Helicopter Drops: How much should we drop?
Now that Ryan Avent is talking about using payroll tax cuts as a proxy for a helicopter drop, we need to address the question of “how much?” Here is Ryan talking about integrating fiscal and monetary policy: “ The Fed could then use the payroll tax rate as an additional policy tool when interest rates fell [...]
excess capacity vs. excess demand, as explained by Winston Churchill
The other day I was reading Winston Churchill’s World War I memoirs, The World Crisis, and in the chapter about his 1917 appointment as Minister of Munitions came across the perfect example of the difference between excess capacity and excess demand. In the first period of the war – indeed almost to the end of [...]
Helicopters Drops and the Monefiscalist Synthesis
Cullen wrote a post agreeing with David Beckworth‘s proposed response to Cardiff Garcia’s challenge. Cardiff posed a challenge to the econobloggers who think there is an aggregate demand problem: What should we do? Beckworth says: “Here is how I would operationalize this policy. First, the Fed adopts a NGDP level target. Doing so would better anchor nominal [...]
Money is Endogenous: Today is Yesterdays Long Run
JKH once again says something hugely interesting, this time about the primacy of accounting over economics: “It acknowledges and uses the powerful logic that accounting is not just a rear view measurement device – it is also a constraint on all forward looking projections of economic outcomes – meaning that it is an important condition [...]
Endogenous vs. Exogenous Money
There is a great twitter debate going on right now on this topic. Cullen wrote a post today on how money is always endogenous, even in the long run. Some people disagree. The participants are so far: Cullen, Noah Smith, Edward Harrison, David Beckworth, Ramanan Iver, Miles Kimball, me to a very small extent, and [...]
Does Tsy backstop the Fed?
In previous thread, JKH has this interesting quote from Paul Krugman (who, I still maintain, is not evil and is not the devil). “There is not, I’m told, any formal Treasury backing for the Fed; there were informal assurances early in the crisis, and everyone takes it for granted that any losses that exceed the [...]
The Accounting Quest of Steve Keen
Economics stands before a summit whose existence it is largely oblivious to. It can’t see the mountain because of a self-imposed fog. It sneers in the general direction of the summit, without really understanding what it is sneering at. One great exception to this is the book: ‘Monetary Economics’ by Wynne Godley and Marc Lavoie [...]
A Fresh Harvest of Widows in the Widowmaker Trade
There is a famous trade out there called “The Widowmaker”. Here is Joe W of Business Insider describing the trade: “In finance, the “Widowmaker” trade basically means one thing: Shorting Japanese Government Bonds (JGB) and inevitably losing money. Because of Japan’s gigantic national debt, and because the Japanese bond rally has gone on so long, [...]
Obama’s next squandered opportunity– the Hyperloop
Twitter should auto-subscribe new accounts to Joe Weisenthal’s @thestalwart and, of course, @realdonaldtrump. To paraphrase Dr. Johnson, If you’re tired of those two, you’re tired of life. Joe’s had a couple great pieces this past week. The first showing that as a percentage of GDP< public construction spending is at his lowest level in at [...]
Safe Private Assets, Zero Bounds, and Weak Arbitrage
David Beckworth is pushing for more creation of safe assets. “One of the big challenges facing the global economy is the shortage of safe assets. These are the highly liquid, information-insensitive assets that function as money. The financial crisis raised the demand for these safe assets just as many of them were disappearing. This cyclically-driven [...]
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