Wednesday, April 4, 2012

New Media Covers the K&K Kontroversy

RTTV's "Capital Account" covers this week's big economics debate in the blogosphere that we have been helping to chronicle here; video below.  Includes an appearance by Steve Keen.  This issue looks like it still has legs in the new media.





16 comments:

Unforgiven said...

Fantastic! Understandable, an excellent summation and excellent reporter.

Mike Norman said...

Lauren Lyster. She's good. And a real cutie!

Unforgiven said...

Couldn't take my eyes off the video and delivery was great!

Dan Kervick said...

I think the substance of the controversy is more important than the fact that there is a controversy. The focus should be on why perspectives such as Krugman's can lead to misguided policy recommendations.

Unforgiven said...

I thought she summed that up adequately in the allotted time and gave a fair framework for those that might want to take some time to slog through the blogs.

Shaun Hingston said...

I think MMT should revert back to the name of Chartilism. T in MMT shouldn't be there, who's idea was that?

Mike Norman said...

@Dan: They're not misguided. It's the way the establishment gets all the wealth and power over everyone else. Krugman is a tool.

Mike Norman said...

@Shaun...I agree. I've always said that. A much better term would be MME, with the "E" standing for Economics.

Matt Franko said...

@Dan,

It has the look here of a "he said/he said" type of thing, when imo, the big takeaway should be that Krugman (and hence all the others) is wrong when he says "banks lend out the deposits", or "banks lend out the reserves" which has been shown to be false here.

This perhaps could be understood and digested by finance/econ professionals and policy makers.

This would represent a significant step 1 then, a smallish victory, which would only be felt in professional circles, but a victory nonetheless. A warmup then to step 2: obliteration of the false "taxpayer on the hook"/government as household (TotH/GaH) analogy.

If we think this "banks lend out the reserves" (BLOTR) falsehood is dying a slow violent death, wait till we get to go after TotH/GaH in earnest.

It's just a small amount of people who have to eat crow and admit they have had it all wrong on BLOTR, this has been mostly an "inside baseball" issue that effects a small number of professionals who have to admit they have had it all wrong for decades.

TotH/GaH goes right on up to the Whitehouse and almost everyone in between.

Basically, anyone who has "made a living" on the concept of TotH/GaH has to admit they have been a moron on this issue.

Anybody who has ever said anything about "grandchildren", "sustainablity", "fixing social security", "fixing medicare", "how do we pay for that?", "we have to raise taxes on the rich", etc, etc... All of these people have to eat crow. That's basically everybody out there.

Big egos need not apply, some of them will go to their graves first I'm sure. But those with small egos and objectivity, those that value truth; I think we can get them to see this. Hopefully the quantity of these type of honest people can reach a plurality.

A lot of people are going to be shown to be BIG morons on this.

This one will not go down easy, but it has to go down if we are ever to move forward...

Resp,

PS Another absolutely fantastic piece at NEP this week!

Anonymous said...

Keen mentions Nem Mem Tree! Wicked!

RyanVMarkov said...

Mr. Krugman has very big megaphone - NYTimes, but he uses it to spread macroeconomics garbage.

Andrew said...

How does any of this matter to real people? Say Keen can convince Krugman and every other economist that banks don't lend deposits. What policy does this change? I don't think any.

Trixie said...

Andrew,

Unbeknownst to me, until this debate started, I didn't know mainstream economists don't include banking in their models. These same models are then subsequently used to analyze and make predictions about the economy. And bizarrely, these same economists think banks are some sort of neutral agent in the economy, and therefore private debt levels don't matter and credit expansion is somehow self-contained (because of reserves or the money base or consumers reading Fed meeting minutes before they spend). But there most certainly is a limit - once it hits a wall as the GFC proved. And in some sort of sick joke, they focus on government debt instead.

Once it's understood that loans create deposits and banks are not reserve constrained, you can see how expanding credit can inject new spending power into the economy. It's not a neutral transaction between borrowers and savers, and therefore a "wash" in terms of AD. As a result, Keen was able to predict the the financial crisis when mainstream economists didn't have a clue. That's why it matters.

Matt Franko said...

Trixie for Secretary of the Treasury!

Andrew, Once you get these professionals to admit that BLOTR is false, they logically will have to support a follow-on effort to wipe out the false TotH/GaH which is broadly believed by the general public and sadly many morons in the media who perpetuate this falsehood.

Warren has quipped "To do a reserve drain you first have to have done a reserve add". This is only logical. And at this point is sort of where BLOTR and TotH/GaH intersect logically.

Get them to first admit BLOTR is false, then go for TotH/GaH...

Resp,

Anonymous said...

what is TotH/GaH?

Matt Franko said...

TotH/GaH acronym for: "Taxpayer on the Hook/Government as Household"

Mike coined the first phrase some years ago on radio, Tom has used the second phrase here over the last year or so.

They both describe the same falsehood that we need to expose...

Resp,

PS: BLOTR is "Banks lend out the reserves" (also false)