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…Canada has surprisingly often been the place where the future happens
first – and it’s happening again. Last Monday, Canadian voters swept the ruling Conservatives out of power, delivering a stunning victory to the center-left Liberals [led by Justin Trudeau,]…in a clear rejection of the deficit-obsessed austerity orthodoxy that has dominated political discourse across the Western world. The Liberals ran on a frankly, openly Keynesian vision, and won big…
The commentary above & below consists of edited excerpts from an article* by Paul Krugman as posted in The New York Times.
[Part of]…the Liberal Party of Canada platform said:
“Interest rates are at historic lows, our current infrastructure is aging rapidly, and our economy is stuck in neutral. Now is the time to invest.”…
[That’s] what sensible economists (even at places like the International Monetary Fund) have been saying all along and the Liberals weren’t punished politically — on the contrary, they won a stunning victory…Does…[the Liberal economic platform] sound reasonable? It should, because it is.
- We’re living in a world awash with savings that the private sector doesn’t want to invest, and is eager to lend to governments at very low interest rates.
- It’s obviously a good idea to borrow at those low, low rates, putting those excess savings, not to mention the workers unemployed due to weak demand, to use building things that will improve our future. Strange to say, however, that hasn’t been happening… continue
Let’s hope that Mr. Trudeau stays with the program. He has an opportunity to show the world what truly responsible fiscal policy looks like.
[For more of Krugman’s views on unconstrained spending read THIS article. For an independent analysis of the TRUE situation in Canada read THIS article from the Globe and Mail which says “the ongoing global slide in the price of oil and many other commodity prices is a very ominous sign for the short- and medium-term future of the Canadian economy… neither the government nor the Bank of Canada has the slightest ability to raise the price of a barrel of oil, a ton of copper or a bushel of corn on world markets. We might be heading into a dark, stormy and long night.”]
The above post has been edited by the editorial team of munKNEE.com (Your Key to Making Money!) and the FREE Market Intelligence Report newsletter (see sample here) for the sake of clarity ([ ]) and brevity (…) to provide a fast and easy read.
*http://www.nytimes.com/2015/10/23/opinion/keynes-comes-to-canada.html (© 2015 The New York Times Company)
Balderdash says this reader!
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Balderdash says this reader!
The Liberals are not Center Left. They, the NDP, Bloc and Greens are all left of center. They are all Social Democrats of the western and northern European kind. Only the Conservatives are Center Left, because they certainly aren’t Right or even Center Right.
Paul Krugman, King of Keynesian economics, Nobel prizewinner in economics, and advocate for unlimited government spending on credit, for the purpose of creating societal wealth and higher living standards, lauds Canadian voters for endorsing Wonder Boy as Prime Minister this past Monday. Oh I forgot, it was a landslide majority win with 39.5 percent of the popular vote, but I digress.
In other words, Krugman believes wealth is created by spending money which doesn’t exist. Government spends and issues bonds which it promises to repay the bond holders at some future point. The more non-existent money that is spent the greater the degree of wealth. Isn’t it wonderful? It is automatic and without any negative consequence, especially because of current low interest rates.
It’s all positive. When governments spend more and more and ever more non- existent dollars, the wealth and living standards get ever greater. Of course there are no negative consequences with prevailing interest rates so low.
If it were only that simple and predictable.
Is Krugman saying that the yield/interest rate on borrowed money/bonds does not affect the face value of that bond in the marketplace when interest rates rise or fall? Since interest rates are currently at all time lows, rising interest rates in the future is the only direction those rates can go.
When interest rates increase, what happens to the price of bonds in the marketplace and what happens to those pension funds and private individuals which own them? They take a hellish loss or go broke. True, but what the hell, that is a future problem on someone else’s watch and for our kids to deal with.
Who cares anyway?