Category Archives: Macroeconomics

3 Blogs in 3 Minutes: Greg Mankiw’s Blog!

Who? -“Hey it’s that guy from the book!” is usually the first reaction by economics majors upon hearing the name Mankiw. Everyone else will simply say “Who?” And thats where this category steps in. Besides being “that guy from the book” Greg Mankiw is also an American macroeconomist, professor at Harvard University and the chairman of the Council of Economic Advisors during the most recent Bush administration. He is one of the most influential economists next to the likes of Paul Krugman. That’s not bad at all for “that guy from the book”, now is it?

What? -On his blog Mankiw talks about, of course, the economy. But it is not only financial crisis this, bail-out that (the old game that we never get tired of) he adresses also various subjects that we might not find in every day news like the disappearing money multiplier for instance. Other than that he wants you the reader to understand what he is writing about, therefore he takes time to explain different topics a bit more thoroughly than other macroeconomic blogs do. With all it’s frequent updates, this site is a “must bookmark” for everyone who is interested in the economy beyond rants about bankers and managers (the other old game that which we never get tired of).

My personal upshot! -This blog is why I love economics, it is passionate, sometimes funny, always witty and mostly challenging! Read this blog and you will definitely learn a little bit more about life and maybe, just maybe be able to impress and subsequently pick up hot girl at a bar with your new found knowledge. Especially if she is a hooker, because hookers are all about money – and in the end, so is the economy!

Greg Mankiw’s Blog

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German ridicule for UK policies

I found this article on the BBC website.

 

 

‘Debt generation’

Criticising the UK government’s decision to cut VAT from 17.5% to 15%, Mr Steinbruck questioned how effective this will be.

“Are you really going to buy a DVD player because it now costs £39.10 instead of £39.90?” he said.

“All this will do is raise Britain’s debt to a level that will take a whole generation to work off.”

Saying the UK government was now “tossing around billions”, Mr Steinbruck questioned why Britain was now closely following the high public spending model put forward by 20th Century economist John Maynard Keynes.

“The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking,” he said.

“When I ask about the origins of the [financial] crisis, economists I respect tell me it is the credit-financed growth of recent years and decades.

“Isn’t this the same mistake everyone is suddenly making again, under all the public pressure?”

 

I think Mr. Steinbrück is making  some very good points here. First of all the Brits departure from their lassez faire, deregulating approach (that I generally approve of) to a heavy state intervention (that I heavily disapprove of) is ridiculous.  Secondly this kind of deficit spending is quite comparable to what happened in Britain over the last few years: You got one credit card in order to pay off the momentary debt, whereas you don’t realize that by doing so you accumulate an even bigger amount of debt that you have to pay off later. This principle works of course until there is no more credit card company willing to hand out new debt to you.

Britain didn’t really use its period of solid growth to re balance their budget – admittedly it is quite hard to get in balance if all your growth stems from encumberance in the first place.

My two cents : I am just a small timer in the big economist game, but I know exactly what is going to happen because I’ve been there, done that: You are partying and drinking like a sailor on shore leave and feel the effects of your excessive alcohol consumption the next morning. Because that nasty hangover stings like a bitch you have another drink, since more alcohol will ease the pain. However you are in for a surprise the same night, when you realize that the hangover has come back and this time it brought friends! We’re in for some happy-go-lucky times.

You see what I am getting at? Tossing around big bucks right now will just strain the coming generation (in other words: us!) later.

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Filed under Economics, Macroeconomics