Defizit mitoak (2008ko eskutitza)

1 Ikus https://twitter.com/wbmosler/status/858401497998118919.

2 Ingelesez: “October 16, 2008

Deficit myths are delaying obvious solutions to the current crisis

From Mr Warren Mosler.

Sir, Martin Wolf (“Asia’s revenge”, October 9) offers an interesting comparison of the current global financial crisis with previous emerging market difficulties. I would, however, like to suggest some clarifications.”

3 Ingelesez: “Mr Wolf correctly identifies a critical difference between the current crisis and the typical emerging market turmoil, namely operating in one’s own currency rather than borrowing in an external currency. As he states, this allows the US to “slash interest rates and increase fiscal deficits”. However, he then states: “Yet the huge fiscal boosts … are only temporary solutions.” “

4 Ingelesez: “From an operational perspective this is not so. Fiscal deficits in one’s currency, large enough to support domestic demand (and thereby the banking system), can be sustained indefinitely.”

5 Ingelesez: “Furthermore, and in light of Mr Wolf’s correct observation that the US financial issues involve only US dollars, the causation is from US domestic credit expansion to foreign savings (loans “create” deposits). Domestic debt is what funds foreign savings (net US dollar financial assets), and not vice versa. In fact, it was an annual $700bn plus of US credit expansion that funded net US imports and foreign saving of the same amount.”

6 Ingelesez: “Foreign savings were not “funding” the subprime expansion. Like all other loans, subprime loans created their own liabilities. “Loanable funds” theory applies only to convertible currencies and external currency finance. Therefore, the notion of a “savings glut” is inapplicable as a point of logic.”

7 Ingelesez: “Any nation that nets exports and accumulates US dollar financial assets presumably does so voluntarily. While what Mr Wolf calls the “financial balances” are true by identity, the art is in identifying causation. Mr Wolf urges that savings surpluses be “recycled” and rightly supports local currency “finance” in the “poor” countries to facilitate current account deficits. However, his statement that it is essential in any case for countries in a position to do so to expand domestic demand vigorously”, implies that there are countries not in a position to do so. Again, operationally, this is not the case. And, while his heart may be in the right place: “It is, above all, neither desirable nor sustainable for global macroeconomic balance to be achieved by recycling huge savings surpluses into the excess consumption of the world’s richest consumers“, the operational reality is that consumption by the world’s richest consumers is not only sustainable but perhaps inevitable as well.”

8 Ingelesez: “I do, however, enthusiastically applaud Mr Wolf for asserting that “exports are a real cost and imports a real benefit” as the basis of his analysis. The rest of the media continuously gets that part wrong. I also applaud Mr Wolf for recognising the role of fiscal policy, and...”

9 Ingelesez: “… I would like to further add that there is no financial crisis however large that cannot be overcome by an appropriately large fiscal response, which can be sustained as long as politically desired to support output and employment. (The lone exception is the eurozone, because of its current institutional structure.)”

10 Ingelesez: “Unfortunately, policymakers are beset by “deficit myths” that are delaying obvious solutions to the current difficulties, such as an immediate “payroll tax holiday” in the US.”