Ramanan fills in some of the Post Keynesian historical background. It's not like this is new thinking. Krugman often chided opponents of being unaware previous advances in the field. Where was he when Basil Moore published Horizontalists and Verticalists: The Macroeconomics of Credit Money back in 1988?
Read it at The Case For Concerted Action
Is Paul Krugman A Verticalist?
4 comments:
I hope the notoriety of this debate can help cause some kind of policy breakthrough here. It's incredible that we have had to suffer through a couple of years of the Krugmans, Sumners, DeLongs, Yglesiases and Romers of the world yelling, "Why doesn't Ben Bernanke fix the economy??!!"
That whole line of policy discourse id based on the same highly flawed understanding of banking that has been embarrassingly on display with Krugman in his recent posts.
You want to boost economic growth? Use the untapped powers of the treasury to buy things, and to get income in the hands of the hundreds of millions of consumers whose demand for products drives economic production. You can't force production down onto the economy from the top of the credit pyramid. People produce and employ when they have customers; citizens only become customers when they have income.
You can't get the employment first and the consumption afterward. The business world doesn't work that way. They don't employ people and produce inventories on the hope that customers might arrive if enough other businesses do the same. Businesses respond to perceptions of existing demand.
If Krugman is a Verticalist, that means he's an authoritarian socialist who wants to nationalize banks. Because that's what Verticalists do, in their spare time when they're not implementing job guarantees and holding guns to people's heads. NOT to be confused with "powerful facilitators".
To go back a ways, I remember myself back in the early 90's all I had to read was the WSJ and Barron's magazine, and books (pre WWW).
So I would read 'Current Yield' by Forsythe in Barrons religiously. He would follow interest rates and bonds. He would report on the money supply, the M's, M1, M2, reserve levels, the monetary base, etc...
So back then, the excess reserves would go from like 10B to like perhaps say 15B in 90 days or something like that, and the monetarists would FREAK OUT.
They would say something like "their printing money and the excess reserves has risen by 50% over the last 90 days.... we're gonna have inflation! Sell the bonds!, etc...
It would never work that way, bonds would rally or something (ie exact opposite) so I could tell this was BS even back then...
Then in 08, the excess reserves went up by like 13,000 % and prices collapsed:
http://research.stlouisfed.org/fred2/series/EXCRESNS
If these events around the GFC is not the last straw for monetarism, I dont know what is...
Resp,
Matt
In an earlier thread you asked about a graphic that I had posted in a thread somewhere. Here are links to the graphics (revised closed-system):
http://www.evernote.com/shard/s82/sh/0195c8ce-2abc-483f-b436-eba854532b7b/3bfb9a7bc3015049b30f8ea9f11e8ebb
http://www.evernote.com/shard/s82/sh/d4f880ac-8614-4d11-9bfa-a2c0d0f51c97/b3c5159646ae2a6ad001fba2a15ffb9c
Any suggestions are welcome.
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