Sunday, August 25, 2019

So Are We All MMTists Now? — Brian Romanchuk

Larry Summers attracted a great deal of attention with arguments that post-Keynesian theories ought to be taken into account, and the ability of central banks to stimulate the economy are limited. One could argue that the zeitgeist is shifting in the direction of Modern Monetary Theory (MMT): the role of fiscal policy may be increasingly important. However, I am unsure how far actual economics debates will shift.

One may note that Summers dodged discussing MMT in his initial tweets; in fact, he referred to Thomas Palley, whose main contributions in recent years has been his sectarian attacks on MMT. My guess is that this will be a fairly standard approach...,

I have said previous, this is about control of the Democratic Party going forward — the Democratic Establishment (the Clinton-Obama camp) versus the progressives (the Bernie-Squad camp). Stephanie Kelton has put MMT at the center of it owning to her association with Bernie and AOC's endorsement of MMT.

The former is backing way from New Keynesian but is not willing to throw in the towel and support MMT. Now the battle is engaged. So far the victories are going in the right direction if one is an MMT supporter. Monetarism is effectively dead and New Keynesian is becoming untenable as a policy position.

There has been an ongoing battle between one faction of Post Keynesians and others that support MMT. Larry Summers just cast his hat with the former.

Bond Economics
So Are We All MMTists Now?
Brian Romanchuk

Saturday, August 24, 2019

Sputnik — Trump Says He Has ‘Absolute Right' to Order US Companies Out of China Based on 1977 Law

When leaving the White House for the G7 summit in France, Trump told reporters that he has "the absolute right to do that, but we'll see how it goes." He later explained that he was referring to the 1977 International Emergency Economic Powers Act (IEEPA) ….
Sputnik International
Trump Says He Has ‘Absolute Right' to Order US Companies Out of China Based on 1977 Law

What does Putin’s staffing decision vis-à-vis Glazyev mean — The Saker


This is important. But if you have not been following Russia, then its level of detail may obscure the key point. Sergei Glazyev is the closest to MMT of all the Russian economists of influence, and he was in Putin's inner circle of advisors until this announcement.

The Saker unpacks its implications for Russia. He views it as good move by Putin, since it is simply not possible to implement a Glazyev program in Russia. Neither is Putin that powerful if he wanted to do so, but other conditions supervene even if he did want to.

Note: "Liberal" in the Russian context means neoliberal, and the neoliberals see their future in alliance with Europe and the US. Russia is basically a conservative traditionalist country and the stavka (military general staff) and siloviki (deep state) are very conservative, so that is not going to happen on their watch, especially after neoliberalism almost destroyed Russian society in the aftermath of the collapse of the USSR.


The Vineyard of the Saker
What does Putin’s staffing decision vis-à-vis Glazyev mean
The Saker

Moon of Alabama — Moon of Alabama U.S. Decoupling From China Forces Others To Decouple From U.S.


The now not-so-hidden agenda is to take Chimerica apart, although I haven't seen it in the Western media yet, and this is decidedly not where American business and finance want to go.

Moon of Alabama
U.S. Decoupling From China Forces Others To Decouple From U.S.

Friday, August 23, 2019

Links — 23 Aug 2019

RT
Epstein: The Maxwell Connection (by George Galloway)

Consortium News
The Missing Howls of Denunciation Over Major Sex Trafficking

Mint Press News
From “Spook Air” to the “Lolita Express”: The Genesis and Evolution of the Jeffrey Epstein-Bill Clinton Relationship
Whitney Webb
Drago Victorien

RT
Putin orders ‘exhaustive’ response to US missile test, says it shows Washington worked to breach INF

Free West Media
The Hipster ‘revolution’ in Hong Kong
Manuel Ochsenreiter

SouthFront
Google, Twitter And Facebook Corodinate Efforts To Supress Non-Mainstream Coverage On Hong Kong Protests

