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J. Bradford DeLong
Berkeley, CA
J. Bradford DeLong is an economist teaching at the University of California at Berkeley.
Interests: history, economic history, information age, political economy, grand strategy, international relations, material culture., information technology, economics
Recent Activity
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**Must- and Should-Reads:** * **Must-Read: Simon Wren-Lewis**: [The Ideologues of the Eurozone](http://equitablegrowth.org/?p=12166) * **Paul de Grauwe**: ["Accepting that the (restructured) Greek debt is sustainable opens the door to both a softening of the austerity programme and to liquidity support of the Greek banking sector..."](http://www.voxeu.org/article/greece-solvent-illiquid-policy-implications) * **Duncan Wheldon**: ["Syriza has transformed from 'end austerity' to 'implement austerity in a left wing redistributionary way' to 'slightly tweak existing austerity'. That's quite a journey in a matter of weeks..."](http://www.bbc.com/news/live/uk-politics-33139218) **Over at [Equitable Growth](http://EquitableGrowth.org)--[The Equitablog](http://equitablegrowth.org/blog)** * [Department of "HUH!? WTF!?!?": Greek Crisis Troika-Defending Ideologues Edition](http://equitablegrowth.org/2015/07/04/department-huh-wtf-greek-crisis-troika-defending-ideologues-edition/) **Plus:** * [Things to Read on the Evening of July 4, 2015](http://equitablegrowth.org/2015/07/04/things-read-nighttime-july-4-2015/) **And Over Here:** * [Department of "HUH!? WTF!?!?": Greek Crisis Troika-Defending Ideologues Edition](http://www.bradford-delong.com/2015/07/department-of-huh-wtf-greek-crisis-troika-defending-ideologues-edition.html) * [Weekend Reading: Arthur Goldhammer: The Old Continent Creaks](http://www.bradford-delong.com/2015/07/weekend-reading-arthur-goldhammer-the-old-continent-creaks.html) * [Weekend Reading: Steve Randy Waldman: Greece](http://www.bradford-delong.com/2015/07/weekend-reading-steve-randy-waldman-greece.html) * [Liveblogging History: July 4, 1187: Battle of Hattin](http://www.bradford-delong.com/2015/07/liveblogging-history-july-4-1187-battle-of-hattin.html) * [Weekend Reading: David Glasner: Mises’s Unwitting Affirmation of the Hawtrey-Cassel Explanation of the Great Depression](http://www.bradford-delong.com/2015/07/weekend-reading-david-glasner-misess-unwitting-affirmation-of-the-hawtrey-cassel-explanation-of-the-great-depression.html) * [For the Fourth of July](http://www.bradford-delong.com/2015/07/2015-07-04-for-the-fourth-of-july.html) * [Must-Read: Simon Wren-Lewis, who is very smart and has followed the Eurozone crisis much more closely than I have, seems to have joined the Ancient, Hermetic, and Occult Order of the Shrill](http://www.bradford-delong.com/2015/07/must-read-simon-wren-lewis-who-is-very-smart-and-has-followed-the-eurozone-crisis-much-more-closely-than-i-have-seems.html) **Might Like to Be... Continue reading
Posted yesterday at Brad DeLong's Grasping Reality
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[**Over at Equitable Growth**][1]: Angel Ubide writes: @mark_dow Good points.Sadly we'll never know if pre-Syriza growth sustainable. Bberg consensus thought so cc:@delong pic.twitter.com/QpQ1m4vcwN— Angel Ubide (@AngelUbide) July 4, 2015 Ummmm... "Pre-Syriza growth" would return Greek GDP to its 1975-1999 trend... never. "Pre-Syriza growth" was at a pace that would not return Greek real GDP to the 2007 level of the 1975-1999 trend (if you think that was Greece's "real" potential output in 2007) until... 2023. [**READ MOAR**][1] [1]: http://equitablegrowth.org/?p=12169 "Pre-Syriza growth" was at a pace that would not return Greek real GDP to the 2007 level of potential output (if you think that was Greece's "real" potential output in 2007) until... 2037. Splitting the difference, "pre-Syriza growth" would not return Greece to the center-point of estimates of 2007 potential output until 2030. And "pre-Syriza growth" would reduce Greek unemployment from its current levels... never: Continue reading
Posted yesterday at Brad DeLong's Grasping Reality
