Contra Krug, Diamond-Dybvig does not help us understand 2008. For one, we had deposit insurance. Even if you say that it was a run on ....
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....shadow banking, Diamond-Dybvig tells us nothing when to expect a run.
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...If you fail to acknowledge the secular rise in leverage in the private sector, you could not have foreseen 2008-09. Krug and mainstream..
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...cannot bring themself to acknowledge heterodox thinkers. MIT keynesians are like the Bourbons, they learn nothing they forget nothing.
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Replying to @teasri
Same as stiglitz market for Lemon paper, the actual model says that if their is info asymmetry, no market clearing price is possible
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Replying to @shishiqiushi @teasri
but the model in the lemon paper isn't equivalent to the real life situation. You can know with a degree of certainty what you're buying.
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Replying to @Molson_Hart @teasri
then why pretend like the model is telling you something new about the real world? Same as DD model
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I'm not. I don't look to economics papers to understand the real world. That might be the worst place to look actually haha
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Replying to @avikram @shishiqiushi
Look up Wynn Godley's work--seven unsustainable processes. Also, Steve Keen on debt dynamics.
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End of conversation
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