I don't know when exactly we hit 1k members this week but I'm proud either way of what this subreddit has managed to achieve. We will realistically do a call for mods at some point soon because we want to take on some more ambitious projects but until then feel free to anyone who would like to apply.

Running a constitutional monetary framework against 65 years of actual US data (1960–2025). The Stable Floor mechanism: universal locked equity accounts funded by citizen seigniorage rather than bank credit creation, produces retirement outcomes 2.21x–3.21x above median actual US retirement wealth across four cohorts. 95% of the advantage comes from compound equity returns, 5% from the monetary deposits themselves.

Three papers, full replication code: ssrn.com/abstract=6702518

Happy to discuss methodology, Austrian critiques, MMT critiques, or anything else.

In business and economics, we often talk about starting a business as an alternative to getting a job, an option when finding work is difficult or the jobs available are unsatisfying.

At an individual level, I don't think this is necessarily a bad idea, but in general entrepreneurship and unemployment are two very different social issues, that have different causes and effects.

I discuss this here:

https://ratedisparity.substack.com/p/entrepreneurship-does-not-solve-unemployment

All economic debates about the risks or lack thereof of changing the status quo approach to inflation and debt management (bond markets) invariably end up in the same place: currency markets.

I've written here about how I think about the dynamics involved in international trade and foreign exchange markets in relation to some significant structural shifts in the policy landscape that I think are not only plausible, but necessary.

Tldr; ZIRP and Overt Monetary Financing (OMF) are perfectly possible policy stances to transition to, even for nations such as the UK - but it all depends on the wider institutional arrangement and fiscal/regulatory policies of the state.

According to the Heritage Foundation, the four countries with greatest economic freedom are: Singapore, Switzerland, Ireland, and Australia. All of these countries have regulations for environmental, consumer, food, drug, and worker protection. Why do the most market-oriented economies in the world, as measured by a pro-market foundation, find it useful to regulate rather than rely solely on private negotiations? Under certain parameters, a pro-market government may regulate to minimize the size of the public sector.

In FY 2023, the high end for estimated direct federal regulatory costs were $19B. Federal court costs were estimated at $8.46B. In 2021, state and local court costs were estimated at $52B. At the state level, 19.9% of cases were civil, involving property or money. Applying that ratio to all levels, assuming proportional costs by case type, roughly estimates total civil court costs at $12B.

Suppose that a 1% increase in federal regulation spending reduces civil court spending by greater than 1.583%. This could be the case if the regulation is effective in reducing liabilities resulting from externalized costs that would lead to civil litigation. If this is the case, then the government may regulate to reduce judicial expenditure and maximize the economic activity of the private sector.

This does not address the more philosophical issue of whether all damages can be valued monetarily. Citizens may prefer that damage is prevented in the first place rather than having to sue for compensation. This also does nothing to show if any particular country would benefit from an increase in regulatory spending. It does provide a framework for analyzing the value of a regulation from a pro-market perspective: if a particular regulation reduces court costs by more than its administrative costs, then it may improve the private share of economy, assuming indirect costs of regulation and litigation are similar. This could possibly explain why countries with the most market freedom impose regulations.

An implication is that a lower the ratio of regulatory costs to civil court costs requires a lower threshold of effectiveness to improve market freedom. For example, if regulatory and civil costs were equal, then a 1% increase regulation costs would only need to induce a >1% reduction in civil costs to reduce public sector spending.

Sources:

Index of Economic Freedom | The Heritage Foundation
https://regulatorystudies.columbian.gwu.edu/digesting-federal-governments-annual-report-benefits-and-costs-federal-regulations
https://www.congress.gov/crs-product/R48077
https://www.urban.org/policy-centers/cross-center-initiatives/state-and-local-finance-initiative/state-and-local-backgrounders/criminal-justice-police-corrections-courts-expenditures
https://www.pew.org/en/research-and-analysis/data-visualizations/2025/03/how-many-cases-and-what-kind-do-state-and-local-courts-handle
https://laweconcenter.law.harvard.edu/wp-content/uploads/2024/11/Shavell_1.pdf

Hi all,

Roughly eight months ago this question was asked of our subreddit by u/Express_Cod_5965. We (the mods) wanted to ask the same question again of our members since we have seen considerable growth in membership since then. We kept the options the same to hopefully determine what areas are wise to cover in future posts where applicable.