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**Arthur Goldhammer**: [The Old Continent Creaks](http://www.democracyjournal.org/37/the-old-continent-creaks.php?page=all): **Austerity and the failures of the technocratic elite have created the current populist backlash. France’s experience is instructive—and, possibly, ominous:** >What’s the matter with Europe? Wherever one looks these days, there are signs of deep trouble. Economic growth has stagnated. Deflation threatens. Unemployment is rampant in many member states of the European Union. Support for the former mainstream parties of the center-right and center-left is waning. Populist parties of the far right and far left are on the rise. Anti-Islamic movements such as PEGIDA in Germany have attracted worrisome support, while in France the xenophobic National Front has topped all other parties in recent polls. Terrorist attacks by native-born citizens in Paris and Copenhagen have raised fears that the social fabric has irreparably deteriorated—fears compounded by the flight of several thousand young Europeans to join the Islamic State in Syria. And to top it all off, Ukraine has been racked by civil war and threatened with disintegration since Russian-backed separatists rejected the rule of the government in Kiev. >Are these various crises and upheavals related? Who or what is to blame? And what does all this turmoil portend for the future of the EU,... Continue reading
Posted yesterday at Brad DeLong's Grasping Reality
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**Wikipedia**: [Battle of Hattin](https://en.wikipedia.org/wiki/Battle_of_Hattin): >The crusaders began their march from Sephoria on July 3.... By noon on that day, the Crusader army had reached a spring at the village of Tur'an some six miles (10 km) from La Saphorie. Here, according to Saladin, 'The hawks of the Frankish infantry and the eagle of their cavalry hovered around the water.' It was still nine miles (14 km) to Tiberias. Therefore, with only a half day of marching time remaining, any attempt to leave this sure water source to seek that objective the same day, all while under the constant attack of Saladin's army, would be foolhardy. (In 1182 the Frankish army had only advanced 8 miles (13 km) in a full day in face of the enemy and in 1183 Guy had managed but six miles (10 km) in a similar situation, taking a full day.) But, as Saladin wrote: >>Satan incited Guy to do what ran counter to his purpose... >Saladin sent the two wings of his army around the Frankish force and seized the spring at Tur'an, thus blocking the Frankish line of retreat.... There was [then] a major change in the Crusaders plan. Believing that the Crusader army... Continue reading
Posted yesterday at Brad DeLong's Grasping Reality
The parallels with the antinomies of the thought of the Ludwig von Mises of today--John Taylor--are, I think, rather striking: **David Glasner**: [Mises’s Unwitting Affirmation of the Hawtrey-Cassel Explanation of the Great Depression](http://uneasymoney.com/2015/07/03/misess-unwitting-affirmation-of-the-hawtrey-cassel-explanation-of-the-great-depression/): >In looking up some sources for my previous post on the gold-exchange standard, I checked, as I like to do from time to time, my old copy of The Theory of Money and Credit by Ludwig von Mises. Mises published The Theory of Money and Credit in 1912 (in German of course) when he was about 31 years old, a significant achievement. In 1924 he published a second enlarged edition addressing many issues that became relevant in the aftermath the World War and the attempts then underway to restore the gold standard. So one finds in the 1934 English translation of the 1924 German edition a whole section of Part III, chapter 6 devoted to the Gold-Exchange Standard. >I noticed that I had dog-eared the section, which presumably means that when I first read the book I found the section interesting in some way, but I did not write any notes in the margin, so I am not sure what it was that I found interesting. I... Continue reading
Posted yesterday at Brad DeLong's Grasping Reality
**Must-Read:** Simon Wren-Lewis, who is very smart and has followed the Eurozone crisis much more closely than I have, seems to have joined the Ancient, Hermetic, and Occult Order of the Shrill: ["Ph'nglui mglw'nafh Euro R'lyeh wgah'nagl fhtagn!"](http://www.bradford-delong.com/wherefore_shrillblog.html). We wish him luck with his new appointment at Miskatonic University in picturesque Arkham, Massachusetts. And we are seriously considering, after reading him, whether the Euro project needs to blown up--indeed, whether the fundamental flaw was in U.S. occupation authorities allowing the formation of the Bundesrepublik, because a European Union that now had five members named "Brandenburg", "Saxony", "Bavaria", "Rhineland", and "Hanover" would be likely to have a much healthier politics and economics than our current one, with one member named "Germany": **Simon Wren-Lewis**: [The Ideologues of the Eurozone](http://equitablegrowth.org/?p=12166): "It was all going so well... >...True, Greek GDP did shrink by 25% over 4 years, unemployment rose to 25% and youth unemployment to 50%, but before Syriza’s election Greek GDP had actually stopped falling. Further austerity was planned so that Greece could start to pay interest on its enormous debts, together with various ‘reforms’ that were so obviously in the interests of the Greek economy, and the consensus forecast was that the... Continue reading
Posted yesterday at Brad DeLong's Grasping Reality
