Matias Vernengo — Classical Political Economics and the History of Central Banks

As promised not long ago, here a short paper on the history of central banks presented at ASSA meeting in Philadelphia. The paper is short, given the submission policy. It discusses the growing literature on the origins of central banks, and essentially disagrees with Charles Goodhart, who is the authority on the topic.… 

The point of the paper is that early public banks (essentially Italian and Dutch banks that preceded the the Swedish and English central banks) were central banks because they did have a public concern considerably before than their LOLR function was developed. They were fiscal agents of the state concerned with providing a stable unit of account and a secondary market for public debt allowing the expansion of the State.

The paper tries, in that sense, to connect the discussion of the origins of central banks with the extensive literature on the Fiscal-Military State and its relevance for the process of capitalist development.

Naked Keynesianism
Classical Political Economics and the History of Central Banks
Matias Vernengo | Associate Professor of Economics, Bucknell University

Edward Harrison — Why the euro crisis will happen again and Italy will be involved

This morning, as the data were coming in from Europe for Q1 GDP, I got a reminder from Twitter about the inherent deflationary nature of the euro area’s design.| And this goes directly to how to think about credit risk in Europe.

I followed a twitter post to a Charles Goodhart article from 1997, written before European Monetary Union. And he was saying things that the late British economist Wynne Godley was banging on about five years earlier when the Maastricht Treaty set out the terms for euro. Here’s the crux as it relates to credit risk in Europe:

Credit Writedowns
Why the euro crisis will happen again and Italy will be involved
Edward Harrison

Mark Blyth — Global Trumpism

Why Trump’s Victory Was 30 Years in the Making and Why It Won’t Stop Here

Goodhart's law. That would be Charles Goodhart.

The era of neoliberalism is over. The era of neonationalism has just begun.

Needless to say, must-read.

Foreign Affairs
Global Trumpism

Mark Blyth | Professor of Political Economy at Brown University

Eric Schliesser — When the Financial Insiders tell you the accounting numbers are (ahhh) made out of thin air

Parsing Emilios Avgouleas and Charles Goodhart on the noble lie about finance and accounting.

Fourth, the reason why they think it's problematic that "published accounting valuations" are not stable is not because, say, all risk models are, thereby, based on epistemic mirages, but, rather, what needs to be prevented is that "the general public" starts the doubt the integrity of published valuations. That is to say, the public needs to stay in the dark about the truth about these numbers (because if the public loses confidence we risk more extensive crises). If keeping the shoddiness of accounting secret from the public serves the public's genuine good, one may call this a a species of Platonic noble lies. But other terms also spring to mind.

Digressions&Impressions
When the Financial Insiders tell you the accounting numbers are (ahhh) made out of thin air
Eric Schliesser | Professor of Political Science, University of Amsterdam’s (UvA) Faculty of Social and Behavioural Sciences

Don Quijones — The “War on Cash” in 10 Spine-Chilling Quotes

You can't make this stuff up.

Citigroup’s Chief Economist Willem Buiter responds to the monetary economist Charles Goodhart’s description of abolishing currency as “shockingly illiberal.”

(T)his cost has to be seen against the cost that the anonymity of currency presents to society. Even though hard evidence is hard to come by, it is very likely that the underground economy and the criminal community are among the heaviest users of currency.

This, I believe, is the hidden intent behind all the excited talk about banning cash: to do away with the personal anonymity it offers.

Raging Bull-Shit
The “War on Cash” in 10 Spine-Chilling Quotes
Don Quijones
(Reposting of April 15, 2015 post at Wolf Street)

Ambrose Evans-Pritchard — Deflation supercycle is over as world runs out of workers

The demographic 'sweet spot' is vanishing. We are on the cusp of a complete reversal, spelling the end of corporate hegemony

When Charles Goodhart speaks it is important. He is one of the few people at the top of the chain that actually understands monetary economics and is MMT-friendly. So you'll probably want to read this, even if you don't pay attention to AE-P.

