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A Trillion Dollar Coin for Canada?

Arun here…breaking radio silence to share with you a thought-provoking piece by Larry Kazdan, a graduate of York University in sociology and history, and currently a Council Member with the World Federalist Movement-Canada, an organization that monitors developments at the United Nations and advocates for more effective global governance. Our friend and fellow blogger Keith […]

Beating Back the Ghosts: Be Gone Appeals to Reinhart and Rogoff Authority. Welcome the Triumph of Reason.

They’ve haunted me.  Incessantly.  The ghosts of Reinhart and Rogoff.  Their research here, there, everywhere. Bank of Canada speeches? Yes.  Finance Department talking points? Check. House of Commons debates? Yup.  Globe editorials? Ditto.  Discussions with fellow progressives? Sadly, yes. Results? Arguments conjured in their name.  Reason decapitated.  Modern Monetary Theorists (MMT) banished to the netherworld […]

A Bank for the Taxpayer’s Buck?

Hi all, I interrupt your regular blog viewing to bring you one of my infrequent posts, this time by a guest contributor — Alan Milner — who for reasons of job security, must remain anonymous.  With no further ado: ******************************************************************* A  Bank for the Taxpayer’s Buck? The Canadian tax system provides a variety of incentives […]

The Times they Are a Changing: The MMT Wave Begins

Take a look at the picture below. Take it in.  Now scan your eyes to the far right…there, in faded blue you’ll see the initials MMT.  Now zoom out.  Take it in again.  Notice: a few hundred people.  Spending their time learning about an economic theory called Modern Monetary Theory or MMT and its application […]

The Economist Takes Note: Modern Monetary Theory Gets Much Deserved Attention

As faithful readers of this blog will know, I make only very sporadic contributions to this blog but a substantial fraction of those contributions have made reference to modern monetary theory (MMT), the view (crudely put) that, based on a detailed understanding of the institutional mechanisms behind monetary operations, calls into question our obsession with […]

Mythologies: Money and Hyperinflation

In an earlier post, Marc Lee mentioned in passing the German hyperinflation episode of the 1920s. It’s remarkable that this event still holds such sway over the popular imagination despite other more recent instances of hyperinflation. Certainly, the imagery is powerful: German citizens pushing wheelbarrows full of worthless paper money around for everyday purchases, banknotes […]

No Retreat, No Surrender: Time For Progressives to Explode Deficit/Monetary Myths

Friends, I’m concerned. I fear that too often, we on the left retreat when we should attack, surrender when we should vanquish.  What do I speak of?  Well, I am concerned that too many of us are willing to play in the frame, the box, the straighjacket of modern discourse about fiscal and monetary policy.  […]

Keeping it Real: Cash, Clunkers and Why Our GrandChildren Have Nothing to Fear

Conversation fragment overheard the other day: “This deficit thing. It worries me. My grandchildren you know?”  To which his interlocutor replies:  “Yes, it worries me too. We just can’t keep this up.” And so it goes.  The grandchildren are trotted out.  We shudder in collective guilt, thinking about the financial hardship that our selfishness imposes […]

Revenge of the Debt Zombies — or — “What are Banks for Anyway?”

What are banks for?  Typically, banks are described as intermediaries that take deposits and lend them out, earning what is called net interest margin on the gap between what is paid on the savings and what is earned on loans.  From where I stand, this description is wrong on three counts. First, it suggests that […]

Rejoice! Dividend Increases Await

An open letter to the world at large: “Bank shareholders rejoice.  Pension funds rebound.  Hark, the Globe and Mail comes bearing good news my brothers and sisters.   Yes, the drums beat steady.  The heart skips irregularly.  The palms sweat profusely.  Because soon, soon, the big banks will engage in our society’s number one passtime.  Well […]

Currency Cooperation, Crowding out and Other Myths

Belatedly, two days after the fact, the Globe picked up on Bank of Canada governor Carney’s discussion of the Bank’s model of the world economy (I blogged about that speech here) at a  speech to the Ottawa Economics Association (OEA) last Wednesday. The Globe spun the story in an unusual way by suggesting that the […]

The OEA Conference: Harmony and Discordance

The Ottawa Economics Association (OEA) held a conference today and yesterday evening. The usual suspects were in attendance saying the usual things: Mark Carney spoke about the need for China to understand the risks of the “paradox of thrift” (see my post from earlier today) that will be unleashed by fiscal consolidation. Don Drummond sang […]

The G-20 Growth Strategy: Self-Flagellation, Prayers and Threats

The media and pundits parsed Mark Carney’s speech today to the Ottawa Economics Association (OEA) every which way to Sunday today and concluded that Carney had effectively signaled the Bank’s intention to raise its target for the overnight interest rate sooner rather than later. But in all the hand wringing about the inevitability of rate […]

Financialization and the Financial Crisis

Eric Pineault is the designated hitter on the topic of financialization but I thought I might make a small contribution to get the discussion rolling. I’ve been reading Galbraith’s The Predator State – see a review here — and it got me to thinking just how little our federal government — and governments elsewhere — […]

