Category Archives: Eric Tymoigne

Money and Banking – Part 3

By Eric Tymoigne

(A quick note: I noticed that the M&B posts get posted on other blogs. If you want me to respond to you, you should comment at NEP.)

MONETARY BASE AND THE BALANCE SHEET OF THE FED.

The previous post examined the balance sheet of the central bank:

f1

Now that we have an understanding of how the balance sheet of the Federal Reserve works, it is possible to go into the details of how the Fed operates in the economy in terms of monetary policy.

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Money and Banking – Part 2

By Eric Tymoigne

[Revised 1/18/16 – updated t-account images]

Central bank balance sheet and immediate implications

The previous post reviewed basic balance-sheet mechanics. This post begins to apply them to the Federal Reserve System (Fed).

Balance Sheet of the Federal Reserve System

For analytical purpose, the balance sheet of the Fed can be presented as follows:

f1

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Money and Banking – Part 1

By Eric Tymoigne

I struggled a few years to get a Money and Banking (M&B) course together. It lacked coherency and students had difficulty linking the different parts of the class. A good part of the problem comes from the M&B textbooks that, besides having outdated presentations, are a disparate collection of chapters without a coherent core. So I gave up with textbooks and went my own way.

The core of the financial system consists of financial documents and among them are balance sheets. Balance sheets provide the foundation upon which most of an M&B course can be taught: monetary creation by banks and the central bank, nature of money, financial crises, securitization, financial interdependencies, you name it, it has to do with a balance sheet. As Minsky used to note, if you cannot put your reasoning in terms of a balance sheet there is a problem in your logic.

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FUNDAMENTALS: Monetary Policy, Interet-Rate Targeting and the Corridor

The latest in a series of class project videos from Eric Tymoigne’s upper division Modern Money Theory class at Lewis and Clark College. Over the next several days, we will be posting  select videos created by his most recent class. Eric has created a YouTube channel to be the home of MMT videos created by L&C students. You can check it out here.

FUNDAMENTALS: Monetary Instruments, Principles and Logic of Acceptance

The latest in a series of class project videos from Eric Tymoigne’s upper division Modern Money Theory class at Lewis and Clark College. Over the next several days, we will be posting  select videos created by his most recent class. Eric has created a YouTube channel to be the home of MMT videos created by L&C students. You can check it out here.

Fundamentals: Automatic Stabilizers and “Clinton’s Surplus”

The latest in a series of class project videos from Eric Tymoigne’s upper division Modern Money Theory class at Lewis and Clark College. Over the next several days, we will be posting  select videos created by his most recent class. Eric has created a YouTube channel to be the home of MMT videos created by L&C students. You can check it out here.

US Treasuries auction: method and implications

The latest in a series of class project videos from Eric Tymoigne’s upper division Modern Money Theory class at Lewis and Clark College. Over the next several days, we will be posting  select videos created by his most recent class. Eric has created a YouTube channel to be the home of MMT videos created by L&C students. You can check it out here.

Penny Hoarders: A Contemporary Example of a Problem with a Gold/Silver Standard

By Eric Tymoigne

Yesterday National Public Radio ran a segment on penny hoarders. These are people whose hobby is to hoard pre-1982 pennies. Some even go to their local banks and ask to convert dollar bills into pennies and then spend their evenings triaging boxes of pennies. Why would they do that would you ask? Well, pre-1982 pennies are made mostly of copper and, given the price of a pound of copper tripled over the past ten years, the face value of a penny is half the value of the content of copper: face value is 1 cent, intrinsic value is 2 cents. 100% profit from selling pennies for their copper content!

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Bitcoin System: Some Additional Problems

By Eric Tymoigne

In my last post, I argued that the fair price of a bitcoin as a monetary instrument is zero BTC; a bitcoin contains no promise in terms of income, in terms of convertibility, in terms of maturity, or any other. As a commodity, I have no idea what its fair price is. BOA says it is $1300. I will let those who find utility in the bitcoin payment system and speculators decide how much they are willing to pay in USD for a number credited on their screen in BTC. All I can tell you is: “money does not grow on trees.” Money is not a natural occurrence, it is a man-made financial devise. It looks like the bitcoin creator’s views on money were shaped by the old and erroneous idea that “gold is money.” Gold was at best a collateral embedded in a monetary instrument (gold coin), the metal itself was never money. In today’s blog, I will focus on three other issues with the bitcoin system that prevent it to work well as a monetary system. While I explain what ought to happen to make the bitcoins work properly as a monetary instrument, I am not sure it can be done.

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MMT 101: A Response to Critics Part 6

Policy Aspects of MMT

By Eric Tymoigne and L. Randall Wray

[Part I] [Part II] [Part III] [Part IV] [Part V] [Part VI]

From the theoretical framework discussed in the 5 previous installments, MMT draws specific policy conclusions about fiscal, monetary and financial policy. In this final post we address the policy implications.

In line with Keynes and Minsky, MMT recognizes that unemployment, arbitrary distribution of income, price instability and financial instability are central problems of market economies that require some government involvement for resolution. 

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