Debt, Deficits or Unemployment

Identifying Real Threats to Growth

Nov 13, 2012

Overview

This seminar explores the intersection between the real and monetary (or nominal) economy. It addresses the relationship between money and economic growth, and explores popular misconceptions surrounding the “sustainability” of government deficits, national debt and trade deficits for developed and developing nations. Questions to be addressed include:

  • Why does unemployment exist in a monetary economy?
  • How does a nation’s developmental stage affect the sustainability of government deficits?
  • Is national debt a problem, and if so, under what conditions?
  • Can developing nations “afford” welfare programs?
  • What is the relationship between capital flows, trade and exchange rates?
  • What is the relationship between money creation, exchange rates and global competitiveness?

Outline

  • JONATHAN BRICE: Seminar Introduction 0:00
  • NATHAN TANKUS: Moderator Introduction 0:56
  • JOHN HARVEY: “The Truth About Debt and The Deficit” – Introduction 1:29
    • JOHN HARVEY: Common Myths about the National Debt 4:10
    • JOHN HARVEY: Truths about the National Debt 7:22
      • JOHN HARVEY: Relationship between Unemployment and GDP 9:18
      • JOHN HARVEY: Relationship between Fiscal Policy & Business Cycles 13:00
    • JOHN HARVEY: But Why Aren’t Federal Budget Surpluses Good? 18:02
      • JOHN HARVEY: Budget Deficits = Private Sector Wealth 19:26
      • JOHN HARVEY: The U.S. Cannot Be Forced to Default on Its Debt 20:40
  • JAN KREGEL: Introduction – The Size of the National Debt vs. The Size of Government 24:32
    • JAN KREGEL: Premise: The Government Should Maximize the National Income 28:14
      • JAN KREGEL: In Economic History, Government is Anterior to the Private Sector 31:50
      • JAN KREGEL: U.S. Monetary Policy In a Growing Economy Requires The Purchase of Government Debt 36:33
        • JAN KREGEL: The Importance of National Income Accounting 40:52
    • JAN KREGEL: Accounting for the Foreign Sector (Everyone Wants to be a Net Creditor) 44:32
    • JAN KREGEL: Fiscal Responsibility Usually Means The Government is a “Net Debitor” 46:37
  • NATHAN TANKUS: Q&A Session 56:00
    • NATHAN TANKUS: Moderator Question: What About Exchange Rates? 56:00
    • NATHAN TANKUS: Audience Questions 1:10:08

Participants

Speaker
John T. Harvey
Professor of Economics
Texas Christian University
Speaker
Jan Kregel
Senior ScholarLevy Economics
Institute of Bard College
Moderator
Nathan C. Tankus
Research Director
Modern Money Network

Core Readings

How Fiscal ‘Responsibility’ Creates Unemployment

Harvey, John T.. “How Fiscal ‘Responsibility’ Creates Unemployment.” Forbes (2013).

Why The Government Should Not Be Run Like A Business

Harvey, John T.. “Why the Government Should Not Be Run Like a Business.” Forbes (2012).

How To Destroy The US Economy? Balance The Budget

Harvey, John T.. “How To Destroy the US Economy? Balance the Budget.” Forbes (2011).

Nurkse And The Role Of Finance In Development Economics

Kregel, Jan. Nurkse and the Role of Finance in Development Economics.” Ragnar Nurkse (1907-2007): Classical Development Economics and its Relevance for Today. 2007.

John T. Harvey

One Businessman’s View Of The So-Called Fiscal Cliff

Harvey, John T.. “One Businessman’s View of the So-Called Fiscal Cliff.” Forbes (2012).

The Real Reason Unemployment Isn’t Falling

Harvey, John T.. “The Real Reason Unemployment Isn’t Falling.” Forbes (2012).

Why Our Current National Debt Is Not The Largest In History

Harvey, John T.. “Why Our Current National Debt Is Not The Largest in History.” Forbes (2012).

The Great Recession: How We Got Here (And How To Get Out)

Harvey, John T.. “The Great Recession: How We Got Here (And How To Get Out).” Forbes (2011).

Why You Should Learn To Love The Deficit: Federal Budget Fallacies

Harvey, John T.. “Why You Should Learn to Love the Deficit: Federal Budget Fallacies.” Forbes (2011).

