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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

The turkeys have voted for Thanksgiving

Posted by WARREN MOSLER on November 20th, 2011

Reader’s comment on the post on Spanish voters supporting austerity:

Adam (ak) Submitted on 2011/11/20 at 4:05pm

So in the country where the official unemployment rate is 22.6% the party promising further fiscal austerity has an unassailable lead? Awesome. The turkeys have voted for Thanksgiving.

51 Responses to “The turkeys have voted for Thanksgiving”

  1. Save America Says:

    I just got done with a cruise with Warren Salinger, he worked with the carter administration and others on international development. His big theme was FEAR of globalization during his lectures on this cruise. I wore my green Mosler t-shirt to a few of his talks and we chatted many times during the cruise. I told him his FEAR meme was a good one, people are fearful of USA losing her world dominance status, ceo’s are fearful of losing profits, politicians are fearful of the debt and tying up our whole government on this issue. What mr. Salinger was most afraid of was global unemployment though, so I think the boyz here have a new recruit to try and talk to and build on this meme him and I discussed several times. I brought up the book the dark hero of the information age, norbert wiener who also feared decades ago that unemployment would be issue number 1 facing humanity in the future. I got his personal email for people to contact him wasal7@verizon.net, (moderator do what you think is best) and users remember he is almost 80 so probably can’t respond to a ton of requests.

    During this cruise Warren, I got to thinking about you and your MMT boyz like cullen on his website and others here. Mario, Hickey, ETC Warren, Cullen and I have already had harsh private words because he says MMT is the future, and he wants to be part of your vision and have his name associated with yours in the annals of history when MMT revolutionizes the world.

    I see lotsa academics whose career and profit and feeding thier kids is tied to that whole “publish or perish” meme. I just read some article on the new york times about lawyer schools who have no interest in applied lawyers with real world experience, they want lawyer theory ivory tower academics teaching at thier universities. Lawyers with lots of publishing and citing credentials.

    So all you academics ask yourself, would you further an idea, warrens idea, if it took removing warrens name from the idea, and maybe letting a krugman or a larry summers go down in history as the person who released the idea that resulted in the rising tide lifting all boats? I see this as a BIG PROBLEM for you boyz. You want your names associated with the idea, won’t let someone else take the credit. Even the book cited above, Norbert Weiner, father of cybernetics at MIT stopped contributing in ways he could to this world when he thought other mathetmaticians and computer people were “stealing” his ideas. How many of you academic types could be better than norbert weiner, one of the youngest PHD’s in human history? Could let someone take credit for your ideas if it helped the agenda of all of humanity, or are so brainwashed that the idea must come from YOU and preserve YOUR LEGACY that you would see it wither and die before you would let al gore take credit for inventing the internet? I think some of you need to think about this and welcome debate, I am always wrong eh? ;)

    Reply

    WARREN MOSLER Reply:

    I’d be fine if you got all the credit. I just want to live in a good economy for a while…

    Reply

    Unforgiven Reply:

    @WARREN MOSLER,

    …I just want to live in a good economy for a while…

    +1

    Reply

    Calgacus Reply:

    @WARREN MOSLER, Why did you steal all of Greg Mankiw’s (aka Save America) ideas, Warren? :-)

    Reply

    beowulf Reply:

    @Calgacus,
    Greg Mankiw’s (aka Save America)

    Now THAT would be a twist if it turned out that Greg is the Dr. Jekyl and Mr. Save America of econoblogging.

