These are the times when Governments punish those citizens who live prudently and reward those who live recklessly!
Isaiah:5:20
Woe unto them that call evil good, and good evil; that put darkness for light, and light for darkness; that put bitter for sweet, and sweet for bitter!
Near-zero interest rates and even a tax on bank deposits are necessary to force those with cash to use it productively
The battlelines are drawn. On one side we have the Labour Government and the Liberal Democrats, the Bank of England, the US Federal Reserve Board and the vast majority of Keynesian economists in every country – plus Barack Obama. On the other side, the Tory Opposition, the German Socialists, the European Central Bank, the Church of England and the vast majority of Marxist economists in every country – plus the British public. The question, of course, is what to do about the recession. Specifically whether the way out is “to spend, spend, spend or to save, save, save” – as David Cameron has so clearly put it.
I believe, in line with the vast majority of non-socialist economists, that Mr Cameron’s campaign for savings is completely wrong; that “borrowing our way out of debt”, paradoxical as it sounds, is exactly the right prescription for our present problems. This paradox is easily explained: if governments or wealthy individuals increase their borrowings they replace weak debtors – bankrupt hedge funds, struggling businesses or repossessed homeowners – with strong ones and this helps to stabilise the financial system and sustain economic activity and employment. The country can borrow its way out of debt.
But what I think is of little importance, especially as I have been wrong about so many aspects of this crisis – as have most conventional economists and policymakers, whose views I broadly share. Of equally little importance is what Mr Cameron and the Tories think. Only two opinions matter: on one side, that of the Obama Administration and the Brown Government; on the other, US and British consumers. . . . .
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