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.
The first part of the post is about Tunisia, and the second is specifically about MMT. MMT economist Fadhel Kaboub is originally from Tunisia and is familiar with the situation there.
Rosa Luxemburg Stiftung Modern Monetary Theory: A Tool for the Global South? Fadil Aliriza, co-founder and editor-in-chief of the Tunisian news portal Meshkal, in conversation with Dr. Fadhel Kaboub, associate professor of economics at Denison University and president of The Global Institute for Sustainable Prosperity.
In terms of the the general case concerning contemporary banking, the basic constraint on lending, by which banks create "money"* by crediting deposit accounts (bank liability) and debiting loan accounts (bank asset), is the availability of creditworthy borrowers. This population is flexible based on, financial and economic conditions, bank credit standards, and government policy and regulation. All of these may change over the cycle.
Price of assets rise to the degree that banks are willing to lend against them as collateral, and goods prices will be affected by changes in bank credit policy. Since bank credit generates much more highly liquid purchasing power (M1) by volume in an economy than government net spending (which also adds to M1), "bank money" is a primary driver of asset values and goods prices.
Since banks, even though privately owned, are part of the government-regulated banking system, they submit to government regulation and oversight, for which they receive access to the central bank as lender of last resort and also deposit insurance.
Yet, much of what we still hear is about gub'ment, crowding out, interest rate explosion, and other idiocies based on the erroneous loanable funds theory.
Thankfully, many economists are finally throwing off the heavy yoke of monetarism, but even many of these are still affected by the cognitive biases resulting from monetarism's deep impressions on the psyche. However, a majority of posts that mention MMT are still rants about the dire effects of "fiat currency"and fiscal depravity as opposed to Libertarianism and "sound money."
* I put money in quotes because "money" is an ambiguous term that should be banned from economics, as Brian notes. "Money" is one of those weasel words that everyone thinks they understand; yet, no one does owing to the extremely high level of abstraction that makes it a wild card. Better to say exactly what you mean, ideally in accounting terms with dealing with a unit of account.
Unfortunately, there are many other terms in economics like this. See, for example, the Cambridge capital controversy that pitted Samuelson and oSlow against Robinson and Sraffa.
I don't know much about the science in Galileo's time, but he said there was no light, colour, or taste, and that all of these experiences were created in the mind. Electromagnetic waves leave the Sun, bounce off objects, and our brains create the images and colours we see. If a tree fell down in a forest and there was no one around, would it make a noise?
Our brains produce all these experiences, but what if it also creates space and time as well. The passing of time is an Illusion, said Einstein, and that all time was here at once.
Professor Donald Hoffman thinks that not only do our minds create space and time, but that the images we see are not the real world at all. What we see could be an interface, like a desktop screen, that helps us to get around in the world. He calls it Eye Candy because we see a beautiful world.
Not many scientists accept Donald Hoffman's theories yet, but he went to a scientist friend who studies evolution using mathematics, and he put his theories to the test in his software, and it was true, creatures that only see an interface that helps them get about the universe survive longer. This interface need not represent the real word at all, anymore than a desktop screen shows the workings that produces the images. So, objects may be nothing more than just icons on a screen. The maths used for the research is considered to be scientifically vigorous by most scientists.
Donald Hoffman does get into metaphysics where he believes he can develop the maths to prove whether God exists or not, and although he thinks there probably isn't one, he does believe that some sort of consciousness survives death.
He is one of the few scientists who now believes that the universe has consciousness woven into it - that molecules cannot just suddenly become conscious as they become more complex.
In a another video I saw, the scientists marveled at how finally tuned the universe was to support life, and the theory goes that there are an infinite number of universes, so it's not surprising that one could be like this. But they had another theory, if the universe is being created by the mind, then it's not surprising it is finally tuned for us.
Donald Hoffman worked in AI for many years where he studied how the brain sees images. To this day, he says, no one has a clue how the brain generates the images that we see.
