A Cartoon by Ruben Bolling (via Economic Perspectives): From politicalirony.com Oh that Scooby and Company were real. We could use them to catch the phantom of crowding out.
Paul Krugman comments today on Modern Monetary Theory (MMT). Unfortunately, he gets it wrong. For example, he says: Right now, deficits don’t matter — a point borne out by all the evidence. But there’s a school of thought — the modern monetary theory people — who say that deficits never matter, as long as you have … Continue reading Krugman on MMT
A colleague asked for my thoughts on this article/column by Michael Manning in the State News, the Michigan State student newspaper, so I thought I'd post it for all. Basically Mr. Manning reaches the right conclusions with a correct, but weak case. In looking at the issue of the size of the U.S. national debt … Continue reading The Misunderstood National Debt
I'm noticing that the media is being somewhat slow to pickup on the real story happening in Wisconsin and not spreading to Indiana and Ohio. It's not about fixing state deficits or finances. It's about busting unions, pure and simple. As such, it's part of an long-term effort that the right wing of American politics … Continue reading Observations on Wisconsin
Kash at Streetlightblog and Angry Bear explains easily with one graph both how the federal budget got to be in such imbalance (deficit) relative to GDP and how insignificant the so-called "massive stimulus" was in 2009-10. I think that when trying to understand the federal government's fiscal situation, at least on the spending side, it … Continue reading Real Causes of Federal Spending Growth: Military and Healthcare
Brad DeLong is as puzzled as I, but is more eloquent in expressing it. In so doing he does my classes a favor in expressing a quick version of the history of addressing macro economic crises. For nearly 200 years economists from John Stuart Mill through Walter Bagehot and John Maynard Keynes and Milton Friedman … Continue reading Why the Austerity Talk?
Here's a series of posts in the next couple days to try to help voters and everybody else cut through the nonsense, lies, garbage, and con games that has become American electoral campaigns - at least with respect to economics. A lot of electoral campaigns have increasingly come to resemble common con games such as … Continue reading The Election Campaign Con Game: “Cut the Deficit”
Again, there is no risk - none, zip, nada - of default by the US (or any other currency sovereign nation) on their government bonds. This does not mean that these governments can run unlimited deficits of unlimited amounts without any consequences. It means the consequences don't include default on government bonds. If the government … Continue reading “Sovereign Default” is an Oxymoron With Fiat Money
Ron Dzwonkowski of the Detroit Free Press ran a column today urging people to participate in various "town hall" discussions to help figure out the US can deal with it's "deficit" and the "debt" that must "lead to collapse". Mr. Dzwonkowski adopts the posture of "reasonable, practical man" - not that of an ideologue. In … Continue reading One More Time, the Government Is NOT Like a Household or a Business
The US Government (and it's budget) is NOT like a household or a corporation. Anybody who uses this time-worn analogy is simply not telling the truth and is likely either ignorant or is trying to pull the wool over your eyes. Randy Wray explains the many reasons. You (your household) must finance your spending (either … Continue reading The US Government is NOT like a Household