Hmmmm….

So, China has been able to provide huge fiscal stimulus while the US has not. Partly because the Chinese Government has a huge banking industry which it controls.

The sad truth is that in spite of our more developed system of governance, the rule of law, and a much more developed economy, the US government has not been all that responsive to the most urgent needs of our national economy in a time of its greatest challenge since the great depression. In fact it is less responsive than the government of a middle-income country run by a Communist party. That ought to give American pundits and social scientists something to think about.

Yes, I suppose we ought to think about that.

Is the ability to provide a large fiscal stimulus worth all the rest of it?

Naah.

OK, next question?

2 thoughts on “Hmmmm….”

  1. The sad truth is that in spite of our more developed system of governance, the rule of law, and a much more developed economy, the US government has not been able to make the trains run on time.

  2. Is the ability to provide a large fiscal stimulus worth all the rest of it?

    I disagree with the very idea that the government should provide a stimulus. I don’t trust the government to do sensible things with the money and I don’t trust the electorate to even want the government to do sensible things. This applies whether the stimulus involves spending more or taxing less. The result is malinvestment and waste, ever higher public debts and further corruption of our political system.

    So, China has been able to provide huge fiscal stimulus while the US has not.

    What about the 2 x $700 billion+ packages from Bush and Obama?

    Also, what is the supposed key benefit in China?

    The state controls most of the banking system, and has used this control to double the amount of bank lending in the first half of this year

    Suggests the government forced banks to lend more, and/or lend at lower rates, than they would otherwise have wanted to. I’m am struggling to understand how this is a good solution to a financial crisis caused by banks lending too much at too low a rate.

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