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Venger

Uk's Solution To Reaching Limit Of Debt Based Growth

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FT story has a bit of a dig about the plight of younger first time buyers being priced out, which of course applies to those who would also like to upsize, when policy-makers seek to keep house prices inflated. Many claiming no problem with house prices.

Last time I read the rules, only 1 sentence allowed to be quoted from an FT article. I'm not sure if the link is behind the paywall or not.

BoE lacks tools needed to p r i c k property bubble

By John Plender

September 24, 2013

In his recent statements denying the existence of a housing bubble George Osborne, the chancellor, has implied that he thinks this issue belongs to him.

http://www.ft.com/cm...144feab7de.html

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The crux of the article seems to be how to get greater outputs (productivity/real growth) for lesser inputs (debt)

The problem as I see it is the establishment, even when with ZIRP and QE basically doing nothing and being the rhetorical dead donkey, still yap on about easing credit/stimulating demand.

I dont see why credit is any different to any other commodity. When it is scarce, it is used for the most productive ventures. When it is plentiful, it is wasted on anything. Bidding up house prices just because you cant stomach being outbid, for example.

European countries like Switzerland and Germany, those with the most historically anti-inflationary approach to monetary policy seem to do best. We're somewhere in the middle, and Greece and Italy, who have, pre-euro, very inflationary monetary policy worst. The opposite to what the Krugmanites suggest.

Even german SPD leftist election loser Peer Steinbruck is on the record as being wholly against the size of debt stimulus the UK has mis-allocated.

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The crux of the article seems to be how to get greater outputs (productivity/real growth) for lesser inputs (debt)

The problem as I see it is the establishment, even when with ZIRP and QE basically doing nothing and being the rhetorical dead donkey, still yap on about easing credit/stimulating demand.

I dont see why credit is any different to any other commodity. When it is scarce, it is used for the most productive ventures. When it is plentiful, it is wasted on anything. Bidding up house prices just because you cant stomach being outbid, for example.

European countries like Switzerland and Germany, those with the most historically anti-inflationary approach to monetary policy seem to do best. We're somewhere in the middle, and Greece and Italy, who have, pre-euro, very inflationary monetary policy worst. The opposite to what the Krugmanites suggest.

Even german SPD leftist election loser Peer Steinbruck is on the record as being wholly against the size of debt stimulus the UK has mis-allocated.

The neoclassical, general equilibrium model the Krugmanites proselytise insists that the economy is caught in a liquidity trap - monetary policy is no longer effective at the zero bound and only fiscal policy has any purchase. Deficit spending is their only answer.

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The crux of the article seems to be how to get greater outputs (productivity/real growth) for lesser inputs (debt)

The problem as I see it is the establishment, even when with ZIRP and QE basically doing nothing and being the rhetorical dead donkey, still yap on about easing credit/stimulating demand.

I dont see why credit is any different to any other commodity. When it is scarce, it is used for the most productive ventures. When it is plentiful, it is wasted on anything. Bidding up house prices just because you cant stomach being outbid, for example.

Seems just about right.

The neoclassical, general equilibrium model the Krugmanites proselytise insists that the economy is caught in a liquidity trap - monetary policy is no longer effective at the zero bound and only fiscal policy has any purchase. Deficit spending is their only answer.

Always thought those Krugman followers have a VI to remain at the top of things, no breaking-up of asset portfolios they continued to amass through debt, wanting to keep the value of their assets inflated, and block younger newer entrants getting in at lower prices.

The idea of allowing markets to rebalance would see their asset holdings lose value; no wonder they're against it. Not to mention just those who've been pushing deficit spending as professional economists. They've got their credibility on it, and in some instances, some of their incomes with chairs at some universities and incomes at newspapers as 'top-sources' including Blanchy who I've seen glowingly quote Krugman.

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