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Pragmatic Capitalism

Capital for Living a More Practical Life

Paul Krugman is Right (For the Wrong Reasons)

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> In fact, it actually looks like more government debt puts downward pressure on interest rates. But as
> they say, we have to be careful confusing correlation and causation.

If that is so, then the government is definitely crowding out the private sector in terms of resources, just not the money supply.

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Posted by MachineGhost
Posted on 01/13/2017 7:23 PM
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I’d argue that the govt ALWAYS competes with the private sector for REAL resources. There’s only so much oil in the world so when the govt starts buying it up and hoarding it they are driving up prices. That’s not how banking works though so the traditional “crowding out” argument is wrong.

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Cullen Roche Posted by Cullen Roche
Answered on 01/15/2017 2:56 PM
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    So then, we can conclude that when the government crowds out real resources and also then blows those coerced resources on little to no productivity (here’s look at you Venezuela!), we get inflation? And if the private economy is also not outcompeting that inferior government sector, we get stagflation?

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    Posted by MachineGhost
    Answered on 01/15/2017 9:29 PM
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