our humble blogger generally refrains from writing about stocks for a host of reasons. But several interesting news bits have prompted me to depart from my usual practice.
Read more...Stephanie Kelton does an important service in discussing a memo from the Fed chairman during the Roosevelt Administration, Marriner Eccles. I was reminded of Eccles’ a fine appreciation for how the real economy worked and how government actions affected business. This keen eye for the fundamentals is sorely absent among most macroeconomists and policy experts today.
Read more...The Eurozone’s debt crisis is getting worse despite appearances to the contrary. How can we end it? This column presents five major options for reducing crisis countries’ debt. Looking into the details, it seems the only option that is both realistic and effective is for countries to default by selling monetised debt to the ECB. Moral hazard aside, burying the debt seems to be the only way we can end the crisis.
Read more...We’ve been pointing out for some time that Germany has refused to budge from wanting contradictory things relative to the Eurozone. Now something still has to break, but some of my correspondents who’ve just been in Europe now think that we will see a political crisis in Europe before we see an economic one, and that, like objects in your rear view mirror, may be closer than it appears.
Read more...Yanis Varoufakis provided the English translation of a new interview with James Galbraith published in Suddeutsche Zeitung. Galbraith focuses on institutional arrangements, the need for restructuring and reform, and constraints on growth.
Read more...Even more so than most cities, Chicago has had the best government money can buy. In this case, the money is willing to engage in a scorched-earth policy of crushing local investors and wrecking the city budget to achieve its end of taming unions and making Chicago even easier pickings for looting via infrastructure sales.
Read more...There are many seminal thinkers who are so well known they’re never read. This category includes Adam Smith, Thomas Robert Malthus, Immanuel Kant, David Ricardo, John Stuart Mill, Fredrich Hayek, John Maynard Keynes and many, many others.
One thinker I’d like to focus on is Karl Marx.
Read more...Yves here. Varoufakis performs the important service of translating what is effectively a formal communication from Germany on its stance towards subject states, meaning the Eurozone periphery.
Read more...Yves here. As readers likely recall, Thomas Herndon, Michael Ash, and Robert Pollin of the University of Massachusetts, Amherst wrote a paper, “Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff,” which revealed serious methodological problems with one of the linchpin papers used to justify cutting government spending even in times of recession. Robert Pollin here discusses some of the bigger issues in the political and economic debates on austerity and the aftermath of the financial crisis.
Read more...Yves here. Because the European slow-motion train wreck is turning out to be particularly slow, it’s almost become background noise in the US, almost a lesser version of the now two lost decades in Japan. But what is happing in Europe is less benign and less likely to be able to continue anywhere near that long.
Read more...I’m a bit late to get to an article in the New York Times that ran on one of the slowest news days of the year, last Saturday, Warren Mosler, a Deficit Lover With a Following. Since Bill Black has since issued a good kneecapping, I’ll soon turn the mike over to him, but I wanted to add some points about the approach used in this heavy-handed exercise propaganda.
Read more...Yves here. Readers presumably know that the US departs from the practice of pretty much every country in the world in taxing its citizens on worldwide income. Spain is breaking new ground in making citizens and residents declare foreign assets…which most see as a precursor to taxation. And of course, a move to tax out of country income or assets will increase the interest of countries to do more intensive snooping into the financial affairs of their inhabitants.
Read more...Mainstream economic discussions employ a false dichotomy. At one “extreme” you have Austrian economists who believe the current Federal Reserve policy is (or should be) causing inflation, malinvestment, and all sorts of other maladies. They think the nominal interest rate set by the Fed is too low and should be raised . At the other “extreme” you have Paul Krugman and “New Keynesian” company, who argue that the nominal interest rate set by the Fed is too high and should be lowered in some way. To the causal observer who is unfamiliar with the history of economic thought, these two positions seem diametrically opposed. They, in fact, are not.
Read more...Yves here. Warren Mosler, who is one of the leading writers on Modern Monetary Theory, circulated an e-mail with his assessment of the state of the economy and the impact of quantitative easing and agreed to letting me publish it.
Read more...How many markets are in upheaval right now? We’ve pointed to several things that have been troubling about the Fed’s apparent view prior to the FOMC statement yesterday and the Bernanke press conference, which only rattled investors further.
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