EconomicsNotes

  The Economic Debate The 1970s in the West saw the emergence into policy of a debate which had been continuous but which was largely conducted amongst intellectuals and policymakers. This was the battle between the Keynesians who had defined the ‘post-war settlement’ and Monetarists who were focussed upon inflation. The consequences of this battle were to be quite serious, and pushed economics and political economy towards a kind of market-based, anti-inflation position which prevailed across the world with few exceptions by 1987-91. The basic disagreement was between those who believed that Aggregate Demand drove the economy, and that the worst problem in a real economy was unemployment, and those who believed that all policy eventually came down to how sound and trusted the money supply of a country was and could be. The former group argued that governments should spend against the economic cycle, that deficits were not a bad thing, and that the economy could be stimulated...

  The idea of a wage gap is somewhat simplistic. It is undeniable that there is a gap in nominal terms between those who are not formally skilled and those with salaried jobs who hold professional qualifications. The development of the ‘precariat’ is something which tends to run against this idea. Many of those who are formally skilled are highly leveraged, and it is estimated, have so little in savings, and so much in housing, educational, and personal debt, that they are between one and two pay-days away from bankruptcy. Often, those who are skilled live in high-cost areas and rent, rather than own property, whereas some of those who are unskilled live in public housing or their family property with a much lower set of outgoings per month. In addition, many of those classed as unskilled are young, and are living with parents or relatives who can accommodate them. It follows that a wage gap predicated upon technological change which pushes out those in service positions, or wh...

  Ultra-low interest policies have been a feature of global monetary management since 2008 in most countries (and were tried in Japan before that.) They exist in the context of the near-collapse of the global economy and of national and international banking, credit, and derivative markets in 2008, though they also reflect a perceived lack of inflation risk. The idea behind ultra-low interest rates, or negative real or nominal rates, was, firstly, to prevent a credit crunch. Credit crunches happen when banks have lent out a great deal of money and cannot fund a large volume of withdrawals. This causes banks to reduce refinancing and new lending, which puts individuals and businesses in a position where they cannot stay in the market and pay their bills and debts, thus creating a spiral of economic decline. In addition, banks might in such circumstances start asking for their loans and credit payments back early, worsening things still further. Many modern banks also are princip...