[jeffkrol]

interesting MMT discussion:
The Center of the Universe Blog Archive comments on Krugman’s post

jown Says:
August 12th, 2011 at 6:24 pm

Once again, apologies if this is idiotic:

Some possibly relevant information as to the fx vs. non-fx question as well as the “situation” of the Franc in the early ’20s:

Link to “Globalizing capital: a history of the international monetary system By Barry J. Eichengreen”

NB: re Milton Friedman: “For them [Friedman and his followers], the history of the franc provides no grounds for doubting that floating
rates can function satisfactorily when monetary and fiscal policies are sensibly and consistently set.” (p52)

Friedman then appears to be counter the Krugman/Nurske-ian line in that he saw causality running from fiscal and monetary policy to exchange rate instability.

My .0002 francs worth from brief review is that France of the time might not have had the internal political strength to handle a tax/spend (Lerner/Functional) line out of the Post WWI situation and that implication/analogy to our current leaders may be apt.

Furthermore, they may have had motive not to; to “read between the lines,” is that the authorities in France at the time were to a certain extent, “captured” in that “The larger the deficits and the more rapid the inflation and currency depreciation they provoked, the stronger France’s negotiating position” (p53) as to the level of commitment Germany would make to the reconstruction effort in France.

And take that, in conjunction with “Meanwhile, revenues were depressed by the slow pace of recovery. Disagreement over whose social programs should be cut and whose taxes should be raised resulted in an extended fiscal deadlock. The parties of the Left demanded increased taxes on capital and wealth, those of the Right reductions in social spending. As long as agreement remained elusive, inflation and currency depreciation persisted.” (p52) and you have where we are not today (with respect to inflation/currency depreciation; yes to the rest though).

So, from France of the 20s to today: maybe more political dysfunction, capture, and internal predatory dynamics instead of “current cost of paying for retirement, health care, and defense.”

We can always pay our bills and can take care of our own, but do we have the integrity, wisdom, foresight, and political will to do it? (well, that’s what I’m gonna work towards)

All the more reason that those in charge need to understand MMT and that MMT is really a sort of post-political position that is designed for social and economic stability.

(I hope I have not mis-represented MMT for I heart it so)

http://books.google.com/books?id=Du5D-u8KBUIC&pg=PA51&lpg=PA51&dq=franc+1920...epage&q&f=true

[GeneV]

The real difference (outside of rhetoric) between Krugman and Mosler is one of degree IMO. Both would see a point at which the money supply is so expanded that it causes inflation, but Mosler would see that point further out.

[jeffkrol]

Now this is at least the third time that Krugman has claimed that MMTers say "deficits are never a problem." He never cites anyone when he makes the false claim. And every MMTer I know has directly refuted his accusation; indeed Stephanie Kelton, Jamie Galbraith and I have all published responses on Krugman's own blog denying that we believe any such thing. All of us have also published elsewhere detailed refutations, including my post at New Deal 2.0. These responses to Krugman have received wide circulation. His refusal to change his tune says more about him than about the MMT position.

L. Randall Wray: Krugman Taken to the Modern Money Cleaners