Japan inflation now falling fast—monetary and fiscal policy settings have been vindicated — Bill Mitchell

The latest information from Japan suggests that in December 2023, its inflation fell sharply for the second consecutive month and that one might conclude the inflation episode is coming to an end. The Bank of Japan made the assumption that this supply-side inflation was temporary and would subside fairly quickly once those constraints eased. And they were right. All the other central banks somehow convinced themselves that the inflation was demand-driven and have been needlessly pushing up interest rates. The experiment is nearly over and I think it is clear that the Japanese path was the sound one. At that point, the New Keynesian academics and officials should resign. After that, as it is Wednesday, we have some music to soothe our souls....

William Mitchell — Modern Monetary Theory
Japan inflation now falling fast – monetary and fiscal policy settings have been vindicated
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Links — 17 Jan 2024

Economics fails not merely to account for biophysical limits to growth but to account for actual and potential alternative provisioning systems. Instead, talk of ‘the economy’ makes an implicit ontological claim that there is only a singular form of modern economy: the capital accumulating, price-making market economy. Economics has then become limited to a discussion of market capitalism and how it can be maintained in light of its evident failings. Hence, a new critical orthodoxy has arisen that seeks to maintain ‘business as usual’. Recognising that there is considerable potential for alternatives to current economic systems is a first step beyond this orthodoxy. Economics must go much further to become a science of social ecological provisioning that recognises and provides for diverse alternatives to be actualised.

The bottom line is how alternative economies as ethical social provisioning systems can be made to work, how current economic and political structures operate to prevent change to such systems and how we get from here to there.

Real-World Economics Review Blog
Alternative provisioning systems

Clive Spash and Clíodhna Ryan and RWER issue 106

The lead story today is about Xi Jinping’s speech at the opening of a study session at the Central Party School. Xi said that the path of financial development with Chinese characteristics not only follows the objective laws of modern financial development but also has distinctive characteristics that are suitable for our country’s national conditions. It is fundamentally different from the Western financial model. We must strengthen our self-confidence and continue to explore and improve in practice to make this path wider and broade…

"With Chinese characteristics" means primarily is controlled by the Communist Party. While this sounds nefarious to Western ears in capitalist countries, what is means is that the party tasked with representing the needs of the people is in control of the commanding heights of the economy, which includes finance. The implies that the capitalist class cannot control the commanding heights and thereby the provisioning system, as it capitalist countries under the command of the ownership and managerial classes, with "democracy" being a veneer over the control of the donor class through campaign finance and lobbying.

Tracking People's Daily

What is the Path of Financial Development with Chinese Characteristics? - Li Qiang's Pitch to MNCs in Davos

Manoj Kewalramani

The path for financial development with Chinese characteristics is different in nature from the mode of Western financial development.

Ginger River Review

A quick review Xi Jinping's speech on the development of China's financial sector

Jiang Jiang, Giustino Jiao, and Yiting Zhang

I apologize for the length and somewhat arbitrary nature of the following, it is an accumulation of thoughts as I react to the notion expressed by an acquaintance that the term “neoliberalism” has little to no explanatory power for the development of American policy since the Johnson years …

The Radford Free Press

Pondering Neoliberalism

Peter Radford

But what about the resource side? Where did all this money go? Why, for example, can the Lebanese Armed Forces, not the wealthiest military in the world, have a dozen Brigades deployed on operations, as well as numerous independent regiments, whereas the British, with their massively greater resources and a larger Army, would be pushed to deploy two? And in this, the British are the norm, rather than the exception.

The paradox has no one single cause, but is probably due more than anything else to the move since the 1980s towards managing defence as budgets, rather than programmes. Let me expand on that slightly gnomic statement. In the private sector, it is accepted that companies can and will manipulate their financial statements to inflate their profits and minimise their losses where possible. It’s also accepted that there is a distinction between the financial picture (a company makes increased profits by selling off assets) and the reality (it is doing so in a desperate attempt to avoid going out of business.) In a world where only profits and the share price matter, it is at least a coherent strategy for the short term. If you think about it, it’s also a ridiculous strategy for the public sector, since what matters, and what the voters want, is output for the long term. But from the 1980s onwards, beginning in Britain and spreading rapidly, the idea of managing the defence programme in terms of budgets, and the “efficient” spending of money took over. This meant, in effect, abandoning the previous pattern of managing programmes for capability output, and managing them instead according to budgetary limits. And as time passed, the poisonous theories of management consultants about “efficiency” began to seep into the public sectors of a number of countries....

