15 Easy Minsky Pieces

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Dr. Rus­sell Stan­dish and I have been work­ing on Min­sky now for almost two years now–ever since we received the $125K from INET’s Spring 2011 grant round: Rus­sell as builder (cod­ing in C++ and Tcl/Tk) and me as archi­tect (play­ing with each release, spot­ting bugs and sug­gest­ing fea­tures). It’s been a part-time endeav­or: Rus­sell, as a con­tract pro­gram­mer, has to keep more than one iron in the fire, while I have a fair few balls in the air myself. Rus­sell has put in about 2000 hours of cod­ing over that time, and we still have funds to sup­port about anoth­er 250 hours after the suc­cess­ful Kick­starter cam­paign ear­li­er this year.

Talk to the Fabian Forum: The Global Financial Crisis: How bad will it get?

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Broad­cast on March 11 2009 by ABC Radio Nation­al Big Ideas

A blog mem­ber has kind­ly pro­duced a tran­script of the off-the-cuff talk I gave at this forum. I’ve made minor cor­rec­tions to the punc­tu­a­tion below, but the text is oth­er­wise as deliv­ered on the night with­out speak­ing notes–so there are some gram­mat­i­cal slips. For those who want to lis­ten to this alone–without also lis­ten­ing to Bernie Fras­er beforehand–here is a link to the MP3 of my talk.

It’s just a flesh wound…”

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It seems we’ve moved from Stan­ley Kubrick to John Cleese. Rory Robert­son’s reply to my “Rory Robert­son Designs a Car” post reminds me of one of my many favourite scenes from Mon­ty Python, the fight between King Arthur and the Black Knight:

King Arthur: [after Arthur’s cut off both of the Black Knight’s arms] Look, you stu­pid Bas­tard. You’ve got no arms left. 

Black Knight: Yes I have. 

King Arthur: *Look*! 

Black Knight: It’s just a flesh wound…

Bernanke an Expert on the Great Depression??

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Note: This post has been mod­i­fied ni the light of com­ments that the ini­tial ver­sion quot­ed Bernanke out of con­text.

A link to this blog from a US legal advi­so­ry web­site the Prac­tis­ing Law Insti­tute’s In Brief ( “DEFLATION IN THE REAL WORLD”) remind­ed me of  Bernanke’s book Essays on the Great Depres­sion, which I’ve been aware of for some time but have yet to read. I’ll make amends on that front ear­ly this year; for­tu­nate­ly, an extract from Chap­ter One is avail­able as a pre­view on the Prince­ton site (I could­n’t locate the promised eBook any­where!; in what fol­lows, when I quote Bernanke it is from the orig­i­nal jour­nal paper pub­lished in 1995, rather than this chap­ter).

Ponzi Maths–Part 2

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In the pre­vi­ous post, I out­lined my basic mod­el of a pure cred­it econ­o­my, in which a sin­gle ini­tial loan allowed a con­ti­nous flow of eco­nom­ic activ­i­ty (at a con­stant lev­el) over time. The basic flowtable of that sys­tem was:


Type 1 -1 -1 -1
Account Firm Loan (FL) Firm Deposit (FD) Bank Deposit (BD) Work­er Deposit (WD)
Inter­est on Loan +A      
Inter­est on Deposit   +B -B  
Pay Inter­est on Loan -C -C +C  
Pay Wages   -D   +D

Ponzi Maths–Part 1

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This is an unplanned post that part­ly pre-empts what I’ll be writ­ing in the Feb­ru­ary Debt­watch Report, where I will explain in full my the­o­ry of mon­ey cre­ation in a pure cred­it econ­o­my. So this is some­what out of sequence, and will undoubt­ed­ly be bad­ly explained com­pared to what I put togeth­er for Feb­ru­ary. 

I will also have to fin­ish this in a lat­er post–probably in the first cou­ple of days of the New Year–because Syd­ney’s fire­works beck­on, and we have to be on board the cruis­er we’re watch­ing them from at 7pm.  But what is here is part of a long-promised expla­na­tion of my mod­el of mon­ey cre­ation. In a cou­ple of days I’ll pub­lish the punch line, which is a new­ly devel­oped mod­el of a Ponzi Scheme.

Dynamics of endogenous money

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Most con­ven­tion­al and uncon­ven­tion­al com­men­ta­tors on mon­ey believe that mon­ey is destroyed when debt is repaid. I disagree–but explain­ing why takes some time. I received an email this morn­ing from a Eco­log­i­cal Eco­nom­ics dis­cus­sion list in the USA on this issue, and wrote the fol­low­ing expla­na­tion of my posi­tion. I thought that read­ers of this blog might find it instruc­tive.

On the mon­ey issue, this is one where I beg to dif­fer both with the response Josh put for­ward, and most of my fel­low econ­o­mists as well–non-orthodox and non-ortho­dox. I think it’s wrong to say that mon­ey is destroyed when debt is repaid–but to explain why, I need to both put for­ward a dynam­ic mod­el, and find an appro­pri­ate anal­o­gy.