Quantitative Easing: Can it Be Unwound?

Malcolm Sawyer and Philip Arestis

The general response to the financial crisis of 2007 onwards by central banks included large cuts to the policy interest rate and then adoption of ‘quantitative easing’ alongside many other policies of bail-outs. The low interest rate regime aided the government’s budget position by enabling borrowing at low rates. But they did little to aid recovery as economies continued to dip into and out of recession. Central Banks started to engage in ‘quantitative easing’.

‘Quantitative easing’ has been an unorthodox piece of policy comprising of two elements: the ‘conventional unconventional’ measures: whereby central banks purchase financial assets, such as government securities or gilts, that boosts the stock of money in the form of M0; and ‘unconventional unconventional’ measures: in this way central banks buy high-quality, but illiquid corporate bonds and commercial paper. In this way the stock of money is expected to increase.

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Econ4: Statement on Building the New Economy

We are economists who think that the economy should serve people, the planet, and the future.

Some politicians and economists still cling to the old claims that bigger is better, greed is good, a fossil-fueled economy is inevitable, and inequality is efficient. A growing body of evidence has shown this model to be bankrupt.

Instead of prosperity, it is feeding ever-wider inequalities of wealth and power that erode our health and economic well-being.

Instead of full employment, it is generating monthly job growth that fails to match labor force growth.

Instead of a sustainable future for our children and grandchildren, it has brought us to the brink of an unprecedented environmental crisis, consistently overstating the costs of actions to protect our climate while understating their benefits.

Instead of a competitive and resilient economy, it has fostered the growth of too-big-to-fail banks and corporations whose political power threatens the integrity of our democracy itself.

We call for a new economy founded on the building blocks of a level playing field, true-cost pricing, resilience, and real democracy.

In addition to new and effective policies in the critical arenas of job creation, housing, health care and regulation, we call for support for 21st century alternatives to the centralized, unfair, and unsustainable economy of the 20th century.

If you’re an economist and would like to add your name to this statement, please send an email to Econ4 by clicking here (info@econ4.org).

Triple Crisis Welcomes Your Comments. Please Share Your Thoughts Below.


Tufts Institute to award annual economics prize to Angus Deaton & James K. Galbraith for work on poverty, inequality, and well-being

Tufts University just announced that it will award its annual economics prize to James K. Galbraith and Angus Deaton for their work on poverty, inequality, and well-being. See the announcement below, which also gives some background on the Leontief Prize for Advancing the Frontiers of Economic Thought. Galbraith and Deaton are certainly worthy additions to an illustrious list of past winners, including Triple Crisis blogger Robert Wade.

GDAE will award its 2014 Leontief Prize for Advancing the Frontiers of Economic Thought to Angus Deaton and James K. Galbraith. This year’s award, titled “Inequality and Well-Being in an Age of Instability,” recognizes the contributions that these researchers have made to the studies of poverty, inequality, and well-being. They have both played a critical role in bringing grounded empirical analysis to bear on topics in need of applied interdisciplinary research.

“For too long many economists have viewed rising inequality as an inevitable consequence of economic development,” says GDAE Co-director Neva Goodwin. “But recent economic upheavals call for a new approach to understanding the causes and consequences of inequality. Angus Deaton has demonstrated that inequality is about much more than income differences, focusing on how inequality affects the health and well-being of societies. James Galbraith has shown that inequality isn’t an outcome driven by factors outside of our control, but instead is often a direct result of the policy choices we make.”

The ceremony and lectures by the awardees will take place in the spring of 2014 at Tufts University; further details will be forthcoming.

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Tufts Institute to award annual economics prize to Angus Deaton & James K. Galbraith for work on poverty, inequality, and well-being

Tufts University just announced that it will award its annual economics prize to James K. Galbraith and Angus Deaton for their work on poverty, inequality, and well-being. See the announcement below, which also gives some background on the Leontief Prize for Advancing the Frontiers of Economic Thought. Galbraith and Deaton are certainly worthy additions to an illustrious list of past winners, including Triple Crisis blogger Robert Wade.

GDAE will award its 2014 Leontief Prize for Advancing the Frontiers of Economic Thought to Angus Deaton and James K. Galbraith. This year’s award, titled “Inequality and Well-Being in an Age of Instability,” recognizes the contributions that these researchers have made to the studies of poverty, inequality, and well-being. They have both played a critical role in bringing grounded empirical analysis to bear on topics in need of applied interdisciplinary research.

“For too long many economists have viewed rising inequality as an inevitable consequence of economic development,” says GDAE Co-director Neva Goodwin. “But recent economic upheavals call for a new approach to understanding the causes and consequences of inequality. Angus Deaton has demonstrated that inequality is about much more than income differences, focusing on how inequality affects the health and well-being of societies. James Galbraith has shown that inequality isn’t an outcome driven by factors outside of our control, but instead is often a direct result of the policy choices we make.”

The ceremony and lectures by the awardees will take place in the spring of 2014 at Tufts University; further details will be forthcoming.

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TPPA affecting health policies?

