What to do when exports falls?

Comments on huangyihello “扩大需求、恢复经济也可以在供给上做文章”, 23/07/2009, http://www.pinggu.name/space-1125736-do-blog-id-16296.html

I am delighted to read this article. huangyihello has raised a very good point in the current debate.

In addition to those two points, there is also an important point very few people have discussed, that is, to increase investment (physical capital) for future more rapid growth. This is a more difficult issue at a higher level than just considering consumption along. It is a change of product mix at another level.

Also, even when using cash handouts to people, consideration should be given to how they are distributed and whether there are other better options than pure cash handouts. For example, government may provide interest-free loans to people to buy goods. The latter can reduce the potential burden for future people, because cash handouts increase government debts and any government debts will have to be repaid.

Government does not have free money, although it can print money. Even printing money has its costs of inflation and devaluation of current assets for their owners.