Richard Koo at INET's Inaugural Conference

Chief Economist, Nomura Research Institute Speaking at the Opening Session of the Inaugural Conference of the Institute for New Economic Thinking. Richard Koo talks about deficits and what the US, Europe and China post-2008 can learn from Japan 1990-2005.

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[tairanotomomori]

He's far more relaxed and eloquent speaking in Japanese, but he's doing okay here. He's right. We've seen all in Japan and all the while we saw all those famed American economists giving 'advice' from on high. I have to admit I've derived a degree of schadenfreude from seeing them discredited. I seriously wonder what they are good for, I mean, economists?? What are they contributing to society???

[bourbakis]

A very insightful lecture. I wish policy makers are listening, unfortunately he also has the foresight saying it's very hard in a democracy system.

[peterfdrucker]

@baychev You are saying that each extra dollar Microsoft spends on hiring an employee, or paying its staff more - has less utility then the last? You have some theory that investment has a declining marginal utility? What are you talking about? Evidently I do need a lesson in economics ... why don't you just give me the references I asked for.

Is every extra grant that NIH gives out worth less utility then the last?

(I'm glad YOU appreciate Keynes' ideas at Bretton Woods, by the way!)

[peterfdrucker]

@baychev Again, you seem a little confused. What claim are you making? Each dollar spent on the construction sector has less utility? Why is this true? Does this apply if it is the private sector that is doing the spending?

And you are talking about *spending* for heaven's sake! Yeah, Gate's-presumably-doesn't get as great an increase in utility from acquiring $X as the next guy. But does this argument *necessarily* apply for each dollar Gates spends?

[peterfdrucker]

@baychev My "beloved 'guvmit'"??  What gives you that idea? I think you're confused about who you are arguing with. I sure as hell don't blame free market capitalism for the problems in Ireland, or here . . . what gives you that idea?

So banks should or shouldn't regulated by the government? You're suggesting, I guess, that had the government not interfered, banks wouldn't have taken on so much leverage? This is also a new theory I'm not familiar with.

[baychev]

@peterfdrucker

this freedom is NOT what bankrupted irish banks. in a sound money system where banks are not levered 40 times this would not have happened. anything but free market capitalism is to be blamed for the current crisis. where was your beloved 'guvmint' when more homes were built than there are families? it was collecting the property and sales taxes and handing the money out like this will go on forever.

[baychev]

@peterfdrucker

man, it is not my job to teach you economics, you can do postrgaduate studies if you wish. $10 bill is worth more to a person on foodstamps than it is worth to bill gates. deficit spending to keep construction jobs is a classic example of dellusional thinking: let's produce more of what we already have plenty of because this is what we have been doing and we don't want to adapt to the new reality. if you do not adapt (spending) quickly, you disappear as species.

have a good day!

[peterfdrucker]

@baychev No, I don't say "debt is necessary to save the economy". I think you are arguing with someone else . . .

What I said was that taking on leverage, even when in debt, does not *necessarily* ruin an individual, firm or nation. It could, but it depends on interest rates, and what is done with the borrowed funds.

Balancing the budget may make things worse - driving up unemployment, lowering demand, and *lowering revenue* making it even harder to pay back the debt.

[peterfdrucker]

@baychev Bretton Woods instituted a regime of fixed exchange rates, was friendly to capital controls, and generally limited the international financial market. You ought to remember that the way Ireland, say, ran its economy was to have a very free regime of capital movement, low corporate taxes, balanced budgets, privatization etc. This doesn't seem to have worked out too well.

[peterfdrucker]

@baychev I'm not familiar with the theory that the "the US became the wealthy state it is largely due to the accumulation of gold, not through production".

Yeah, Bretton Woods, I am familiar with Keynes' role in Bretton Woods. What's your point?

Also not familiar w/ the theory tht payments to the US due to the Mars. Plan are what allowed it to pay back its wartime debts. I thought it had something to do the massive increase in the economy.

Point me to the right literature, please.