Economics

Imagine being on the FOMC and in the mainstream paradigm. In 2008 you moved quickly to make sure the US would not become the next Japan. What do you have to show for it, 3 years later?

This week we begin a new topic: functional finance. This will occupy us for the next several blog posts. Today we will lay out Abba Lerner’s approach to policy.

I don't expect any response from Paul Krugman, Alex Tabarrok or Tyler Cowen on this but they know who I am and read my articles from time to time. I am going to add my voice to a debate they have been having in the blogosphere on debt,…

Over the holidays, a debate broke out in the blogosphere about the so-called job guarantee idea that the MMT folks have bandied about. I call this controversial idea "Unemployment Insurance for the 21st Century", something I first addressed…

OK, you might be wondering: Isn’t this a strange point at which to raise the question, “what is modern money theory?” Yes, in some important ways, it is. However in the past week there have been some really pretty extraordinary pieces in…

Yet another rescue plan for the EMU is making its way through central Europe—with the ECB acting as lender of last resort to Euro-banks. It is trying the tried-and-failed Fed method of rescue. As we now know the Fed lent and spent over $29…

The last post by Randall Wray below is an interesting one because it points out how the world has changed since the end of the gold standard and why the sovereign debt crisis is centered in the euro zone. While I have an Austrian bias…

It seems to have been none other than Paul Krugman who made it safe for others to adopt MMT. He shined his headlights on the obvious: the reason why interest rates on government debt are not exploding in countries like Japan, the US, and…

Let’s see how it is really done in the US—where the Treasury really does hold accounts in both private banks and the Fed, but can write checks only on its account at the Fed. Further, the Fed is prohibited from buying Treasuries directly…

It is apparent that adoption of a foreign currency is equivalent to running a very tight fixed exchange rate regime. It provides the least policy space of any exchange rate regime. This does not necessarily mean that it is a bad policy. But…