Sunday, February 17, 2019

Michael Klare — A Long War of Attrition

Washington’s fears of a rising China were on full display in January with the release of the 2019 Worldwide Threat Assessment of the U.S. Intelligence Community, a synthesis of the views of the Central Intelligence Agency and other members of that “community.” Its conclusion: “We assess that China’s leaders will try to extend the country’s global economic, political, and military reach while using China’s military capabilities and overseas infrastructure and energy investments under the Belt and Road Initiative to diminish U.S. influence.”
To counter such efforts, every branch of government is now expected to mobilize its capabilities to bolster American -- and diminish Chinese -- power. In Pentagon documents, this stance is summed up by the term “overmatch,” which translates as the eternal preservation of American global superiority vis-à-vis China (and all other potential rivals). “The United States must retain overmatch,” the administration’s National Security Strategyinsists, and preserve a “combination of capabilities in sufficient scale to prevent enemy success,” while continuing to “shape the international environment to protect our interests.”
In other words, there can never be parity between the two countries. The only acceptable status for China is as a distinctly lesser power. To ensure such an outcome, administration officials insist, the U.S. must take action on a daily basis to contain or impede its rise....
When it comes to the economy, the language betrays the reality all too clearly. The Trump administration’s economic struggle with China is regularly described, openly and without qualification, as a “war.” And there’s no doubt that senior White House officials, beginning with the president and his chief trade representative, Robert Lighthizer, see it just that way: as a means of pulverizing the Chinese economy and so curtailing that country’s ability to compete with the United States in all other measures of power....
In fact, this should be considered a straightforward declaration of economic war. Acquiescing to such demands would mean accepting a permanent subordinate status vis-à-vis the United States in hopes of continuing a profitable trade relationship with this country....
Completing the picture of America’s ongoing war with China are the fierce pressures being exerted on the diplomatic and military fronts to frustrate Beijing’s geopolitical ambitions....
That puts the US and China on a collision course.

Tom Dispatch
Tomgram: Michael Klare, A Long War of Attrition

Zero Hedge — In "Serious Blow" To US, Britain Concludes Huawei Is "Manageable Risk" To 5G Rollout

Following intense pressure from the US on its European allies to boycott the use of Huawei products in the rollout of next-generation 5G products and shut out the Chinese telecom giant from local markets, Germany was the first nation to rebuke Washington, with Handeslblatt reporting last week that the German government wanted to avoid excluding products offered by Huawei.
Now it's the UK's turn.
In the latest "serious blow" to US efforts to persuade allies to ban the Chinese supplier from high-speed telecommunications systems, the FT reported that the British government has concluded that it can "mitigate the risk from using Huawei equipment in 5G networks."…
Not onboard with the de facto US embargo.

Zero Hedge
In "Serious Blow" To US, Britain Concludes Huawei Is "Manageable Risk" To 5G Rollout
Tyler Durden

Zero Hedge — New Study Exposes How 21st Century Capitalists Game The US Tax System


Pass-through.
Researchers explained the evolution of the top .01%: Reagan-era tax reforms increased tax liabilities for businesses and reduced them for individuals. While this has been great for small firms over the last three decades, it made the concept of the pass-through business more appealing for large business owners to game the system....
Pass-through enables rent extraction by the "working rich."
Zidar also said these findings exemplify what is often overlooked in discussions of income inequality. There is an entire class of wealthy Americans who are gaming the tax system, by the way money flows through in human capital income.
These finds are a wake-up call for the need to reform the business tax system, the urgent need for more skilled workers and the need for better educational opportunities to empower the next generation of innovators and entrepreneurs,
“We show that if you look and decompose this income, a lot of it comes from these pass-through businesses, and that activity more closely resembles labor than the idle rich,” concludes Zidar. “Our results suggest that educating the country’s next generation of innovators may be more important than tax incentives.”
You now know how the top .01% game the tax system.
Zero Hedge
New Study Exposes How 21st Century Capitalists Game The US Tax System
Tyler Durden

Ulson Gunnar — Ukraine’s Neo-Nazis “Suddenly” a Problem as Power Grows


US caught supporting not only terrorist proxies in the Middle East proxied but also neo-Nazis in Ukraine? Oh my!

NEO
Ukraine’s Neo-Nazis “Suddenly” a Problem as Power Grows
Ulson Gunnar

Tom Luongo — Warsaw and Munich: Whistling Past NATO’s Graveyard

In the end, the whole Munich affair looked like a bunch of people gathering to whistle past the graveyard of the fraying post-WWII institutional order. Trump wants Europe to pay for NATO so we don’t but Europe doesn’t want NATO on Trump’s terms which put them in the cross-hairs of his power play with Russia and China over the INF treaty.
Putin has built a version of fortress Russia that is for all practical purposes impregnable, short-of an all-out nuclear conflict which no one except maybe the most ideologically possessed in D.C. and Tel Aviv wants.…
And that’s why Europe is so unwilling to go along with Trump on the INF Treaty, Iranian regime change and even his Arab NATO plan. They are the ones being asked to be on the front lines, pay for and fight a war against their best interests.
And that’s why no one was willing to join the latest ‘coalition of the willing’ in Munich to perpetuate the conflict in Asia. They’ll go along with Trump’s plans in Venezuela, it doesn’t cost them anything strategically.
But even Merkel knows that in light of the events of the past three and a half years, the right move for Europe is to cut a deal with Russia and Iran while keeping their head down as the U.S. loses its mind....
Tom Luongo
Warsaw and Munich: Whistling Past NATO’s Graveyard

See also
Russian lender Gazprombank has decided to freeze the accounts of Venezuelan state oil company PDVSA and halted transactions with the firm to reduce the risk of the bank falling under U.S. sanctions, a Gazprombank source told Reuters on Sunday.
Reuters
Russia's Gazprombank freezes accounts of Venezuela's PDVSA: source

Sputnik International
Venezuela's PDVSA Refutes Reports of Gazprombank Freeze on Company Accounts

Bill Mitchell — The EU is neoliberal to its core and captured by corporate interests

The aptly named – Corporate Europe Observatory (CEO) – “is a research and campaign group working to expose and challenge the privileged access and influence enjoyed by corporations and their lobby groups in EU policy making”. It is relentless in exposing the corporate scams that result in European Union laws being biased towards corporations at the expense of the well-being of the broader population. The research results they publish are diametrically opposed to the claims by the Europhile Left, especially those from Britain, that posit that the EU is the exemplar of global organisation, defending workers’ rights and all manner of good things, and with just a few reforms here and there is the hope for a progressive future. CEO’s most recent report (February 6, 2019) – Captured states: when EU governments are a channel for corporate interests – allow us to see how the EU machinery has turned the Member States into a “channel for corporate interests” – “middlemen for corporate interests”. My position is that CEO has it right and the Europhiles a dreaming....
The distinguishing factor between classical economic liberalism and neoliberalism is that the former is based on isolating government from economic influence with the later is based on government capture by the ownership class as an analog to the aristocracies and gentries under feudalism Neoliberalism is better characterized as neo-feudalism than a new form of liberalism.

Both classical economic liberalism and neoliberalism are supposedly manifestations of "capitalism." Classical economic liberalism is such as an ideal system but realistically it is no possible to either abolish the nation state or to limit the state to the role of "night watchman." Pure capitalism is based on perfect competition such that the operation of "free markets" eliminates economic rent as unearned gai. But this requires social liberalism in the sense of absence privileged entities and networks and political liberalism is the sense of absence of political power wielded by special interest.

