South By North Strategies, Ltd.

At Grasping at Reality with Both Hands Brad DeLong asks what the Obama administration’s economic strategy is. Writes DeLong:

If the Senate won’t let us run bigger deficits, and if the Federal Reserve is not expanding but rather cutting back on its degree of monetary easing, then there are only three paths open to try to increase employment:
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Shifting government spending from things that create the most in the way of useful goods and services (and that also boost employment) to things that create the most employment (and maybe also create some useful goods and services): i.e., large government employment programs.
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Shifting private production from things that create the most in the way of useful goods and services (and that also boost employment) to things that create the most employment (and maybe also create some useful goods and services): i.e., large (but incremental and temporary) new employment tax credits.
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Using the U.S. Treasury as the world’s biggest hedge fund to take huge amounts of private-sector risk onto the government’s books, and thus create an appetite on the part of investors to finance additional risky investment even given their limited and depressed risk tolerance.