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Breakingviews: Modern bad economic ideas

Friday, August 22, 2014 - 02:55

Jeffrey Goldfarb and Martin Hutchinson discuss some of the dubious notions on wealth, money supply and regulation that have grown out of the Great Recession.

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Tough economic times lead to all sorts of new economic thinking we've had sufficient distance from the downturn in 2008 to start thinking about ideas. That were born out of this Great Recession. Some of them were not so hot Martin Hutchinson. You take some time to look at some of the thought that's come out and and found some problems -- well. Yes I mean this happened the last time to we have Mussolini's corporate state in the nineteenth -- tees which wasn't the most brilliant of economic -- Inventions. But for example list -- adults famously Thomas entities. Theory that capitalism leads to ever increasing wealth. Which may or may not be too but does it take account of what they've -- the money supply and lost to them. Few years -- indeed the last couple of decades because obviously -- rich people component money very easily and very well they tend to get richer. Well it was got a bestselling book they're probably not a lot of people would read that they've bought it I -- Steps that you might -- needs -- be so bad hadn't changed in theory as well -- -- -- you talk about money supply he said that's another issue that's really been thought about the wrong way round. We've been pushing out money in this time around fumbled them we have a habit forming we didn't do this -- 1950s. And you've golf negative real interest rates and something like two point seven trillion of reserves in the banking system. It's traditional economic theory says that she calls hyper inflation. And obviously at the moment it isn't doing a lot of people standing there with bated breath. Waiting for this to happen a lot of people -- sort of scratching their heads and solo wondering where the previous there it was all right to some extent this one's going to be borne out by events one -- of the all right in other words if we. If it causes a catastrophe leveled it at that next I. And then of course you've talked about regulation as well. You know it's one of those things where. You know we all kind of sense that we needed some regulation out of this crisis but you make the point that maybe we've taken the idea that that a lot more that is a good idea. Well yes we got a bit nervous excited I think -- -- consent. Particularly the banking system. I mean in the thirteen staples in Glass-Steagall which was 35 pages and seems to work fairly well. This time around I mean including the originations dropped about thirteen thousand AG's. -- lose it is a huge cost of acting as he's I'll be probably just little unfortunate people are two legal thing. -- hundred but it prevents an extra security yes well yes actually Q. I bet that that -- we will will leave it there thanks for about a look at the peace and we will have more Britain views him.

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Breakingviews: Modern bad economic ideas

Friday, August 22, 2014 - 02:55