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Comments on: Japan’s hole, the US hole, our hole? http://www.tvhe.co.nz/2008/12/17/japans-hole-the-us-hole-our-hole/ The Visible Hand in Economics Thu, 18 Dec 2008 19:25:56 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Matt Nolan http://www.tvhe.co.nz/2008/12/17/japans-hole-the-us-hole-our-hole/#comment-4751 Thu, 18 Dec 2008 19:25:56 +0000 http://www.tvhe.co.nz/?p=2465#comment-4751 Hi Gareth,

I guess that if we could identify a “hoarding of cash” then it would make sense for the government to do all it can to attract the capital back into the economy.

It is a difficult issue though, as it is hard to really understand how and when government would target such a policy

]]> By: Gareth http://www.tvhe.co.nz/2008/12/17/japans-hole-the-us-hole-our-hole/#comment-4575 Thu, 18 Dec 2008 00:52:53 +0000 http://www.tvhe.co.nz/?p=2465#comment-4575 “In this case, if the government can get hold these resources and put them to use (or say, if people are only willing to lend to government because of a substantially negative economic outlook) we avoid the paradox of thrift.”

So does this mean the Government should issue bonds at a higher-than-prudent rate to attract those savings?
The usual problems with investment assymetry etc would come into play and you’d have to limit it to local savings only I suppose? And you;d need to be pretty certain that the banks wouldn’t be lending out because you’re actively taking money out of the pool that would normally feed private investment.

Braindump, could be a terrible idea that I just haven’t thought through!

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