    Well done Calgacus putting all the pieces of the puzzle together.
    :o)

    Save America Reply:

    @Calgacus, This meme also fascinates me, the OUTING of the ZORRO’s of this world by his own friends who he is trying to help. It seems thier desire to uncover the mask and solve the mystery outweighs thier common sense to realize unmasking zorro will get him killed and hurt thier cause. I see this all the time with genius hackers, they don’t even need someone else to do this, they unmask themselves to brag and destroy the help the could continue to give to the cause by remaining masked. If everyone knew who ZEROHEDGE’s tyler durden really was, that person couldn’t contribute in the ways they do. If you have discovered I am greg mankiw, please keep it under your hat and don’t uncover my mask so I can keep helping anonymously…. Dark Pools and Closed trading records are best right? Warren’s funds do it…. He is just really trying to help us all with his ZORRO funds that are shrouded in mystery and darkness :) http://www.youtube.com/watch?v=dzGW-kFeviE&feature=fvst

    Save America Reply:

    @WARREN MOSLER, How fast can you add new human wetware to the world, versus how fast you can bring that wetware up to the level of understanding of most of the MMT philosophers here? There were people on the boat with Salinger who truly believed the world was only 6K years old, somehow the logic and science and memes that drive many here never made it into thier brains and at this point probably never will. So why continue to add more and more human beings to this “system” who don’t contribute to thier own advancement and in fact will bring down new members of society into their degenerate state? As you point out time and time again Warren, it is like turkeys advocating for thanksgiving. And the couple turkeys you reach to convince to save themselves, the dumb turkeys infect thousands to hurt themselves. To use your example warren, You are in a bowling alley, and the dude and walter are good bowlers, and there is a smart guy controlling the score, and all is at peace and harmony and ZEN in the bowling alley. Then some fool opens the front door and lets in a religous nut, and then a few criminally insane people, and then some shot out old drunken bums, and now the bowling alley smells of urine, is rundown, and the dude and walter can’t come there and play anymore and get thier ZEN, the place has been ruined by ignoramuses, turkeys voting for thanksgiving. If three people in the world are advocating science and MMT, but 3 billion are spreading nonsense, the sheer numbers of the “virus” will overpower, in fact human history proves this out, we rise and fall from ages of enlightenment to dark ages. Why don’t we have better societal engineers who recognize we have to add humans to society that have wetware that is based on some kind of logic, we can’t let the “virus” of ignorance come in and overpower. Where is the edward bernays of MMT? The propoganda master that can alter the minds of billions with just some key marketing? All your smarts and money and political runs don’t seem to have worked Warren, time for a change in strategy. 70% of IBM’s budget each year was for marketing, what advertising agencies have you contacted to do this MMT spreading professionaly? Why can’t all you smart big brains here do some youtube debates or shows that feed this info in ways using multimedia, coming here and trying to read this esoteric stuff is not going to infect the greatest number of humans. First you are going to have to do like the big networks, have a hot blonde that appeals to the base animal instincts of J6P like becky quick, warren you got Sada, covered, then you need a funny guy to throw a little humor into the mix like mark haines used to do. Warren I hate to say this, but your delivery of your “topic” was a real failure on CNBC, it was hard to watch you, you didn’t project confidence or make it seem simple and easy, so you lost the attention span of the turkeys who are voting for thanksgiving. You need to do a professional documentary mike moore style about the topics covered in your and how unemployment and wasted human output is the real enemy, not debt and financial abstractions on a spreadsheet. I have watched my nieces turn on shows like aqua teen hunger force, the neural connections those mish mash of memes start in those young minds explains a lot why no matter what you do or how much logic you use, thier brains are never going to acquire thier minsky moment, they are lost souls. Thier minds at young ages never learned structure, their neural network wetware was damaged before they even had a chance, and here you come along beating your head against the wall trying to reprogram these broken wetware computers who can’t be fixed, trying to teach pigs to fly, wasting everyones time. I think I can speak for a lot of people here, we all have known some crazy ex-girlfriends, altucher is talking about it all the time on his blog now, these brains are insane, thier neural networks can’t be fixed no matter how many times you repeat the message and provide facts.

