Tag Archives: krugman

Krugman, Helicopters, and Consolidation

By Scott Fullwiler and Stephanie Kelton

Paul Krugman has a new post that explains why the debate over money- vs. bond-financing of government deficits is really much ado about nothing.  In it, he essentially echoes longstanding MMT-core principles, as we will show below.  Indeed, MMT blogs have written as much many times previously (for example, see here, here, here, and here).

Krugman’s post looks at two alternative scenarios:

Case 1: The government runs a deficit, selling bonds to offset the shortfall, while the Federal Reserve does QE

Case 2: The government runs a deficit but does not sell bonds, instead financing all of its spending by “printing money” (i.e. with newly created base money)

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Revealed Biases: Why MMT Critics Continue to Rely on Strawman Arguments

By William K. Black

Economists of nearly every flavor believe in the concept of “revealed preferences.”  What matters is not what people say they will do in a hypothetical situation, but what they actually do.  Their actions speak more credibly than their words.  In this column I announce a related concept: “revealed biases.”

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Beyond Pity and Safety Nets

By Dan Kervick

Paul Krugman is justifiably appalled at what he calls the “war on the unemployed”, the accelerating right-wing campaign to subdue, discipline and pauperize the jobless.  Yet there is nothing new in this campaign.  Economic conservatives and market fundamentalists have always tended to believe that the private enterprise system is both self-correcting and stringently just, and that unemployment results from a misguided combination of indulgent maternal do-gooding and inept government interference with the austere and efficient rectitude of market operations.  The fundamentalists believe unemployment happens because artificial minimum wage laws prevent wages from falling as far as they need to fall to clear the labor market, and that unemployment insurance compounds the problem by seducing potential workers into an unsustainable, dead-end limbo on the dole when they should be swallowing their strong laissez faire medicines and the bitter wages that go with them.  After all, if these dregs and flops were worth more handsome wages, then the Invisible Hand would have already dispensed those wages to them, right?

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The New York Times Thinks Bleeding Cyprus is “Strong Medicine”

By William K. Black
(Cross posted at Benzinga.com)

I’m announcing the New York Times award for incompetence in macroeconomic reporting (IMR, pronounced like “screamer”).  I suggest that the paper offer as a prize to awardees a two hour lunch with Krugman in which he provides a remedial economics lecture.  My premise is that it is impossible to be a NYT reporter and fail to know that the paper has a Nobel Laureate in economics who writes a regular column for the paper and frequently discusses making economic downturns worse by inflicting self-destructive austerity.  Even the most casual reader of Paul Krugman’s columns would know that opposition to austerity has long been the dominant view among economists and that over the last five years events here and in Europe have again confirmed that view.  Continue reading

Krugman is Right about Simpson-Bowles: The Buzzards Circle the Fiscal Cliff

By L. Randall Wray
(Cross posted from economonitor.com/lwray)

In a powerful piece, Paul Krugman blasts Alan Simpson as an ignoramus when it comes to federal government budgets. He rightly wonders why anyone takes this nutter seriously:

Simpson is, demonstrably, grossly ignorant on precisely the subjects on which he is treated as a guru, not understanding the finances of Social Security, the truth about life expectancy, and much more. He is also a reliably terrible forecaster, having predicted an imminent fiscal crisis — within two years — um, two years ago…. So what is it that makes Simpson the figure he is? Clearly, it’s an affinity thing: never mind his obvious lack of knowledge, his ludicrous track record, reporters trust and idolize Simpson because he’s their kind of guy.

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Understanding the Permanent Floor—An Important Inconsistency in Neoclassical Monetary Economics

By Scott Fullwiler

I’ve written numerous times already about how a deficit “financed” by bonds vs. “money” doesn’t matter in terms of inflationary effect.  Notwithstanding my views there (which are not discussed in this post), the point of this post will be to explore the neoclassical paradigm on this matter, since this is at the core of the recent debate between Steve Randy Waldman (see here, here, and here) and Paul Krugman (see here and here) on the so-called “permanent floor.”  (It might be of interest to some that I explained how a “permanent floor” would work back in 2004.)

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Wake Up Progressives: the Trillion Dollar Coin Can Be Game-Changing!

By Joe Firestone

Well, not really. But if you view the Trillion Dollar Coin (TDC) meme, as I do, as a short-hand for the more general idea of using Platinum Coin Seigniorage (PCS), then yes, it can change the whole political game for progressives if President Obama dares to use it.

Literal TDC proposals would solve the debt-ceiling, but they won’t solve the larger problem of defeating the austerity politics that is so close to getting the cuts to social safety net and important discretionary government programs that austerians have long sought. PCS game-changer proposals are the ones calling for, or analyzing the impact of, PCS options aimed at paying off the national debt and covering anticipated federal deficit spending for some years. Continue reading

Wake Up Progressives: The Bad Guys Are Trying To Steal the Trillion Dollar Coin to Save the Financial Status Quo!

By Joe Firestone

Among the many posts on the Trillion Dollar Coin (TDC) and Platinum Coin Seigniorage (PCS) we’re seeing this week, is a category of posts favoring using PCS in a limited way to avoid the debt ceiling crisis, rather than using it in a much more robust way, that would change the procedures underlying Federal spending, so that fiscal policies advocating austerity no longer have a political foundation in a visible and rising national debt that austerity advocates can constantly talk about fixing through “shared sacrifice.” Continue reading

Paul Goes Platinum!

By Joe Firestone

Another platinum coin surge in the Second Wave rippled through the mainstream media yesterday and this time hit the Congressional Progressive Caucus. Domenico Mantanaro of MSNBC kicked things off on one of the morning shows by mentioning the Trillion Dollar Coin (TDC) as a possible solution to the debt ceiling problem. Then, in the afternoon, on MSNBC’s the cycle, Krystal Ball, and Steve Kornacke, in discussing the coming debt ceiling conflict talked rather matter-of-factly, I thought, about minting some TDCs to get around the debt ceiling. Continue reading

What I Did Not Get to Say on NPR’s On Point This Morning

By Stephanie Kelton

This morning, I appeared on Tom Ashbrook’s radio show, along with Paul Krugman and Stan Collender.  I wish there had been more time to explore Paul Krugman’s very important point that one sector’s deficit spending becomes another sector’s surplus.  This is a core point that we make all of the time on this blog.  Cutting the deficit cuts the non-government surplus dollar-for-dollar.  So any plan to cut $4 trillion in deficit spending is a plan to reduce the non-government surplus by $4 trillion.  The ordinary American will gleefully support deficit reduction (as polling shows), but I’m confident that you’d get a very different reaction if you asked them whether they support cutting their own surplus by trillions of dollars.  Almost no one recognizes that the former implies the latter.

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