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<DIV style="FONT-SIZE: 12pt; FONT-FAMILY: times new roman, new york, times, serif"><B style="RIGHT: auto"><SPAN style="FONT-WEIGHT: bold; RIGHT: auto">MMT will always be incomplete compared with TFE. Moreover, the latter would take a more pragmatic approach. <VAR id=yui-ie-cursor></VAR></SPAN></B></DIV>
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<DIV style="FONT-SIZE: 12pt; FONT-FAMILY: times new roman, new york, times, serif"><B style="RIGHT: auto"><SPAN style="FONT-WEIGHT: bold; RIGHT: auto">From:</SPAN></B> "ideasinc@ee.net" <ideasinc@ee.net><BR><B><SPAN style="FONT-WEIGHT: bold">To:</SPAN></B> P2P Foundation mailing list <p2p-foundation@lists.ourproject.org><BR><B><SPAN style="FONT-WEIGHT: bold">Sent:</SPAN></B> Sunday, 13 November 2011, 14:56<BR><B><SPAN style="FONT-WEIGHT: bold">Subject:</SPAN></B> [P2P-F] PAUL KRUGMAN DOES MODERN MONEY THEORY/Wray<BR></FONT><BR>This the link to the original posting, where the embedded links will work.<BR><BR>NYTimes columnist Paul Krugman came across Modern Money Theory several <BR>years ago and periodically opines that we have something or other wrong. <BR>(See my response to one of his columns here: <BR><A href="http://www.huffingtonpost.com/l-randall-wray/paul-krugman-modern-money-theory_b_926757.html"
target=_blank>http://www.huffingtonpost.com/l-randall-wray/paul-krugman-modern-money-theory_b_926757.html</A>)<BR><BR>And other times he adopts MMT without acknowledging the source. Yesterday, <BR>for example.<BR>For some time he’s been wondering why Japan–with a government debt ratio <BR>just north of 200%–enjoys essentially zero interest rates, while periphery <BR>Euro nations suffer under government bond rates of 6%, 7% or more–with <BR>debt ratios half as high. Of course, MMT has explained the reason for the <BR>past decade and a half–and correctly predicted the crisis currently <BR>gripping Euroland. But on 11-11-11 Krugman “discovered” the answer: Euro <BR>members gave up their currency sovereignty in favor of what is essentially <BR>a foreign currency–the euro. Who wudduv thought?<BR>Yesterday John Carney at CNBC picked up on the argument made by MMT-er <BR>Cullen Roche that
Krugman is channeling MMT.<BR><BR> Here’s the link to Carney’s post: <A href="http://m.cnbc.com/us_news/45260177" target=_blank>http://m.cnbc.com/us_news/45260177</A><BR><BR> Here’s the basic argument:<BR>Carney: It seems pretty clear that the school of thought known as Modern <BR>Monetary Theory has made a big impact on Paul Krugman’s thinking. As <BR>Cullen Roche at Pragmatic Capitalism points out, just a few months ago the <BR>spread between bonds issued by Japan and Italy, which have similar debt <BR>and demographic issues, was perplexing Krugman. (See Cullen’s post here: <BR><A href="http://pragcap.com/a-puzzle-solved" target=_blank>http://pragcap.com/a-puzzle-solved</A>)<BR><BR>Krugman: “A question (to which I don’t have the full answer): why are the <BR>interest rates on Italian and Japanese debt so different? As of right now, <BR>10-year Japanese bonds are yielding 1.09%;
10-year Italian bonds 5.76%. …I <BR>actually don’t have a firm view. But it seems to be an important puzzle to <BR>resolve.” (See here: <BR><A href="http://krugman.blogs.nytimes.com/2011/07/16/italy-versus-japan/" target=_blank>http://krugman.blogs.nytimes.com/2011/07/16/italy-versus-japan/</A>)<BR>Yesterday, however, Krugman finally found his answer in MMT (here: <BR><A href="http://www.nytimes.com/2011/11/11/opinion/legends-of-the-fail.html?_r=1" target=_blank>http://www.nytimes.com/2011/11/11/opinion/legends-of-the-fail.html?_r=1</A>)<BR><BR>Krugman: “What has happened, it turns out, is that by going on the euro, <BR>Spain and Italy in effect reduced themselves to the status of Third World <BR>countries that have to borrow in someone else’s currency, with all the <BR>loss of flexibility that implies. In particular, since euro-area countries <BR>can’t print money even in an
emergency, they’re subject to funding <BR>disruptions in a way that nations that kept their own currencies aren’t — <BR>and the result is what you see right now. America, which borrows in <BR>dollars, doesn’t have that problem.” (end of quote)<BR><BR><BR>Well, live and learn, as they say! Welcome aboard, Paul!<BR><BR>L. Randall Wray UMKC<BR><BR>_______________________________________________<BR>P2P Foundation - Mailing list<BR><A href="http://www.p2pfoundation.net/" target=_blank>http://www.p2pfoundation.net</A><BR><A href="https://lists.ourproject.org/cgi-bin/mailman/listinfo/p2p-foundation" target=_blank>https://lists.ourproject.org/cgi-bin/mailman/listinfo/p2p-foundation</A><BR><BR><BR></DIV></DIV></div></body></html>