tag:blogger.com,1999:blog-2546602206734889307.post27778315694733874..comments2024-03-28T04:29:22.717+00:00Comments on mainly macro: Mansion House Myths and ExcusesMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-2546602206734889307.post-83084385430640838762012-06-18T08:48:59.324+00:002012-06-18T08:48:59.324+00:00What you're missing is that one person's b...What you're missing is that one person's borrowing is another's saving. Those "ordinary frugal investors" decided to lend the money to those borrowers; they'd complain more if they didn't get their investment back at all.<br /><br />The comparison with alcoholism is fatuous.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-66801448360384429382012-06-17T22:36:36.789+00:002012-06-17T22:36:36.789+00:00I'd like to note too the option of tax finance...I'd like to note too the option of tax financed stimulus.<br /><br />We're concerned about government debt, and we're concerned about the great recession. Some people say the government can't deficit spend to stimulate because of high debt, and this is actually true in countries that can't borrow cheaply.<br /><br />So, you could raise taxes, especially on wealthier people with a high propensity to save, and then the government spends, invests, the money. We're worried that people aren't spending enough; this makes the money get spent. You tax a dollar from someone with, say, a 90% propensity to save; their spending goes down by 10 cents, and the government spends the whole thing, $1.00, hopefully on high return public investment. Private spending goes down by 10 cents, government spending goes up by $1.00, so total spending goes up by 90 cents, with not one cent added to the debt. It's sad that this is so rarely considered; the spending always has to be defict, because the right's billionaire financed propaganda machine has convinced so many that tax increases are always terrible for the economy, short or long term. <br /><br />Robert Shiller, wrote in 2010:<br /><br />It has long been known that Keynesian economic stimulus does not require deficit spending. Under certain idealized assumptions, a concept known as the “balanced-budget multiplier theorem” states that national income is raised, dollar for dollar, with any increase in government expenditure on goods and services that is matched by a tax increase.<br /><br />At: http://www.nytimes.com/2010/12/26/business/26view.htmlRichard H. Serlinhttps://www.blogger.com/profile/09824966626830758801noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-39612350218927728922012-06-16T22:33:48.855+00:002012-06-16T22:33:48.855+00:00Simon, the "textbook response" quote is ...Simon, the "textbook response" quote is from a Treasury committee session last year:<br /><br />http://www.publications.parliament.uk/pa/cm201012/cmselect/cmtreasy/uc1675/uc167501.htmBritmousehttp://uneconomical.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-65575869615397095882012-06-16T20:27:32.406+00:002012-06-16T20:27:32.406+00:00Sorry to begin by quoting a quote:
"To q...Sorry to begin by quoting a quote:<br /><br /> "To quote: “The economic difference between the government borrowing from the private sector to finance investment spending, and the government guaranteeing the borrowing of another entity - with the government guarantee meaning that the lender has no more or less risk of non-repayment than if the money was lent direct to government - is marginal.” If the new investment happens, I would agree."<br /><br />Your "if" is a sound proviso. <br /><br />The difference is that the banks already hold extensive loan books, against which their new source of cheap capital can be arbitraged. It is likely that the net impact on new business written will be very much lower than the headline billions devoted to the scheme as the banks internalise the benefits of the lower cost of capital. If the government invested directly, then at least we could be sure that the first-round effects of the new capital was reaching ground level, and (possibly) directed towards projects with the greatest second-round impact. <br /><br />I fear that this initiative may prove to be one further case of economics not really understanding how finance operates.Daniel Bnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-65769920650855634942012-06-16T16:34:13.858+00:002012-06-16T16:34:13.858+00:00“tight fiscal policy and loose monetary policy is ...“tight fiscal policy and loose monetary policy is the right macroeconomic mix to help rebalance an economy in the state of high indebtedness..” I’ll translated into English.<br /><br />“When large numbers of numpties borrow too much, they should be rewarded with continued low interest rates (at the expense of ordinary frugal consumers who suffer from the above “tight fiscal policy”) so as to encourage the numpties to continue borrowing too much. Likewise the best cure for an alcoholic is to ply them with more alcohol.”<br /><br />Is that a fair translation?Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.com