you are absolutely right. The question society needs to ask is that if the pain that goes through a massive wave of bankruptcy, unemployment, and short term wealth distribution/wealth destruction is worth it versus the alternative of government spending that can then smoothen the debt payoff over many decades. In those decades services can be scaled back gradually as society changes. I would argue that a systemic shock is cruel and unnecessary.
Interesting insight but some gaps in analysis maybe. Why would Spanish fund managers supply their funds to the German government in the first place? Is the risk in Spain that drives them over to Germany or is it their flight causing the risk to be perceived? Any answers if anyone will? Thanks
It IS the Keynesian approach. Going into debt, increasing the size of government, printing money and lowering interest rates during a recession are Keynesian solutions to the bust part of a cycle.
And additionally, if higher interest rate was the reason why German bankers bought Spanish bonds in the boom years as Mr Koo mentioned, why have the high rates become unattractive now? Essentially is there a difference between high rate driven by high demand or high rate caused by greater risk premium?
On the face of it, I don't disagree. However, what you are arguing is for a long drawn out less painful recovery at the expense of future productivity vs a quick but more painful recovery that is over quickly with no erosion of future productivity. It's the Keynesian vs Austrian approach to a major recession. For your approach to work long term, when the economy is in a boom, debt should be paid down, interest rates should be raised, and money supply restrained, but politicians never do that.
They take those things out because they vary a lot (causing "noise" in the trend lines). The CPI takes those things into account, it's around 3.6% currently, if the current trend continues. That's due to oil though. When oil prices drop again (beginning to), then that should drop some. The government figures are for dealing with business, not running a household.
Wonderful as always. Can somebody provide a link as to where at the INET we can download the notes mentioned by the host lady? Cause I can find Richard's talk and a couple of other entries for him at the INET website but no notes from this lecture. Tnx in advance
03:41 - Clearly because banks are holding most of the money injected and not lending it because we're seeing liquidity restrictions in combinations with monetary injections.
The problem with the Keynesian approach is it's a far shot guess when you want to cut spending and raise taxes and vice versa. It's hard to identify when and how long the economy is going into recovery and vice-versa.
its kind of silly to think that human beings will die off because making food won't yield a profit, hence people are willing to starve rather than make food at a loss.
If interest rates were raised substantially, wouldn't that cause the most debt laden under water businesses to go bankrupt? Once this has happened, the remaining buisesses will grow stronger due to a now larger piece of the pie would they not? Wouldn't these businesses now be worth more and no longer be under water thus no longer needing to pay down debt releasing capital for production and consumption?
On the off chance the editor gets to read this, i think it serves the purpose of the video best to focus on the speaker/stage. This is not an award ceremy and the audience is unimportant (with respect). Otherwise tyvm and 'Koodos'.
I think you have that wrong. Low interest rates, money printing and government debt causes wealth destruction through currency debasement and loss of purchasing power from inflation. In the last ten years, savers have been punished by taking away any interest from savings combined with inflation. How is a person passed 65 who has saved for the their twilight years supposed to live? I think stealing wealth from savers and future generations with debt is cruel and should NOT be necessary.
Inflation (monetary not price) essentially takes wealth away from people who have money and gives it to people who owe money. In small amounts its tolerable yes, like if I stole $20 per $1000 of your income every year to pay my credit card. I just can't see how an economy based on debt fueled consumption with interest rates on that debt at or below inflation can be sustainable. That is a failed business model in the real world and when it corrects, there will be consequences.
YOU WISH! when the global economy collapses, all corporations will fail! If you haven't noticed food is produced by corporations! Food production and distribution will founder! Think about what is being said before you respond!
The fact that the Keynesian approach has been, is, and always will be abused, and along with the inability of Keynesians to see a bubble that their model created until after it pops, is WHY the Keynesian approach does more damage than good. Keynesian approach looks good on paper but if fails miserably in the real world because human nature is not factored into it's calculations. Keyensians were oblivious the housing boom that Austrians clearly saw coming. That should tell you something.
you are absolutely right. The question society needs to ask is that if the pain that goes through a massive wave of bankruptcy, unemployment, and short term wealth distribution/wealth destruction is worth it versus the alternative of government spending that can then smoothen the debt payoff over many decades. In those decades services can be scaled back gradually as society changes. I would argue that a systemic shock is cruel and unnecessary.