    Reply

    Save America Reply:

    @Save America, there is a guy on youtube, deek jackson, FKN NEWZ, there is a website called business insider, another called zero hedge, they appeal to the masses because they are funny and riveting, but I stopped coming here a long time ago to learn about MMT, but more to see you Warren pick on all these idiots and constantly laugh at you showing again and again turkeys voting for thanksgiving, where is the deek jackson of MMT? Can’t some of you do a youtube newscast showing how the failure to follow some MMT memes is really hosing the world and adding to unemployment deek jackson style? This would spread your memes to a much wider audience of humans than the limited reach you have achieved so far, what does the chart look like for the growth of unique hits every month to moslereconomics?

    Paul Mineiro Reply:

    @Save America, Perhaps MMT can be sold to conservatives as a national security issue. Here’s a prototype pitch:

    “When Reagan set fiscal policy appropriately, it was morning in America, and we went from being a superpower to being the only hyperpower. Now it’s China that understands what it means to be a currency sovereign, and they are eating our lunch. If we don’t start taxing less and spending more, we’re going to continue to tread water and they are going to continue to eat our lunch. Another American century demands MMT.”

    Reply

    Unforgiven Reply:

    @Paul Mineiro,

    And then hold your hand over a candle to prove your point!

    Excellent spin, Paul!

    Reply

    Save America Reply:

    @Paul Mineiro,It is a security threat, 2cnd only to nuclear war, former secretary of defence: Robert Macnamara http://en.wikiquote.org/wiki/Overpopulation “Short of nuclear war itself, population growth is the gravest issue the world faces. If we do not act, the problem will be solved by famine, riots, insurrection and war. Robert McNamara, Former World Bank President”

    But Mcnamara assumed billions of dumb turkeys who vote for thanksgiving (which warren does a good job showing is our current course), imagine if those billions were instead as Julian Simon said from the same link above:

    Adding more people causes problems, but people are also the means to solve these problems. The main fuel to speed our progress is our stock of knowledge, and the brake is our lack of imagination. The ultimate resource is people – skilled, spirited, and hopeful people who will exert their wills and imaginations for their own benefit, and inevitably they will benefit not only themselves but the rest of us as well.

    Unlike plagues of the dark ages or contemporary diseases we do not yet understand, the modern plague of overpopulation is soluble by means we have discovered and with resources we possess. What is lacking is not sufficient knowledge of the solution but universal consciousness of the gravity of the problem and education of the billions who are its victims. Martin Luther King, Jr., acceptance speech, Margaret Sanger award in human rights 1966; Lamont Hempil Sustainable communities.

    There are now 6 billion people on Earth. The planet’s population will most likely continue to climb until 2050, when it will peak at 9 billion. Other predictions have the world’s population peaking at 7.5 billion in 2040. In either case, it will then go into a sharp decline. The world may soon be facing an under-population crisis — a prospect that has all but escaped media scrutiny. Anthony C. LoBaido, “The overpopulation lie”

    Growth of loving human beings was god’s first commandment in Genesis, he said to go forth and multiply, this before all other commandments.

    As warren said in the carney post – “grossly overtaxing for inflation prevention”

    Just like we are trying to currently fight monetary inflation with misdirected overtaxing, we are fighting population inflation with the wrong policies too.

    Reply

    jonf Reply:

    All the MMT writers are well known. You just can’t hide it. But Warren, stop stealing Manikiw’s stuff.

    Reply

    WARREN MOSLER Reply:

    first i have to read it to know what i’m stealing?

    Reply

    Save America Reply:

    @WARREN MOSLER, http://www.alexa.com/siteinfo/moslereconomics.com# Read this bond god, looks like this chart shows your website is slowly dying, 23% loss of traffic in the past 3 months.

    http://siteanalytics.compete.com/moslereconomics.com/ you tell me dear traders, does this look like a stock you want to go long? The unique visitors to warren’s blog – in essence measuring the success of his meme spread? I like to see slow steady growth in my long term bets, thats not what this chart shows with warren’s traffic.

