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Coming from the OECD's live twitter stream, "we need decisive policy action now" but "we're...

Coming from the OECD's live twitter stream, "we need decisive policy action now" but "we're aware of the political economy of some of these problems. The scope for macro-economic policy is virtually exhausted." The OECD released its revised economic outlook just moments ago, warning the recovery is both fragile and uneven. (more)
Comments (2)
  • noob
    , contributor
    Comments (384) | Send Message
     
    I read this article and find it terrifying. They skate very neatly around recognizing macroeconomic fiscal policy is a failed concept. I'm impressed at how close they come to it in the beginning.

     

    By the end of the story they are right back into the thick of the usual garbage. Need to spend a lot more money on wasteful projects that have no economic value (greater than the alternatives) and raise taxes to cover the expenses of those wasteful projects.

     

    I'm very reluctant to believe that we will have an utterly complete collapse of what we identify as money simply because the notion sounds so "out there". Yet it's difficult to imagine the alternatives when this is the thinking that is trying to drive our economy.

     

    There are only a handful of political entities who can even converse on this subject without throwing up blinders and scurrying off to their caves to worship Keynes yet again.

     

    It can get pretty depressing when politicians open their pie-holes and, with a straight face, utter their nonsense. There are too many sheeple out there to nod their heads and go along with it - driving us into the ruinous end.
    22 May 2012, 06:46 AM Reply Like
  • CautiousInvestor
    , contributor
    Comments (3051) | Send Message
     
    The enshrined theologies of QE and monetary accommodation are approaching or have reached their limits of influencing macro economic activity.

     

    It's fairly clear fiscal expansion simply leads to an "identity led" expansion that is not sustainable due to deeply rooted economic dysfunctionalities stemming from structural imbalances led by unsustainable debt levels, massive government footprints and distortions in pricing which leads to inefficient allocation of capital.

     

    And QE simply channels newly created funds into inflating certain asset prices and currencies without expanding credit and benefiting the broader economy. The limits are clearly seen in Japan where interest rates are so low that banks do not wish to buy new bonds as interest rates are so low that risk/reward calculations lead banks to believe they are betting sitting on reserves.

     

    Rather than accept these harsh realities, central authorities continue to rely on old nostrums and press on old, familiar strings.
    22 May 2012, 08:38 AM Reply Like
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