tag:blogger.com,1999:blog-7707793736288462113.post7318634828388435281..comments2024-03-15T03:27:49.084-04:00Comments on Bubbles and Busts: The Economy Needs a Bubble!Anonymoushttp://www.blogger.com/profile/00720722626969395929noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-7707793736288462113.post-7507174373923507392012-05-29T22:16:46.057-04:002012-05-29T22:16:46.057-04:00That's a fair point. Borrowed money need not g...That's a fair point. Borrowed money need not go to financial asset investments or consumption. As you've pointed out, it seems that many public policies over the past few decades have attempted to push individuals towards using credit for consumption or financial assets. In my view, these policy decisions almost certainly played a role in the appearance that finance is more profitable than the productive sector (I'm not convinced it actually has been in the aggregate). <br /><br />If this is correct, the goal of policy going forward should be to reduce the reliance on credit versus money while realigning incentives toward the productive sector and away from finance. Reducing corporate tax loop hopes/expenditures and lowering the marginal rate may be one way to promote firms to re-invest rather than pay out higher salaries or bonuses.Anonymoushttps://www.blogger.com/profile/00720722626969395929noreply@blogger.comtag:blogger.com,1999:blog-7707793736288462113.post-6219920909224601722012-05-28T17:36:16.649-04:002012-05-28T17:36:16.649-04:00Interesting post. Something I never thought of bef...Interesting post. Something I never thought of before.<br /><br />Dunno about the Nick Rowe post, however. I always went with what Keynes said, that low interest rates are good for growth. Because, as you say, <b>"When growth outpaces interest rates, the environment is ripe for borrowing money to invest and consume."</b><br /><br />As far as "needing a bubble" ... <br />We've been getting those unsustainable financial bubbles since the 1980s, because finance is more profitable than the productive sector. There was lots of borrowing in the 1950s and '60s, but we didn't get bubbles then, because the productive sector was more profitable than finance. We got output.<br /><br />Something like that.The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.com