Sunday, July 21, 2019

Naked Capitalism — Modern money theory and its implementation and challenges: The case of Japan VoxEU. Thread in response by Fullwiler.

Lambert Strether posed these links at Naked Capitalism. The VoxEU article was posted here at MNE when it came out. It is cited here if you missed it. The operative post is the Twitter thread that Scott Fullwiler tweeted in response to it.

Modern money theory and its implementation and challenges: The case of Japan VoxEU. Thread in response by Fullwiler.Naked Capitalism

See also at Naked Capitalism today.

Michael Hudson exceeded himself on this one. Here is the conclusion.
The American promise is that the victory of neoliberalism is the End of History, offering prosperity to the entire world. But beneath the rhetoric of free choice and free markets is the reality of corruption, subversion, coercion, debt peonage and neofeudalism. The reality is the creation and subsidy of polarized economies bifurcated between a privileged rentierclass and its clients, eir debtors and renters. America is to be permitted to monopolize trade in oil and food grains, and high-technology rent-yielding monopolies, living off its dependent customers. Unlike medieval serfdom, people subject to this End of History scenario can choose to live wherever they want. But wherever they live, they must take on a lifetime of debt to obtain access to a home of their own, and rely on U.S.-sponsored control of their basic needs, money and credit by adhering to U.S. financial planning of their economies. This dystopian scenario confirms Rosa Luxemburg’s recognition that the ultimate choice facing nations in today’s world is between socialism and barbarism.
Michael Hudson: U.S. Economic Warfare and Likely Foreign Defenses
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

Walk the World - A Conversation With Steve Keen: Part One - The Debt Problem

Economists still leave out the role that money plays in the economy, says Steve Keen, in fact, they accuse him of confusing stocks with flows. They believe the economy is all based on barter, i.e, one to one, not understanding how bank credit can distort prices.

To get the Australian economy going again, the Australian government will boost the housing market, but this makes the problem worse in the long run, says Steve Keen.

In Part 2 Steve Keen says he differs from the MMTers in that he places more concern on the problem of too much private debt. In fact, Max Keiser and Naomi Prins both criticise MMT for the same reason.

Parts 3 and 4 are available too.

Part 2 - From Central Bankers to MMT

Saturday, July 20, 2019

Paul Mason and Jesse Norman on a Revolutionary Defence of Humanity

Conservatives politician, Jesse Norman, interviews Paul Mason, an economic advisor to Jeremy Corbyn. Paul Mason describes himself as a non-statist Marxist, and he seems to hold similar views to me. It's interesting what he says about identify politics.

The interview is non confrontational and it's interesting to see on what they both agree on, although they remain politically opposite. Both want to see less neoliberalism, less rent extraction, and more improved markets.

Paul Mason says he wants the state to run transport and the energy companies to improve the environment. We might even have free public transport one day, he says. I always thought this was a good idea as it would really take the vehicles off the road and reduce pollution. Right now I can walk 5 minutes to a bus stop and a bus will come within 10 minutes, so I don't even bother to check on my phone too see if one is due.

Jesse Norman says how conservatives have always had a long tradition of conservation and caring for the countryside.

Intelligence Squared - Podcast

 Paul Mason and Jesse Norman on a Revolutionary Defence of Humanity

Nobel Economist Says Inequality is Destroying Democratic Capitalism — Angus Deaton

Should be neoliberalism is destroying the illusion of liberal democracy.

Nobel Economist Says Inequality is Destroying Democratic Capitalism
Angus Deaton | Senior Scholar and the Dwight D. Eisenhower Professor of Economics and International Affairs Emeritus at the Woodrow Wilson School of Public and International Affairs and the Economics Department at Princeton University

Trump Is Back Under Bolton’s Thumb — Paul Craig Roberts

I don't think that this quite correct. John Bolton is the frontman in the administration for casino billionaire Sheldon Adelson, a rabid supporter of Zionism and a major contributor to Trump's political campaign. It is not an exaggeration to say that Trump owes his 2016 victory in large part to Adelson's legal bribery.

OK, course, Trump gave no quid pro quo for the funding, so it is not bribery in the legal sense. However, anyone who thinks that political contributions, especially large ones, don't come with strings attached is very naive about how the world works.

