Brown Says Monetary Policy Is Having Reduced Impact in U.K.

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In fact, lower rates are slowing things down by cutting government interest payments, and thereby requiring a higher fiscal adjustment.

Brown Says Monetary Policy Is Having Reduced Impact in UK

Jan 27 (Bloomberg) — Prime Minister Gordon Brown said the Bank of England’s ability to influence the economy with lower interest rates is being hurt by the impact of the financial crisis in the U.K. “Our financial system remains under such strain that this will reduce the impact of lower interest rates,” Brown said in a speech in London today. “We have to do more. We took the decision in the pre budget report to launch a major fiscal stimulus. Rather than cutting back on public investment, we have decided to stick to our spending plans.”


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4 Responses to Brown Says Monetary Policy Is Having Reduced Impact in U.K.

  1. warren mosler says:

    much appreciated!

    try to get me air time on other financial media?


  2. mike norman says:

    But not in YOUR Administration, hopefully!

    By the way, I will volunteer to help in any way on your campaign!


  3. warren mosler says:

    And now you’re overqualified for a senior govt. position


  4. Mike Norman says:

    Yeah, when will they learn what is written in every basic macro textbook, that private savings equals:

    (Y + NFI + TR + TI – T) – C

    Where Y equals national income or GDP
    NFI equals factor payments from abroad
    T equals TAXES
    C equals consumption

    Three of the six components that make up private sector savings (and by identity, investment) are influenced by what the gov’t does. Actually it’s more than that because a main component of GDP is Government spending and investment.


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