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**Steve Randy Waldman**: [Greece](http://www.interfluidity.com/v2/5965.html?utm_source=dlvr.it&utm_medium=twitter): "I’ll end this ramble with... >...a discussion of a fashionable view that in fact, the Greece crisis is not about the money at all, it is merely about creditors wresting political control from the concededly fucked up Greek state in order to make reforms in the long term interest of the Greek public. Anyone familiar with corporate finance ought to be immediately skeptical of this claim. A state cannot be liquidated. In bankruptcy terms, it must be reorganized. Corporate bankruptcy laws wisely limit the control rights of unconverted creditors during reorganizations, because creditors have no interest in maximizing the value of firm assets. Their claim to any upside is capped, their downside is large, they seek the fastest possible exit that makes them mostly whole. The incentives of impaired creditors are simply not well aligned with maximizing the long-term value of an enterprise. >If it were 2009, I might have been persuaded that the corporate bankruptcy analogy is poor, that Europe’s interest in the development and cohesiveness of its empire would substitute for narrow economic incentives (which should in any case be blunted, since they are the incentives of 27 different fiscs). If the past five... Continue reading
Posted yesterday at Brad DeLong's Grasping Reality
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**Must- and Should-Reads:** * **James Galbraith**: [Greece: Only the 'No' Can Save the Euro: As Greece prepares for a referendum on its creditors' demands for austerity, the future of Europe hangs in the balance](http://prospect.org/article/greece-only-no-can-save-euro) * **Cardiff Garcia and Diane Coyle**: [Camp Alphaville videos: Is GDP losing its relevance?](http://ftalphaville.ft.com/2015/07/02/2133522/camp-alphaville-videos-is-gdp-losing-its-relevance/) * **Simon Wren-Lewis**: [The Greek people have paid for their governments’ mistakes – and for the errors of the Troika](http://www.newstatesman.com/politics/2015/07/greek-people-have-paid-their-governments-mistakes-and-errors-troika) * **Joseph Cotterill**: ["It’s a Greek debt sustainability analysis by IMF staff... the frankest effort... so far to acknowledge the straits Greece is in regarding its debt to official creditors, and accordingly, their most radical proposal yet to euthanise large parts of that official debt..."](http://ftalphaville.ft.com/2015/07/02/2133520/how-we-would-have-restructured-greeces-debt-by-the-imf/) * **Phillip Inman and Larry Elliott**: [IMF says Greece needs extra €60bn in funds and debt relief, issues strong message to Europe by warning that Athens’ debts are unsustainable and it needs 20-year grace period on debt repayments](http://www.theguardian.com/business/2015/jul/02/imf-greece-needs-extra-50bn-euros) * **Must-Read: Mark Thoma**: [Austerity: The Public-Sector Jobs Gap](http://equitablegrowth.org/?p=12148) * **Must-Read: Miles Kimball**: [Bruce Greenwald: The Death of Manufacturing](http://equitablegrowth.org/?p=12150) * **Must-Read: Mark Thoma**: [The Problem with Completely Free Markets](http://equitablegrowth.org/?p=12153) * **Must-Read: Angel Ubide**: [A Political and Intellectual Proxy War over Greece](http://equitablegrowth.org/?p=12155) * **Must-Read: Paul Krugman**: [Europe’s Many Economic Disasters](http://equitablegrowth.org/?p=12158)... Continue reading
Posted 2 days ago at Brad DeLong's Grasping Reality
