Tuesday, 10 December 2013

Opinion - silly season

Recently we have seen a theory that monetary injections are deflationary because you need lower inflation in order for people to be willing to hold larger cash balances. Little did we know that inflation would fall!

Then we have the chancellor informing us that a huge rise in the minimum wage, hard on the heels of a previous increase, will actually create new jobs. And yet I don’t see many liberal economists accusing him of “voodoo economics.” But that term’s passé, as even liberals now claim that deficits pay for themselves in terms of economic growth.

Apparently if the Portuguese do not do something quickly they might end up looking like Germany, a country with 5.2% unemployment where the top 10% earn a scandalous 31% of the income. I would guess the top 10% of my earning years while I was still working have produced about 31% of my lifetime income, which means that Germany is as unequal as a country containing 80 million people, all at different stages of their life. I guess liberals have finally realised that they have no answers to high unemployment, so they will focus instead on “inequality.”

And then there is the ECB, assuring folks not to worry, they have a 2% inflation target and intend to meet that target [despite the fact that they are falling ever further behind]. Please take your time before “reflecting” on solutions; there is no hurry.  It is not as though the Euro zone has been in recession for 6 years.

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