More Stimulus Needed

Brad DeLong points us to Jamie Chisholm of the FT: "Amid the panic, there is one asset class in demand: US government bond yields are tumbling as a safe harbour is sought. The yield on the 10-year benchmark, which at one point touched its lowest level since the start of December, is down 7 basis points to 3.30 per cent."

If America where anywhere within sight of full employment you'd just say "hey, good news, the government can finance its debt more cheaply." But with output and employment still well below potential this is the world's way of telling us that the US government should increase its borrowing and increase employment with new temporary spending or transfer payments. A lump-sum transfer to avert state layoffs (or even to allow maniacal rightwing governors to keep laying people off while cutting taxes) would seem to me to be just the thing.