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...... full of people ludicrously thick or optimistic.
The problem by the late 70s was inflation and the classic way to throttle inflation out of the system is to raise interest rates and depress demand. That's what she did. (Whether it worked is another issue altogether...).
As one very simple example of exactly the point that Glyn made at the foot of the previous page (the constriction of the money supply) I happen to be in the market for a mortgage with which to buy a property for subsequent renting. I know that's anathema to some, but that's the way it is. Now, I am employed, I have what is considered to be a bloody good salary, my own private mortgage is only 35% of the value of my house and will be paid off in May this year too, I have an absolutely spotless 15 year track record of being a rentier, I own another property in Swindon outright, I have a 50% share in the ownership of another 16 properties in Milton Keynes. I have never been late making a mortgage payment. I have access to upwards of half a million in equity. I am a sodding great bet when it comes to lending money to people. There are very few who will have a better record than me. And guess what? On any half way sensible basis what I propose to do is profitable - for both the lender and for me. But the banks and co are so shit scared that they all, all, want to impose such restrictive conditions that, even if they'll lend at all, it becomes plain pointless.So I shan't bother. And bang goes another £10K of spend to the economy - on stuff like paint, wood and all the crap, and people, that would have resulted from a tidy up. Ergo - I am now forced to help the economy contract even further. This is the economics of the mad house.BobG
Glyn. Or actually GIVE the money out to businesses and individuals. One point that both Friedman and Keynes would have agreed on when you are at the zero lower bound on interest rates is that Govt should expand the monetary base AND GET IT INTO HANDS THAT WILL SPEND IT. Friedman coined the term Helicopter Money, suggesting that in such a scenario, the Governor of the Fed should sprinkle dollar bills from a helicopter. The debate on this concept is (finally) starting to be taken seriously among policy makers. If we have another year of flatlining throughout the developed world, it'll get taken more seriously still.
One way to do that would be to cut taxes, both for individuals and businesses.
Quote from: BillyStubbsTears on February 26, 2013, 04:26:10 pmGlyn. Or actually GIVE the money out to businesseso and individuals. One point that both Friedman and Keynes would have agreed on when you are at the zero lower bound on interest rates is that Govt should expand the monetary base AND GET IT INTO HANDS THAT WILL SPEND IT. Friedman coined the term Helicopter Money, suggesting that in such a scenario, the Governor of the Fed should sprinkle dollar bills from a helicopter. The debate on this concept is (finally) starting to be taken seriously among policy makers. If we have another year of flatlining throughout the developed world, it'll get taken more seriously still. One way to do that would be to cut taxes, both for individuals and businesses.
Glyn. Or actually GIVE the money out to businesseso and individuals. One point that both Friedman and Keynes would have agreed on when you are at the zero lower bound on interest rates is that Govt should expand the monetary base AND GET IT INTO HANDS THAT WILL SPEND IT. Friedman coined the term Helicopter Money, suggesting that in such a scenario, the Governor of the Fed should sprinkle dollar bills from a helicopter. The debate on this concept is (finally) starting to be taken seriously among policy makers. If we have another year of flatlining throughout the developed world, it'll get taken more seriously still.
Quote from: The Red Baron on February 26, 2013, 07:28:36 pmQuote from: BillyStubbsTears on February 26, 2013, 04:26:10 pmGlyn. Or actually GIVE the money out to businesseso and individuals. One point that both Friedman and Keynes would have agreed on when you are at the zero lower bound on interest rates is that Govt should expand the monetary base AND GET IT INTO HANDS THAT WILL SPEND IT. Friedman coined the term Helicopter Money, suggesting that in such a scenario, the Governor of the Fed should sprinkle dollar bills from a helicopter. The debate on this concept is (finally) starting to be taken seriously among policy makers. If we have another year of flatlining throughout the developed world, it'll get taken more seriously still. One way to do that would be to cut taxes, both for individuals and businesses. TRBAs Glynn says, that ain't going to be the best way to do it. The key was in the bit in capital letters. If you want to stimulate the economy, you have to get money circulating. There's no point directing money into people's pockets if it just stays there. That is why the cries for Corporation Tax to be cut are particularly stupid. Companies are already sitting on hundreds of billions of pounds that they are too scared to invest. Why give them more money to sit on? What we need to do is put money into places where it will be spent. Do you know the easiest way to do that? Increase welfare benefits. That's trick No1. No2 is to spend money on projects that employ poorly paid staff who will spend most of their new income. Stuff like construction. Now. This lot in power. They cut capital investment on Day One. So that was construction f**ked. And they make a big play on cutting benefits. And I thought Cameron had a First in PPE from Oxford? I assume the PP saw him through because he seems to know f**k all about the E
Quote from: The Red Baron on February 26, 2013, 07:28:36 pmOne way to do that would be to cut taxes, both for individuals and businesses. A sledgehammer to crack a walnut. You wouldn't be directing it at where it does most good and not getting the most effective stimulus for the cost of it.
Quote from: The Red Baron on February 26, 2013, 07:28:36 pmQuote from: BillyStubbsTears on February 26, 2013, 04:26:10 pmGlyn. Or actually GIVE the money out to businesseso and individuals. One point that both Friedman and Keynes would have agreed on when you are at the zero lower bound on interest rates is that Govt should expand the monetary base AND GET IT INTO HANDS THAT WILL SPEND IT. Friedman coined the term Helicopter Money, suggesting that in such a scenario, the Governor of the Fed should sprinkle dollar bills from a helicopter. The debate on this concept is (finally) starting to be taken seriously among policy makers. If we have another year of flatlining throughout the developed world, it'll get taken more seriously still. One way to do that would be to cut taxes, both for individuals and businesses. TRBAs Glynn says, that ain't going to be the best way to do it. The key was in the bit in capital letters. If you want to stimulate the economy, you have to get money circulating. There's no point directing money into people's pockets if it just stays there. That is why the cries for Corporation Tax to be cut are particularly stupid. Companies are already sitting on hundreds of billions of pounds that they are too scared to invest. Why give them more money to sit on? What we need to do is put money into places where it will be spent. Do you know the easiest way to do that? Increase welfare benefits. That's trick No1. No2 is to spend money on projects that employ poorly paid staff who will spend most of their new income. Stuff like construction. Now. This lot in power. They cut capital investment on Day One. So that was construction f***ed. And they make a big play on cutting benefits. And I thought Cameron had a First in PPE from Oxford? I assume the PP saw him through because he seems to know f*** all about the E
Quote from: Glyn_Wigley on February 26, 2013, 08:44:16 pmQuote from: The Red Baron on February 26, 2013, 07:28:36 pmOne way to do that would be to cut taxes, both for individuals and businesses. A sledgehammer to crack a walnut. You wouldn't be directing it at where it does most good and not getting the most effective stimulus for the cost of it.You seem to be working on the assumption that politicians and central bankers are wiser at spending money than individuals and businesses. I'd have thought if the last few years have taught us nothing else it is that the assumption is flawed.