What Keeps the Rich and Powerful up at Night

[applegrove]

By Tom Streithorst at Evonomics

http://evonomics.com/keeps-rich-powerful-night-theyre-happy-dont-know/

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Interest rates are low today because collectively we have more money than ways to spend it. The private sector craves safe assets, risk free places to put its money. It wants to save. It doesn’t want to borrow. That means that government can access capital remarkably cheaply, allowing it to invest in infrastructure and education at little expense. Low interest rates are markets way of telling governments to borrow and spend. Austerity has been the wrong medicine, bleeding a patient that needed a transfusion.

So I’ve spun this tale banging on about the importance of interest rates only to end up saying that today, maybe for the first time ever, they are not as effective as they used to be. (Actually, that is not true. Raise interest rates now and watch the global economy collapse.) Interest rates once were the most powerful way to stimulate growth. At zero, they are that no longer. Now, plunging into unprecedented low levels, they have morphed from a tool into an alarm, telling us our economy is broken.

Secular stagnation, a term invented in the 1930s and brought back into fashion by Larry Summers a few years ago, is caused by a reluctance by the private sector to invest as much as the economy requires. If the private sector won’t invest, then the public sector must. In times of secular stagnation, the government should become “the investor of last resort”. We still need investment, in infrastructure, in education, in basic research, even if the private sector is too fearful to fund it.

Only once we recognise what is wrong with the economy can we start to fix it. The cure is right before our eyes. Keynes knew it, Hansen knew it, Kalecki knew it 80 years ago. Increased government spending can bring the economy back to full employment. The microscopic interest rates of the past decade tell us it is time for stimulative fiscal policy.


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[Dreamweaver 5.0]

1. Their expensive callgirls?

Just ask Ailes.

[orpupilofnature57]

2. The TPP isn't " stimulative fiscal policy " it's a way for the Greedy to get a good nights sleep,

cozy knowing 600% is still possible . And as far as the need for infrastructure, education and research, they may be a need for 99% of us, but we have built a world where only 1% counts, 99% of us spend time, money and life trying to escape the elements of greed

[Warpy]

3. Devaluing labor got the ultra rich unimaginably richer

Now we're in the end game. With the market as flat as a pancake, it's getting harder for hedge funds to shave money off trades. Earnings have been flat or declining for some time because demand for goods and services has been choked off. The days of fast, easy money are over.

So yes, it's time to reinstitute the only system that actually worked in practice, Keynesian economics.