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Paul Krugman Still Gets MMT Wrong

Randall Wray — Wed, 17 Aug 2011 19:00:30 +0000

I appreciate the role that Krugman plays. Like many of you, I enjoy reading his blogs and more often than not, I agree with him. He is almost the lone, sane, voice in a position of authority who argues against the standard deficit hyperventilation that is driving the nation into a great depression. I mean no disrespect in the following critique. And I am glad that he is writing about MMT—most of those within the Beltway simply ignore it. But there are two reasons to respond to his critique: first, there is some hope that he might change his mind and embrace MMT. That would allow him to mount a much more powerful attack on the deficit hysterians. Second, he is misleading his many readers—by misstating what MMT believes, and by his own misunderstanding of monetary operations

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For whatever reason

Edward Harrison — Mon, 15 Aug 2011 19:00:38 +0000

Investors shunning US debt ‘for whatever reason’ presupposes the outcome. I need to see the steps that get us from 2.25% 10-year rates to 4 or 5% without the Fed actively raising rates because the only way rates are going higher is because the Fed is forced by inflation to raise them

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Krugman on Modern Monetary Theory

Edward Harrison — Mon, 15 Aug 2011 05:18:09 +0000

Last summer I wrote a post clarifying some points that I have learned about Modern Monetary Theory. The genesis of the post was a gross mischaracterization of Modern Money Theory (MMT) by Paul Krugman in a piece called “I Would Do Anything For Stimulus, But I Won’t Do That (Wonkish)”, which Paul Krugman had written in July of last year. Last week Paul Krugman again attempted to take on MMT in another piece called "Franc Thoughts on Long Run Issues."

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Greece: Last Exit To Nowhere?

Edward Hugh — Sun, 15 May 2011 23:30:05 +0000

If the strongest argument against going back to the Drachma always was that this would imply default, now that default is coming, why not allow Greece to devalue? As Krugman says, the issue isn’t whether Greece would openly decide to exit the euro, the issue is what happens if the markets force this solution on Greek and European leaders? Given the programme isn’t working, the likelihood of this event occurring in the next 2 or 3 years is far from being negligible, so why not be proactive rather than always being reactive? What matters is whether Greece becomes Turkey (oh what a historical irony) or Argentina. If the powers that be can agree on an ordered restructuring of Greek debt, and a controlled exit from the Eurozone, then Greece has some possibilities of turning the situation round. If exit is forced on Greece in order to escape the clutches of both the EU and the IMF then the move will be, as I suggest in my title, simply the last exit to nowhere

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Ben Bernanke’s Press Conference

Edward Harrison — Wed, 27 Apr 2011 20:45:48 +0000

Today marks the first time we are witnessing a regularly scheduled news conference by a Fed chairman in the Federal Reserve's 98-year history. Most reactions to Ben Bernanke's performance were positive, meaning he reiterated the themes he has consistently delivered in the past without making any gaffes. But that goes to style; what about substance? Here's my take

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Thoughts on Austerity

Edward Harrison — Fri, 25 Mar 2011 18:24:46 +0000

Yesterday, Paul Krugman wrote: Portugal’s government has just fallen in a dispute over austerity proposals. Irish bond yields have topped 10 percent for the first time. And the British government has just marked its economic forecast down and its deficit forecast up. What do these events have in common? They’re all evidence that slashing spending

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Cotton Hoarding in China Shows There is Serious Commodities Speculation

Edward Harrison — Thu, 17 Feb 2011 18:40:16 +0000

You have to watch this video to believe it. The speculation in the commodities market is well out of hand. Cotton futures are at a record high on speculation that demand in China will continue to increase, as China is the world’s largest importer of cotton. Add in the flooding in Australia and you have the makings of a rally driven by fundamentals but bolstered and amplified by speculation.

Bloomberg explains in the video below.

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Krugman, China and the role of finance

Michael Hudson — Mon, 22 Nov 2010 21:35:42 +0000

by Michael Hudson Here’s the quandary that the U.S. economy is in: The Fed’s quantitative easing policy– creating more liquidity so that banks can lend more – aims at helping the economy “borrow its way out of debt.” But banks are not lending more, for the simple reason that a third of U.S. real estate

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Krugman: China is ‘Really the Bad Guy’ in Currency War

Edward Harrison — Thu, 14 Oct 2010 12:21:13 +0000

The U.S. Senate will pass legislation geared to pressuring China to revalue its currency and the US is set to label China a currency manipulator. The view in Washington ahead of the mid-terms is that China is "the bad guy" as Paul Krugman explains in the video below. Here is a synopsis of the Krugman

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Since Plaza Accord dollar-yen has sunk 70% without decreasing US deficit with Japan

Edward Harrison — Thu, 14 Oct 2010 03:47:53 +0000

In regards to Paul Krugman’s argument’s on China in the video in the last post, I think this quote from David Rosenberg’s latest daily market commentary is spot on: Since 1985, dollar-yen has sunk nearly 70% and yet the US has the same bilateral deficit with Japan today as it had then. So why does

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