Ronald Reagan has been anointed as the GOP god. Each of the GOP candidates claims to be the reincarnation Ronald Reagan and that his economic policies are closer the Reagan's than any other candidate. This article was written by an economist who was "present at the creation". He explains why Reagan's supply side policies were appropriate for dealing with the problems of double digit inflation and high unemployment. He also gives Reagan credit, along with the Fed which did most of the work, for disinflating the economy without creating disastrous levels of unemployment. More importantly, he tells us why this economy is different and why the Reagan policies are inappropriate. We have a demand side problem today and it requires demand side solutions. The Fed is limited because inflation is very low and interest rates are close to zero. This was not the case in the Reagan era. There was high inflation and the Fed could create negative real interest rates to boost output.
He concludes that the GOP candidates should not be advocating Reaganomics to deal with our current economic situation. He is correct in his analysis but he may miss the point. The GOP campaign is about winning the nomination by getting the votes from a GOP base which believes that Reagan went directly to heaven upon his death. They are resurrecting Reagan from the dead in order to win the nomination. It has little to do with economics.
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