Neoliberals realized this and set about capturing governments through representative democracies in which outcomes are determined largely by monied interests competing with each other factionally, but cooperating against the marks from whom economic rent is extracted. The result nationally is corporate statism and internationally in the attempt of transnationals to gain leverage over national governments through agreements and treaties that favor special interest rent-seeking globally.

Bill Mitchell – billy blog
The EU is neoliberal to its core and captured by corporate interests
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Renegade Inc - Death by a Thousand Cuts

The PPI and PFI scam: the government can borrow money at record low interest rates but is locked into PFI deals at 8% to 10% interest rates instead.

The Conservative government is corrupt, as well as the Liberal Democrats and New Labour as they all clamber to the corporations who see the NHS as the big one - where the serious money is to be made. They brag to their investors how they can provide less service to the public while maximising profits, which they are by law obliged to do.

The U.S. war machine is busy at work destroying one country after another to maximize profits, while the neoliberals are still busy finding more to privatize to shove even more profits into the hands of the few. And then there is the pay back, where the politicians leave government to get top jobs in finance or the privatised companies. The revolving door.

Tony Blair apparently now has his own yacht so he doesn't have to feel inferior anymore when entertaining his rich and powerful oligarch friends. He rose through the ranks and  overcome the inequality gap. Socialism for the rich! He's still a member of the Labour Party.

Once upon a time society had values, for instance, very bright young women with 5 O-Levels would train as nurses because they felt a duty to provide a service to society, but it seems everything is only about the money now. Killing millions of people is very profitable too - and Iran probably next after Venezuela.




For years corporate interests have had their eye on one of Britain’s biggest assets namely the National Health Service.
Working quietly with unprincipled politicians they – and the corporate media – claim the NHS can only survive if it is subject to‘free market’competition.
So why is the British state continuing to privatize the NHS despite overwhelming evidence that the outcome will be deadly?
Host Ross Ashcroft is joined by the former doctor and campaigner, Sarah Gangoli and the GP and author, Youssef El-Gingihy explain how the national treasure that is the NHS is suffering death by well over a thousand cuts.



John Mauldin — Modern Monetary Madness


For the record. No comment. My time is valuable. Who is the crazy here?
Hey, it's their theory. Don't ask me to explain it.
The only reason to read is for a laugh.

econintersect
Modern Monetary Madness
John Mauldin, Thoughts from the Frontline

Alex Baca — The Green New Deal’s Huge Flaw


Sprawl.

China is already tackling this with urbanization, which is the reason for the build out of "ghost cities."
Unsprawling America isn’t as hard as it sounds, because America is suffering from a critical, once-in-a-lifetime housing shortage. The National Low Income Housing Coalition reported last year that the U.S. has a national deficit of more than 7.2 million affordable and available rental homes for families most in need. Of course, if we build those homes in transit-accessible places, we can save their occupants time and money. But the scale of housing demand at this moment is such that we could build them in car-centric suburbs, too, and provide a human density that would not just support transit but also reduce the need to travel as shops, jobs, and schools crop up within walking distance. 
Naked Capitalism
The Green New Deal’s Huge Flaw
Alex Baca

Brian Romanchuk — Comments On The Green New Deal And MMT

There is considerable interest in the Green New Deal (GND) proposal by U.S. Representative Alexandria Ocasio-Cortez, and its relationship with Modern Monetary Theory (MMT). Although my preference is to focus on my business cycle book, since I am one of the many MMT bloggers, I should at least comment on the Green New Deal. The natural question arises: what does the Green New Deal mean, and is it feasible? Based on my very limited understanding of the American legislative process, I would guess that it is way to early to say anything definitive. That said, that has not really stopped anyone else from making wild claims about the proposal...
It should be noted that the concept of a Green New Deal has attracted a good deal of attention elsewhere, such as in Europe. However, since the programme itself is uncertain, the suggested mode of implementation will vary. As a result, we can see calls for a "Green New Deal" from people who are otherwise critical of MMT. In other words, the concept is not synonymous with MMT.
MMT makes two major contributions to the debate on the GND.

 1. There is no financial constraint on a currency sovereign in deploying real resources that are available.

2. If the government competes with nongovernment for scarce real resources, then the price of those resources will rise in markets, exerting inflationary pressure.

The GND is a special case, since it is represented as an existential threat. This could involve government both commandeering real resources for emergency use and also taking some real resources off the table, e.g., to quickly shrink the carbon footprint.

This could necessitate considerable public investment or incentives to draw forth private investment. The same goes for investment in developing and scaling green resources.

In the emergencies of the past, the real constraint of #2 has been overridden by necessity, e.g, during WWII, price controls and rationing were imposed, and savings bonds introduced. John Kenneth Galbraith was deputy head of the OPA.

Thus, a question of urgency arises with respect to implementing the GND. What resources will be required and how to deploy them is an engineering problem.

This has all to be integrated in terms of a comprehensive policy proposal and then fleshed out into specific legislation. Input from economists will be needed in model construction and fiscal recommendations.

In fact, it is a global challenge that requires concerted effort internationally, and lot of conflicting national interests will have to be taken into account to arrive at something workable that can get agreement.

Bond Economics
Comments On The Green New Deal And MMT
Brian Romanchuk

Alexander Douglas — Functional Finance for Mainstream Macroeconomists

After reading Paul Krugman’s attempt to grapple with Functional Finance, I happened to browse through Wendy Carlin and David Soskice’s macroeconomics textbook. This book, I should note, comes with the endorsement of Simon Wren-Lewis. I was surprised to find in it the mechanics of Functional Finance clearly explained in terms of the mainstream theory, specifically the ‘3-equation model’ — a version of the ‘New Consensus’ model....
Alexander Douglas at Medium
Functional Finance for Mainstream Macroeconomists
Alexander Douglas | Lecturer in Philosophy, University of St. Andrews

Merijn Knibbe — Modern Money Theory and inflation control: look at constant tax inflation


Merijn Knibbe demonstrates that some economists sympathetic to MMT don't grasp the finer points — yet. 

Just pointing them to the literature is probably not sufficient or the best strategy. The literature needs to be organized in terms of topics, and links provided for easy access, for example.

There are two fundamental principles in sales, and now we "selling" MMT. That is, we want people to "buy in."

Some buyers are exhibit resistance that needs to be overcome. Others are open but need to be persuaded to take action. Others are ready to buy and the task is to make it simple to take cation by making the buying experience easy and enjoyable for them.

Real-World Economics Review Blog
Modern Money Theory and inflation control: look at constant tax inflation
Merijn Knibbe

Here is a comment I left there:
Tom Hickey
February 17, 2019 at 5:28 pm
MMT economists emphasize that spending and taxation are both part of the existing automatic stabilization mechanism, with transfer payments (welfare) increasing with economic contraction and tax revenue decreasing. The opposite holds for expansion.
Since fiscal policy is not designed this way at present, the spending and offset mechanism is not functioning as well as it could to optimize performance along the cycle. Instead, fiscal policy is determined under mistaken assumptions about both spending and taxation, as MMT economists have pointed out. 
This is what the debate needs to be about.
An ideal fiscal policy would incorporate this in modeling the cycle in order to optimize stabilization policy and reduce the need for ad hoc measures to correct, although that might be called for in special cases, such as the GFC and ensuing deep and persistent contraction owing to a financial cycle culminating in the stage of Ponzi finance. Incorporating heterodox knowledge could have avoided or mitigated that.
MMT economists were also pointing this out based on stock-flow consistent modeling, functional finance, and incorporation of understanding Minsky had provided prior to the crisis and they also provided a fiscal remedy that was not deployed. MMT is based on Keynes, Lerner, Godley and Minsky, for example, but integrates this knowledge and develops it further.

