Understanding The Modern Monetary System...
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 [...]
All of this started in an exchange I had with Steve Waldman a few weeks ago on twitter. Is fractional reserve banking possible with bitcoin? Well the answer is “NO”, and “yes”. SqueekyWheel makes a great point: “I think you misunderstand the bitcoin version of fractional reserve – it’s a bit more like gold standard [...]
All Hail Bitcoin. If bitcoin is to capture 10% of the U.S. transactions involved with GDP in 15 years, it needs to grow in value at 61%+ per year during that time. I think 15 years is a good amount of time as a rough and ready indication of what can happen on the internet, [...]
I’ve been getting into Solar lately – the fall in prices has been absolutely shocking over the last 2-4 years. We are seeing price drops closer to 20% per year after several decades at 6% price drops per year. 6% year is a fantastic rate of decreases, but 20% is simply astonishing. 20% is an [...]
Paul Krugman and Simon Wren-Lewis make a good point – the reason capital-A Austerity seems to come back to us over and over has to do with the psychology of humans, and not as much with the underlying economics. Here’s Wren-Lewis: “when the market starts to punish fiscal profligacy, it is as if a parent [...]
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 [...]
NGDP level targeting is one of the huge successes of the economics blogosphere. The readers of this blog don’t need much background on NGDP, so but if you need some information, go read any post from Scott Sumner. He mentions NGDP level targeting in just about every post he writes, so you’ll get the picture [...]
The Zerohedge story on Paul Ryan budget has interesting chart from Ryan’s plan The easiest way to cut deficit spending is to cut debt service. This can be done by moving Mohammed to the mountain (Mosler’s suggestion to lock interest rates at 0% and issue nothing longer than 3-month T-bills). or by moving the mountain [...]
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 was a painful discussion about Social Security on ‘This Week with George Stephanopoulos” this past Sunday. Paul Krugman endeavored to explain to several non-believers how it works (here at 10:40): http://abcnews.go.com/ThisWeek/video/week-roundtable-budget-battles-18696520 It’s not an easy explanation. One wonders how many times the issue has been discussed and not understood over the decades – and [...]
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