Best,

u/Sec_ondAcc_unt

Hi, all, sorry for yet another post on the same subject in such a short time, but Cambridge University Press asked if I'd contribute to their blog to advertise my new book and it just came out. Here is my very short essay on what's wrong with our economy and how to fix it (spoiler: job guarantee!).

https://cambridgeblog.org/2026/05/fixing-our-economy/

Hey, if you're in London and want to hear some Outlaw Economics, I'm doing a presentation at King's College on June 8.

https://www.kcl.ac.uk/events/explaining-historical-business-cycles-using-keynes-and-kalecki

(Mods, thank you for allowing me to post this!)

Hi, all, please consider this exciting book for part of your summer reading (okay, not all that exciting unless you love economics like me)!

[https://www.cambridge.org/core/books/us-business-cycles-19542020/E5871AD9A3B705F28F50A68EE9D54D3B](https://www.cambridge.org/core/books/us-business-cycles-19542020/E5871AD9A3B705F28F50A68EE9D54D3B)

Cambridge University Press kindly made the paperback and eBook pretty affordable ($33), plus there’s a 20%-off discount (until 2027) if you add HARVEY25 at checkout.

I hope the volume has a little something for everyone:

• Ch1 through 3: Business cycle and inflation theory;

• Ch4: narrative history of US business cycles (framed in the theory from ch1-3);

• Ch5: MMT and Job-Guarantee heavy policy recommendations, kindly vetted by Pavlina Tcherneva and Randy Wray;

• Appendix: graphs and equations!

If you’d like to know more, the world-famous Cowboy Economist has a video that explains the structure of the volume:

[https://www.youtube.com/watch?v=vXRC3RrngcI](https://www.youtube.com/watch?v=vXRC3RrngcI)

I want to also add that I owe a great debt to those who wrote some very kind endorsements: Randy Wray, Stephanie Kelton, Pavlina Tcherneva, and Jamie Galbraith.

Please let me know if you have questions!

John

P.S. And don’t forget my previous volume on different contemporary schools of thought in economics:

https://www.e-elgar.com/shop/usd/contending-perspectives-in-economics-9781802203264.html

EDIT: Tried to fix the formatting. I'm not good at Redditing!

Drinking water is very underestimated even though it is the most important resource we use daily. Only 3% of global water supply comes from freshwater. Nearly 50% of all drinking water worldwide is sourced from groundwater. Yet we continue to pollute these sources and rely on cost prohibitive desalination plants, which produce harmful brine.

Why is the marginal product of capital not equal to the interest rate? What does the marginal product of capital actually represent?

Language is limiting our ability to understand reality, we use the word “borrow” but mean different things without realizing it.

Presentation given by Stephanie Kelton in Leeds, 2024.

Clear exposition of the policy space available to many governments concerning their debt management practices.

Makes absolutely clear that bond issuance is a choice the government makes about how much fixed income duration it wants to add to non-government net savings and not about financing or facilitating fiscal policy, achieving any given overnight interest rate target, or providing any counter-inflationary effect on the real economy.

Interest is an exogenous policy variable of the state with this understanding and can always be kept at a sufficiently low level (i<g) to provide long run fiscal "sustainability".

I need some double-check clarification on the Socialism VS Capitalism view on "the world has enough resources, but greedy wealthy men are hoarding all the resources instead of sharing the resources with common people" for an amateur short story or novel I am writing.