Martin Khor

Are big companies making use of trade and investment agreements to challenge health policies?  Evidence is building up that they do so, with medicine prices going up and tobacco control measures being suppressed.

This issue came up in Parliament last week when International Trade and Industry Minister Datuk Seri Mustapha Mohamed said the government would not allow the Trans- Pacific Partnership Agreement (TPPA) to cause the prices of generic medicines to go up.

He added he would defend existing policies on patents and medicines, and if we don’t agree with some of the terms, we can choose not to sign.

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TPPA affecting health policies?

Martin Khor

Are big companies making use of trade and investment agreements to challenge health policies?  Evidence is building up that they do so, with medicine prices going up and tobacco control measures being suppressed.

This issue came up in Parliament last week when International Trade and Industry Minister Datuk Seri Mustapha Mohamed said the government would not allow the Trans- Pacific Partnership Agreement (TPPA) to cause the prices of generic medicines to go up.

He added he would defend existing policies on patents and medicines, and if we don’t agree with some of the terms, we can choose not to sign.

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Himalayan Blunders

Sunita Narain

The floods in the Himalayas have been ferocious and deadly. Fears are that the final body count could run into several thousands. There is no clear estimate of the number of villages wiped out, property destroyed, roads washed away and hydropower projects damaged in the mountain state of Uttarakhand. The mountains are bleeding and its people have been left battered, bruised and dead.

We know that the Himalayas are the world’s youngest mountain range, prone to landslide and flash floods. But what we do not easily comprehend is that two factors have made the already vulnerable region more hazardous. One, climate change-related extreme weather events; Indian monsoon has become more intense. Studies show extreme rain events are becoming more frequent as compared to moderate rain events. Rainfall is also becoming variable and unseasonal. This is what happened in Uttarakhand on that fateful June 16. It rained without a break; some 200 mm came down within hours at a few places like Kedarnath. It brought down the mighty Himalayas. Rain was also unseasonal. June is still not considered the beginning of the monsoon season, so pilgrims and tourists thronging the region were caught unawares.

What really compounded the disaster—made it truly man-made—is the scale of development intervention in the past decade or so. This Himalayan region has seen unchecked construction activity, illegal and legal mining, unscientific road building and, of course, hydropower projects built next to each other. In Kedarnath large-scale construction has been done on the land evacuated by glacier in the past few years. It is small wonder that the water, moraine and stones came crashing down and took all with it. Many human lives were lost that morning and families shattered. This is the deadly and painful cost of environmental mismanagement.

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Lessons From Brazil

Alejandro Nadal

Managing neoliberalism is an uncomfortable proposition, especially when you are a centre left government. The rhetoric from the government palace insists in painting a pretty picture of social progress in a context of economic development. But the truth is somewhat different: the constraints of the neoliberal policy package conspire to cancel the successes that may be attained in the realm of equity or growth. The fact is that neoliberalism is not made for development.

During the past decade a new myth was born concerning Brazil’s economic performance. Its growth rate was above Latin America’s mean rate (2.2 per cent) and its exports allowed for a significant surplus. Besides, the increase in social expenditures resulted in a significant reduction in poverty and hunger. What possibly could go wrong?

The angry demonstrations that spread throughout Brazil’s cities a few days ago were triggered by several factors. They range from the bad quality of public services in transportation, health and education, to widespread corruption and the lavish expenditures in preparation for the World Cup. Violent repression fuelled the vigorous protests against a political elite more preoccupied with preserving their well-paid jobs than anything else. Some analysts have advanced the hypothesis that various conservative forces in Brazil were behind the wave of discontent with an eye on the 2014 elections. That may very well be true and the drop in popularity of Brazilian president, Dilma Rousseff, is a bad sign in this context. She has tried to recover the initiative by announcing a plan for “political reform” that would lead to greater democracy, transparency and better public services. It is too soon to conclude whether this move will be successful or not. In any case, events in Brazil force a more rigorous analysis of the structure and performance of the economy.

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Bringing the Struggle for Water to its Source

Robin Broad

Asunción Mita, Jutiapa, Guatemala: I am here as part of an international delegation — representing 22 organizations plus individuals such as myself, from 12 countries – that has come to support El Salvador’s right to stop environmentally-destructive gold mining. Half of the delegation has traveled over the border into Guatemala because the giant Lempa River that supplies most of El Salvador’s fresh water begins in the Guatemala hills where one of Canada’s largest mining firms is trying to mine gold.  Environmental destruction from this mine would therefore hurt not only Guatemalans, but also millions of Salvadorans who depend on the river’s water as it winds into the Pacific Ocean a nation away.

Our delegation is the result of an almost decade-long struggle of Salvadorans to protect their communities from the ravages of commercial gold mining.  That we are in Guatemala is a reminder that environmental havoc does not respect national boundaries — and that the rights of Salvadorans are interconnected with the rights of Guatemalans.

As gold and other mineral prices skyrocketed over the past decade, Canadian, US and Australian gold-mining firms have sought out veins of gold that were unprofitable when prices were low. Quite attractive is a gold deposit belt, first discovered about a century ago, which traverses the middle of Central America, including El Salvador’s northern provinces and this particular part of Guatemala.

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