Paul Krugman pointed out out in a recent post that whether a government finances itself through bond purchases, which are later bought by the Fed, or whether it prints money directly, makes no difference. The two are in effect the same. Some, however, still question this idea because they wrongly believe the Fed and the Treasury to be two separate entities. While this may be the case on paper, in reality they represent more of a married couple with a joint account than two separate entities.
To help explain, we’ve done some balance sheet exercises to show how it is that the ultimate outcome of bond-funded spending, whether QE supported or pure money printing, is the same.FT Alphaville
Guest post: The helicopter can drop money, gather bonds or just fly away
Stephanie Kelton, chair of the Department of Economics at the University of Missouri, Kansas City, and Scott Fullwiler, associate professor of economics and James A. Leach chair in banking and monetary economics at Wartburg College
10 comments:
Hats off to Neil doing yeoman work over there in the comments dealing with the unwashed rabble.....
That FT post is over a year old, no!
Meant to put a question mark at the end above. Anyway the FT thing is 11 months old...
The truth is timeless? ;)
Havent seen as much mainstream coverage of MMT lately. There was that burst in 2012, but now..crickets.
On a positive note, I have seen MMT concepts and ideas stated in public, just not with the name attached.
Oldie but goodie that Stephanie just linked to on Twitter/FB and I put it up here FYI.
Because "the economy is doing good" (sic). The economy = SP500 buybacks and profits.
We should read more about MMT when libertarian part of the GOP tries to shut down the govt because of debt ceilings next year.
Europe is a different story (we are debating if we should allow or not governments to finance deficits by printing money, existentially and philosophically)... And in Asia there was/is applied MMT and some other experiments, different story too. Everybody has to check their exchange rate with the $, neither too low or too high, along trade balance. Risky times.
Anyway MMT was an USA story mostly so.
ps: the helicopter can also run out of gas & crash on top of a house, killing innocent citizens
:(
I like that Roger
Heres another;
Today the helicopters just fly to someones personal helipad and from the rooftop they use their cannons to fire at the marauders.
:(
ps: shoulda said "mechanical failure" rather than running out of something :)
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