Irrussianality
The Greenland Connection
Paul Robinson | Professor, Graduate School of Public and International Affairs at the University of Ottawa

Lobe Log
The Trump Administration Has Criminalized the Iranian Economy
Tyler Cullis

Moon of Alabama
U.S. Says Israel Bombed Iraq

SouthFront
Netanyahu Loosely Confirms Israel Carried Out Strikes In Iraq

RT
Israel preparing to bomb Houthis in Yemen to warn them away from Iran – reports

The Unz Review
The Saker Interviews Professor Marandi

Zero Hedge
Ex-Overstock CEO Byrne Reveals FBI's Peter Strzok Manipulated Him For 'Political Espionage'
Tyler Durden








Reuters — World needs to end risky reliance on U.S. dollar: BoE's Carney

Bank of England Governor Mark Carney took aim at the U.S. dollar's "destabilizing" role in the world economy on Friday and said central banks might need to join together to create their own replacement reserve currency.…
Boom!!! (Sound of heads exploding.)

Reuters
World needs to end risky reliance on U.S. dollar: BoE's Carney
Writing by William Schomberg; Editing by David Milliken

Whither Central Banking? Lawrence H. Summers

In an environment of secular stagnation in the developed economies, central bankers’ ingenuity in loosening monetary policy is exactly what is not needed. What is needed are admissions of impotence, in order to spur efforts by governments to promote demand through fiscal policies and other means.
Throwing in the towel (but not endorsing MMT). Politically, this is about control of the Democratic Party after the transition from Clinton-Obama-Third Way. Summers is on the side of the Establishment, while Stephanie Kelton is Bernie's advisor and in league with The Squad.

Project Syndicate
Whither Central Banking?
Lawrence H. Summers & Anna Stansbury

Top 1% Up $21 Trillion. Bottom 50% Down $900 Billion. — Matt Bruenig

The insights of this new data series are many, but for this post here I want to highlight a single eye-popping statistic. Between 1989 and 2018, the top 1 percent increased its total net worth by $21 trillion. The bottom 50 percent actually saw its net worth decrease by $900 billion over the same period.…
People's Policy Project
Top 1% Up $21 Trillion. Bottom 50% Down $900 Billion.
Matt Bruenig

Manufacturers Want to Quit China for Vietnam. They’re Finding It Impossible. Nobody has China's scale, infrastructure, experience, and supply chains — Niharika Mandhana

“China has a 15-year head start—whatever you want, someone’s doing it,” said Wing Xu, the operations director for Omnidex Group, which helps make large pumps for Pennsylvania-based industrial equipment manufacturer McLanahan Corp....
Checkpoint Asia
Manufacturers Want to Quit China for Vietnam. They’re Finding It Impossible. Nobody has China's scale, infrastructure, experience, and supply chains



Niharika Mandhana, The Wall Street Journal

Axios — In tweets, Trump tells American businesses to leave China

"Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA."
The bottom line: It should go without saying that Trump doesn't have the authority to order U.S. companies to look for alternatives to China....
Axios
In tweets, Trump tells American businesses to leave China

See also at Axios

With deficit rising, worries grow the U.S. may be out of tools if recession hits


Nice figurative language metaphor here "out of tools!" like "out of money!" blah, blah, blah... no adjustment being made...  or no one "changing their minds!" either... above the fold Washington Post...



Thursday, August 22, 2019

Three Reasons To Be In Favor Of A Payroll Tax Cut — John T. Harvey

For at least a few moments this week, President Trump suggested a payroll tax cut to stimulate the stalling macroeconomy. Although it appears that he has already changed his mind, it’s worth taking a look at the strategy...just in case.
Let’s say for sake of argument that the negative signals we have received of late are accurate. What should we do if we slip into full-fledged recession? Cut interest rates? Lower the budget deficit? Decrease payroll taxes? It turns out that the last one is the clear and easy winner. Why?
Forbes — Pragmatic Economics
Three Reasons To Be In Favor Of A Payroll Tax Cut
John T. Harvey | Professor of Economics, Texas Christian University

