Wed 2010-07-21 10:36 EDT
Economist's View: Is Galbraith Right that Deficits are Never a Problem?
Paul Krugman has a "wonkish" post on deficits rebutting Jamie Galraith's [alleged] contention that deficits are never a problem...
s viewed Topic in The Credit Debacle Catalog
criticised James K. Galbraith's view (1); Economist's View (3); insider's view (1); refute Modern Monetary Theory's view (1); Sculptor's View (1); West's view (1).
Wed 2010-07-21 10:31 EDT
Social Democracy for the 21st Century: A Post Keynesian Perspective: Galbraith versus Krugman on Deficit Spending
In a recent post, Paul Krugman has criticised James K. Galbraith's view of deficit spending. The latter is obviously influenced by Modern Monetary Theory...Krugman has misunderstood Galbraith...Galbraith understands that there are real constraints on deficit spending, not phantom ``financial'' ones. Moreover, it is perfectly clear that Galbraith is talking about deficit spending during a period of high unemployment and low capacity utilization, and perhaps even in the face of a double dip recession. In his response to Galbraith, Krugman adopts the flawed quantity theory of money and attempts to prove mathematically what is perfectly obvious: that hyperinflation can result from continuous budget deficits that are monetized by the central bank. But, since Modern Monetary Theory already acknowledges that inflation is a real constraint on deficit spending, Krugman's analysis seems rather pointless.
21st century; deficit-spending; Galbraith versus Krugman; Post Keynesian Perspective; social democracy.
Credit Writedowns Mon 2010-07-19 12:08 EDT
Misunderstanding Modern Monetary Theory
Paul Krugman wrote a post today regarding MMT called "I Would Do Anything For Stimulus, But I Won't Do That (Wonkish)." The gist of Krugman's post was to refute Modern Monetary Theory's view on money and deficits...Krugman's post mischaracterizes both MMT and Galbraith's statement...Krugman is trapped in a gold standard view of money as he assumes the government must issue bonds to fund itself. He forgets that we live in a fiat world...the problem for deficits is not national solvency but inflation and currency depreciation. That makes me worried about deficits. If that makes me an inflation hawk and anti-deficit, then so be it. Nevertheless, MMT does say the same thing about deficits, namely that they can lead to inflation. But MMT also says that inflation is not a problem when you have an enormous output gap from 17% underemployment. MMT proponents recommend deficit spending to close that gap. But you can't spend at will under MMT; eventually the output gap closes and inflation becomes a big problem...
THE PRAGMATIC CAPITALIST Wed 2010-02-10 11:22 EST
AN INSIDER'S VIEW OF THE REAL ESTATE TRAIN WRECK
The first time I spoke with real estate entrepreneur Andy Miller was in late 2007, when I asked him to serve on the faculty of a Casey Research Summit...what most intrigued me about Andy was that he had been almost alone among his peer group in foreseeing the coming end of the real estate bubble, and in liquidating essentially all of his considerable portfolio of projects near the top...he remains deeply concerned about the outlook for real estate...the United States home mortgage market has been nationalized without anybody noticing...If government support goes away, and it will go away, where will that leave the home market? It leaves you with a catastrophe...eventually the bond market is going to gag on the government-sponsored paper...commercial properties are not performing and that values have gone down, although I've got to tell you, the denial is still widespread, particularly in the United States and on the part of lenders sitting on and servicing all these real estate portfolios...The current volume of defaults is already alarming. And the volume of commercial real estate defaults is growing every month...When you hit that breaking point, unless there's some alternative in place, it's going to be a very hideous picture for the bond market and the banking system...second quarter 2010 is a guess...the FDIC and the Treasury Department have decided that rather than see 1,000 or 2,000 banks go under and then create another RTC to sift through all the bad assets, they'll let the banking system warehouse the bad assets. Their plan is to leave the assets in place, and then, when the market changes, let the banks deal with them. Now, that's horribly destructive...it's exactly a Japanese-style solution...The entire U.S. residential mortgage market has in effect been nationalized, but there wasn't any act of Congress, no screaming and shouting, no headlines in the Wall Street Journal or the New York Times...That's a template for what they could do with the commercial loan market.
insider's view; pragmatic capitalists; Real Estate Train Wreck.
Satyajit Das's Blog - Fear & Loathing in Financial Products Sun 2009-08-30 12:20 EDT
El-dollardo Economics
In the 1980s, the Japanese were taking over the world. In the 1990s, it was going to be an ?Asian? century. These days the pundits are betting on the ?Chinese Age?. Like all such glib predictions, despite their superficial appeal, they mask complex undercurrents and issues that require careful study. Business journalist Michael Schuman's The Miracle: The Epic Story of Asia's Quest for Wealth. Paul Midler's Poorly Made in China; quality fade. Underlying both `The Miracle' and `Poorly Made in China' is a view of the emerging world best captured by the term `Orientalism', associated with Edward Said...the West's view of the East was shaped by political power and unequal commercial exchange. Said's work built on George Orwell's criticism of colonialism. Former Chinese premier Zhao Ziyang's secret journal `Prisoner of the State' provides antidote to a Western view of East Asia.
El-dollardo Economics; fears; financial products; loath; Satyajit Das's Blog.
Wed 2008-05-28 00:00 EDT
Economist's View: "The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too"
review of Jamie Galbraith's "The Predator State" by L. Randall Wray; "market solutions are designed to enrich a favored oligarchy through a spoils system administered through the states structure"
Conservatives Abandoned; Economist's View; free market; liberalism; Predator state.