I’ve noticed that many others, like me, are puzzled by the mechanics of the Saving=Investment accounting identity. How do household savings get instantly and perfectly intermediated, in a period, into investment spending — the purchase/creation of long-term productive fixed assets? An Aha! for me: According to Krugman’s textbook, they don’t. First a correction: “The savings[sic]-investment […]

I don’t usually link to Paul Krugman because he everyone reads him anyway, right? He doesn’t need my google juice. But I have to make an exception here because he adds to my trove of graphs demonstrating how America today — after thirty years of Reaganomics policies that were supposed to be all about freedom, […]

John Scalzi: …in Ayn Rand’s world, a man who self-righteously instigates the collapse of society, thereby inevitably killing millions if not billions of people, is portrayed as a messiah figure rather than as a genocidal prick, which is what he’d be anywhere else. Yes, he’s a genocidal prick with excellent engineering skills. Good for him. […]

Ever since Bryan offered this bet on future unemployment rates in the U.S. and Europe, I’ve been wondering: how do incarceration rates affect those numbers? Europe has consistently higher unemployment than the U.S., but the U.S. has far and away the highest incarceration rate in the world — .75% of the population. (World Prison Population […]

You hear from lots of people — including lots of economists — that they do. Because they’re monopolistic price-fixers, they distort economic decisions and make us all worse off. The theory makes sense, as far as it goes. But if it were really true you’d expect to see it in the data. This got me […]

Imagine that over the next week (in a closed American economy — the rest of the world has never existed) everyone sold all their financial assets, paid off all their debts, and deposited the remaining money (and any currency they have) in their checking accounts. No money-market funds, even. Just banks with reserve accounts at […]

Neil Wilson has done yeoman’s duty to (perhaps) achieve a convergence that has been too-long delayed. A Double Entry View on the Keen Circuit Model. Steve Keen is, to my knowledge, the only person who is actually encoding a Godley-esque, MMT-style, accounting-based, stock-flow-consistent dynamic simulation model of how economies work. But many MMTers have been […]

Continuing with one of my current hobbyhorses: Ryan Avent reports on the American Economic Association meeting, with special attention to a presentation by Robert Hall: Monetary policy: The zero lower bound in our minds | The Economist. Mr Hall argued that: A little more inflation would have a hugely beneficial impact on labour markets, And […]

I want to thank all the commenters on my last post — at Angry Bear, at Asymptosis, and at Mike Norman’s blog. You’ve provided me with exactly the education I hoped to achieve. Here’s hoping others benefited similarly. I asked: what would happen if the the Fed cut the interest rate on reserves from its […]

For the non-cognoscenti: “IOR” is interest on reserves. Banks keep money in their accounts at the Fed. In October, 2008 the Fed started paying .25% interest on those accounts. The Fed’s also engaged in “quantitative easing,” a.k.a. open-market purchases on steroids, creating new money and using it to buy $1.6 trillion dollars worth of bonds […]