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Mikhail Liebenstein

Kick Starting The Economy

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In the past Government's have tried both monetarist and Keynesian approaches to managing the economy.

In a simplified form, the Keynesian idea is that you can spend money to give a boost to demand and kick start things. In the monetarist case you can cut interest rates, though it is noted that monetarist policies are usually more effective for slowing booms down than kick-starting weak economies.

Basically both approaches are methods for getting money into the economy. The interesting thing is that with the current mess is that it is in some ways a repeat of the mistakes made with Keynesian policy, just through the banking system and interest rates and money auctions instead.

When the Keynesian approach goes wrong, we usually end up with pork barrel projects and public sector union wage demands and strikes, as the Government which has been dishing out cash for so long finds it has distorted the economy.

The current banking crisis is no different. Here interest rates have been kept to low for too long and this has ended up with Banks and Hedge Funds distorting the economy.

On balance I am slightly more of a monetarist, as the trouble with Keynesian policies is that they are generally enacted by Governments which have too much direct control. That said, I also find the profits made by the banks (who are simply taking a cut of the economic action) and general move of our economy to financial services very worrying.

So given that that the current situation is the result of monetarism being led astray, wouldn't a better approach by the Government to be to keep interest rates high and not make lots of liquidity available to the banks. And instead try and identify various infrastructure projects that could increase the economies capacity and make the UK a better place to live without lining the pockets of the unions or dole seekers etc.

I can think of few examples, like a Bullet Train line from London to Manchester and London to Glasgow. Some new Nuclear Power Stations etc.

Edited by mikelivingstone

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I Want to see a huge park and ride train terminal at the bottom of the M25 near Luton but Brown won't allow one because he likes us queqing up and paying more in his first gear tax on the M25.

Such a project will put money into the system but it won't turn a profit for brown so don't exspect plans like this to ever happen.

The printing press has reduced the value of GBP 20% against the euro and it's not like the euro is the best currency in the world and it's plain stupid to pretend inflation is running at 2-3% when the M3 is going up by double digits.

Time you all opened a euro account since speculation on the GBP is a game your all playing without even knowing it.

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Renewable energy projects. More 'congestion charging to pay for infrastructure improvements'. Micro power generation subsidies for solar panels etc (paid for by MEW. LMAO!!!)

Any capacity building projects whould allow the government to take the spend to mend approach rather than the monetarist moral hazard method.

I wish they would spend more on nuclear, but I think the one has been consigned to the 'could have worked if only we hadn't invented the bomb' shelf.

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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