Brit homofag makes interesting macroeconomic connection

9 posts

President Camacho

So I'm reading Nic's thread on this idiot Brit who's using his "face blindness" as a chip for admission into the hallowed ranks of the disabled, and I followed the link to the "Dragon's Den" (wtf?) section of the Guardian. Then I saw a story there that was promoting one of Britain's "gay presenters" and clicked on it to read about this new assramming talent.

I don't know who this Evan Davis guy is or why the Gaurdian broke with standards and decided to print something intelligent, but the guy made an interesting connection between savings, manufacturing, and exports. Here's what he said in the interview that really had nothing to do with the title:

Full article:


The English Boarding School School Of Economics-- an idea whose time has come?

Bob Dylan Roof
This is an interesting point, but the switch to exports is only in the national interest if it generates wealth more efficiently than a profligate consumer base at home.

And can't the other two effects of liquid savings he describes be simulated by artificial increases in the money supply?
True. But wealth doesn't come from exporting itself. It comes from the actual savings which drive capital investment. I agree with Roland:
Yes, this is what Austrian Economics is all about.

Foreign investment and importing will generally have the same effect on exchange rates. There might be a difference in the two since the nature of investment is opposite of that of consumption. In either case, it's "We pay you in American dollars, you pay us back in Yen."

Yes. That's what Keynesians call "priming the pump". Print money -> more investment + lower exchange rates = more exporting and employment.

The problem with this is you get Cantillon effects and the business cycle, along with capital consumption and a continuing increase in economic dis-coordination. See America for the last 40 years.
President Camacho
But a "profligate consumer base"-- to the point that ordinary people are spending more than they are saving--- is never in the national interest. It "generates wealth" for the elites alone and increases income disparity.

There's the problem. Print money -> more investment + lower exchange rates + more spending/less saving = more exporting and employment.

Print money to drive exports in the short term and induce consumer spending, or don't print money and hurt short-term exports and consumer spending.

Bob Dylan Roof

It seems that there isn't an Austrian solution to the liquidity trap because it is essentially a national problem. A public, representative government can never wait for the market to correct itself and purge malinvestment because the increase in the demand for money - the savings rate - translates into a sluggish economy, and a sluggish economy translates into voter discontent, which ultimately opens the door for opportunistic politicians.

In the short term, yes.
Bob Dylan Roof

Yes, and the term limits prescribed by modern government ensure that states are highly susceptible to short-term economic discontent among the electorate. I should have said that there is no Austrian national or state-based solution to the liquidity trap problem.


Lol at the Dragons Den confusion.