Throughout the history of economic thought, opposing perspectives on interest and money have created fundamental divides between the various schools. In the one camp, interest is regarded as having a real determination, with monetary policy ultimately at the mercy of…
Opposition to Modern Monetary Theory (MMT) tends to come from two different directions. From the one side, there are those who deny that monetarily sovereign governments have the fiscal capacity to maintain full employment and price stability. From the other…
At the university I attended, a few of the academics were strongly influenced by classical political economy, especially that of Smith and Ricardo. Prior to my student days, one of them had published a paper in the Cambridge Journal of…
Modern Monetary Theory (MMT) makes clear that the only genuine constraint on fiscal policy in a sovereign currency system is real-resource availability. The reason government can always command available resources with its currency is that it is able to ensure…
What follows is a simple parable. The post is long because it illustrates numerous scenarios and their implications, but the parable itself is simple and hopefully very easy to follow. The parable is designed to illustrate as simply as possible…
In a recent NYT post, “I Would Do Anything for Stimulus But I Wouldn’t Do That (Wonkish)”, Paul Krugman writes: Right now, the real policy debate is whether we need fiscal austerity even with the economy deeply depressed. Obviously, I’m…
For Marx, the most important tendency of a capitalist economy is the ‘law of the tendential fall in the rate of profit’ (LTFRP). This ‘law’ is often misinterpreted as referring to a permanent fall in the rate of profit, but…
To understand aggregate behavior, it is necessary to start at the aggregate or macro level of analysis rather than the individual or micro level. This is because there are certain relationships that must hold, by definition, at the aggregate level.…
The abstract to Brian Riedl’s Heritage Foundation paper, ‘Why Government Spending Does Not Stimulate Economic Growth: Answering the Critics‘ reads: Despite decades of repeated failure, President Obama and Congress continue to promote the myth that government can spend its way…
The MMT position on hyperinflation is that it is initiated by a sharp contraction in output and in the supply potential of the economy. Bill Mitchell provides an in-depth explanation in a recent post. Mitchell points out that in Weimar…
