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Joe Weisenthal has a good post going after Roger Altman’s assertion that European austerity was necessary to satisfy the markets.
Author: L. Randall Wray · · Share This Print
The economic significance of this roller coaster was basically nil.
What has changed? For one thing, the crisis they predicted keeps not happening. Far from fleeing U.S. debt, investors have continued to pile in, driving interest rates to historical lows .
Paul Krugman posts a simple chart that makes a profound point. It compares the yield on UK debt vs. US debt .
There’s an interesting mix of contrast and similarity between the policy debates in Britain and the United States right now. In both countries — as in every country that retains its own currency and has debts denominated in that national currency — interest rates are near record lows: However, Very Serious People tell very different stories in the two nations.
Scott Fullwiler tweets:
In-depth analysis on Credit Writedowns Pro , now with big discounts for regular readers.
It seems the first skirmish in the battle for economic minds may be at an end. Krugman has declared the debate at an end. And thanks to modern technology we've been able to watch and take part in this debate. A summary has been posted and everybody believes their man won. But you may be wondering why this arcane battle matters at all.
Q: What do John Maynard Keynes and Steve Keen have in common? A: They’ve both been misread by Paul Krugman . In just a couple of days I’ve gone from the privilege of being acknowledged by Krugman to being misread by him, in a way that would have any student failed in a multiple choice exam. In a passage where I specifically referred to DSGE models–which includes both “New Classicals” and “New Keynesians” he interpreted me as referring to New Keynesian models only.
By Scott Fullwiler Update: Paul Krugman has posted a reply to this post that is a straw man. He and Nick Rowe are viewing this all through the lens of the old Monetarist/Keynesian debates in which there was a choice b/n interest rate targets and monetary aggregate targets; the Monetarist critique assumed the Keynesians were going to keep interest rates at the same level forever and not change them. Once John Taylor came up with his “rule,” everyone agreed an interest rate target could work.
I see that Scott Fullwiler has what he thinks is a slam-dunk refutation of what I’ve been saying about banking. Actually, not. Leave aside the continuing confusion between the argument that banks can create inside money — which nobody denies — and the claim that they can create unlimited amounts of inside money, never mind the size of the monetary base, which is what is at issue.
Author: L. Randall Wray · · Share This Print Last week I explained why Minsky matters, outlining his main contributions.