Next Big Future - Latest Comments in China may stimulate its economy to keep 9-10% GDP growth

Re: China may stimulate its economy to keep 9-10% GDP growth

MichaelGR — Wed, 27 Aug 2008 21:43:53 -0000

This cannot boost the real economy.

If the money comes from taxation, it is only redistribution from taxpayers to whatever groups the government decides to give it to.

If it comes from printing money, it is only inflation; increasing the money supply without creating any wealth (goods, services) only dilutes the purchasing power of the money. It is very similar to taxation. The value in people's bank accounts loses value, and those who get the newly printed bills get to spend the money before inflation hits, so it is basically redistributing wealth from everybody who holds currency to those who get the new bills first.

Re: China may stimulate its economy to keep 9-10% GDP growth

nextbigfuture — Wed, 27 Aug 2008 16:29:06 -0000

Temporary boosts for one or two quarters is clearly possible with stimulus. As was done with the US stimulus package. Governments clearly can take the edge off of an economic slowdown to bridge the time until an economy recovers. You are correct that innovation and capital investment are needed for better real growth

Re: China may stimulate its economy to keep 9-10% GDP growth

Brock — Wed, 27 Aug 2008 16:21:46 -0000

Spending doesn't grow the economy. Only innovation and capital investment grow the economy. And government sucks at both.