Isaac Chan’s Reviews > Money and Government: Unsettled Issues in Macroeconomics > Status Update

Note 2/2:
... Did Keynes (and I mean the Keynes in TGT, not the ‘Monetary Reform’ or the ‘Treatise of Money’ Keynes) even advocate the relinquishing of central bank independence? Skidelsky is a radical.

Note 1/2:
What in the actual fuck? Skidelsky advocates a relinquishing of central bank independent control of interest rates to the government. Has decades (or even centuries) of economic history not already taught us that political pressure will just jack rates down to oblivion? ...

Note 2/2:
... although underlying US productivity remains shit.

Furthermore, this gets me thinking - Hayekians think that a declining price level is desirable because it is natural under productivity growth. But my point is that you can't observe underlying productivity, and what if the stable/declining price level is caused by cheap imports? That would be a misguided price-level policy, then.

Note 1/2:
A good, practical example of the perhaps slightly abstract concept of China's current account surplus causing the US's capital surplus, which pushed down r* and thus allowed developed market central banks to run expansionary monetary policy - the massive entry of cheap Chinese goods flooding the world market, which subdues inflation. I can imagine a story of cheap Chinese goods keeping down inflation ...

Note 2/2:
... productivity. And what makes Skidelsky so certain that such schemes invariably raise productivity? He certainly hasn't cited any research so far that suggests so.

Who knew that criticising is easy but finding solutions difficult?

Note 1/2:
Lmao, it is undeniably hilarious that Skidelsky is quick to criticise orthodoxy, but when it's his time to propose a solution, i.e. his Public Investment Banks idea (intellectually justified by the crackpot Mariana Mazzucato's key ideas), he falls back to Laffer-style, supply-side logic by claiming that although state investment does not directly 'pay for themselves', they do so 'indirectly' by raising ...

Note 3/3:
... capital flowing from a capital-scarce country to a capital-rich one?

Does China really have no social safety net tho? I wanted to find out, and ig that's 1 of my vague motivations for visiting China, but guess where that plan went? It's fine.

Note 2/3:
... next page, he quotes Rajan who explains American overconsumption by literally 'growing inequality and (a) thin social safety net' which creates political pressure to encourage easy credit to keep the economy going. Wtf man? Fantastic example of how you can just pick and choose whatever story you want, and run with it. But anyway, the key paradox is clear - how on earth is ...

Note 1/3:
The argument that Skidelsky is making - that China's savings glut is explained by high inequality and the absence of a social safety net (which he quotes Pettis on), which forces the Chinese to intensively save whatever excess wealth they have, and even invest them in strong foreign asset markets (i.e. the US here), is novel and got me seriously pondering ... BUT the only problem is that, right on the ...

Note 2/2:

Furthermore, Skidelsky’s commentary also made me concede my own naivety, that most of the capital liberalization will just be used by investors for global speculative purposes (say, the carry trade), rather than productive investment in the real economy lol.