(At least for the Anglo zone; more on Europe and Emerging Markets in coming weeks).
The bigger the financial sector gets, the more it can destroy. And Bank of England Governor Mark Carney’s vision of British banks nine times the size of GDP is positively terrifying…
The penultimate Windows version of Minsky (released a few days ago) inadvertently installed an old kernel with a very low execution speed. This has been fixed in the latest version. If you downloaded a few days ago and now find that models run very slowly, please download the latest version today (it has the same name: Minsky.1.D32). If you downloaded before then, the execution speed will be fine, but a few bugs have also been fixed in this release: see Tickets for the details (from my perspective, the main bug was a failure to pass LaTeX formatting codes between Godley Tables).
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Last week I satirised Australia’s outmoded belief that the rate of interest can be used to fine tune the economy. This belief was ensconced in the so-called “Taylor Rule”, which accurately described what central banks tended to do until the economic crisis hit in 2007. That rule saw the inflation rate and the unemployment rate as the two key economic indicators, and the interest rate as the key mechanism needed to achieve an acceptable balance between them.
With the announcement that Toyota will stop its manufacturing in Australia in 2017, Australia has become one of the few wealthy nations on the planet without a car industry. But there’s a good argument that Australia never had a car industry in the first place.
Douglas Adams’ brilliant comic farce The Hitchhiker’s Guide to the Galaxy describes Earth as residing in sector ZZ9 Plural Z Alpha, one of “the uncharted backwaters of the unfashionable end of the Western Spiral Arm of the Galaxy” and being inhabited by “ape-descended life forms” who “are so amazingly primitive that they still think digital watches are a pretty neat idea”.
“I know my place” was the title of a famous sketch on English class sensibilities from the 1960s, starring the very tall (Upper Class) John Cleese, the average height (Middle Class) Ronnie Barker, and the very short (Lower Class) Ronnie Corbett.
This paper will be published in a forthcoming book on the crisis edited by Malliaris, Shaw and Shefrin. In what follows, I derive a corrected formula for the role of the change in debt in aggregate demand, which is that ex-post aggregate demand equals ex-ante income plus the circulation of new debt, where the latter term is the velocity of money times the ex-post creation of new debt.
That verbose title is almost the reverse of a quintessentially arrogant statement of economic supremacy published in the UK’s Daily Telegraph - on the editorial page of the business section — by Andrew Lilico. Entitled “Economists are nearly always right about things, despite what you may think” in the print edition, its content and tone encapsulated everything about economic theory, and economists’ blind belief in it, that led me to write Debunking Economics over a decade ago.
On January 31, we will bid goodbye to chairman Ben Bernanke and say hello to chairman Janet Yellen. Most commentary has focused on what Yellen’s ascendancy might mean for the Federal Reserve and the US economy, but today I’d like to consider how Bernanke’s legacy might he be regarded in future years — say, 70 years after the crisis we’re in now.