A note on Modern Monetary Theory
Just to note that of course a theory should be tested against the real world, and that the real tests of a theory are in the extreme outcomes and corner cases.
I therefore note that, in respect of the Krugman/Galbraith/Baker/cast of thousands debate, that Zimbabwe exists as a country as well as a debating point, and that it does have domestic currency treasury bills, and that it is a perhaps startling fact that throughout the unorthodox policy measures of the last ten years, Zimbabwe has, in fact, never defaulted on its domestic currency sovereign obligations. So I score this one for MMT.
In Gideon Gono's autobiography, linked above, he recounts how the IMF offered him a job for life as a director of monetary & economic research as a sinecure in an attempt to get him to leave Zimbabwe. Perhaps (particularly given the twists and turns of Zimbabwean politics over the last couple of years), they should come back, particularly if they are looking for more unorthodox approaches in future. I hope and trust that the Levy Economics Institute of Bard College isn't considering a counteroffer to the unsung hero of MMT.
I would also like to note, per the recent Crooked Timber thread, that the best way to think about Talebian "tail risk" is to analogise it to that old 20th century parlour game "which one out of you and me is more likely to shag the Queen Mum?"
ReplyDeleteI used to know someone who used to know someone who got friendly with the Queen Mum, as she then wasn't (exactly how friendly we'll never know). It was wartime, he was called up, he was assigned to her personal protection unit, and the rest is history, or rather isn't.
ReplyDeleteI think that makes you the winner so far.
ReplyDeleteI used to slightly know somebody who was related to someone who almost went on a date with Natasha Kinski, but then his mum got very sick so nothing came of it.
ReplyDeleteMy second cousin once removed or something like that (John Hospers) was part of Ayn Rand's inner circle at one time. She did screw around some, so maybe he got lucky.
ReplyDeleteIf your 2nd cousin once removed was part of Ayn Rand's inner circle and "maybe got lucky", that would mean that they did not have sex, correct?
ReplyDeleteMarcel
You do not understand the concept of scoring, Marcel.
ReplyDeleteThe question then is whether Zimbabwe would be better of, had it defaulted.
ReplyDeleteTo me using Zimbabwe in this debate is like pointing out that a patient in a persistent vegetative state also doesn't develop psychoses.
Now thats funny. This is a point for MMT though. Zimbabwe's hyperinflation was not caused by 'monetizing' the debt. The Zimbabwe fed was not at fault, it was the Treasury.
ReplyDelete