After a somewhat acrimonious exchange with Rodger some time ago, Barry Ritholz now:
The US still controls its own currency and issues debt in that currency. The US government can always fund its spending, regardless of access to external debt markets or tax revenues, so long as it keeps inflation under control and doesn’t push aggregate spending beyond the economy’s capacity.
The euro zone isn’t like that. The governments of France, Italy, Spain, and Germany issue debt in the euro, a currency they do not control.
Read it at Monetary Soverignty
Does Barry Ritholz finally get it? Did he “know” it all the time?by Rodger Malclm Mitchell
My comment at Rodger's: "Krugman cannot be far behind."
UPDATE!
Oops. Retraction required.
Peter points out in the comments that the article Rodger quotes from is by MMT-friendly John Carney of CNBC rather than Ritholtz. While Ritholtz is quoted on the article on another matter, it does not appear that he is associated with the the quotation above.
Thanks to Peter for catching that.
16 comments:
Well Mike may also have something to do with this as he often had Ritholtz on his show years ago, and from what I remember of those conversations, Ritholtz was not in paradigm....
He would grow a bit testy when Mike would try to enlighten him on these issues.
A bit testy, but not a complete ass like many others.
So he may have finally had a breakthrough...
Resp,
Thanks, Matt. I was just about to post the very same comment! :)
-Mike
One enlightened, many many more to go...
Right Mike, you paid many dues with these morons going back now a long time....
From Ritholtz via Rodger's blog:
"The self-esteemed commentator, Barry Ritholtz, wrote a post titled, “Who Will Buy Treasuries When the Fed Doesn’t” in which he described U.S. treasuries as a Ponzi scheme. "
Sounds like Ritholtz lifted that one from Bill Gross.
and based on Rodger's post of BR's comments, it still doesnt prove that BR doesnt still think it's a Ponzi scheme technically... I'd like to hear him repudiate his prior statements here for proof positive.
Resp,
PS Tom, "I will eat my hat" if Krugman caves... ego.
Ironically his quote is one of the most succinct, comprehensive and understandable definitions of monetary sovereignty I’ve read. It reads like a “unified theory” as it addresses inflation, taxes, spending, borrowing all in one.
"I will eat my hat" if Krugman caves... ego.
I think that when the tide turns, they will all have to turn with it or be found swimming without suits.
Or die first.
I agree Broll, its very well stated, lets break it down... :o)
1. The US still
(a) controls its own currency
and
(b) issues debt in that currency.
2. The US government can always fund its spending, regardless of access to external debt markets or tax revenues, so long as it
(a) keeps inflation under control
and
(b) doesn’t push aggregate spending beyond the economy’s capacity."
AND: with the Demographics the way they are, when will there be any aggregate spending in the near future? Boomers will be spending less for the forseeable future, will they not? (except for health care)
I'm still waiting to bump into Pete Peterson again at the gym and tell him that his "boy" --David Walker --said on my radio show that "there is no solvency issue" when it comes to Social Security. I will gladly email him the sound bite.
The Long Shadow of German Hyperinflation: Echoes
Beo,
They perhaps can still run a bad policy even if they violate Point 2 imo...
iow imo the Treasury probably could still spend without the 2a. and 2b. limitations technically... it would be bad policy probably, destabilizing.
I think Prof Wray put it like "the govt can always purchase the surplus of the non-govt" with no basic problems...
iow: "The govt can always fund it's spending." (period) ?
Resp,
I think there is some confusion. Are you sure RItholtz wrote the piece Mitchell quotes? He is only quoted there, and the author seems to be John Carney, a celebrated MMT convert.
Peter, I checked, too, and you are correct. The author is Carney, not Ritholtz. I changed the post to reflect this.
Hi Tom, it is actually a different Peter who spotted this. I always go by peterc (or my full name). Cheers.
PS: Well done to the real Peter. :-)
Yeah, I got excited, but Ritholtz does not have a very coherent view on this, and it most certainly is not MMT.
Thanks to both Peters. Corrected in post.
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