Trying to Understand the World

The Wrong Stuff — Don't even think about rebuilding western militaries.

Aurelien

A rentier economy under financial and managerial capitalism has replace the former productive economy under industrial capitalism.

Michael Hudson

Debt Makes the World Go Around

Radhika Desai and Michael Hudson

The social costs of greenhouse gas emissions in health care are astounding — and we’ve been ignoring them completely — David Introcaso

The social cost of greenhouse gas (GHG) emissions, considered the single most important measure in addressing the climate crisis, is generally defined as an estimate of societal damages, including health harms, resulting from unpaid or externalized GHG emissions. Researchers have been calculating this cost for several decades. Federal agencies began regularly incorporating the social cost of these emissions in 2008 — today, more than 80 federal regulations reflect its use.

Despite the fact that GHG emissions are defined as the greatest threat to human health this century, the social cost of the health care industry’s emissions has somehow escaped the interest of the Department of Health and Human Services (HHS).

Negative externality. "Privatize the gains, socialize the losses."

While not MMT directly, although it concerns MMT as a matter of accounting, the article is illustrative of the consequences of ignoring true cost in setting the market price. The result is negative externality, the cost of which falls on society.

The Hill
The social costs of greenhouse gas emissions in health care are astounding — and we’ve been ignoring them completely 

David Introcaso

h/t Naked Capitalism

A Response To A Question About Post-Keynesian Interest Rate Theories (...And A Rant) — Brian Romanchuk

I got a question about references for post-Keynesian theories of interest rates. My answer to this has a lot of levels, and eventually turns into a rant about modern academia. Since I do not want a good rant to go to waste, I will spell it out here. Long-time readers may have seen portions of this rant before, but my excuse is that I have a lot of new readers....

Bond Economics

A Response To A Question About Post-Keynesian Interest Rate Theories (...And A Rant)
Brian Romanchuk

Year of the Dragon: Silk Roads, BRICS Roads, Sino-Roads — Pepe Escobar

Pepe Escobar's forecast on Eurasian development in the coming year.

Strategic Culture Foundation (sanctioned by the US Treasury Department)
Year of the Dragon: Silk Roads, BRICS Roads, Sino-Roads

Pepe Escobar

If SCF is blocked, you can access the article at The Alternative World here.

“Inflation”

This aggregate general price increase isn’t going to be reversed by November by keeping the current risk free rate static… so the Biden people are stuck with this politically … and the inequity of economic outcomes being caused by this high risk free policy rate they continue to impose…

Democrats sacrificing their political prospects in a deranged defense of art degree monetarism…

🇺🇸US Inflation Rate: Aggregated

Average American purchasing power eroded by 22.37% Since Jan 2020. pic.twitter.com/1TreF01Air

— Truflation (@truflation) January 8, 2024

"Medieval doctors drew blood; modern central bankers raise interest rates" — Bethesda 1971

Daily Kos? Yep. At least some of the so-called "left" are waking up?

The quotes is from a recent piece by James K. Galbraith and the post refers to Stephanie Kelton for explanation.

Daily Kos

"Medieval doctors drew blood; modern central bankers raise interest rates"
Bethesda 1971

So-called ‘Team Transitory’ declared victors — Bill Mitchell

On June 8, 2021, the UK Guardian published an Op Ed I wrote about inflation – This article is more than 2 years old:

Price rises should be short-lived – so let’s not resurrect inflation as a bogeyman. In that article, and in several other forums since – written, TV, radio, presentations at events – I articulated the narrative that the current inflationary pressures were transitory and would abate without the need for interest rate increases or cut backs in net government spending. In the subsequent months, I received a lot of flack from fellow economists and those out in the Twitter-verse etc who sent me quotes from the likes of Larry Summers and other prominent mainstreamers who claimed that interest rates would have to rise and government net spending cut to push up unemployment towards some conception they had of the NAIRU, where inflation would stabilise. I was also told that the emergence of the inflationary pressures signalled the death knell for Modern Monetary Theory (MMT) – the critics apparently had some idea that the pressures were caused by excessive government spending and slack monetary settings which demonstrated in their mind that this was proof that MMT policies were dangerous. Of course, they were just demonstrating their ignorance (deliberate or otherwise) of the fact that there are no MMT policies as such. MMT is an analytical framework not a policy regime. Anyway, in the last week, on mainstream economist seems to have recanted and has admitted that “Those who believed inflation would be transitory were proven right, and those who demanded the sacrifice of mass unemployment proven wrong”. For those E-mail warriors who think it is okay to send abusive messages to people you don’t know (or abusive messages in general) please do not send me apologies!...

William Mitchell — Modern Monetary Theory
So-called ‘Team Transitory’ declared victors
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Also at Bill's

Welcome to 2024 – the 20th year of my blog

The Conceptual Roots of the Global South’s Debt Crisis — Ndongo Samba Sylla

Modern Monetary Theory provides a useful lens through which to view the mounting sovereign-debt crisis in the developing world. It sheds light on why low- and middle-income countries borrow in foreign currencies, while also suggesting that rich countries could provide significant relief if they so desired....

MMT to the rescue from the debt trap. Is the debt trap due to a misunderstanding of economics and finance, or is it policy? 

Project Syndicate
The Conceptual Roots of the Global South’s Debt Crisis

Ndongo Samba Sylla

Central bankers on their ability of banks to create money out of thin air — Richard Murphy

Quotes and links to sources.

Funding the Future
Central bankers on their ability of banks to create money out of thin air
Richard Murphy

See also by Richard Murphy

Shouldn’t bankers know how banking works?

Predictions 2024 — Michael Hudson

Video and transcript.

Michael Hudson — On Finance, Real Estate And The Powers Of Neoliberalism
Predictions 2024
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

The Smith Family manga continues – Episode 9 is now available Bill Mitchell

Episode 9 in our new Manga series – The Smith Family and their Adventures with Money – is now available. We are approaching the climax for Season 1.

Have a bit of fun with it and circulate it to those who you think will benefit …

William Mitchell — Modern Monetary Theory
The Smith Family manga continues – Episode 9 is now available
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

MMS London Event – Friday, January 26, 2024 — Bill Mitchell

As I previously indicated I am returning to Europe and the UK in a few weeks for the first time since the Covid pandemic began. I will provide further details in due course, but for now, here is a link to the first event I will be speaking at in London on Friday, January 26, 2024 that is organised by the wonderful women from GIMMS. See over for details and how you can get tickets to the event.

William Mitchell — Modern Monetary Theory

GIMMS London Event – Friday, January 26, 2024
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Review of The Case for a Job Guarantee by Pavlina R. Tcherneva, Polity Press (2020) — Sheila D. Collins

Pavlina Tcherneva, a Professor of Economics at Bard College and a Research Scholar at the Levy Institute, has written a concisely, argued case for a federal job guarantee within the context of a Green New Deal. Citing its origins in FDR’s 1944 Economic Bill of Rights and the U.N.’s Universal Declaration of Rights, and the, at least nominal, commitment to the idea of full employment that prevailed through every administration until it was quashed with the election of Ronald Reagan, Tcherneva points out that it is a moral imperative, more needed than ever before. Although this book was written before A.I.’s threat to jobs became visible, Tcherneva’s call to action could not be more prescient.

The National Jobs for All Network
Review of The Case for a Job Guarantee by Pavlina R. Tcherneva, Polity Press (2020)
Sheila D. Collins, professor emeritus of political science at William Paterson University

Modern Monetary Theory Explained — Steve Burns

For the record. Not the best presentation of MMT, but it takes a positive approach. It is more or less correct, even though there are some major mistakes. So some progress on balance.

Although MMT has kind of faded into the background lately, on the blogs at least, the message still seems to be filtering out there.

New Trader U — Empowering Your Financial Journey
Modern Monetary Theory Explained
Steve Burns

The Smith Family manga continues – Episode 8 is now available — Bill Mitchell

Episode 8 in our new Manga series – The Smith Family and their Adventures with Money – is now available. Have a bit of fun with it and circulate it to those who you think will benefit …

William Mitchell — Modern Monetary Theory

The Smith Family manga continues – Episode 8 is now available

Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

US Rates

 

Biden people still 3.5% above their “inflation!” target….

