tag:blogger.com,1999:blog-2761684730989137546.post8397600825204834469..comments2024-03-18T19:09:18.510-04:00Comments on Mike Norman Economics: Winterspeak — Krugman out of paradigmmike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-2761684730989137546.post-65322453883081220252015-08-26T05:04:53.726-04:002015-08-26T05:04:53.726-04:00That difference in opinion between Mosler and Krug...That difference in opinion between Mosler and Krugman (or at least one of the differences between them) can be resolved by taking into account the fact that the state performs two quite different types of borrowing. First, it borrows to fund infrastructure and other assets. The logical TERM for relevant bonds there is "very long". Plus the rate of interest, ideally, needs to be whatever the average rate over the life of the asset will be, which of course is difficult to estimate.<br /><br />The SECOND function consists of issuing money and borrowing some of that back so as to control aggregate demand (a point which Mosler quite rightly keeps making). The term of those bonds needs to be SHORT: reason is that private sector confidence can change quickly, which means the state will tend to issue and sell those bonds quickly.<br /><br />I'm putting a post on my own blog in this subject shortly, possibly today.<br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.com