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The Interest Blog has linked to a couple of old Dominion Post articles from Infometrics economists:
One the provides a metaphor for the slowdown in economic activity.
And one that describes the possibility of centrally determined tax rates. (I have mentioned that one before).
Enjoy …
Prime Minister Key appears to believe that it is in the interest of the nation for us all to take our tax cuts and throw them around – either spending them or finding other people to spend them for us. However, I don’t see why we have to rely on consumption now or giving to charity to do this.
Our credit market is working – if we give money to the bank they will lend it out to someone that will spend it. The person that spends it will earn income in the future and pay the bank back, and the bank will pay us back. Where is the issue here? The focus really shouldn’t be on spending – it should be on production.
Now, if the credit market was broken in NZ there could be a different story. Hell if unemployment was nose-bleedingly high you could make a case for it – but it is 4.6%.
Bernard Hickey at Interest Blog expresses similar sentiments here.
The Fed is going to buy some government bonds.
Now, if they fund this buy printing money – doesn’t this effectively imply that they are shifting the burden of their recession from taxpayers to bond holders? If so, isn’t this equivalent to a partial default on debt.
I don’t think other countries would be allowed to do this.
What am I missing?
Update: CPW points out why I’m wrong – effectively I’m presuming that the Fed won’t stick to a future inflation target anymore, which is not really a fair assumption. He pointed me to this very good post as Econbrowser, and I also really enjoyed this post on Greg Mankiw’s blog. I’m nervous about the Fed’s willingness to pull back the QE/lift rates in the future – but this is no different to the usual concern I hold during the whole economic cycle. The introduction of QE hasn’t actually changed this issue.
There is nothing wrong with productivity, I love productivity. But why does this government have to bang on about it like it is an issue they actually have control over.
Increasing productivity implies that we can make more stuff for the same amount of labour and capital – now this is a completely good thing, we can be wealthier without any more work! However, surely when I put it this way alarm bells must start to ring!!!!
So I’ve started reading the moral philosophy and economics book I was discussing, and on the eighth page I found this quote:
The idea that studying ethics could help people do economics or policy analysis may seem far-fetched. Why not consult tarot cards instead?
Now I do not agree with the first part of the above paragraph – policy analysis requires value judgments to reach conclusions, and understanding ethics helps to inform value judgments.
But my focus is on the second part of the paragraph. Why the dig at tarot card reading?
My impression that his focus is on the broader form of economics that requires value judgments in order to reach conclusions – however, if this is what he is focused on tarot card reading is virtually equivalent. Let’s discuss why:
My economics tea leaves are suggesting to me that there will be fewer than 4,747 departures to Australia in the February figures. If this is the case, the number of departures to Australia will be LOWER than in Feb 2008.
It is this sort of speculation that is giving me dreams suggesting that net migration will pick up quite quickly, very interesting.
The reason I think it is important to keep an eye on this is because I’m getting hacked off with news stories talking about the “huge outflow to Australia” when its growth has been drastically slowing since the end of 2008 😛
Update: Realised today is Wednesday – not Thursday. The numbers are out on Friday 😛