Readers Question: Could you please help me understand why high debt as a big percentage of GDP is bad, or at what point does it becomes bad? Japan is at something like 194%, and the UK at 500% (counting all debts and liabilities). Both countries are still waking up every day and going about business …
Readers Question: Why can’t a debt-crippled and deficit-induced state, go on with its most normal economic activities (by borrowing the needed money to make sure that no or at the most, unproductive spendings are curbed, no tax rates up, and no austerity measures) in a bid to emerge out of debt & deficit potholes sooner …
Readers Question: Why, on the one hand, do commentators talk about organisations and consumers paying off debt and not having money to spend. And on the other hand, Corporations sitting on large piles of cash? In the boom years 1995-2007, UK economic growth was led by consumer spending and a rise in borrowing. The saving …
A look at why the value of the Euro is relatively strong despite the serious economic problems that the Eurozone faces. Readers Question: We keep getting told we face an imminent crisis. The Euro will fail, recession looms yet the stock markets soar after a sticking plaster is attached and the Euro remains high on …
Readers Question: Is large government spending bad for economic growth? to what extent does empirical evidence support this assertion? How Government Spending Might Lead to Lower Economic Growth Higher spending leads to higher taxes. Higher income taxes may discourage people from working. High corporation tax might discourage firms from setting up in that country. (e.g. …
Three questions on quantitative easing, inflation and why inflation in the UK is high despite falling real incomes and lower consumer spending. Readers Question: Isn’t the government (of UK) already printing lots of money? The Bank of England have electronically created money and used this to buy government bonds from financial institutions. The Bank created …
Readers Question: I understand that inflation can cut the value of debt for countries and companies, because higher prices mean more revenue for the same output therefore additional money to pay of debt. However, does this apply to personal debt? i.e. unless my wages are rising with inflation I have no extra revenue and therefore …
Readers Question: I have been interested in the US economy in the last few months, and with current news of their $14 trillion debt problem heating up, I’m wondering could the demand for dollars go down, if they were possible to have a similar or close problems of debt issues like Greece, and if the …