    WARREN MOSLER Reply:

    a few months ago i suddenly got a lot of traffic from a site called maybe stumblon and hits shot up for week or so, then came back down to about where they were, maybe a little higher, and they are up some from there. but traffic has been up steadily for quite a while, with thousands of repeat visitors

    Save America Reply:

    Audience Snapshot
    Top Search Queries for Moslereconomics.com

    Based on internet averages, moslereconomics.com is visited more frequently by males who are in the age range 18-24, have no children, have no college education and browse this site from home.
    Get complete site demographics.

    There are your current demographics, what are you gonna do to fix things Warren?

    Query
    Percent of Search Traffic

    1 warren mosler 5.57%

    2 mosler 4.60%

    3 mosler economics 3.81%

    4 mmt wray 3.13%

    5 wp-content 2.58%

    6 tom hickey mmt 2.44%

    7 jj lando goldman sachs 2.33%

    The Advisor makes all investment decisions for the Partnership and Finance. A potential conflict
    of interest exists because the Advisor has a disincentive to replace itself as trading adviser even if such replacement may be in the best interests of the Partnership.

    The General Partners and their principals may trade for their own accounts and may, as a result of
    a neutral allocation system, testing a new trading system, trading their proprietary accounts more aggressively, or
    any other actions that would not constitute a violation of fiduciary duties, take positions in their proprietary accounts
    which are opposite or ahead of the positions taken for the Partnership and/or Finance. The records of such trading
    will not be made available to Limited Partners.

    Absolute power corrupts absolutely Warren, how does a guy worth so much money not let it go to his head? Obama promised transparency, some people have to lead by example, you can do it Warren. Open the records of that trading, make it available. The financial sector is a lot more trouble than its worth….

    WARREN MOSLER Reply:

    i havent made fund trading decisions since the end of 1997 after doing it for 15 years, and every trade was fully disclosed in real time. when i ran the fund it was fully transparent. and just so happened there wasn’t a single losing trade during those 15 years.

    Save America Reply:

    @WARREN MOSLER, “a few months ago i suddenly got a lot of traffic from a site called maybe stumblon and hits shot up for week or so,”

    How does an information manager like you not get his IT people to unravel this mystery and whatever caused that upsurge to be analyzed and repeated to cause more upsurges? You really don’t care about the specifics of that event?

    “i havent made fund trading decisions since the end of 1997 after doing it for 15 years,and every trade was fully disclosed in real time. when i ran the fund it was fully transparent. and just so happened there wasn’t a single losing trade during those 15 years.”

    So address the points made, absolute power corrupts absolutely, opaqueness is a bad idea, why are you affiliated with a fund that won’t disclose trades? Something smells rotten in the state of denmark….

    I see a pool boy from miami who used a bean pit trader to fool some rich old guys into poorly executed trades. From his own experience he points out how pathetic our current financial system is in serving the needs of humanity. He tried to make huge topdown level changes running a senate campaign, but my preacher says when you want to save a beach full of dying starfish who have washed ashore, you throw one starfish at a time back into the water. Maybe you should move back to DC or Florida and get personally involved with city or state governments or smaller companies about make work jobs employing people just to keep thier idle hands occupied and pay them nothing but give them skill that maybe they can sell later. You could personally get involved with the high speed train in florida that could employ people who are idling right now and give them skills that they could use to build high speed rail all over the USA. You could get involved with the spaceport stuff richard branson is doing, help out some florida nasa guys who have no employment right now. Show up in person, talk to city councilmen personally, work on the starfish problem one at a time from the ground level, not the way you have done it, there is so much idle labor out there looking for some leadership and direction, and the government has and is failing them, but you sitting in the USVI for 6 months doing 25 knots in your superboat aint helping in the macro picture. How many local city councilmen and mayors who could put things together at the real grassroots level do you meet with personally every day?

    Save America Reply:

    @WARREN MOSLER, Obama didn’t get to where he was preaching to the masses from the ivory tower top level down about some macro grand strategy that would save the world, he worked out in the foxholes building support personally with the sheeple one at a time, meeting with the starfish one on one, I don’t see you doing what Obama did.