The dilemma that Trump has faced and still face is that Adelson's money is needed for his political campaigns and this requires that he play the role that his backer demands, which ties his own hands regarding preferred policy and strategy.  This is especially the case now that the 2020 presidential campaign is upon us.

I don't see Trump caving to Bolton. I see Sheldon Adelson with a gun to Trump's temple in the form of campaign funding.

This is a big reason that for anything like representative democracy instead of plutonomy to prevail in the US, campaign finance has to be reformed, the revolving door locked, and lobbying outlawed. This would require nullifying SCOTUS's Citizen's United decision.

Complicating the problem is that this is a bipartisan issue. Electing the opposition party will not affect it, judging from the past. The lesson is that money doesn't mix with politics in a liberal democracy, not that there are any now, or have been any historically. Bourgeois liberalism is liberalism in name only.

Paul Craig Roberts
Trump Is Back Under Bolton’s Thumb
Paul Craig Roberts | formerly Assistant Secretary of the Treasury for Economic Policy, associate editor of the Wall Street Journal and a columnist for Business Week, Scripps Howard News Service, and Creators Syndicate

China’s best friend? — Scott Sumner

Same with Russia. Moronic strategy, making declared adversaries stronger and more self-sufficient. The other good side is that empires don't last long with morons in charge.

The Money Illusion
China’s best friend?
Scott Sumner | Professor of Economics at Bentley University

"Don't do as I do, do as I say."

Anyone see a pattern here? Any wonder why there is a push for multilateralism to counter unipolarism (read world dominance).

News in Asia
Laughable: US Claims ‘Free and Open Seas,’ Tries to Push China Out of Indian, Pacific Trade
Pepe Escobar

Mike Pompeo Says Foreign Actors Must Leave Venezuela, So That US Can Rebuild It

Stephen Fry - Boris And Trump's Killer Healthcare Trick, with Stephen Fry.

Stephen Fry has made the ultimate myth-busting video about private healthcare vs the NHS

Will Boris and Trump privatise the NHS? How much would medicare for all cost in the US? Which healthcare system is most likely to save you? Killer facts are hidden by carefully constructed illusions.

Friday, July 19, 2019

Herland Report - Totalitarian Rule means end of Democracy

I've got addicted to Twitter recently, probably because it works better with my new phone. But Bill Binney won't go near twitter, or Facebook, or leave any likes anywhere, because he knows the NSA are watching everybody. And they listen to every phone call you make and read all your emails.

I read on the internet yesterday how they a are hunting everywhere for photographs of you to build up a facial recognition database. They go to Facebook, Google, Twitter, where ever.

Bill Binney says he designed Thinthread - the software he made for spying on people to counter terrorism - to be very selective leaving most people alone, but the NSA didn't want it, they wanted Big Data instead so they could spy on everyone, except it collects so much data that it misses the terrorists and their planed attacks on the public.

If you watched the movie about Bill Binney - which I have posted here in the past - you would have seen how the NSA bought software from a private company instead paying $millions for it, but it was useless compared to Bill Binney's elegant program, and so it misssed 9/11 where Bill Binney's one wouldn't have done. But everyone was making lots of money out of it - the tax payer scammed again.

This is a good interview.

System Capture 2020: The Role of the Upper-Class in Shaping Democratic Primary Politics — Anthony DiMaggio

The Democratic primary season is upon us, and the party’s candidate list is a useful starting point for assessing the impact of affluence on American politics. Classic works by sociologists of decades past, including C. Wright Mills and G. William Domhoff, posited that U.S. political institutions were captured by elite economic actors, who seek to enhance their own material positions at the expense of the many....
"Class" is a technical term in sociology. It is synonymous with "social class" and "socio-economic class, and it denotes the social stratification of a group, usually a society based on cultural and institutional arrangements that are generally a combination of formal and informal. Characteristic of each class as a set of individuals is a level of status, power and wealth.

It is useful to think of a society in terms of a system of networks and their relations. The "upper class" especially is usually identified by certain characteristics that are relevant to status, power, and wealth, such as family background, educational background and career. The top tier is a much more closely knit network that lower classes and the top tier lives in a completely different environment from the lower tiers. In some cases the structure is rigid with little social mobility, such as the aristocratic and caste system based on birth. There is much more social mobility in liberal societies than in traditional ones.

