Money is essential to a successful economy. But it's money in circulation that's useful. Money that's locked up in storage in vaults and savings doesn't help. The early economists understood this well and often used the analogy of money-is-to-economy as blood-is-to-human-body. Circulating money, money that is used to buy things is as important to the … Continue reading Rhetoric Is A Powerful Tool To Advance Moneyed Interests
MMT
What a Liquidity Trap Looks Like in Pictures
I want to follow up a little on my discussion of the liquidity trap that we are have been in. Brad Delong has an excellent post today called "Four Years After the Wakeup Call". In it he shows some graphs which illustrate very well our the liquidity trap. Delong first serves us two graphs on … Continue reading What a Liquidity Trap Looks Like in Pictures
But What About National Debt-to-GDP Ratio? Not a Problem, Really
In the comments to my post on the extraordinarily weak 2nd qtr 2011 GDP numbers a reader asks for my thoughts about debt-to-GDP ratio and "how can we afford more stimulus"? Since my response will be a little long and others might be interested, I'll post it here. Reader AZLeader asks: Here are some other GDP … Continue reading But What About National Debt-to-GDP Ratio? Not a Problem, Really
Government Bonds are Just Like Government Money
Government debt is not like private debt. Government debt, government bonds, are really just another form of the government-issued fiat money obligations - just like paper money. There really is little difference between government bonds and that paper money in your pocket - except that the bonds pay interest and are harder to cash at … Continue reading Government Bonds are Just Like Government Money
Private Debt vs. Government Debt
The Great Recession of 2007-2009, which has been morphing into a Depression, has been different from most recessions of the post-World War II era. It has been what economists call a "balance-sheet" recession. Normally (at least since World War II), recessions were the result of the central bank (The Fed in the U.S.) raising interest … Continue reading Private Debt vs. Government Debt
Debt Ceiling: Kabuki Theater of the Absurd
Tuesday evening the House of Representatives voted on whether to raise the so-called "debt ceiling". It was pure charade. No, it's worse. It's kabuki theater of the absurd. First off, the House Republican leadership knows it's only for show. The reality is that Congress will vote to raise the limit later this summer. They have … Continue reading Debt Ceiling: Kabuki Theater of the Absurd
Krugman Is Still Wrong About MMT – and with it still wrong on deficit
On Friday Paul Krugman posted the first of what has become 2-3 posts on his blog wherein he claims that MMT is "just wrong". As I noted Friday here, I commented on his blog to point out how his post was deceptive and misrepresented MMT. I was not alone. Well over 100 people have taken … Continue reading Krugman Is Still Wrong About MMT – and with it still wrong on deficit
Krugman on MMT
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
The Misunderstood National Debt
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
MMT Isn’t All That New
Modern Monetary Theory, MMT, is still considered a heterodox theory and a bit outside the mainstream. That's largely because of two factors. First, graduate economics education in money is largely stuck in quasi-gold standard era stuff from pre-1971. Milton Friedman and his disciples still dominate, despite the facts. Empirical evidence and knowledge of how banks … Continue reading MMT Isn’t All That New
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