tag:blogger.com,1999:blog-2277215496195926573.post3667008723971515296..comments2024-01-01T07:41:51.347-08:00Comments on RALPHONOMICS: What’s the optimum or GDP maximising rate of interest?Ralph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2277215496195926573.post-39201026232391845512017-05-07T08:35:18.725-07:002017-05-07T08:35:18.725-07:00On the assumption that artificial adjustments to i...On the assumption that artificial adjustments to interest rates are the best way of adjusting demand, then yes, the optimum rate of interest rate is the one that results in full employment. However, the above is a very questionable assumption.<br /><br />There is, after all, an alternative way of adjusting demand, namely fiscal policy or combination of monetary and fiscal, e.g. simply printing more base money and spending it (and/or cutting taxes), as advocated for example by Positive Money, the New Economics Foundation and Prof Richard Werner argued in their submission to Vickers. I.e. they argue that demand should be adjusted by the latter combination of fiscal and monetary measures, with interest rates left to find their own level.<br /> <br />I also argue much the same in Part III, p.16 here:<br /><br />https://mpra.ub.uni-muenchen.de/78896/1/MPRA_paper_78896.pdf<br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-50929138588298831762017-05-07T05:15:35.469-07:002017-05-07T05:15:35.469-07:00UK interest rates are set by the Bank of England, ...UK interest rates are set by the Bank of England, presumably at rates which it deems to be "optimal". This could also be the case under Full Reserve banking. <br />.<br />So interest rates are not determined in free markets, and there is no valid analogy with air miles or apples. KongKinghttps://www.blogger.com/profile/10992633301481631373noreply@blogger.com