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**Must-Read: Virginia Postrel**: [The Venus de Milo’s Arms](http://www.slate.com/articles/arts/culturebox/2015/05/the_venus_de_milo_s_arms_3d_printing_the_ancient_sculpture_spinning_thread.html): "The re-creation provides a plausible answer to a question posed... >...by the original advocate of a spinning Venus, archeologist Elmer G. Suhr, in the 1950s and 1960s. Suhr identified many classical sculptures with poses suggestive of spinning, but none of them had implements. Where did the tools go? Suhr argued that ‘the equipment of a spinner must have been a disturbing element to the artist,’ who simply dispensed with the distaffs and spindles, assuming that ‘everyone in ancient times was sufficiently familiar with the process’ to recognize the stance and gestures. Cosmo’s version suggests a better answer: that the tools were separate accessories made of perishable materials or precious metals and have simply been lost or stolen. None of this proves, of course, that the Venus de Milo was originally a spinner.... But the replica demonstrates plausibility. ---- **Odyssey:** >Mother.... Go, then, within the house and busy yourself with your daily duties, **your loom, your distaff,** and the ordering of your servants; for speech is man's matter, and mine above all others—for it is I who am master here... >"Mercury, you are our messenger, go therefore and tell Calypso...". He found her... Continue reading
Posted 2 days ago at Brad DeLong's Grasping Reality
**Must-Read: Paul Krugman**: [Europe’s Many Economic Disasters](http://equitablegrowth.org/?p=12158): "It’s depressing thinking about Greece... >...So let’s talk about something else... Finland, which couldn’t be more different from that corrupt, irresponsible country to the south... a model European citizen; it has honest government, sound finances and a solid credit rating, which lets it borrow money at incredibly low interest rates. It’s also in the eighth year of a slump that has cut real gross domestic product per capita by 10 percent and shows no sign of ending.... If it weren’t for the nightmare in southern Europe, the... Finnish economy might well be seen as an epic disaster. And Finland isn’t alone. It’s part of an arc of economic decline that extends across northern Europe through Denmark--which isn’t on the euro, but is managing its money as if it were--to the Netherlands. All of these countries are, by the way, doing much worse than France.... And what about southern Europe outside Greece?... Spain... real income per capita that is still down 7 percent from its pre-crisis level. Portugal has also obediently implemented harsh austerity — and is 6 percent poorer than it used to be.... >What’s striking at this point is how much the... Continue reading
Posted 2 days ago at Brad DeLong's Grasping Reality
**Must-Read:** There is an astonishing antinomy in this column by the Peterson Institute's Angel Ubide. (A) On the one hand, he says Greek nationalists and Keynesians are cynically and reprehensibly sacrificing the people of Greece in a proxy war to try to advance their anti-EU and anti-austerity views. (B) On the other hand, he says that the nationalists--who complain that the EU is being run for the benefit of German bankers, German bank depositors, and German exporters rather than for the continent as a whole--and the Keynesians--who complain that the austerity and the lack of debt reorganization imposed on Greece is simply insane--are right. I think Ubide should pull this back, think hard, rewrite it, and try again when he has decided whether he thinks Greece should (A) accept the Troika offer or (B) hold out for, in his words, what it deserves: "massive external assistance... the resources needed--including conditional debt relief... whatever it takes to help the Greek people recover from this tragedy..." **Angel Ubide**: [A Political and Intellectual Proxy War over Greece](http://equitablegrowth.org/?p=12155): "The conflict is a proxy for two wars—one intellectual and one political... >...in which the Greek people, especially the poor, have been taken hostage. The intellectual... Continue reading
Posted 2 days ago at Brad DeLong's Grasping Reality
**Must-Read:** So when I go back onto the Econ 1 teaching line in the spring of 2016, how do I organize (a) the excellences of markets, and (b) the failures of markets? Reich and Tyson have a nice four-part typology: 1. government creates markets, 2. government corrects markets, 3. government distorts markets, 4. government supplements markets. Is that the way to go? **Mark Thoma**: [The Problem with Completely Free Markets](http://equitablegrowth.org/?p=12153): "Republicans... believe that markets free of government rules and regulations... >...almost always outperform markets where the government is involved. So it’s a good time to review why this faith in free markets is sometimes misplaced.... But we shouldn’t confuse free markets with competitive markets. When there are significant departures from pure competition, what economists call market failures, markets are ‘free’ to perform very badly, and sometimes a market will collapse entirely.... The conditions for textbook competitive markets are fairly strict... numerous participants... perfect information... weights and measures [that] are accurate... free of externalities... [free of] principal-agent problems... free of moral hazard and adverse selection problems.... If a private firm asked you to pay for national defense, why would you say yes? If everyone else pays, you will still be protected,... Continue reading
Posted 2 days ago at Brad DeLong's Grasping Reality