Our minds seem to create the world around us, which means it may also be creating the physical brain too, but this could be another icon? Donald Hoffman seems to think that the part of the mind which creates the physical world - along with time - is the part that sees it, and it might not be material, it could be the consciousness of the universe, it may even be spiritual.
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At a quantum level, we may throw a quantum dice, say, but one person may see a heads while the other see a tails.
Hydrogen has been dubbed ‘the fuel of the future’ but thanks to our scientists, that future could be much sooner than we think. We’ve created a metal membrane that filters out pure hydrogen gas from ammonia. It can then be dispensed into fuel cell cars, buses and even trucks. And the technology isn’t just fantasy, we recently powered fuel cell electric vehicles using locally-produced ultra-high purity hydrogen. And now the technology is being commercialised via a partnership with Fortescue Metals Group Ltd. The investment in our hydrogen membrane technology will help steer us towards a domestic hydrogen industry, with the potential for future global uptake. CSRIScope. Melina Gillespie - Hyper for hydrogen: our world first for carbon-free fuel
The [Wolfowitz] doctrine announces the U.S.'s status as the world’s only remaining superpower following the collapse of the Soviet Union at the end of the Cold War and proclaims its main objective to be retaining that status.
Our first objective is to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere, that poses a threat on the order of that posed formerly by the Soviet Union. This is a dominant consideration underlying the new regional defense strategy and requires that we endeavor to prevent any hostile power from dominating a region whose resources would, under consolidated control, be sufficient to generate global power.
"The top one percent owns nearly $30 trillion of assets while the bottom half owns less than nothing."
The growth of wealth inequality over the past 30 years, Bruenig found, is "eye-popping."
"Between 1989 and 2018, the top one percent increased its total net worth by $21 trillion," Bruenig wrote. "The bottom 50 percent actually saw its net worth decrease by $900 billion over the same period."
It is now important for every American to realize that he or she can get little to no reliable news from the US mainstream media on Ukraine, Russia, or even the United States itself. The inevitable confusion and apathy is particularly dangerous in a country with the enormous responsibility of being the leader of the democratic community of states the U.S. purports itself to be. It will allow political leaders with strong media support to manipulate reality and lead the country down a dark alley from which there is no return.
So far, in considering a simplified economy with a job guarantee, the focus has been on the demand-determined behavior of output and employment. Prices, in this exercise, have simply been taken as given on the grounds that they are not causally significant in the process. This approach does not require prices to remain constant, though, for given supply conditions, they may well do so over a fairly wide range of output for reasons to be discussed. Nor does it require that prices are necessarily unrelated to output; only that the direction of causation in any aggregate relationship between the two mostly runs from output to prices rather than the other way round. But once attention turns to the issue of price stability, which is of considerable interest to job-guarantee proponents, it becomes relevant to entertain a possible short-run relationship between output and prices. This will provide a basis for identifying potentially price-stabilizing aspects of a job guarantee in the next part of the series....
In 1995, the sociologist Ralf Dahrendorf argued that developed countries’ “overriding task” for the subsequent decade was to "square the circle of wealth creation, social cohesion, and political freedom.” More than two decades later, most have not even attempted that feat....
The paradoxes of liberalism involve the incompatibility of social liberalism, political liberalism, and economic liberalism, in particular, a fundamental tension between accumulation and democracy. Enlightenment liberalism (not to be confused with enlightened liberalism) is bourgeois liberalism, the bourgeoisie being the owners of property.
The particle is strong on analysis and weak on solutions.
As Marx observed, the problem is property. Property is a social construct based on legal institutions. It can be addressed through institutional reforms that limit economic inequality, which leads to social and political inequality through status, networking and power. But that would involves modifying the concept of economic liberalism to bring it into balance with social and political liberalism. This requires more than surface alterations ("band-aids"), e.g., more progressive taxation. It requires revisiting the Enlightenment concept of liberalism, which was an advance at the time but an anchor to the past now.
“Federal deficits and debt are not so scary. Neither is on an unsustainable path," was the opening salvo from Randall Wray, a professor at Bard College and one of the leading advocates of Modern Monetary Theory. The emerging school of thought says countries like the U.S., which borrow in their own currency, can pursue growth through deficit-spending so long as prices are under control.
