Warwick macroeconomic expert Roger Farmer proposes paying for social welfare programs with no tax hikes.

Jonah Whanau

2019-07-05 09:32:00 Fri ET

Warwick macroeconomic expert Roger Farmer proposes paying for social welfare programs with no tax hikes. The U.S. government pension and Medicare liabilities are $47 trillion in total. As Farmer suggests, national treasuries should establish social care funds, and these public funds borrow money at low interest rates and invest the proceeds in many international stock markets. A recent study analyzes data from OECD economies over a century and empirically shows that the average stock return is about 7% above the return on government bonds. Also, the average equity risk premium ranges from 3.8% in Denmark to 9.9% in Japan. Stock market idiosyncratic volatility may not fully accord with economic fundamental factors such as size, value, momentum, asset growth, operating profitability, and market risk etc. This volatility instead shows the animal spirits and sentiments of investors who often buy and sell shares on the basis of self-fulfilling prophecies of greed and fear.

When the government institutes social care funds, these public funds can smooth out short-term stock price gyrations to invest in the long-term fundamental health of the global economy. The key Farmer proposal may work well in practice as most public funds can then earn an average 4%-7% equity premium per annum.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

Peter Schuck analyzes U.S. government failures and structural problems in light of both institutions and incentives.

Dan Rochefort

2023-04-28 16:38:00 Friday ET

Peter Schuck analyzes U.S. government failures and structural problems in light of both institutions and incentives.

Peter Schuck analyzes U.S. government failures and structural problems in light of both institutions and incentives. Peter Schuck (2015)   Why

+See More

In the modern monetary system, each CBDC helps anchor public trust in money in support of economic welfare, especially in a new cashless society.

Joseph Corr

2024-07-31 09:28:00 Wednesday ET

In the modern monetary system, each CBDC helps anchor public trust in money in support of economic welfare, especially in a new cashless society.

In the modern monetary system, each new CBDC helps anchor public trust in money in support of economic welfare, especially in a cashless society. In our

+See More

President Trump signs an executive order to freeze federal employee pay in early-2019.

Rose Prince

2019-01-06 08:39:00 Sunday ET

President Trump signs an executive order to freeze federal employee pay in early-2019.

President Trump signs an executive order to freeze federal employee pay in early-2019. Federal employees face furlough or work without pay due to the govern

+See More

White House economic advisor Gary Cohn resigns due to his opposition to President Trump's protectionist tariff stance.

Peter Prince

2018-03-02 12:34:00 Friday ET

White House economic advisor Gary Cohn resigns due to his opposition to President Trump's protectionist tariff stance.

White House top economic advisor Gary Cohn resigns due to his opposition to President Trump's recent protectionist decision on steel and aluminum tariff

+See More

Reuters polls show that most Americans blame President Trump for the recent U.S. government shutdown.

Olivia London

2019-01-05 11:39:00 Saturday ET

Reuters polls show that most Americans blame President Trump for the recent U.S. government shutdown.

Reuters polls show that most Americans blame President Trump for the recent U.S. government shutdown. President Trump remains adamant about having to shut d

+See More

The Chinese Xi administration may choose to leverage its state dominance of rare-earth elements to better balance the current Sino-U.S. trade war.

Dan Rochefort

2019-06-13 10:26:00 Thursday ET

The Chinese Xi administration may choose to leverage its state dominance of rare-earth elements to better balance the current Sino-U.S. trade war.

The Chinese Xi administration may choose to leverage its state dominance of rare-earth elements to better balance the current Sino-U.S. trade war. In recent

+See More