one-month money

The Debate Stopper

I recently debated with an Austrian friend about the causes of macroeconomic cycles. He argued that all macroeconomic distortions result from our unwillingness to let prices (including wages) adjust freely. According to this view, the Great Depression occurred simply because deflation was not allowed to work its way through the system.

Of course, I completely disagree with his position, but that’s not why I’m writing this blog. I’m writing because what stood out most from our conversation was the conversation itself — how almost ninety years after the fact we’re still fiercely debating what happened or didn’t happen or should’ve happened in the 1930s.

Money Unbound

Last night I realised that focussing this blog solely on secular stagnation was a mistake. Reading through a discussion by pre-eminent economists on whether secular stagnation is the cause of the slow recovery, or of Greek’s problems, it suddenly hit me: it doesn’t really matter.

That’s right: it doesn’t matter what causes deficient demand. What matters is that demand can be deficient.

The problem is that the secular stagnation debate introduces a false premise: that without secular stagnation our monetary system is civilised.

One-Month Money — Frequently Asked Questions

What is One-Month Money about?

One-Month Money (buy from Amazon UK, Amazon US, Harriman House) is divided into two parts. Part One — ‘The Case for Change’ — explains why our current economy is inherently unstable, and why our tools of fiscal and monetary policy can only ever hope to moderate, but never eliminate, this instability. This section ends with an explication of secular stagnation in developed economies. Driven by a structural decline in workforce growth, secular stagnation will make our current remedies, already inadequate, even more so.