**Must-Read:** With a more equal distribution of income, there would be a lot more demand for manufactured goods--both consumer and residential investment goods. And here, as elsewhere, I think that there is confusion between what we used to think of as the short-term aggregate demand problem and the long-term technological change-driven structural adaptation problem: **Miles Kimball**: [Bruce Greenwald: The Death of Manufacturing](http://equitablegrowth.org/?p=12150): "This is a fascinating discussion by Bruce Greenwald... >...of the difficulties of shifting people from working in sectors like agriculture and manufacturing where employment is declining because productivity is going up faster than demand, the efforts of some countries to export this problem to other countries, and the effect of these forces on interest rates, and therefore, implicitly, their interaction with the zero lower bound.... It still doesn’t work to have more manufacturing output that people want to buy any more than it makes sense to have more food grown than people can possibly eat. So at the end of the day... either people will start consuming a lot more because of the low interest rates, or more likely there would end up being extra investment in something else. A good possibility is education.... Standard human capital theory... Continue reading
Posted 2 days ago at Brad DeLong's Grasping Reality
**Wikipedia**: [Siege of Fort Ticonderoga (1777)](http://en.wikipedia.org/wiki/Siege_of_Fort_Ticonderoga_(1777)): >The 1777 Siege of Fort Ticonderoga occurred between 2 and 6 July 1777 at Fort Ticonderoga, near the southern end of Lake Champlain in the state of New York. Lieutenant General John Burgoyne's 8,000-man army occupied high ground above the fort, and nearly surrounded the defences. These movements precipitated the occupying Continental Army, an under-strength force of 3,000 under the command of General Arthur St. Clair, to withdraw from Ticonderoga and the surrounding defences. >Some gunfire was exchanged, and there were some casualties, but there was no formal siege and no pitched battle. Burgoyne's army occupied Fort Ticonderoga and Mount Independence, the extensive fortifications on the Vermont side of the lake, without opposition on 6 July. Advance units pursued the retreating Americans. >The uncontested surrender of Ticonderoga caused an uproar in the American public and in its military circles, as Ticonderoga was widely believed to be virtually impregnable, and a vital point of defence. General St. Clair and his superior, General Philip Schuyler, were vilified by Congress. Both were eventually exonerated in courts martial, but their careers were adversely affected. Schuyler had already lost his command to Horatio Gates by the time of the... Continue reading
Posted 2 days ago at Brad DeLong's Grasping Reality
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**Live from FT's London Camp Alphaville: Izabella Kaminska**: [Izabella Kaminska on Twitter:](https://twitter.com/izakaminska/status/616533155273641984): "But here's @ofnumbers and @delong... >...watching @FD 's short seller interview h/t @philippechuzel @awabot Continue reading
Posted 3 days ago at Brad DeLong's Grasping Reality
Nothing: I see no reason to edit my: [What Do We Learn from the Latest Monthly Employment Report?: DeLong FAQ — Brad's Buffalo Blog](http://delong.buffalo.io/what-do-we-learn-from-the-latest-monthly-employment-report-delong-faq) Continue reading
Posted 3 days ago at Brad DeLong's Grasping Reality
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**Must-Read:** At a time when nominal interest rates are at their zero lower bound, and when as a result there is neither a real resource cost nor a future burden in terms of higher tax wedges to put more people to work doing things for the government, the fact that the U.S. has cut 1.8 million government jobs relative to trend since the start of 2008 is, from any technocratic point of view, a total and complete macroeconomic disaster. Remember: whatever good things you may say about Democratic President Barack Obama, he helped it along. **Mark Thoma**: [Austerity: The Public-Sector Jobs Gap](http://equitablegrowth.org/?p=12148) > Continue reading
