What Is Modern Monetary Theory?

The crisis has given rise to a range of new ideas and theories to replace the discredited view of the economy. The newest and most imaginative of these is known as Modern Monetary Theory (MMT) and is one of the first theories to owe its growth to the internet. Without a doubt MMT is radical and completely turns established economic thinking on its head. If it is correct then it would change the way we think about the economy forever.

Continue reading “What Is Modern Monetary Theory?”

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Promises We Cannot Keep

A guest blog I did for a new group, Irish Student Left Online, on the Anglo Promissory Note. Its a specifically Irish issue, but basically a private bank made reckless gambles and was about the go bankrupt when the Irish government bailed it out. It will cost 30 billion euro to wind down the company (as in return for 0 benefit). It been a huge problem figuring how we should pay this and this week the government finally got an agreement with the ECB to delay repayments for 30 years. I discuss whether or not this a good deal.

Irish Student Left Online

In his debut for the ISLO Robert Nielsen goes through the bizarre and tragic nature of the recent “deal” on the Promissory Notes. Robert blogs over here normally. 

Whenever discussing the banks people often preface their comments by saying that they don’t know much about economics. It is assumed that the bank bailout only seems absurd due to a lack of economic knowledge, that in actual fact the government is following well-established economic principles. As an economics student, let me tell you that nothing is further from the truth. There is no economic logic or theory behind the government’s

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Conservative Logic

There is no such thing as a free lunch . . . except for free trade which makes everyone everywhere better off

It is naive and foolish to imagine there is some magic pot of gold which will make us all magically richer . . . but competition magically makes everyone richer

As Adam Smith said, the “invisible hand” of the free market ensures everyone is best off . . . even though Smith never said that about the market but rather about protectionism.

We should never rely on one-size-fits-all solutions that don’t take account of the specifics of each case . . . and cut taxes in response to every problem

The government makes everything worse . . . which is why countries like Somalia which have no government are so much better off Continue reading “Conservative Logic”

The Fool’s Gold Standard

Having money linked to a Gold Standard is an idea that almost every economist opposes. It is described as the economic equivalent of creationism and a major cause of the Great Depression. It is ignored by policymakers and no country has one anymore. Yet there is some support for it on the internet. It is one of Ron Paul’s main ideas in his campaign for the Presidency and is supported to some extent by Paul Ryan. The Republican platform promises a commission to consider reintroducing it. So what is a Gold Standard and why is it so bad? Continue reading “The Fool’s Gold Standard”