  2. Anders Says:

    Warren – I’d like to try and flesh out a formal-ish inflation model along the lines of the ideas I’ve seen on your site – eg (1) there are several groups competing for their share of real GDP, (2) if one sector is able to pass on price increases to those it sells to, it will grow its share of real GDP, (3) inflation will only happen / accelerate if all of the other sectors similarly have sufficient market power to increase their own output pricing (ie if there is sufficient slack in any of the other sectors, inflation will peter out because one sector will have ‘yielded’ some share of real GDP to another).

    Two questions: has this been done – eg is this what Lerner formalised in his MAP work? I haven’t been able to track down any papers from the MAP movement. Second, which would be the relevant sectors? Looking at data, it seems the breakdown of GDP by income is wages + gross operatings surplus + taxes on production (net of subsidies); no mention of imports or exports, which seems unintuitive.

    Any insights appreciated..

    Reply

    WARREN MOSLER Reply:

    first, I haven’t read much of Lerner

    second, what’s the further purpose of you model?

    Reply

    Anders Reply:

    @WARREN MOSLER, when I broach MMT with sophisticated, reasonably open-minded non-MMTers, the conversation quickly turns to inflation, and the ‘inevitable’ inflationary consequences of unsterilised deficits. The account of inflation I respond with, is still a bit half-baked, so I’d like to delve into it a bit more so as to be more cogent when I engage montarists.

    I think specific points I feel weak on are: (1) why should MMT be so confident that it’s (only) NFA, and not (at all) liquidity, that drives aggregate demand; and (2) the current inflation (in the UK in particular) appears stubbornly high, putting pressure on the account that it is entirely related to VAT/FX/commodity prices.

    Reply

    Kristjan Reply:

    @Anders,
    I feel the same way. You cannot explain to them that deficit spending without issuing bonds is no more inflationary than with bonds issuing.
    One way is to say that central banks only set price not quantity. But that really doesn’t get against the “liquidity causes inflation” argument.

    WARREN MOSLER Reply:

    as if they think the 3T in qe might have shown up somewhere in the inflation data if it mattered?

    jrbarch Reply:

    @Anders,

    Would this help: Can taxes and bonds finance Govt. spending? Stephanie Bell (Kelton)

    ” …it is argued that the proceeds from taxation and bond sales are technically incapable of financing government spending and that modern governments actually finance all of their spending through the direct creation of high-powered money.”

    After that it’s just when to stop spending (and on what) …?

    WARREN MOSLER Reply:

    I tried to keep them from calling it high powered money as with floating fx it’s not,
    but Randy was Minsky’s student and his initials were HPM. Seriously!

    WARREN MOSLER Reply:

    1. History and theory. Point to all the QE the world has done, never causing inflation. And then ask why adjusting market interest rates to shift investor balances from securities accounts to reserve accounts should be inflationary in a world where the economy is a net receiver of interest?

    2. Yes, call those ‘administered prices’ institutionalized by govt. paying the higher prices as well.

    Anders Reply:

    @Kristiaan, yes – the “liquidity causes inflation” argument is pretty much unchallenged. I think its microfoundations are actually quite flawed. For example, Tim Congdon dismisses Kaldor and the entire school of endogenous money by saying that (i) excess deposit balances can only be shed by repaying bank debt, (ii) the sectors with bank debt are not those sectors that get the excess deposits from QE, (iii) ergo the guys who get the excess deposits aren’t able to shed them. He ignores the fact that every risk asset bought by a non-bank from a bank reduces deposits.

