Blood and Treasure by Kris James Mitchener and Joseph Mason Article

Blood and Treasure by Kris James Mitchener and Joseph Mason - Article Example History demonstrates, after all, that the post-Great Depression government and Federal Reserve were wholly unsuccessful, and mostly unable, to time their exit strategy appropriately. The metaphor of blood and treasurer in Mitchener and Mason is an appropriate one in that it connects economics with society. The connection between the government and the economy has always been a controversial one, but at moments of crisis, it becomes apparent that the government feels responsible for aiding the economy by adopting economic policies. During the Great Depression, this took the form of minimizing inflation and lowering interest rates, which is very similar to the monetary policy in reaction to the current financial crisis. Both of these strategies intend to achieve an optimal point between too much and too little, where too little makes it appear that the government is ineffective at solving economic problems (i.e. lost treasure) and where too much leads to unemployment and losses in output (i.e. lost blood). In this article, the authors attempt to provide an account of not only providing emergency assistance for an economy from the perspective of policymakers but al so providing a framework for transitioning away from the policies that could harm long-term recovery. Ultimately, this account is useful, but it is not useful in building predictions. In their introduction, Mitchener and Mason introduce a concept more frequently heard in foreign policy than in economic studies: that of â€Å"exit strategy†. In this context, the term is meant to refer to the shift back to economic conditions like steady-state growth, which encompasses stability in inflation and government intervention in the economy.