Bill Mitchell — The Balanced Budget silly season is upon us again

"Again" in the post title  refers to the US in 1936 when FDR was persuaded by Treasury Secretary Henry Morgentau to adopt a policy of fiscal conservatism after years of fiscal liberalism on the advice of Fed chair Marriner Eccles. While the policy recommended by Eccles had been working, its reversal was soon followed by a reversal in the economy, too, in the recession of 1937. Bill catches us up on the history to show why the supposed medicine of fiscal discipline is actually poison for the economy.

Bill Mitchell – billy blog
The Balanced Budget silly season is upon us again
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Austral

More People Read Frederik Pohl Than Ever Read Marriner Eccles ... But Both Were Ignored by ISLMist Economists, To Our Detriment

Commentary by Roger Erickson

It's an enduring mystery why the entire, vaunted academic community of the USA totally missed the elegant operational advances which Marriner Eccles pragmatically introduced, as he personally shepherded the USA off the Gold-Std to the enlarged Policy Space and greater Policy Agility possible with the Fiat-Currency Standard.

Some of the people who did catch on early were science fiction writers of the day.

They grasped the implications of what Marriner unleashed, long before the Ptolomaic-emulating absurdity of the ISLMists even finished soiling their academic diapers, let alone retracting their misguided efforts. It was too late, of course, as the contents were already out of the diaper and on the runs throughout university economics programs coast to coast. The real lesson was overrun Ex-Lax, not just ex-poste.

One of the few exceptions was Beardsley Ruml (Taxes for Revenue Are Obsolete), and he, like Marriner Eccles, was simply ignored by the vast majority of clueless economic academics and their dutifully worshipful public.

One of the best known of those early science fiction writers was Frederik Pohl.

'His first major novel, “The Space Merchants” (1953), written with Cyril Kornbluth, was built around the idea that the values of business and advertising had replaced governments, creating disastrous effects.'

'“The Space Merchants” has never been out of print and is often cited as an influence on ... other [SciFi] authors.' 

Unfortunately, few, if any of those authors were economists.

Pity more economics students didn't spend more time reading SciFi novels. They might have actually grasped a bit of context too, rather than just ISLMist ideology. Real scientists of the day understood that data is meaningless without context. Can someone slip that into a modern day econ-101 course too? Please? Before it's too late, and the ISLMists in the gorilla suits take over completely?

Tschäff Reisberg — Why can't the Treasury borrow directly from the Fed

Nice quote by FDR appointed Fed chair Marriner Eccles. Here's the punch line:

So it is an illusion to think that to eliminate or to restrict the direct borrowing privilege reduces the amount of deficit financing. Or that the market controls the interest rate. Neither is true.

Read it at This Episode of Life

Why can't the Treasury borrow directly from the Fed

by Tschäff Reisberg