Comments on: I don’t like this macro stuff

By: Matthew

Matthew — Sun, 19 Jul 2009 16:51:31 +0000

I think I agree with current. It’s hard to see a huge difference in outcome of a 20% devaluation and a 20% subsidy to exports funded by a tax on imports.

That it’s the market rate doesn’t, I would suggest, mean that the government – which after all is a monopoly supplier of the good in question – plays no role in that rate.

By: john cramer

john cramer — Thu, 16 Jul 2009 22:58:06 +0000

Britain came out of it in 1934?
I remember uncles and the like that said poverty was around till the war saved them
People has trouble buying boots for lack of cash

By: Current

Current — Thu, 16 Jul 2009 15:39:17 +0000

QE may be about “avoiding deflation”, though I am skeptical.

My point is though that importers are harmed and exporters benefit by the devaluation of currency. So, it is a form of back-door mercantilism. This has been known since the 19th century.

By: john b

john b — Thu, 16 Jul 2009 12:36:26 +0000

1) there’s no ‘h’ in mercantilism.

2) QE is about avoiding deflation; it’s not about deliberately rigging the system to favour exporters and disadvantage importers.

By: Current

Current — Wed, 15 Jul 2009 17:43:15 +0000

John B: “it’s not mercantilism: we’re letting the pound fall to the rate that the markets believe is appropriate”

The government is using quantitive easing, it is not “letting the pound fall” it is causing it to do so by printing more pounds.

Whether you’re against it or for it it is certainly merchantilism.

By: john b

john b — Wed, 15 Jul 2009 13:09:51 +0000

“I believe that Money represents the time exchanged in the economy.”

AC1′s a Marxist. Blimey, didn’t expect that.

@ Current – no, it’s not mercantilism: we’re letting the pound fall to the rate that the markets believe is appropriate. That’s equivalent to simply “not having export taxes or subsidies”, which isn’t a mercantilist policy at all. If the government were deliberately devaluing the pound, which they aren’t (it’d be kind of the opposite of what Lamont did in 1992, I suppose) then it’d be a different story.

By: Current

Current — Wed, 15 Jul 2009 12:40:44 +0000

The theory Tim is proposing is merchantilism by means of money.

If Tim supports merchantilism in the instance why doesn’t he support it generally?

By: AntiCitizenOne

AntiCitizenOne — Wed, 15 Jul 2009 11:46:34 +0000

I believe that Money represents the time exchanged in the economy.

When you have a gold standard it works in that the money supply is harder to expand (although new technology has “fixed” that) i.e. it’s harder for the state to inflate.

However in deflation, the volume of gold stays the same even if the economy isn’t exchanging that much time, and thus doesn’t need it.

This IMHO is the problem for “god=real money” people.

By: Kit

Kit — Wed, 15 Jul 2009 09:42:02 +0000

This theory holds true so long and you ignore the 1920s. Britain didn’t enjoy the boom/bubble that occurred in the US and so the bust was far less severe. Also, during the 1930s fiscal and industrial policy was not as bonkers as in the US which prolonged the depression there.

By: Peter Briffa

Peter Briffa — Wed, 15 Jul 2009 09:06:17 +0000

David not Danny. Unless you is being satirical.

Tim adds: Yes, Ooops!

By: Kay Tie

Kay Tie — Wed, 15 Jul 2009 09:05:51 +0000

I think you’ll find our friend Ambrose EP at the Telegraph has been banging on about this since before the crisis. And predicting an almighty train wreck in the EU around the end of this year.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5811343/Europe-digs-its-economic-grave-while-the-ECB-answers-to-no-one.html

By: Cleanthes

Cleanthes — Wed, 15 Jul 2009 08:49:12 +0000

So we’ll want to watch the Eurozone like a hawk – the real question for us all is what would have happened if we were in the Euro when all this happened.