Welcome to the new version of European Tribune. It's just a new layout, so everything should work as before - please report bugs here.
Display:
If your economy is growing in nominal terms it will need more high-powered money, unless you want your financial system to become brittle from increasing leverage.

There is precisely one way to inject high-powered money into the economy: Sovereign deficits. So on average over the long run, the sovereign should run deficits.

The fact that you should sometimes run surpluses during the boom part of the business cycle does not change the fact that the sovereign has to be in the red on a cycle-averaged basis, any more than a cold summer disproves global warming.

If you're talking short-run, then attempting to run surpluses is counterindicated at the moment. If you're talking long-run, then surpluses are wrong-headed, full stop.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Aug 14th, 2011 at 02:56:23 PM EST
[ Parent ]

Others have rated this comment as follows:

Display:

Top Diaries

I'm done with the EU

by tyronen - Jul 13
212 comments

The Greece Blame Game

by Frank Schnittger - Jul 20
28 comments

The democractic insolvency

by rz - Jul 16
23 comments

Scape goating Greece

by Frank Schnittger - Jul 13
25 comments

In which I defend Wolfgang Schäuble

by rz - Jul 15
24 comments

Occasional Series