Syria wants answers from UN over illegal invasions

Syria has complained to the U.N. about the illegal U.S. and Israel strikes in their country, but no one at the U.N. will listen, says Michael Maloof, who was formally a Pentagon advisor.

Col Lawrence Wilkerson has attended bipartisan meetings between Democrats and Republicans and he says they are planning endless wars for the World. After Venezuela it will be Iran, or Iraq again, says Michael Maloof.  The elite make billions out of endless wars.



Former Pentagon official Michael Maloof joins In Question to weigh in on Syria calling for the UN to end US strikes and invasions in the country. Maloof discusses what he expects from Syria’s requests, reports of an Israeli drone firing missiles near a demolished hospital, Syria’s options for retaliation and Trump’s withdrawal plan.

Saturday, February 16, 2019

“What You Need To Know About The $22 Trillion National Debt”: The Alternative Interview

Steven Rattner’s opinion piece in the New York Times and [Jason] Furman’s interview on National Public Radio are perfect examples of the ideas that MMT wants to debunk:  Deficits are not normal; deficits crowd out private investment; the public debt is a burden on our grandchildren; our ability to respond to societal problems is limited by the fact that the US government does not have enough money to confront them.
Below is an alternative interview to the Furman’s interview that reviews these points. This blog will run like a traditional interview and all the evidence for the points made are in appendices at the end...
New Economic Perspectives
What You Need To Know About The $22 Trillion National Debt”: The Alternative Interview
Eric Tymoigne | Associate Professor of Economics at Lewis and Clark College, Portland, Oregon; and Research Associate at the Levy Economics Institute of Bard College

Friday, February 15, 2019

Goldmoney — Currencies Threatened By A Credit Crisis

In this article, I draw attention to the similarities between the current economic situation and that of 1929, and the threat to today's unbacked currencies.
  • There is the coincidence of trade protectionism with the top of the credit cycle, and there are the inflationary events that preceded it.
  • The principal difference today is in modern macroeconomic delusions, which hold that regulating inflation of money and credit is the solution to all ills.
  • I conclude that economic salvation can only come from ditching today's macroeconomic theories and by returning to monetary stability through credible gold exchange standards...
Ahem, the world was on a gold standard in 1929. Been there, done that.

Seeking Alpha
Currencies Threatened By A Credit Crisis
Goldmoney

Dean Baker — MMT and Taxing the Rich


Dean Baker looks at offsets.

He doesn't see "taxing the rich" as a good offset. I don't think MMT economists do either, and as far as I know, they have not pushed this proposal.

"Taxing the rich" through progressive taxation has another reason. That is, limiting the political power of wealth and reducing inequality. There are good reasons for this – social, political and economic.

Some MMT economists have recommend preemption of rent extraction first, with the residual to be addressed by taxation.

Beat the Press
MMT and Taxing the Rich
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

Thursday, February 14, 2019

SWF Institute — PART 1: How Institutional Investors Would Fare Under Alexandria Ocasio-Cortez's Green New Deal?

This article goes into the controversial Green New Deal package put out by U.S. freshman Congress member Alexandria Ocasio-Cortez (known on Twitter as AOC) and veteran lawmaker Senator Edward Markey. Majority Leader Mitch McConnell moved to bring the legislation to a vote in the U.S. Senate. However, the probability of such legislation passing would require a Democrat figure in the White House, but it outlines what key party members feel about capitalism, Modern Monetary Theory (MMT), economics, and policy….

Iain Murray — Economics of Green New Deal: More Red Than Green


"Socialism."

While Iain Murray presents an ideologically biased argument agains the GND and MMT, he brings up points that need to be addressed for popular consumption, since it is likely that many people think this way.

The GND is not a proposal but an idea for a proposal. A lot of things need to be spelled out that aren't yet. In fact, it is probably not possible to do so at this point, at least comprehensively, since significant pieces are lacking and need to be modeled, developed, discovered, or invented.

This is a huge challenge and throwing money at it can't solve it. This impression should be avoided in arguing that affordability in not an issue for currency sovereigns. Reconfiguration of the use of real resources is required, and this also will require institutional change and a shift in cultures globally.

Competitive Enterprise Institute
Economics of Green New Deal: More Red Than Green
Iain Murray

Michael Lebowitz — Modern Monetary Theory and its Fictional Discipline


Michael Liebowitz makes up his own theory of inflation to criticize MMT and the inflation constraint.

Pepe Escobar — Iran looks East amid US trials and tribulations

The latest internal polls reveal that 40 years after the Islamic Revolution, over 70% of Iranians of all social classes have zero trust in any negotiations involving the US government. And that even includes an increasing number of millennials, for whom the Islamic Revolution is just an echo of a distant past.
That may not be the exact sentiment in Teherangeles, California – the capital of the Iranian diaspora, which may number over half a million people worldwide, mostly upper-middle-class. But it does reflect the pulse of the nation....
The post is also about global de-dollarization.

Asia Times
Iran looks East amid US trials and tribulations
Pepe Escobar

Andrei Martyanov — About US Dollar and Sanctions, Yet Again.

It is clear that once dominance of the US Dollar and the system which sustains it is removed, consequences for the United States could be catastrophic. The question is NOT about IF US Dollar will survive as world's reserve currency--this is not even up for a debate--it is WHEN and HOW the departure will happen.
Reminiscence of the Future
About US Dollar and Sanctions, Yet Again.
Andrei Martyanov

Peter May — Paul Mason demonstrates all too clearly why much of Labour don’t ‘get’ money

I confess I expected better. Paul Mason misses the fact that it is not ‘hit and hope’ it is actually the way money IS created – the neoliberal deceit is the ‘fact’ that we tax and spend.
The Treasury has after all, admitted as much as, indeed, have the Bank of England in September 2017: “Regarding whether taxation is necessarily required to finance government spending the answer is no, it is not. Along with raising money by taxation, governments can borrow money and they can create money outright.”…
Actually, money is created outright as credit. Banks extend loans that create deposits by crediting deposit accounts. Governments that are currency issuers create tax credits denominated in the currency as the unit of account and use them to credit nongovernment accounts, nowadays usually through the central bank as the government's fiscal agent.

According to the "law of reflux" money returns to its source. Credits that banks create through lending are used to pay down loans, which destroys the funds created by the deposit. Payment of tax credits to the government in payment of tax obligations destroys the funds created by the initial issuance. Of course, this is in aggregate, taking flows over time into account.

Spending and taxing are separate different fiscal operations for a currency issuer. Spending must logically precede taxation. Taxation, as well as payment of fees, fines and tariffs, destroy funds created through issuance, which occurs through government spending including transfers.

Spending is therefore offset by taxation and, in terms of "funds" spending with respect to sources and uses, but taxation is not used operationally to "pay for" spending. Spending and taxation are a separate fiscal operations, and tax policy is separate from spending policy. Taxes don't "pay for" spending — ever — under any circumstances.

