Economic Ghosts Block Post-Lockdown Recovery

By Jomo Kwame SundaramKUALA LUMPUR, Malaysia, Jun 9 2020 (IPS) As governments the world over struggle to revive their economies after the debilitating lockdowns they imposed following their failure to undertake adequate precautionary containment measures to curb Covid-19 contagion, neoliberal naysayers are already warning against needed deficit financing for relief and recovery. Deficit financing options The range of deficit financing options has changed little since first legitimized by Roosevelt and Keynes in the 1930s and used extensively to finance wartime government spending. Jomo Kwame SundaramFirst, debt financing has typically involved government borrowing. More recent understandings of sovereign debt stress the implications of the source of borrowing, domestic or external, e.g., Japan’s total government debt now greatly exceeds double its annual national income, but this is not considered problematic as most of it is domestically held by Japanese. Second, price controls, general or selective, can cut both ways, and may require subsidies. Price controls on extracted natural resources can also enable governments to capture resource rents to augment revenue. Third, the widespread use of unconventional monetary measures since the 2008 global financial crisis has forced economists to reconsider earlier monetarist articles of faith about deficit financing by ‘taxing’ everyone via inflation, also giving an unexpected boost to modern monetary theory. Exchange rate p...
Source: IPS Inter Press Service - Health - Category: International Medicine & Public Health Authors: Tags: Economy & Trade Education Financial Crisis Global Headlines Health Humanitarian Emergencies TerraViva United Nations Source Type: news