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Marriner Eccles, in a brilliant 1939 speech: “I think that we will also all agree that we have abundant material resources and money, so that they are not a limiting factor on further recovery. In fact, the supply of funds is not only more than...

fraser.stlouisfed.org/title/statemen…
...adequate under present conditions for an expansion of output, but our monetary and credit system has sufficient elasticity so that we can always create the funds necessary to expand production within the limits of our man power.

We may say then, I think, that our greatest...
...domestic problem – the major task before the nation— is to find productive employment for all of our people capable of working who are now unable to find employment. The magnitude of the problem is measured by the number of these people.”
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More from @michaelxpettis see all

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Michael Pettis
@michaelxpettis
1/- Very interesting article. One of the most obvious ways to boost the consumption share of China’s GDP sustainably would be to provide adequate pensions for the aged. Not only would their spending rise almost one-for-one with their pensions, but... scmp.com/economy/china-…
2/- working-age Chinese would feel less pressured to save for their parents and for their own retirements, and so would also spend more.

This won’t be cheap – if rural pensioners for example were eventually to receive one-third of what urban pensioners get (and urban...
3/- pensioners don’t get much), it would cost nearly 1% of GDP – but because more consumer spending would generate more productive private-sector investment, it would be better for the economy, and more labor intensive too, than spending an equivalent amount of money on...
Read 5 tweets
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Michael Pettis
@michaelxpettis
1/- Spain now has nearly 2000 miles of high-speed rails, second only to China, but Spain’s independent fiscal authority now says that except for the major Madrid-Barcelona and Madrid-Sevilla lines, they are not worth the money spent on them, and...

economist.com/europe/2020/08…
2/- that Spain shouldn’t build more. It would be far better, they say “to invest in neglected commuter networks, which carry 89% of rail users”.

With a per capita GDP more than 3 times China’s reported per capita GDP, it is hard to believe that HSR is less economically...
3/- viable in Spain than in China. The value of infrastructure, after all depends on the productivity of workers whose time it saves. Given the sheer amount of HSR in China – two-thirds of the global total, and rapidly building more – I would argue that either Spain (and the...
Read 4 tweets
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Michael Pettis
@michaelxpettis
1/- Very good article about how China is turning to “flexible” jobs as a way of reducing unemployment. The problem is that in China, like in most countries, most of these jobs involve finding ways to tap into dwindling consumer spending, and so worker...
scmp.com/economy/china-…
2/- “flexibility” is more likely to involve transferring income from employed workers to unemployed workers than it is to increase workers’ income overall.

While it reduces unemployment levels, in other words, it doesn’t raise incomes or help resolve the problem of weak...
3/- consumer spending. The only sustainable way to boost employment and growth continues to be either more government spending on infrastructure, however unnecessary, more exports or import substitution, or more income transfers to the poor.

Most other countries face this...
Read 4 tweets

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