Hence, it makes no sense to say that taxes are needed to "afford" spending, or that spending without offsetting taxes is "living beyond our means," or that liabilities are "unfunded." In terms of accounting statements, funding is simply a matter of accounting entries ("keystrokes on spreadsheets") that balance the books.

For a full explanation of the MMT POV on money and banking and finance, see Eric Tymoigne's book draft, The Financial System and the Economy.

Progressive Pulse
Paul Mason demonstrates all too clearly why much of Labour don’t ‘get’ money
Peter May

Barkley Rosser — Who Is Really A Socialist? [Updated]


Barkley Rosser either makes a bad mistake in starting with Marx's definition of "socialism" as state-ownership of the means of production as exclusive, or he is carrying water for the ownership class that uses this arbitrary definition to demonize the opposition to its rent-seeking and parasitic rent extraction, e.g., by socializing negative externality, the result of which is now climate change. I suspect that he was shooting from the hip and shot himself in the foot instead of hitting his target. Disappointing for a smart guy. On the other hand, I often disagree with his analysis when it exceeds the scope of his field, which is economics within the scope of the conventional approach to it. Such is the case here, in my view, although he does bring it non-economic factors.

Wikipedia:
Socialism is a range of economic and social systems characterised by social ownership and workers' self-management of the means of production[10] as well as the political theories and movements associated with them.[11] Social ownership can be public, collective or cooperativeownership, or citizen ownership of equity.[12] There are many varieties of socialism and there is no single definition encapsulating all of them,[13] with social ownership being the common element shared by its various forms.[5][14][15]
Socialist systems are divided into non-market and market forms.[16] Non-market socialism involves the substitution of factor markets and money with engineering and technical criteria based on calculation performed in-kind, thereby producing an economic mechanism that functions according to different economic laws from those of capitalism. Non-market socialism aims to circumvent the inefficiencies and crises traditionally associated with capital accumulation and the profit system.[25]By contrast, market socialism retains the use of monetary prices, factor markets and in some cases the profit motive, with respect to the operation of socially owned enterprises and the allocation of capital goods between them. Profits generated by these firms would be controlled directly by the workforce of each firm, or accrue to society at large in the form of a social dividend.[26][27][28] The socialist calculation debate concerns the feasibility and methods of resource allocation for a socialist system.
Socialist politics has been both internationalist and nationalist in orientation; organised through political parties and opposed to party politics; at times overlapping with trade unions, and at other times independent and critical of unions; and present in both industrialised and developing nations.[29] Originating within the socialist movement, social democracy has embraced a mixed economy with a market that includes substantial state intervention in the form of income redistribution, regulation, and a welfare state. Economic democracy proposes a sort of market socialism where there is more decentralized control of companies, currencies, investments, and natural resources.
In particular, critics of "socialism" that charge it is a failed system that history exposes as inferior ignore a factor that I regard as the most salient one, namely, the ferocious opposition and actual violent attacks of the capitalist, so-called liberal order  (read "bourgeois liberal" plutonomy)  on any hint of social power and control that would limit the power and control of the privileged elite and which imposes a dictatorship of the ruling class through their minions, behind a facade of representative democracy. In the US, for instance, the a bipartisan establishment is rife with corruption, much of it legalized.

Economists simply are not in a position to hold themselves out as experts capable of commenting definitively on these matters since they have put so many relevant factor beyond the scope of their subject matter. The result is an economics devoid of connection with reality.

In the real world, capitalism has been linked historically with imperialism and colonialism. Neoliberalism can be viewed as joined at the hip with neo-imperialism and neocolonialism. Neoconservative and liberal internationalism/interventionism are both based on "spreading freedom and democracy" which is equated with economic liberal as bourgeois liberalism, which is liberal chiefly in the sense that powerful elites are enabled by capture of the state to extract rent without limitation and to do so globally, backed by a powerful military and control of the global financial system.

This is becoming especially important now that "socialism" is becoming a hot topic and economists think that they are are in a position to be best informed about it and comment on it. That is not necessarily so. Very few have the breadth and depth of knowledge of Michael Hudson, for instance.

Socialism involves not only economics, but also other fields such as political theory, sociology, anthropology, history, general systems theory, psychology, and philosophy.

Oh, and did I forget physics, you know, like neoclassical economics is trying to imitate? See Albert Einstein, Why Socialism?

Is genuine socialism best characterized in terms of government that is actually "of the people, by the people and for the people" rather than being controlled by a ruling class and operated for special interests as a representative democracy under capitalism and the way the US was really organized under the Constitution?

Econospeak
Who Is Really A Socialist?
J. Barkley Rosser | Professor of Economics and Business Administration James Madison University

UPDATED

Yves Smith weighs in here. Useful in my view, but also incomplete. She also ignores the political aspect of external pressure, including threat of force and actual force, that I brought in above. It is very difficult to disentangle the social, political, financial and economic, especially when it involves key international and geopolitical input. Characterizing "socialism" based on such historical examples is naive, in my view.

For example, is Venezuela a "failed state" entirely owing to "socialist" policy or in part, even great part, owing to US pressure since Chavez, including a former coup attempt. Moreover, the sorry state that Venezuela was in prior to Chavez and which underlay his rise was a result of the comprador government that served as US puppet, a state to which is the US is working reestablish there. Simlarly, a great deal of Soviet and Red Chinese policy was a response to pressure, threat of force and actual application of force from the "free world" dominated by "capitalism" as the mortal enemy of "socialism"

Moreover, "capitalism" and "socialism" are such high level abstractions they are difficult to define technically in a way that can be measured quantitatively. And quantitative modeling is a sine qua non of science these days. Otherwise it is speculative in a way that is undecidable on data-based evidence. However, to reduce the problem to what is measurable often excludes material factors that are relevant. So the end-result is based on opinion, which famously suffers from cognitive bias, including ideological bias.

Bill Mitchell – billy blog A progressive European superstate will never come to pass

The increasing uprising against Modern Monetary Theory (MMT) in the media is salutory because it means our ideas are now considered to be a threat to the mainstream economics (for example, Paul Krugman now buying into the carping) and to the heterodox tradition (for example, the British economists who self-identify with that tradition). The high profile debate around the Green New Deal has been associated with MMT and this has brought all sort of crazy attacks on MMT from those who think they are ‘green’ but haven’t traversed out of ‘Monetarist-type’ economics thinking. And then I note that apparently the Green New Deal is being expropriated by Europhiles to wedge those who consider Lexit and Brexit to be the only way to re-establish progressive society and politics. 

Apparently, the Europhiles are arguing that you cannot be both Lexit/Brexit and support the Green New Deal. Curious logic. And, of course, a desperate attempt by the Europhiles to grasp at anything to discredit both Brexit and MMT, given that there is a high proportion of MMTers who prefer Britain leave the EU and that the EU disappears in its current form. And so it goes. Wolfgang Streek recently published an interesting academic article that bears on this discussion. That is what this blog post is about....

Well, never is a long, long time. Who knows what will happen in the future, but it fairly certain it won't be anytime soon and even more sure that it won't be the outcome of the present arrangements that are supposedly designed to make it happen. More liberal utopianism that disregards realities involving traditional values and national patriotism, for example, and social, political and economic asymmetry. Moreover, since liberalism is about freedom, it follows that attempts to impose it on the unwilling is illiberal.

