In order to stimulate productive bank credit – and boost the effectiveness of fiscal policy – governments should stop issuing bonds, and instead borrow from banks through loan contracts, often available at lower rates than bond yields. This would bolster bank credit and stimulate demand, employment, GDP, and tax revenues.Project Syndicate
How Money is Made
Karl-Theodor zu Guttenberg, former German Minister of Economics and Technology, Chairman of Spitzberg Partners LLC, and a nonresident distinguished statesman at the Center for Strategic and International Studies, and Richard Werner, Professor of International Banking and Director of the Center for Banking, Finance, and Sustainable Development at the University of Southampton
7 comments:
"How Money is Made": according to sub-humans aka "libertarians"
:) Should be titled "how to go from bad to worse"
Did Guttenberg and Werner authored the proposal themselves, or did they "lift" it from someone else?
Causa Guttenberg
http://en.wikipedia.org/wiki/Causa_Guttenberg
Werner is circutist with a strong neoliberal bias. He has said that government deficit spending takes money away from private sector dollar by dollar. How can you maintain that money is endogenous after that gets me.
He apparently thinks that taxes and borrowing fund government and that the only money is bank credit, as do some other circuitists that reject the MMT view of government as currency issuer.
He was one of the first ones that opened my eyes about bank credit creation. I don't considder myself a genius. This MMT stuff is not so hard to get really.
To my knowledge this is prohibited in EMU that banks lend to governments. Why do they make the rules right? Because they understand the matters. This smokescreen is necessary to maintain the establishment. Anyone who pokes holes in the screen goes down. I have communicated with mainstream politicians and economists in my country, as soon as you poke the wholes they disappear and you are an outsider. This is like an unwritten rule that everyone understands.
Werner is circutist with a strong neoliberal bias
To get the right slant on Werner, I think you should look at him as a kind of Listian state capitalist. While he does have "neoliberal tendencies," mostly due to his having received his economics education in the neo-liberal era, he is a severe critic of neo-liberalism in the sense that he doesn't believe in independent central banks and, much like MMT, believes fiscal and monetary policy should be closely integrated. He is in accord with neo-classical thought in that he believes in a "crowding out" theory which in his view explains the ineffectiveness of fiscal policy in Japan of the '90s, for example. He does not, however, follow the neo-classical tendency to see money as "a veil" over "underlying forces" in the economy. He is a bit of a strange bird.
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