The conservative UK newspaper The Telegraph has featured an article “How to end boom and bust: make cash illegal” about Trond Andresen’s RWER paper “Improved macroeconomic control with electronic money and modern monetary theory”. It has already attracted over 3,000 comments.Real-World Economics Review
“This may all sound far-fetched, but the idea has been developed in some detail by a Norwegian academic, Trond Andresen”
3 comments:
While these proposals are interesting, they assume that all boom/bust cycles are both driven by monetary factors and amenable to monetary repair, and can be addressed by monetarily "validating" - as Minsky put it - an earlier Ponzi cycle.
There are long-term costs to addressing collapses in these ways. If Ponzi architects always get paid via monetary policy intervention, no matter how stupid and wasteful their rackets were, then they acquire an incentive to keep running those rackets. The result is a long-term drain on the creation of real and more fundamental economic value, and a persistent mis-allocation of human and other resources.
good point Dan
The macroeconomic debate is about aggregates. If one thinks that aggregates are superfluous, then doing macro is a waster of time, and so this observation about real vs financial is irrelvant.
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