Posted 3 days ago at Brad DeLong's Grasping Reality
A question of special interest to me right now because the departmental powers-that-be have decided to ask me to go back onto the 700-person Econ 1 Wheeler teaching line next spring... **Chris Y.**: [A colleague](http://www.unfogged.com/archives/week_2015_06_28.html#014713) (middle grade civil servant) has sent this request to Mrs Y: >>I was wondering if we could do a mentor session on the underpinning economic philosophies (lenses)--I have always wondered what the main underlying philosophies are and the risks associated with viewing economics through particular lenses like Neo-classical or Neo-Keynesian. I know you are quite good at the economics stuff, what do you think? ---- And so, like Own Glydwr, LizardBreath summons me from the vasty deep!: >If you had a moment to waste at Unfogged.... I figure that if anyone had useful suggestions, it'd be you. And given that you're demonstrably reading the comments, I also figured that it wasn't too much of an imposition to ask. First, I am not reading *all* the comments. In fact, I do not understand how anyone can read all the Unfogged comments and have a life--unless, of course, they are a post-human anthology intelligence. Robert Heilbroner's [_The Worldly Philosophers_](http://amzn.to/1GSytCF) is, I think, still the best place to... Continue reading
Posted 3 days ago at Brad DeLong's Grasping Reality
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**Must- and Should-Reads:** * **Ryan Cooper**: ["Being in power while unemployment skyrockets towards 30 percent is not so great for one's political prospects. PASOK did not just lose, it has been essentially destroyed--falling from 38 percent of the vote in 2009 to less than 5 percent this year..."](http://theweek.com/articles/563891/eurozone-become-murdersuicide-pact) * **Must-Read: Monique Morrissey**: [Are Disability Rates Increasing?](http://equitablegrowth.org/?p=12097) * **Must-Read: David Atkins** (December 2014): [Another Opportunity to Test Who is Right About the Economy](http://equitablegrowth.org/?p=12103) * **Martin Wolf**: [The Difficult Choices Facing the Greeks](http://equitablegrowth.org/?p=12101) * **Must-Read: Caroline Freund and Sarah Oliver**: [Gains from Harmonizing US and EU Auto Regulations under the Transatlantic Trade and Investment Partnership](http://www.piie.com/publications/interstitial.cfm?ResearchID=2797) * **Dean Baker and Cherrie Bucknor**: [Obamacare Is Good for Older Workers Too](http://www.cepr.net/blogs/cepr-blog/obamacare-is-good-for-older-workers-too) * **Danny Haim**: [U.S. Chamber of Commerce Works Globally to Fight Antismoking Measures](http://equitablegrowth.org/?p=12108) * ** Samantha Cooney and Heidi Moore**: [Who's who in the Greek bailout crisis](http://mashable.com/2015/06/30/whos-who-in-greece/) * **Jessica Fulton**: [A key tool to fight housing inequality remains intact](http://equitablegrowth.org/news/key-tool-fight-housing-inequality-remains-intact/) * **Karl Whelan**: [Greece, The Euro and Gunboat Diplomacy](https://medium.com/bull-market/greece-the-euro-and-gunboat-diplomacy-3193983d8336) * **Joe Gagnon**: [Can the Grexit Lemon Be Made into Lemonade?](http://blogs.piie.com/realtime/?p=5073) * **David Glasner**: [Gold Standard or Gold-Exchange Standard: What’s the Difference?](http://uneasymoney.com/2015/07/01/gold-standard-or-gold-exchange-standard-whats-the-difference/) **Over at [Equitable Growth](http://EquitableGrowth.org)--[The Equitablog](http://equitablegrowth.org/blog)** * **Marshall Steinbaum**: [The Rigid DNA of the European... Continue reading
Posted 3 days ago at Brad DeLong's Grasping Reality
Keynes says that they must be "inexperienced persons". **John Maynard Keynes** (1936): [*The General Theory of Employment, Interest and Money*](https://www.marxists.org/reference/subject/economics/keynes/general-theory/ch19.htm): **Chapter 19: Changes in Money-Wages:** "The method of increasing the quantity of money... >...in terms of wage-units by decreasing the wage-unit increases proportionately the burden of debt; whereas the method of producing the same result by increasing the quantity of money whilst leaving the wage unit unchanged has the opposite effect. Having regard to the excessive burden of many types of debt, it can only be an inexperienced person who would prefer the former... Continue reading
Posted 3 days ago at Brad DeLong's Grasping Reality
