Having given the economic patient the stimulus medicine that the IMF prescribed, it seems that the IMF is now downgrading UK economic growth forecasts.
There's been lots of stimulus economics. Just not much growth to show for it.
Ever since the credit crunch first unfolded, Treasury ministers have responded with so-called monetary stimulus; low interest rates, handouts for banks and billions of pounds of funny money through QE.
Far from engineering growth, ministers are instead testing monetary stimulus to destruction - much the same way that successive Chancellors in the 1970s tested fiscal stimulus to destruction.
Politically, the key question is who is going to be sitting in the hot seat when, as happened in 1978/79, it eventually becomes clear the orthodox approach isn't working? Who'll get the blame once it becomes clear that print-and-pray monetary policy is a disaster?
Economically, the key question will be what does a post-Monetarist economic policy look like? Government, it seems, is no better at managing credit and money than it is at anything else. The big idea of the British left seems to be that we revert to pre-1976 Keynesianism. All this suggests to me that it is only a matter of time before Austrian school economics goes mainstream.blog comments powered by Disqus
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