Original Sinn

Willem Buiter provides his critique of the Sinn argument in this note.

7 replies on “Original Sinn”

“the Interdistrict Settlement Account System of the Federal Reserve System in the US does not imply a substantially reduced scope for persistent imbalances in credit flows within the US currency area. While it is true that interdistrict imbalances need to be settled once a year with gold-backed securities or Treasury bills, individual district banks can purchase these securities in the open market and finance these purchases with base money creation. Therefore the US system does not effectively constrain interdistrict credit flows.”

How cool is that! Just magic it away…

We might need to ease off. It may come to the point that Herr Dr. Sinn is more sinned against than sinning. The Economist has an interesting take on the Good Doctor’s contentions and on the ECB’s stance:

The ECB is being forced to do things it shouldn’t be required to do – or at least not to the extent it is or for so long.

I don’t know where this belongs threadwise but this is a remarkable article from Samuel Brittan in the FT


“One can go back further. Rudolf Hilferding, the early 20th century German-speaking neo-Marxist, annoyed many of his soulmates by denying that capitalism was bound to collapse. But – in his 1910 book, Finanzkapital – he was one of the first to observe the changing nature of the system. He asserted that financial forces were leading to the cartelisation of industry. He did not live to see them threatening to bring down governments.
I have no 10-point programme for making “finance less proud”, as
Winston Churchill once put it. I do not believe it will be done just by calling for more macro prudential bank regulation; nor by the so-called Tobin tax on all financial activity.
It is more a matter of recognising, at every point of policy decision, that the free movement of artificially created electronic money across frontiers is not on a par with the free movement of goods and services, let alone more basic human freedoms, and recognising this not only for developing countries but for the so-called advanced ones as well.”

The detached perspective of Buiter fascinates me.
The man has a strange coldness in his reasoning – maybe he thinks we are all just Pavlov dogs waiting for a shock and then only then do we deserve a reward.
Maybe just maybe he is right but we can still be self aware and appreciative of the finer things in life.

It seems Sinn was all too human and made a emotional tribal mistake.
Its so passe now in Europe this attachment to home , obsolete even.


+ 1. Its’ a Mundell Fleming particle accelerator. Hold on to your hat.

‘But markets have found other ways of speculating against countries like Greece and Ireland, and central bankers have been forced to step in to provide the supporting capital flows which the private sector has not been willing to contemplate.

The key difference is that the process has lasted much longer, with a much bigger build-up of cross-border debt, than would have occurred under the ERM. And that brings with it the risk of a much bigger blow-up at the end of the day’

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