Welcome to the new version of European Tribune. It's just a new layout, so everything should work as before - please report bugs here.
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:


Top Diaries

Creeping Despotism Log #1

by THE Twank - Feb 13

Austria: No new elections

by generic - Jan 30

The Nemesis

by Luis de Sousa - Feb 3

My Brick

by Drew J Jones - Jan 30

Occasional Series