Monthly Archives: July 2013

An MMT vs Austrian Debate Post-Mortem Part III of V: Democracy, Taxes, and the Currency Monopolist

By Rohan Grey

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

As mentioned at the end of the preceding section, Murphy’s major outstanding critique of the MMT analysis was that it presumed the existence of a state with a currency monopoly by virtue of its taxation power – or, as Murphy’s described it, MMT was “in favor of robbing liquor stores” in order to ensure a demand for its currency. In my opinion, this critique was underdeveloped, since it did not articulate why the problems identified were worse than the problems of any other feasible system.

Continue reading

Conservatives and Libertarians should Support the Return of Glass-Steagall

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

Glass-Steagall prevented a classic conflict of interest that we know frequently arises in the real world.  Commercial banks are subsidized through federal deposit insurance.  Most economists support providing deposit insurance to commercial banks for relatively smaller depositors.  I am not aware of any economists who support federal “deposit” insurance for the customers of investment banks or the creditors of non-financial businesses.

Continue reading

An MMT vs Austrian Debate Post-Mortem Part II of V: Monetary Operations vs. Political Economy

By Rohan Grey

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

As will be clear to anyone who watches the entire thing, there was very little clash by the end of the debate on the operational mechanics of the modern monetary system:

Murphy: In particular, what makes the Austrians different from other schools of thought, even other nominally free market schools like the Chicago economists – Milton Friedman, guys like that – the Austrians have a very particular view of what interest rates do.

So the Austrians say “look, the interest rate is a price, and in that respect it is like any other price – it communicates information about the real world. It’s not an arbitrary number – it really means somethingand if the market interest rate is supposed to be 7 percent and the Federal Reserve makes it 0.25 percent, that’s going to screw things up.

Continue reading

An MMT vs Austrian Debate Post-Mortem Part I of V: Preface

By Rohan Grey

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

[If you are interested only in the substantive analysis of the debate, skip directly to Part II]

On July 4th, the New York Times published a profile written by economics journalist Annie Lowry on former hedge fund manager and maverick economic theorist Warren Mosler. The school of thought Mosler subscribes to, known as “Modern Monetary Theory” or “MMT,” has been covered by a number of journalists (see, e.g. here, here, here, and here). MMT purports to combine insights from a range of historical monetary theorists with an understanding of contemporary monetary operations to construct a progressive meme for money that drastically differs from most standard economics textbooks.

Continue reading

The Smart Bunny’s Guide to Debt, Deficit and Austerity: A Review

One of the most important parts of the collective effort to spread the good news about the Modern Money Theory approach to macroeconomics is popularization of MMT views. We need short simply-stated cultural artifacts that tell people what MMT has to say and what some of its policy implications are for fiscal policy that can deliver a greater measure of economic and social justice to people.

Continue reading

From an Appraiser

In response to Bill Black’s recent articles (here and here) on appraisal issues surrounding the financial crisis, the following comes to NEP from an Appraiser via creditwritedowns.com.

Continue reading

The Fraud Shotgun: The Overlapping Fields of Fraudulent Fire that Drove the Crisis

By William K. Black

I have written a series of articles recently that focus on appraisal fraud.

I did so because appraisal fraud allows such “clean” tests of what (and who) drove the financial crisis and how many different private and public sector actors could have easily prevented the crisis had they acted against the fraud epidemics.

Continue reading

What if Bernanke Had the Character to be Candid?

By William K. Black

David Wessel has just published a fantasy piece in the Wall Street Journal that asks the question “what if Bernanke could be blunt” in his Congressional testimony later this week.  Here are the first two things that Wessel envisions a blunt Bernanke as telling Congress:

Continue reading

NEP’s Bill Black Appears on Peak Prosperity Discussing Financial Markets

The Banks Have Blood on Their Hands and the regulators are too fearful to act. Bill returned to Peak Prosperity to explain whether the level of systemic risk due to fraud in our financial markets has improved or worsened since the dire situation he painted for us in early 2012. Sadly, it looks like abuse by the big players has only flourished since then.

Why did the Fed Refuse to Heed the Appraisers, Prosecutors, and Industry’s Fraud Warnings?

By William K. Black

The Appraisers’ Warning of the Lenders’ Fraud Epidemic

Two of my recent columns have explained the effort by a very large number of appraisers to combat the “Gresham’s” dynamic that home lenders and their agents were deliberately generating by extorting appraisers to inflate appraisals.  A “Gresham’s” dynamics perverts market forces.  When cheaters prosper the markets drive honest firms and professionals out of business. Honest appraisers tried to block this dynamic.

Continue reading