“What you don’t touch, for you lies miles away. (…) What you don’t coin, you’re sure is counterfeit.” These sophisms are voiced by Mephistopheles, under the guise of the Court Fool, in Goethe’s Faust. He aims to convince the Emperor to mint more coins, for money buys everything: parks and palaces; breasts and rosy cheeks. The Commander-in-Chief accompanies the scene and speaks his mind: “The Court Fool is wise, for he promises benefits to all.”
Economic theory, in contrast to the Commander-in-Chief, the Court Fool and other populists, states that all government handouts come at a cost – regardless of whether they are distributed in the form of subsidies or direct transfers. Financing them is only possible by raising taxes and getting into debt (or creating more money… and inflation).
I have received many encouraging responses to my first blog. Thank you. This time, let's look at Indonesia's budget. Last year, Indonesia's budget reached the magical threshold of US$100 billion.
You may want to grab your surfboard to be prepared even though this wave may not yet be visible now. There is little (public) focus on this question in Asia at the moment and I suspect that the reason is simple – over the past ten years we have witnessed a relatively long period of stability and rapid economic growth across Asia. Such a situation can too easily breed complacency and high levels of risk-taking by banks, as well as a more relaxed stance by the r