Monetary System

I have been off the grid of late so I have limited blogging capacity. But I still wanted to present a different perspective on monetary policy here for a second given the recent Fed move to permanent zero. First, I should say that my view…

The normal case—let us say, in the US or the UK or Japan—is that anything for sale is for sale in the domestic currency. These sovereign governments never find that they cannot buy something by issuing their own currency. However, the…

Procyclicality is fine for states as a constraint despite how they exacerbate the swings in the business cycle, creating deadweight losses. The federal government can always counter this pro-cyclicality and smooth out the cycle. This is one…

This column addresses the high price paid by the President’s Council of Economic Advisors’ failure to read Akerlof & Romer

When the government issues a currency used as the money of account and accepts that currency in tax payment, it is not necessary to “back” the currency with precious metal or enforce legal tender laws. Taxes drive money.

You tell me.

At the weekend, I saw three articles asking essentially the same question about sovereign debt crisis contagion: why Italy and why not Japan (the US or Germany)? Here's my answer.

There is, and historically has been, some confusion surrounding sovereign currency. So, many policy makers and economists have had trouble understanding why the private sector would accept currency issued by government as it makes…

The research presented below from the IMF from October 2010 "finds that fiscal consolidation typically reduces output and raises unemployment in the short term. At the same time, interest rate cuts, a fall in the value of the currency, and…

8 banks out 90 banks fail: Five in Spain, two from Greece and one from Austria (Spain's CAM, CatalunyaCaixa, Banco Pastor, Unnim & Grupo Caja; Austria's Volksbanken; Greece's Eurobank & ATEBank). One additional bank, Helaba, the…