Post Tagged with: "asset-based economy"
Economics in the Age of Deleveraging
Clearly, economic policy is now far more complex than it appeared to be before the GFC. As we enter this Age of Deleveraging, the worst thing we can do is apply policies that appeared to work during the preceding Age of Leverage—but were in fact predicated on ever-rising private sector indebtedness. Politicians should be sceptical of conventional economic advice at this time; it would be much wiser to study the history of the 1930s instead
Banking Wasn’t Meant to Be Like This
the banks now browbeat governments – not by having ready cash but by threatening to go bust and drag the economy down with them if they are not given control of public tax policy, spending and planning. The process has gone furthest in the United States. Joseph Stiglitz characterizes the Obama administration’s vast transfer of money and pubic debt to the banks as a “privatizing of gains and the socializing of losses. It is a ‘partnership’ in which one partner robs the other.” Prof. Bill Black describes banks as becoming criminogenic and innovating “control fraud.” High finance has corrupted regulatory agencies, falsified account-keeping by “mark to model” trickery, and financed the campaigns of its supporters to disable public oversight. The effect is to leave banks in control of how the economy’s allocates its credit and resources
Markets Vanish – “In a Flash”
Government interference extends unstable market conditions longer than would otherwise be true. By doing so, George Eliot’s observation (at the bottom, here) is even more appropriate in
Steve Keen on HARDtalk on the financial crisis and the economy
This time it’s Steve Keen on the hotseat on HARDtalk. Now, Steve is one of the few economists who actually predicted the global financial crisis. But what about the possibility of another Great Depression? That possibility and how to avoid it were the topics of conversation in this 25-minute interview. Great stuff
Juergen Stark explains ECB opposition to monetisation is not about inflation
As I have been saying at Credit Writedowns, the ECB’s opposition to monetising sovereign debt is not about inflation concerns but rather its resistance to moving into a politicised quasi-fiscal role
Debt Deflation on the rise
“Without consumption, markets are going to shrink. Companies won’t invest, stores will close, “for rent” signs will spread on the main streets and local tax revenues will fall. Companies will lay off their employees and the economy will shrink more. Why aren’t economists talking about these effects of debt deflation, which are becoming the distinguishing phenomenon of our time? They advocate giving more money to the banks, hoping that somehow everything will be okay, as if the banks would lend out the money to fund new production and employment. Mainstream economics and political leaders in both parties are failing to ask why the banks are using these giveaways to speculate abroad, pay their managers bonuses and high salaries or to pay dividends rather than to lend to small businesses or do other things to actually get the economy moving again. This phenomenon cannot be explained without seeing that debt service is siphoning off revenue into the financial sector, which is not recycling it back into the production-and-consumption economy.”
Manufacturing inflation in a wage deflationary environment
How does manufacturing CPI inflation benefit an economy in which incomes are falling? When inflation rises and incomes are stagnant or falling, the economy rolls over
Goldilocks, the Crash, and the Perfect Fiscal Storm
Randall Wray revisits the Clintonian Goldilocks economy to find the seeds of the Global Financial Crisis, using the sectoral balance approach
What are the differences between QE1, QE2 and QE3?
Last week, when discussing what QE3 could look like I indicated that were the Federal Reserve to start expanding its balance sheet, QE3 will see interest rate caps after a pause and period of reflection. Let me address the differences between the various QEs here to illustrate why interest rate caps are being contemplated
Roach: Return of the Living Dead
Rather than adding stimulus with the aim of goosing demand to help the economy reach escape velocity, I would say that the central objective of economic policy is to help the economy reach full employment. Doing so will increase demand, increase output, and cut budget deficits tremendously. Policy makers should do this while aiding the economy in reallocating scarce resources to areas that will sustain longer-term productivity growth. In America, that means less resources in finance and housing and perhaps more in technology and infrastructure
Limits of Monetary Policy
In this column, Marc Chandler argues that US monetary policy can be a powerful tool, but it has limitations. Some commodity prices have risen and some have fallen since the Federal Reserve signaled QEII. The anticipation of QEII did weigh on the dollar, but against some of the leading major currencies, the dollar was little changed net-net until the ECB shifted its monetary stance
The jobs crisis is not just about demand
If the US wants job growth, it will need to reduce private sector debt levels – and that takes time. The government can act a a counterweight to the demand drag but I am very sceptical of claims like Summers’ that doing so would solve a jobs crisis borne out of a debt crisis