ShareSeveral notable economists prognosticated on what Japan should do to get out of their malaise in the 1990s but none of them understood the problem or the options available to the sovereign government. They all gave poor advice. The way Japan recovered after that decade of poor economic outcomes was through fiscal policy. Monetary policy [...]

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ShareWhen I read Ed’s recent piece “Japan: stimulus without reform leads to a policy cul de sac,” I couldn’t help but think he is wrong about Japan.
Supporting aggregate demand
The problem is taxes. In Japan, taxes are too high relative to the desire for spending and savings. Policy makers need to stop taking so many yen [...]

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ShareMarshall Auerback here. You saw Ed’s last post on China, quoting from Peter Tasker, one of the top analysts in Japan when I lived there. I take Peter’s insights very seriously. His analysis implies something a lot more in regards to currencies, trade and credit.
China’s bank credit expansion is so great that even if [...]

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ShareMarshall Auerback here with a few thoughts on money, the Federal Reserve’s balance sheet, and the alphabet soup of emergency liquidity facilities.
The expansion of the Fed’s balance sheet has been widely misunderstood within the economics profession, because it has been viewed through the lens of a pre-existing debate about the monetary transmission mechanism. Those who [...]

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ShareI was heartened to hear that Alan Greenspan has repudiated the Too Big to Fail doctrine (as practiced in the Bush and Obama Administrations) in such unequivocal terms. He almost sounded like a Teddy Roosevelt trust buster.
Nevertheless, President Obama clearly believes the line fed to him by Wall Street. He is no Teddy Roosevelt. [...]

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ShareThis is a cross-post from an article I wrote at the finance site New Deal 2.0, a one-stop-shop for current news, sharp analysis and potential solutions of the country’s fiscal crisis. Edward linked to this in this morning’s links, saying “I don’t agree 100% but this is a good overview” – tied to the Austrian business [...]

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ShareMarshall Auerback here.  I want to add a few thoughts on the situation in Latvia which Ed has highlighted on several occasions. His allusion to Argentina to describe the situation in the Baltics last July was on the money. I have a solution here out of the Argentine playbook.
In Latvia, the neo-liberal insanity continues.  The [...]

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ShareMarshall Auerback here with a few thoughts on employment policy and the limit to government spending in a fiat currency regime.
The Detroit story Edward just posted illustrates that we should start by eliminating the notion that society requires a buffer stock of unemployed people to discipline wage demands and protect profits.  Not only is this immoral and [...]

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ShareMarshall Auerback here. This is a cross-post from an article I wrote at the finance site New Deal 2.0, a one-stop-shop for current news, sharp analysis and potential solutions of the country’s fiscal crisis.
We’ve said it before and we’ll say it again. As a matter of national accounting, the domestic private sector cannot increase savings [...]

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ShareMarshall Auerback here. I have been posting at an interesting new site called New Deal 2.0. You may have seen Edward linking out to articles on the site.
Edward saw an article I wrote there recently and asked me to post it here as well to highlight a recurrent theme at Credit Writedowns – namely that [...]

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