Author Archives: Stephanie Kelton

Why Minsky Matters

Posted on March 25, 2014 | 7 comments

minsky American economist Hyman Minsky died in 1996, but his theories offer one of the most compelling explanations of the 2008 financial crisis. His key idea is simple enough to be a t-shirt slogan: “Stability is destabilising”.

BBC Radio 4’s Analysis program has an episode on Minsky and looks at topics such as:

In the aftermath of the financial crisis, why did Minsky die an outsider?
What do his ideas say about the response to the 2008 crisis and current policies like Help to Buy?
And has mainstream economics done enough to respond to its own failure to predict the crisis and the challenge posed by Minsky’s ideas?

7 Comments

Posted in Uncategorized

Tagged financial instability hypothesis, Great Financial Crisis, Hyman Minsky, Stability is destabilising

The Triumphant Return of NEP’s Podcast

Posted on February 27, 2014 | 5 comments

By Stephanie Kelton

It’s been a long time, but I finally carved out enough time to record a new podcast. Although they’re my colleagues, Bill Black, Randy Wray and I see surprisingly little of one another these days. I did manage to catch up with Bill in Minneapolis last week, where I happened to be giving a talk (more on that in the coming days), but for the most part we’re all just trying to keep up with requests, which is a good problem to have when you think about it.

It was nice to slow down and talk with Randy this afternoon. We promised one another we’d do it more often. Anyway, here is today’s podcast. We hope you enjoy it.

5 Comments

Posted in Uncategorized

How Fiat Money Works

Posted on January 8, 2014 | 50 comments

By Chris Mayer*

Warren Mosler tells a good story that shows how our economy works at its most basic level.

Imagine parents create coupons they use to pay their kids for doing chores around the house. They “tax” the kids 10 coupons per week. If the kids don’t have 10 coupons, the parents punish them. “This closely replicates taxation in the real economy, where we have to pay our taxes or face penalties,” Mosler writes.

Continue reading →

50 Comments

Posted in Guest Blogger

Tagged fiat money, MMT, Modern Monetary Theory

Five Ways to Improve Your Odds of Succeeding in the Labor Market

Posted on January 6, 2014 | 12 comments

By Stephanie Kelton

It’s been five-and-a-half years since the US economy officially went into recession and three-and-a-half years since we entered the “recovery” phase of the business cycle. While technically in “recovery,” it’s no secret that when it comes to the labor market, workers are suffering the weakest turnaround in the post-WWII era.

And despite what you may have read, the truth is we’re still nowhere near full employment — at least not if you’re honest and you’re counting everyone who wants full-time work and can’t get it.

Continue reading →

12 Comments

Posted in Stephanie Kelton

Tagged labor market

They’re Back: The Poltergeists in the Kansas Senate Renew their Attack on Education

Posted on December 31, 2013 | 13 comments

By William K. Black

Two Kansas legislative leaders who have been attacking Kansas education for over a decade through their wars on teaching about sex and evolution are back. Their threats drove the Regents’ policy destroying academic freedom and tenure.

Poltergeist: A ghost that manifests itself by noises, rappings, and the creation of disorder – from the German Poltern (to make noise) and Geist (ghost).

I have written two prior columns (here and here) explaining how the Kansas Regents casually ended academic freedom and tenure in their universities with no notice to or participation by the faculty.

Continue reading →

13 Comments

Posted in William K. Black

Tagged academic freedom, kansas, Koch, NRA

Slapping Trillions of Obligations Into the Diapers of the Next Generation

Posted on December 18, 2013 | 54 comments

By Stephanie Kelton

I get a huge volume of e-mail, but I don’t get the kind of hostile stuff that guys like Joe Weisenthal and Paul Krugman sometimes joke about. I got one today, though, and boy is this guy steaming over my MMT coloring book! Here’s the message:

It’s hard not to sympathize with a guy like this. He apparently has kids, and he’s scared to death that his children and grandchildren will suffer real harm because Washington won’t get its fiscal house in order. And why wouldn‘t he think that? I mean, really. Politicians on both sides of the aisle have spent decades labeling the government’s finances a “fiscal train wreck” that will leave future generations with a “crushing burden of debt.” The mainstream media hypes these fears on a daily basis, and even NPR appears to be shilling for the debt scolds.

