AARoN MeDLiN

Asst. Professor, International Studies/Economics @bostoncollege Study International finance, monetary policy, wealth & income inequality. PhD @UMassEcon

[AARoN MeDLiN @medlinian]

I have piece out today in @TheProspect with Jerry Epstein, codirector of @PERIatUMass, arguing the Fed’s inflation phobia, not just currently but since the 1970s, disproportionately benefits the top 1% by preserving their wealth at a cost to workers. 1/5

[The American Prospect @TheProspect]

The foremost priority of the Federal Reserve is to serve the interests of the ultra-wealthy.

From Gerald Epstein and @medlinian:

https://t.co/rZA80UWo3a

[AARoN MeDLiN @medlinian]

@dandolfa It’s not guaranteed sanity will return, David. After all, we voted Trump in not once, but twice—and we had four years in between to think about it. Something is clearly broken. In a repeat game under anarchy, not retaliating makes coercion cheap and undermines cooperation.

[AARoN MeDLiN @medlinian]

@ChrisPacia @StephanieKelton One could argue that bond issuance helps with the stability of the system because it serves as a benchmark for risk and, as Wray argues, allows the CB to manipulate the interbank rate to influence the rate of credit expansion.

[AARoN MeDLiN @medlinian]

@ChrisPacia @StephanieKelton People don’t like paying taxes, but taxes—among other fines, fees—are paid nonetheless and fluctuate with level of activity. You don’t need tax financing 1-for-1 even w/o bond issuance. The obligation is to accept dollars in pmt of taxes and maintain a stable monetary system.

[AARoN MeDLiN @medlinian]

@michaelxpettis @rlucas7 Ricardo’s model is not relevant at all because he abstracted away from the monetary and institutional channels that create competitive advantage—which operative even in his day.

[AARoN MeDLiN @medlinian]

@michaelxpettis @rlucas7 Not the same concepts. Absolute advantage = who can produce more output with the same inputs (pure productivity). Comparative advantage = lower opportunity cost. What people call “competitive advantage” is about money prices—wages, subsidies, exchange rates, industrial policy.

[AARoN MeDLiN @medlinian]

@wbmosler @t_holden @gilliantett Or you can just draw the Lm curve horizontal = CB sets policy rate/money supply endogenous, and make exchange rate a positive function of policy rate. Doesn’t fix everything, but more coherent for floating rate/open financial account environment.

[AARoN MeDLiN @medlinian]

@InvestorsFriend @clintballinger @eponysterical @stevemaughan All of this I know you are obviously aware of, but just to compete the thought for others.

[AARoN MeDLiN @medlinian]

@InvestorsFriend @clintballinger @eponysterical @stevemaughan And obviously if a bank can’t do that, can’t settle their (your) payment obligations, bc it can’t access fed funds in interbank market or Fed, it fails. banks are just as reliant on govt money—thus receive special access via the Fed to maintain stability in the payment system.

[AARoN MeDLiN @medlinian]

@InvestorsFriend @clintballinger @eponysterical @stevemaughan Certainly other credit instruments/IOUs can have “moneyness” (money-market shares, shadow-bank IOUs), but without state backing they rarely achieve broad or stable acceptance.

[AARoN MeDLiN @medlinian]

@InvestorsFriend @clintballinger @eponysterical @stevemaughan Bank liabilities are widely accepted precisely because the state guarantees the system: deposit insurance, capital rules, lender-of-last-resort support, and clearing via the Fed. The state makes private credit function as public money.

[AARoN MeDLiN @medlinian]

@InvestorsFriend @clintballinger @eponysterical @stevemaughan MMT doesn’t hinge on whether Treasury banks at the Fed or at JPMorgan. That’s form, not substance. The ontology doesn’t change: the state issues the currency, taxes extinguish it, and spending creates the net financial assets the public uses to pay taxes.

[AARoN MeDLiN @medlinian]

@InvestorsFriend @clintballinger @eponysterical @stevemaughan Even if Treasury kept its accounts at commercial banks today, reserves would still be required. Interbank payments always settle in Fed reserves, so banks would still have to move reserves whenever taxes were paid or Treasury spent. TT&L would change the plumbing, not the logic.

[AARoN MeDLiN @medlinian]

@OxfordFrom @brian_callaci MR is calculable only after a sale occurs. Firms don’t know the demand curve in advance, so they can’t know their MR function ex ante. Hence, MR cannot guide real-world output decisions. Firms use expected sales, cost-plus pricing, and inventory adjustments—not MR=MC

[AARoN MeDLiN @medlinian]

@MortimerleePaul @RelearningEcon Also financial crowding-out has been empirically and theoretically debunked for decades. Even the mainstream (mostly) accepts this.

[AARoN MeDLiN @medlinian]

@MortimerleePaul @RelearningEcon firms’ use of retained earnings is an accounting outcome after income (or profit) is generated, which comes from the expenditure injection of the other sectors—as in the original Kaleckj eq.

[AARoN MeDLiN @medlinian]

@itaisher @alexolegimas @petesivey @brian_jabarian Hi Itai, this sounds interesting. What’s an example of an assignment that is take home but with an in class evaluation component?