Commentary When a writer starts a new column, his first battle is to justify why people should read it. Paul Krugman has just made that task much easier for me, by publishing a column on money that, to use his favorite phrase, is “all wrong.” The crucial point at which Krugman gets it “all wrong” —yes, a Nobel Prize winner in Economics is wrong about money—is his assumption that, when they lend, banks lend out reserves: Since the 2008 financial crisis, however, banks have been voluntarily holding vast excess reserves, apparently because they don’t see enough good lending opportunities. If you’ve studied economics, you might think there’s nothing wrong with that statement, because that’s what the textbooks tell you: banks take in deposits from some customers, and then lend out the reserves these deposits create to other customers. But in 2014, the Bank of England said that the textbooks were …
-
Recent Posts
-
Archives
- May 2025
- April 2025
- July 2023
- June 2023
- May 2023
- April 2023
- March 2023
- February 2023
- January 2023
- December 2022
- November 2022
- October 2022
- September 2022
- August 2022
- July 2022
- June 2022
- May 2022
- April 2022
- March 2022
- February 2022
- January 2022
- December 2021
- November 2021
- October 2021
- September 2021
- August 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
- February 2021
- January 2021
- December 2020
- September 2013
- July 2013
- March 2013
- January 2013
- December 2012
- November 2012
- December 1
-
Meta