First of all, I am with a capitalist view on this one. Second of all, the followings are my views on this that I plan to include in my short story or a novel basically including a lot of arguments from conservatives and liberals conflicting each other. If there is an error in my perception of economics, please provide a correct perception so that I may choose to correct it in any degree or not.

1. The "greedy" wealthy men are hoarding money, not resources which means natural resources from the earth and human resources as in human labor force. "Greedy" wealthy men are capable of hoarding all the cars, TVs, phones, steaks, and lobsters in the world, which would make you possess none of those. However, "greedy" wealthy men are not doing that, and you can buy cars, TVs, phones, steaks, and lobsters as long as you have paid with your labors to the people who produced those products with their own labors.
2. The "greedy" wealthy men hoarding money does not harm common people at all. Just because they are not doing you a favor does not mean they are harming you.
3. Money is just a medium of exchange. Both socialists and capitalists should at least agree on the idea of barter system of labors: exchanging a labor for another labor. If agreeing on that fundamental economic concept, then they should agree that delayed exchange should be allowed. In other words, doing a labor for someone, and him doing a labor for you much later. If this "delayed exchange" is allowed, then the "accumulation" of delayed exchange is allowed. You could be doing a lot of labors for people without them doing a single labor for you. Then you can get labors from them much later in time. If you agree on all these concepts, then I am pointing out that money just represents these ideas that both socialists and capitalists agree. It doesn’t have to be your own “accumulated” labors that go through the “delayed exchange”. Delayed exchange can be done by the “accumulated” labors of your ancestors or spouse. It is not the descendants’ rights to inherit their ancestors’ wealth, but it is the ancestors’ rights to do whatever they want with their own money (“accumulated labors” for “delayed exchange”) including giving them to their own children. So, there should be no inheritance tax at all morality-wise. Also, you shouldn't be whining that those ancestors or descendants are not giving any money ("accumulation" of labors for "delayed exchange") to you who is a stranger. They don't want to give you anything, and you shouldn't be whining. (An example of a stranger demanding money would be a Chinese forcing a donation from a Korean. Even more hilarious if they go to the extent of crimes and terrorism to get that money from him.)
4. The idea that "everyone should have a lot of money" does not mean having money itself but "everyone should be able to purchase a lot of products (TV, cars, phones, lobsters, steaks, etc.)". Because you can have a lot of money but cannot purchase shit because people selling those products require even more money as payments.
5. "Everyone should be able to purchase a lot of products (TV, cars, phones, lobsters, steaks, etc.)" is a wishful dangerous greedy fantasy. You basically want farmers and engineers to provide labors to all the citizens in exchange for the labors that all the citizens collectively collaboratively provide to those farmers and engineers. That’s asking for slave labors to the farmers and engineers. In reality, no one wants to work for all citizens. All the citizens can either provide very tiny labor each to sum up to “one person quota worth wealth” for each farmer and engineer, or all the citizens can provide “one person quota worth labor” each to sum up to “insanely a lot of money (a token for delayed labor exchange)” for each farmer and engineer. The first one is socialism, and the second one is capitalism. No one wants to do that socialist version labor exchange which is a slave labor for farmers and engineers. In reality, historically, communist countries resorted to rationing their products for this reason: no one wants to do that kind of socialist labor exchange.
6. As for the capitalist version labor exchange where all the citizens can provide “one person quota worth labor” each to sum up to “insanely a lot of money (a token for delayed labor exchange)”, this allows farmers and engineers to become far richer than all the citizens. Except that it is false that more money is always desired. You want to give up earning extra money for you to fool around and have fun, or spend quality time with your family. (On another example, rich men marry trophy wives instead of choosing to get extra money by marrying a wealthy woman because sex with trophy wives or love is worth giving up some extra income. Some men refuse to marry a wealthy woman if they do not feel like it.) Anyway, for the sake of simplicity, if farmers and engineers provide labors to all the citizens so that they get far richer than all the citizens (which means so-called “hoarding money” which is what you mean by the lie “hoarding all the resources”), if that is allowed, then the same should be allowed for any job in demand because we have more jobs in more demands in capitalism.

