Tag Archives: Economics

Robert Shiller’s straw man critique of MMT M.M.T. is sometimes invoked to justify reckless government borrowing for marginally good causes, without raising taxes. Well, here’s a spoiler alert: Though increased spending on infrastructure, education, social welfare and the environment may be wise, and rising deficits may make sense some of the time, we really cannot borrow ceaselessly without risking real harm … It seems that modern monetary theory is not so...

Do​es higher interest rates inevitably cause inflation? Most proponents of MMT argue that the aggregate demand impact of interest rate changes is​ unclear. Their effect depends​ on intricate and complex relations — especially distributional — and institutions which​ makes it realiter impossible to always be able to tell which way they work. Public budget deficits and higher interest rates may cause inflation to go up — or go down. And if so, the​ neoliberal...

Mainstream theories of income distribution Markets are never just given. Neither God nor nature hands us a worked-out set of rules determining the way property relations are defined, contracts are enforced, or macroeconomic policy is implemented. These matters are determined by policy choices. The elites have written these rules to redistribute income upward. Needless to say, they are not eager to have the rules rewritten — which means they also have no...

The myth of independent central banks  [embedded content]

The myth of barter Even in the most advanced industrial economies, if we strip exchange down to its barest essentials and peel off the obscuring layer of money, we find that trade between individuals and nations largely boils down to barter. Paul Samuelson You will find similar nonsense stories told in almost all mainstream textbooks today. And the truth, as so often when it comes to economics fairytales, is quite another: No example of a barter economy,...

Der Geist des Geldes  [embedded content] [I was happy to see a dear old friend of mine, Otto Steiger (1938-2008), appear in this film. When discussing the history of MMT I don’t think he is given enough credit. A great economic thinker and a very amiable person.]

The recession that is coming  [embedded content]

Guest post by Jeff Mosenkis of Innovations for Poverty Action. Good links from David McKenzie this week (as always), including this one from CSWEP on mentoring underrepresented minority women in economics.As much as it pains me to link to both David *and* my other Friday links competitor, Tim Ogden of NYU’s faiV, (which focuses on financial inclusion) he’s got a really good piece on CGAP’s blog. It’s ostensibly on what can we expect to learn from financial inclusion research, but really...

The modern state can make anything it chooses generally acceptable as money and thus establish its value quite apart from any connection, even of the most formal kind, with gold or backing of any kind. It is true that a simple declaration that such and such is money will not do, even if backed by the most convincing constitutional evidence of the state’s absolute sovereignty. But if the state is willing to accept the proposed money in the payment of taxes and other obligations...

How money is created Everything we know is not just wrong – it’s backwards. When banks make loans, they create money. This is because money is really just an IOU. The role of the central bank is to preside over a legal order that effectively grants banks the exclusive right to create IOUs of a certain kind, ones that the government will recognise as legal tender by its willingness to accept them in payment of taxes. There’s really no limit on how much...