Washington Center for Equitable Growth | Watching Bitcoin, Dogecoin, Etc… Underpinning the value of gold is that if all else fails you can use it to make pretty things. Underpinning the value of the dollar is a combination of (a) the fact that you can use them to pay your taxes to the U.S. government, and (b) that the Federal Reserve is a potential dollar sink and has promised to buy them back and extinguish them if their real value starts to sink at (much) more than 2%/year (yes, I know). Placing a ceiling on the value of gold is mining technology, and the prospect that if its price gets out of whack for long on the upside a great deal more of it will be created. Placing a ceiling on the value of the dollar is the Federal Reserve’s role as actual dollar source, and its commitment not to allow deflation to happen.
Placing a ceiling on the value of bitcoins is computer technology and the form of the hash function… until the limit of 21 million bitcoins is reached. Placing a floor on the value of bitcoins is… what, exactly? Timothy B. Timothy B. Okay. John Quiggin: MMT: Noted. Mike Norman Economics. Matt Franko said... " Not members of the tribe, I guess. "LOL Tom... Noooooo they are not! LOL.The sub-human, metal-loving tribe they're in....rsp, April 17, 2013 at 12:44 PM Ben Johannson said... Can someone please explain JKH's post there to me? April 17, 2013 at 4:47 PM Ralph Musgrave said... A load of hot air from DeLong. April 17, 2013 at 4:58 PM Ben,I don’t think JKH is suggesting there is an “additional sector”. April 17, 2013 at 5:42 PM JKH said... SUPPOSE that an economy was sufficiently strong that private sector investment created enough private sector saving (investment creates saving), such that the household demand for net financial assets is satisfied.
April 17, 2013 at 6:28 PM Tom Hickey said... @ BenI think that Ralph is basically correct, but I would add that JKH is simply saying what MMT says. April 17, 2013 at 6:35 PM April 17, 2013 at 6:39 PM winslowreconomics said... My interpretation of JHK's comment is similar. April 17, 2013 at 6:44 PM April 17, 2013 at 6:49 PM. Lernerism in a Hicksian Straightjacket. Whenever I read Abba Lerner (1943) or his latter-day disciples, I find myself puzzled by their near-certainty: they know that fiscal expansion and contraction can keep employment high and inflation equal to expectations, and that monetary expansion can keep interest rates so low that there is no government budget financing constraint that binds. As with so much else, a remarkably large measure of clarity can be achieved quickly by casting their argument in Hicksian (1937) IS-LM terms. Why doesn't monetary expansion producing overheated economy and rising inflation, as inflation expectations become dis-anchored?
Because there is little sensitivity of spending to the interest rate--the IS curve is steep. Thus even a large overshoot on the inflationary side on monetary policy can be neutralized by a small fiscal contraction. Why doesn't a monetary expansion raise expectations of future inflation on its own? Why should it? How sensitive are the components of spending to the interest rate? Stephanie Kelton: April 13, 2013 10 AM: Bill Black, Stan Collender, Brad DeLong, and Jay Weisenthal on the Economy. Great Leap Forward » Brad DeLong to Paul Krugman: Yes Deficits DO Matter in MMT. Author: L. Randall Wray · · Share This Print Finally, a prominent “mainstreamer” Keynesian gets MMT. Over the past couple of years, Paul Krugman has got close, but he keeps claiming that MMT believes “deficits don’t matter”. He refuses to cite any MMTer who has ever said such a silly thing. In any case, Brad DeLong has written an excellent piece recognizing that MMTers actually are not crazy hyperinflationists (link is at the bottom of this post).
Yes, I know, some critics provide a few citations and occasionally a few quotes. Back to Brad. There’s been a mighty kerfuffle going on between Jeff Sachs and Paul Krugman on budget deficits and debts. He accuses Krugman of “crude Keynesianism”. But Krugman just can’t resist the chance to take a sideways slap at MMT whenever he can: MMTers make the crazy claim that deficits don’t matter. “Right now, deficits don’t matter — a point borne out by all the evidence. Brad begs to disagree. Brad actually quoted from a long-forgotten piece I wrote: DeLong (and Krugman) Smackdown Watch: Bill Black, Stephanie Kelton, and Randy Wray Are Justifiably Irate Modern Monetary Theory How Do Deficits Matter?: Monday Hoisted from Comments Weblogging.
Jeff Sachs is irate. He says that Paul Krugman says that deficits don't matter. And that makes Paul Krugman irate: Crude - NYTimes.com: I came into this crisis with what I think can be described as a pretty sophisticated view of liquidity-trap economics… [and] made some predictions — about interest rates, about the effect of large increases in the monetary base, and about the size of fiscal multipliers — that were very much at odds with what a lot of people were saying… [and that] have been overwhelmingly confirmed by recent experience. I guess I can understand some people not wanting to believe that evidence. But they don’t help their case by pretending that there is no evidence, and certainly not by pretending that people like me, Brad DeLong, Martin Wolf, Larry Summers etc. etc. are ignoramuses who unconditionally favor fiscal expansion under all conditions, as opposed to as a specific remedy under special conditions that happen to apply right now… And this makes Bill Black irate:
Is There Still a Demand for Even More Modern Monetary Theory Weblogging? If not, don't look below the fold! Sigh. This morning was supposed to have been spent outlining the inner logic of the perspective of today's Austerians. It wasn't. It was spent thinking about MMT. My lack of self-discipline is depressing. OK. When people like Paul Krugman or me read the writings of, say, Warren Mosler, we tend to focus on statements like "a government that can print its own currency can never be forced into default", and "if government bonds find no buyers, that simply means that instead of lending the government money and a positive nominal interest rate the banks are holding excess reserves and constructively lending the government money at zero", and that the government is not constrained by its budget because "the deficit can present no financial risk.
The underlying gestalt we get from things like Warren Mosler's Soft Currency Economics is this: Each individual sentence is certainly correct. For example, things that seem off balance: L. Randy continues: