NEP’s Pavlina Tcherneva appears on The Real News on October 5, 2014. The topic of discussion is the slow recovery and why monetary policy that is directed at finance and not job creation has this effect.
By William K. Black
Regular readers understand the three dynamics that drive economists crazy about the New York Times’ coverage of the troika’s infliction of austerity on the Eurozone. The troika consists of the European Central Bank (ECB), the International Monetary Fund (IMF), and the European Commission (EC).
- NYT reporters treat austerity as a response to the eurozone’s Great Recession as obviously the only possible response – they rarely discuss alternative policies or views
- The NYT refuses to inform its readers that economists overwhelmingly consider this malpractice and that it has caused catastrophic and gratuitous harm
- All of this is particularly bizarre given the NYT’s economist, the Nobel Laureate Paul Krugman, who writes regularly in the paper to explain why austerity is a disastrous response to the Great Recession. The NYT eurozone writers routinely ignore Krugman (and anyone else who makes the same point).
The massive, wholly avoidable harm caused by “bleeding the patient” to make him well (austerity in response to a recession) for the people of the eurozone is stark, but typically minimized or wholly ignored by the NYT reporters. Roughly one-third of the population of the eurozone lives in nations with Great Depression levels of unemployment.
By L. Randall Wray
Memo to Obama: Don’t tie progressive spending policy to progressive tax policy. Each can stand on its own.
Reported today in the Washington Post:
Obama proposes $600 billion in new spending to boost economy
President Obama on Tuesday unveiled an ambitious budget that promised more than $600 billion in fresh spending to boost economic growth over the next decade while also pledging to solve the nation’s borrowing problem by raising taxes on the wealthy, passing an overhaul of immigration laws and cutting health costs without compromising the quality of care. Obama seeks to raise more than $1 trillion – largely by limiting tax breaks that benefit the wealthy — to spend on building roads and bridges, early childhood education and tax credits for the poor.
Here’s the conceit: Uncle Sam is broke. He’s got a borrowing problem. He’s gone hat-in-hand to those who’s got, trying to borrow a few dimes off them. But they are ready to foreclose on his Whitehouse.
By Robert E. Prasch
We all know that predictions in economics can be fraught. This is for a variety of reasons, with the absence of controlled experiments high on the list. However, over the years we have learned a few things through the observation of regularities and by deducing from the things about which we are reasonably certain to formulate conjectures about things of which we are less certain.
With this in mind, let us consider the December jobs report. By all accounts, it was a “disappointing” result with only 74,000 jobs created. The “headline” rate of unemployment did fall appreciably, but that was solely and completely due to an increase in the number of people who have entirely given up looking for paid work. While we can all agree that the result is disappointing, I would like to take issue with the almost ubiquitous report that it was “surprising.”
By Frederic S. Lee
Whether it be inflexible prices, wage rates that are too high and sticky, or interest rates that cannot become negative, they all have the common property of disrupting the smooth workings of the price mechanism, thereby causing recessions, preventing economic recovery, and creating unemployment. But what if there is no price mechanism that allocated scarce resources among competing ends? Then the ‘price problem’ would disappear and the causes of recessions and persistent unemployment would be quite different. Ignoring the issue whether scarce resources as defined in mainstream economics exist or not, I am going to interrogate the supposed existence of the price mechanism that lies at the theoretical core of all mainstream explanations of recessions and unemployment.
By Joe Firestone
In Part One, of a critique of the most important of “Fix the Debt’s” reasons for “Why the National Debt Should Matter To You,” I asserted that high debt levels haven’t caused high unemployment in the United States, and that, if anything causation was in the other direction. I didn’t want to disturb the flow of the argument there with a relatively lengthy survey of some of the numbers in the historical record since the 1930s. But let’s test the idea that High debt causes fewer jobs and lower wages in the United States by looking at that record now.
Posted in Joe Firestone
Tagged austerity, debt-to-GDP ratio, deficit spending, fiat currency, GBC, goldilocks economy, Government Budget Constraint, MMT, modern money theory, national debt, Peter G. Peterson, sectoral financial balances, unemployment, “Fix the Debt”
By Joe Firestone
I came across a post from the “Fix the Debt” campaign last month called “The Top Five Worst Reasons Why the National Debt Should Matter to You.” It’s a post full of debt/deficit lies that cry out for correction. That’s what I’ll provide in this series. Continue reading
Posted in Joe Firestone
Tagged $60 Trillion Coin, austerity, debt-to-GDP ratio, deficit spending, High Value Platinum Coin Seigniorage, HVPCS, MMT, modern money theory, national debt, Peter G. Peterson, unemployment
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?
By Stephanie Kelton
Steve Kraske of The Kansas City Star recently interviewed me for a piece about austerity. The story ran in today’s paper. It doesn’t provide much depth (unlike bloggers, journalists have strict space constraints!), so I followed up with a few comments on the Star’s website. I thought I’d share them here, since I’m always trying to improve the way I communicate these ideas with non-economists. So here’s my best effort to make the anti-austerity case in simple terms. Continue reading