Category Archives: Macroeconomic policy

Philip Pilkington: Paul Krugman and the Fatherless Keynesians

By Philip Pilkington, a writer and research assistant at Kingston University in London. You can follow him on Twitter @pilkingtonphil

Some decades ago the British economist Joan Robinson – one of John Maynard Keynes’ most brilliant students who helped him with the original draft of his General Theory – half-jokingly referred to some of her colleagues as “Bastard Keynesians”. These colleagues were mostly American Keynesians, but there were a few British Bastard Keynesians too – such as John Hicks, who invented the now famous ISLM diagram. What Robinson was trying to say was that these so-called Keynesians were fatherless in the sense that they should not be recognised as legitimately belonging to the Keynesian family. The Bastard Keynesians, in turn, generally assumed that this criticism implied some sort of Keynesian fundamentalism on the part of the British school.

Such a misinterpretation exists to this day. The second and third generation Bastard Keynesians – which include many of those who generally collect under the title “New Keynesian” – have reinforced this criticism.

IMF Rethinks Sovereign Defaults, Again

By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness

Dan Kervick: Reserve Balance Misconceptions

Yves here. While it may seem a bit unfair to make an example of Mark Thoma, since the statement he makes about bank reserves is conventional, Kervick’s post is a useful reminder of why this sort of thinking is misleading.

David Dayen: FSOC Annual Report Shows Continued Interest in Austerity Bargain Over Reducing Financial System

With Jack Lew now installed at Treasury, I decided to take a look at the annual report of the Financial Stability Oversight Council (FSOC), the Dodd-Frank creation that’s supposed to monitor systemic risk. We already know the leanings of the not-so-new regime at Treasury: they think Dodd-Frank worked to secure a more stable financial system, an opinion reiterated Tuesday at a Senate Banking Committee hearing.

Dan Kervick: Did the House of Representatives Just (Unintentionally) Eliminate the Debt Ceiling?

My fellow NEP blogger Joe Firestone wrote recently about House Resolution 807, the Full Faith and Credit Act, which was passed on May 9th by the US House of Representatives. The supposed purpose of the act is to prevent default on the public debt as a result of the debt ceiling… But if I am not mistaken, this act would provide the Secretary of the Treasury with the power to meet all US spending obligations, and effectively eliminate the debt ceiling as a serious political and operational consideration going forward.

Nathaniel Cline and Nathan Tankus: Fiscal Systems, Organizational Capacity, and Crisis: A Political Balance of Payments Approach

In the preface to the forthcoming Festschrift to Alain Parguez, Mosler argues that in the mid 1990s he thought, “the theory of the monetary circuit was correct to the point of being entirely beyond dispute”. However, he also argues that the theory “could be further enhanced by starting from the beginning”. This beginning for Mosler was of course why the workers accepted the units of a currency as payment for their labor services. His answer (which is quite well known among heterodox economists by now) was that imposed debts denominated in that unit of account, give it’s units value; in other words taxes.

This is an important part of the story, but we would argue it is in fact not the beginning. The true beginning to the circuit is the question of where people and organizations gain the ability to tax.

The Limits of Governing Budgetary Policies by Rules

By Daniela Schwarzer, who heads the research unit European Integration at the German Institute for International and Security Affairs, Stiftung Wissenschaft und Politik (SWP) in Berlin. Cross posted from Triple Crisis

The European squabble over budgetary austerity reached a new peak a good week ago when a document drafted by leading representatives of the French Socialist Party, which reportedly had been seen by Elysée officials close to President Hollande, personally attacked German Chancellor Angela Merkel. Less mediatized, but more telling about the nature of the governance problems facing the euro area, are the statements made by Finance Minister Pierre Moscovici this weekend.

Jack Lew’s Nose is Getting So Long He Needs a Hacksaw

Jack Lew really needs to get better at lying in public. So far, he’s making a hash of it.

Philip Pilkington: Homosexuality Leading Cause of Economic Crisis, Harvard’s Niall Ferguson Reports

By Philip Pilkington, a writer and research assistant at Kingston University in London. You can follow him on Twitter @pilkingtonphil

Over the weekend a leading member of the pro-austerity crowd came out with what is probably their most ludicrous argument yet.

Yanis Varoufakis: Macroeconomic Experiments: Abenomics Versus Euro-Austerity

By Yanis Varoufakis, a professor of economics at the University of Athens. Originally posted at Australian Broadcast Corporation’s The Drum

In the long, unending wake of the global financial crisis, desperate governments and central banks are trying their hand at experimental economic policy mixes. Japan and the eurozone offer a glimpse of how radically different anti-crisis experiments can be.

Europe’s Depression Worsens

Yves here. Take note in particular the discussion of the state of play in Italy. Even though other countries under the German yoke are complaining, Italy is the one that can credibly defy Germany, and the Germans know it.

I welcome comments from people who are following European media. I’m not sure that Latta’s failure to round up supporters matters much. I’d imagine he wants to position himself as Berlusconi’s messenger rather than a staunch ally.

By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.

As I mentioned earlier in the week Italy may have a new parliament but there is very familiar person who appears to be pulling the strings, and how long such an arrangement can last is questionable.

Yanis Varoufakis: Intransigent Bundesbank – Mr. Jens Weidmann’s Surreptitious Campaign to Bring Back the (Greater) Deutsch Mark

By Yanis Varoufakis, Professor of Economics at the University of Athens. Cross posted from his blog

Any fair minded reading of the Bundesbank’s latest Constitutional Court deposition must lead to one of two conclusions: Either the Bundesbank has failed to recognise the existentialist threat to the Eurozone (that was placed in suspended animation during the past eight months or so), or the Bundesbank has intentionally opted for a strategy that will, sooner or later, see the disbanding of the current Eurozone. Loath to assume naiveté on the Bundesbank’s part, I opt for the latter. Here is why:

Reply to Reinhart and Rogoff’s NYT Response to Critics

One of the striking aspects of the furor over Thomas Herndon, Robert Pollin and Michael Ash’s dissection of the considerable flaws in the Carmen Reinhardt and Kenneth Rogoff austerity-justifying paper are the “the earth is still flat” efforts to salvage the theory.

If Only Europe Could Sell Unemployment

By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from http://www.macrobusiness.com.au/2013/01/imf-admits-more-mistakes/“>MacroBusiness.

Another day, another round of atrocious data out of the Eurozone: