Over the past week, I’ve been hearing the rumors. They’re saying that Jeremy Corbyn is crazy–that he’s released an economic plan so radical, so incendiary, so madcap that no reasonable person could possibly support him for Labour leader. I thought to myself “Oh no Jeremy, what could you possibly have done to get these folks so riled up?” So I read the plan. It’s not crazy–indeed, there is significant support in the literature and in recent experience for what Corbyn is proposing.
This is the conclusion of my three-part series on how governments finance themselves. The aim is to clear up the popular misconception that the state’s budget is similar to that of a corporation or a household, that government borrowing is always necessarily a bad thing. Previously we talked about taxation and borrowing–today is all about printing. Read the rest of this entry »
It has become fashionable on the political right to attack the Federal Reserve and its policy of quantitative easing, the process by which the Federal Reserve increases the money supply by purchasing assets owned by the private sector with cash that it prints. The right argues that quantitative easing encourages inflation and makes it easier for the government to borrow money, that it discourages saving, and that these are bad things. In contrast, these are very good things, and I shall endeavour to argue as to why.