(10-08-2022, 12:27 PM)Ournextstriker Wrote: Do you ever wonder why the free market requires bailing out by the state with increasing regularity?
Simple. Stop bailing out markets then.
(10-08-2022, 12:29 PM)Logic1 Wrote: Had we not had austerity, interest rates would have been higher and this wouldn't have happened. You supported austerity so stop moaning.
Now I need to be clear - I am not saying that having a high public spending/GDP is necessarily a good thing - the chart below says it is almost higher than ever. That is a medium/long run policy choice (my preference would be a higher share as we need strong health care for an elderly population and a highly educated workforce for the future). But when interest rates are zero (zero lower bound) and they can't go lower, then if you do austerity (especially with respect to public investment) then the denominator stays low and in conjunction with QE you get a massive increase in asset prices. Osborne et al. did not understand this. When you have a massive demand shock you get out of it with fiscal policy, not monetary policy. When you have a massive supply shock (like we have now) you don't get out of it with a fiscal expansion (lower taxes), you essentially have to ride it out and leave the economy alone. The Tories have done exactly opposite to what the standard economics textbook tells you to do!
Well we agree on the outcomes of the BoE's, Osborne's and Kwasi's policies at least.
Let's not forget this isn't just a failure of politicians. The BoE has failed for almost its entire independent existence - and it's not alone in that. Brown only followed the Fed into independence just as Greenspan's magic began to become tarnished. It's only got worse since on both sides of the Atlantic.
We're piling madness upon madness at the moment. Which is probably something else we can agree on.
You say I supported austerity. I'd counter that I'd have preferred the recession we should have had in 2008-2010. Then markets. governments and central banks might actually have learned the lessons then, rather than draw out austerity, massive asset price inflation ended by the inevitable bust.
I'd hope you agree that the last thing we need now is another bailout of private debt.
(10-08-2022, 12:16 PM)Borin' Baggie Wrote: The only way to correct the housing market is to build more houses to freeze house price growth so they are cut in real terms over time.
OK, so we could look forward to equilibrium in the housing market in, say, 30 years? If we start building 250,000 homes a year starting this year?
(10-08-2022, 11:58 AM)baggy1 Wrote: Trickle up economics - made up phrase created by right because trickle down economics has failed on a monumental scale, and now being used by the right to justify trickle down economics
It was created on here by me to describe your various prescriptions.
Simple question - should we bail out private debt, again?
You do realise the phrase "trickle down" is only ever used by the Left don't you? I've never heard the term espoused by a single economist.
