What every ten year old should learn at school

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  • wunsacon

    Please paste inline, as I refuse to visit Shitter.

    • kimyo

      ‘you will not use negative rates as a substitute for fiscal policy’ (bart simpson in front of the blackboard,)

      there aren’t many i’d unblock twitter for, but steve keen qualifies. unfortunately, this time i’m not quite sure that my life was enriched.

      it would be nice if wblog site policy prohibited posts without any text.

      • wunsacon

        Thank you, kimyo.

        >> there aren’t many i’d unblock twitter for, but steve keen qualifies.

        That’s understandable. And I like Steve Keen, too.

        I just don’t want to encourage anyone to post their ideas in that medium, especially with all the extra metadata on it that can be so easily hoovered up somewhere that we can only speculate about.

  • The idea that the government should go further into debt is crazy. Negative interest rates are the sane thing to do. Negative interest rates are caused by capital buildup, wealth inequality, more efficient money and capital markets. This pushed the equilibrium interest rate lower and lower.

    Throughout history returns on investments have mostly been higher than economic growth. This is unsustainable when most capital income is reinvested because this means that at some point capital income will grow at the expense of wages.

    The growth of interest income can become even more problematic when the ownership of capital is not evenly distributed. Most capital is in the hands of a relatively small group of wealthy people that tend to reinvest their capital income instead of spending it.

    As a result other people are not able to buy from their income all the goods and services that this capital produces. This helped to reduce the returns on investments so that interest rates could go down.

    Banking provided convenience by making it possible to call in loans at short notice. Banking also reduced risk by making loans to many different people and corporations. Both developments helped to lower interest rates.

    Central banks also helped to reduce risk and lower interest rates. Most loans carry interest, but the money to pay the interest from doesn’t exist when the loan is made. This money has to be loaned into existence. Central banks are a backstop when this scheme runs into trouble.

    The deregulation of the financial system further increased convenience and reduced risk. This helped to lower interest rates even further. But lower interest rates and reduced risk also allowed financial institutions to take on more debt and risk.

  • jadan

    How can you tell when your private central banking system has hit the iceberg? It starts talking about “negative interest rates”. This is like the doctor telling you he’s going to take one of your kidneys because a friend of his needs one AND YOU’VE GOT MORE THAN YOU ACTUALLY NEED. The solution? Get rid of the corrupt and incompetent central banking system! It never worked worth a damn and now it’s into its cannibal phase!

  • Robert Colescott

    Ah yes, but 10 year olds don’t get to make monetary policy. Only Ivy League and University of Chicago Econ PhDs, who know much better of course, get to do that.