Modern Monetary Theory

William White, the former chief economist at the Bank of International Settlements (BIS) gave an important speech at George Soros' Inaugural Institute of New Economic Thinking (INET) conference in Cambridge.  While everyone is casting…

The question of fiscal sustainability looms large at the moment - not just in the peripheral nations of the eurozone, but also in the UK, the US, and Japan. More restrictive fiscal paths are being proposed in order to avoid rapidly rising…

The following is a post by Marshall Auerback, who also writes at New Deal 2.0. We’ve persistently taken the view that there is no economic doctrine, no magic number, which would imply a firm external constraint as far as public…

Marshall Auerback here with a post which I originally published at New Deal 2.0. What is a fiscal crisis? When does deficit spending become “unsustainable”? Today, we can see net public spending rising (sharply as a percentage of GDP in…

Last Friday, Mr. Obama and the GOP staged the equivalent of a British Parliamentary Question Period in front of the TV cameras. It showed the quick-thinking, articulate President at his best. Unfortunately, the subsequent Saturday morning…

Marshall Auerback here again.  A lot of good questions surrounding my piece on the euro. Many of them seem to revolve around the issues of why the euro gets weaker when national governments deficit spend, and the issue of whether my…

Marshall Auerback here with a post which I originally published at New Deal 2.0. I wrote an earlier post called Spain: Deficit Terrorism in Action to explain some of the institutional flaws at the heart of the euro zone.  This post…

On a number of occasions, I have pointed to the sectoral balances model of finance to help demonstrate what happens when the government sector runs a deficit or a surplus. A recent article in the Financial Times by Martin Wolf on Japan’s…

This is a pretty wonkish post but I hope you appreciate the concepts presented. I made some allusions to modern monetary theory in a recent post when I asked, “If the U.S. stopped issuing treasuries, would it go broke?” The short answer is…

Here’s another interesting piece from Randall Wray, the economics professor from University of Missouri-Kansas City (that same school which employs Bill Black of “The Best Way to Rob a bank is to own one” fame). Wray has a lot to say…