The Federal Reserve’s new Distributional Financial Accounts provide telling data on growing U.S. wealth and income inequality — Raksha Kopparam

Wealth disparities between the rich and the poor in the United States have broadened over the past 30 years, according to a new dataset released earlier this month by researchers at the Federal Reserve Board. Their Distributional Financial Accounts is the new dataset that provides quarterly estimates of wealth distribution in the country from 1989 to 2019. 2 The new dataset was created by integrating the Federal Reserve Board’s Financial Accounts with the Survey of Consumer Finances. Together, they contain reliable measures of the distribution of household-sector assets and liabilities from 1989, which gives policymakers and economists alike new insight into how the distribution of wealth has changed since the 1990s.

The new Federal Reserve Board dataset confirms that wealth concentration has been growing, consistent with other data series such as the World Inequality Database assembled by academics worldwide. Indeed, the Fed’s new Distributional Financial Accounts open up new opportunities to study close to real-time changes in the U.S. wealth distribution. It provides the necessary data to study fluctuations in the wealth distribution over short time periods, while accounting for changes that occur between times of survey measurement for less frequently collected datasets....
WCEG — The Equitablog
The Federal Reserve’s new Distributional Financial Accounts provide telling data on growing U.S. wealth and income inequality
Raksha Kopparam, Research Assistant at the Washington Center for Equitable Growth

On Demagogues and Democracy — Eric Schliesser


Some social & political theory. Focuses on Walter Lippmann, The Good Society.

Although Eric Schliesser doesn't mention it in this post, Aristotle discussed these issues in detail in his Politics.

Digressions&Impressions
On Demagogues and Democracy
Eric Schliesser | Professor of Political Science, University of Amsterdam’s (UvA) Faculty of Social and Behavioural Sciences

Our Money: Modern Monetary Theory Must Dominate Democratic Debate — PR Newsletter

This Labor Day, Our Money will gather 500 participants to host a march for Full Employment and Economic Justice in commemoration of the Civil Rights Movement legacy of advocacy for a Federal Job Guarantee. The march will begin at the MLK Memorial in Washington DC at 11 am and end at the Marriner Eccles Building of the Federal Reserve around 2 pm. 
Our Money founder, Rev. Dr. Delman Coates, will use this opportunity to draw the connection for lay audiences between the Civil Rights struggle for Full Employment and Economic Justice, and the importance of understanding our public power of money creation, as illuminated by insurgent school of economic thought, Modern Monetary Theory (MMT). Dr. Coates will call on Congress to pass a Federal Job Guarantee, as well as hold hearings on MMT in order to allow the public to formally interrogate the implications of our public power....
Grassroots MMT.

Yahoo Finance
Our Money: Modern Monetary Theory Must Dominate Democratic Debate
PR Newsletter

Just do nothing...


Kashkari going to State Fair... Fed in Jackson Hole... these people not doing much work these days... kicking back here in August this month...

Pretty good indicator that they wont be doing anything before September meeting... good sign...

 #JustDoNothing



Powell: “Treasury is responsible for exchange rate policy -- full stop"


Looks like a political impasse between these 2 Monetarist morons:





Bill Mitchell — The EU pronouncement of a Greek success ignores the reality

I keep reading ridiculous articles about Brexit in the UK Guardian. The latest was comparing it to pre-WWI Britain and suggesting there were no signs of a “Damascene moment remainers hoped for”. I thought that reference was apposite – given the reference invokes St Paul’s conversion after he was struck blind. Good analogy – blind and remainer. The Brexit imbroglio is all the more puzzling because it seems to be a massive mismatch of scale – a currency-issuing nation and an organisation with no currency and no democratic legitimacy. And that is before one even contemplates the nature of that organisation. On August 20. 2019, the European Union provided us with a perfect example of why no responsible government would want to be part of it. In its – Daily News 20/08/2019 – there were three items. The last item told us that construction output in the EU28 had declined by 0.3 per cent in June 2019. The first item was a sort of cock-a-hoop boast about how great Greece is after the EU saved it from disaster. Parallel universe sort of stuff. Britain will thank its lucky stars after October 31, 2019 when it goes free from that madness. Even though the remainers remain ‘blind’ without their Damascene moment”….
Bill Mitchell – billy blog
The EU pronouncement of a Greek success ignores the reality
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Wednesday, August 21, 2019