Data last week indicated US inflation over the last six months likely returned to the Fed’s 2% target on an annualized basis. Figures out Friday are poised to make the achievement official https://t.co/CAVTfVK2EA

— Bloomberg Economics (@economics) December 21, 2023

And circling the toilet bowl:

CNBC: "Americans are giving President Biden TERRIBLE approval numbers — no matter how you look at it."

Overall: 35%
Economy: 33%
Foreign Policy: 29% pic.twitter.com/9rwiHA93C1

— RNC Research (@RNCResearch) December 19, 2023

Monetarism….. 🤔

The parallel universe in Japan continues and is delivering superior outcomes, while the rest look on clueless — Bill Mitchell

The question that the mainstream economists should be paraded out in front of the public and forced to answer is how can Japan do this and experience economic growth (albeit moderate) while the rest of the world is contracting due to misconceived monetary and fiscal tightening and is recording inflation rates above the Japanese rate?

The New Keynesian mob never directly answer questions like that because they cannot.

William Mitchell — Modern Monetary Theory

The parallel universe in Japan continues and is delivering superior outcomes, while the rest look on clueless
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Is It Over Yet? — Radhika Desai and Michael Hudson

"It" is neoliberalism.

Michael Hudson: "Well, you’ve just made the point that neoliberalism wants to make itself invisible. It’s like the devil. If there a devil, the devil wants to say he doesn’t exist. Neoliberalism says inequality doesn’t exist, exploitation doesn’t exist, and everything is quite fair."

Michael Hudson

Is It Over Yet?
Radhika Desai and Michael Hudson

Demographics, the economy and the environment: An MMT approach — Randall Wray and Yeva Nersisyan

Special Issue
How can we construct an economics consistent with the biophysical limits to economic growth?

The whole issue looks interesting. 

Real World Economics Review #106
Demographics, the economy and the environment: An MMT approach

Randall Wray and Yeva Nersisyan

Explain this

 

Hey Art Degree people explain this:

Explain that… 🤔

Here’s fucking another one:

Explain this dumb fuck Art Degree people… 🤔

Here here’s another one with go- go dancers… Art Degree m-fers what is going on here?

What?  Lead belly song from AT LEAST  Jim Crow?  What is going on Art Degree morons? what?

Another one can’t make it up:

What is going on Art Degree morons?

F=ma I can explain that let me know …  can you morons explain what going on here?

🤔

Central banks and climate change — Bill Mitchell

Today, I discuss a recent paper from the Bank of Japan’s Research and Studies series that focused on how much attention central banks around the world give to climate change and sustainability and how they interpret those challenges within their policy frameworks. The interesting result is that when there is an explicit mandate given to the central bank to consider these issues, the policy responses are framed quite differently and are oriented towards solutions, whereas otherwise, the narratives are about how climate change will impact on inflation. In the latter case, the central banks do not see their role as being part of the solution. Rather, they threaten harsher monetary policy action to deal with inflation. I also consider the most recent US inflation data. Finally, some live music from my time in Kyoto this year....

William Mitchell — Modern Monetary Theory
Central banks and climate change
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

New Argentina libertarian cutting government

 

This should be revealing… 🍿

BREAKING: President of Argentina, Milei, signs his first executive order, which reduces the Argentine government from 21 ministries to 9 pic.twitter.com/tRVshSCcPI

— Election Wizard (@ElectionWiz) December 11, 2023

US labour market – no sign of a major slowdown underway — Bill Mitchell

Last Friday (December 8 , 2023), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – November 2023 – which showed payroll employment rising by 199,000 which is a good sign. The unemployment rate also fell as employment growth outstripped the growth in the labour force – down to 3.7 per cent (from 3.9 per cent). The participation rate rose by 0.1 point, indicating optimism among workers. I see no sign of a major slowdown emerging. Real wages have also started rising – modestly.

