Important. The intersection of the political and the economic, and the predominance of the political under national sovereignty. The internationalist left ignore this at its peril, especially in a world of transnational corporatism. Bill also discusses the situation in Iceland in relation to the recent IMF paper, Neo-liberalism: Oversold?
Bill Mitchell – billy blog
Iceland proves the nation state is alive and well
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
Iceland proves the nation state is alive and well
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
7 comments:
I do like Bill Mitchell, and I even read it through to the end this time, with a bit of speed reading.
"We also learned this week that the Icelandic government has increased the intensity of its capital controls and is forcing speculative capital to behave itself."
Isn't this the "Xenophobia!" ???
"to prevent this cash destabilising the exchange rate when the nation reduces the capital controls,"
How can "cash" destabilize anything????
So what are we saying... that the existence of foreign reserves both official and non-official ITSELF is "destabilizing"? When a CB changes policy from said CB setting the exchange rate directly and then would delegate this function to a system of fiscal agents with limited access to capital as opposed to a CB that can issue new domestic reserve balances ex nihilo?
Then this:
"eschewed the notion that self-regulating markets – the catchcry of the free market lobby – deliver optimal outcomes."
What is "self-regulating" ????? (oxymoron)
Websters: "a law, rule, or other order prescribed by authority, especially to regulate conduct."
The exchange rate IS regulated whether regulated directly by a CB or whether that regulatory function is delegated to a system of fiscal agents with relatively limited regulatory parameters at its disposal..
This is like the MMT top ender people saying the exchange rate can be "free floating!"...
Hi Matt,
The open question for me is how does "the market" settle in aggregate, how much does bank lending play a part in that, and what would happen if you *restricted lending by policy* (say making loans for currency sales/purchase of foreign assets unenforceable)?
"how does "the market" settle"
Well the two parties have to come to an agreement on the price... THEN the fiscal agents who get involved in financing of the deal have to respond to those results...
If the price falls from previous, then the fiscal agents respond one way... if the prices rises from previous, then the fiscal agents respond another way...
The reserve balances are assets to the fiscal agents like loans, etc... and assets are regulated against capital via a standing ratio...
"fiscal agents"
What does this term mean?
A fiscal agent, fiscal sponsor, or financial agent is a proxy that manages fiscal matters on behalf of another party. A fiscal agent may assist in the redemption of bonds or coupons at maturity, disbursing dividends, and handling tax issues. For example, the United States Federal Reserve is the fiscal agent of the federal government of the United States.
Wikipedia
It's very common for MMT economists to say that central banks are fiscal agents of their governments.
You bank is your fiscal agent when you pay taxes by bank draft. Payments are only accepted in government liabilities and you don't have access to the central bank. So your bank makes the payment at your direction and debits your account at the bank.
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