Wray’s paper for the committee argued that MMT has never said deficits or debt don’t matter. But he said that they’re best viewed as outcomes of policies aimed at lifting the economy, rather than goals in themselves. When economists and lawmakers push for debt-reduction, he said, “MMT cautions that what we might be reducing is economic growth."
MMT has won converts, but there’s been a backlash too -- with heavyweights from Federal Reserve Chair Jerome Powell to billionaire Warren Buffett denouncing it. MMT on Trial?
As debate raged over MMT earlier this year, Republicans called for a hearing to condemn it as dangerous. Before Wednesday’s session, GOP lawmakers on the budget committee said they expected the doctrine to be a “central theme.”
They called MMT “a convenient theory” for politicians determined to spend trillions, and quoted Democrat-leaning economists including Paul Krugman and Larry Summers slamming the doctrine....
Buttigieg is probably likely to pick a Federal Reserve chairman who’s similar to Janet Yellen, Seiberg added, as he may understand the “importance of an independent central bank that can put the long-term interests of economy ahead of short-term political gains.” Buttigieg is unlikely to choose a central banker who endorses modern monetary theory, Seiberg said....
Randy Wray's testimony to the US House of Representatives Budget Committee today. CONGRESSIONAL TESTIMONY: Reexamining the Economic Costs of Debt Statement by L. Randall Wray Hearing before the House Budget Committee, November 20, 2019 210 Cannon House Office Building
Important. Andrew Batson summarizes Charles Kindleberger's insight into development in terms of ability to transform the economy — what promotes it and what hinders it.
Neoclassical economics assumes flexibility among the factors of production and also flexibility within them, resulting in immediate response to economic "laws," e.g., based on natural market forces that automatically generate spontaneous order (general equilibrium).
However, economic forces are not independent of social and political factors in society. Neoclassical assumptions generate an idealistic model that doesn't necessarily correspond to actual conditions. As a result there are market failures and idle resources.
There are different rates of transformational capacity and reasons for them. Charles Kindleberger considered them.
...I will outline the issues as I see it. One typical insight offered from neoclassical modelling is that a recession would be the result of some sort of shock. Although my argument is that recessions are hard to forecast, that seems to offer almost no information. We can usually see certain mechanisms behind a recession, as is discussed in my manuscript (which is volume one). So it's a hard sell to say that recessions are purely random processes.
We can get slightly more specific, such as having some sort of shock to the credit markets, which might be used to help explain the events of the Financial Crisis. But once again, the Financial Crisis, was hardly "random," market participants (including bankers within "market participants") followed behavioural patterns that Minsky described long ago. Saying that there is a "random shock" to credit markets offers a whole lot less information than Minsky's writings.
So I am left with the conundrum: what is worthwhile from neoclassical theory that is worthwhile putting into a second volume of a book on recessions?
Facts show nothing suspicious about the re-election of Evo Morales
What is the difference between an outright lie — stating something as a fact while knowing that it is false — and a deliberate material representation that accomplishes the same end? Here is an example that really pushes the boundary between the two, to the point where the distinction practically vanishes.
And the consequences are quite serious; this misrepresentation (or lie) has already played a major role in a military coup in Bolivia last week. This military coup overthrew the government of President Evo Morales before his current term was finished — a term to which nobody disputes that he was democratically elected in 2014.
More violent repression and even a civil war could follow.
The neoliberals’ impact on the “new right” is nowhere clearer than in the British hard right’s attempt to enforce a no-deal Brexit.
The populist right-wing backlash against neoliberal austerity is just more neoliberalism. Those people who hate the present system and turn to the right will get more of the same. Life will get harsher.
