Wynne Godley was hardly a goldbug, but his system of monetary economics is remarkably consistent with the view of monetary economics embedded in the U.S. Constitution. Godley concluded that the size of a country's foreign trade deficit depended mainly on the size of the public sector deficit, while the exchange rate and the competitiveness of the economy affected mainly the overall level of output and employment. W. Godley: Money, Finance and National Income Determination (1996) [32 page PDF]

He was remarkably prescient in his comments in 2008 about what lay ahead for all of us. "Fiscal policy alone cannot, therefore, resolve the current crisis. A large enough stimulus will help counter the drop in private expenditure, reducing unemployment, but it will bring back a large and growing external imbalance, which will keep world growth on an unsustainable path." W. Godley, et al.: Prospects for the United States and the World (Dec 2008) [8 page PDF]


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