Saturday Quiz – November 28, 2009

This Post Has 15 Comments

1. I qualify for some award by getting 5 out of 5?

2. Dear Richard

   Yes you do. Congratulations.

   best wishes
   bill

3. I don’t know if I deserved getting 5/5 I didn’t even understand question 2.

4. 2 weeks in a row and still 80%. Must read the questions with more care…but at least I am not a neo-liberal

5. Dear Jake

   Yes, you are spared from that shame!

   best wishes
   bill

6. Woohoo! 5 out of 5 again.

7. I qualified the MMT Friend of the State/Friend of the People award. 🙂
   What happened to making them hard

8. Status report on the neoclassical inquiry into the nature of the monetary system:

   http://www.youtube.com/watch?v=9uhn14zrd48&feature=related

9. Dear JKH

   That is probably giving them too much credit.

   I include the IS-LM and deficit-dove Keynesians in the group too by the way – that is, those who believe that the money multiplier concept is a fair depiction of the way the banking system operates.

   best wishes
   bill
   ps: Thanks for you lovely answer to Scepticus. I am having “shortage of time” troubles catching up on all the great comments.

10. 4 out of 5! Not bad.
    Bill,I’ve only recently (within the last two years) begun learning about economics so in some ways I may be ahead of the game,less to unlearn. I’ve been reading Randy Wray and Marshall Auerbacks writings and linked to this blog two days ago and am wearing it out !

    Thank you VERY much.

    I’m trying to learn about how taxes fit in, I understand private accounts are debited then treasury is credited then the $ is gone.
    I’d read that the purpose of taxation is controlling inflation but I need to read more on it. If you or one of your readers could point me to a blog which would explain this I’d be very grateful.
    Thanks again

11. OK, just found this blog, and thought I’d see how I’d score. Read the last week’s posts, and still failed miserably, 2 out of 5.

    Frankly, perhaps I’m just too dense to understand what you’re talking about here, but based on the notion that you do not really understand something unless you can explain it to your grandmother, I suspect a more succinct approach might be helpful to your readers.

    I’ll follow your blog for a bit as sometimes osmosis helps my understanding, but I’m still puzzled as to how the exponential nature of the astronomical debt that was created can possibly be serviced (without an appropriately astronomical response, the current response seems sub astronomical, and even if it approached the staggering levels appropriate to sustain 1.44 quadrillion dollars in derivatives, I suspect it would be too disruptive to manage by anyone but astrophysicists cum economists, and those are in short supply).

    Perhaps I’m naive in my expectations of a ‘grandmother friendly’ explanation, but I’m ultimately an optimist (although a bit pessimistic given your rather extreme political bent… I’ve found that those with extreme political leanings usually produce idealistic notions that eventually prove impractical… At best).

    Cheers,

    Dave

12. Dear Dave

    Welcome to my blog and thanks for your comment.

    You have to separate a person’s political views from their understanding of the way the monetary system operates. Modern monetary theory is neither right, centre of left wing. What I would do with the understanding of how the monetary system operates reflects my ideology.

    best wishes
    bill

13. Dear Oso

    Thanks for your comment.

    To get you started on where taxes fit in I suggest you start with the three blogs Deficit spending 101 – Part 1 – Deficit spending 101 – Part 2 – Deficit spending 101 – Part 3.

    Further, these blogs might help – Will we really pay higher taxes? and Functional finance and modern monetary theory .

    They cover the question of tax in some detail.

    best wishes
    bill

14. Thanks Bill,

    If it’s indeed possible to separate extreme political views from monetary policy, I’ll be grateful, but it would certainly make you the exception to the rule..!

    However, I’m still at a loss as to how an explosion in debt-based money can be rectified without creating an (inherently unstable) larger explosion, IOW, how a bigger bubble can replace a burst one without creating a chaotic marketplace that eventually ceases to function. From where I sit, the central banks (in a puzzling attempt to indebt the world) simply created too much debt too quickly, rendering it unserviceable – And the current attempt to muddle through will prove impossible. I’m just sitting around waiting for this to play itself out.

    More on this concept can be found here http://www.perfecteconomy.com/

    AFA politics go, I think you’re perfectly entitled to enjoy the company of a majority of like minded individuals according to your community standards, as I like to enjoy the company of like minded individuals according to my community standards. As such, I’m big fan of everyone being forced to embrace diversity – Somewhere else. ; )

    Cheers,

    Dave

15. Fascinating read. Thanks.
    Even Friedman endorsed the government money-creation powers in a fiat currency.
    He did so not only in supporting the full-reserve banking proposals of Fisher, but also in his own Monetary Framework for Economic Stability.
    Yours is a very essential contribution to understanding the inner natural workings of a monetary system, what Hemphill called the most important subject that intelligent people can consider.
    Congratulations.
    And, thanks again.