"because the financial sector isn't maximizing profit it is minimizing debt." thank you for sharing.
good analysis, we need more of this, good work
Interesting insight but some gaps in analysis maybe. Why would Spanish fund managers supply their funds to the German government in the first place? Is the risk in Spain that drives them over to Germany or is it their flight causing the risk to be perceived? Any answers if anyone will? Thanks
It IS the Keynesian approach. Going into debt, increasing the size of government, printing money and lowering interest rates during a recession are Keynesian solutions to the bust part of a cycle.
The de-leveraging is more than needed. Clean balance sheets should be the norm, and not an exception.
Love Richard.
And additionally, if higher interest rate was the reason why German bankers bought Spanish bonds in the boom years as Mr Koo mentioned, why have the high rates become unattractive now? Essentially is there a difference between high rate driven by high demand or high rate caused by greater risk premium?
On the face of it, I don't disagree. However, what you are arguing is for a long drawn out less painful recovery at the expense of future productivity vs a quick but more painful recovery that is over quickly with no erosion of future productivity. It's the Keynesian vs Austrian approach to a major recession. For your approach to work long term, when the economy is in a boom, debt should be paid down, interest rates should be raised, and money supply restrained, but politicians never do that.
They take those things out because they vary a lot (causing "noise" in the trend lines). The CPI takes those things into account, it's around 3.6% currently, if the current trend continues. That's due to oil though. When oil prices drop again (beginning to), then that should drop some. The government figures are for dealing with business, not running a household.
Wonderful as always. Can somebody provide a link as to where at the INET we can download the notes mentioned by the host lady? Cause I can find Richard's talk and a couple of other entries for him at the INET website but no notes from this lecture. Tnx in advance
What % of industries, in an economy, are private sector?
What % of industries, in an economy, are public sector?
+I.A .M. depends on the economy... different everywhere
03:41 - Clearly because banks are holding most of the money injected and not lending it because we're seeing liquidity restrictions in combinations with monetary injections.
The problem with the Keynesian approach is it's a far shot guess when you want to cut spending and raise taxes and vice versa. It's hard to identify when and how long the economy is going into recovery and vice-versa.
its kind of silly to think that human beings will die off because making food won't yield a profit, hence people are willing to starve rather than make food at a loss.
If interest rates were raised substantially, wouldn't that cause the most debt laden under water businesses to go bankrupt? Once this has happened, the remaining buisesses will grow stronger due to a now larger piece of the pie would they not? Wouldn't these businesses now be worth more and no longer be under water thus no longer needing to pay down debt releasing capital for production and consumption?
On the off chance the editor gets to read this, i think it serves the purpose of the video best to focus on the speaker/stage. This is not an award ceremy and the audience is unimportant (with respect).
Otherwise tyvm and 'Koodos'.
I think you have that wrong. Low interest rates, money printing and government debt causes wealth destruction through currency debasement and loss of purchasing power from inflation. In the last ten years, savers have been punished by taking away any interest from savings combined with inflation. How is a person passed 65 who has saved for the their twilight years supposed to live? I think stealing wealth from savers and future generations with debt is cruel and should NOT be necessary.
Inflation (monetary not price) essentially takes wealth away from people who have money and gives it to people who owe money. In small amounts its tolerable yes, like if I stole $20 per $1000 of your income every year to pay my credit card. I just can't see how an economy based on debt fueled consumption with interest rates on that debt at or below inflation can be sustainable. That is a failed business model in the real world and when it corrects, there will be consequences.
min 13:25 this will spread!
YOU WISH! when the global economy collapses, all corporations will fail! If you haven't noticed food is produced by corporations! Food production and distribution will founder! Think about what is being said before you respond!
Min 10:29 starts the collapse!
The fact that the Keynesian approach has been, is, and always will be abused, and along with the inability of Keynesians to see a bubble that their model created until after it pops, is WHY the Keynesian approach does more damage than good. Keynesian approach looks good on paper but if fails miserably in the real world because human nature is not factored into it's calculations. Keyensians were oblivious the housing boom that Austrians clearly saw coming. That should tell you something.
lol
20:20 George soros