Recent comments by Michael Heller

• Learning About Growth from Austerity

  Michael: This is an excellent, timely, and balanced article in my view. Only one thing was not made explicit - the private sector will need government help in order to respond to the deleveraging cycle. Structural adjustment (removing obstacles to growth) inevitably has this (very tough) institutional dimension. But your discussion will sharpen minds among reluctant reformers and deluded money magicians. It is good to have contested facts confirmed -- the debt was misused; exit from excessive debt inevitably mean less demand, less growth, and more savings; nothing will be achieved by deleveraging alone; there are big risks and limits to what central banks can do; and burden-sharing solutions require real compromise.
  

• Reckless Caution: The Stress and Strain of Sovereign Debt

  Ralph, you must be studying a different economics - the one I call magic wand economics or flushing plumber economics, in which new purchasing power for increased consumption is literally “created out of nothing”, and, allegedly, “for nothing” (free lunches). In a situation like the present one, real capitalist economics is not against credit at all. But it should be passive credit at market-restrained competitive rates for entrepreneurial purchasing power, i.e. for investment in innovation, and credit for putting factors of production to new uses in new combinations. You activists can paper over an innovation-production supply blockage by compensating consumers with ‘monetary base’ for a week or two, but not for a month or a year (not unless you want to risk destroying production potentials for a decade or more).