(https://twitter.com/wbmosler/status/1099632398034190336)
CB’s believe rate hikes fight inflation but say with high pub debt rate hikes = higher interest pymts = inflation, so using fiscal to fund a JG = no option to hike rates to fight inflation. I say THEREFORE they have it backwards and lowering rates fights inflation = no problem with JG
As long as tight controls on bank lending and capital controls?
different points
Low interest rates could drive up private debt like mortgages. Wouldn’t limiting bank lending reduce chances of bubbles and inflation ?
Honi erantzuten: @81NC19
First explain why this hasn’t happen in Japan after decades of 0 rates? The euro zone with negative rates? The US when we had 0 and now very low rates? We had more housing starts when rates were 15% than today and a lot more people today. Other factors count a lot more seems?
2019 ots. 24
I’m sure you’re right that other factors contribute. I’m asking, what contributes to private debt, if not low rates? Also, Japan’s culture of saving and not spending income is vastly different than Americans culture, no?
http://piketty.pse.ens.fr/files/Horioka90.pdf … from 1990 there seems to be a savings culture grossly different than ours. They’re fearful of deflation so how rates influence private sector doesn’t seem applicable to American economic psychology?
The impact of a JG in increasing efficiency/productivity and therefore push down interest rates?
Just means funding a JG doesn’t take away the ability to fight inflation with higher rates as critics fear, because in any case higher rates cause inflation, rather than fight it.
Elkarrizketa berria
to clarify, you’re saying “using their logic the reverse of the equation would have to be true,” yes?
Using their logic about rates and deficits they are wrong/backwards about rate hikes fighting inflation.
