Wednesday, July 27, 2011

Some Miscellaneous Links

I’ll post below some interesting links I’ve seen recently:
(1) Marshall Auerback, “Worse than Hoover,” New Economic Perspectives, July 25, 2011.
This is a great little essay by Marshall Auerback on Herbert Hoover’s corporatism and limited, but woefully inadequate, government interventions from 1929–1933, and how Obama has never really been any sort of progressive on economics.

(2) Bill Mitchell, “3 Million Americans or so May Find out the Truth,” Billy Blog, July 26, 2011.

Bill Mitchell, “When Might That Be?” Billy Blog, July 21, 2011.
Some great links from Bill Mitchell on the debt ceiling fiasco.

(3) Paul Davidson, “Making Dollars and Sense Out Of The U.S. Government Debt,” Journal of Post Keynesian Economics 32 (2010).
Some much needed balance on the public debt and its significance from a leading Post Keynesian called Paul Davidson.

(4) James Galbraith, On Deficit Hysteria, Left Business Observer, July 23, 2011.
A good audio interview with James Galbraith on Doug Henwood’s Left Business Observer website (scroll down for various other formats of the interview).

(5) L. Randall Wray on the Debt Ceiling, 14 July 2011.
This is a short interview with Randall Wray on Russia Today, with some curious references to Ron Paul, the Fed’s toxic assets, and the limitations of monetary policy.


  1. Also a nice post on coin seigniorage in a modern monetary economy like the United States

  2. LK, I'm trying to read up on your school of thought, the Post Keynesian, so thought I would begin with:
    Post Keynesians do not accept that the theoretical basis of the market failure to provide full employment is rigid or sticky prices or wages

    However I remember you have repeatedly used rigid or sticky prices or wages in your arguments with me here. Can you please explain.

  3. "However I remember you have repeatedly used rigid or sticky prices or wages in your arguments with me here."

    (1) Even if you had complete wage and price flexibility you would still have failures of aggregate demand

    (2) But of course wage and price rigidities can contribute to market inefficiencies in the real world. In this Post Keynesians woudl agree with new Keyneians and pos-Walrasians (e.g., Leijonhufvud). The point is you have further factors (money with a store of value function and liquidity preference) that mean even if wages and prices were perfectly flexible you still wouldn't have market clearing in the way imagined by Austrians and neoclassicals.

    There is no difficulty or contradiction here.

  4. I was interested to see that Randall Wray was reporting in from Annandale-upon-Hudson, NY. I had associated him with the Kansas City School. But as a disciple of Minsky, he teaches and researches (also?) at Bard College's Levy Economics institute, of which I was little aware. They house a collection of Minsky's papers and Host a Minsky seminar as part of the Ford-Levy Institute Project.

    There is a large set of working papers, including some by Wray.

    And a lot of conference audio, which is better accessed through the news page, because of labeling and availability of proceedings to interpret labels like "session 6".

    Annandale and Bard are very attractive places.

  5. No, the stickiness is critical in your arguments remember, because something must prevent the price deflation which increases the real value of money during recession. Otherwise your claim that money has zero elasticity of substitution with producible commodities becomes too clearly absurd, like that peopel wouldn't buy a whole kingdom for $1 because of their liquidity preference...

  6. Argosy Jones,

    Nice links,


  7. @Joanna Liberation

    With balanced government and foreign sectors money can only come through private sector loaning. Banks expands their balance sheets creating both the loan (principal) and the corresponding deposit but not the interest which can only be found by new loans. Also, interest cannot become negative. Thus if i halve prices and wages your available income and liquidity preference will not improve but rather decrease+increase because your nominal debt will have stayed the same or dropped only a little (if the central banks decreases interest rates). Furthermore, when people start deleveraging the actual deposits and loans are destroyed decreasing the money supply instead of keeping it steady. The banks will obviously gain the interest but they do not put this into consumption/investment, only in their capital (at least the retained profits) so that they can increase their loan assets.

    Leakages in every corner.

  8. Lastly, deflation works as an interest on the existing money supply. Someone holding a large sum of money has a preference not to spend it in anticipation of prices falling even further and his money value increasing. If not for anything else he faces the risk of prices deflating even more after he engages in a commodity/asset purchase. The opportunity cost of doing nothing is far less than engaging in a 'risky' purchase.

  9. Kostas, I don't understand even your first sentence. What on Earth are "balanced" government and foreign sectors? What are foreign sectors to begin with, even before you explain "balanced" foreign sectors?