Nearly, nearly

Lords Desai and Skideslky offer an interesting compromise.

Whether we accept Hayek\’s version of the cause of the recession or Keynes\’, we can still agree upon a solution:

Second, a recovery loan that will mop up money in banks, firms and households for which there is no present use – and use it for infrastructure projects: the high-speed rail link, road building and repairs, and house construction by local authorities; or projects to do with carbon emissions – insulating houses, and solar panels. A company could be set up to raise money for these projects that would not add to the deficit.


They seem to have forgotten another part of Hayek\’s thought. That the centre does not, cannot possibly, know what to spend the money on.

So, not all that convinced myself.

6 thoughts on “Nearly, nearly”

  1. Given how long it takes to get planning permission for something like high speed rail we should be just about ready to go for the next recession or more likely the one after. Unless Gideon or, God forbid, we have a Labour Chancellor who have abolished boom and bust.

  2. I thought that all money was in use in some way or other. Money in banks is being invested elsewhere. Firms have profits to pay to their shareholders. Households have money to pay for what they need to survive or emergency repairs.

    The only money not being used is cash under the matress. Are they going to go round everyone’s houses and look under the matresses?

  3. So, we loan our money to the government to “invest” … because we can’t just buy gilts to the same end? Or maybe we could indeed lend our money to an institution who then lends it out to other people and businesses… hmm, I wonder if anyone’s thought of that before?

    And BTW, I can think of a present use for all of the money in my bank account. And then some.

  4. It’s not just that the centre does not know what to spend the money on, they also do not know _when_ to spend the money.

    The only money not being used is cash under the matress.

    There seems to be a general view that all money must be in use at all times. Why should this be desirable? Going with the idea of markets being distributed computers giving everyone feedback on what they are doing, then money “under the mattress” says that even the best opportunity for spending or investing that money today is not attractive enough to the owner of the money, and that the market needs to do better tomorrow.

  5. If the Lords cannot appreciate that we know best how to spend our own money thank you very much they surely can appreciate the enormous obstacle SimonF outlines – that of planning permission.

    In this financial crunch it would appear everyone is having to ‘give’ something except for the Government. We would be better off with lower taxes and lower spending. Leave more money in the pockets of productive people and leave us alone more.

Leave a Reply

Your email address will not be published. Required fields are marked *