By Raúl Carrillo
“Where does money come from?” That’s our question. That’s the trump card Deficit Owls play to explain why the case for austerity is shallow and sadomasochistic, now and forever. When one spreads the true answer—that the Federal Reserve creates dollars with keystrokes, that the U.S. government, unlike like a state or a household, can’t possibly “go broke”, that Uncle Sam has to worry about inflation but doesn’t need to tax or borrow to spend—policy creativity explodes. The false choices of public finance are illuminated. We can decrease taxes AND increase expenditures. We can achieve full employment AND price stability at the same time. Once we align conversation with operational reality, and recognize that we can’t collectively run out of money, we can have an honest—if always antagonistic—conversation about what institutions should do to create, administer, and regulate stocks and flows of resources.
Dr. Perry Merhling presented this seminar at UMKC on 4/30/14. He presented on the Shadow Banking System, in particular, the Dealer Model. The slides are immediately below the video.
By Philip Pilkington
(Cross posted from Fixing The Economists)
Piketty’s Wikipedia page says that he’s a Keynesian. Well, I don’t see it at all. His book contains a section on the public debt in historical perspective and it is desperately misinformed.
A caveat first though: I actually like Piketty’s book in a lot of ways. While not extremely well written, it is highly readable (if you are an historical data sort of person). And it is very nice to see what is effectively a work of economic history get so much play. Because economists should be far more interested in reality than in modelling and this book could spur that interest.
But the history presented in Piketty’s book is selective and, I think, ultimately untrustworthy. Even the way he chooses to present data — both in terms of the averaging of the time periods and aggregates used — is often quite misleading. I don’t want to get too far into this here but I’m pretty concerned that people who are broadly ignorant about economic history are reading this book and coming away, in many ways, misinformed.
On March 22, 2014, Marc Lavoie of University of Ottawa presented a workshop on Stock Flow Consistent Modeling at University of Missouri Kansas City. Prof. Lavoie graciously provided his slides and they available below the video.
On March 21, 2014, Marc Lavoie of University of Ottawa presented a seminar on Heterodox and Post-Keynesian Economics at University of Missouri Kansas City. Prof. Lavoie graciously provided his slides and they available below the video.
By Anonymous Student*
And there I was, a teenager, strolling on the Kingsway – a district with a long road that encompasses high-end shops, restaurants, and hotels on both sides of the road and as the name implies, it literally used to be the King’s way to his palace – when I saw a few street children walking around begging the privileged passersby for mercy-money. Sadly, I observed that the street children were invisible to almost everyone. The fortunes would look straight at them and see right pass through them. I wondered why those shoppers who could afford to spend on high-end designer handbags could not show mercy on those children and spend a few dollars on them. One of the conclusions I reached was that maybe because they were so used to encountering not only those underprivileged children, but also, a lot of other underprivileged people in their daily lives in that society that they were immune to them. This story is of a developing country and as with a lot of developing nations, the income gap between the “haves” and the “have-nots” was pretty high and consequently, inequality persisted in every aspect of life among the citizens there.
By A. Clayton Slawson III*
In today’s economic market, people tend to think excessively about money whether to spend on essential or discretionary goods and services, savings or which investment options to choose, or even the current topic du hour in Washington, whether there is too much or too little money floating around! Many “arm chair” economists, lacking the knowledge of our economic history, stop at these basic thoughts however, and thus never fully understand money in terms of its identity, origin, or even how today’s currencies became of value in the first place. Just as these concerns can vary person to person, so too can the very definition of money and how currency adopts value. In order to better understand the “nature of money,” this paper will utilize the frameworks of both the Orthodox school and the Heterodox schools of thought to provide a basic understanding of money in their respective approaches, which will set up a clear argument for why one approach is more advantageous for guiding economies toward full employment. Undoubtedly, any weekend warrior economists will be better prepared for discussions on money at the conclusion of this paper.
By Alex Hofmann
Coming back to Stephanie Kelton’s “A Contest: MMT for Eighth Graders” from last May, we have yet to find a good way of explaining basic modern money concepts to children. I followed the blog thread with much interest, but it seems that the initiative has got stuck on the fundamental challenge of finding child-like analogies for concepts that are too abstract even for well-educated grown-ups. As has been pointed out many times, didactics or ‘framing’ is perhaps MMT’s biggest strategic challenge.
Looking at my own children, a lot if not most of their learning happens not by chewing on concepts but through play, often enough by integrating recent experiences into their favourite games. Hence, what might work better than verbal explanations is an adaptation of the popular ‘Monopoly’ board game: Modern Money Monopoly (MMM).