tag:blogger.com,1999:blog-2277215496195926573.post173855888016371458..comments2024-01-01T07:41:51.347-08:00Comments on RALPHONOMICS: Hellooo political left. If you want “radical” and “progressive” economic policies, try this...Ralph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2277215496195926573.post-46894291673386284642013-05-17T02:24:24.438-07:002013-05-17T02:24:24.438-07:00Hi Monty,
Yes: assuming there is room for stimulu...Hi Monty,<br /><br />Yes: assuming there is room for stimulus, then that stimulus could take the form of dishing out new money to all and sundry, with debtors forced to use the money to pay down debts. In that case the jubilee would not be at the expense of creditors.<br /><br />On the other hand if an economy has no room for stimulus, then the only way of doing a jubilee is to extract money from creditors and give it to debtors. And with inflation currently in the UK over the 2% target, I don’t see that there is room for a huge amount of stimulus.<br /><br />Next problem is that private debts are about equal to GDP. I don’t see any chance of even a tenth that much being printed and dished out before serious inflation kicks in.<br /><br />Next, if debtors are forced to cut their debts, what’s to stop them subsequently ramping up their debts as soon as they are allowed to? After all, most people who incur debt do so so as to allocate their monthly spending in a way that suits them: the typical mortgagor is someone who doesn’t have enough cash to buy a house of the size they want, but DOES HAVE the income to pay interest on a loan that enables them to buy that house.<br /><br />If the entire economy expands, and everyone allocates their income as between booze, holidays, cars, mortgage repayments etc etc in the same proportion, then given freedom to choose, mortgagors will INCREASE their debts, not reduce them.<br /><br />On the other hand if households are in cautious mode, they’ll tend to pay off debt without anyone telling them to. 40% of the money that households in the US got from the payroll tax cut in 2011 was used to pay off debts. See:<br /><br />http://libertystreeteconomics.newyorkfed.org/2013/05/my-two-percents-how-are-american-workers-dealing-with-the-payroll-tax-hike.html<br /><br /><br /><br /><br /><br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-33265296302106760372013-05-16T12:36:04.782-07:002013-05-16T12:36:04.782-07:00Well Steve Keen, for example, has advocated giving...Well Steve Keen, for example, has advocated giving everyone a chunk of money, with the proviso that those in debt use it to repay or reduce their debt. Those people not in debt can do what they like with it, so it's not a question of the irresponsible benefiting at the cost of the responsible.<br /><br />Everyone benefits, and in addition, there should be a stimulus to the economy.montmorencyhttps://www.blogger.com/profile/12879422255762834319noreply@blogger.com