Wednesday, October 27, 2010

I see your graph and raise you another graph

John Hemming claims that the government's economic policies are

in many ways traditional keynsian
demonstrating either a shocking misunderstanding of Keynsian counter-cyclical theory or a shockingly poor attempt to spin examples of classical economic theory - the same sort of theory that led to the Depression. He maintains the fiction that Labour are arguing against any sort of cuts - which is utter drivel, as Ed Miliband has backed the Darling proposals to halve the deficit over the course of this parliament (although I would actually back the Ed Balls approach of running the deficit down over a slightly longer period). In any case, we do not back slashing government economic sustenance until the private sector is suitably ready to pick up the slack.

And here's my graph, showing the gilt trend over almost two decades, showing that government borrowing has been consistently more affordable since Norman Lamont was last in charge. The trend has been inexorably downwards. There is no evidence to support John's claim that gilt interest rates were about to rocket skyward - government bond issues were easily subscribed, indicating a good demand for them and the low rates are certainly not indicative of a market demanding premium rates. Still less was there any risk of a sovereign debt crisis.

1 comment:

DomFisher said...

With your lot in charge the private sector would never be ready to pick up the slack.