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where exactly do you think the "financial brain rot" comes from?

Wind power
by Jerome a Paris (etg@eurotrib.com) on Thu Jun 2nd, 2011 at 08:21:51 AM EST
[ Parent ]
Originally, Austria.

The Anglo press and upper classes have been enthusiastic promoters and missionaries. But they were never the originators.

And don't forget that Keynes was British.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Jun 2nd, 2011 at 08:46:59 AM EST
[ Parent ]
Henry George: American
Veblen: American
Fisher: American
Keynes: British
Kalecki: Polish
Galbraith: American
Minsky: American
Steve Keen: Australian

Institutional Economics: American
Keynesian economics: British/American
Modern Monetary Theory: British/American

This may have something to do with my own bias as I read mostly in English. Chartalism was developed by a German: Knapp. But the intellectual heirs of the theory are mostly British or American. Monetary Circuit Theory which appears to be most closely associated with French and Italian economists. It bears a strong resemblance to the Tableaux Économiques of Quesnais (an 18th Century French Physiocrat). Silvio Gesell was a German anarchist. The Wörgl experiment took place in Austria. The JAK banking cooperative is Scandinavian.

Pretty much the only prominent economic school originating in Continental Europe is Austrian Economics (Hayek). That then became Neoliberalism and the Chicago School, which was back-exported to Europe where it was adopted with the zeal of the bad student that must memorize Jesuitic nonsense and then spouts it uncritically. I might observe that European central bankers and economic policy makers have been a lot more "orthodox" than Americans in this crisis, who have been more "pragmatic".

Trichet, a Frenchman, was initially more daring in his liquidity provision, but has since been reined in by the recalcitrant ECB council.

Goldbuggery is a sure sign of insanity. Martin Wolf describes the Eurozone's design as a modern version of the classical Gold standard.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Jun 2nd, 2011 at 09:14:23 AM EST
[ Parent ]
there's been more critics in English because they were closer to the problem...

Wind power
by Jerome a Paris (etg@eurotrib.com) on Thu Jun 2nd, 2011 at 09:32:18 AM EST
[ Parent ]
Oh for crying out loud.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Jun 2nd, 2011 at 09:38:46 AM EST
[ Parent ]
And maybe there are so few critics from Europe because they don't believe there's a problem at all.

You're trying to have it both ways - justifying the EU's design as an extension of German policy tradition, and then trying to blame the Anglo countries for those same policies.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Jun 2nd, 2011 at 09:42:46 AM EST
[ Parent ]
And which part of the "Anglo-Saxon" economic thought has been taken up by the Eurozone economic policy elites? Market fundamentalism or the macroeconomics of Veblen-Fisher-Keynes-Kalecki-Minsky? The menu was there and they did their picking.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Jun 2nd, 2011 at 09:43:20 AM EST
[ Parent ]
I've never said that our continental elites had not been largely infected in the past 2 decades.

But I'm still saying that the German "disease" (the one that led to the design of the euro) is somewhat different. I agree that the combination of the two is especially noxious.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Thu Jun 2nd, 2011 at 09:48:38 AM EST
[ Parent ]
The combination of the two leads to
  1. a, yes, flawed design of the Eurozone
  2. policy inability to devise solutions to the macroeconomic crisis
  3. political wilingness to IMF fellow EU member states

The whole thing would have been avoided had the ECB simply acted as a market-maker of last resort for Greek (and, generally, EUsovereign debt) bonds back in February 2010. That, however, was incompatible with the ideological blinders of the Eurozone policy apparatus. In particular, the canard that secondary market purchases of sovereign bonds are illegal was debunked immediately on this site, which didn't prevent Axel Weber and Jürgen Stark from lying about it as late as May 2010 and making the bond purchase program ineffective when it did get going.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Jun 2nd, 2011 at 10:00:20 AM EST
[ Parent ]
by Jerome a Paris (etg@eurotrib.com) on Thu Jun 2nd, 2011 at 10:11:07 AM EST
[ Parent ]
You do know that Stark and Weber were hardly the whole governing council and executivge board.

Stark is one of six; Weber and Strak arer two out of 23.

So this is hardly a german affair.

But somehow you only seem to dislike neo-liberalism if its speaks with a german accent.

by IM on Thu Jun 2nd, 2011 at 12:00:40 PM EST
[ Parent ]
Stark and Weber famously broke collegiality and spoke in public against ECB council decisions in May/June 2010.

They also spoke demonstrably factually wrong.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Jun 2nd, 2011 at 01:35:24 PM EST
[ Parent ]
that the ECB is hardly german-dominated.

And what do you mean, its not their neo-liberalism?

For all their inflation obsession, none of them is a gold bug.

by IM on Thu Jun 2nd, 2011 at 06:41:19 PM EST
[ Parent ]
I call them gold bugs because they manage the Euro as if it were on the Gold standard and not a fiat currency.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Jun 2nd, 2011 at 06:55:59 PM EST
[ Parent ]
Entertaining but nothing more. The obsession of german central bankers with inflation is odd, but a gold standard it isn't. Their intellectual background is neoliberal; Weber did go to Chicago, after all.
by IM on Thu Jun 2nd, 2011 at 07:19:34 PM EST
[ Parent ]
I happen to be in good company: The eurozone was supposed to be an updated version of the classical gold standard. says Martin Wolf.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Jun 2nd, 2011 at 07:25:26 PM EST
[ Parent ]
you base your unfounded claims on the unfounded claims of Martin Wolf. Who hardly was a architect of the eurozone. And who is claiming that - unsourced n. b. - now.
by IM on Thu Jun 2nd, 2011 at 07:52:06 PM EST
[ Parent ]
The Eurozone operates like on a gold standard in that the ECB refuses to create fiat money.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Jun 2nd, 2011 at 07:55:55 PM EST
[ Parent ]
Not enough money. That is not quite the same. A too strict monetary policy is exactly that, not a gold standard. Words have meaning, after all

And the "left" in the US has  more or less the same complaints about the Fed. A gold standard too?

by IM on Thu Jun 2nd, 2011 at 08:01:30 PM EST
[ Parent ]
Are you familiar with "bond purchase sterilization"?

A central bank which insists on borrowing from private banks with one hand in order to buy bonds from them with the other and frets every time it fails to borrow enough is operating as if it believed that the total available number of Euros is constant. Which makes sense under a gold standard but it bizarre nonsense in a fiat currency regime.

Therefore the ECB manages the currency as if it were on a gold standard and not a fiat currency.

The macroeconomic consequences of the gold standard, of currency pegs, of the European Exchange Rate Mechanism and of the Euro are the same: recurrent devaluation crises. The Euro may yet succeed in replicating the greatest feat of the 1920s gold standard: an actual depression.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Jun 2nd, 2011 at 08:12:12 PM EST
[ Parent ]
It's not their neo-liberalism. It's their gold-buggery.

You can find plenty of criticism of Trichet's neo-liberalism in my comments, even on this thread.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Jun 2nd, 2011 at 01:36:51 PM EST
[ Parent ]
Curious. But thinking about it: Does academic economics play any part in German public debate? The mass media is usually dominated by a couple of think tanks shilling for the usual suspects and sending out their talkshow economists, but I don't have the slightest idea what the state of the rest of German economics is.
by generic on Thu Jun 2nd, 2011 at 07:12:13 PM EST
[ Parent ]

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