“From the end of World War II until 2007, Western political leaders at least acted as if they were interested in achieving full employment, price stability, an acceptably fair distribution of income and wealth, and an open international order in which all countries would benefit from trade and finance”



Not true: Clinton, a so-called “Democrat” ruined the separation of banking and speculation (installed by president Roosevelt and Congress in 1933). Instead of serving all, banks were reset to serve mostly the wealthiest. Moreover Clinton enabled so-called “financial derivatives” with total free rein. Even more serving of the wealthiest, enabling them to leverage themselves tremendously. That led to the 2008 crisis, when a bank dealing mostly in US Treasury Bonds and an insurer, AIG, got acutely bankrupt from derivatives… with nearly all other major banks, just as bad. Bush, in accord with Obama, and then Obama alone sent to the banks all the money they needed and some.



Brad De Long: “Then came 2008, when everything changed. The goal of full employment dropped off Western leaders’ radar, even though there was neither a threat of inflation nor additional benefits to be gained from increased openness. Likewise, the goal of creating an international order that serves everyone was summarily abandoned. Both objectives were sacrificed in the interest of restoring the fortunes of the super-rich, perhaps with a distant hope that the wealth would “trickle down” someday.”



Right. So why do we still call individuals like Obama, “Democrat”, and act as if they were, when all they did was to serve the wealthiest, the plutocrats (feeding them ever since)?



De Long: “Others, like me, understood that expansionary monetary policies would not be enough; but, because we had looked at global imbalances the wrong way, we missed the principal source of risk – US financial mis-regulation.”



One reform is necessary: banks are there to serve We The People and the real economy serving We The People. Banks should not serve speculation to make the wealthiest wealthier. This was FDR's main reform. Plutocrats hate it, so economists can't understand its utility (to themselves!)





De Long: “Between the financial crisis of 2008 and the political crisis of 2016 came the presidency of Barack Obama. In 2004, when he was still a rising star in the Senate, Obama had warned that failing to build a “purple America” that supports the working and middle classes would lead to nativism and political breakdown.

Yet, after the crash, the Obama administration had little stomach for the medicine that former President Franklin D. Roosevelt had prescribed to address problems of such magnitude... With policymaking having been subjected to the malign influence of a rising plutocracy, economists calling for “bold persistent experimentation” were swimming against the tide – even though well-founded economic theories justified precisely that course of action.”



Need one say more? De Long congratulates himself with the present state of affair. But actually US society became more unequal under Obama. Rising inequality brings the collapse of civilization: such is the lesson of history. One can’t get a worse result than collapse. That collapse didn’t happen yet is why we can still talk about it.