Home > Uncategorized > Summary of Stiglitz on monetary policy

Summary of Stiglitz on monetary policy

from Asad Zaman

After the Global Financial Crisis, there has been a lot of re-thinking about Monetary Policy, as one might expect. In fact, in light of the magnitude of the failure, re-thinking efforts have been much less than proportional. There are many, many, different strands of thought, and personally, I do not have clarity on what needs to be done. Furthermore, the situation is rapidly changing, so that a solution for today would not be a solution for tomorrow.  The fundamental problem is private sector creation of money, and nobody wants to discuss this elephant-in-the-room. But there may be a good reason for this unwillingness — with the financial sector is firmly in control of the US Government, and the Euro area, it does not seem politically feasible to think about radical alternatives. The goal of this post is just to summarize a paper of Stiglitz expressing his post-GFC thoughts on Monetary Policy — without much in the way of comments and discussion. The full paper itself is linked at the bottom of the post.

Summary of Joseph Stiglitz paper on monetary policy:  read more

  1. lobdillj
    September 9, 2018 at 10:34 pm

    In the US all rentier income is included in GNP. Is rentier income a product? No. What product does Goldman Sachs produce? Products are goods and services that are bought and sold in the market place.The 2008 crash was the result of speculative lending in a phony real estate boom generated by investment banks, real estate companies, liars loans, crooked underwriting, etc. Now the rentiers are amassing capital gains on loans to corporations to buy back their stock to inflate share prices.
    The QE totaled about $26T when all was said and done, all of it injected into the Wall Street casinos by the US Treasury and the Fed. None of this stimulated production in the real economy. It all went to the rentiers, who used it for more crooked speculation.
    So GNP is no longer a measure of the health of the real economy. And its increase is due to rentier activities, not production/consumption.

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