Links — 21 Aug 2019

The Vineyard of the Saker
U.S.-UK Deep State Tries to Grab Hong Kong
Eric Zuesse

NEO
Roots of Chaos in Hong Kong were Planted in Washington
Salman Rafi Sheikh

CGTN
179 officers injured, Hong Kong police urge public to stay rational

The Unblanced Evolution of Homo Sapiens
John Pilger: Breaking up the Russian Federation is an American objective

Sic Semper Tyrannis
Joseph Mifsud, British "Joe", Not Russia's Boy by Larry C Johnson
Larry C. Johnson | CEO and co-founder of BERG Associates, LLC, an international business-consulting firm with expertise combating terrorism and investigating money laundering, formerly Deputy Director in the U.S. State Department’s Office of Counter Terrorism (1989-1993, and CIA operations (1984-1989)

Moon of Alabama
Anti-China Cult Gets U.S. Government Money - Runs Large Pro-Trump Ad Campaign

Reminiscence of the Future
As Was Totally Expected.


AlterNet
This passage was deleted from the Declaration of Independence — here’s what it reveals about motivation for the American Revolution
Cody Fenwick


Trump HAMMERING the Fed


He mutilated them today:







Helicopter presser:



Planetary Thinking — Eric Berglöf

As policymakers, academics, and activists prepare for next month's United Nations climate summit in New York, they should consider precisely what it will take to build a truly sustainable global economy. First and foremost, the world needs a new multidisciplinary approach that is broad enough to tackle the challenge....
Project Syndicate
Planetary Thinking
Eric Berglöf

‘Was Goebbels unavailable?’: ABC blasted for ‘normalizing fascism’ by putting Sean Spicer on ‘Dancing With the Stars’ — David Badash

I am purposefully avoiding overtly political stuff now that we are in the throes of another campaign.

However, when one faction of the country sees the other faction as fascist and names it, political discourse has descended about as far as it can go in that direction other than upping the amps.

The opposite extreme when one side sees the others a socialist and even communist, political discourse has descended about as far as it can go in that direction other than upping the amps.

This is a political issue that is being reflected in societal problems that have wide-ranging impact on social, political and economic life.

At the extreme, this will surface as the campaign being represented as between Hitler and Stalin.

AlterNet
‘Was Goebbels unavailable?’: ABC blasted for ‘normalizing fascism’ by putting Sean Spicer on ‘Dancing With the Stars’
David Badash | The New Civil Rights Movement

It’s official: Parts of California are too wildfire-prone to insure — Nathanael Johnson

California is facing yet another real estate-related crisis, but we’re not talking about its sky-high home prices. According to newly released data, it’s simply become too risky to insure houses in big swaths of the wildfire-prone state.
Last winter when we wrote about home insurance rates possibly going up in the wake of California’s massive, deadly fires, the insurance industry representatives we interviewed were skeptical. They noted that the stories circulating in the media about people in forested areas losing their homeowners’ insurance was based on anecdotes, not data. But now, the data is in and it’s really happening: Insurance companies aren’t renewing policies areas climate scientists say are likely to burn in giant wildfires in coming years....
I had friends burned out in the recent fires and insurance paid for it. With insurance it was still a disaster, not only materially but also psychologically. Without insurance?

The Midwest is affected by the opposite issue — flooding. And the coasts are being threatened by sea level rise.

Big changes coming economically and financially.