US Business Cycles From 1971-2010: A Post Keynesian Explanation

Harvey, John T. US Business Cycles from 1971-2010: A Post Keynesian Explanation., 2010.

Neoliberalism, Neoclassicism, And Economic Welfare

Harvey, John T. Neoliberalism, Neoclassicism, and Economic Welfare., 2009.

Post Keynesian Versus Neoclassical Explanations Of Exchange Rate Movements: A Short Look At The Long Run

Harvey, John T. Post Keynesian versus Neoclassical Explanations of Exchange Rate Movements: A Short Look at the Long Run., 2009.

Modeling Interest Rate Parity: A System Dynamics Approach

Harvey, John T. Modeling Interest Rate Parity: A System Dynamics Approach., 2005.

Capital Flows And Trade In Mexico: A Model Of Institutional Dynamics

Harvey, John T. Capital Flows and Trade in Mexico: A Model of Institutional Dynamics., 2004.

Jan Kregel

China In The World: Growth, Adjustment And Integration

Kregel, Jan China in the World: Growth, Adjustment and Integration., 2013.

An Alternative Perspective On Global Imbalances And International Reserve Currencies

Kregel, Jan An Alternative Perspective on Global Imbalances and International Reserve Currencies., 2010.

The Global Crisis And The Implications For Developing Countries And The BRICS

Kregel, Jan The Global Crisis and the Implications for Developing Countries and the BRICS. Public Policy Brief. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College, 2009.

Some Simple Observations On The Reform Of The International Monetary System

Kregel, Jan Some Simple Observations on the Reform of the International Monetary System. Policy Note. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College, 2009.

Managing The Impact Of Volatility In International Capital Markets In An Uncertain World

Kregel, Jan Managing the Impact of Volatility in International Capital Markets in an Uncertain World. Working Paper. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College, 2009.

The Discrete Charm Of The Washington Consensus

Kregel, Jan The Discrete Charm of the Washington Consensus. Working Paper. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College, 2008.

Financial Flows And International Imbalances: The Role Of Catching Up By Late-Industrializing Developing Countries

Kregel, Jan Financial Flows and International Imbalances: The Role of Catching Up By Late-Industrializing Developing Countries. Working Paper. Annandale-on-Hudson, NY: Levy Economics Institute of Bard College, 2008.

Nurkse And The Role Of Finance In Development Economics

Kregel, Jan Nurkse and the Role of Finance in Development Economics. Working Paper. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College, 2007.

Globalization, Capital Flows And International Regulation

Kregel, Jan Globalization, Capital Flows and International Regulation. Working Paper. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College, 1996.

Related Materials

The Jobless Trap

Krugman, Paul. “The Jobless Trap.” The New York Times (2013).

Low Wages And High Unemployment Are Paralyzing The Global Economy

Jay, Paul, and Heiner Flassbeck Low Wages and High Unemployment Are Paralyzing the Global Economy. The Real News Network, 2012.

It’s About “Time”: Why Time Deficits Matter For Poverty

Antonopoulos, Rania, Thomas Masterson, and Ajit Zacharias It’s About “Time”: Why Time Deficits Matter for Poverty. Public Policy Brief. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College, 2012.

Towards An Understanding Of Crisis Episodes In Latin America

Caldentey, Esteban Pérez, and Matías Vernengo Towards an Understanding of Crisis Episodes in Latin America. Working Paper. Annandale-on-Hudson, NY: Levy Economics Institute of Bard College, 2012.

The Rise And Fall Of Export-Led Growth

Palley, Thomas I. The Rise and Fall of Export-Led Growth. Working Paper. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College, 2011.

How To Sustain The Chinese Economic Miracle?

Bibow, Jörg How To Sustain the Chinese Economic Miracle?. Working Paper. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College, 2010.

Globalization And The Changing Trade Debate

Palley, Thomas I. Globalization and the Changing Trade Debate. Public Policy Brief. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College, 2007.

Measuring Capacity Utilization In OECD Countries: A Cointegration Method

Shaikh, Anwar M., and Jamee K. Moudud Measuring Capacity Utilization in OECD Countries: A Cointegration Method. Working Paper. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College, 2004.