The money multiplier - an outdated model

5 January, 2013 at 21:09 | Posted in Economics | 1 Comment

Added: And, on his blog, Paul Krugman sidesteps the really interesting issues, contenting himself to write:

As best I can tell, what set the ragers off was the suggestion that under current conditions – that is, in a liquidity trap — it really doesn’t matter whether the government covers its deficit by selling debt or just printing money, which is why, among other things, using the platinum coin ploy to sidestep the debt ceiling would be harmless. (The MMTers showed up, as usual, to insist that debt versus money printing *never* makes a difference; but that’s a different story).

It would of course be much more interesting if Krugman really took the debate with MMTers rather than wasting time and energy on gold bugs and other economic cranks and ragers …

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