Mike Whitney quotes Warren Mosler on QE
Williamson is not alone in his belief that the Fed is on the wrong track. Economist Warren Mosler arrives at the same conclusion although there are notable differences in their analysis. Here’s a short clip from an article by Mosler which wraps it up in one paragraph:
“Theory and evidence tell me it’s impossible for the Fed to create inflation, no matter how much it tries. The reason is because all the Fed does is shift dollars from one type of account to another, never changing the net financial assets held by the economy. Changing interest rates only shifts dollars between ‘savers’ and ‘borrowers’ and QE only shifts dollars from securities accounts to reserve accounts. And so theory and evidence tells us not to expect much change in the macro economy from these primary Fed tools, making it impossible for the Fed to create inflation.” (“It must be impossible for the Fed to create inflation“, Warren Mosler, Huffington Post)
The Fed is stuck in an ideological cul de sac mainly because its members ascribe to Bernanke’s monetary theories which simply don’t work.
4 comments:
This is good news.
I've been a Whitney fan for years. He's a good writer with good political instincts. But at times his economic thinking has been a little muddled. Glad to hear that he's been reading Warren.
The stimulus that the tea party failed to stop is coming soon called Obamacare.
I am surprised that MMT did not focus on this.
I am surprised no one from occupy ran to the streets to rally for it.
This is going to make the bush stimulii shrub like.
That is we what the repukeklans are fighting...Obama's success.
i'm thinking O'care is reducing the deficit otherwise the repubs would be letting us know?
Warren the deficit so far this FY (for October and November) is a cumulative 227b.... so multiply that by 6 for a 12 mo projection of $1.362T while for last FY the deficit came in at about 700b for the whole FY...
See the MTS report here page 2:
https://www.fms.treas.gov/mts/mts1113.pdf
We have even had surplus months over the last 6 months of FY 2013 April thru Sept 2013, the net deficit over these last 6 months of the year was only 79B total...
So short term, the deficit seems to be increasing. FYoY seems to be smaller yes, but short term, it seems to be ratcheting up...
As far as the 'spending' side, 2014 FYTD net TGA withdrawals are $818b while 2013 FYTD net TGA withdrawals were $859b thru the 9th statement day of December for each year...
So this FY we are running about $40b below last year 'cash basis' (mostly due to the October shutdown which we cant get back...)
Looks like the October shutdown took out about 50b from the normal monthly flow of 'spending' from what Mike and I were seeing in the normal monthly TGA withdrawals leading up to October... and this has hurt and short term we are seeing an uptick in savings (the deficit) as the non-govt takes a defensive posture in the face of the October failure of government...
4th qtr business results dont portend to be very good on a YoY basis with the govt taking out 40B (so far) from their leading flow on a YoY basis....
rsp,
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