Modern Monetary Theory

Richard Koo was on Bloomberg yesterday making a lot of good points about what public sector retrenchment will mean, namely a decrease in private sector savings. With households already highly indebted in many countries, this cannot be a…

Long-term interest rates are really a series of short-term rates smashed together. The real reason that the Federal Reserve would lose control over short-term interest rates is because the economy was operating at full capacity and creating…

In March I wrote an American version of this post which pointed to the bailout culture in America as a major reason I fear a depressionary relapse. American policy makers have shifted private losses onto the government's books while…

Greece fiddled its books and ran a deficit in good times and bad.  But, it is rubbish to paint all of the debtor nations in Euroland now in crisis with the same brush. There are huge differences I would like to point out. And I will…

To paraphrase Shakespeare, things are indeed rotten in the State of Denmark (and Germany, France, Italy, Greece, Spain, Portugal, and almost everywhere else in the euro zone). An entire continent appears determined to commit collective…

Econ 101 Imagine you and I are the only two people in an economy. For the sake of argument, say we use sea shells as a currency and we trade with no one else but each other. So when we do trade, we exchange goods and services with each…

Marshall Auerback here with a post which I originally published at New Deal 2.0. This post on deficits in fiat currency regimes is the second in a series of posts on Modern Monetary Theory. Many market analysts, commentators and economists…

Let's attack the question of hyperinflation using Zimbabwe and Weimar Germany as examples. These are the two most extreme cases of hyperinflation that economic historians have ever witnessed. They are instructive regarding what causes…

Regular readers know that, while I have a little of what Marshall Auerback calls deficit terrorism in my DNA, I fully support fiscal stimulus as a means to arrest a deep downturn.  The horrendous Keynesian nightmare My move into…

The Maginot Line, named after French Minister of Defense André Maginot, was a line of defenses which France constructed along its borders with Germany and Italy after suffering appalling damage and casualties during World War I. The French…