The two don\’t go all that well together.
Nationwide’s house-price data saw a monthly drop of 0.9 per cent in August, its sharpest fall since February. The news prompted a sell-off in sterling, which plumbed a three-week low against the euro.
So that\’s the FT. In response Ritchie tells us that there must be lots of government spending to expand the economy and:
It has to be import substituting to protect the pound.
A falling exchange rate is in and of itself expansionary of the domestic economy. It promotes import substitution and promotes exports, both of which are expansionary.
So, why on earth would we want to stop the decline of the value of the pound, exactly that thing which produces domestic expansion, in order to promote domestic expansion?
Further, why, when the pound is falling and thus expanding the domestic economy, is this proof that we must go and do something to expand the domestic economy?
Some time ago Ritchie revealed that during his first term on his economics and accounting course at university he decided to ignore all of the economics because it was obviously rubbish.
Shows, don\’t it?