I was reading this post by Scott Sumner in which he concluded with the following: “This post has already run too long, so I’ll do the quantity theory of money in the next post.  We’ll see how the central bank can control the value of money (and NGDP), by changing the currency stock.” I just [...]

This section will be a new addition/clarification to my paper on Understanding the Modern Monetary System.   Modern forms of money are largely endogenous (created within the private banking system), but are organized under the realm of government law.  The specific unit of account in any nation deems how money will be denominated.  The government therefore [...]

There’s a clash of ideas in Richard Werner’s work and that of Monetary Realism’s.  I’ve had a stack of papers on my desk here by Werner, a German economist, that I’ve been meaning to write posts about for weeks.  But they’re so good that I don’t to do them injustice.  But then today I am clicking [...]

(Cross posted via Pragmatic Capitalism): Brad Delong rightly slams Austrian economist Robert Murphy this morning for a bet he made in 2009 regarding inflation.  Murphy stated that headline inflation would hit 10% by January 2013.  Well, here we are with 24 hours to go and the latest monthly CPI reading is 1.8%.  I don’t want to just pile on [...]

Lots of people are talking about how today’s change in FOMC guidance is a move towards NGDP Targeting.  They might be right.  And while I don’t think NGDP Targeting is all bad, it’s definitely not my preferred approach.  I’ve recently started to discuss something called “elastic deficit targeting”.  I explained it briefly here: “What I did [...]

It’s now been one year since Standard and Poors downgraded the debt of the USA from AAA to AA+.  If you recall, many pundits were saying this would be an earth shattering event and that it was a sign of much bigger problems to come.  Some even said it could cause a Eurostyle debt spiral [...]

Paul Krugman has a post up about interest rates which I think requires a bit of elaboration.  He says: “Low interest rates on the bonds of just about every country that still has its own currency have created a small industry of would-be explainers. It’s a bubble; no, it’s the global shortage of safe assets; no, it’s “disaster economics“. [...]

I liked this quote over at Zero Hedge: “The most bizarre thing to come out of the Barclays scandal, Zervos goes on to say, is the attack on the Bank of England and Paul Tucker. Is it really a scandal that central bank officials tried to affect interest rates? Absolutely NOT! That’s what they do for a living. Central [...]

Few things are more important than understanding precisely how the US government is able to eliminate solvency crisis through its institutional arrangements.  One of the key Monetary Realism contributions is understanding these relationships and how they create the autonomous currency issuer.  Banks are essentially harnessed as agents of the government in the funding process as [...]