Bill Mitchell – billy blog
A progressive European superstate will never come to pass
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Brian Romanchuk — Functional Finance Versus New Keynesian Economics, Krugman Edition

Paul Krugman has piled onto the "MMT explained by non-MMTers" bandwagon, with a critique of Functional Finance. Functional Finance is largely associated with the Old Keynesian Abba Lerner, and is one of the key intellectual roots of Modern Monetary Theory (MMT). In my view, the most interesting part of the article is that it contradicts the commonly made assertion that there is very little new in MMT (which Krugman hints at in the article as well). In presenting his summary of Functional Finance, Krugman obviously has theoretical blinders on, and the objective of MMTers is to point out the existence of those blinders.…
The fundamental problem with the New Keynesian approach of Paul Krugman, Brad DeLong, Simon Wren-Lewis, etc., is that the model is fundamentally neoclassical rather than Keynesian., only departing somewhat in assumptions but not methodology. This methodology falls into the class formal (mathematical) rather than empirically based and it ignores the role of institutions and operations. As a result, it is either utopian or fitted.

For example, "full employment" in the neoclassical model is defined down to fit the assumptions about "natural rates" that are theoretical constructs and are not observables. The proof is in the pudding and the data reveals that the model only fits special cases, and it doesn't fit the non-trivial aspects of the issue, namely the turning points in the financial and business cycles.

As a result conventional economists missed the most momentous financial and economic event of contemporary times, the global financial crisis, because it was beyond the scope and scale of the model, explained as an "exogenous shock." Other models, in particular the Godley stock-flow consistent model based on accounting that MMT economist did, because such occurrences are within the scope and scale of the model.

Moreover, the remedies for the subsequent recession when the financial crisis went viral and spilled over into the global economy proposed by conventional economists failed. The country that dealt with the crisis successfully used the fiscal approach recommended by MMT economists. That country was China.

MMT economists were all trained in conventional economist in their academic studies and teach it along with other approaches in their classes. They have provided nuanced critics of other systems in their writings by showing the differences between MMT and these approaches, which conventional economists seem not to be aware of. Keynes and other of his followers have also, notably in the Cambridge capital debates in which Piero Sraffa and Joan Robinson defeated Paul Samuelson and Robert Solow, although the inadequacies of the model were not addressed subsequently. In fact, the "Keynesianism" of the New Keynesian synthesis developed and popularized by Samuelson is based on John Hicks' misreading of Keynes, and so the IS-LM model that Paul Krugman loves to cite is not true to Keynes.

The charge that there is nothing new in MMT, or that "we knew that already," are clearly false, as MMT economists have pointed out. So is the charge that the monetarism of the New Keynesian approach is superior to the fiscal approach of MMT. Finally, New Keynesians define down "full employment" to fit the NAIRU model based on dubious assumptions, resulting in a buffer stock of unemployed that involves million of people throughout the cycle.The MMT approach includes actual full employment (less transitional) by using a buffer stock of employed in which the government-set wage provided a price anchor by denominating the hourly wage for unskilled labor in the currency as the government's unit of account.

Bond Economics
Functional Finance Versus New Keynesian Economics, Krugman Edition
Brian Romanchuk

UPDATE

Brad DeLong follows Krugman, although he had aleady offered this criticism some time ago. As the MMT economists point out, this confuses Abba Lerner's approach to functional finance with the MMT approach to it. Similarly, the MMT approach to the JG is not the same as Hyman Minsky's.

Word for Word: Excange between Rep. Ilhan Omar and Elliott Abrams

Elliott Abrams is held to account in front of Congress, but the slippery scaley-back wiggles out of it by refusing to answer the question. He's feels no guilt and never has because the media is never held him to account. Would anyone in Putin's government be allowed to get away with war crimes like his? The U.S. lectures the World but no country lectures America about its long history of crimes against humanity.


Rep. Ilhan Omar (D-MN) has a heated exchange with Elliot Abrams, the U.S. special envoy to Venezuela, highlighting his role in the Iran-Contra affair. She says, "I fail to understand why members of this committee or the American people should find any testimony you give today to be truthful." The exchange came during a House Foreign Affairs Committee hearing. Full video here: https://cs.pn/2E8mXwn

Wednesday, February 13, 2019

Paul Mason — Alexandria Ocasio-Cortez’s Green New Deal is radical but it needs to be credible too

The backers of Ocasio-Cortez’s bill released and then withdrew an FAQwhich seemed to suggest the investment would be paid for using the methods advocated by Modern Monetary Theory (MMT). MMT rightly argues, as against free-market economics, that a state with a sovereign currency cannot go bust. The state can create growth, and thus the means to pay back money borrowed; and it can create money, via the central bank, which can be used to lend to government.
For many people on the radical left, MMT has become a new panacea - a get-out-of-jail free card for Keynesian economics in a world of highly indebted and stagnant capitalism. Unfortunately, it is not.
While it’s true there is a lot more tax and spend capacity in a modern economy than the free-marketeers admit, it is not infinite. Nor is it possible to infinitely expand the money supply without collapsing the value of money towards zero. MMT gives no account of where economic growth or profit comes from other than within the monetary system itself. Unlike Marxists, who believe value is created in the production process, the MMT crowd believe it can be created by the interplay of fiscal and monetary policy. (For a longer takedown, see this from the left economist Michael Roberts.)
If MMT is wrong, there are two negative outcomes for the Green New Deal project.
That "MMT gives no account of where economic growth or profit comes from other than within the monetary system itself" is flat out wrong. Paul Mason claims to have read all of the MMT literature. Well then, if he has, he doesn't seem to be been an attentive reader, or lacks reading comprehension.

MMT is in agreement with most economists that economic is about the allocation of scare real resources, non-scarce resources having no market value, i. e. are "free goods." What conventional economics misses is how finance and economics are joined at the hip in a monetary production economy, and that this joint is structured in terms of double-entry accounting, which implies stock-flow consistent modeling using a unit of account. This brings in the the institutional arrangement and operations of finance, both public and private. 

Finance makes economics understood as the production, distribution and consumption of real good possible in a monetary production economy through price rationing in markets. Failure to understand this and its implications results in economic under-performance and inefficiency in the use of real resources, and also leads to financial excess (inflation) and deficiency (deflation). 

This was a major point made by Keynes that MMT economists agree with: Investment causes saving. It is not the case that saving causes investment. In a market-based capitalist society, production is chiefly the outcome of investment, with government acting in the background to provide a fertile field on which to plant, so to speak.

Full employment is the outcome of optimal economic performance. In a monetary production economy, proper understanding of the relationship of finance and economics is needed to maintain optimal economic performance and real full employment (not defined-down unemployment) while also maintaining price stability. 

This may seem to be the same as the neoclassical assumption of general equilibrium in the long run, but it is not. According Keynes, whom the MMT economists follow in this respect, there is no tendency to long-run equilibrium. Optimal performance with minimal waste of real resources has to be achieved and maintained. The task that MMT undertakes to make possible by providing the needed understanding that is now missing.

Optimal efficiency arising from natural spontaneous order in perfectly symmetrical markets exists only in formal models and not in the real world, where social, political and economics asymmetries predominate. The question is what to do about this. 

The answer of economic liberalism is bend the real world toward the ideal. That is a chimera given culture and institutions that impose social, political and economic conditions that work against it. It is as utopian as the pure communism that economic liberals criticize.

MMT is about dealing with reality, such as it is, and doing what is possible to make it better for all.

This is not to say that Paul Mason has nothing constructive to say. There is plenty to say about the Green New Deal and what it implies financially and economically as well as socially and politically. This is a huge challenge and instead of sniping at each other, we need to exert concerted effort to develop the design solution that has the best chance of success, with no guarantees that it will actually succeed. And it has to pass muster globally, where a myriad of competitive interests are in play.

