which reminds me of Mosler’s earlier comment above on ISLM – i.e. that it applies to a fixed exchange rate model)
Fixed exchange rate means what? Central bank will buy and sell to maintain rate of exchange.
Sterilize important concept. Central bank would "sterilize" gold inflows to maintain value of money relative to gold.
Bond vigilantes. Chinese selling Treasury bonds which they bought to maintain exchange rates. Krugman and Baker regularly point out if they sell, makes currency cheaper, exports more competitive. Increases jobs and income and demand. Greece couldn't adjust b/c of euro.
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