Credit Suisse
Global Money Notes #26 Countdown to QE4?
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.
Even as hedge funds and smaller broker-dealers lean more heavily on the biggest U.S. banks for borrowing in repo markets, the lenders’ cash holdings have been declining https://t.co/ug3c7LTkUz pic.twitter.com/mqOXz5vn92— Bloomberg Markets (@markets) December 10, 2019
There was an IMF paper released in April 2018 – The Aggregate and Distributional Effects of Financial Globalization: Evidence from Macro and Sectoral Data – that had a long title but a fairly succinct message. It indicates that the IMF is still in a sort of schizoid process where the evidential base has built up so against the political voice and practice that the IMF has indulged itself as a front-line neoliberal attack dog that elements in its research division are breaking ranks and revealing interesting information. In part, the Brexit debate in Britain has been characterised by economists supporting the Remain argument claiming that free capital flows within Europe (and Britain) are the vehicle for strong output growth and better living standards. They claim that when Britain leaves the EU global capital flows will be more restricted in and out of Britain and that will be damaging. It is really just a rehearsal of the standard mainstream economic claims found in monetary, trade and macroeconomics textbooks. What the IMF paper does is provide what they call a “fresh look at the at the aggregate and distributional effects of policies to liberalize international capital flows” and the researchers find that, “financial globalization … have led on average to limited output gains while contributing to significant increases in inequality”. That is, the pie hasn’t really grown much as a result of all these free trade moves but a growing share is being taken by an increasingly wealthier few. And workers are the losers....
The economics of money is back in the limelight. Even five years ago, I cannot imagine that a lecture on money and the payment system could have been a subject for an event like today’s. Theoretically speaking, money is a social convention. People accept money in the expectation that everyone else will do the same. According to this bare-bones definition, anything could serve as money provided that everyone, as it were, buys in. In economic parlance, this equilibrium analysis gives rise to a theoretical notion of a currency area consisting of users in a community, as shown in a recent paper by our host Markus Brunnermeier and his co-authors. In giving further texture to the analysis of money as a convention, economists and central bankers have learned over the years that the institutional details matter when it comes to how durable and how efficient any economic arrangement can be. To define money as a self-sustaining convention is not the same as nailing down the nitty-gritty details of the monetary system’s architecture."...money is a social convention. People accept money in the expectation that everyone else will do the same." Right. As David Graeber showed in Debt: The First 5000 Years, the concept of "money" arose from prehistoric tribal societies that operated on the "gift economy," when gifts were considered social obligations to be reciprocated. Adherence to such customs generated social trust, not only for "money" as a social construct but also for the rule of law (justice) over the rule of men (power) as a matter of reciprocity and fairness, in addition to utility.
The monetary system is founded on trust in the currency. This is something that only the central bank can provide. Like the legal system and other public goods, the trust underpinned by the central bank has the attributes of a public good.3 To coin a phrase, I would like to refer to “central bank public goods”.This is a huge step in the right direction. The state's power to create currency is delegated to the central bank as the government's fiscal agent. This power derives from the constitution of the state. Thus, the currency issued on this fashion is a public good rather than a private good.
There's definitely something special about him. He's modest and yet he stands up to the toughest. Even Gordon brown says he's a phenomenon.
Why the Pentagon Says It Needs Low-Yield Nukes | via @PopMech @KyleMizokami #NuclearWeapons #LowYieldNukes #USMilitary #DoD https://t.co/84j5O3uN1B pic.twitter.com/vF9zAM8p8d
— RealClearDefense (@RCDefense) December 8, 2019
Bill Mitchell, the leading Australian proponent of modern monetary theory, argues that governments should abandon their obsession with budget surplusesThe Guardian
BREAKING: Pensacola mass shooter identified as Mohammed Saeed Alshamrani, a member of the Saudi Arabian military who was in the U.S. for aviation traininghttps://t.co/Tqbe58Sora
— Jack Posobiec 🇺🇸 (@JackPosobiec) December 6, 2019
Buttigieg- “My party’s not known for worrying about the deficit or the debt too much but it’s time for us to start getting into that.”
— Tom D'Angora (@TomDangora) December 6, 2019
Actually @PeteButtigieg President @BillClinton took the deficit balanced the budget and left America with a surplus. https://t.co/QdanbPrjqR
Probably the salient point: "As Wolff has said: 'If you want to understand an economy, not only from the point of view of people who love it, but also from the point of view of people who are critical and think we can do better, then you need to study Marxian economics as part of any serious attempt to understand what’s going on. Not to do it is to exclude yourself from the critical tradition.'”I would add, at the very least. Marx and Engels, and subsequent Marxists and those influenced by Marx are still highly relevant and they are becoming more so as capitalism is more and more in crisis owing to neoliberalism, neoliberal globalization and the challenge of climate change. Change is coming.
Most important at this aristocratic level of Empire is the extent to which, despite appearances, its general contours remain unchanged. From this perspective, the much-heralded return of the nation-state—along with nationalist rhetoric, threatened trade wars and protectionist policies—should be understood not as a fracturing of the global system, but rather as so many tactical manoeuvres in the competition among aristocratic powers.The elite may no longer be titled aristocrats, but the class structure of feudalism and the imperial designs remain in place.