Why is network a good way to consider the concept of class? "Network" emphasizes connections and inter-communication. Class is often thought of more in terms of aggregates. While it is true that a the lower rungs of society, class does exhibit the characteristics of aggregates, where connects are few and scattered, the top tier is "well-connected," and it is these connections that giver the upper class its social, political and economic power and influence.

The common characteristic of the "upper class" is that it constitutes a ruling elite, if not directly providing the bulk of the leadership, at least choosing it and to some extent controlling it. This constitutes the political organization called "oligarchy," literally the rule of the few. In liberal societies the characteristic of oligarchies is plutonomy, literally governance based wealth.

Anthony DiMaggio asserts that this is due to state capture. I would not disagree with in my view it is not so much a matter of "capture" in a concerted and intentional sense, since it is the historical norm. New members come, old members go. The structure remains mostly the same, although it changes appearance owing to historical and geographical conditions that affect culture and institutions. If there was capture, and there seems to have been historically based on comparison with the more egalitarian social structure of so-called primitive societies, it happened ages ago through what Marx called primitive accumulation, e.g., of taking control of land. Historians, sociologists, political theorists and philosophers have investigated this and speculated about. While primitive accumulation continues to some degree, the patterns were established during the transition from hunter-gather societies to agricultural ones.

The top tier assumes and asserts that there was really no capture "back then," and there is no capture now; it is the natural state for the stronger and more  competent to rule since they can use resources more efficiently and effectively. Recall John Locke's just-so tale of private property arising from mixing land with use. So what may look like "capture" was really just a natural concentration of "human capital" based on initiative and ability. Lower tiers are either convinced by this line of reasoning — or not. At any rate, pretty much the same process repeats under different cultural garb geographically and across time, in spite of the occasional revolution, since revolutionary change is soon co-opted by a newly emergent elite.

This post is a summary of studies and polls about the contemporary US, which the author then relates to the contemporary Democratic Party. The GOP has already decided on renominating a sitting president that is a billionaire whose record is one of favoring the upper class based on "trickle down." The GOP base seems to buy this.

His conclusion:
Early polling data suggests that Democratic partisans have continued to elevate neoliberal “electable” Dems when it comes to the highest office in the land, although progressive candidates are gaining ground. Pollingfrom mid-July of this year reveals that Joe Biden leads all candidates, with 32 percent support. Bernie Sanders and Elizabeth Warren are not far behind, each polling at 19 and 14 percent respectively, while Kamala Harris stands at 13 percent support. These results suggest that there is a real struggle among Democratic partisans to determine the future direction of the party, with the top four candidates as of mid-2019 split between establishment neoliberals on the one hand, and New Dealer-style liberal-progressive reformers on the other. Whoever prevails in the primaries, one thing appears clear. Should a neoliberal candidate win the 2020 nomination, there is little reason to expect a reverse in the status quo-elitism of the Democratic Party.
System Capture 2020: The Role of the Upper-Class in Shaping Democratic Primary Politics
Anthony DiMaggio | Assistant Professor of Political Science, Lehigh University, and author of The Politics of Persuasion: Economic Policy and Media Bias in the Modern Era, and Selling War, Selling Hope: Presidential Rhetoric, the News Media, and U.S. Foreign Policy After 9/11

Nothing has changed

We're in the exact same position we were in when I read this book almost 30 years ago:

Nothing has changed... no cognitive adjustment has ever been made by the Liberal Art trained morons in control... none... zero... zip... nada...

Nothing has changed

Unqualified Art Degree morons still in control; arguing with each other based on their "out of money!" cognitive error.

Nothing has changed...

The Trump administration late Thursday gave Democrats a menu of $574 billion in savings options from which to find $150 billion to offset the costs of a two-year budget cap agreement. 
The official described the White House demand as a starting point.
Roughly half of the administration proposals are cuts and the others come from reforms, two people familiar with the proposal said. One of the suggested reforms is the drug pricing plan from the White House’s 2020 budget, which would save $115 billion, one of the people said. 
There are no revenue or tax increases on the list. 
The offer also includes a proposal to extend budget caps for two extra years after they expire in 2021 in order to save $516 billion. Under current law, $126 billion in automatic cuts would take effect by the end of the calendar year if the caps are not raised.

Quint Forgey - How Elizabeth Warren would reform Wall Street

I will believe it when I see it. But it's a start.

