Notable “sound finance” proponents such as Warren Buffett, Angela Merkel and Barack Obama argue that a balanced government budget and economic health go hand-in-hand. Adherents to a philosophy known as “functional finance,” on the other hand, believe that governments should tailor policy to foster price stabilization and full employment. With that latter viewpoint in mind, investment expert James Montier deconstructs and demolishes some well-worn “myths” about fiscal policy in this engaging, thought-provoking article. getAbstract recommends his paper to anyone interested in a nontraditional view of fiscal and economic policy.
In this summary, you will learn
- What supporters of “functional finance” believe is the role of government’s fiscal policy and
- What “five fiscal fallacies” proponents of balanced government budgets support.
About the Author
James Montier is on GMO’s asset allocation team and has written several books on investing.