New Statesman
Alexandria Ocasio-Cortez’s Green New Deal is radical but it needs to be credible too
Paul Mason

Detroit Dan — MMT Elevator Speech


Frequent contributor to MNE, Detroit Dan, just posted this piece, with links. I think you will like it.

Mindorenyo
MMT Elevator Speech
Detroit Dan

Michael Hudson — Super-Imperialism at the Pentagon


Sputnik International interviews Michael Hudson. Audio and transcript.

Michael Hudson — On Finance, Real Estate And The Powers Of Neoliberalism
Super-Imperialism at the Pentagon
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

NBC News - Senate has uncovered no direct evidence of conspiracy between Trump campaign and Russia

"We were never going to find a contract signed in blood saying, 'Hey Vlad, we're going to collude,'" one Democratic aide said.


By Ken Dilanian
WASHINGTON — After two years and 200 interviews, the Senate Intelligence Committee is approaching the end of its investigation into the 2016 election, having uncovered no direct evidence of a conspiracy between the Trump campaign and Russia, according to both Democrats and Republicans on the committee.

Daniel Herborn — Gates takes issue with Ocasio-Cortez's plans to raise income tax on the super-wealthy

The iconic business magnate and philanthropist also dismissed “modern monetary theory” as “crazy talk”. The theory has been embraced by progressive US politicians such as Bernie Sanders and Ocasio-Cortez, and, curiously, President Donald Trump. It dictates that governments should not be concerned about deficits because they control the printing of their own currency. This leads to the conclusion that inflation should instead be managed with interest rates.
Does Bill Gates implicitly advance the r > g argument without naming it?

Bill Gates seems to dissociate himself from "sound finance" as "expansionary austerity," not being concerned with a manageable level of debt or requiring budget balance. But apparently he still identifies with neoclassical monetarism in terms of managing r > g through monetary policy, or limiting spending/increasing taxes.

It seems to me from what I am aware Gates said is that he is suggesting the later.

CEO Magazine
Gates takes issue with Ocasio-Cortez's plans to raise income tax on the super-wealthy
Daniel Herborn

Peter Cooper — Developments in Value Theory

Previously I have discussed how Marx’s well known aggregate equalities have been shown to hold under single-system interpretations of his theory of value. In the July 2018 edition of the Cambridge Journal of Economics, there is a noteworthy paper by Ian Wright that reconciles the classical labor theory of value with Marx’s prices of production within a dual-system framework. As with single-system interpretations, Marx’s equalities also hold under Wright’s approach. However, they do so in a different way. Here, I want to offer some thoughts on the difference.
Why is this important now other than as a matter of historical interest? British classical economists Smith and Ricardo raise the issue of economics rent and rent extraction, which would have been obvious to all in a recently post-feudal society and nascent capitalism. Marx noticed the similarity and attempted to show how in a capitalist system, economic rent is extracted chiefly from labor rather than land rent as it had been in feudalism, although the basis of rent under feudalism was also the making of land productive through labor. The factory became the new manor or landed estate.

A major thrust in the development of neoclassical economics was discrediting this idea based on marginalism, which purported to show that both capital and labor received their marginal productivity in terms of "just deserts" based on contribution. This is key because economic rent is unearned and simply a privilege of ownership.

Almost entire economic issue being debated now, which is of course constituted of many related issues, inequality in particular, reduces to economic rent and the many ways it is extracted as a privilege of ownership and control, control resulting in market power. The entire rationale for capitalism is assuming that free markets, free trade, and free flow of capital are based on symmetric power as long as government does not influence the market, together with assuming that ownership of the means of production is financially and economically neutral (no privilege involved if the state stays out of the picture). Thus, the attempt on the right to drown the state in the bathtub (Grover Norquist).

This is the basis of economic liberalism that is really bourgeois liberalism, the "bourgeoisie" being the owners of the means of production under capitalism, comparable to the aristocracy and landed gentry under feudalism.

Marx argued that just as land ownership as ownership of the means of production conveyed privilege under feudalism; so too, ownership of the means of production under capitalism also conveys privilege. There is therefore no "naturally" free market under capitalism, and this is especially evident in the labor market, as Marx sought to show. Thus, replacement of the labor theory of value with the neoclassical theory of marginalism became a high priority. Marx and his followers were excluded and supporters of marginalism were supported by directing a (small) portion of the economic rent extracted to them, along with social benefits for their political contributions.

We need to stop arguing over whether Marx was "right," or "wrong," and instead look at his work (along with his close collaborator Engels) in terms of useful contributions for the present impasse humanity faces. Nor should this be limited to Marx and Engels, but also should include subsequent Marxists and Marxians. It is rich field and needs to be mined intellectually. To dismiss it out of hand is simply bias based on propaganda.

This post requires some previous knowledge of the debate. Peter Cooper has quite a few posts on Marxism, and Marxism and MMT.

heteconomist
Developments in Value Theory
Peter Cooper

Brian Romanchuk — Real Estate And The Cycle

Real estate -- particularly residential real estate -- is an extremely important factor when discussing recessions in the modern era. To a certain extent, real estate is where economic theory goes to die. One possibility is that the theory was largely developed when the norms in real estate investment were conservative, so attention was moved to the industrial sector. However, the herd tendencies in the housing market may now overwhelm the industrial cycle.
(This article is a set of notes about the housing market. I started laying out my book on recessions, and I realised the need for a chapter on housing investment. I want to lay out some of the ideas that I mulled over while I was losing in a curling tournament down in the United States. The article is somewhat long on assertions, and missing the research to back up those statements. I will be filling the details as I turn to that chapter.)...
Bond Economics
Real Estate And The Cycle
Brian Romanchuk

Alexander Douglas — Paul Krugman on Functional Finance (UPDATED)


I don't link to the NYT since it stopped being a newspaper. Alex Douglas explains Paul Krugman's criticism there of MMT based on r > g.

This is not a new criticism. It is a neoclassically based argument. It was raised when Thomas Piketty's Capital in the 21st Century made r > g famous.

The expression r > g itself was criticized at the time, and I won't repeat it. Suffice it to say that that is a monetarist view that suffers from the insufficiency of neoclassical assumptions about monetarism, in particular the assumption that interest rates are determinative economically, upon which monetarism is based. Brad DeLong raise this issue, too, if I recall correctly. It also prioritizes interest rates as an economic factor (cause) and policy instrument much higher than the data justifies, and it ignores the difference between currency users that must obtain the currency and the currency issuer, especially when the issuer is sovereign in its currency.

While the model is perfectly logical based on the assumptions, that it is wrong as shown by its being useless other than perhaps in special cases. Of course, it could matter in the special case that Paul Krugman and other conventional economists are chiefly concerned with, inflation. But the monetarist solution involving interest rate setting (NAIRU) works through economic contraction that idles workers to reduce wage pressure. This results in a buffer stock of unemployed.

The idling of real resources amounts to waste that cannot be recaptured, and economic inefficiency is the big sin in neoclassical economics, which leaves economic effectiveness to "market forces" and spontaneous natural order. MMT proposes a solution for that in terms of the MMT JG that maintains full employment (less transitional) while providing a price anchor in the guaranteed wage.

