tag:blogger.com,1999:blog-2546602206734889307.post130062354258183770..comments2024-03-28T04:29:22.717+00:00Comments on mainly macro: Howes thatMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-2546602206734889307.post-72548614688586980902015-10-20T17:15:24.852+00:002015-10-20T17:15:24.852+00:00'As Smallwood points out, the Treasury and Ban...'As Smallwood points out, the Treasury and Bank drew the wrong conclusion from the apparent success of the combination of fiscal contraction and monetary expansion in the 1980s and 1990s. "In both cases, the contractionary impact of tax rises and spending cuts was counterbalanced by substantial falls in interest rates, and of the sterling exchange rate at a time when our export markets were growing," he writes. Exports and investment took up the slack left by budgetary cuts.'<br />21 Feb 2013 <br />http://keegan94.rssing.com/chan-14842860/all_p1.htmlPostkeyhttps://www.blogger.com/profile/11747509012748106827noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-7294731630670414272015-10-13T12:53:26.778+00:002015-10-13T12:53:26.778+00:00Worth noting that he was never really a strong mon...Worth noting that he was never really a strong monetarist though, and enjoyed tweaking Keith Joseph's nose a lot!<br /><br />While it is probably true that Howe was never a mathematical expert I have always got the impression he was a decent and fair man.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-80895843851897747212015-10-13T09:21:46.585+00:002015-10-13T09:21:46.585+00:00Nice point, and indeed I had similar thoughts at t...Nice point, and indeed I had similar thoughts at the time. As I explain in the post, I do not think this was the original intention - they really thought the impact of their policy on unemployment would be minimal. I've no doubt high unemployment did help weaken the union movement. But I suspect that if you had offered the government in 1981 a magic wand that would have halved unemployment, they would have taken it. After the Falklands war, less clear. Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-30217047341453712082015-10-13T09:15:29.821+00:002015-10-13T09:15:29.821+00:00I don't think there is much doubt about the de...I don't think there is much doubt about the deficit being used as a smokescreen.<br /><br />It's a very simple message - compare the country to a household, claim that we are spending too much, identify groups ('welfare scroungers', 'bloated public sector') as the main cause of this overspend - especially as they don't vote for you anyway - and away you go. <br /><br />Andrewhttps://www.blogger.com/profile/02729454651003425550noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-36021032466369841432015-10-13T06:54:57.728+00:002015-10-13T06:54:57.728+00:00Howe's special adviser at the time Adam Ridley...Howe's special adviser at the time Adam Ridley (sort of) admits in this volume on the 1981 budget that they got the monetary side of the MTFS wrong:<br /><br />http://www.cambridge.org/gb/academic/subjects/economics/macroeconomics-and-monetary-economics/expansionary-fiscal-contraction-thatcher-governments-1981-budget-perspectiveAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-8319813774055792482015-10-12T18:45:37.051+00:002015-10-12T18:45:37.051+00:00MMT dosen't say "deficits don't matte...MMT dosen't say "deficits don't matter"<br />The limit to government spending is real resources. So if you want to build a school, you need cement and builders, etc.<br />There is also a fiscal multiplier as the money is "respent."<br />All government spending will come back as tax IF there is no saving in the spending chain. Some money is spent, it is taxed, spending becomes income and is taxed again. It is a maths progression.<br />It is that saving that *causes* the deficit.<br />Government spending always leads to an amount tax and excess savings.<br />To run surpluses you have to have people running down savings and/or increased private debt.<br />Conservative policy is based on widely taught lies, such as the money multiplier.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-11998148508302657772015-10-12T18:21:05.355+00:002015-10-12T18:21:05.355+00:00In a debate with Oliver Kamm in 'Prospect'...In a debate with Oliver Kamm in 'Prospect' early in the year, you wrote “As an academic I have tried and failed to find a macroeconomic logic to what the government is proposing. Could it be that in reality the deficit is a smokescreen to hide the underlying goal, which is a smaller state? The British people do not want a smaller state, so the only way it can be achieved is by maintaining the myth that reducing the deficit is our top priority.” <br /><br />Now turn the clock back 34 years and replace 'smaller state' with 'weaker unions', 'deficit' with 'inflation'.Anonymoushttps://www.blogger.com/profile/10623963884259918737noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-40558433875145663722015-10-12T18:01:09.748+00:002015-10-12T18:01:09.748+00:00Like Andrew I wonder about the conventional story ...Like Andrew I wonder about the conventional story of 1970s inflation and suspect much of it is a myth. I'm not one of those MMT subscribers who believe deficits and inflation don't matter, etc. <br /><br />But in the U.S. context, I believe Volcker slammed on the brakes too hard. There was also a demographic aspect with the boomers entering the workforce. Perhaps Fed Chair Burns did the best he could and the demographic "rat" had to work its way through the snake until inflation came down. <br /><br />http://www.interfluidity.com/v2/4561.html<br /><br />It is amazing to me that conservative policy makers don't have a better grasp of the issues.<br />Peterhttps://www.blogger.com/profile/08272747870634233567noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-53593125721402740852015-10-12T16:49:17.422+00:002015-10-12T16:49:17.422+00:00It was a disastrous decision to borrow foreign cur...It was a disastrous decision to borrow foreign currency. Cameron is talking nonsense.<br />http://www.3spoken.co.uk/2013/03/uk-borrowed-foreign-currency-from-imf.html?m=1Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-13727691239986295832015-10-12T13:13:32.515+00:002015-10-12T13:13:32.515+00:00Here is Cameron's response to Denis Healey'...Here is Cameron's response to Denis Healey's death aged 98, about the 'IMF crisis' of 1976:<br /><br />"Denis Healey told his party hard truths about Britain having to live within her means."<br /><br />We will all know when this country has begun to sort out its economics from its politics when most of the media and the electorate know the details of 1976 and 1981, found here elsewhere on this blog, and people's obituaries are no longer used by Prime Ministers to make a point they either know to be wrong and are lying, or are too stupid to have realised and in which case they should resign as Prime Minister, give all their money to charity, and take up anonymous service to the poor.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-13064113715866706172015-10-12T09:37:02.385+00:002015-10-12T09:37:02.385+00:00It also has to be asked; what would have happened ...It also has to be asked; what would have happened to inflation with more 'normal' economic policy? The oil price spike from the Iranian revolution had peaked, and from memory serves, the wage/price automatic link had already been dropped.<br /><br />And it wasn't really until the early to mid 90s that inflation fell to what we now consider 'normal levels'. <br />Andrewhttps://www.blogger.com/profile/02729454651003425550noreply@blogger.com