Thread by @ChinaFinance40

#CF40 #MACROECONOMIC POLICY REPORT: The Great Depression and Roosevelt’s New Deal led by senior fellow Zhang Bin: new.cf40.org.cn/uploads/ZB2020… #COVID19 #novelcoronavirus #economics

The novel coronavirus is wreaking havoc on China and the global economies, as economic activities come to a standstill and unemployment rate skyrockets. The #GreatDepression and the #NewDeal are valuable experience and lessons for the current economic situation.

1. Maintaining credit growth and preventing deflation are cure for avoiding severe depression. The excessive tightening of credit led to the Great Depression, which ended following the restoration of credit, and economy could not recover from the Great Depression without help.

2. Breaking the doctrine of fiscal balance. Against the background of dropping demand,increased supply will lead to further deflation and make it harder to boost income. To stop declining demand requires credit support while driving up demand through increased fiscal expenditure.

3. Avoiding international trade war. Trade protectionism is detriment to export and will accelerate the deterioration of international credit and debt relations, consequently sabotaging international collaboration in the face of challenging situations.

4. Steering away from new market distortion with targeted relief efforts. Different relief strategies should be in place for different groups, such as introducing monetary relief for the elderly; providing job opportunities for the young.

5. Policies are about trial and error, with rectification being the key.While the advantages of some policies might outweigh their disadvantages at the time of their conception,as the economy evolved disadvantages will likely outweigh advantages,making timely adjustment critical.

6. Focusing on checks and balances of privileges. The idea of checks and balances used to play an active role in mitigating social conflicts and promoting a balanced economic structure.