the early 80s. It would seem that this is the reason why the Japanese central bank is unwilling to take more radical monetary policy. While fiscal policy allows the unemployed to be absorbed in public works, tight monetary policy is needed to bankrupt firms so they can picked up as cheap assets and restore the profitability of more powerful capitals or so they can be eliminated outright and thus create the market space to make profitabile new investments in lower cost capacity either offshore or in superior technological substitutes. The BoJ seems unwilling to allow a restructuring to be forestalled any longer through cheap money which would only allow output and employment levels to be maintained at the expense of profitability. The Keynesians think capitalism can be healed of its crises, that the dentist can make sure that teeth will never get so bad that they have to be pulled. ____________ Patrick added: The standard of living of most households were driven downward. And, during the 1990s government debt was severely reduced. Unlike Japan, the US public has the capacity to run enormous deficits to fight off unemployment. _____________ Yes but the total debt situation is bad; the corporate bond market has been tight, I think. Why won't big deficits put pressure on the dollar and long term rates especially? Krugman reported that at the first signs of US deficits as a result of Bush's tax cuts, the long bond reacted unfavorably. Again, I think there are *political* reasons why the US can get away with issuing cheap debt--Sa'udis can be coerced to hold US treasuries, the BoJ can be convinced as well since it needs to keep access to the US market and may not want a retrenchment of the US military. But then all we have is the rest of the world subsidizing the American economy. I tend to be opposed to the study of profit rates within national boundaries. Rakesh
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