Readers Question: If all Greeks native or from abroad (or any other country in debt) bought their own bonds would this make the debt much lower? No, it would not make the debt any lower. But, it would help to finance the government’s deficit. It would make it easier for the government to avoid a …
Readers Question: 1. I read somewhere that accommodative monetary policy (in other words, quantitative easing) does not automatically result in higher inflation. For higher inflation to occur, the output gap must be crossed. i.e. idle factories back in business, unemployment rates down, etc. However, I don’t think the hyperinflation in Zimbabwe was preceded by increasing …
Readers Question:… So, basically we have the FED using it’s money to liquidate the fund’s of other people, and those other people are lending, or a portion of them are lending, the fund’s that they now have because of the FED. Wouldn’t it make more sense for the FED to, instead of purchasing bonds so …
Is this the future of a world without oil? Readers Question: What would a world without oil look like? Oil is currently the most important commodity. It is vital to transport (air, sea, road and rail) and also the production of goods like tar and plastic. Without oil, society and the economy would look quite …
Readers Question: What would happen if the Euro collapses? The most likely scenario is that countries will leave one by one. A country would default on its debt and decide best option is to leave and create a new currency. The first country to leave would be Greece. Greece would be damaging, but if Greece …
Readers Question: I am much in favour of governments defaulting on what they owe to private financial institutions (as opposed to other governments). This would be in line with the ideas fuelling the current OCCUPY THE WALL STREET movement. I would very much like someone to comment if this is at all possible and practical. …
Readers Question: Also what are the negatives to the Robin Hood Tax that has been suggested and is it akin to the suggested European transaction tax? A ‘Robin Hood tax’ is a popular name for a Tobin tax that was proposed by Nobel laureate James Tobin. Initially, the idea was to place a small tax …
Readers Question: I am wondering why the 75 billion of quantitative easing that the Bank of England announced today to be “injected into the economy” isn’t spent on infrastructural projects? Why spend those funds on government bonds? This doesn’t seem to be the best way of using these funds. Many thanks. It’s a good question. …