tag:blogger.com,1999:blog-2761684730989137546.post9134652666991321737..comments2024-03-29T07:30:30.121-04:00Comments on Mike Norman Economics: General theory and special cases in Modern Monetary Theorymike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-2761684730989137546.post-34169368210644027752012-06-23T18:18:24.060-04:002012-06-23T18:18:24.060-04:00Tom -- I just got caught up to this post. Thanks ...Tom -- I just got caught up to this post. Thanks for an excellent essay. BTW, re: Ramanan, I saw this not so much as an "argument", but as an explication of a lot of confusion about MMT.John Zelnickernoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-12087188316754190282012-06-23T14:21:55.526-04:002012-06-23T14:21:55.526-04:00Ramanan "I can't make sense of your argum...Ramanan "I can't make sense of your argument. Untypical because whether I agree or not, I can usually"<br /><br />No big deal. I guess have have not stated my meaning clearly enough, but I am done with it for now. I am sure it will continue to come up though, since there seems to be continuing misunderstanding fo the MMT position about general and specific.<br /><br />So I'll think about how to make it better.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-24727773373668988582012-06-23T14:18:51.617-04:002012-06-23T14:18:51.617-04:00Ramanan "Now, a nation has to make its curren...Ramanan "Now, a nation has to make its currency acceptable in international trade."<br /><br />Right. Domestically a currency gets value because taxpayers have to obtain it.<br /><br />Unless tariffs payable only in the importers currency are imposed, the exporter doesn't need the importer's currency. And even if there are tariffs, only the amount of the tariff is required and that is not enough of an incentive to promote saving.<br /><br />So unless the exporting countries is either using the importing country's currency to import reciprocally, there is no incentive to hold the currency in itself. <br /><br />The currency has to be attractive as a saving vehicle, or the exporter has to have enough incentive to fund the importers CAD by saving to generate a corresponding KAS.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-65958462439072696912012-06-23T13:52:19.796-04:002012-06-23T13:52:19.796-04:00Tom,
I can't make sense of your argument. Unt...Tom,<br /><br />I can't make sense of your argument. Untypical because whether I agree or not, I can usually.Ramananhttp://www.concertedaction.com/noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-36912172490134854612012-06-23T13:48:16.984-04:002012-06-23T13:48:16.984-04:00AndyCFC,
I couldn't really understand your qu...AndyCFC,<br /><br />I couldn't really understand your question. <br /><br />Btw, as you suspected, I am not generally in a mood to debate this given the history since long back .. it usually happens that there are commenters to whom I feel the need to defend and then it all becomes long debates. So I try to stay out unless I can't resist!<br /><br />Once I was raising funds for my startup and the angel investor told me people invest for all vague reasons .. for example if they like your face.<br /><br />Now, a nation has to make its currency acceptable in international trade. Usually people allocate their wealth into assets in their own currency. This is home bias. To make its currency acceptable a nation has to by hook or crook make foreigners accept it. <br /><br />The reason people/institutions may not hold debt denominated in say Bangladesh's currency is because they think there is a risk of impairment of the asset - due to depreciation, default by the government default by the debtor etc. Simple enough ...Ramananhttp://www.concertedaction.com/noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-40183498085122423592012-06-23T01:03:46.819-04:002012-06-23T01:03:46.819-04:00"It would be helpful if you would spell out t..."It would be helpful if you would spell out the first instance of each acronym."<br /><br />Done.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-5744650835246492362012-06-23T00:41:49.171-04:002012-06-23T00:41:49.171-04:00It would be helpful if you would spell out the fir...It would be helpful if you would spell out the first instance of each acronym. Not doing so precludes handing your article along to another who is not familiar with the jargon.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-44430217303552256642012-06-22T20:34:42.316-04:002012-06-22T20:34:42.316-04:00For those following the feed, I updated "gene...For those following the feed, I updated "general v. specific" with a comment of mine at Warren's <a href="http://moslereconomics.com/2012/06/22/mike-norman-economics-general-theory-and-special-cases-in-modern-monetary-theory/comment-page-1/#comment-196113" rel="nofollow">here</a>.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-77446805384641659102012-06-22T14:12:57.990-04:002012-06-22T14:12:57.990-04:00This comment has been removed by the author.Ryan Harrishttps://www.blogger.com/profile/04815033054435303399noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-70898733025715293222012-06-21T18:57:29.215-04:002012-06-21T18:57:29.215-04:00Ramanan: "You know Tom - most nations can'...Ramanan: "You know Tom - most nations can't even float in the sense you require (pure float)."