Why Ireland can’t borrow to stimulate

Karl Whelan explains why a Keynesian stimulus package isn’t feasible for Ireland in a blog post at Irish Economy – By the way, it gives me no joy whatsoever to write this. I would love to be in a position to recommend fiscal stimulus. The vast majority of us dismal mainstream economists believe that fiscal policy should be counter-cyclical, so that deficits are run up during recessions and run down during expansions. We would love to be recommending stimulus programs. …

Read more…

ECB : There are no alternatives

European Central Bank executive member Lorenzo Bini Smaghi outlined the fiscal and monetary constraints facing EU states at the Group of 30 conference in Rabat. In it he warns of a US of future crisis, and perhaps controversially denounces Keynesianism as inappropriate. European states can’t rely on inflation to reduce their debts, fiscal austerity is the only course available to them, but Americans may be deluding themselves that they will be able to impose an ‘inflation tax’ on investors in …

Read more…

Galbraith and Schiff go head to head

Interesting head-to-head, reprising John Maynard Keynes and Fredrick Hayek, between James Galbraith and Peter Schiff on CNBC – Galbraith and Schiff seem to regard the straight-jack of the Euro as equivalent to the old gold standard, typically Galbraith views this as something akin to Keynes’ barbourous relic. Greece’s inability to print money is a problem, while Schiff sees this as essentially a good thing that forces countries and citizens to live within their means. What’s most interesting however, is that …

Read more…