Central bankers, politicians and an economic earthquake

realitykeeper

The policies of Quantitative easing and low interest rates being pursued by the ECB are supposed to happen alongside structural reforms throughout the economies of the EU. Structural reforms involve cutting waste and inefficiencies, reigning in budget deficits and reducing debt. In other words: Structural reforms = Cutbacks.

Cutbacks are of course politically unpopular so if politicians have an alternative to structural reforms they go with the alternative. As it happens, politicians do have an alternative because quantitative easing and low interest rates pump so much money into the economy there is no need for cutbacks.

Unfortunately, (as already stated) serious structural reforms are supposed to happen in conjunction with quantitative easing and low interest rates if these stimulus measures are ever to work. Serious structural reforms are not happening which is why QE & low interest rates will end in disaster.

In the video link below, if you skip ahead to 55:15 a representative of the Bank of International settlements speaks. In my opinion he is the only one on the panel worth listening to and he warns of the danger of a "snap back" in the economy. The term "snap back" could also perhaps be used in seismology to describe an earthquake so the term accurately describes the risk to the global economy.

https://www.youtube.com/watch?v=nvP0m6Xdo38

Jawgap

realitykeeper wrote: »

The policies of Quantitative easing and low interest rates being pursued by the ECB are supposed to happen alongside structural reforms throughout the economies of the EU. Structural reforms involve cutting waste and inefficiencies, reigning in budget deficits and reducing debt. In other words: Structural reforms = Cutbacks.

Cutbacks are of course politically unpopular so if politicians have an alternative to structural reforms they go with the alternative. As it happens, politicians do have an alternative because quantitative easing and low interest rates pump so much money into the economy there is no need for cutbacks.

Unfortunately, (as already stated) serious structural reforms are supposed to happen in conjunction with quantitative easing and low interest rates if these stimulus measures are ever to work. Serious structural reforms are not happening which is why QE & low interest rates will end in disaster.

In the video link below, if you skip ahead to 55:15 a representative of the Bank of International settlements speaks. In my opinion he is the only one on the panel worth listening to and he warns of the danger of a "snap back" in the economy. The term "snap back" could also perhaps be used in seismology to describe an earthquake so the term accurately describes the risk to the global economy.

https://www.youtube.com/watch?v=nvP0m6Xdo38

Cutting waste and removing inefficiencies is not 'structural reform' - likewise its not cutbacks - it's called 'good operational and budgetary management.'

'Structural reform' - at its simplest - is about changes to the way the government works, for example modifying rules, changing laws etc - IFAC was a structural reform, as was the Legal Services Regulation Act.

You really need to read up on these things and issues like 'selection bias.'

To quote Chris Johns from the IT....."Monetary theory – and practice – is not simple. It is often counterintuitive. Most of the instant experts need to reflect on this. "

BTW, you've previously timelined these apocalyptic posts but I notice no such mention time of when you think this might happen. When do you think it will happen?

realitykeeper

Jawgap wrote: »

Cutting waste and removing inefficiencies is not 'structural reform' - likewise its not cutbacks - it's called 'good operational and budgetary management.'

To quote Chris Johns from the IT....."Monetary theory – and practice – is not simple. It is often counterintuitive. Most of the instant experts need to reflect on this. "

BTW, you've previously timelined these apocalyptic posts but I notice no such mention time of when you think this might happen. When do you think it will happen?

If structural reforms are about "budgetary management" then it involves budgeting. When normal people budget, it usually involves "cutting back" in order to live within ones means. That is what a budget is supposed to be, it is not supposed to be about spending more when the country is running a deficit and supporting a ridiculous national debt.

I would rather take the word of a representative of the Bank of International Settlements over that of a national/continental central banker or Keynesian economist any day.

I expect things to turn ugly for the world economy by the end of next year.

Suryavarman

realitykeeper wrote: »

If structural reforms are about "budgetary management" then it involves budgeting. When normal people budget, it usually involves "cutting back" in order to live within ones means. That is what a budget is supposed to be, it is not supposed to be about spending more when the country is running a deficit and supporting a ridiculous national debt.

Structural reforms aren't about budgetary management. The most common form of structural reform discussed is the regulation of labour markets. Another form of structural reform would be reforming Ireland's planning system.

I would rather take the word of a representative of the Bank of International Settlements over that of a national/continental central banker or Keynesian economist any day.

I expect things to turn ugly for the world economy by the end of next year.

There's no such thing as Keynesian economists these days. It isn't the 1970s anymore.

Jawgap

realitykeeper wrote: »

If structural reforms are about "budgetary management" then it involves budgeting. When normal people budget, it usually involves "cutting back" in order to live within ones means. That is what a budget is supposed to be, it is not supposed to be about spending more when the country is running a deficit and supporting a ridiculous national debt.

I would rather take the word of a representative of the Bank of International Settlements over that of a national/continental central banker or Keynesian economist any day.

I expect things to turn ugly for the world economy by the end of next year.

Again, you mis-understand - a 'budgetary reform' would be moving from one basis for calculating/managing/governing the budget to another wholly different set of methodologies - IFAC was a budgetary reform, but it was only partial as we haven't gone the whole hog on improving budgetary governance in respect of the integrity and quality of budgetary forecasts, fiscal plans and budgetary implementation.

Plus, I know it's 'homely' to equate fiscal budgeting to household or business budgeting but very different principles are at play. Such comparisons are, to a degree false, but they help simplify the message so people can understand it.

......and Keynes wasn't dogmatically against deficit spending - his objections to it were limited to "collecting taxes less than the current non-capital expenditure of the state as a means of stimulating consumption" (Collected Writings Vol 27) - and he certainly had no problems with with government borrowing to finance capital expenditure to stimulate investment.

Finally, debt is only 'ridiculous' if it cannot be sustainably serviced - any evidence we can't or are not servicing our debt pile?

pauldavis123

Jawgap wrote: »

BTW, you've previously timelined these apocalyptic posts but I notice no such mention time of when you think this might happen. When do you think it will happen?

2019. It's going to happen in 2019.

realitykeeper

Suryavarman wrote: »

There's no such thing as Keynesian economists these days.

Are you serious? Where have you been the past 8 years?

realitykeeper

Jawgap wrote: »

Again, you mis-understand - a 'budgetary reform' would be moving from one basis for calculating/managing/governing the budget to another wholly different set of methodologies - IFAC was a budgetary reform, but it was only partial as we haven't gone the whole hog on improving budgetary governance in respect of the integrity and quality of budgetary forecasts, fiscal plans and budgetary implementation.

Plus, I know it's 'homely' to equate fiscal budgeting to household or business budgeting but very different principles are at play. Such comparisons are, to a degree false, but they help simplify the message so people can understand it.

......and Keynes wasn't dogmatically against deficit spending - his objections to it were limited to "collecting taxes less than the current non-capital expenditure of the state as a means of stimulating consumption" (Collected Writings Vol 27) - and he certainly had no problems with with government borrowing to finance capital expenditure to stimulate investment.

Finally, debt is only 'ridiculous' if it cannot be sustainably serviced - any evidence we can't or are not servicing our debt pile?

... and yet the BIS are warning the risks associated with long term low inflation should not be underestimated.

PopePalpatine

pauldavis123 wrote: »

2019. It's going to happen in 2019.

...in the Juche calendar, so only another 1919 years to go! :pac:

Suryavarman

realitykeeper wrote: »

Are you serious? Where have you been the past 8 years?

Where have you been the last 40 years?