tag:blogger.com,1999:blog-8764541874043694159.post6737175921301965987..comments2024-03-28T12:23:39.665+00:00Comments on Coppola Comment: Of interest rates and deficitsFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-8764541874043694159.post-12602110830529865572014-07-02T10:27:16.897+01:002014-07-02T10:27:16.897+01:00the idea that whatever fiscal deficit is implement...<em>the idea that whatever fiscal deficit is implemented, the central bank will “offset” it</em><br /><br />I always want to say "why not ask them?"Alexhttps://www.blogger.com/profile/17153530634675543954noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-47299504627249434712014-06-29T18:40:46.671+01:002014-06-29T18:40:46.671+01:00Sumner’s description of slow deficit reduction as ...Sumner’s description of slow deficit reduction as a “fair argument” took my breath away when I first read it. Reason is that I’ve followed his blog and studied his Market Monetarist ideas over the last year, and that “fair argument” flatly contradicts many of his previous pronouncements.<br /><br />In previous occasions he has said that Keynsianism / fiscal policy is all nonsense, and MMTers are round the twist. Rather, so he claims, all adjustments to demand should be done via monetary policy: specifically having the central bank buy private sector assets.<br /><br />As to his “offset” idea (mentioned above) that’s the idea that whatever fiscal deficit is implemented, the central bank will “offset” it, ergo fiscal policy is pointless.<br /><br />But he know seems to have had a Damascene conversion to a slightly more normal view of things. However, with a view to saving his professional reputation, I don’t expect him to admit he has changed his mind. If challenged, he’ll produce some ultra-complicated arguments to the effect that his views were pretty normal all along.<br /><br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-55876707283414414592014-06-29T18:38:49.320+01:002014-06-29T18:38:49.320+01:00This comment has been removed by the author.Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-17660115977614575082014-06-29T14:27:13.395+01:002014-06-29T14:27:13.395+01:00"I think it is very evident that loose moneta..."I think it is very evident that loose monetary policy cannot offset fiscal austerity"<br /><br />I just depends how effective monetary policy is. Under present arrangement MP is only mildly effective.<br /><br />"Supporting asset prices for the rich does not have the same effect on AD as increasing benefits and cutting taxes for the poor"<br /><br />Even worse QE is increasing money balances of banks and large corporates which dont consume. These entities are oriented toward investing unlike people. At least rich people consume a little. The BoE is trying to stimulate investment in an environment of excess investment which is pretty stupid. They should also stimulate consumption. I is like 15% and C is about 65%. Its alot more effective to target both I and C instead of I.dannyb2bhttp://cmamonetary.orgnoreply@blogger.com