Interesting personal story.The discovery of a monetary approach, which, in this case, not only relates to a field that I was not familiar with, but also constitutes a total challenge to my own knowledge of public finance management, which I have practiced throughout my career, is not something trivial. So I decided to tell my own story.
MMT France
How I came to MMT
Robert Cauneau
The article is available in French here.
37 comments:
“ Then I returned to France, where I found a position as a public accountant, but which I quickly abandoned, requested by Bercy to develop IT specifications for the development of software for the accounting”
Not an Art Degree moron..
Would he have been as open-minded if he were conservative or possessing values comparable to the Protestant work ethic?
It’s not “open minded” he’s never been taught that scientific abstractions are real and limited and you can run out of them…
“Open minded” is textbook Art degree moron 101…
If a job guarantee were contrary to his conservative values he'd be opposed to it. Just like Cullen Roache and a slew of other MMTers who have frequented MNE.
That is what I mean by "open-minded".
Another way of putting it: He discovered in MMT what he already wanted to hear. His support for basic income is a clue.
Cullen most likely Art Degree
https://disciplinefunds.com/our-leadership/
“ Cullen is a Georgetown University alumnus”
Jesuit trained …. All Aquinas Platonist ie the foundation of the Art Degree…
They espouse their thesis (no basis in Science) and some people believe it and others believe someone else thesis (anti thesis) .., they all pick sides and fight it out …, really really sick stuff..,
Cullen understands MMT. How is that possible?
Although a search for his name on Google is revealing some disturbing quotes.
I understand Marxism yet I am right of Fascism how is that possible? If you can read you can understand anyone’s thesis… is that said thesis true or accurate? That is a different assessment…
Here:
https://x.com/triplenetinvest/status/1823776599981937036?s=61&t=2WPBW-5PNOSZxkEWhNtQfw
MMT people say that those building owners committed fraud in 2019 saying the building was worth $255M when it was really worth only $33M …
I certainly understand what they are saying but I do not believe that to be an accurate assessment of events … and they do not understand the functional equations used to compute present value of financial assets..,
You can understand anyone’s thesis if you can read.,,
Monetarists: “printing money causes inflation!” … I understand that…
Cullen has an art degree, so that is what he should be screaming: "printing money causes inflation!" or "job guarantee is not part of MMT!"
He’s come up with his own thesis
Meh his thesis is not original.
Only parts of it
Is the Russian economy in trouble ?
Using the MMT sectoral balances approach
The fact that the central bank keeps raising interest rates now at 19%.
Budget deficit 1.9%
Trade surplus falling and falling now at below 2020 levels.
The debt to GDP is small anyway and falling now at 15% of GDP and I'd imagine household saving rate falling overall due to small deficit and an inflation rate of over 9%.
Bank.lending has exploded now that the ability to save and meet their savings desires are being crushed. Households debt to GDP rising although still only 22% of GDP.
Scratching the surface It doesn't sound very healthy to me ?
What am I missing considering everyone points to it saying how strong and goldilocks it is ?
Could it be the sanctions are actually working and knowing Putin's fiscal conservative " Sound money " mindset why they are targeting his trade surplus ?
If so is he desperate for Trump to win so he can make a deal?
When you look at the government balance and the private sector balance. They were probably onto something when they shouted - Russian exports fund Putin's war.
Their trade surplus is now falling and falling.
The Russian Central bank is making things worse hiking rates to 19%. How much of the small deficit anyway is going on interest payments.
GDP in 2023 was roughly $2 trillion ,21 billion 420 million.
22% of that is roughly $445 billion.
19% of $445 billion is $85 billion
So $85 billion is interest payments alone.
Russia recorded a budget deficit of 1.9% of GDP in 2023, According to the preliminary estimate, the overall deficit stood at 3.24 trillion rubles ($36.5 billion),
Taking the exchange rate changes into account in Aug 2024 their deficit must have doubled by now and interest payments must be a big chunk of it ?
Yet...
Russia's Finance Ministry has raised its estimate for the federal budget deficit to 2.120 trillion rubles in 2024, or 1.1% of GDP, from 1.595 trillion rubles, or 0.9% of GDP,.
Which also means their GDP has hardly moved during 2024. Their debt to GDP has fallen further.
It is the IMF that is shouting about how strong and good the Russian economy is lol.
Viewed through a MMT lens, On the surface It doesn't look that great.
When you look at the external balance that's falling and falling.
MMT'rs should write this up and view the Russian economy via the MMT lens to give a different view point from the IMF nonsense.
The IMF and economist magazine are probably just looking at the size of deficit and debt as they usually do and shout look at how strong Russia is that's how a country should be run.
Meanwhile consumers are getting crushed and can't meet their savings desires and consumer credit has exploded to the highest it has ever been.
It is the only way the fiscal conservative, sound money guys ( IMF, economist mag) know. To the point that if the trade surplus keeps falling due to the sanctions. The deficit and debt become too small to support the credit structure of the economy. Putin and Elvira Nabiullina who are fiscal conservative, sound money people are making it worse.
I could be wrong because the sectoral balances are not my strong point. That is what it looks like to me.
Mike should take a look and do a video on it.
