Moon of Alabama — The Non-Coup Coup In Zimbabwe

Backgrounder.

Moon of Alabama
The Non-Coup Coup In Zimbabwe

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JP Koning — Zimbabwe's new bond coins and the demonetization of the rand

Not just Zimbabwe but also other nations using foreign currency as the unit of account and different currencies for the medium of exchange.

Moneyness
Zimbabwe's new bond coins and the demonetization of the rand
JP Koning

Brad DeLong — Between Greece And Zimbabwe

Brad DeLong takes MMT seriously.

But suppose that you are in an intermediate case, where the Treasury and the central bank do not want to peg the currency (and the internal price level) but do not want to let it (them) do their own thing without limit either? Suppose the Treasury Secretary believes that a strong dollar* is in America’s interest. What you then have is a mix of the polar gold-standard and MMT cases. But what are the proportions of the mix?

Grasping Reality with Both Invisible Hands
Between Greece And Zimbabwe (very short)
Brad DeLong | Professor of Economics and chair of the Political Economy major at the University of California, Berkeley
(h/t Mark Thoma at Economist's View)

* Bob Rubin and his protegés favor a "strong dollar" in order to "keep borrowing costs low," which translates to running a balanced budget or even a surplus, as Rubin advised Democrats in the Clinton administration to do, setting the stage for the first depression of the 21st century. This goes by the name "Rubinomics." See also the Roosevelt Institute piece with links on Rubinomics. The Rubinites are now deficit doves that think moderate austerity is called for now rather than the austere austerity of the sound money crowd.

Tim Taylor on hyperinflation

For the record. Some useful data on hyperinflations.

Read it at Conversable Economist

Hyperinflation and the Zimbabwe Example

by Tim Taylor | Managing Editor, Journal of Economic Perspectives

(h/t Mark Thoma)

Edward Harrison on Hyperinflation

Edward Harrison of Credit Writedowns has written insightfully about hyperinflation previously, integrating the MMT perspective with his Austrian school background. Here is Ed's latest, along with a video of his recent appearance with Max Keiser.

On Hyperinflation

Giving Up On Krugman and Dean Baker Too

Dean Baker has posted a response to Krugman's second MMT hit piece:

Greece vs. Zimbabwe: More on Krugman and Deficits

First, Baker presumes that the US needs to borrow to spend:

"Paul Krugman added another post on the potential impact of large deficits on the U.S. economy in which he argues that it doesn't matter that the U.S. can print its own currency; it still faces the same constraints from financial markets. I would argue that it matters a great deal for two reasons that I laid out in my previous post.

"The first reason is that at any point in time the Fed would have the option to intervene in bond markets and buy up debt, if private investors were demanding very high interest rates. This is important because the decision by the Fed to not buy debt would always be a policy choice, not an economic fact."

Worse, Baker concludes:

"For these reasons it is important that the U.S. has its own currency. It can never be Greece. It may end up as Zimbabwe, but this sort of hyper-inflation would be the result of long period of badly failed policies in which our economy essentially unraveled. While that may not literally be impossible, even the biggest pessimists would have to acknowledge that we are very far from seeing this situation."

OMG. Zimbabwe! The Godwin's law of economics. Tell me it ain't so.

Krugman responds to Baker:

The Euro Straitjacket

Krugman begins: "I think Dean Baker and I are converging on deficits and independent currencies. He asserts that having your own currency makes a big difference — you can still end up like Zimbabwe, but not like Greece right now. I’m fine with that."

Zimbabwe? Really?