The Real News Network has the interview Deconstructing Fed Vice Chair’s Grim Economic Forecast.
EPSTEIN: … Now, what he’s leaving out in these three factors are factors such as the distribution of income and wealth and the level of aggregate demand in the economy, as emphasized by John Maynard Keynes. So you can have a lot of growth in technology, you can have a lot of growth in population, but if you don’t have demand, nobody’s going to buy the products that these factories are producing. And if income distribution is tilted way towards the rich who don’t consume very much, you’re not going to have much demand.
I just do not understand why it is so hard for the main stream economists and the FED to understand what has been well known in economics since the 1930s. Why is this theory which fits the facts so well ignored in favor of a theory that just keeps failing to explain the solution to the problem? All the effort to apply the solutions from the wrong theory have produced anemic results, yet they cling to this theory which keeps failing to produce the results that it predicts that it should.
You’d think that eventually these people would wake up to the fact that it is the theory that is wrong, not the failure of the real world to behave according to the theory.