Anonymous Coward writes:
"http://www.theguardian.com/commentisfree/2014/mar/ 18/truth-money-iou-bank-of-england-austerity
Back in the 1930s, Henry Ford is supposed to have remarked that it was a good thing that most Americans didn't know how banking really works, because if they did, 'there'd be a revolution before tomorrow morning.'
Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called "Money Creation in the Modern Economy", co-authored by three economists from the Bank's Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window."
(Score: 2) by Thexalon on Tuesday March 25 2014, @10:34AM
That's not their theory at all. Modern monetary theory says that right now, you can and should maintain extremely low interest rates as a way of creating investment that will get people back to work. Once there's 4% unemployment and 2.5% GDP growth and other signs that things are getting better, that's when you start raising the rates back up again to prevent an inflation-palooza like we had in the 1970's.
This is exactly what a central bank does. The US Fed's decision to send interest rates to the floor is the biggest reasons that the US is doing much better than Europe in handling the whole financial crisis (it's bad in the US, but not as bad as, say, Spain).
Every task is easy if somebody else is doing it.