In this clip Dan Mitchell of The Centre for Freedom and Prosperity talks about the Rahn Curve, and it is the spending equivalent of the Laffer curve (which is about taxation). If government gets too big it can have the effect of reducing prosperity, figuring out the ideal level is difficult as many affecting factors come into play, however, the ideal tends to be between 15% & 25%, in the USA current spending is c. 40% – so will it be any surprise to see crowding out or reduced productive sector activity?
The China Bubble
I have maintained for some time that new world orders don’t occur overnight, and that even trends that may appear to be secular don’t necessarily work out if you extrapolate them into the future. Let me explain, in the 70’s everybody said Brazil was going to rule the world by the late 1980’s, they came up with all of the reasons for this, demographic, growth, the education and markets in place etc. then it just didn’t happen.
By the end of the 80’s when Brazil was meant to be the new world power they had been usurped, this time by Japan, now it was the turn of the Japanese to be ruling the world within the next 20 years, then far from taking over Japan imploded and they have struggled ever since.
Today we are told that it will instead be China who rule the world by 2020, and frankly, I don’t believe that this can happen without massive painful adjustment that would set them back years, and it also doesn’t accommodate for the fact that the USA views the …
The Great Depression of 1920? Yep, you never heard of it….
This video is a fascinating take on monetary and fiscal policy which is contrary to the increasingly popular Keynesian solutions being put forward today. It advances the virtues of Austrian Economics, which is viewed by many as being a fringe economical school which lacks practical application. Admittedly many of the Austrian ideals would be totally unpalatable to general society, but it is important for the sake of balance to consider the views of the counter movement and not to discount it without due regard or rigour.
Thomas E. Woods has presented us with the idea that doing nothing in a financial crisis is what is required to allow an economy to heal itself, a view shared by many modern day commentators such as Jim Rogers. There is a middle ground somewhere between the hypothesis of Krugman and Mises but for now the debate rages on.