Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Monetary System’

What comes after Bretton Woods II?

Posted by hkarner - 15. August 2019

   Date: 14-08-2019
Source: The Economist: Free exchange

The world’s monetary system is breaking down

“THERE IS no longer any need for the United States to compete with one hand tied behind her back,” Richard Nixon, then America’s president, told his countrymen in August 1971. With that speech, he heralded the end of the postwar economic order, suspending the convertibility of the dollar into gold and putting up tariffs on imports. The survival of today’s order, which emerged from the chaos that followed, now looks increasingly in doubt. In other circumstances, its demise might not have been mourned. But with each passing August day, the prospects for a happy shift from one global monetary regime to another look ever grimmer.

The seemingly simple act of trading across borders is complicated by the fact that most countries have their own currencies, which move in idiosyncratic ways. Governments’ efforts to manage these wobbles are constrained by certain trade-offs. Pegging currencies to an external anchor to stabilise their value means either ceding control of domestic economic policy or restricting access to flows of foreign capital. Systems of monetary order, which resolve these trade-offs in one way as opposed to another, work until they do not. The context for America’s economic showdown with China is a system that worked once but no longer does. Den Rest des Beitrags lesen »

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Is modern monetary theory nutty or essential?

Posted by hkarner - 14. März 2019

Date: 13-03-2019
Source: The Economist: Free exchange

Some eminent economists think the former

“MODERN MONETARY THEORY” sounds like the subject of a lecture destined to put undergraduates to sleep. But among macroeconomists MMT is far from soporific. Stephanie Kelton, a leading MMT scholar at Stony Brook University, has advised Bernie Sanders, a senator and presidential candidate. Congresswoman Alexandria Ocasio-Cortez, a young flag-bearer of the American left, cites MMT when asked how she plans to pay for a Green New Deal. As MMT’s political stock has risen, so has the temperature of debate about it. Paul Krugman, a Nobel prizewinner and newspaper columnist, recently complained that its devotees engage in “Calvinball” (a game in the comic strip “Calvin and Hobbes” in which players may change the rules on a whim). Larry Summers, a former treasury secretary now at Harvard University, recently called MMT the new “voodoo economics”, an insult formerly reserved for the notion that tax cuts pay for themselves. These arguments are loud, sprawling and difficult to weigh up. They also speak volumes about macroeconomics.

MMT has its roots in deep doctrinal fissures. In the decades after the Depression economists argued, sometimes bitterly, over how to build on the ideas of John Maynard Keynes, macroeconomics’ founding intellect. In the end, a mathematised, American strain of Keynesianism became dominant, while other variants were lumped into the category of “post-Keynesianism”: an eclectic mix of ideas consigned to the heterodox fringe. In the 1990s a number of like-minded thinkers drew on post-Keynesian ideas in fleshing out the perspective embodied in MMT. Den Rest des Beitrags lesen »

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Modern Monetary Madness

Posted by hkarner - 18. Februar 2019

By John Mauldin

February 15, 2019

Modern Monetary Madness
Pet Economists
Can This Really Be a Thing?
Sound Bite Economics
Do Deficits Matter?
Strategic Investment and Life Planning

More than 10 years ago some Australian readers begin regaling me with the ideas of economist Bill Mitchell of the University of Newcastle in New South Wales. He was teaching about something he called (and he coined the term) Modern Monetary Theory. I looked into it and fairly quickly dismissed it as silly. Actually printing money as an economic policy? Get serious.

MMT is a revival of an early 1900s idea called chartalism. Now it is influencing the thinking of new socialist-like movements in the US and other places and cited by politicians. MMT is increasingly appearing in mainstream media like this sobering Financial Times article. Since it is increasingly discussed in more public venues, you should know more about it and that will be today’s topic.

Modern Monetary Madness

Essentially, MMT espouses that the public through the government owns the process of money creation, and that in addition to borrowing and taxing, should simply issue currency as payment for its obligations. This is not the sleight-of-hand that quantitative easing was. This is direct monetization in lieu of borrowing. Den Rest des Beitrags lesen »

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Central Bankers’ Shifting Goalposts

Posted by hkarner - 7. September 2017

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Rewriting the Monetary-Policy Script

Posted by hkarner - 3. März 2017

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An Inheritance of Incompetence

Posted by hkarner - 16. August 2016

By John Mauldin, August 13, 2016mauldin 

– Dean Acheson

“Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

– John Maynard Keynes

I don’t often agree with Keynes, but he is the most quotable of all major economists. The above sentence was one of his best. He was right about defunct economists. Of course, he was talking about all those other defunct economists who no longer kept up with his new and improved way of thinking about all things economic. Now his quip comes back to haunt his legacy and his followers.

