Archive for January 22nd, 2020

What Happens When Economics Doesn’t Reflect the Real World?

January 22, 2020

Prof Anwar Shaikh in this INET video talks about the shortcomings of neoclassical economics. More importantly, he discusses the alternative frameworks as discussed in his book Capitalism: Competition, Conflict, Crises.

Central bank group to assess potential cases for central bank digital currencies

January 22, 2020

I wrote this piece on how central banks after ignoring and threatening digital currencies have warmed upto the idea of central bank digital currencies. It reminds me of this famous hindi movie song.

Yesterday 6 central banks signed an agreement to study digital currencies:

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, Sveriges Riksbank and the Swiss National Bank, together with the Bank for International Settlements (BIS), have created a group to share experience as they assess the potential cases for central bank digital currency (CBDC) in their home jurisdictions.

The group will assess CBDC use cases; economic, functional and technical design choices, including cross border interoperability; and the sharing of knowledge on emerging technologies. It will closely coordinate with the relevant institutions and forums – in particular, the Financial Stability Board and the Committee on Payments and Market Infrastructures (CPMI).

The group will be co-chaired by Benoît Cœuré, Head of the BIS Innovation Hub, and Jon Cunliffe, Deputy Governor of the Bank of England and chair of the CPMI. It will include senior representatives of the participating institutions.

Sveriges Riksbank will be represented by First Deputy Governor Cecilia Skingsley.


Seigniorage through periodic recoinage: When the validity of money was restricted in time

January 22, 2020

Roger Svensson and Andreas Westermark have this superb piece on monetary history. Call it demonetisation of coins:

Inclusive American Economic History: Containing Slaves, Freedmen, Jim Crow Laws, and the Great Migration

January 22, 2020

Fascinating paper by Trevon Logan and Peter Temin:

In this paper, we combine white and black economic histories of the United States from its formation to the present.

The Constitutional compromises between slave and free states set the stage for rapid economic growth as cotton from Southern slave states provided the raw material for the emerging cotton industry in the North. The cooperation between states also set up tensions that intensified over time as the addition of new states reiterated the Constitutional compromise over and over again with increasing acrimony.

This tension led to the Civil War that brought with it the 13th Amendment freeing slaves. But Reconstruction after the war proved to be only a temporary reprieve for African Americans. Despite all the carnage and death in the Civil War, gains for African Americans proved highly elusive. President Grant did what he could as Congress increasingly lost interest in the progress of democracy in the post-war South. Isolated opposition to black office-holders showed itself in violence and murder and formed a pattern of opposition to the Federal troops enforcing Reconstruction. The 1876 election was very close, and the Republican candidate was allowed to take the office by promising to remove Federal troops from the South, ending Reconstruction.

The fortunes of the South and West then diverged as the cotton industry was replaced as a center of economic growth by growing manufacturing, mining and wheat exports. Racial violence that had grown during Reconstruction increased after its end. The Supreme Court invalidated the 14th Amendment as it applied to local violence in the 1880s, and blacks were trapped in a stagnant agricultural setting without education or votes to alleviate their lot. Their conditions deteriorated as the South stagnated and Jim Crow Laws proliferated, while the North leapt ahead with the settlement of the West.

White Americans became the industrial leaders and dominant country through world wars and a world-wide depression in the first half of the 20th century. The peace treaty after the First World War led to the Second World War as the Constitutional compromise led to the Civil War. Black American families peacefully moved North and West through this aggregate turbulence. Whites obscured the racial divergence by using a new technology to project their hostility and violence onto blacks in The Birth of a Nation.


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