We are living in a strange world. When gas prices fall it is considered to be good for an economy. It brings more money into the pockets of the people. Disposable income increases and more goods and services are bought.But gloomy faces are all round.When interest rates are low it is supposed to increase house building. More people are supposed to buy houses on loan.Housing starts have gone up. But it is said that housing starts have not gone up as fast as required.When money supply increases it usually brings in more inflation.Inflation is bad for an economy and is taken as an indirect tax on the poor. Keynesian economics is blamed for the present state of affairs. But Keynes wanted more inflation when private investment is waning. Unemployment is falling faster than ever. During 1930s Keynesian economics worked.Now it is said that Keynes economics have failed. Now dollar is stronger. When deficit goes up dollar must fall.With more than 17 trillion money transferred to banks, dollar must fall. But here dollar is gaining. A stronger dollar reduces the foreign debt But is said to be bad for exports.I am totally confused.My rabbit brain can not digest all these. I think we need to rewrite the text books. May be economics is a voodoo science.
Posted on: Thu, 06 Nov 2014 14:14:19 +0000
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