Warning: Credit Card Use May be Harmful (to Your Country’s Income Distribution)

Ah plastic. What’s not to love? Convenient? Check. Light in the pocket? Check. Monthly bill summaries? Check. Free short-term credit? Check (provided you pay your bills in full, on time). Benefits (free car rental insurance, points, cash back etc): Check AND… Take from the poor and give to the rich? err… wait a minute. Unfortunately, […]

Quantitative Easing Redux

A couple of weeks back, I posted on the topic of “quantitative easing,” the policy of having the central bank aggressively purchase government (and possibly corporate) debt in the open market ostensibly to increase the money supply. I argued that at best, quantitative easing was a pricing operation that worked at the margin by increasing […]

The Financial Crisis: You Should Have Known Better

Ian Brown has a wonderful column in today’s Globe which rightfully suggests that maybe, just maybe, people should be a little upset about all the false promises of endless prosperity and perfect social harmony that were made in the leadup to the current economic and financial crisis.  Maybe, just maybe, the “system” must bear some […]

Canada’s Beggar-Thy-Neighbour Economists

It has come to my attention that some economists claim that our sovereign federal government is more or less powerless to kickstart the economy because of our great dependence on the United States and therefore should do next to nothing: “Mr. Orr and other economists urged Ottawa to ignore pleas to boost stimulus spending further […]

The Meaning(lessness) of Money — Why “Quantitative Easing” Won’t Do What People Think it Will Do

There has been much talk, of late, about the ineffectiveness of conventional monetary policy — i.e., lowering the target for the overnight interest rate to incite borrowing and hence economic expansion — and the need for monetary authorities to consider something more dramatic, like so-called “quantitative  easing” — the active buying of government debt and […]

The Crisis in Economics (and the Economic Crisis)

Far be it for me to suggest that the economics profession is or should be in crisis — introspection has never been the economist’s strong suit — so I won’t. But these far more qualified commentators do in a piece whose title says it all:  The Financial Crisis and the Systemic Failure of Academic Economics. […]

It’s the Demand-Side Stupid — Why Credit Ain’t Like Water

In the last few months, governments here and abroad have made every effort to “turn on the taps” of credit — in Canada, we have more than half a dozen such programs (and counting) under the banner of the EFF (Extraordinary Financing Framework), including (but not limited to): the IMPP (InsuranceMortgage Purchase Program); the CSCF […]

The 18.2 Overture: An Evasive Tax Symphony

It has to be the single most successful lobbying effort in a long time. And no one will notice or care.  In Budget 2007, the Conservatives did something courageous and which tax experts had long called for : they proposed measures that would have denied firms a tax deduction on money borrowed in Canada, invested […]

The Devil is in the Budget Implementation Act

Ah. For the good old days. When a Budget Implementation bill lived up to its, err, billing.  You know, stuff from the budget was in the bill.  Other stuff was dealt with in other bills where stuff could be properly debated. Nowadays, you never know what you’re going to get when you open your Bill […]

Laughing All the Way to the err…Bank

The Canadian Bankers’ Association must be happy.  They’ve somehow managed to convince pundits south of the border, and even a few here who really ought to know better, that they’ve somehow been able to weather the economic and financial storm with absolutely no help from the federal government. The most recent evidence for this position […]

The Predator State — More Progressives Who Saw True and Through

PEF people are not the only ones who correctly anticipated some of our recent economic and fiscal events.  Jamie Galbraith also saw a lot of this coming in his book The Predator State. With no further ado, I’m posting an enthusiastic review of the book by fellow traveler and Sorbonne PhD economics graduate Henry Sader:

Deficits. Boo!

Deficits. There. I said it. Are you afraid? You shouldn’t be. If, as I suggested in my previous post, monetary policy is proving ineffective and if fiscal policy needs to be a big part of the solution, then we must consider what for many has become the unthinkable. We must revisit our fear of deficits, […]

Monetary Policy: Pushing on a String

The Bank of Canada today announced what appeared to be a dramatic cut (witness the splashy headlines) in the target for the overnight rate — a 50 basis point reduction. Bank of Canada to the rescue? Think again. The move was greeted with yawns from the banking community, which lowered mortgage rates by a mere […]

Obama. Galbraith. Hope.

It’s not often that I get my hopes up about a potential volte-face in the way we talk and think about economics at the policy and political level but this is by far the best news I’ve heard in a long long time. It seems that our very own Jamie Galbraith, scion of John Kenneth […]

The Law of Unintended Deregulation Consequences

I have been critical of the Globe‘s business reporting practices in the past (especially its tendency to quote Bank economists as “objective” observers of economic events) but on Saturday, it ran one of the best business pieces I’ve read in a long time. The article, titled “Who is responsible for the global food crisis?” is […]

Stagflation and the Bank of Canada

Ever wonder what the Bank of Canada might do in the event of staflation (high/rising inflation & high /rising unemployment)? Wonder no more. In an interview with LaPresse, our new Governor Mark Carney states, in no uncertain terms, that the Bank’s objective would remain the same as it has been since the early 1990s, namely […]