    Also, rsj has done some good stuff (with graphs too!) on why _most_ of an exogenous shock to non-bank deposits will be shed quickly, by focusing on sectoral elasticity of net supply. But his argument concedes that _some_ of the excess balances will be retained, pushing up asset prices, which I’m not sure is a concession that needs to be made.

    http://windyanabasis.wordpress.com/2011/06/16/pushing-on-a-string-supply-demand-version/

    Kristjan Reply:

    @Anders,
    they don’t really believe that liquidity causes inflation, if you ask them if operation twist is inflationary, they say no because money is not added

    Anders Reply:

    @Warren,

    Warren – thanks, but surely that portion of the economy which is a net recipient of interest income is wealthy asset managers or households with low marginal propensities to consume, or else foreigners. The net interest expense relates to net debtor households and firms with a higher propensity to consume. So, the argument goes, even with the economy being a net recipient of interest, reduced interest is still inflationary.

    Also, Japan is disregarded as being non-comparable…

    WARREN MOSLER Reply:

    fed research shows, last i checked, that the propensities to consume of savers and borrowers are about the same

    beowulf Reply:

    @Anders,
    That all-around good egg (and Nobel Laureate) was a big believer in Abbal Lerner’s idea of tackling cost-push inflation via a markups warrant market.
    http://findarticles.com/p/articles/mi_qa5461/is_n2_v37/ai_n28633195/pg_8/?tag=content;col1

    Over at Trader’s Crucible, TC (an active currency trader) explained why such a market would quickly turn into a mess. I suggested as alternative that replacing the corporate income tax (firms could report gross sales, COGS and gross profits on their quarterly payroll tax filings) by instead taxing based on a firm’s Lerner Index (“named after the economist Abba Lerner, describes a firm’s market power. It is defined by: L = (P-MC) / P”).
    http://traderscrucible.com/2011/04/21/yglesias-and-mmt/#comment-340

    beowulf Reply:

    @Anders,
    The all-around good egg was of course Bill Vickrey, sorry. :o)

    NKlein1553 Reply:

    @Anders,

    http://community.middlebury.edu/~colander/articles/real_theory_inflation.pdf

    http://community.middlebury.edu/~colander/articles/real_theory_inflation.pdf

    http://community.middlebury.edu/~colander/articles/macroeconomics%20was%20vickery%20ten%20years%20ahead.pdf

    All three articles touch on the MAP. First is the most comprehensive. There was also a whole book about the MAP Colander wrote with Lerner. Out of print now I believe, but you can find used copies on Amazon.

    http://community.middlebury.edu/~colander/books/map.html

    Pretty sure Warren doesn’t think much of the whole creating a market for mark-up warrants idea. Not terribly sure why not. Beowulf is more sympathetic.

    Reply

    WARREN MOSLER Reply:

    Right, doesn’t do much for me. Seems highly problematic measuring, no less enforcing profit margins.

    Reply

    Talvez... Reply:

    @Anders,
    Yes, inflation is always the problem I bump into as well.

    I’m happy if the conversation can go three pages with hyperinflation manias.

    Reply

    Ivan Reply:

    Anders:

    What is with the “@” sign in addressing people these days? Is this a twitter thing? Can’t stand it!

    Anyway, the best argument I find in combating the inflation response is to look at Japan. Their deficits as a percentage of GDP are and have been significantly higher than the deficits in the United States yet they have a hard time keeping inflation above 0%. Their interest rates are and have been much lower than our rates as well. I also like to ask people where the very first dollar that the government borrows comes from. That always throws them off.

    Reply

    Anders Reply:

    @Ivan, Ivan – I try the Japan argument, but my interlocutors invariably reject it on the basis that Japan’s very strong NIIP is what enables the deficits and QE; with the US’ and UK’s negative NIIPs at c. 15-20% of GDP, we are not comparable to Japan. It’s a pretty annoying argument, but it neutralises Japan as a positive example.

    WARREN MOSLER Reply:

    like it matters that most yen reserve balances at the boj are held by residents vs non residents

    Ivan Reply:

    What is their argument with respect to NIIP and inflation? The Japanese “fund” 90+% of their “debt” internally and we fund 70+% internally. Japan was downgraded 10 years ago. I still don’t understand. Japan imports 100% of its oil and natural gas. In traditional economics, spending more than you take in by “borrowing” and then having the central bank buy the securities issued is inflationary. I can’t imagine how they can argue that their logic applies to the U.S. and not Japan. I’d actually argue that our trade deficit is deflationary. We’re buying products at discounted prices from China which is keeping our factories and labor idle and retail prices soft.

