An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
John Carney — Is Kyle Bass Wrong on the Japan Trade?
John bounces off Joe Weisenthal at Business Insider to explain why Bass has it all wrong, as Mike Norman pointed out here recently on the same reasoning.
> Joe Weisenthal at Business Insider thinks that this resemblance is an illusion. Japan, he argues, is not going bust. Bass’ logic is “badly flawed,” he writes. As a result, the Japanese trade is “never going to pay off for him.”
This Weisenthal guy sounds MMTish. Is he a "known" MMTer?
Reading Carney it seems that an additional qualifier (or maybe a higher level of?) to be a "monetary sovereign" is the desirability of the issuer nation’s currency outside its own borders. Otherwise it would need to *use* / fund itself in FCY to import what it can't produce locally. Am I missing something here?
Also, given that most commodities are priced in USD isn't every nation effectively in this position, expect the US?
Just means that there are limits on the sovereign. As Randy Wray says, the government has to watch inflation rate and exchange rate. A currency sovereign has more policy space than a nation that is not, but it doesn't have unlimited policy space. The general has to be interpreted wrt specific instances and conditions.
5 comments:
Carney writes:
> Joe Weisenthal at Business Insider thinks that this resemblance is an illusion. Japan, he argues, is not going bust. Bass’ logic is “badly flawed,” he writes. As a result, the Japanese trade is “never going to pay off for him.”
This Weisenthal guy sounds MMTish. Is he a "known" MMTer?
Good analysis
Reading Carney it seems that an additional qualifier (or maybe a higher level of?) to be a "monetary sovereign" is the desirability of the issuer nation’s currency outside its own borders. Otherwise it would need to *use* / fund itself in FCY to import what it can't produce locally. Am I missing something here?
Also, given that most commodities are priced in USD isn't every nation effectively in this position, expect the US?
Just means that there are limits on the sovereign. As Randy Wray says, the government has to watch inflation rate and exchange rate. A currency sovereign has more policy space than a nation that is not, but it doesn't have unlimited policy space. The general has to be interpreted wrt specific instances and conditions.
Post a Comment