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March 01 2013

Roubini: Ten QE Questions

Most observers regard unconventional monetary policies such as quantitative easing (QE) as necessary to jump-start growth in today’s anemic economies. But questions about the effectiveness and risks of QE have begun to multiply as well. In particular, ten potential costs associated with such policies merit attention.


First, while a purely “Austrian” response (that is, austerity) to bursting asset and credit bubbles may lead to a depression, QE policies that postpone the necessary private- and public-sector deleveraging for too long may create an army of zombies: zombie financial institutions, zombie households and firms, and, in the end, zombie governments. So, somewhere between the Austrian and Keynesian extremes, QE needs to be phased out over time.

// also completely available at here

Reposted from02mysoup-aa 02mysoup-aa
Should One Fix Monetary Policy Or Fix A ‘Sclerotic’ European Labour Market?

Perspectives from a New Keynesian model New Keynesian macroeconomics (henceforth NK) was born as a defensive reaction to the radical agenda of the new classical economists of the late ‘70s vintage....

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April 02 2012


Printing money does not lead to inflation, argues Argentine central bank president | 2012-03-26

The president of Argentina’s Central Bank (BCRA), Mercedes Marcó del Pont, stressed the importance of the recently approved bank’s charter reform and denied that printing currency leads to the creation of an inflationary state “since inflation is rooted in other causes”. Marcó del Pont: tensions with prices must be looked on the supply side and the external sector”.

“The new charter will provide the government with more tools to deepen the development model and to give priority to investment credit” said Marcó del Pont in a Sunday interview with two pro-government local newspapers Página 12 and Tiempo Argentino.

The banker added that “it is totally false to say that printing more money generates inflation, price increases are generated by other phenomena like supply and external sector’s behaviour”.

In that sense, the BCRA president explained that “the priority right now is the investment credit, because it is one of the issues in which Argentina is still with insufficient coverage. We look for credits of longer-term investment plans at reasonable rates with the return of these investment projects.”

“We discard that financing the public sector is inflationary because according to that statement the increase in prices are caused by an excess of demand, something we do not see in Argentina. In our country the means of payment are adjusted to the growth of demand and tensions with prices must be looked on the supply side and the external sector”.

Marcó del Pont remarked that criticism of the way the state is funding itself “have a clear ideological condiment, it is that or either the public sector has to make adjustments or go abroad to get credits and/or loans”. She added that the debate is very similar to that referred to “the use of BCRA reserves to pay for sovereign debt”.

Under the new charter of the bank the primary and main task of the BCRA will not be only to preserve the value of the currency but must also include inflation, jobs, economic development with social fairness, financial stability and the need to coordinate with government policies.

“We’re recovering the sovereign capacity to formulate and implement economic policy”, said Marcó del Pont who anticipated some pictures will be coming down from the bank’s hall of fame “beginning with Milton Friedman.”

The banker explained that the criteria to determine the optimum level of reserves will be determined in coming days and will involve several existing and new elements. Under the new BCRA charter funds above the ‘optimum level’ can be used for other purposes such as development financing.

“The formula will include issues referred to imports, short term foreign debt payments, the evolution of bank deposits and accumulation of foreign currency assets”, said Marcó del Pont who forecasted that in the first quarter the sum will be below two billion dollars but for the whole year the sum is estimated in 9 billion or more.

January 27 2012


Aber gerade eine antizyklische Finanzpolitik, also eine aktive Konjunkturpolitik durch den Staat, wird durch den Fiskalpakt, wenn nicht ausgeschlossen, so doch wesentlich eingeschränkt. Man kann es also auch so sagen: Mit dem Fiskalpakt wird eine ganz bestimmte Finanz- und Wirtschaftspolitik auf einen Verfassungsrang erhoben. Nämlich das neoliberale Dogma, das den Staat zugunsten der Marktkräfte zurückdrängen will und dem Staat eine schädliche Wirkung auf den marktwirtschaftlichen Wirtschaftsablauf zuschreibt.

Merkel nennt das „marktkonforme Demokratie“. Keynesianische oder Neokeynesianische Wirtschaftslehren, die von einer prinzipiellen Instabilität der „Märkte“ ausgehen und deshalb eine aktive Rolle des Staates mittels der Finanz- und Wirtschaftspolitik für das Wirtschaftsgeschehen verlangen, werden also durch Schuldenbremsen, wenn nicht nur wesentlich eingeschränkt sondern sogar per Verfassung verboten.

Die Einführung der Schuldenbremse in Deutschland bedeutete schon eine Einschränkung unserer bisherigen Verfassung. Das Grundgesetz – so war bisher die allgemeine Auffassung – ist „wirtschaftspolitisch neutral“, d.h. es ist offen für ganz unterschiedliche wirtschaftspolitische Theorien und Vorstellungen. Es lässt sogar mit seinem Artikel 15 GG – schrecklich zu sagen – „sozialistischen“ Gesellschafts- und Wirtschaftsvorstellungen Raum: „Grund und Boden, Naturschätze und Produktionsmittel können zum Zwecke der Vergesellschaftung durch ein Gesetz, das Art und Ausmaß der Entschädigung regelt, in Gemeineigentum oder in andere Formen der Gemeinwirtschaft überführt werden.“ Und nach Artikel 14 GG sind „zum Wohle der Allgemeinheit“ auch Enteignungen zulässig. In den Länderverfassungen gibt es hinsichtlich staats- und gemeinwirtschaftlicher Lösungen noch viel weitergehende Formulierungen, bis hin zur Möglichkeit der Verstaatlichung des Bankenwesens. (Siehe „Das Grundgesetz ist links“)

Wer betreibt eigentlich einen Systemwechsel? | 2012-01-27
Reposted bydatenwolftuedel

November 08 2010


Germany's Finance Minister Doesn't Understand Basic Economics | Beat the Press

Sunday, 07 November 2010 22:30

This should have been the headline of an article in which Germany's finance minister both complained about the United States credit led model of growth and the decline in the value of the dollar. A falling dollar is the mechanism through which the United States would get off its credit led model of growth. It will make imports more expensive in the United States, leading us to buy fewer imports. It will also make our exports cheaper, leading us to increase exports. This will reduce the U.S. trade deficit and therefore its foreign borrowing.

Complaining about both the credit led model of growth and then complaining about the decline in the currency is like complaining that the room is too hot and then complaining when someone turns on the air conditioner. Germany's finance minister apparently does not understand economics, which should have been the main point of this article.

Reposted bykrekksuppen-kaspar

November 07 2010


German Finance Minister attacks Fed move again : report | Reuters

(Reuters) - German Finance Minister Wolfgang Schaeuble renewed his criticism of the U.S. Federal Reserve's move to buy $600 billion worth of government bonds, [...]

March 17 2010

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15. März 2010 - A roundtable discussion with UC Berkeley faculty Brad DeLong, Martha Olney, Robert Reich, and David Robinson.
Reposted from02myEcon-01 02myEcon-01
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