If you thought Geithner, Bernanke & Friends were out of touch with the basic principles of Econ 101 — i.e., Savings=Investment — you should listen to what some private economists are saying. Richard Koo, for instance.  He is Nomura’s chief economist and therefore about as mainstream as they come. But to hear him speak his mind on how to end the recession is to despair of the possibility that private capital will have a significant role to play in whatever economy emerges from the ruins of the one now dying.   

Koo evidently thinks the U.S. has something to learn from Japan’s death-like experience with deflation and prolonged recession. However, his advice to U.S. policymakers overlooks the fact that Japan itself has yet to escape the deflationary drag that has constrained the island nation’s economy for the last 20 years.  Ignoring this depressing fact, Koo emphasizes instead that Japan managed via heroic fiscal stimulus to keep the country’s GDP from falling even as deflation destroyed wealth equivalent to three years’ GDP.  Is it possible the economy » Read the full article