Abba Lerner proposed functional finance in contrast to so-called sound finance, which manifests as fiscal conserativism, for example. It is grounded monetarist thinking, the idea being that fiscal imprudence will generate inflation that will result in the bond vigilantes driving up the interest rate they demand to lend money, assuming loanable funds and crowding out. Government, having lost control of the interest on its debt will be driven to insolvency if it doesn't adopt draconian measures that "restore confidence" to financial markets. "Sound finance" is has therefore been a cornerstone of finance capitalism in addition to neoclassical economics, which serves as its academic justification.

One of the foundations of functional finance in its rejection of "sound finance" is that monetarism upon which sound finance is based is not only ineffective but also based on false assumption (which is a reason it doesn't work). This is revealed by a correct operational understanding of government finance built on a correct theory of money. Neoclassical (conventional) economics miss the target here. Even the Fed recently admitted that it has no good theory of inflation. This implies that monetary policy is discretionary rather than rule-based, since a rule-based policy requires a good theory articulated in a model.

Hint: Mono-causal theories are generally insufficient at explanation in complicated simple systems and a fortiori in complex adaptive systems. The reliance on "expectations" shows that the Fed understand that the finance and the economy are aspects of a complex adaptive system. Any mono-causal explanation is likely to be inadequate to the task of predicting, and monetary policy is based on the ability to forecast. Barking up the wrong tree.

The good news though is that Paul Krugman continues to move toward the MMT position. Progress!

Alexander Douglas at Medium
Paul Krugman on Functional Finance
Alexander Douglas | Lecturer in Philosophy, University of St. Andrews

UPDATE

Paul Krugman is out with a follow-up piece at the NYT, to which I don't link, calling for "spend and tax" rather than interest rate setting.

Identical with the MMT position, if Krugman understood it, or was even aware of the exchanges on Twitter these days.

The MMT position as Stephanie Kelton stated in succinctly on Twitter is that spending must be offset as the economy reached optimal capacity as indicated by approaching full employment. Taxation is one offset. Others are available.

See also

Angry Bear
I actually disagree with Paul Krugman for once
Robert Waldmann

Tuesday, February 12, 2019

Links — 12 Feb 2019

Mint Press News
Mass Protests in Haiti, Like France’s Yellow Vests, Threaten Modern Oligarchic Structure
Alan Macleod

Moon of Alabama
Russiagate Is Finished


RT
We must be ready to use ‘hard power’ against Moscow and Beijing – UK defense chief

RT
‘We are like the living dead’: Citizens of Mosul in despair 1.5 years after liberation from ISIS

Zero Hedge
China Accelerates Renewed Gold-Buying Spree "To Diversify Its Reserves"
Tyler Durden





Bill Mitchell — Those Imbecilic Keynesianisticists are loose – lock up your … whatever!


Nassim Taleb gets the smackdown.

Bill Mitchell – billy blog
Those Imbecilic Keynesianisticists are loose – lock up your … whatever!
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Steve Hayward — The Laffer Curve of the Left?

It occurred to me recently that everything has gone wrong since Milton Friedman died in 2006.
Enuff said.

PowerLine
The Laffer Curve of the Left?
Steve Hayward



Jonathan Spicer — Red flags emerge as Americans' debt load hits another record


How close is the US to a "Minsky moment" in the financial cycle?

Reuters
Red flags emerge as Americans' debt load hits another record
Jonathan Spicer

Tom Luongo — Russia’s Exports Continue to Defy Sanctions


Putin was not joking about sanctions being a blessing in disguise, since Russia would have found it difficult to restructure otherwise. Necessity is the mother of invention.

Gold, Goats 'n Guns
Russia’s Exports Continue to Defy Sanctions
Tom Luongo


Brian Romanchuk — A MMT View On The Theory Of Hyperinflations


Now that MMT is in the news big time, it's high time to repost a link to Brian's post on MMT and hyperinflation.

Bond Economics
A MMT View On The Theory Of HyperinflationsBrian Romanchuk

Ryan Bourne — Let America's radical socialists be a warning to British politics

 
"Radical socialists" now. This person has no idea of what a radical socialist is based on history and policy, or else he is using the term as a smear. Oh wait, Cato Institute. There's a third possibility. Ideological bias.
Ocasio-Cortez and her cohorts are disciples of a new macroeconomic worldview called “Modern Monetary Theory” (MMT).
This postulates that governments with sovereign currencies face no financing constraints, and can spend as much as they like through new printed money. The only real constraint on spending levels is the capacity of the economy.
Even academic MMT-ers admit that if you pump in too much money when the economy is at full employment, inflation will rise, and will need to be choked off by higher taxes or spending cuts.
But political proponents of this kooky theory downplay this implication. In fact, they circumvent it, by claiming that, despite low unemployment, our economies are running significantly below their potential. This allows them to say that huge new spending could be financed by money printing without requiring higher taxes or resulting in rising inflation.
MMT recommends using functional finance to maintain full employment at optimal economic capacity with spending and offsets sufficient to meet nongovernment saving desire while maintaining price stability, instead of employing "sound finance" to achieve a fiscal target on the books.

The key constraint is availability of real resources and the key variable is nongovernment saving desire, which must be maintained at the level full employment to avoid the inefficiency of idling resources unnecessarily (though demand leakage), or sparking inflation by contributing to effective demand in excess of the capacity of the economy to meet it. The economic modeling involved is based on stock-flow consistent approach developed by British Treasury "wiseman" Wynne Godley and US economist James Tobin.

Ryan Bourne | R Evan Scharf Chair in the Public Understanding of Economics at the Cato Institute in Washington DC.

Nilay Patel — Bill Gates says tax policies like Alexandria Ocasio-Cortez's are 'missing the picture'

Gates also took exception to “modern monetary theory,” which is an economic theory with growing prominence on the policy teams of Ocasio-Cortez, Bernie Sanders, and others. MMT, as it’s known, suggests that governments need not worry about deficits because they can simply print their own currency, and should instead manage inflation with interest rates. (You can read more about it in this Vox explainer.) What does Gates think of MMT?

“That is some crazy talk,” he told me. “It will come back and bite you.”
(Interestingly, Gates did suggest that you could raise debt to 150 percent of the gross domestic product without a problem, which Vox’s Matt Yglesias tells me, puts Gates on the same side as MMT advocates for the foreseeable future even if they disagree about the long term.)...
He has made a lot of money (from intellectual property rights) so he must know what he is talking about, right? (Argument from false authority)

All of this was part of a wide-ranging conversation on The Vergecast about the philanthropic work Gates does around the world with his wife Melinda and their foundation — you can listen to the whole thing below or read the full transcript here. Below are Gates’ remarks about taxes and MMT....
The Verge
Bill Gates says tax policies like Alexandria Ocasio-Cortez's are 'missing the picture'
Nilay Patel

Oh wait. Bill Gates was misinformed about MMT.