So it’s no wonder a guy like this is blasting me. He had probably never before encountered anything that rejects, so forcefully, the entire compilation of debt and deficit tropes.

He doesn’t strike me as a particularly open-minded guy, but I think I’ll send him this list of suggested readings anyhow. Maybe he hasn’t finished his holiday shopping.

Recommended Inoculation

Freedom From Debt by Frank Newman

7 Deadly Innocent Frauds of Economic Policy by Warren Mosler

Understanding Modern Money by L. Randall Wray

Also these short articles:

Does Debt Matter? by Robert Skidelsky

Balanced Budgets and Depressions by Frederick Thayer

* I did bother to reproduce, by the way. These are my little burdens of joy. Both will find copies of the coloring book in their stockings on Christmas morning.

Follow me on Twitter: www.twitter.com/stephaniekelton

54 Comments

Posted in Stephanie Kelton

Tagged debts, deficits, grandchildren

How to Exit Austerity, Without Exiting the Euro

Posted on December 6, 2013 | 81 comments

By Rob Parenteau

First of all, if a government stops having its own currency, it doesn’t just give up ‘control over monetary policy’…If a government does not have its own central bank on which it can draw cheques freely, its expenditures can be financed only by borrowing in the open market, in competition with businesses, and this may prove excessively expensive or even impossible, particularly under ‘conditions of extreme urgency’…The danger then is that the budgetary restraint to which governments are individually committed will impart a disinflationary bias that locks Europe as a whole into a depression it is powerless to lift.

So wrote the late Wynne Godley in his August 1997 Observer article, “Curried Emu”. The design flaws in the euro were, in fact, that evident even before the launch – at least to those economists willing to take the career risk of employing heterodox economic analysis. Wynne’s early and prescient diagnosis may have come closest to identifying the ultimate flaw in the design of the eurozone – a near theological conviction that relative price adjustments in unfettered markets are a sufficiently strong force to drive economies back onto full employment growth paths.

Continue reading →

81 Comments

Posted in Guest Blogger

Tagged austerity, euro, Eurozone, eurozone crisis

MMT for Toddlers

Posted on November 28, 2013 | 11 comments

By Stephanie Kelton

This year’s must-have stocking stuffer. My new MMT Coloring book.

11 Comments

Posted in Stephanie Kelton

Tagged MMT, Modern Monetary Theory

JFK and Federal Budgetary Policy

Posted on November 22, 2013 | 19 comments

By Mathew Forstater

On this, the 50^th anniversary of the assassination of President John F. Kennedy, we would do well to remind ourselves that another loss resulting from that fateful day was that of a progressive trend in leadership regarding federal budgetary policy. The points are expressed so clearly they require no interpretation or commentary.
Continue reading →

19 Comments

Posted in Guest Blogger

Tagged budgetary policy, John F. Kennedy

Former Dept. Secretary of the U.S. Treasury Says Critics of MMT are “Reaching”

Posted on October 30, 2013 | 75 comments

By Stephanie Kelton

A few weeks ago, I had a lengthy e-mail exchange with Frank N. Newman, former Deputy Secretary of the U.S. Treasury. Frank’s books (here and here) are so closely aligned with MMT thinking about deficits, debt, monetary operations, etc. that I wanted to get his thoughts on one of the most common criticisms of MMT. MMT recognizes that the currency itself is a simple public monopoly and that the issuer of the currency must spend (or lend) it into existence, before it can be used to pay taxes or buy bonds. The implication? Governments that issue sovereign money are not revenue constrained. Critics have argued that MMT has this all wrong because the system requires the government to have numbers on its balance sheet before it can spend — i.e. the government is not allowed to run an overdraft and is, therefore, constrained by cash on hand. Here’s what Frank Newman thinks of that critique: