Monday, 29 June 2015

Inane drivel from the Bank of International Settlements.

Assuming the above headline from The Telegraph correctly summarises BIS thinking, then there is nothing that remotely resembles "thinking” going on at the BIS.

If interest rates are at zero that does not, contrary to the suggestions of BIS idiots, prevent further stimulus. All a country that wants more stimulus has to do is print fresh money and spend it, and/or cut taxes. The fact of spending that money, e.g. on health or eduction, creates jobs in hospitals and schools. Moreover, that spending equals extra money (base money to be exact) in the hands of the private sector. And that induces the private sector to spend more: i.e. raise demand.

The average street sweeper has worked out that when people win a lottery they spend more. Evidently some of the world’s leading economists have not worked that out.


P.S. Dean Baker also has a go at that BIS report. And a few hours later, Tim Worstall as well.

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