Monthly Archives: August 2022

RIP, Lance Taylor

Lance Taylor has passed away.

Among other things, he promoted stock-flow consistent modeling. He had a book Reconstructing Macroeconomics.

I hold dear the review of Lance Taylor of Wynne Godley’s work, titled: A Foxy Hedgehog: Wynne Godley And Macroeconomic Modelling.

The article starts:

The fox knows many things, but the hedgehog knows one big thing (Archilochus, seventh century BCE).

Lance Taylor clearly understood the importance of accounting. In the paper A Simple Model Of Three Economies With Two Currencies, Wynne Godley and Marc Lavoie quote him:

As pointed out by Taylor (2004, p. 206), ‘the best way to attack a problem in economics is to make sure the accounting is right’.

Bibliography

Taylor, L. 2004. Exchange rate interderminacy in portfolio balance, Mundell–Fleming and
uncovered interest rate parity models, Cambridge Journal of Economics, vol. 28, no. 2, 205–27

Here’s the link to that Lance Taylor paper.

Thomas Palley On The Intellectual No-Fly Zone

Thomas Palley has a new blog post Flirting With Armageddon: The US And Ukraine discussing how the US government is escalating the situation in Ukraine and that warns that it may end badly. An important part of his post is ponting out the existence of an edict of silence.

First, the liberal blob has promulgated an edict of silence against those who challenge its explanation of the war and the case for US participation. The edict applies to conservatives who argue “it’s not our war”, and to independent critics who argue the war has been “made in the USA” via a thirty-year slow-motion attack on Russia conducted through eastward expansion of NATO and regime change subversion in the republics of the former Soviet Union.

Matt Taibbi has used the phrase intellectual no-fly zone to describe this.

Anyone who criticises will be brought down. Supposed left-wing politicians such as Bernie Sanders and the “Squad” vote for more funds for the military industrial complex. The left in the West has always been soft on imperialism and with this the process seems complete. Even supposedly left-wing governments of Sweden and Norway have joined NATO.

There’s a serious problem with the left in the West.

Matt Taibbi quotes Noam Chomsky:

… I reached out to Chomsky this weekend and asked him what in particular it is about the Ukraine conflict that’s brought out such an aggressive response.

“Putting aside the dangers, which are all too real,” he says, the unusually intense response is “part of something much worse: the general atmosphere of irrationality engendered by the whole Ukraine affair. It ranges from the nutcases like Fukuyama assuring us that there’s no threat of nuclear war if we escalate (and the official policy that is not much different), to the ‘left’ shouting slogans about how we have to defend Ukraine and punish Russia no matter what, and any voice that breaks unanimity has to be stilled, maybe crushed.”

A Rare Admission Of How Monetary Policy Works

A recent FT Alphaville post by Ajay Rajadhyaksha, global chair of research at Barclays has this admission on how monetary policy works:

Central bankers don’t like admitting it, but a primary goal of rate hikes is to cause enough job losses to ensure that wage growth slows down.

Several Post-Keynesians have of course said this but here I quote Nicholas Kaldor who wrote in 1980 in the article Monetarism And UK Monetary Policy:

… This does not mean that a ‘monetarist’ economic policy such as that of the present government is futile. But its real effect depends on the shrinkage of effective demand brought about through high interest rates, an overvalued exchange rate and deflationary fiscal measures (mainly expenditure cuts), and the consequent diminution in the bargaining strength of labour due to unemployment. Control over the ‘money supply’, which has in any case been ineffective on the government’s own criteria, is no more than a convenient smoke-screen providing an ideological justification for such antisocial measures.