If You Think Clinton Was Good For The Economy, Then You Don't Understand The Economy

[cthulu2016]

27. This argument is seriously deformed

Last edited Fri Jun 8, 2012, 02:12 PM - Edit history (3)

The irony here is that my most controversial theory about the economy is that I believe that 1996-2008 was a unified asset bubble. I am more in agreement with Baker in some of his observations than most people are.

But to lay all that at Clinton's feet suggests an emotional agenda.


Asset bubbles require relatively-low interest rates. But so does general GDP growth. All presidents want relatively-low interest rates. If that is a mistake it is a universal mistake, not something Clinton thought up.

The combination of astonishing once-in-a-generation (or even lifetime) technology driven productivity gains and government moving from deficit to surplus and Greenspan's stock friendliness all combined to make the internet bubble.

Similar productivity gains (like railroads) have typically done the same, when occurring in low rate environments that made bubbles possible.

What did NOT cause the internet bubble was repealing Glass-Steagall, since things that happen in 1999 do not typically cause things that happened in 1997.

The suggestion that a president can deflate a bubble is far-fetched. The idea that any president WOULD deflate a bubble is absurd. No president would. None.

The job of deflating the bubble was Greenspan's job, and that's the bulk of Clinton's contribution to the formation of the bubble. He reappointed Greenspan. A fair charge.

Again, no president will ever say, "I think we need to shave a few points off GDP because I think the stock market is doing too well."

Since no president is ever going to do that you subtract that from both sides of the equation.

In terms of what was specific to Clinton, and unlike Reagan, Bush I and Bush II, the government did a better than average job within the bubble environment.


We had a bubble under Clinton. We had a bubble under Bush II. Neither man created those bubbles single-handedly.

During the Clinton bubble workers made almost all the gains they have made since 1980 and tax revenues were way up.

During the Bush II bubble workers made no gains and the deficit doubled.

If the author wants to write a general economic piece about the relationship between low interest rates and asset bubbles, and that what business always wants in the short term is destabilizing in the long term, and question what all presidents think in terms of basic assumptions, that's fine.

But this piece is just a tantrum.