<br /><br />The only thing that the general theory requires is staying within the boundaries of what the system makes possible. Countries could even opt out of the international system running at the time by introducing convertibility. If the country was influential enough, that might ever result in a change of the existing system.<br /><br />There seems to be misunderstand about requirements, and some think that the MMT analysis requires certain strategy and tactics within the parameters of the general case. That is not so. The claim is simply that the operational rules (institutional arrangements) of a monetary system have certain boundary conditions. Within those boundary conditions many policies, strategies, and tactics are options. But choosing policy, strategy and tactics has consequences that limit the liberalism of the system by imposing political restraints. However, these political restraints don't alter the operational reality of the system from the standpoint of the general theory.<br /><br />Central banks, Treasury issuance of term securities, etc. are options but not requirements of the system. An option can work perfectly well without them — in principle. What may be possible politically for a country is another matter and that is a question of the special case that the country represents. <br /><br />Sovereign countries presumably will choose what they deem best for their interests, but that often means choosing what is best for special interests. For example, "what is best for America" is not necessarily best for all American, but beneficial for only the privileged. <br /><br />While country like the US could go to direct Treasury issuance of currency and no bond issuance and tight regulation of bank credit money that would be difficult to a legislature that captured by financial interests to pass. Even though there are many arguments that this would benefit most American by reducing the financial instability and recurrent crisis, while eliminating an unnecessary subsidy for bondholders. Such matters have been explored in the comments here and elsewhere, with various views and reasons forthcoming.<br /><br />Everyone can float operationally under the parameters of the monetary system, but there are consequences if some nations do this, so they choose to modify policy away from the purely liberal stance that is possible. Some do it long term by adopting a peg, others short term depending on conditions.<br /><br />The general theory that lays out the operational parameters that bound the system functions like the sectoral balance approach wrt fiscal stance. In the sectoral balance approach, any stance within the mathematical boundary of the sectors summing to zero is possible operationally, but countries choose different policy options depending on social, political and economic conditions, and changing economic conditions, chiefly changes in propensity of non-government save and economic cycles, also affect the specifics of the balances in a way that endogenously determined.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-56168419936352939752012-06-21T18:29:15.091-04:002012-06-21T18:29:15.091-04:00phil "This general vs specific discussion sme...phil "This general vs specific discussion smells like a bad case of revisionist history."<br /><br />It based of a paper that Scott Fullwiler wrote a August, 2010, and well as numerous discussion in comments since then here and elsewhere.<br /><br />Here's a link to the paper.<br /><br /><a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1723198" rel="nofollow">Scott T. Fullwiler, Modern Monetary Theory - A Primer on the Operational Realities of the Monetary System</a><br /><br />Educate yourself.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-42692995518226636222012-06-21T16:29:39.527-04:002012-06-21T16:29:39.527-04:00Ramanan
Just a question (not an argument lol)
as ...Ramanan<br /><br />Just a question (not an argument lol)<br />as you say there the first industrial countries currencies seem to be highly acceptable but as far as i can see there is no real reason apart from being first and may not have been succesful for a long time. I am curious as to why...is it misconception or lack of trust of their own currencies/governments?AndyCFCnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-85387401528137762342012-06-21T15:17:53.114-04:002012-06-21T15:17:53.114-04:00This general vs specific discussion smells like a ...This general vs specific discussion smells like a bad case of revisionist history.philnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-73005605503663216612012-06-21T15:04:18.733-04:002012-06-21T15:04:18.733-04:00(Only for Tom)
You know Tom - most nations can...(Only for Tom)<br /><br />You know Tom - most nations can't even float in the sense you require (pure float). Only a few have that luxury because they industrialized early & lot of related Et ceteras such as success in international trade. They are able to float because their currencies are highly acceptable. <br /><br />(Btw, the example you give - Switzerland and China have supreme external positions).Ramananhttp://www.concertedaction.com/noreply@blogger.com