Elizabeth Warren — whose criticisms of big banks powered her decade-long political ascent from law professor and consumer advocate to top-tier White House contender — on Thursday unveiled her plan to take on Wall Street as president.
"The truth is that Washington has it backwards. For a long time now, Wall Street’s success hasn’t helped the broader economy — it’s come at the expense of the rest of the economy. Wall Street is looting the economy and Washington is helping them do it,” Warren wrote in a blog post of her plan, which marks the latest plank in the candidate's platform of “economic patriotism.”

Thursday, July 18, 2019

MMT's Kelton Sees Central Banks Quietly Yielding to Governments — Yuko Takeo and Masahiro Hidaka

  • Their independence will shrink to policy execution, she says
  • Says Japan policy flawed by hitting gas and brakes together
Looks like the last mile has closed.


This Is Where The Next Recession Will Start: An Epidemiological Study — Nicholas Colas

US recessions are like epidemics: they all begin somewhere, and the “tell” is state-level unemployment data. For example, the end of the 2000 dot com bubble hit Connecticut and Massachusetts first – two hubs for the financials services industry with lots of affluent investors to boot. The end of the 2000s housing boom predictably impacted Florida and Nevada before the rest of the country. This time around, the data shows the manufacturing-heavy states of Michigan, Ohio and Indiana are most at risk. No wonder “Dr. Fed” wants to inoculate the region with lower interest rates....

Rick Sanchez - US & Euro economies crumbling

Europe has had near zero interest rates for 5 years and is now considering negative interest rates to help its failing economy. But could the Federal Reserve be about to lower interest rates to near zero too?

European Central Bank is floating a ridiculous proposal to introduce “negative interest rates.” Rick Sanchez describes the economic horror that will arise. Meanwhile, the Federal Reserve intends to cut interest rates yet again. Rick Sanchez breaks down what this means about the true state of the economy.

Jonathan Cook Tweet - The Guardian and Steve Bell are Heading for the Rocks

Steve Bell is the cartoonist at the Guardian. His cartoons are pretty excellent and he was always very radical and left, but I did fear he was following the Guardian line too with some of his anti Putin cartoons. But it seems he's not really in line with them after all. He's pretty angry about the Guardian’s treatment of Jeremy Corbyn

The Guardian and Steve Bell are heading for the rocks, it seems. Paradoxically it's over the Guardian banning his new cartoon strip. It shows Tom Watson as the 'antisemite-finder general'. Too close to the bone for the Guardian, which has been cheerleading the same witch-hunt

The bottom picture is the beginning of the letter.

Arvin Ash - Does Consciousness Create Reality? Double Slit Experiment may show the Answer.

It has been found human consciousness is not necessary to bring the universe into existance because the universe observes itself. But that doesn't mean it's conscious in the way we are.

Abigail Disney - 'We didn’t feel safe’: Disney heiress describes violence in childhood

Abigail Disney says Bernie is uninspiring and the young want something new,  something radical, something different - well, MMT popped into my mind. It's coming!

Abigail says she's naturally a Democrat, but really, she is probably more to the left of them - a progressive.

Disney heiress Abigail Disney joins “Through Her Eyes” to share what it was like to grow up in the Disney family. “My parents were conservative and very strict. And both alcoholics.” She claims she never really felt safe in her own home. “So there was some violence in my home. Not all over the place, not all the time. But when you do get subjected to some violence as a child, you kind of never feel safe again.” Disney also shares the difficulties of growing up in a Republican household, saying that her mother was “the love child of Rush Limbaugh and Phyllis Schlafly.

Debt Ceiling

Looks like Mnuchin knows the typical 1 Sept first of the month BIG drop in the TGA might not be possible... they have been exhausting the 'Extraordinary Measures' in an attempt to stabilize the TGA at higher levels... with limited success... once those 'measures' are exhausted it appears they think the TGA is going to quickly collapse .... creating a fast bearish increase in Reserve Assets again... which will top when they finally suspend the Debt Ceiling...

Modern money theory and its challenges Sayuri Shirai

Modern monetary theory (MMT) has recently gained prominence in light of doubts about the effectiveness of monetary policy in addressing economic shortfalls. This column assesses the implications of implementing the theory’s policy prescriptions, and the challenges it presents in the case of Japan – an economy that some have argued has already been subject to such policy. Japan’s labour shortages and low inflation mean modern monetary theory’s fiscal stimulus suggestions may be harder to implement than they initially seem....
Stephanie Kelton was recently in Japan talking up MMT. This is a response. It is a serious article on MMT that gets the outline reasonably correct and offers comments on its applicability to conditions in Japan. It's a should-read.

