Archive for Macroeconomy

What is going on?

Looking at the status of the G20 economies, one might say nothing works. Keynesianism taken extreme has led to negative interest rates, moderate unemployment and no growth. Neo-liberalism generated uncontrolled banks, opinionated leadership and polarization of welfare. Trickle down economics do not work at all, especially if we look at the African or the Latam economics. Even the Chinese market-oriented communism is crumbling here and there. So now what?

New Deal Means A Sort of Old Liberal Keynesianism

Yesterday I noticed an interesting trend on the financial investments blogs – many started to talk recently about a New Deal. Which is normal, don’t get me wrong – with stagflation and investments decimated in the US, with the BRIC markets trailing behind expectations and a sluggish Europe, things look hardly “rainbowy” for the global asset managers.
Which of course gets the economic policy makers and thinkers worried. Especially in the US, the world’s powerhouse in economics 101. No wonder that famous and serious bloggers, such as Rortybomb, turned their attention to that. After all, what’s easier than taking an old wheel, polishing it and using it to restart a virtuous economic cycle?
My short answer is – everything. The neo-liberal thinking pushed the US economy in this prolonged recession – by allowing the US government to throw billions of dollars into several sector’s arms which used them sub-optimally. Of course, all those blogs are against this policy. Or pro this policy with changes (big or small).
Then, what’s the problem? Why do I argue for a new paradigm?
It is very simple. It is called “behavioral finance”. And NLP. 2 in 1, crash course my friends:
1. New Deal is an old paradigm Read more