Peter Cooper — MMT and Capitalism from a Marxist Standpoint

A perennial question for Marxists is how to overturn capitalism. Will institutional changes that improve the lot of workers but fall short of ending capitalism immediately help or harm this cause? To the extent that social struggle is a learning-by-doing process, it may be that the securing of small gains can whet the appetite for more significant gains and that institutional reforms of a transformational nature can place revolution on a more secure footing if and when it does occur. But there is also the possibility of complacency in which workers come to tolerate capitalism so long as their own situation is not so dire.
The increasing prominence of modern monetary theory (MMT) has once again brought the perennial question to the forefront for some socialists. Is knowledge of MMT going to make it easier to extend the life of capitalism? What should a Marxist make of the theory?
In my view, there are several aspects to consider:
  • the correctness of MMT;
  • the broad analytical applicability of MMT;
  • the implications of MMT for capitalism....
heteconomist
MMT and Capitalism from a Marxist Standpoint
Peter Cooper

Bill Mitchell — The brainwashing of economics graduate students

I was reminded this week of an interesting studies published in 1987 by Arjo Klamer and David Colander on the influences that go into the training of a professional economist. This study was repeated by Colander in 2005. The results are rather disturbing although obviously I am an ‘insider’ in the sense I went through the process in one way or another myself (although not in a US graduate program). They demonstrate how far removed graduate students are from learning or being interested in the real world. They compete among each other for ‘technical excellence’ in mathematics so they can solve tricky technical problems but do not think it is important to know anything much about the real world economy nor about the economics literature and history of the discipline that has gone before them. They adopt classic Groupthink characteristics as they are moulded (socialised, brainwashed, choose your own word) by their professors (who then feed them into their own networks for employment etc). There is little wonder the profession has very little to say that makes any sense about the real world. It is largely a disgrace....
I would put this somewhat differently. It depends on whether a discipline focuses on pure theory or practical application. Pure math at the grad level is about proof. Theoretical physics is about mathematical modeling focus on questions at the frontier of knowledge rather than practical applications. In fact, the charge against the present state of theoretical physics is that it as exceeded the scope of science and has ventured into philosophy.

There is nothing inherently wrong about choosing to focus on pure  theory rather than practical application. But we rely on engineers to solve practical problems about material systems, not theoretical physicists or pure mathematicians.

What if there were no attention paid to applied physics and applied math, which is what engineering involves?

Yet, there we are in relation to the application of economics. Calling on pure theorists to do this work is not something that happens in other fields? Why economics? That is a pressing question.

If pure theorist want to pursue theoretical questions, no problem. The problems arise when they attempt to apply the models beyond the limitations of the scope and scale of the assumptions to arrive at solutions that to problems that are at bottom engineering problem. Or they are asked to do as "experts."

Business schools know this and devote minimal time to instruction in theoretical economics and none to pure math?

Theory is formal; experiment and practical application are empirical. In the context of application, theory is judged on its usefulness, not its elegance.

Bill Mitchell – billy blog
The brainwashing of economics graduate students
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Fred Freed - Pussy John Bolton and His Codpiece Mustache

They're living in cloud-cuckoo-land! And the mainstream media too, all mad, like Caligula!
American government has become a collection of sordid and dangerous clowns. It was not always thus. Until Bush II, those governing were never lunatics. Eisenhower, Truman, Kennedy, Johnson, Nixon, Obama, Clinton had their defects, were sometimes corrupt, and could be disagreed with on many grounds. They weren’t crazy. Today’s administration would seem unwholesome in a New York bus station at three in the morning. They are not normal American politicians.
In particular they seem to be pushing for war with Iran, China, Russia, and Venezuela. And–this is important–their behavior is not a matter of liberals catfighting with conservatives. All former presidents carefully avoided war with the Soviet Union, which carefully avoided war with America. It was Reagan, a conservative and responsible president, who negotiated the INF treaty, to eliminate short-fuse nuclear weapons from Europe. By contrast, Trump is scrapping it. Pat Buchanan, the most conservative man I have met, strongly opposes aggression against Russia. The problem with the current occupants of the White House is not that they are conservatives, if they are. It is that they are nuts.
Unz Review

Caitlin Johnstone — Why The Entire Political-Media Class Just Tried To End Ilhan Omar’s Career


This is indicative of a much larger problem than AIPAC. It's the basis of attacks grounded in sophistry that uses invalid logic.

The aim is to attack an opposing party or cohort "X." The logic used runs thus.

X is against Y. Y has a property. Therefore X is against everyone/everything having that property.

This is clearly wrong if Y is not identical to everyone/everything having that property, e.g, being Jewish, which in this instance is not the case. Y is represents only some of those having that property, not all, since the relevant property is holding a policy and acting on it. In fact, those having this characteristic may not all be Jewish. Some are not.

Here the political leadership of a country, Israel, and its supporters within and outside of the country, must be distinguished from the dominant group in the country, that is, people identifying a Jews or having Jewish heritage, especially when this group is not characterized entirely by being associated with the country's political leadership and policy.

It is simply invalid logically to charge that someone that criticizes a particular political faction of Israel under the rubric, "Israel" is biased against Jewishness, i.e., is antisemitic. In logic, this is called "nonsense."

While some people that criticize "Israel" and its supporters may be antisemitic, all are clearly are not, since many Jews also criticize and oppose "Israel" in the sense of Israeli leadership and policy. This would include those outside Israel that support regardless of whether they are Jewish. Some are and some are not.

Moreover, there is no connection with having the property of being Jewish and supporting the Israeli leadership and its policy. Many Jews in Israel and also outside of Israel also don't.

This is false argument mounted by those either ignorant of basic logic, or used intentionally to smear the opposition. In other words, morons or complicit.

Intentional or not, it is an effort to silence opposition based on false cause. It is to be condemned.

The situation of a boycott is somewhat different, but related. It is also similar to imposing sanctions. Both boycotts and sanctions may be imposed on an entire country, affecting all in the country and those connected with it, regardless of whether they support the country's leadership or policy that is being targeted. This penalizes all for the actions of a few. Is that just?

This is a larger issue, too, and affects all areas in which is there is bias and discrimination. These kinds of tactics are in wide use to smear opponents in an attempt to destroy them.
Whitney Webb

See also

Blaming the Venezuelan leadership and "socialism" for a crisis exacerbated by economic sanctions. Adding insult to injury, those that imposed the sanction then disingenuously offer "aid" without revoking the sanctions unless the government capitulates. And the media amplifies the subterfuge rather than exposing it.

Again the "logic" here is nonsense.

FAIR
U.S. media ignore—and applaud—economic war on Venezuela
Gregory Shupak

Also at FAIR
Joe Emersberger
Staff, Brasil247.com


Richard Murphy — The ‘economists’ have lost control of climate change


The neoliberal economists, that is. There is no "market solution" to existential threats that require mobilization of real resources to meet the emergent challenge.

Tax Research UK
The ‘economists’ have lost control of climate change
Richard Murphy

See also

Alex Tabarrok is aware that addressing climate change is a global effort, which some people in the US apparently overlook or minimize. A US GND would be a step in the right direction, but it is not the solution.

A single country, even the US with the largest economy, cannot do the job alone. It requires concerted effort internationally. This involves sacrifice in not preferring the most expeditious and least expensive energy sources in favor of developing and deploying sustainable energy, renewables in particular.

The scale of the challenge is enormous if contemporary living standards are to maintain an anywhere near the present level, especially in developed countries. Naturally, developing countries are trying to catch up, and they cannot be expected to shoulder most of the burden by further lowering their prospects.

What to do? Alex Tabarrok proposes buying up the coal mines with the intention of leaving the coal in the ground, for starters anyway.

While market-based solutions may not be sufficient to do the job, there is no reason to dismiss them completely either. A complement of tools is called for.

Marginal Revolution
Buy (or Rent) Coal! The Coasean Climate Change Policy
Alex Tabarrok | Bartley J. Madden Chair in Economics at the Mercatus Center and Professor of Economics at George Mason University, and a research fellow with the Mercatus Center