Treasury Secretary Steven Mnuchin said he’s working closely with Fed Chairman Powell to make sure there are ample reserves following funding strains in money markets in September, which he attributed in part to bank liquidity rules.https://t.co/xA76QhGFvV
— Kate Davidson (@KateDavidson) December 5, 2019
This is the final part of a two-part discussion about the consequences of a currency-issuing government exercising different bond-issuing options. The basic Modern Monetary Theory (MMT) position is for the currency-issuing government to abandon the unnecessary practice of issuing debt (which is a hangover from the fixed exchange rate, gold standard days). Currency-issuing governments should use that capacity to advance general well-being and providing corporate welfare to underpin and reduce the risk of speculative behaviour in the financial markets does not serve any valid purpose. However, when we introduce real world layers (politics, etc) we realise that some pure MMT-type options are not possible. This question introduces just such a case in Japan. Given the political constraints, we are asked to choose between two options for central bank conduct, when the government does issue debt: (A) Buy it all up in the secondary bond markets. (B) Leave it in the non-government sector. In this final part, I go through some of the considerations that might influence that choice....
There is no substitute for the ‘big picture’. Economists should not be doctors but social scientists, or more accurately they should develop an economics that recognises the wider social forces that drive economic models, in particular, the social mode of production that is capitalism. That is political economy, mostly not taught in universities and certainly not practised in international agencies....Michael Roberts Blog — blogging from a marxist economist
“We said that this gathering [the summit] should be seen as a threat to global humanity. It’s quite clear from its history - that is NATO’s history - that it is a structure that is used to maintain and advance Western global capitalist interest, and for that it should be seen as a threat. Most of the interventions by NATO have been beyond the pale of legality,” [Ajamu] Baraka, [national organizer of the Black Alliance for Peace,] told hosts Eugene Puryear and Sean Blackmon.
“The very fact that this structure has the kind of respectability among Western forces is quite troubling and … reflects the current contradiction, which is a contradiction between the Western interests, Western powers, Western capitalist powers and the vast majority of global humanity,” he continued, also referring to NATO as a “very important instrument” used by the ruling elites to further their capitalist and white supremacist goals....Not buying "spreading freedom and democracy."
Douglas Valentine is an investigator and author with a rare and tenacious approach toward research. His writing results in uniquely incisive and revealing books on the dark side of U.S. intelligence activities and the National Security State. His latest book, The CIA as Organized Crime: How Illegal Operations Corrupt America and the World, draws parallels between CIA operations in Vietnam—as exposed in his well-known 1990 book, The Phoenix Program: America’s Use of Terror in Vietnam—and recent/current operations in Afghanistan, El Salvador, Iraq, Syria, Yemen and elsewhere. In the following interview, Valentine reflects on a variety of issues including the Phoenix Program, plausible deniability, paramilitary wars, drug trafficking, sabotage, blackmail, propaganda, Operation GLADIO, class interests of the CIA establishment, Trump, the Mueller Report and the Bidens. —CAM EditorsDoug Valentine has written numerous books and articles on the CIA based largely on interviews with former CIA officers revealing how the CIA is not just an intelligence organization tasked with intelligence gathering and analysis, as many suppose it to be, but also it is also a paramilitary operational organization tasked with carrying out covert operations based on plausible deniability.
Healthcare corporations are spending millions of dollars on astroturfed attack ads against Medicare for All. The Partnership for America’s Healthcare Future, for example, a coalition of hospitals and insurance companies, has spent $1 million on a television campaign against changes to the current healthcare system they profit from.
The commercial presents the Partnership as a grassroots organization of concerned citizens, rather than that corporate front group exposed by The Intercept that it is. It features a range of actors of different races, ages and occupations expressing their concern over Medicare for All. “We come from different walks of life but we agree on one important thing: we don’t want to be forced into a one size fits all government insurance system” the commercial states, without telling the viewer that “we” does not refer to human beings, but an amalgamation of corporations. It warns that any changes to the system would result in “higher taxes or higher premiums” and “lower quality care” and features one actor scoffing over the idea of “politicians and bureaucrats in charge of our healthcare.”...
The diplomat then proceeded to tell me who was and who was NOT Latin American, and pointing to the photo of a needy child which graced every table, he said: “For instance, that child there is not Latin American”. Astonished I asked how can you say that? She is Peruvian! “No, she is Indian. Latin Americans are those of us who stem from Spain and Portugal.” He was not kidding nor making some sort of epistemological statement on the origin of Latin languages. He was unashamedly, sneeringly , racist, making a clear distinction between himself and that poor child. Our conversation deteriorated from then on to reach a point when he said that “those” children got sick because their mothers were too ignorant to know how to care for them....
Although there are various attempts to downplay rate expectations as an explanation for bond yields. the reality is that they dominate any other attempt to generate a fair value estimate by using "fundamental data". (Since we cannot hope to explain every last wiggle of bond yields without having a largely content-free model, we need to look at fair value estimates.) The reasoning is rather straightforward: so long as the risk free curve slope is related to the state of the economy, bond yields are pinned down by the front of the curve, and the slope....Bond Economics
Central Asia, between China and Europe, is bustlingTake the tour with Pepe.
The myth of crowding out https://t.co/dyQHg5F4TE
— Clint Ballinger (@clintballinger) December 3, 2019
Australian fund managers are already betting on quantitative easing https://t.co/FBiuqhQVNu
— Bloomberg (@business) December 3, 2019