This is the essence of it:
In any case following Fullwiler here we get a working distinction between fiscal and monetary policy that's easy to follow. Fiscal [policy] increases the net worth of the non-government sector [by increasing non-govt net financial assets through deficits]; monetary policy increases liquidity [reserve quantity] through asset swaps [that change the composition of assets but do not affect net financial assets of non-govt]. In the liquidity trap this breaks down as you have perfect substitutes being swapped-money and bonds.Read it at Diary of a Republican Hater
Fiscal vs. Monetary Policy: Scott Fullwiler vs. Lars Christensen
by Mike Sax
Is this a follow-up to the monster thread?…
ReplyDeletehttp://mikenormaneconomics.blogspot.com/2012/06/why-cant-treasury-borrow-directly-from.html
Seems like one of the participants doesn't know/understand this.
@ paul
ReplyDeleteLars Christensen is not an Austrian (he's Danish) :)
He is an economist at Danske Bank.
Christensen coined the term "market monetarism."
So it is related but not the same issue.
Why the disrespectful hack job? Lars is definitely not a nut. Furthermore, he comes from the Laidler school of thinking that money must be taken seriously. You obviously haven't taken the time to understand where he comes from.
ReplyDelete@ JP Koning
ReplyDeleteOK, I agree that it's over the top. I apologize for getting overly flippant, and will take that down.
You can read comparison of monetary policy and fiscal policy in Ed Butowsky post, "Obama Chose Monetary Policy - And You're Feeling It"
ReplyDelete