Saturday, March 25, 2017

De Grauwe defends central banking

Interview: Prof. Paul De Grauwe, London School of Economics

It is indeed a big problem. The problem is most acute in the Eurozone where national governments have lost most of their capacity to stabilize their economies from the booms and busts that are endemic in capitalism. Instead financial markets dictate the extent to which governments use fiscal policies to stabilize their economies. If nothing is done about this, many people will reject the system.
The evidence in the USA is that government is procyclical, and that is one quarter of global GDP. Yes, financial markets dictate to our swamp government, but without their dictate, our government would procyclical us to death with the massive, and volatile interest charges they accrue.

The School of Economics, over there, has the basket weaver problem, their results require policy dictates as their math is weak.

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