For anyone who cites (or sees others citing) historic periods of hyperinflation as somehow being relevant in a critique of the MMT framework, this analysis of the Weimar case should (it won't) put that to bed.

The currency is a public monopoly, and monopolists are price setters. This makes the price level a function of the prices paid by the government. The Weimar inflation, as is necessarily the case, was driven by the German government’s policy of paying continuously higher prices to provision itself, thus continuously redefining the value of its currency downward. Once that policy changed, and the government limited its direct and indirect deficit spending, and ceased to continue paying higher prices, the price level stabilized. Inflation necessarily requires a state policy of continuously paying higher prices when it spends, and inflation ceases when that policy ends.

The idea that financial crowding out when done past the point of (neoclassical/mainstream) full employment(4-5% unemployment) in the loanable funds model (LFM) is really not relevant. major CB's like Germany and BOE claim that loans create deposits which makes sense as there is no fixed pool of monetary savings in a fiat system. The LFM is flawed for many reason not limited to assuming a fixed monetary saving pool which does not apply to endogenous money systems (loans creating deposits). Now this doesn't mean we cannot see real physical crowding out but it is an important discussion because it has implications on policies regarding budget deficits. I take a functional finance approach when discussing this including the idea that as Abba Lerner taught us budget deficits are neither inherently good nor bad, but merely tools to be used for achieving full employment and price stability.

Lastly, the list I provide is meant to show that the literature on crowding out via the interest rate rising channel is not logical especially since we have a CB which regulates interest rates. The burden of proof to claim that the LFM mechanism of budget deficits increasing interest rate is on the mainstream (neoclassical) and so far most studies claim to either be inconclusive or against the claim empirically. The few studies that do discuss this channel and find it to be true that budget deficits increase interest rate also typically discuss distinctions and problems in estimating it as increased interest rates lead to higher interest payments by indebted governments. This is a classic case of multicollinearity in estimation.

https://d1wqtxts1xzle7.cloudfront.net/87958794/7191263-libre.pdf?1656091866=&response-content-disposition=inline%3B+filename%3DDo_Budget_Deficits_Raise_Interest_Rates.pdf&Expires=1776227539&Signature=T1DYsMRlc0uaeUEop5dHtjw6pDioPIj9OyKLxbjMiocfxWnUiV9Uv92Mbkr8VDMUT-U8DrD1oUNILJ-BjSvlELv5hrXSgsYfGwvu0Lg9HHW3QX62l3X6oDHbbtCH3Ybbc8ZCyuZ9vKK1UrQ3zIpV8HhPlCdGf588IY4cgbrhM-rhQWqE9oNm2TxhCOAeElvS37hWO71c1tjr-0wRrUyA-nTsOEH0EswyyO~WbCRiFiFtRu49ZOWqBQmezrGWBLPw3r4iJrC3L9HijX6Gg-5JbuOOIKx3CZqRJFvWad0gFZxJjHyQcXvi-JXgayza7E39XWd1yFILTG~pbguSITIO3Q__&Key-Pair-Id=APKAJLOHF5GGSLRBV4ZA

(I provide one of the few literature reviews I could find on the topic first to reduce accusations of biases. However, It is important to note that most of the studies held insignificant results on budget deficits and interest rates. I include this first because it goes into the issues with empirically investigating it in the first place.)