    Talvez... Reply:

    @Ivan,

    No, it’s not a Twitter thing. It’s a general Internet thing.

    NIIP?

    My biggest problem is inflation in what regards money creation. I mentioned money creation as a source of revenues (like the textbook indicates :) ) and the reply was basically “inflation”.
    I had a discussion about inflation with my Public Finances professor, I got him to contradict himself a couple times, but I wasn’t able to close the matter (aka, leave them without reply/ or an obvious win).

    WARREN MOSLER Reply:

    The currency is a simple public monopoly making the gov price setter rather than price taker

    So the price level, whatever that means, is necessarily a function of prices paid by gov when it spends and or collateral demanded when it lends.

    This is beyond dispute

    jrbarch Reply:

    @Anders,

    WARREN MOSLER Reply:“I tried to keep them from calling it high powered money as with floating fx it’s not …”

    Could you expand a little on that one for me please Warren?

    Thanks …

    Reply

  3. Paul Mineiro Says:

    A scene from Animal House comes to mind.

    http://www.youtube.com/watch?v=wm7D5VRfaTI

    Reply

  4. Gary Says:

    “”The one thing that we can be certain of, among all the uncertainties, is that the global economic recession caused by the international financial crisis will be chronic,” Xinhua, the official newsagency, reported Wang as saying. And Xinhua tends to check its quotes when made by vice-premiers.”

    http://www.smh.com.au/business/keeping-the-faith-in-china-20111121-1nq3c.html

    Reply

  5. Jose Says:

    @ Kristjan,

    “… cannot explain to them that deficit spending without issuing bonds is no more inflationary than with bonds issuing”.

    How about trying this: if I hold a liquid bond that pays interest why would I start spending more if I sold that bond and put the money in a non interest bearing bank deposit?

    Reply

    Anders Reply:

    @Jose, it’s not necessarily you, under the (conventional) monetarist argument, who is going to start spending more. If you sold a bond – because the yield had gone down a bit – you probably expected to put the proceeds into another risk asset, rather than in the bank. The problem you then find (according to this account) is that other people who have sold bonds to the central bank have the same idea – so risk assets quickly get more expensive. The increase in asset values leads to general higher levels of consumer confidence – and a lower desire to run a financial surplus.

    Reply

    Kristjan Reply:

    @Anders,
    That’s exactly how they argue It, the money would go into other assets making those prices higher-nominal GDP would grow.

    Reply

  6. Unforgiven Says:

    @Anders,

    Well, now we have some data relating to that; QE exchanged X amount of bonds for dollars and we got what amount of inflation from that?

    This also sounds like they are saying that people will rush out and buy the same risk assets; perhaps some would (oil futures, maybe?). All kinds of result come from risk, that’s why they call it risk. Just because some buy it doesn’t mean it’s going to increase in price. Some will, some won’t, all dependent on what timeline your looking at too. Sounds like more arguments using static values where variables are called for.

    Reply

  7. jrbarch Says:

    And John Quiggin has voted for consigning MMT to the ‘sandpit’ for children to play with while the adults get on with confusing the world ….http://johnquiggin.com/2011/11/20/blogging-the-zombies-austerity/#comment-163162

    Reply

  8. Jim@ Says:

    Dreamin’, I’m always dreamin’…

    1. Ban party politics entirely and require as law that all politicians serve the country first ahead of their electorate.

    2. Require that every politician enter a written contract regarding their pledges on issues raised in the campaign and remove them from office if they fail to uphold their promises.

    3. Require all politicians to tell the truth at all times while in elected office.

    4. Require politicians to hold all investments at arms length for the duration of their appointment.

    Reply

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