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BlogTaxes and the Public Purpose
In previous installments we have established that “taxes drive money.” What we mean by that is that sovereign government chooses a money of account (Dollar in the USA), imposes obligations in that unit (taxes, fees, fines, tithes, tolls, or tribute), and issues the currency that can be used to “redeem” oneself in payments to the [...] -
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Working Paper Roundup 6/4/2014
Monetary Mechanics: A Financial View Éric Tymoigne “This paper presents an alternative framework that can be used to analyze monetary systems by drawing on the work of Smith, MacLeod, Knapp, Innes, Hawtrey, Keynes, Murad, Olivecrona, Wray, and Ingham, among others. The analysis asks what “money” is instead of what “money” does. Monetary instruments are not [...] -
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Creationism versus Redemptionism: How a Money-Issuer Really Lends and Spends
MMT has emphasized that there is a close relation between sovereign power to issue a currency and its power to impose tax liabilities. For shorthand, we say “Taxes Drive Money.” I’ve dealt with that topic in the previous installments of this series on MMT’s view of taxes. We’ve also demonstrated (as if it needed demonstration!) [...] -
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The Far Right and the European Elections
C. J. Polychroniou, reflecting on the results of the European Parliament elections: The stunning victory of Marine Le Pen’s National Front in France that came in first with 25 percent of the vote—when it had won less than 6.5 percent in the last European elections—is quite indicative of the general political and social trends in [...] -
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Why Draghi’s New Measures Won’t Solve the Low Inflation Problem
In yesterday’s Financial Times, Jörg Bibow addressed Mario Draghi’s recent announcement that the ECB will take new steps (including cutting its deposit rate to -0.1 percent) in an attempt to deal with (or, one might argue, in an attempt to appear to deal with) the fact that inflation in the eurozone is too low, according to the [...] -
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The Supposed Decade of Flat Wages Was Worse Than We Thought
It’s well known that the wages of US workers have become disconnected from productivity growth, with real wages growing much more slowly than advances in productivity over the last several decades. This is a key part of the story of widening income inequality. But these observed trends actually understate the degree to which working people have been [...] -
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McCulley on Fed Policy, Inflation, and the Taylor Rule
Paul McCulley, a familiar face at Levy Institute events (he gave a keynote at our Rio conference and at last year’s Minsky Summer Seminar), is back at PIMCO and his first note is (predictably) worth a read. His latest essay looks at Federal Reserve policy from the standpoint of what McCulley terms the Fed’s “secular [...] -
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Are German Savers Being Expropriated?
Last week the ECB’s governing council agreed on interest rate cuts and some fresh liquidity measures. The policy move has sparked off quite some excitement in all kinds of corners. Certainly financial markets highly welcomed the ECB’s much-awaited new easing initiative, with stock indices surging and bond yields plunging to record levels. International commentators generally [...] -
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Tax Bads, Not Goods
This is another installment in the series on the MMT view of taxes. I’m back from China, participating in the annual Hyman P. Minsky Summer Seminar at the Levy Economics Institute. Yesterday my colleague, Mat Forstater, gave a talk on the job guarantee and “green jobs.” Along the way he made two particularly insightful comments [...] -
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Inequality, Unsustainable Debt, and the Next Crisis
In The Guardian, Dimitri Papadimitriou warns that the combined forces of persistent inequality, shrinking government budgets, and the US trade deficit are setting the stage for another private-debt-driven financial crisis: Right now, America is wrestling a three-headed monster of weak foreign demand, tight government budgets and high income inequality, with every sign that these conditions [...] -
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Daniel Alpert at the Minsky Summer Seminar
On Saturday, Daniel Alpert delivered the closing remarks at the Levy Institute’s Hyman P. Minsky Summer Seminar: Minsky had the rarely seen ability to stand back from all he had learned—even at times from his own mentors—and not only see and articulate what was misunderstood, what wasn’t working, but also to explain why conventional wisdom is often not [...] -
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“Who Is Minsky and Why Should We Care?”
These two interview segments, with Marshall Auerback and Edward Harrison (at 23mins), feature some basic discussion of Hyman Minsky and his view of financial crises: [iframe width=”427″ height=”255″ src=”http://www.youtube.com/embed/ppjeupTYPz4?feature=player_detailpage&start=895″ frameborder=”0″ allowfullscreen></iframe]