Politicians and economic illiterates frequently assume two wrongs make a right. Here is a case in point: Japan panel backs sales tax hike coupled with stimulus.
Japan's government won backing for a controversial decision to raise the national sales tax in 2014 after influential members of a special advisory panel said the step would not threaten economic recovery or business confidence if it was coupled with other stimulus.
I am happy to see Paul Krugman address the question. He writes:So why not forget about open-market operations, and just drop the stuff
from helicopters? Well, remember that at this point cash and short-term
bonds are equivalent. So a helicopter drop is just like a temporary
lump-sum tax cut. And we would expect people to save much or most of
such a tax cut — all of it, if you believe in full Ricardian
Just a few weeks ago, the Icelandic government started threatening to use the European 'template' of removing guarantees on large deposits (though maintaining its capital controls) indirectly pressuring the wealthy to spend (for fear of haircuts).
Canadians may be growing weary of — even hostile to — all those Economic Action Plan ads the Harper government has been pumping out for the last four years.
Eight polls the Finance Department commissioned between 2009 and 2012 suggest the TV, radio, print and Internet ads are starting to fizzle — and annoying some people.
The most-recently released survey has respondents calling the material “propaganda” and a “waste of money,” while fewer people than ever are taking any action after viewing the ads.
Will the Fed carry out its threat to reduce bond purchases and putting upward pressure on rates, or will it continue on and allow them to settle down? Who knows what the Fed will do? If you listen to some pundits bonds are the universally accepted worst investment.