[A post for Alex Douglas.] Here are two closely related questions, about Chartalism and the relation between stocks and flows of money. 1. How can intrinsically worthless bits of paper be a valuable asset that gets used as a medium of exchange? One answer is that the government forces us to pay taxes with those […]
If I were any good at writing book reviews, this post would tell you all about Morgan Ricks' new book "The Money Problem", and would explain why I think it's a very good book. [Disclaimer: I was paid to fly down to Nashville for a couple of days to help Morgan with his first draft.] […]
It's a simple point, perhaps an obvious point, that only needs a short blog post, but I think it's worth making. The Brits seem to be arguing about whether they should have some sort of rule (or charter) for fiscal policy, and if so, what it should look like. I am a bit skeptical, because […]
Warning: math-challenged economist at play. I want to see if I can sucker any readers into checking my math and doing the rest of the math for me. Do not read this post unless you think that might be fun. Update: Keshav has solved the math. Now we are trying to understand what it means. […]
Here's a fun one. (OK, I think it's fun, anyway.) Especially for those who teach macro. A first year student emails me. Paraphrasing, he asks "For a closed economy, we know that national saving equals national investment, and investing in newly-produced goods counts towards GDP. And "saving" means anything we do with our income other […]
By popular request (well, David Andolfatto asked, but I think he's right to ask) I'm drawing a picture to illustrate my previous post on the distinction between the interest rate Rb you get paid for lending money and the interest rate Rm you get paid for holding money. But first I need to take a […]
Prerequisite: intermediate macro. I reckon some people might be getting those two things muddled. The difference matters. Actually, the difference is the only thing that matters. It's the spread between those two interest rates, not the levels of those two interest rates, that matters for Aggregate Demand. Simplify massively. There are two rates of interest. […]
This is my response to Tony Yates' lovely fairy tale about escaping the zero bound. There is a Nash equilibrium in which each individual tosses a coin to decide which side of the road to drive on that day. But it's not a stable Nash equilibrium, in the old-fashioned sense of "stable". If I switch […]
In the olden days, economists would argue about whether fractional reserve banking should be banned, and 100% reserve banking should be mandatory. In today's mirror world, economists are arguing about whether fractional reserve banking should be mandatory, and 100% reserve banking banned. Or at least strongly discouraged. What JP Koning calls "cash escape inhibitors" (designed […]
Immigrants to Canada can, after living here for four years as a permanent resident, opt to become naturalized Canadian citizens. Most immigrants opt for naturalization – but some cling to their original citizenship, even after living in this country for thirty, forty, fifty or more years. The graph below shows the proportion of immigrants choosing to become […]
Worthwhile Canadian Initiative 
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