Editorial

Stagnating economy, thriving finance

 Are mature economies in long-term stagnation? In the four years since the great crisis of 2007-9, the USA has grown at an annual rate of 2.2%, Germany 2%, Japan 1.6% and the UK 1%. Considering that the GDP of these countries shrunk by a total of 4-6% during the crisis, they have just about made up this lost ground - and the UK has not even achieved that. Meanwhile, the prospects for growth in 2014 and beyond look far from bright.

Some well-known economists have begun to sound very worried. Larry Summers, for instance, has claimed that long-term stagnation is the ‘new normal’. The reason is that the interest rates required for sustained, privately-led growth would actually be negative. Since nominal rates cannot fall below zero, mature economies can break out of stagnation only if they have a financial bubble. This is a bit like taking amphetamines: there is a heavy price to pay when the bubble bursts. Paul Krugman has essentially concurred, describing the current state of affairs as a ‘liquidity trap’. For both economists, the answer is decisive expansion of public spending.

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Events

29/4/2014 - Next meeting of Economists Against Austerity

The next meeting of Economists Against Austerity will have Prof. Engelbert Stockhammer (Kingston University), Prof. Ozlem Onaran (University of Greenwich), and Andrew Harrop (General Secretary of the Fabian Society) as the speakers on the strategies for a wage-led recovery.

01/04/2014 – Meeting - Economists Against Austerity: The Entrepreneurial State and the Risk-Reward Relationship

Members of RMF have been involved and will be attending…

The next meeting of Economists Against Austerity is pleased to have Prof. Mariana Mazzucato as the key speaker on what really happens in the process of innovation. Andrew Simms (Global Witness) will respond.

29/3/2014 – Conference: Life Before Debt - Why debt rules our lives and how to resist it

RMF helped organise and presented at a conference held at SOAS investigating the impact of debt and strategies for resitance.

More details here: http://jubileedebt.org.uk/life-before-debt-conference-london-2014