Grist
It’s official: Parts of California are too wildfire-prone to insure
Nathanael Johnson

The Gold Standard Fell As All Currency Pegs Do — Martin Armstrong

The fate of pegs is always the same because there is this thing we call the business cycle.
Armstrong Economics
The Gold Standard Fell As All Currency Pegs Do
Martin Armstrong

Completing The Euro: The Euro Treasury And The Job Guarantee — Esteban Cruz-Hidalgo, Dirk H. Ehnts, Pavlina R. Tcherneva

Abstract
The problems with the design of the Eurozone came into focus when, late in 2009, several member nations– notably Greece – failed to refinance their government debt. The crisis that followed was not entirely asurprise. When the Euro was launched in 1999, many economists warned that the single currency was unworkable. Even Eurozone optimists argued that the Euro project would eventually need to be completed. More than 10 years after the crisis, unemployment rates remain elevated and continue to threaten the social, political and economic stability of the Eurozone. The institutional constraints of the single currency however preclude bold action to address these challenges. In this paper, we suggest that tackling the twin problems of the Eurozone – its institutional flaws and mass unemployment – could be addressed by creating a Euro Treasury that would finance a Job Guarantee program, which would eliminate mass unemployment, enhance price stability, and foster social and economic integration across Europe.
COMPLETING THE EURO: THE EURO TREASURY AND THE JOB GUARANTEE
Esteban Cruz-Hidalgo, Universidad de Extremadura, Dirk H. Ehnts European University of Flensburg, Pavlina R. Tcherneva Bard College

Solar Power Is Now As Inexpensive As Grid Electricity In China Charles Q. Choi

Researchers found that PV systems could produce electricity at a lower price than the grid in 344 cities.
Good news for air quality and climate. China has been relying on coal-fired plants (72% in 2016).

Two anecdotes. I have a friend that teaches for six-weeks in Beijing on occasion. I once said to him that it must be a great experience. He answered that it was terrible, the pollution was so bad. I have another acquaintance that is Chinese, now living in the US. He's been here about 20 years. I asked him if he thought ever of returning to China. He shook his head and pointed upward. I asked him what he meant, and he said, "blue sky." 

China is not alone in this in the developing world. Electrification is a big deal, and cost is a major consideration.

China Could Overwhelm US Military In Asia In Hours — Brad Lendon


Arms race watch. It's on.

CNN
China Could Overwhelm US Military In Asia In Hours
Brad Lendon

Research finds the domestic outsourcing of jobs leads to declining U.S. job quality and lower wages — Kate Bahn

The domestic outsourcing of jobs in the United States is fast becoming a dominant explanation for the destruction of the social contract of work, a historic concept in which norms of fairness and solidarity between firms and their employees played a major role in wage setting and workplace standards for some U.S. workers—though of course many others such as African American workers were consistently more marginalized. The destruction of this social contract, detailed in Brandeis University economist David Weil’s book The Fissured Workplace, describes a labor market structure in which workers are employed at firms with core competencies and then those firms subcontract out all other duties or specific functions in the production process.
Within daily work activities, U.S. workers may directly interact with other workers across a variety of firms with different levels of job quality. One prototypical example is janitorial work, where most office cleaners today are employed by a janitorial services company that is contracted by the building owner where individual office places lease their space. These kinds of fissured employment patterns have led economists and other social science researchers to examine a variety of empirical research questions about what has caused domestic outsourcing, what the impacts have been and for whom, and what the future of the firm will be.

This body of research lays the groundwork for U.S. policymakers to understand the impact of this domestic outsourcing phenomenon and what sort of policy solutions can ensure that economic prosperity is broadly shared as workers and firms alike consider “the future of work” in the United States....
The bottom line is that "the American dream" was based on a significant portion of the population being employed in relatively secure and well-compensated in manufacturing. Foreign outsourcing changed that and the US economy has been in flux ever since. The trend is toward concentration at and near the top, that is, the upper quintile, while the rest of the population available for work either stagnates or sinks. Another trend is domestic outsourcing, which has disrupted the previous concept of a secure job, essentially for life.

