Hoisted from the Archives from October 2010: Can I Please Go Back to My Home Timeline Now? Output-Gap Weblogging
Brad DeLong (October 2010): Can I Please Go Back to My Home Timeline Now?:
If you had told me four years ago that come October 2010 I would be forecasting that highly-efficient American steel companies would be operating at only 70% of normal capacity in 2011, that the U.S. Treasury would be able to borrow for 30 years at 1.61%/year real and at 3.71% per year nominal placing all inflation risk on the creditor, and that the last six months' CPI inflation would be 0.1% at an annual rate...
...I would simply not have believed you. I would have said that that could happen in some strange alternate universe in which Spock was evil and had a beard, but not in any real world that could plausibly exist.
...I would have said that, in the real world, with that much excess capacity and those low borrowing rates, 90% of both the Senate and the House would get behind big programs to push taxes off into the future and pull infrastructure and other spending into the present.
How the &^#%^*@! did we get here? And why can't we get out?