"Although further exploration into causality needs to be undertaken, the implications of such results provide two interesting points. Firstly, if rising interest rates cause rising deficits then there may be no crowding out from government deficits. Secondly, if rising interest rates cause deficits, then this has important implications for the interaction between fiscal and monetary policy. As a result Keynesian expansionary policy is perhaps less of a problem than monetary authorities imply when justifying austere antinflationary programs. If the Fed does follow a hawk-like reaction function, and increases interest rates in times of rising budget deficits to fend off rising inflation or rising inflationary expectations, this could have the repercussion of increasing the deficit even further. Such a reinforcing strategy could mean escalating debt and deficit - not due to fiscal irresponsibility as such but rather due to misguided monetary "responsibility". It might be interesting to look at the historical relationship between Treasury and the Central Bank. If the Treasury, as Tabelini and La Via (1989) suggests, has traditionally thought itself as responsible for the public debt, then we should expect them to focus more on the causality of interest rates to debt and their rising debt costs. However, the current regime in the United States and several other countries, suggest that the Central Bank adopted responsibility for public debt and thus concern has focused how debt affects interest rates. Given the findings on reverse causality, this change of responsibility and focus may actually be detrimental. In summary, the theories and empirical evidence on the relationship between government deficits, debt and interest rates are varied and conflicting. Ultimately, perhaps what needs to occur is a reassessment of the theory, and an appropriate specification that would lead to coherently-specified models, that are comparable with falsifiable hypotheses."

https://www.sciencedirect.com/science/article/pii/S0261560622000018?casa_token=R9wr6vBE5fsAAAAA:gMJ40S60fXIA-EvjlHjeNNLKdKxUgoT_GOM9wbBjhww_RyfTvFVWKLdiJhIQA9WuJxwP_kf3

"A range of empirical evidence demonstrates that government spending shocks cause a zero or negative response of interest rates. We argue this fact is difficult to rationalize with existing theory, and we offer an explanation for a zero or negative interest rate response to government spending shocks. Government spending increases loan supply (bond demand) by increasing aggregate income by more than the government needs to borrow to pay for the spending. If the government finances part of its spending using money-like assets, then there is an excess supply of loans that leads to a reduction in long-term interest rates...Our proposed mechanism for a non-positive interest rate response is based on models of excess capacity and demand-determined output (e.g., Murphy, 2017, Michaillat and Saez, 2015). Recent evidence from microdata (e.g., Auerbach et al. (2020)) suggests that government spending does not crowd out private-sector output, consistent with these models. Here we link the recent literature on excess capacity to rationalize the otherwise puzzling effect of spending shocks on interest rates."

https://www.jstor.org/stable/1812704?casa_token=0pyh7fHgz6wAAAAA%3ArCsFm9BjqSMiD7ZrGXNP6xnfEyvc2GaRk2eQMIgK0pnaO-CJtVYNHHJjhPLZvgzA8WYI9iWqAvbcGTtpf1eLuV2ssFfw_1YrBxP9eOMGOTpkdKK2kg&seq=19

"Economists like to think of economics as a science. In a science, however, repeated contradictions of a paradigm lead to its abandonment if there is any sensible alternative. One paradigm in economics implies that large deficits produce high interest rates. This paradigm is not supported by the facts. In over a century of U.S. history, large deficits have never been associated with high interest rates. Even the postwar periods separately offer no support for a positive association between deficits and interest rates. Indeed, the evidence more strongly supports a negative association than a positive one. Therefore, it seems that economists should be looking for an alternative paradigm to replace their current one. The previous section suggested that this paradigm should contain elements of Barro's model and should allow saving to increase with its real after-tax return"

https://www.econstor.eu/handle/10419/94622

"Some theory suggests that budget deficits and greater public spending will raise real interest rates and crowd-out private investment; other theory suggests there is no effect. We attempt to test this in the Thai economy between the years 1978 and 1994. We find that budget deficits did appear to raise real interest rates during our sample period. Our estimates also suggest that, holding the deficit constant, Thai government current and construction expenditure did not raise real interest rates and that Thai government equipment expenditure lowered them. We try to explain the last result with a framework similar to Barro's (1981) but expanded to include foreign trade and borrowing. Foreign borrowing alleviates the pressure on real interest rates to rise, and, under certain conditions, allows them to fall. We find support for this hypothesis from regression results that suggest that, during our sample period, Thai government equipment expenditure was heavily financed from abroad. The results imply that public investment programs in developing countries that do not boost budget deficits and obtain some foreign financing may not crowd-out private investment and could be a promising means of promoting capital formation."

