tag:blogger.com,1999:blog-2277215496195926573.post8373646822975008133..comments2024-01-01T07:41:51.347-08:00Comments on RALPHONOMICS: Varoufakis’s questionable “surplus recycling mechanism”.Ralph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2277215496195926573.post-315054995492541132016-09-26T11:09:15.159-07:002016-09-26T11:09:15.159-07:00Greece is not monetarily sovereign to be the monop...Greece is not monetarily sovereign to be the monopoly supplier of its own currency, therefore MMT does not apply. MMT applies for the EU as a whole towards other currency unions. Anonymoushttps://www.blogger.com/profile/01688282877392265100noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-20551758687604799362015-07-07T08:33:22.133-07:002015-07-07T08:33:22.133-07:00Roger, In the simple case of a single country tha...Roger, In the simple case of a single country that issues its own currency, then yes: if people repay loans that has a deflationary effect. Unemployment will rise, all else equal. But there’s no good reason for all else to be equal. That is, the state can perfectly well counteract that deflationary effect with any of the well known forms of stimulus: interest rate cuts, deficits, QE, etc.<br /><br />Same sort of point applies to Greece in the EZ. If we ignore the slight problems involved in just one country repaying debts, while others don’t, then Greece repaying debts would have a deflationary effect, but that’s easily countered by EZ wide stimulus. <br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-73339206673335645372015-07-07T06:16:03.112-07:002015-07-07T06:16:03.112-07:00Ralph,
I decided to upgrade my comment into a blo...Ralph,<br /><br />I decided to upgrade my comment into a blog post. The post can be found at <br /><br />http://mechanicalmoney.blogspot.com/2015/07/greek-loan-repayment.html<br /><br />I make one typo correction ('call as second' to 'call a second') and add some beginning and ending expansion.<br /><br />Thanks for your many posts.Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-28715753247005381902015-07-07T05:01:44.479-07:002015-07-07T05:01:44.479-07:00Our community could have a young couple that l...Our community <b> <i> could </i></b> have a young couple that liked to borrow money from the community bank for the simple reason that they liked to spend more than they could earn. <br /><br />If this couple was very likable, they might be able to borrow more than they earned every year for many years.<br /><br />In fact, they could do this until the bank said "NO MORE LOANS!".<br /><br />A "NO MORE LOANS" decision would be a paradigm change. It would be a change in the annual way of running the local economy.<br /><br />How might the economy change if, after many years of lending to the (formerly) young couple, the lending stopped? Those businesses that received the annual loan proceeds (the couple always spent the loan money) would see fewer sales and need fewer workers. This because less money each year would be spent.<br /><br />Now <b> <i> if </i></b> the bank also required the (formerly) young couple to <b> <i> repay </i></b> the loan, there would be an additional effect that we might call as second paradigm change. The couple would need to work harder to earn money. Working harder would entail producing products already made by other workers which would increase sales competition. The economic effect of loan repayment is the opposite of initial loan creation.<br /><br />I think we can consider that Greece has been this (formerly) young couple. Now the loans are being denied. Do we really want them to repay the loans?Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.com