Secular stagnation III –minus the irony

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I’m sorry, I couldn’t help it: when Larry Sum­mers first made his sec­u­lar stag­na­tion speech at the IMF, and the Amer­i­can eco­nom­ics tribe her­alded it as if it were the great­est (and lat­est) thing since sliced bread, my irony gene went into overload—and that showed in my first post on the topic. The argu­ment that the West has been suf­fer­ing from sec­u­lar stag­na­tion, and that only a series of finan­cial bub­bles have kept the illu­sion of pros­per­ity going, has been part of non-orthodox eco­nom­ics for over three decades.

Manchester University Post Crash Economics Society

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Last week I vis­ited the stu­dents who have started the Post Crash Eco­nom­ics Soci­ety at Man­ches­ter Uni­ver­sity, and took part in a debate on the topic of “Should (and could) eco­nom­ics have pre­dicted the eco­nomic cri­sis?” with Peter Backus. The soci­ety will release a video of the talk at some point, but in the mean­time here is my presentation.

Don’t Do the Math

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Eight years ago, in Decem­ber 2005, I began warn­ing of an impend­ing eco­nomic cri­sis that would com­mence when the rate of growth of pri­vate debt started to fall. My warn­ings hit a pop­u­lar chord: jour­nal­ists through­out the world picked it up and pub­li­cised my views – as well as sim­i­lar argu­ments from Nouriel RoubiniDean BakerAnn Pet­ti­forMichael Hud­sonWynne God­ley, and a few oth­ers.

Sack the Economists?

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Guest post by Geoff Davies*

Read­ers of this blog will have encoun­tered the idea that near-equilibrium neo­clas­si­cal eco­nomic the­ory is irrel­e­vant to dynamic, far-from-equilibrium, real mod­ern economies, and that the body of the­ory built around the neo­clas­si­cal assump­tions is full of incon­sis­ten­cies.  You will also be famil­iar with the idea that money and debt play cen­tral, dynamic roles in mod­ern economies.

The International Financial Order

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I was invited to give a speech on that topic to the Sec­ond Meet­ing of Min­is­ters of Finance of the CELAC in Quito, Ecuador today (Novem­ber 29 2013). In it I out­lined Keynes’s Ban­cor pro­posal from Bret­ton Woods, explained why White’s plan was adopted instead, sup­ported the pro­posal by Zhou Xiaochuan, the Gov­er­nor of the Cen­tral Bank of China, to insti­tute Keynes’s scheme, and pro­posed that Latin Amer­ica could try a regional ver­sion of the same via the Bank of the South.

Trust economic textbooks? Not on your life!

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Recently Krug­man has been defend­ing text­book eco­nom­ics, argu­ing that if pol­icy mak­ers had sim­ply fol­lowed their advice, the cri­sis would have been far less severe.

It is deeply unfair to blame text­book eco­nom­ics either for the cri­sis or for the poor response to the cri­sis.  (Krug­man, The Trou­ble with Eco­nom­ics is Econ­o­mists)