Theories and practices often outlive their usefulness in our fast-changing world. So do institutions, including those chartered at the 1944 Bretton Woods Conference. In today’s letter we are going to look closely at the International Monetary Fund and a scathing report from its own internal auditors. For those of us who have been following the IMF for decades, the report is not all that surprising.

My real purpose here is not to point the finger at the IMF but to point out where its problems are part and parcel of a greater problem in global institutions. During the next global recession we are going to see a continuation of the same approaches to crisis solving that we’ve seen in the past, based on the theories of defunct economists mixed with personal and institutional biases. Their prescription is a witches’ brew that we will be told is good for us but that will in fact ensure that those of us least able to cope will bear the brunt of its impact. Den Rest des Beitrags lesen »

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The Way Back for Monetary Policy

Posted by hkarner - 18. Mai 2016

Photo of Lee Jong-Wha

Lee Jong-Wha

Lee Jong-Wha, Professor of Economics and Director of the Asiatic Research Institute at Korea University, served as Chief Economist and Head of the Office of Regional Economic Integration at the Asian Development Bank and was a senior adviser for international economic affairs to former President Lee Myung-bak of South Korea. His most recent book, co-authored with Harvard’s Robert J. Barro, is Education Matters: Global Gains from the 19th to the 21st Century.

MAY 17, 2016

SEOUL – The central banks of major advanced economies have been navigating uncharted territory in recent years. While their use of a range of unconventional monetary-policy tools has had benefits, it has also generated significant uncertainty, without fully stabilizing the world economy. Now the time has come to head back toward more familiar policy terrain.

Following the 2008 financial meltdown, the US Federal Reserve cut the policy rate to almost zero and pursued so-called quantitative easing (QE), by purchasing long-term securities from the public and private sectors. The central banks of the European Union, Japan, and the United Kingdom soon launched similar unconventional programs. The result was a vast amount of cheap liquidity that helped to stabilize the financial sector, restore stock and real-estate prices, and increase domestic demand. All of this helped to limit the fallout of the financial crisis and push the global economy toward recovery. Den Rest des Beitrags lesen »

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Warren Mosler

Posted by hkarner - 6. März 2016

Mosler CCWarren Mosler (born September 18, 1949) is an American economist, broker and sportscar engineer. He has mosler 7 deadly fraudsbeen the founder of Mosler Automotive and a co-founder of the Center for Full Employment And Price Stability at University of Missouri-Kansas City.

An influential proponent of post-Keynesian Modern Monetary Theory, Mosler was awarded a Doctor h.c. by the Franklin University Switzerland, and in 2014 was appointed Visiting Professor at the University of Bergamo, Italy.

Academically, he is known for his writings on Modern Monetary Theory, an economic theory that describes the way fiat money is created and used in modern economies. His unorthodox views have gained a substantial following among the Internet and academia.[4]

In 2010 he published Seven Deadly Innocent Frauds of Economic Policy outlining errors that can be made in the development of policy and explains what he deems „true“ as proper alternatives.

2010 Mosler W 7 deadly innocent frauds of EconPolicy

Mit Dank an H.F.!

 

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America is at the centre of a global monetary disorder

Posted by hkarner - 4. Oktober 2015

Date: 04-10-2015
Source: The Economist
Subject: Global monetary system: Thrills and spills

JOHN MAYNARD KEYNES observed that in the late 19th century London’s influence on the global financial system was such that the Bank of England could be considered the world’s orchestra conductor. Today America is like the dominant rapper in an anarchic transnational collective. Some politicians reckon that the global monetary system is a source of American soft power. This article will argue that it is unstable and, if unreformed, poses a threat to American interests.

The global monetary system has long been a headache. The gold standard of the 19th century dissolved into depression and chaos in the 1930s. The post-war Bretton Woods system of fixed exchange rates collapsed in the 1970s, to be replaced by a freewheeling system of floating currencies and mobile capital. Today it suffers from three related problems. First, the old collective-action one that Keynes grappled with: how to resolve the imbalances between countries (their current-account deficits and surpluses) in a way that does not hurt world economic growth. If deficit countries are forced to bear all the burden of adjustment by cutting back their imports, world output will be lower. This has haunted the euro zone, where tensions between northern countries with surpluses and southern ones with deficits were partly responsible for the crisis. Countries that try to cheapen their currency to boost their exports can set off tit-for-tat devaluations that benefit no one. China’s devaluation in August has raised fears of such beggar-thy-neighbour policies. Den Rest des Beitrags lesen »

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What the general public knows about monetary policy

Posted by hkarner - 23. August 2015

Carin van der Cruijsen, David-Jan Jansen, Jakob de Haan 23 August 2015, voxeu

Head of Research, De Nederlandsche Bank (DNB); Professor of Political Economy, University of Groningen

Researcher at De Nederlandsche Bank

Researcher, De Nederlandsche Bank

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