Market Monetarism – Monetary Base Overdrive

Martin Wolf has written (HT Cullen Roche) an excellent article on the recent Bank of England paper. Here are his key summary points from that article: First, banks are not just financial intermediaries. The act of saving does not increase deposits in banks. If your employer pays you, the deposit merely shifts from its account to yours. This […]

Thomas Palley on Steve Keen’s Model of Aggregate Demand

Thomas Palley’s paper is here: http://www.thomaspalley.com/docs/research/ad_and_debt.pdf (HT: Ramanan) Some time ago, a few of us were after Steve Keen in respect of his newly defined aggregate demand function, pointing to a time-inconsistency in its income and non-income flow of funds components. He has since corrected this, with a model whose principal defining equation is now […]

Money Creation in the Modern Economy (Bank of England)

This is an excellent paper: http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf The paper is written in easy to understand language and helpful balance sheet graphics. It does a particularly good job in simplifying several technical issues. As Cullen Roche notes, the money multiplier is dispatched to the ash can of history, where it belongs. It is reassuring to see this sort […]

The Bank of England Debunks the Money Multiplier

Regular readers will be more than familiar with the debunking of the money multiplier and the concept that banks don’t lend out reserves or deposits (see here & here), but it’s nice to see it catching on in places more important than this lowly blog.  A new research report out of the Bank of England debunks the money multplier in […]

Negative Money

This post is just for fun – or negative fun – or something. It follows from a Nick Rowe post with the same title: http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/02/negative-money.html I’m going to tell a story that should be similar in concept to Nick’s, but described in quite a different way. I think it should end up in about the […]

A New Operating Framework for the Federal Reserve (Joseph Gagnon and Brian Sack)

Commenter AH pointed to an FT Alphaville post that in turn pointed to this paper by Joseph Gagnon and Brian Sack: http://www.piie.com/publications/pb/pb14-4.pdf The paper is excellent and certainly deserves a complete read. This is a highly technical topic, not only with respect to bank reserves and reserve management regimes, but also as it relates to […]

More Toxic Stuff from MMT

I attempted to be respectful in my last post, which dealt with a difficult and potentially sensitive subject. And so I appreciated the first comment following it: “Modest, professional, and humble. We need more bloggers with this type of positive, constructive objective. Nice work, JKH.” I try to make that effort in most cases, but this post will […]

The Sankowski Solar Boom

The Sankowski Solar boom – it’s in full force: “2013 was a banner year for clean energy and the U.S. solar industry was no exception. California, the nation’s solar standout, more than doubled its rooftop solar installations last year from 1,000 megawatts (MW) to 2,000 MW. To put this number in perspective, writesBernadette Del Chiaro of […]

Solar is dropping at 40% for every doubling of Capacity

The Solar Powered Death Spiral For Utilities Begins – In Hawaii

A solar powered death spiral for utilities and conventional power has already begun. Solar power is proving to be more disruptive, more quickly than anyone imagines. People think “Solar needs to get to grid parity before it’s widely adopted.” This is simply false. There is no one price for electrical power. Electrical power has different […]

Secretly, everybody loves the trillion dollar coin

Ryan J. Reilly has an interesting article up at Huffington Post. WASHINGTON — The Obama administration was serious enough about manufacturing a high-value platinum coin to avert a congressional fight over the debt ceiling that it had its top lawyers draw up a memo laying out the legal case for such a move, The Huffington […]