These are obvious trends in a liberal economic model ("capitalism") since they reduce costs and increase efficiency. However, they are also having a profound social impact, and therefore a political one as well, as life for many becomes more precarious. 

WCEG — The Equitablog
Research finds the domestic outsourcing of jobs leads to declining U.S. job quality and lower wages
Kate Bahn

Econometrics and the problem of unjustified assumptions — Lars P. Syll


This is important but may be too wonkish for those who are not intimately familiar with econometrics. So let me try to simplify it and universalize it.

The basic idea in logical reasoning is that an argument is sound if and only if the premises are true and the logical form is valid.  Then the conclusion follows as necessarily true.

This is the basis of scientific reasoning.

In modeling, a set of assumptions, both substantive and procedural, is stipulated, that is, assumed to be true. In a well-founded model all the assumptions that make substantive claims are known to be true empirically on the basis of evidence. This is called semantic truth. The logical truth of logical form is formal proof. This is called syntactical truth. Only the former contains substance. The latter is purely procedural.

A key methodological assumption of the scientific method is naturalism. Being "scientific" signifies being based on observation, rather than say, intuition or "common sense," that is, self-evidence. No self-evident first principles — that's doing philosophy, not science. Not that such speculation is not useful. It's just not science and should not be conflated with science. There is often a tendency to do so.

This presents two major difficulties with scientific modeling versus philosophical speculation. The first is the empirical warrant of the starting points, the stipulations that are assumed to be true and serve as the premises of the argument. The second is knowing that all relevant information is included in the assumptions. This is called identification.

Paraphrasing Richard Feynman, we do science in order to avoid fooling ourselves and we are the easiest ones to fool (owing to confirmation bias, for example). This requires following scientific method scrupulously when substantial claims are made.

Keynes pointed out to Roy Harrod that econometrics did not conform to this strict procedure and that owing to the nature of the subject matter, economics was "moral science," which at the time signified what we would now call "philosophy." The social sciences and much of psychology fall into this category. They are basically speculative exercises that employ some formal methods that may be scientific, or not. 

Accounting is a formal method that is proto-scientific in the sense that double entry it is made up of tautologies. But the entries can be checked for substance against journals and inventories. It is a method to prevent fooling ourselves on one hand, and to prevent cheating on the other.

When accounting tautologies (identities) are interpreted causally, then causal explanation demands empirical corroboration through data, e.g., measurable changes in stocks and flows.

Lars P. Syll’s Blog
Econometrics and the problem of unjustified assumptions
Lars P. Syll | Professor, Malmo University

See also

Bond Economics
Comments On "Business Cycle Anatomy"
Brian Romanchuk

Bill Mitchell — The rich are getting richer in Australia while the rest of us mark time

Only a short blog post today – in terms of actual researched content. Plenty of announcements and news though, a cartoon, and some great music. I have been meaning to write about the household income and wealth data that the ABS released in July, which showed that real income and wealth growth over a significant period for low income families has been close to zero, while the top 20 per cent have enjoyed rather massive gains. These trends are unsustainable. A nation cannot continually be distributing income to the top earners who spend less overall while starving the lower income cohorts of income growth. A nation cannot also continually create wealth accumulation opportunities for the richest while the rest go backwards. These trends generate spending crises, asset bubbles and social instability. That is what is emerging in Australia at present.
While Bill's analysis in this post is Aussie-centric, the rationale is applicable to the whole neoliberal world. It's basically what neoliberalism is about. The contemporary difference is that now the domestic populations of the neoliberal nations are being colonized as well. Even some of the top tier that are receiving most of the benefits are getting squeamish, realizing that an unsustainable process cannot go on forever and that eventually the bill will come due.

Bill Mitchell – billy blog
The rich are getting richer in Australia while the rest of us mark time
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia