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June 29, 2014


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Ralph Musgrave


You’ve identified the problem beautifully, but you haven’t given a very clear answer. That’s the answer to the question: “Why then, don't politicians do what Carney does, and say that policy will be data-driven?”

The answer is that the economic illiterates in Westminster and the Treasury think that more fiscal stimulus involves more national debt. And the word “debt” has negative emotional overtones.

Paul Krugman actually said that Kenneth Rogoff’s concerns about debt were driven by emotion, or words to that effect.

In fact, as Keynes pointed out, extra fiscal stimulus can be funded by borrowing OR PRINTING money. Thus there’s no need to increase the debt.

Of course whenever the words “print” and “money” appear in the same sentence, another lot of economic illiterates appear out of the woodwork chanting “inflation”. But they’ve been rather confounded by the ASTRONOMIC increase in central bank created money now sloshing around thanks to QE combined with an absence of inflation.


data equals bla bla

 Politically yes

intellectually no

 Politically yes

boat people thats who

fresno dan

When one talks of inflation, one needs to talk of deflation and standard of living as well. In the US there has been inflation every year since...well, since they began measuring it. Yet since the 1970's this "inflation" has eluded working male wage workers. It doesn't matter if the price level goes up and you don't get raises, or the price level doesn't go up and you get less pay - the effect is the same.


If the FED money creation keeps the assets the rich own from any decrease in price (letting the rich bankers keep their fraud induced house price increases during the housing bubble) - who does that help and who does that hurt?

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