Real-World Economics Review

from Ken Zimmerman (originally a comment) Following the ‘Great Depression’ excessive wealth required justification. Otherwise those who possessed it were looked on as freeloaders and featherbedders who played no or little useful part in society. FDR came from one of America’s wealthiest family’s but proved himself by his work ethic, care for ordinary Americans, and work to save the USA. Even the wealthy who wanted to be ostentatious feared public rebuke and legal punishments if they...

from Dean Baker Yes, it is spring. The flowers are blooming, the birds are singing, and the deficit hawks are whining. The proximate cause is President Biden’s new budget, which will push the ratio of government debt to GDP to its highest level ever. The question is whether this should bother anyone who has a life? The projections show that the debt to GDP ratio will rise to 117 percent of GDP in 2031. If that sounds scary, consider that Greece’s debt to GDP ratio is over 180 percent....

from Lars Syll Analogue-economy models may picture Galilean thought experiments or they may describe credible worlds. In either case we have a problem in taking lessons from the model to the world. The problem is the venerable one of unrealistic assumptions, exacerbated in economics by the fact that the paucity of economic principles with serious empirical content makes it difficult to do without detailed structural assumptions. But the worry is not just that the assumptions are...

from Lars Syll Third, explanations fail by question (3.1) [“are the factors cited as possible causes of an event in fact aspects of the situation in which that event occurred?”] where the factors invoked as possible causes are idealisations. No doubt this claim will be considered contentious by some economists, accustomed as they are to explanations based on such dramatic assumptions as rational expectations, single-agent ‘economies’, and two-commodity ‘worlds’. The issue here turns on...

from Peter Radford Paul Krugman has been rightly skeptical about cryptocurrencies lately.  The extraordinary volatility in the price of Bitcoin, for example, has brought a bout of crypto mania to the fore in both the media and the marketplace.  And, as seems usual, various regulators around the world are arriving at the party about a decade after the launch of what their advocates call an alternative to the evils of fiat currencies. I suppose it would be churlish of me to remind us all...

“Household Income by Percentile, for the time period 2019 to 2020. The open circle represents an estimate of income in the top percentile, including income gains for billionaires reported in April 2020.”Source: Rhys McCarney – https://medium.com/@rhys.mccarney/wealth-inequality-the-gini-coefficient-and-the-pandemic-economy-fbc6a19bdd43    “Each point represents the wealth of one household in the approximate middle of the percentile.”Source: Rhys McCarney –...

Dean Baker joins Julianna for a discussion about the real story and impact of so called supply chain disruptions. Surprise! It's mostly fear-mongering. But then guess what... they talked about everything else: housing, student loans, free college, and Biden. Dean Baker co-founded The Center for Economic and Policy Research in 1999. His areas of research include housing and macroeconomics, intellectual property, Social Security, Medicare and European labor markets. He is the author of several...

from Lars Syll According to Abba Lerner, the purpose of public debt is “to achieve a rate of interest which results in the most desirable level of investment.” He also maintained that an application of Functional finance will have a tendency to balance the budget in the long run: Finally, there is no reason for assuming that, as a result of the continued application of Functional Finance to maintain full employment, the government must always be borrowing more money and increasing the...