Wednesday, June 26, 2013

Bill Mitchell – Since when did the BIS become the Neo-liberal Ministry of Misinformation?

One despairs when a sober institution gets ahead of itself, usually because they make hiring mistakes, and start to think they know stuff. This is an organisation that is steeped in statistical analysis and should have a very good idea of empirical regularities. They know that interest rates have been “essentially zero” in Japan since the 1990s and they know that what hasn’t happened as a consequence. They know that central banks have been “expanding their balance sheets” (now “collectively at … three times their pre-crisis level”) and what hasn’t happened as a consequence (inflation). But as the neo-liberal paradigm has concentrated its control of the policy debate, this organisation has morphed from playing a useful role as a coordinator of central banking into a propaganda unit pumping out misinformation and outright lies and distorting the public debate. Welcome to the Bank of International Settlements, which is now firmly ensconced with the likes of the IMF, the OECD, the ECB, the EU, the World Bank, and others as being part of the problem the World economy faces.
Bill Mitchell – billy blog
Since when did the BIS become the Neo-liberal Ministry of Misinformation?
Bill Mitchell

The BIS is another agency in the Department of Propaganda.

Bill provides a good summary of monetary versus fiscal policy in stimulating aggregate demand.
Claiming monetary policy was highly effective (despite no serious evidence to support that proposition) and fiscal policy was ineffective (again in denial of the facts) was an important strategic plank for the conservatives.
It allowed them to limit the discretion of the elected representatives of the people and transfer economic management to central bankers who are unelected and largely unaccountable. They tightened the straitjacket on democratic choice by imposing so-called fiscal rules, which are nothing more than arbitrary ideological constraints on the capacity of government to adopt flexible policy choices to changing circumstances.
Part of the straitjacket and shifting of economic policy management was also evidenced by the rise of so-called fiscal commissions – faceless, unelected people who think we are so stupid that their ideological diatribes on fiscal consolidation should be taken seriously. But the intent is clear – these commissions are used to place political pressure on the elected government to adopt austerity measures and transfer real income to the top-end-of-town at the expense of the disadvantaged, fragile and poor citizens.
Two key MMT points that set straight the BIS misinformation and disinformation — yes, they lied in addition to being ignorant.
Basic macroeconomic theory tells us that spending equals income. If there are leakages from the spending cycle via saving, imports, or taxes then there have to be equal injections into spending stream (via government spending, investment spending or export revenue) if the current level of economic activity is to persist.
A sovereign government can always buy anything that is for sale in the currency it issues including all the unemployed labour. In fact, it has a duty to purchase all that unemployed labour if there is zero bid for its services from the non-government sector. 

2 comments:

F. Beard said...

A sovereign government can always buy anything that is for sale in the currency it issues ... Tom H.

How about buying some restitution for the population? How about a universal bailout at least until all deposits are 100% backed by reserves?

In fact, it has a duty ... Tom H

Government has a duty to pursue the GENERAL welfare, not the welfare of counterfeiters for usury and the so-called "creditworthy." And it does not have a duty to train better slaves for their oppressors.

F. Beard said...

Ooops! Sorry, Tom. I misattributed Bill Mitchell's quote to you.