Donnerstag, 24. April 2014

Mostly Model Tailoring against the Miraculous Money Treat of Modern Monetary Theory (MMT)

Cullen Roche has written a brillant in-depth "Critique of Modern Monetary Theory (MMT)" (Nov. 2013, unfortunately not paginated).
While he hopes that "this critique will be viewed as a constructive criticism and not an attack on MMT", at times he still does get pretty irritated with "doublespeak",  "sloppy ... terminology", "sloppy generalization" etc. of MMT-proponents. And in the context of how payments are effected through the VISA system he concludes that "[Stephanie] Kelton does not even have the most basic facts right."
So let as take a look at some other facts which MMTers assert (or which we can logically discern as facts behind their verbal constructs) and analyze, with the help of models, the truth value of those claims. 

Sonntag, 13. April 2014

Don Draghi snickers: "In meiner Eurotz-Zone gibt es keine Inflation! Nur Schwund in der Packung"

Once upon a time ..... es war einmal:
Da enthielt ein solcher Riegel 62,5 g Snickers. Irgendwie eine merkwürdige Größe, obwohl es ja eigentlich nur 1/8 Pfund ist. Aber jedenfalls, wenn man an Schokoladentafeln zu 100 g gewohnt ist, dann prägt sich so eine krumme Zahl schon mal ein.

Samstag, 12. April 2014

MMT: Modern Monetary Theory - or Monstrous Mental Twisting?

Some 400 - 500 years ago, Nicolaus Copernicus and Johannes Kepler revolutionized astronomy by replacing the geocentric model (geocentrism or Ptolemaic system - Wikipedia) by heliocentrism (heliocentricism).
These days, a clique of economists is trying to turn back the hands of time and obfuscate the understanding of the relationship between money and the real economy.

In preaching their self-referential chartalist money-money-merry-go-round they employ brainwashing techniques in lieu of sound arguments.
The name of this monetary creationism is "Modern Monetary Theory" (MMT).
list of and hyperlinks to MMT-publications as of July 2013 can be found here.]

Samstag, 5. April 2014

Banks do not lend reserves (or deposits). But banks need reserves (and deposits) to lend. Remarks on the BoE-paper "Money creation in the modern economy"

Vorbemerkung für deutschsprachige Besucher (Preface for German-language visitors):

Der vorliegende Text ist (wie bereits
der vorangegangene Blott) aus einem Mailwechsel mit dem US-Soziologen John Bradford, Assistant Professor and Coordinator of Sociology, Mississippi Valley State University, hervorgegangen und daher auf Englisch verfasst.
Prof. Bradford war es auch, der mich auf das hier (hauptsächlich) behandelte Papier (Nr. 2) der englischen Zentralbank zum Thema Geldschöpfung hingewiesen hat.

The current blog post is part of an ongoing email-exchange with John Bradford, Assistant Professor and Coordinator of Sociology, Mississippi Valley State University, on the subject of money (creation etc.). I am grateful to prof. Bradford for calling my attention to the BoE paper on money creation (no. 2) which is the (main) subject of the following remarks.


In its Quarterly Bulletin 2014 Q1 the Bank of England is trying to clean up a mess of myths about money, in particular about how money is created (nowadays).

Two papers tackle this subject:
  1. "Money in the modern economy: an introduction" By Michael McLeay, Amar Radia and Ryland Thomas of the Bank’s Monetary Analysis Directorate. [Henceforce also quoted as "Introduction".]
  2. "Money creation in the modern economy" by the same authors. [Henceforce also quoted as "Money creation".]

As for the first paper, I will restrict my comment to the chapter "Money is an IOU" (p. 6).