A budget is a values statement.
According to Fadel Kaboub, a modern monetary theory economist, a monetary sovereign country is one that issues its own currency, taxes the people in its own currency, issues debt in its own currency and has a floating exchange rate that is not fixed against another currency. Technically, such a country cannot default on its debt. It can also pursue its economic development objectives without worrying too much about the reactions of international investors. Modern monetary theory is an increasingly popular school of economic thought that has been embraced by many democratic socialists in the United States.
South Africa comes close to meeting all four conditions. It has the unique privilege among developing countries of having 90% of its sovereign debt denominated in rands. It also has deep capital markets that were worth R20.7 trillion – four times the size of its R5.1 trillion economy – at the end of December 2019, according to the Reserve Bank. The shares on the JSE stock exchange were worth R17.4 trillion. The government and corporate debt instruments that trade on the bond market were worth R3.3 trillion.
The debate over the much-touted and much-criticized modern monetary theory (MMT) is the murkiest I have ever been involved with, short of secondary school debates about the existence of God. But I finally see it clearly. Incredible as it may sound to nearly all observers - once they learn what MMT says - its basic economic tenets are agreed to by most knowledgeable economists. The dispute is not really over its core economic model; it is over fears of its perceived political implications.Exactly, and this generates the perceived need for a "noble lie."
The economic shock caused by the coronavirus pandemic is often conceived of as a pivotal moment ushering in major shifts in political economies across the globe.
The most profound shift taking place in China’s political economy is a move away from the export-led growth strategy adopted in the 1990s to a new economic model based on domestic consumption, indigenous technology development and urbanisation....Eurasia Review
The discussion of the role in unemployment is a key theoretical divide between Modern Monetary Theory and mainstream approaches. Theoretical conclusions determine the suggested policy response of governments to unemployment. The structural changes to the labour market made by policymakers in the 1990s were based on following a theory....
The number of billionaires in the world is at a record high, and the U.S. is home to more than any other country.Fast Company
The “loss” of China in 1949 was perhaps the biggest blow to strike American hegemony in the post-World War II era, and it is felt increasingly to this day. During the past 70 years, Washington's strategy towards China has been to destabilise and fracture one of the world's oldest and largest nations. These imperialist policies have clearly failed to attain their objectives.
Nevertheless US efforts to undermine Chinese power have been steadily growing over the past 30 years, in part spurred on by the Soviet Union's demise in 1991, partially also due to China's increasing clout.The danger now is that the American elite became overconfident after the collapse of the USSR and now believes that China under the Chinese Communist Party will inevitably be next, only given some nudging. The outcome of this will turn out to be either one of the greatest strategic triumphs of history, cementing US semi-permanent hegemony, or else the most disastrous strategic blunder, leading to the collapse of the American empire and Western global dominance.
On this substack I rely on Modern Monetary Theory (among other bodies of knowledge) to inform my analysis. Yet, I rarely explicitly write about MMT (for my own introduction to MMT and an overview of what it has to say about the current crisis, see my written remarks from a speech I gave to a Federal Credit Union). Today though, I’m going to tackle a recurring issue that comes up in discussions of MMT that I think will benefit my substack audience. One of the claims Modern Monetary Theory makes that critics have the most trouble with is the idea that the Federal Government already finances itself through money creation. Today, I’m going to restate this thesis step by step as simply as I can, while using T accounts. Incidentally, Professor Stephanie Kelton already substantiated this thesis in the United States 20 years ago in an article (aptly) entitled “Do Taxes and Bonds Finance Government Spending?”Naked Capitalism
This is Episode 5 in the MMTed Q&A series.
This week I had a Zoom conversation with Dr Pavlina Tcherneva and we answered three questions about the Job Guarantee. The answers will be spread out over three episodes to keep each episode relatively short....Bill Mitchell – billy blog
