Classic Krugman. He is really the master of a few words.
Read it at The New York Times
G.O.P. Monetary Madness
By Paul Krugman
Best line from the MMT standpoint:
O.K., a brief digression: the Federal Reserve doesn’t actually print money (the Treasury does that). But the Fed does control the “monetary base,” the sum of bank reserves and currency in circulation. So when people talk about Mr. Bernanke printing money, what they really mean is that the Fed expanded the monetary base.This is an important contribution in sinking the rampant "printing money" meme.
Oh, and did I mention he even shows up Peter Schiff as the fool he is about seeing hyperinflation around every corner.
UPDATE: Cullen Roche sets PK straight on some things from the vantage of MMT. Lots of good stuff.
Read it at Pragmatic Capitalism
INFLATION PREDICTIONS AND BROKEN MODELS
by Cullen Roche
11 comments:
Paul Krugman wrote:
"O.K., a brief digression: the Federal Reserve doesn’t actually print money (the Treasury does that). But the Fed does control the “monetary base,” the sum of bank reserves and currency in circulation. So when people talk about Mr. Bernanke printing money, what they really mean is that the Fed expanded the monetary base."
He is in MMT paradigm, has he always said that? Am I misunderstanding something here? Why was he advocating QE in japan?
Does anyone else get the feeling that Krugman is going to eventually (long time from now)accept MMT, and then claim he's ALWAYS believed that?
Krugman is still off base, I believe. The Fed didn't save the day by expanding the monetary base. The Fed "saved the day" by buying bad bank loans. Although this had the effect of expanding the monetary base, Krugman conflates that with the Fed's purchases of government bonds (QE) which also expanded the monetary base, but had nothing to do with saving the economy.
Krugman is very much more sensible than most commentators, yet very much less sensible than your average amateur MMT student...
And I agree with DustinM's implication that Krugman seems oblivious to his own mistakes and is unable or unwilling to acknowledge that MMT got right the stuff that he got wront...
But Krugman's economics are still better than any of the prominent Republicans or Democrats...
I updated the post with a link to Cullen Roche's running MMT critique of PK.
Thanks, Tom, as always!
"Mr. Romney isn’t trusted because he’s seen as someone who cynically takes whatever positions he thinks will advance his career — a charge that sticks because it’s true."
Is this going to be the big Democrat strategy? "Flip-flopper" LOL! This is garbage right out of a Tea Party rally. Purely political statement by Krugman, unobjective, unedifying.
> the Federal Reserve doesn’t actually print money (the Treasury does that). But the Fed does control the “monetary base,” the sum of bank reserves and currency in circulation.
Does anyone know whether this is just "traditionally true" or whether there are actual constraints on who the Fed can buy from? For example, if the Fed wanted to buy GM stock from an exchange, is there anything that would prevent them from doing it?
I know other central banks around the world (e.g. HKMA) have done this.
@ marris
The legal scope of Fed purchases — guest post by JP Koning at Worthwhile Canadian Initiative
BTW, see the comments at the above link, too. Complicated issue.
In an emergency the Fed is likely to do what it deems necessary under some rationale and ask permission later if necessary.
Post a Comment