Mike Norman Economics

Richard Wolff gives a simple explanation of MMT, but he has a caveat - the MMTers, he says, don't have much to say about how capitalism can be transformed into something better. [embedded content]

Dan Baum, writing in support of drug legalization at Harper’s, has unleashed a frank 1994 quote from former Nixon policy advisor John Ehrlichman, and as inadvertently salient an argument for legalizing drugs as any I’ve ever seen: At the time, I was writing a book about the politics of drug prohibition. I started to ask Ehrlichman a series of earnest, wonky questions that he impatiently waved away. “You want to know what this was really all about?” he asked with the bluntness of a man who,...

[embedded content] Greenspan: "We can guarantee cash benefits as far out and at whatever size you like"FEBRUARY 16, 2005 COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, UNITED STATES SENATE  GREENSPAN: I think we should maintain the principles of Social Security, but I think the existing structure is not working, and that until we can construct a system which creates the savings that are required to build the real assets so that the retirees have real goods and services, we do not have a...

Two weeks ago Alphaville published a clarification on modern monetary theory by Scott Fullwiler, Rohan Grey and Nathan Tankus. They argued that, counter to what had been reported, MMT does not rely exclusively on raising taxes to counter inflation. Proper MMT, they wrote, uses a lot of tools to manage inflation -- taxes only one among them.... FT Alphaville (Free registration required if not a FT subscriber) When DoJ and the FCC slowed inflation Brendan Greeley

Slowly but surely, the EU is shifting its priorities to the East Asia TimesThe EU bows to ‘systemic rival’ ChinaPepe Escobar

No one can agree how high above the sea level that La Rinconada really lies at: 5,300 meters or 5,200 meters? On the access road, a metal plate says 5,015. But who really cares? It is indisputably the highest settlement in the world; a gold mining town, a concentration of misery, a community of around 70,000 inhabitants, many of whom have been poisoned by mercury. A place where countless women and children get regularly raped, where law and order collapsed quite some time ago, where young...

Brad DeLong apparently missed the part about role of the job guarantee in mopping up residual unemployment after the implementation of fiscal policy based on functional finance and using automatic stabilization to maintain output close to an optimal level with respect to growth, full employment and price stability. This would be done using Godley-inspired SFC macro modeling rather than the conventional approach to econometrics. I mention DeLong's criticism even though it is getting...

The received wisdom on government debt is that it saddles future generations with the burden of repayment. The received wisdom is wrong. As long as a government’s debt is denominated in its own currency, repayment is never a problem. Why? Because the government can always create the necessary funds.  A sovereign government’s debt is one source of a country’s currency. National governments literally spend money into existence. Deficits can cause problems, but to properly understand those...

In this two-part series I will: 1. Consider the question as to whether fiscal policy is sufficiently flexible enough to provide an effective counter-stabilisation against the non-government spending cycle.If a nation is heading into recession, can governments act quickly enough with discretionary spending changes? If a nation is ‘overheating’ and inflation is threatening to accelerate, can spending and tax changes be implemented quickly enough to counter these tendencies? 2. Should...

Zombie Trading caught the move down in NZD and we took some money out of CAD today as well.