William Mitchell — Modern Monetary Theory
US labour market – no sign of a major slowdown underway
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Science v Art

Massie (BSEE MIT, allegedly) vs. Kerry (BA PoliSci, Yale)…

House freakdom caucus member Massie doesn’t understand the contemporary organization of the academe… 

Amazing how people don’t understand this simple bifurcation… 🤔

MUST-WATCH: Rep. Thomas Massie masterfully exposes John Kerry's #ClimateScam propaganda—upon which Net Zero is built—for the sheer undiluted nonsense that it is, in just two minutes.

"I think it's somewhat appropriate that somebody with a pseudoscience degree is here pushing… pic.twitter.com/fZ4u7JtcEK

— Wide Awake Media (@wideawake_media) December 8, 2023

Progress coming in Biology

 

Looks like the department of Biology is going to finally shit can the Art Degree entirely… that would leave Economics as last moron standing…

Seems like a consensus is forming amongst many smart people!

This is Jensen Huang, CEO of $NVDA

Basically WATCH OUT for the impending biotech BOOM 💥 pic.twitter.com/QrN7heeyiQ

— Gene Investing w/Anthony 🧬 (@GeneInvesting) December 6, 2023

Biden: Fed should be discouraged from raising interest rates

 

Implies at least a hold for election year… for now…

Hey, I thought Biden always said he respected the Fed’s independence. What gives?
“Biden said the Federal Reserve should be discouraged from raising interest rates, in rare comments from the president on central bank policy making” https://t.co/9SnBThvJWU via @bpolitics

— Judy Shelton (@judyshel) December 9, 2023

Scientists revisit Solomon Asch’s classic conformity experiments—and are stunned by the results — Eric W. Dolan

This article is not about MMT as such or even economics, but rather social psychology. It may explain to some degree both opposition to MMT in the face of evidence and also the appeal of monetarism in the face not only of evidence but also fiancial losses sustained from trading on monetarist assumptions. It is also of interest to contrarianism.

TL/DNR version:

The study’s findings were striking in their similarity to [Soloman] Asch’s original results. In the non-incentivized group, the average error rate in the line judgment task was 33%, closely mirroring Asch’s findings. However, in the incentivized group, the error rate dropped to 25%. This suggests that while financial rewards can reduce the impact of group pressure, they do not eliminate it.

“When we started the study, we could not imagine to be able to replicate the original findings as close as it turned out,” Franzen and Mader told PsyPost. “We thought Asch’s findings were overstated. We also believed that providing incentives for correct answers would wipe out the conformity effect. Both did not happen. The replication turned out to be very close to the original results and providing monetary incentives did not eliminate the effect of social pressure.”

The conclusion is also of interest to contrarianism.

Regarding what people should take away from the findings, the researchers remarked: “Here we like to cite Mark Twain, ‘Whenever you find yourself on the side of the majority, it is time to pause and reflect.'” 

PsyPost
Scientists revisit Solomon Asch’s classic conformity experiments — and are stunned by the results
Eric W. Dolan

The Smith Family manga continues – Episode 7 is now available — Bill Mitchell

Episode 7 in our new Manga series – The Smith Family and their Adventures with Money – is now available. Have a bit of fun with it and circulate it to those who you think will benefit …

William Mitchell — Modern Monetary Theory

The Smith Family manga continues – Episode 7 is now available
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

British House of Lords inquiry into the Bank of England’s performance is a confusing array of contrary notions — Bill Mitchell

On November 27, 2023, the Economic Affairs Committee of the British House of Lords completed their inquiry into the question – Bank of England: how is independence working? – by releasing their 1st Report after taking evidence for several months – Making an independent Bank of England work better. The report is interesting because it contains a confusing array of contrary notions. On the one hand, the witnesses to the Inquiry claimed it was “Groupthink” in operation that prevented the Bank from raising rates earlier and that it was obvious the inflationary pressures were traditional excess spending driven by excessive monetary supply growth (classic Monetarism). That assessment is contested by the alternative, which I adhere to, that the inflationary pressures were supply driven and not amenable to interest rate shifts. And the Groupthink arises because these economists consider interest rate changes would solve the inflation irrespective of the contributing factors. While the Report is sympathetic to the mainstream view as above, it then launches into a critique of the mainstream forecasting approaches. A confusing array of notions....

William Mitchell — Modern Monetary Theory
British House of Lords inquiry into the Bank of England’s performance is a confusing array of contrary notions
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia