среда, 15 января 2014 г.

I know how to overcome the economic crisis (and I'm looking for a very small country for the experiment)

If you are interested in my theory, outlined in the MANIFESTO OF THE NEW ECONOMIC THEORY then I can write a book or an article for your order to be published in your journal.

In an economy which  is developing normally the balance is kept. The number of new jobs is the number of fired employees . But the balance is distroyed during the crisis, when there is a need for restructuring the economy. Unprofitable companies are closing rapidly , but the growth rate of viable firms   is limited. And the "natural" rate of growth may not be enough to compensate the dismissal , which caused the closure of loss-making companies . An imbalance , growing unemployment and social discontent appear..

It is possible to overcome this imbalance in two ways:
1)To provide the anti-crisis assistance for unprofitable companies  not to be closed.
2)To encourage t the company's profitability , so that they can grow faster .

Governments usually choose the first way to slow  down the growth of unemployment and reduce social discontent. But this method leads to slowing down of  restructuring and prevents recovery from the crisis.

All anti-crisis measures of governments  are aimed at closing a smaller number of companies , thus supporting weak companies. But  only strong enterprises can pay for this support, because only they have the money . Therefore, all measures taken by governments  are the transfer of outflow of resources  from strong to weak enterprises . Even if the government calls these measures economy stimulating  . For example, to reduce the discount rate is  such a measure, but it does not help to overcome the crisis .

The second method is preferable . Natural growth rate of successful companies in a crisis is not enough to employ all the citizens who lost their jobs with the closure of unprofitable companies. Therefore , the state must apply extraordinary measures to help the successful and growing companies to grow even faster.

F or  successful companies that receive private investment to  grow even faster "natural" market-based instruments are not enough. Additional extraordinary measure may be, for example , money issue " in reverse." In this case the government by printing money creates funds which are invested  in the most successful companies and businesses . Funds can be  controlled  both by  the state and private companies . But the criterion of success is to be the  only one - the profitability of these funds. Then the money will be invested only in the most successful projects and companies . And in this case, there will not be any  inflation, because a  long-term increase in turnover of funds  is stimulated .

But now the government s are  trying to mitigate the effects of the crisis and  are guided by erroneous Keynesian  theory, they use   monetary emission incorrectly. Due to this theory unprofitable structures are supported , that is why  the turnover increases only temporarily , and then the inflation comes t and the crisis will get even  worse .
In general, the correct principle of redistribution is reduced to the rule: money should  be receive d by those companies which are able to use it in the most effective way. That is, during the crisis , the government should stimulate the outflow of funds from less profitable to more profitable companies .