God Question Darius,

The both must be, I repeat its must. The both to be attempted together to take on, to go ahead with. One cannot be compromised over other, for a sustainable stability and at the same time sustainable development is also essential

Regards,

Fatema Miah

Dear Professor Prokopowicz, in my opinion, the reconciliation of these two opposing-oriented policies in the medium and long term is rather impossible. I did a simple analysis in the classic IS-LM model for a closed economy, taking into account the need to conduct an intensive and highly restrictive monetary policy in relation to the expansionary fiscal policy implemented at the same time (maintaining internal demand) combined with a reduction in tax rates (CIT and PIT, which flattens the slope) IS curve for the commodity market). As a result, the imposition of the effects of these two policies on the commodity and money markets in the graph will lead in the medium term (from 6 to 12 months) to a rapid increase in the cost of capital (a strong increase in the interest rate r) with a simultaneous recession, i.e. a decline in real national income. (Y), but also to dampen CPI inflation. However, everything depends on many details (for example, the level of domestic and foreign debt, as the cost of debt servicing as a result of interest rate increases will significantly increase and may cause problems with debt repayment and the need for budget cuts), on many variables, especially the impact of foreign markets on the economy country and its currency. Best regards

Although these goals might appear to be contradictory, they can be harmonized through at least one important, but often-overlooked policy. This policy solution resolves what I refer to as "the infrastructure conundrum."

We create infrastructure to facilitate development. But, if that infrastructure is well-designed and well-implemented, it inflates the price of nearby land. High land prices chase development to cheaper, but more remote sites. We run after remote development with more infrastructure, only to have the cycle repeat. The resulting urban sprawl is bad for the environment and bad for our budgets due to the wasteful duplication of expensive infrastructure systems.

The ability of private landowners to appropriate publicly-created land value is the fuel for land speculation - a parasitic activity that creates nothing of value but which inflates land prices even more. Returning publicly-created land value to the public sector would reduce land price inflation while inducing development of high-value sites near existing infrastructure amenities. Thus, it is simultaneously a growth stimulant and anti-inflationary.

For more information, see https://www.shareable.net/land-value-return-and-building-a-more-equitable-economy/ .

May be we are talking about Liquidation, you mentioned interest and high, Dariusz Tomasz Grala. It is risky at this point for the general economic system would cause suffering to most ordinary people.

Production I advocate at this moment must be the focus on to cycle

back on, to create jobs, to cut unemployment, to bring salary, to encourage spending and saving to Investment , so forth.

Environment must be taken care of, not to damage natural resources for building infustracture. Rick Rybeck. Land must be carefully used.

Regards,

Fatema Miah.

Yes, lower interest rates.

I don´t see how. Goods market and money market do not work in different environments. There are others variables that influence more intensely long term

Dear Fatema Miah, I understand that you want to pursue an economic policy that would ensure the optimal use of the earth's resources, without further contamination of it with poisonous waste, and at the same time provide jobs for all those willing to work in the market.Unfortunately, such a closed economic cycle, in which they will be produced as finished products, then after their use, the waste is fully utilized and processed for use in the next production cycle, in the current conditions of the energy crisis caused by Putin's war and his energy blackmail on the market gas and oil, and the grain market, distances us from the perspective of a circular economy. In the current situation, pro-ecological projects are not the first necessities of the moment, because now, more than during the covid epidemic, we need to fight against rising prices and destabilization of energy markets. We need to rebuild the world energy network without the participation of Russia, which, as we all see, is an evil empire that sows death and destruction of territories and a population that wants to be free from Russian influence and blackmail. The times of normal fiscal and monetary policy activities are a thing of the past. In the current global, total war threat, in principle, officially established energy price caps, government-controlled distribution and coordinated international control of energy prices are possible on an unprecedented scale in the past to contain global cost inflation. Environmental protection, although very important, must wait until the end of the war and the settlement of those responsible for the crime and destruction. Almost all the governments of the present EU in Europe take the position that Russia should be forced to surrender and the perpetrators of war crimes and genocide should be tried. Therefore, while economic models show the ineffectiveness of a combination of expansive fiscal policy and restrictive monetary policy, such a mix is ​​likely to be implemented in many countries to protect labor markets and social peace. Best regards

For many decades, most economists had hold that an increase in economic growth leads to an increase in inflation and an decreased growth reduces inflation.

The argument is that tightening monetary policy solws spending growth and allows to reduce inflation.

In recent years in most countries, a public policy of low economic growth has been applied.

Conducting an effective economic growth policy while addressing inflationary pressures can be challenging, but it is not necessarily impossible. Economic policies often involve a delicate balancing act between promoting growth and managing inflation.

In general, policies aimed at stimulating economic growth typically involve measures to increase aggregate demand, such as fiscal stimulus, infrastructure investments, or tax cuts. These policies can boost employment, consumer spending, and business investment, thereby stimulating economic activity. However, if demand increases too rapidly and surpasses the economy's capacity to produce goods and services, it can lead to inflationary pressures.

On the other hand, anti-inflationary policies focus on managing inflation by reducing aggregate demand or addressing supply-side issues. Central banks often play a crucial role in implementing monetary policies to control inflation. They can adjust interest rates, reserve requirements, or engage in open market operations to influence borrowing costs and the money supply. Governments may also implement fiscal policies, such as reducing government spending or increasing taxes, to reduce demand and manage inflation.

Effectively balancing economic growth and anti-inflationary policies requires careful coordination and consideration of various factors. Central banks and policymakers need to monitor economic indicators, such as inflation rates, employment levels, and productivity, to assess the appropriate policy measures. Timely adjustments and a flexible approach are necessary to adapt to changing economic conditions.

It's worth noting that the effectiveness of these policies can vary depending on the specific circumstances and the overall health of the economy. There may be trade-offs between short-term growth and long-term stability, and different countries may prioritize different objectives based on their unique economic challenges.

Overall, it is possible to pursue both economic growth and anti-inflationary policies simultaneously, but it requires careful planning, coordination, and monitoring to strike the right balance.

Dear Dariusz

Politicians have won elections with promises to conduct an effective activating economic growth and anti-inflationary economic policy at the same time.

During the last decade, inflation control has become the main goal of monetary policies in most economies, applying a restrictive monetary policy by central banks.

According Miguel Sidrauski (Inflation and Economic Growth). The neutrality of monetary sector is a problem that has been widely discussed in the monetary theory literature. In terms of the standard macroeconomic model, if prices are flexible and it wealth is not an argument in the saving function, a once-and-for_ all change in the quantity of money will not affect the real variables of the system". pag. 796

Best regards