Brown Says Monetary Policy Is Having Reduced Impact in U.K.
Posted by WARREN MOSLER on January 29th, 2009
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.”
[top]
January 29th, 2009 at 9:26 am
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
TR equals GOV’T TRANSFER PAYMENTS
TI equals INTEREST PAID BY GOV’T
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.
Reply
January 29th, 2009 at 10:50 am
Thanks,
And now you’re overqualified for a senior govt. position
Reply
January 29th, 2009 at 11:06 am
But not in YOUR Administration, hopefully!
By the way, I will volunteer to help in any way on your campaign!
Reply
January 29th, 2009 at 12:09 pm
much appreciated!
try to get me air time on other financial media?
Reply