Thursday, February 11, 2010
Niall Ferguson: no such thing as a Keynesian free lunch
"What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not â€œsaveâ€ us half so much as monetary policy â€“ zero interest rates plus quantitative easing â€“ did...The International Monetary Fund recently published estimates of the fiscal adjustments developed economies would need to make to restore fiscal stability over the decade ahead. Worst were Japan and the UK (a fiscal tightening of 13 per cent of GDP). Then came Ireland, Spain and Greece (9 per cent). And in sixth place? Step forward America, which would need to tighten fiscal policy by 8.8 per cent of GDP to satisfy the IMF."