Economics

I appreciate the role that Krugman plays. Like many of you, I enjoy reading his blogs and more often than not, I agree with him. He is almost the lone, sane, voice in a position of authority who argues against the standard deficit…

While rate easing and its cousin permanent zero might have some salutary effect in the short term, these policies are toxic to the financial sector and consumption demand. Likely, they will not spur the economy but lead to a deepening…

Investors shunning US debt ‘for whatever reason’ presupposes the outcome. I need to see the steps that get us from 2.25% 10-year rates to 4 or 5% without the Fed actively raising rates because the only way rates are going higher is because…

Previous Modern Money primer blog posts were quite general and apply to all countries that use a domestic currency. It does not matter whether these currencies are pegged to a foreign currency or to a precious metal, or whether they are…

Last summer I wrote a post clarifying some points that I have learned about Modern Monetary Theory. The genesis of the post was a gross mischaracterization of Modern Money Theory (MMT) by Paul Krugman in a piece called “I Would Do Anything…

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.