Harringay, Haringey - So Good they Spelt it Twice!
Market Macro Myths: Debts, Deficits and Delusions
Fascinating macroeconomics essay by James Montier to be read here.
Some tidbits:
Myth 1: Governments are like households
Myth 2: Printing money to finance budget deficits is inflationary
Myth 3: Budget deficits/high debt lead to high interest rates
Myth 4: Budget deficits are unsustainable
Myth 5: Debt is a burden on future generations
Basically says what I've always thought, our fiscal policy is merely to assuage the worries of employers and capitalists. It's not at all optimal.
The solution? We should all donate money to political parties, not just the oligarchs.
Tags for Forum Posts: debt, deficit, economy, government, macroeconomics
Replies to This Discussion
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Permalink Reply by Xavier on
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From what I hear generally from economists in the media (I am not an economist) is that any government that reduced the increase in debt to zero (without actually paying it off) would have to cut public spending and raise taxes to such a degree that it would be political suicide.
Are we playing a sort of reverse pass-the-parcel between generations where each puts an extra layer of paper on a prize of 'no debt', which one day will be too heavy to carry?.
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Permalink Reply by Michael Anderson on
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Thre is an artificial hysteria about the national debt. Through most of the 20th century it was much, much higher than it is now and even in the boom years of the 1960s it was over 50% of GDP.
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Permalink Reply by Neil on
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There is no evidence that this author is right. He panics that various popular government policies are 'inflationary' and lead to 'high interest rates'. The opposite appears to be true.
At the moment, we all benefit from almost zero inflation and record low interest rates. Food, loans and mortgages stay cheap with little chance of price rises in future. Not to mention, unemployment is falling rapidly with a record amount of people in work. These conditions help working people the most and not capitalists.
This government has achieved an amazingly good set of economic figures. James Montier can get on his bike and go back to obscurity.
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Permalink Reply by John McMullan on
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No comments on the myths then? Governments are like households for instance?
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