Tuesday, January 29, 2013

Iceland: Let banks go bankrupt

A misallocation of human capital: @2m4s.

See also The illusion of skill.


Hauser Quaid said...

Steve Hsu, I would highly recommend that you study some MMT - Modern Monetary Theory. As a physicist I think you'll appreciate the quality of that theory, the only economic model that corresponds to reality and you'll also see how current stupidity (comparing USA debt with Greece for example) destroys economic perspectives by making artificial constraints on a economy. The current economic models are useless and dead wrong, this is a first attempt to make a coherent, scientific model. You would be shocked that mainstream macroeconomists have no idea how monetary system really works, how money is created, or what is the connection between deficit spending and taxes (most of them still think that government can spend only what they've collected through taxes, although US government is the issuer of it's own currency!). Even the simple identities like government deficits = private sector surplus is a mystery to most, I find that incredible.

Here are couple of key names:

prof. Bill Mitchell, Warren Mosler, prof. L. Randall Wray and prof. Stephanie Kelton

LondonYoung said...

Tiny note on Iceland and bank bailouts - During the bubble, Iceland developed three huge internet-type banks whose depositors were mainly in the UK and continental Europe. The number of non-Icelandic depositors was many multiples of the entire population of Iceland. You can kinda see why Iceland might not have been as keen to bail banks and make depositors whole! A lot of the bubble money went into Iceland and never came back out - which was kinda helpful for them when the volatility died out. Recently Iceland won a European court case to keep that money.
So, I am not objecting to the message, but I doubt the messenger in this case is sincere ...

Blog Archive