Naked Keynesianism

Nikolaos Bourtzis (Guest blogger)There we have it again. Another one of those clashes between Greece’s creditors and the Greek government. For the millionth time, the Troika, I’m sorry I mean the institutions, are demanding that Greece comes up with policy suggestions that could bring in 3.6 billion approximately in fiscal savings.This time, though, is different because these are going to be a “just in case” package, a buffer in case the government misses its fiscal targets. The government...

Real GDP starting in 1929 for the US and 2007 for Greece. Back then, with the New Deal, the US economy had essentially recovered after less than a decade. But there is no solution in sight for Greece now. This summer with more payments due, and the Brexit discussion on top, should bring new developments.

The private sector added 156,000 jobs in April, according to the Automatic Data Processing (ADP) report, ahead of the Bureau of Labor Statistics (BLS) more comprehensive release this Friday. As the graph shows there is a slowdown form last month. This adds to weak manufacturing growth,and a smaller trade deficit, resulting from lower imports, that is, a slower economy. I still think a recession might not be in the immediate horizon. However, the data seem to indicate, as I said before, that...

There are three kinds of lies, "lies, damned lies, and statistics," supposedly said Benjamin Disraeli. This applies to John Cochrane piece in the Wall Street Journal today. Cochrane says that: "Sclerotic growth is America’s overriding economic problem. From 1950 to 2000, the U.S. economy grew at an average rate of 3.5% annually. Since 2000, it has grown at half that rate—1.76%. Even in the years since the bottom of the great recession in 2009, which should have been a time of fast catch-up...

Complex technical stuff indeed Pascal Blanqué and Amin Rajan complain about unconventional monetary policy, low or negative rates and Quantitative Easing, which they mostly blame on Greenspan and the excessive reliance on the lender of last resort (LOLR) function of the central banks (even though this precedes Greenspan). They say: The US example shows all too clearly that the longer such unconventional policy remains in place, the harder it is to exit. Most likely, ultra-low rates will...

[embedded content] Defunding a program is the best way to promote privatization. He discusses here public education, but you can go down the line. The idea of voucherizing Medicare is basically a way of defunding it, worsening its quality and eventually move to private health (you get it if you pay for it). And on education note that while Chomsky is right that it worked well and is being defunded and privatized (think charter schools), it is also true that the system was always unequal and...

New paper on the resurgence of capital controls. From the Abstract: The startling resuscitation of capital controls during the global crisis has substantially widened policy space in the global north and south. The paper highlights five factors that contribute to the evolving rebranding of capital controls. These include: (1) the rise of increasingly autonomous developing states, largely as a consequence of their successful response to the Asian crisis; (2) the increasing confidence and...

In the first quarter the economy slowed down grinding nearly to a halt. Real Gross Domestic Product (GDP) slowed to a 0.5% annual growth rate in the first three months of 2016, according to the Bureau of Economic Analysis (BEA). By the way, federal government spending has been a drag on growth. And here in lies the problem. Don't expect any stimulus this year, and very unlikely that this would change significantly any time soon. The problem isn't secular stagnation, it is rather...

[embedded content] From the BBC Yes, Prime Minister comic series. True, most bankers never quite learned Keynes, and then had to learn the stuff from some other Milton.

Sometimes there is simple and right New paper by Professor Petri, which is always worth reading, titled "Nonsubstitution Theorem, Leontief Model, Netputs: Some Clarifications." From the abstract: The nonsubstitution theorem concerns long-period technical choice and relative prices, and was so understood in its first (1951) formulations, but the modern advanced micro textbooks that present it do not make this clear, rendering the theorem impossible to understand for students. These modern...