Modern money theory and its challenges
Sayuri Shirai | Professor, Keio University; Visiting Scholar to ADB Institute; and, former Board Member, Bank of Japan

Philly Fed

Pretty big snap back for Philly Fed in June on the $139b TGA bottom (Reserve Asset top) beginning of the month... remember Mike called June 6th...

Policymakers currently trying to stabilize TGA around the $200b level using Extraordinary Measures in advance of a deal to suspend the Debt Ceiling again... having so-so success...

Imperialism in a coffee cup — John Smith

Why is it that just 1p of a £2.50 cup of coffee goes to the farmer who cultivated and harvested the coffee beans?
Open Democracy
John Smith

The Great Paradox: Liberalism Destroys the Market Economy —Heiner Flassbeck

Another paradox of liberalism arising from equation of economic liberalism with capitalism and of economic liberalism as equatable with political liberalism as representative democracy. The rise of interest in social democracy now no accident of history but rather a logical progression of the historical dialectic?

Flassbeck Economics
The Great Paradox: Liberalism Destroys the Market Economy
Heiner Flassbeck

Will Kim Jong Un As Head Of State Move More Towards Markets? — J. Barkley Rosser


My view is that NK likely will move toward the Chinese system of market socialism with Chinese characteristics, but in NK it will be with NK characteristics. Kim Jong Un had already liberalized quite a bit, so this would not constitute an about-face but rather a speed-up of development. Kim Jong Un seems finally to want to join the world economy, which is why he is negotiating with Trump at all, in the face of resistance from the US deep state and military trying to scuttle progress. Bolton is the point man but he is not alone in this thinking.

Will Kim Jong Un As Head Of State Move More Towards Markets?
J. Barkley Rosser | Professor of Economics and Business Administration James Madison University

"Pump It!"



Black Eyed Peas:

Elizabeth Vos - Consortium News Target of a Malware Attack as Twitter Takes Down Assange Support Group’s Account

The alternativel news media is under attack again. And a pro Assange group was taken down from twitter.

The simultaneous escalation of censorship of Julian Assange’s support base, alongside the latest wave of fact-free attacks on Assange and WikiLeaks‘, raises concern about a coordinated effort to smear Assange while silencing those who counter such dubious reporting.

“Our website is completely down. Our media host said we have been attacked by malware. They actually tried to blame ‘the Russians’! Every article published since 2011 now gets a 404 Not Found. They are working on it. Problem started slowly on Friday first day of CN Live!”

Consortium News

Elizabeth Vos - Consortium News Target of a Malware Attack as Twitter Takes Down Assange Support Group’s Account Stephenie Kelton - MMT – Letters from America

Another superb interview by

Who could not want to give MMT a try after hearing this?

It was Victor Hugo who said that all the forces in the world are not so powerful as an idea whose time has come. In the US, inequality and collapsing capitalism means the idea of embracing a socialist politician is gathering momentum.
The cynical stock response to how socialism can deliver on its economic promises is to ask, ‘but how do you pay for it?’ Economists advocating Modern Monetary Theory say it is the way to fund vital public services.
Host Ross Ashcroft travels to New York to meet with Bernie Sanders economic adviser, Professor Stephanie Kelton, to ask what MMT can deliver and if America is ready for a new socialist American dream.

JAYATI GHOSH - The Exploitation Time Bomb

China zooms ahead knowing you can't have a good economy and a high standard of living without industry and technology, but in the West the One Percent make more money through rent extraction, and so feel no need to invest and innovate.

Sadly, lots of other peoole, including small businessmen, support the present system thinking it is true capitalism, but there would be more rich people and more entrepreneurs if we moved towards a social democracy with a robust welfare state.

The West is being destroyed and hollowed out by this neoliberal system, while the East zooms a ahead.

Worsening economic inequality in recent years is largely the result of policy choices that reflect the political influence and lobbying power of the rich. There is now a self-reinforcing pattern of high profits, low investment, and rising inequality – posing a threat not only to economic growth, but also to democracy.

Project Syndicate 

JAYATI GHOSH - The Exploitation Time Bomb