The Post is getting really scared, but not enough to think clearly. The obsession with deflation is positively bizarre. Just imagine we had a situation like Japan did a few years back where prices were dropping at the rate of almost 1 percent a year. Who would buy a car today, if they knew that they could get it for almost 0.1 percent less next month? What is most disturbing about this piece is the unmitigated praise for the selection of Timothy Geithner. Geithner may do a fine job at Treasury, and we should all hope that he does, but let's not forget that he was in the middle of the policy team that gave us this economic mess. He was a top official in the design of the East Asian bailout that set us up on the over-valued dollar, bubble-driven growth course. He also thought that one-sided financial deregulation was just fine. The Post thinks its important to evaluate school teachers by their performance. Why is it so reluctant to use performance as a criterion to evaluate economic policymakers? Finally, in this moment of fear, I can't resist reminding BTP readers of one of the great Post editorials of the past. Last January, the Post warned readers against fiscal stimulus: "There is not yet any proof of a recession, defined as two straight quarters of negative growth; Mr. Bernanke said yesterday that the economy probably grew "at a moderate pace" in the past three months. Nor is there any consensus that a recession, if one comes, will be severe; Goldman Sachs thinks it's likely to be short and mild."
--Dean Baker
