By starting with a very simple model of money creation it is possible to get insight to some basic questions of national economy, like reasons and cures of depressions. At the same time it provides an opportinity to straighten sources of confusion like the national savings rate. MoneyCreation. On March 7. 2015
There’s always much controversy on how to best help and stimulate an economy in deep recession. Let’s investigate two alternatives generally considered as most extreme and one more conventional case. It turns out that even such measures may sometimes be more sensible than the actual policies followed in Europe in recent years. Economic Stimulus is Good for You (This text might be called a Keynesian oath.)
The question of endogenous money has been controversial for long time. This treatment EndogenousMoney shows how to create that beast using basic double entry T-accounts.
The picture shows GDP change in some selected countries from 1970 to 2012. GdpGraph The scale is logarithmic so that percentage change is easily visible. The glitch at 2004 comes technically from dollar values in 1990 and 2005.
The picture shows recovery from the great 2007 depression in relative terms in some selected countries. GDP_recovery The economy’s peak GDP has been scaled to be 1. It’s not fair to rate countries based only on how deep they are at the end. That depends too much on how high peak they had. The interesting thing is various turns for the better or worse on the way.
A bit more elaborate thoughts on several macro economic subjects. Basics of money and employment 26 printed pages.