Massive Overstatement Of Profits?

6 March 2014

In an article, The Profits’ Conundrum, Marshall Auerback uses Kalecki’s profit equation analysis (which is just a simple rearrangement of terms of the sectoral balances equation) to claim that corporate profits have been overstated in the United States. Now consider the US deficit and explain how on earth we can still have profits as a […]


Neochartalism, Original Sin And The Backfire Effect

24 February 2014

[This post is a sort of part 2 of the previous post Indebtedness And Liability Dollarization] In the Neochartalist blogs, one frequently comes across the notion of monetary sovereignty, together with the notion of a “sovereign currency” – their notions of such things. One also sees an admission that countries whose governments have debt in foreign […]


Indebtedness And Liability Dollarization

19 February 2014

In the previous post, I commented on Neochartalists’ questionable intuitions on the external sector of an economy – let me add more. There is a silly notion in there that somehow public debt held by foreigners (but in domestic currency) is not debt in ordinary sense at all and things such as that. I will […]


Thomas Palley Dismembers MMT

17 February 2014

Thomas Palley has written another critique of Neochartalism aka “Modern Monetary Theory” in the blogosphere. Title and abstract: Modern money theory (MMT): the emperor still has no clothes  Eric Tymoigne and Randall Wray’s (T&W, 2013) defense of MMT leaves the MMT emperor even more naked than before (excuse the Yogi Berra-ism). The criticism of MMT […]


Strange Claims About KfW

4 December 2013

Earlier, I had two posts on this but now these have been merged into one.  Chartalists again! This blog post The fiscal role of the KfW – Part 1 by Bill Mitchell of Australia makes the most exorbitant claims about an institution called KfW and the government of Germany. Bill Mitchell claims: It is a major […]


Endogeneity Of Budget Deficits

3 December 2013

In this New Economic Perspectives post Randy Wray and Eric Tymoigne confuse accounting identities with behaviour. In a context, the bloggers claim: … Only a government deficit induced by fiscal policy leads to net saving. where “net saving” is saving net of investment. This posits a one-way causality of the sectoral balances accounting identity S […]


Firestone Backfiring More

30 June 2013

So I happened to get a reply from Joe Firestone on my reply to his blog post. I don’t have too much patience for going back and forth but a few points stand out. I created a situation in which the current account balance of payments is at 4% of GDP, private sector balance is […]


Firestone Backfiring – An Unfriendly Critique ;-)

28 June 2013

Joe Firestone’s gun Joe Firestone has a blog post critiquing Marc Lavoie’s critique of Neochartalism. Among other things, he seems to have issues with Marc Lavoie’s critique of the Neochartalist claim [which he quotes] that . . . the creation of high powered money requires government deficits in the long run; . . . Firestone states: High-powered […]


Fake Trade-Offs

13 February 2013

Elasticities for one last time for now. Recently Tom Palley wrote a fine critique of the Neochartalist approach to solve the world problems with oversimplistic solutions. Among other things, Palley challenges the simplistic Chartalist solutions due to dilemmas posed by the external sector. Bill Mitchell of Australia wrote a reply in which he states the […]


Wynne Godley And The Dynamics Of Deficits And Debts

5 January 2013

In a five-part series in his blog, Functional Finance and the Debt Ratio Scott Fullwiler claims that if the interest rate is held below the growth rate of output, sustainability of the public debt/gdp ratio is guaranteed in the sense that the ratio converges and does not keep increasing forever. This is erroneous and his conclusions are […]