**John Maynard Keynes** (1936): [The General Theory of Employment, Interest and Money by John Maynard Keynes](https://www.marxists.org/reference/subject/economics/keynes/general-theory/ch19.htm): "A moderate increase in the quantity of money... >...may exert an inadequate influence over the long-term rate of interest [to restore full employment], whilst an immoderate increase may offset its other advantages by its disturbing effect on confidence... Continue reading
Posted 3 days ago at Brad DeLong's Grasping Reality
**Comment of the Day/Early Monday DeLong Smackdown: Robert Waldmann**: [Comment on "More Musings on "Monetary Economics"](http://www.bradford-delong.com/2015/07/highlighted.html#comment-6a00e551f08003883401bb084c3e41970d): "Also: >>it is not the case that curing the excess demand for safe and liquid assets always requires painful 'liquidation' and austerity... >is true but doesn't go very far. >In particular, painful liquidation doesn't require austerity--overinvestment is costly to those who overinvested whether or not there is countercyclical stimulus: WorldCom and Global Crossing went bankrupt, even though Greenspan made sure the 2001 recession was tiny. >I think the the weight of evidence strongly suggests that structural adjustment and sectoral rebalancing is accelerated not slowed by demand stimulus. I actually think this is proven beyond reasonable doubt. Non-monetary models with either effect can be written. >I note as always, that there can be fluctuations of production, exchange and welfare in models without money including say the original Diamond search model. In general imperfect competition is plenty (and needed anyway for price stickiness). >Also incomplete markets are enough. >It may be that historically those who understood that something could and should be done about depressions focused on money and money demand, but it is not and was not logically necessary to recognise the existence of money... Continue reading
Posted 3 days ago at Brad DeLong's Grasping Reality
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**Eric Lonergan**: [On Twitter: Keynes on inequality](https://twitter.com/ericlonners/status/612374934522871812): "@delong @t0nyyates @Noahpinion From John Maynard Keynes *The Economic Consequences of the Peace*: the combination of high inequality and Victorian Prudence on the part of the upper class is, Keynes believes, highly functional for economic growth: >**III. The Psychology of Society:** [Before World War I] Europe was so organized socially and economically as to secure the maximum accumulation of capital. While there was some continuous improvement in the daily conditions of life of the mass of the population, Society was so framed us to throw a great part of the increased income into the control of the class least likely to consume it. >The new rich of the 19th century were not brought up to large expenditures, and preferred the power which investments gave them to the pleasures of immediate consumption. In fact, it was precisely the *inequality* of the distribution of wealth which made possible those vast accumulations of fixed wealth and capital improvements which distinguished that age from all others. Herein lay, in fact, the main justification of the capitalist system. If the rich had spent their new wealth on their roownad enjoyments, the world would long ago have found such... Continue reading
Posted 3 days ago at Brad DeLong's Grasping Reality
**Wikipedia**: [Battle of Hattin](https://en.wikipedia.org/wiki/Battle_of_Hattin): >On July 2, Saladin, who wanted to lure Guy into moving his army away from the springs at La Saphorie, personally led a siege of Raymond's fortress of Tiberias while the main Muslim army remained at Kafr Sabt. The garrison at Tiberias tried to pay Saladin off, but he refused, later stating that: >>when the people realized they had an opponent who could not be tricked and would not be contented with tribute, they were afraid lest war might eat them up and they asked for quarter... but the servant gave the sword dominion over them... >The fortress fell the same day. A tower was mined and, when it fell, Saladin's troops stormed the breach killing the opposing forces and taking prisoners. >Holding out, Raymond's wife Eschiva was besieged in the citadel. As the mining was begun on that structure, news was received by Saladin that Guy was moving the Frank army east. The Crusaders had taken the bait. >Guy's decision to leave the safety of his defenses was the result of a Crusader war council held the night of July 2. Though reports of what happened at this meeting are biased due to personal feuds... Continue reading
Posted 3 days ago at Brad DeLong's Grasping Reality