This is going to shift the conversation if it gets traction. Goodheart saying it and AE-P featuring itguarantee it will.

The world is in flux. The great leveling is already here in this view.

The Telegraph

Deflation supercycle is over as world runs out of workers

Ambrose Evans-Pritchard

Dirk Ehnts — Goodhart on pegged exchange rates

One wishes that the creators of the euro would have read this text-book before the creation of the euro. The TARGET2 system has worked properly, but as mentioned by Goodhart “such financing of itself does nothing to correct the imbalance caused by a divergence between the pegged and the ‘equilibrium’ exchange rate”. The imbalance bothers not because it has to be financed – TARGET2 takes care of that – but because employment is low in those areas where the ‘equilibrium’ exchange rate is not correct.

econoblog 101
Goodhart on pegged exchange rates
Dirk Ehnts | Berlin School for Economics and Law

Lars Syll — William Buiter on useless macroeconomic theories

Both the New Classical and New Keynesian complete markets macroeconomic theories not only did not allow questions about insolvency and illiquidity to be answered. They did not allow such questions to be asked....

Lars P. Syll's Blog
On useless macroeconomic theories
Quoting William Buiter

Randy Wray — Banks Don’t Lend Reserves! Who Knew? MMT, That’s Who!

OK so it took almost four decades but finally the mainstream is waking up to the fact that banks do not “lend out” reserves (except to one another in the fed funds market). The whole “deposit multiplier” story that was taught in every American money and banking textbook is wrong. Always has been wrong.
(Just an aside: the mistake was largely an American deal. British students got to use Charles Goodhart’s text, which always got it right. But generations of Americans as well as foreigners who studied in America were misled by our textbooks.)

If our policymakers who art in Washington understood this, we would not have got QE. Or all the hyperinflation hyperventilating by those who fear that the trillions of dollars of excess reserves will get “lent out” and cause prices to go to the stratosphere.
Banks do not “use” reserves as the raw material for loan-making. Rather, they lend out their own deposits, which are created by keystrokes. Post Keynesians have been saying this since a seminal piece by Basil Moore was published in 1979 (and it is easy to find early precursors all the way back to the dawn of time–as I demonstrated in my 1990 book, Money and Credit in Capitalist Economies).

Economonitor — Great Leap Forward
Banks Don’t Lend Reserves! Who Knew? MMT, That’s Who!
L. Randall Wray | Professor of Economics, UMKC

The Future of Central Banking - INET Hong Kong

Keynote panel on "The Future of Central Banking" at the Institute for New Economic Thinking's "Changing of the Guard?" conference in Hong Kong. Featured panelists include Liu Mingkang and INET Advisory Board members Charles Goodhart, Richard Koo, and Adam Posen, with Fung Global Institute President and INET Advisory Board member Andrew Sheng moderating.

The Future of Central Banking - INET Hong Kong
INETeconomics

Matthew Zeitlin — Sorry, Libertarians, History Shows Bitcoin Isn't the Future

As we consider the digital-currency phenomenon that is Bitcoin, bear in mind that there are, broadly speaking, two accounts of the origin and history of money. One is elegant, intuitive and taught in many introductory economics textbooks. The other is true. 

The financial economist Charles Goodhart, a former member of the Bank of England’s Monetary Policy Committee, laid out the two views in a 1998 paper, “The Two Concepts of Money: Implications for the Analysis of Optimal Currency Areas.”

Bloomberg | The Ticker
Sorry, Libertarians, History Shows Bitcoin Isn't the Future
Matthew Zeitlin

Here's a link to Goodhart's paper, The Two Concepts of Money.

Randy Wray — Back To The Future: Modern Money Conference In 1999

MMT history lesson.

New Economic Perspectives


Back To The Future: Modern Money Conference In 1999
L. Randall Wray | Professor of Economics, UMKC