sovereignty

If a central bank guarantees investors credibly that they can invest in certain debt instruments and not suffer principal or interest repayment risk, but only currency and inflation risk, some investors are almost definitely going to buy…

Harvard Economist Kenneth Rogoff has a post up at Project Syndicate which does a good job in laying out the conundrum that Europe faces in the sovereign debt crisis. He theme is exchange rates and currency revulsion. But the underlying…

This post describes how austerity works in the European Monetary System where the euro is used as a currency. I will start by framing the difference between currency users and currency creators, then move to how central banks and government…

Imposed austerity does directly alter output and employment- for the worse. Additionally, for all practical purposes, there is universal global support for austerity as the means supporting global output and employment. So even if the euro…

Japan and the US, as the two largest economies with high deficits, also have the largest gross financing need, ahead of all of the euro zone periphery, Belgium and France. But they are sovereign in their currencies and have therefore not…

What people don’t realize is that what happened in Iceland has been used as a test case for what’s happening in Greece and what’s happening in Europe, and maybe what happens in the United States

Let’s not get bogged down in numbers. The EFSF could have 440 billion euros behind, 1 trillion, 2 trillion, even 10 trillion euros, but it all comes back to the funding sources. The French are right: it makes no sense to implement this…

In an interview from late September, Zulauf tells James Turk that he is very much a eurosceptic. The external imbalances in the euro zone make the euro an untenable currency union. Like David Blanchflower, Zulauf remarks how markets are…

This week we will begin to examine our next topic: government spending, taxing, interest rate setting, and bond issue. We will examine fiscal and monetary policy formation by a government that issues its own currency. We will bear in mind…

All US government obligations are substantially identical promises to repay a specific amount of the currency unit of account backed by nothing but taxing authority. So, Treasury bonds don’t ‘fund’ anything. If the Treasury were allowed to…