Relevant and even prescient commentary on news, politics and the economy.

Full-Reserve Banking and Loanable Funds

Richard Williamson asks a sensible and straightforward question: If, as Modern Monetary Theorists propose, banks’ reserve levels put no significant constraints on their lending, why don’t we have 100%-reserve banking — and presumably no runs on banks as a result?First an explanation — I hope simple, clear, and generally accurate (if simplified): Say you start […]

Social Security: The Elevator Pitch

• Since Social Security started it has always brought in more money than was spent. It contributes a surplus to the total federal budget. That’s true today and will continue for quite some time.• The extra revenue needed to make SS solid far beyond the foreseeable future (75 years) is tiny: 0.6% of GDP.• A […]

Why This Time Is Different

A while back I pointed to (and demonstrated with not very pretty pictures) Randall Wray’s rather stunning observation: every depression in American history was preceded by a large decline in nominal federal debt. And I puzzled about why this wasn’t true of our latest little…event:   We saw a decline leading up to 2000, but […]

Machines Replacing Humans: They Shoot Horses, Don’t They?

Eric Brynjolfsson and Andrew McAffee have a new Kindle instant book out, Race Against the Machine, that very nicely describes the issues related to technological unemployment. It’s well-written, content-packed, cogently argued, usefully hyperlinked, and well worth the $3.99 they’re asking.But I think there’s one crucial topic they don’t address, highlighted by the following.They deliver a […]

Does Government Debt Impose a Burden on Future Generations/Periods/People? #12,143

I think (after a lot of effort) that I’ve internalized Nick Rowe’s modeling of this question (follow links from here) pretty well conceptually. His answer is Yes. There have been thousands of posts and comments across the blogosphere since Nick took Krugman to task on the issue a couple of weeks ago, and Nick has […]

There is Only One Trustworthy News Source: Fox. There is Only One Trustworthy News Source: Fox. There is Only One Trustworthy News Source: Fox. There is Only One Trustworthy News Source: Fox.

Repeat as needed to avoid cognitive dissonance. “Trust” percentage minus “Distrust” percentage: Via: Chart of the Day: Republicans Don’t Trust Anyone (Except Fox News) | Mother Jones. Cross-posted at Asymptosis.

Saving Equals … Inventory?

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 […]