As I noted in my last post the Bank of England have released an official policy document that concedes that much of Post-Keynesian endoegnous money theory is indeed correct. Interestingly, they have also released some Youtube clips with the authors where they expound on their work in more details. You can watch these videos at the BoE website here.
The videos are fascinating. The language the authors use — which contains references to ‘fiat money creation’ and money as IOUs — is straight out of either David Graeber’s book Debt: The First 5000 Years or MMT. If I were to guess I would say that it is some combination of both.
This is an enormous step forward. But I found it particularly interesting how young the authors in the videos were. One of them must be in his early 30s or so. It seems that the younger folks in the BoE are finally starting to ‘get it’.
Now, the question is where this might take the BoE if it begins to spread. There are two paths that can be taken now that they’ve gotten the basic mechanics of money creation correct.Econintersect
A New Era of Central Banking?
Philip Pilkington
ht Lambert Strether at Naked Capitalism
I quite agree that heterodox economists can take some of the credit for the change in BoE thinking. Another group not mentioned by Philip Pilkington is Positive Money. Geoff Tily, economist for the UK trade union movement said that without PM the BoE would have taken longer to revise it's ideas on money creation.
ReplyDeleteBit like Bernanke at the start of the crisis, who at first refused to admit that the Fed simply creates money by book-keeping entries, and then finally admitted the point.
If I understood Stephanie K's stories re her recent interaction with Bernie Sanders, it was very difficult for her to try to convince Congress- critters (including BS) to succumb to the allure of MMT-related ideas which might facilitate avoiding/modifying the periodic financial crisis decision-making that results in such non-productive accomplishments by the lawmakers. I have thought that she is one of the more persuasive MMT-proponents, but it is not obvious whom someone, with a background such as her's, should target/focus on in order to exert some influence in the US.
ReplyDeleteObviously, the BoE and Fed Reserve operate in distinctive manners, and what works with one may be irrelevant wrt what works with the other. However, I am curious why some of the regular commenters at mne.com have not commented on Phil P's article to get a discussion started.
MMT-ers need to become more sarcastic about the orthodox view. Right now they are supplicants and a pain to listen to.
ReplyDelete