:)
With Elvira Nabiullina running the central bank they are going to have to use Turkey 's and Argentina 's trick and keep increasing wages.
Which have have doubled since 2020.
Russia is on a war footing. Mass mobilization, redirection of the economy towards armaments production, discounted energy exports, increased imports of armaments from NK and Iran. Plus sanctions. If all that hasn't resulted in deficits, what will?
^trade deficits.
Exports pay for imports, import substitution counters sanctions, and domestic policy is the deciding factor in managing the economy and the war. Russia is enough of an autarky to be in control of their fate.
Trade deficits
Money is what allows them to pay for imports. That's why they have a trade deficit.
In the UK we run a trade deficit. Money is what allows the UK to pay for imports. That's why we have a trade deficit.
In reality the trade is balanced. The export product you're missing is 'Sterling savings'.
Imports are paid for with Sterling promises. Hence why we have a trade deficit in a floating exchange rate environment.Which tells us that 'abroad' is sending us things for nothing material in return - meaning they have no better alternative.
When you choose like Russia to export your way to growth and run trade surpluses. The external sector is supposed to do the heavy lifting.
Why the likes of Germany etc can run small budget deficits.
But what happens when your trade surpluses collapse and because you have a fiscal conservative,sound money mindset you don't carry out the fiscal adjustment required to offset it ?
Maybe we are about to find out as consumer credit becomes the main driver ? Although that can last for a long time before it breaks.
MMT'rs using the sectoral balances approach should write it up and get another feather in their cap.
If Putin and Elvira Nabiullina keep hiking rates we'll find out sooner rather than later.
Russia is still running a trade surplus. Their exports are paying for imports.
Russia is doing the heavy lifting with regard to the war. Not the best kind of 'growth' to invest in, but they are getting value for the money, compared with the wasteful spending by the Pentagon.
Despite sanctions, Russia is supplying the needs of their military while the US is running low on inventory. This is an embarrassment. This is what you get when you financialize your economy.
Russia is doing the heavy lifting with regard to the war.
Yes, due to sanctions it has allowed them to transfer resources from exports to the war effort. But the budget deficit has gone from 1.9% of GDP in 2023 to a projected 1.1% in 2024.
GDP in 2023 was $2021 billion
Projected GDP for 2024 is $2120 billion
The deficit is getting smaller not bigger so it is not doing the heavy lifting as the external sector gets smaller.
Add this to the private sector getting crushed and not being able to save and now taking loans out at 19%.
With inflation above 9% and because of Elvira Nabiullina it will get worse.
Doesn't look good to me.
Why we need a MMT economist to write it up. My guess is, it will be night and day compared to the IMF and Economist magazine and neo classical view.
The ideologues screamed recession for 4 years when interest rates in the US were at 5.5% with an inflation rate of 2.9%.
The very same ideologues say what a beautiful strong economy Russia has with interest rates at 19% and inflation running over 9%.
MMT economists have an open goal to once again destroy their thinking and highlight their hypocrisy.
Mike could do it in one of his videos but he tends to shy away from geopolitics. However, what a chance to really show how crazy and detached from reality these ideologues are. Destroy their framing and narrative.
The non government sector savings have been crushed and with the deficit and debt falling further it is getting worse.
Even though wages have doubled in 4 years. Wages have doubled in 4 years and the non government sector savings ratio's are falling not rising. Let that sink in.
Capitalism is run on sales, so consumer credit has exploded at lending rates of 19%. Household debt has increased.
With the external sector falling to 2020 levels.
In my view and I could be wrong, is the only thing that keeps it afloat if Elvira Nabiullina keeps hiking is the Argentina and Turkey trick and they have to keep increasing wages due to inflation moving higher.
Or it will fall like a pack of cards.
No wonder they haven't touched their preferred flat tax rates. Income tax is 13%. As increasing them would suck even more out.
They can't reverse whatever wage increases they have done. They'll need to do more. How does that look after the war when inflation goes back to 2% and interest rates normalise?
Not good
Inflation will now be higher for longer.
There is the Moscow vs outside of Moscow econometric to be considered.
"The deficit is getting smaller not bigger so it is not doing the heavy lifting as the external sector gets smaller."
It might be. If roubles are being spent and not saved then there won't be a deficit. It's the quantity of government spending that matters, not the ratio. It would help enormously if they weren't paying out so much in interest, given it is clearly not having the saving effect required.
It would be interesting to know how they save for a pension. As clearly most of the bonds are held by foreigners.
" The Russian Federation has undergone a major reform of the pension system which has resulted in a shift from a single, publicly managed system to one supplemented by a mandatory, privately managed occupational funded component and voluntary pension arrangements. The reform aimed to tackle a set of problems of demographic, social and economic order inherent to retirement income provision and was viewed as a way to improve old-age security of retirees in Russia by ensuring long-term financial and fiscal stability of the pension system and adequacy of pension benefits.
Most prominent among the challenges is the need to further strengthen the pension system regulatory capacity and enforcement powers of the authorities in charge of the oversight of private pension institutions. "
How ironic it would be if Russians who have turned to private pension companies are invested in the countries they are fighting against to provide a pension.
Sound money, fiscal conservatism will be their downfall in the end.
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