Bill Mitchell — When economists ignore the elephant called reality and applicability

I have sat through many economic seminars in my time where there is a sense of suspended reality necessary so the presenter can run through the exercise of bringing their latest research idea to the academic community. This suspended reality normally relates to the a priori assumptions made to condition the exercise and the framework within with the exercise is conducted. It typically involves ignoring the elephant in the room called reality and applicability. The ruse goes like this – assume a, b and c (where none of these assumptions capture the most important aspect of the object of study); then use these analytical tools (none of which reflect how the actual mechanisms being studied operate); and QED we show this. I no longer go to seminars like this – life is too short....

Bill Mitchell – billy blog
When economists ignore the elephant called reality and applicability
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

For the umpteenth time: the U.S. CANNOT become Greece!!

How many times do we have to hear this crap from know-nothing, lazy, journalists or right wing ideologues?

Here's yet another moron, some dude named Michael D. Tanner (mtanner@cato.org, Twitter) of--where else--the Cato Institute--who who wrote this column in the rag sheet, NY Post, today, saying that we'd better be careful, because the U.S. can become the next Greece.

Most Americans look at the rerun of the Greek euro crisis with something between smug amusement and condescending disapproval. When will those profligate Greeks get their economic house in order and stop looking to others to bail them out?

But, should people living in glass economic houses really throw stones?
After all, just like Greece, the United States government has been living beyond its means, running up an enormous debt that will eventually need to be repaid.

Nothing...NOTHING...in this article that explains the MASSIVE distinction between the U.S. and Greece, the former being a currency issuer and the latter being a currency USER.

There is not one single example in all of history of a currency issuing nation that has all its debts denominated in that currency and where the currency floats freely, that was forced to involuntarily default. NONE.

Any claims to the contrary are either pure ignorance, vicious dogma or, an intentional effort to deceive or incite fear.

It's crap.

Geoff Coventry — When good analogies go bad

We've all heard it.

"If I ran my business like the government I'd be bankrupt".

It sounds so intuitive; so moral. It would be irresponsible for a government to keep spending more than is earns. And for many governments, it really is true - all those cities, states, and the nations that do not issue their own currency (like Greece). Yep - they all have to get the money they spend because they are all users of a currency.
But what about nations that issue their own currency? After-all, that's most sovereign nations.

Let's go back to our analogy. We said if I ran my business like the government... stop right there. What business issues its own money? Businesses are currency users just like cities, but the United States is a currency issuer. In what way can a business ever run like a currency issuer? 

Yep, some analogies are just bad. So bad, in fact, that they can mislead whole nations into thinking something false is true, and something true is false. Or, to put it in moral terms, they lead us to believe that something very destructive to our economy is actually the only righteous solution, and that the very thing that could help society and people is deemed irresponsible and even evil.

That's what happens when good analogies go bad....

It's the people's money
When good analogies go bad
Geoff Coventry

Giancarlo Corsetti and Luca Dedola — Is the euro a foreign currency to member states?

Spain and Britain have similar debt problems. So why does Spain face far higher sovereign-interest rates? Is this only about Eurozone membership? This column argues that Eurozone membership does not fully explain this discrepancy and that, in fact, it is central banks which cannot provide an effective backstop to national debt that are the root cause of high sovereign-interest rates. Eurozone members are more vulnerable to debt crises to the extent that the ECB cannot count on the joint support of national fiscal authorities.

VOX.eu
Is the euro a foreign currency to member states?
Giancarlo Corsetti, Professor of Macroeconomics, University of Cambridge and Programme Director, CEPR, and Luca Dedola, Adviser in the Directorate General Research, European Central Bank; Research Affiliate, CEPR

Paul Krugman — How to Beat a Dead Horse

More on the blog than in the column, I follow research. When there’s new papers, that can be helpful. The ideas evolve, too. I wasn’t thinking much about the importance of having your own currency at first. I learned about that a couple of years into this Don Quixote role—some mixture of Don Quixote and Cassandra. One thing about Cassandra is that she was always right. A lot of what I’ve been doing is telling people they’re about to make a terrible mistake, watching them make the mistake, and then saying, “See, you made a terrible mistake.”

Bloomberg Businessweek
How to Beat a Dead Horse
Paul Krugman | Professor of Economics, Princeton University\

(h/t Dan Lynch on FB)

Point of Logic: Every Currency Issuer Must Actually Issue Notes, Before Collecting the Currency That Only They Issue.

Commentary by Roger Erickson

Seems like a point of logic we can - and should - work with.

A Background to the Origination Of Soft Currency Economics aka Modern Monetary Theory

"Honey Badger Don't Care" about ratings by menu items

commentary by Roger Erickson

S&P's rating goes up there with Quixote's rating of windmills?

A year later, S&P downgrade of US looks like a dud

Prof. Brad Lewis, Union College, responds privately: "Parts of this should be considered comedy--like the commentary by Philip Swagel, the U. of Maryland economics prof quoted in the story who served in George W. Bush's Treasury Department. He cites a 'massive fiscal challenge.' It would be best if he understood MMT. But somehow I also can't help asking, 'And if you really think that, what exactly did the administration you served in do about it?'  We might make big progress on that if we just got the [terms] currency issuers and currency users into consistent usage."

Black Comedy, perhaps? Or rather tragecomedy?