Valance Weekly Report 11.9.2011
Posted by WARREN MOSLER on November 9th, 2011
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Highlights
US – Underwhelming payroll report
EU – ECB cut rates; Greece and Italian Prime Ministers agree to step down
JN – Exports improve
UK – Negative effect from Euro-area crisis
CA – BoC renewed its inflation target.
AU – RBA cut Growth/CPI forecast
NZ – Unemployment continued to edged up
November 10th, 2011 at 7:34 am
I have some questions for anyone who is capable of answering. I was reading Abba Lerner/functional finance and he says there is three ways the government spends. Taxing, borrowing and printing. What does he mean by printing. Is this the bare issuance of bank reserves or did they literally printed money as reserves at this period in time. I’m not really sure if this was bretton woods or war time floating fx policy.
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Joe C Reply:
November 10th, 2011 at 10:20 am
@rodney,
Check out lesson #9 from Mathew Forstater on Aba Lerner. The whole paper is a gem.
http://129.3.20.41/eps/mac/papers/9908/9908002.pdf
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WARREN MOSLER Reply:
November 10th, 2011 at 11:49 am
yes. interesting how lerner was totally forgotten until people started reading my stuff and started checking to see if anyone had ever said anything like it.
That’s when Lerner, Knapp, Innes, etc. were rediscovered.
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WARREN MOSLER Reply:
November 10th, 2011 at 11:37 am
he meant spending without borrowing.
he wasn’t all that good on actual monetary operations.
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beowulf Reply:
November 10th, 2011 at 3:52 pm
@rodney,
The most logical way would be direct Tsy issuance of US Notes but they’re capped at $300 million in circulation.
Since 1947, the Fed has refunded net interest to Tsy so in economic terms, that’s the simplest way spending can be funded without borrowing (though it does count against the debt ceiling).
Of course, the Fed can buy coinage in any quantity from the US Mint or (God I would love to see this) stamps in any quantity from the US Postal Service. :o)
OT I’m glad to see Ben Bernanke stick his finger in the eye of Rick Perry:
“Bernanke Takes Fed’s Message to Texas”
http://blogs.wsj.com/economics/2011/11/10/bernanke-takes-feds-message-to-texas/
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November 10th, 2011 at 7:51 am
In the mandatory readings the examples for the mechanics of federal spending are missing. How exactly do the reserves move. If they remove reserves from theh t&l accounts and move them to the sellers, how does it work when they borrow?
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WARREN MOSLER Reply:
November 10th, 2011 at 11:38 am
Prof Stephanie kelton published a paper with those details
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November 10th, 2011 at 10:32 am
THanks! Will do.
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