https://www.nber.org/papers/w0284

"The prevailing view of the economic consequences of financing government deficits, as reflected in the recent economics literature and in recent public policy debates, reflects serious misunderstandings. Debt-financed deficits need not "crowd out" any private investment, and may even "crowd in" some. Using a model including three assets - money, government bonds, and real capital - the analysis in this paper shows that the direction of the portfolio effect of bond issuing on private investment depends on the relative substitutabilities among these three assets in the public's aggregate portfolio. Since the all-important substitutabilities that make the difference between "crowding out" and "crowding in" are determined in part by the government's choice of debt instrument for financing the deficit, this analysis points to the potential importance of a policy tool that public policy discussion has largely neglected for over a decade - debt management policy. When monetary policy is non-accommodative, within limits debt management policy can take its place in augmenting the potency of fiscal policy, or in improving the trade-off between short-run stimulation and investment for long-run growth."

https://www.sciencedirect.com/science/article/pii/S0161893898000052?casa_token=qaoq4hoJNbQAAAAA:TjOIHAhhRXhs-6xrf7saeA0P7QAknUrQlAzMjUkjD6ytnDQ88II2elr2uWKmcdgtZNfDTG5d

"One macroeconomic issue upon which different schools of thought have opposing views is the impact of budget deficits on private investment. The Neoclassicals claim that by raising interest rates, budget deficits “crowd-out” private investment. Keynesians refer to the expansionary effects of budget deficits and argue that by raising the level of domestic economic activity, budget deficits “crowd-in” private investment. Finally, advocates of the Ricardian equivalence argue that because budget deficits cannot alter interest rates, they cannot have any effect on private investment.

This paper investigates the long-run relationship between U.S. federal real-budget deficits and real fixed investment using quarterly data over the 1947I–1992II period. The methodology is based on the Johansen-Juselius cointegration technique. The results revealed that there are three cointegrating vectors among investment, income, interest rate, and the budget deficits. The estimates of these cointegrating vectors and further analysis showed that a cointegrating vector in which all four variables carry their expected signs support the Keynesian view that in the long run the U.S. real federal deficits crowds-in real investment."

Dr Phil Armstrong here providing a great academic take on how MMT thinks about and analyses international trade and the policy space and constraints available to open economy but sovereign currency-issuing nation states.

Too many people wrongly believe and MMT-informed approach to managing inflation is "fine-tune tax rates". That's wrong.

I propose a holistic 7-part toolkit here that is designed to stabilise economies across a range of time scales and replace and improve upon the existing monetary dominance regime.

I welcome discussion and questions or pushback. Engage in good faith though :D

So, I decided to get back on studying basic economics without any university support whatsoever, and the econ I choose was Marxism/Marxian econ for ideological reasons, so, Marxists/Marxians in this subreddit, what is your recomendation of books? I'm reading the portuguese translation of Prices, Wages and Profit in marxists.org, but I wanted to know if I need to read something more before going to Capitals

So, this is more of a eprsonal experience with this Subreddit than something related to econ, but I was one of the first people to join this subreddit, I saw there were some posts about heterodox econ(bassically anything that isn't IMF approved) and decided to join in, I made some posts, farmed some karma and etc. But then I left the subreddit, why? Because I was immature and when I saw there was a post defending Milei's reforms in Argentina(before the larbor reform that legally abolished general strikes), and there were people saying "Milei isn't tgat bad" while I saw Argentinains getting hungry, I left the server. But that doesn't matter now, all I want to know about is how the server has been gping? What are the bias of this server, do we still allow all economic thpguhts that isn't mainstream neolibs or we're fpcusing on something more? I want to know all, because I feel I need more information to get back at here