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Monday, April 3, 2023

William Mitchell — Fiscal policy can always protect employment, incomes and business solvency if there is political will

I was at the optometrist the other day getting my regular eye test and all the person doing the test wanted to talk about was whether we were heading into recession. I think he was toying with buying a new apartment to live in and was trying to assess risk with the rising interest rate regime and all the negative talk. I actually don’t like giving that sort of advice to people I am dealing with in that sort of relationship. But it is a good question – and there is evidence either way. First, it is clear that governments can always protect employment, incomes and business solvency with appropriate fiscal policy interventions. Second, it is less clear on what monetary policy does and that is the issue – eventually interest rate rises will cause certain sectors, such as construction, to encounter difficulties and start laying off workers and recording bankruptcies. But the problem is that monetary policy is such a crude instrument that the damage is done before we really can measure it....
William Mitchell — Modern Monetary Theory
Fiscal policy can always protect employment, incomes and business solvency if there is political will
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

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