The ongoing and increasingly intense conservative backlash currently taking place across Europe is often understood as a populist reaction to neoliberal policy. The neoliberal assault on the welfare state, as for instance Chantal Mouffe has argued, has eroded post-war social security even as it destroyed people’s faith in electoral politics. Coupled with a sharp increase in inequality and rapid globalisation, the technocratic nature of neoliberal government has angered electorates across the continent. Wanting to “take back control” of their political life, these electorates have turned away from traditional centrist parties and have thrown their lot in with populist parties on the fringes of the political spectrum. Although, as Mouffe is at pains to point out, this creates a space for both left-wing and right-wing populisms, today it seems that especially its inward-looking, nationalistic variants are experiencing electoral success.
CNN ran an article called 25 times Trump
has been soft on Russia. Caitlin Jonestone disagrees.
Caitlin Johnstone discredits a CNN listicle on Trump’s “softness” towards Moscow. In fact, she writes, the U.S. president has actually been consistently reckless towards Moscow, with zero resistance from either party.
In May of this year, House Budget Committee Republicans sent a letter to Chairman John Yarmuth (D-KY) requesting a hearing on MMT. Tomorrow, the House Budget Committee is holding a hearing titled “Reexamining the Costs of Debt,” and MMT is expected to be a central theme.
The Hon. Mr. Womack neglects to say that Dick Cheney told us that President Reagan (who has been sainted by the GOP) showed that deficits don't matter. 😀 Maybe he should rethink his position.
I am currently working through the entire Commissaire Maigret detective series written by Belgian author author Georges Simenon. I read a lot as I travel around and I have 74 (out of 75) Maigret novels to read. But don’t let that fool you, I am already becoming familiar with Maigret’s forensic way of thinking (-:. So for the next two blog posts we will be conducting a forensic examination of data to solve a puzzle that appears to be confusing people. This is the sort of puzzle that people (like me), who are interested in data and have a penchant for spy and detective novels like to investigate. For others though, while the nuances might appear to be rather obscure, the importance of this sort of puzzle cannot be understated. Community perceptions are influenced by what I am talking about today. Policy decisions are taken. Industrial relations strategies are designed, implemented, and, in some cases, fought out with significant consequences. The data I am analysing today and tomorrow can provide information about the state of the economy. It can inform us of the way in which the economic is changing in structure over time. It can provide guidance to fiscal and monetary authorities as to the likely impact of policy changes. So, as you will see, ambiguity is not going to be very helpful. The data I am dealing with in this blog post explores the relationships between nominal wages, prices and productivity in the Australian economy. The principles established, though, apply to all economies. What I will show you is that the choice of how we choose to measure key variables can fundamentally alter the way we think and act. This is Part 1 of a two-part series. Now, if only I had a pipe to light! (Maigret joke for insiders)....
Many US economists and policymakers cling to the faith that free markets are enough to effectively drive innovation and believe that any national IT strategy would be inappropriate government meddling. Most Chinese government officials are engineers who don't get hung up on such philosophical debates: they do what works.…
So it's not surprising that the World Values Survey finds 78% of Chinese residents agree that "more emphasis on the development of technology" is a good thing, compared to just 49% of US residents....
More keeper quotes. The idea behind MMT is as old as the hills. But previously, it was only a possible scenario, whereas MMT describes the existing monetary system since 1971 — the "pure creditary system" that Knut Wicksell had envisioned as a thought experiment.
Keynes said it would be useful to educated people in this in order to remove the shibboleths of the past that prevent proper fiscal response now. How prescient he was. Received knowledge is sticky even when it is shown to be wrong.
Lars P. Syll’s Blog The origins of MMT Lars P. Syll | Professor, Malmo University
Scott Fullwiler Replying to @BPC_Bipartisan@JJFichtner and @kkcarmodyThank you for providing further evidence that "bipartisan" is currently code for "the same shit we've been doing for decades that got us into this mess in the first place."
Followed by:
Authors: It's hard to pin MMT down Also authors: We didn't cite any academic MMT literature, only critics of MMT who also didn't cite any academic MMT literature
And ... the authors: We actually believe the loanable funds model & used it to prove MMT wrong. Hey, stop laughing.
If only an MMT economist had written a book and called it something like Modern Money Theory.
With a link to Randy Wray's book.
Beyond superficial.
Maybe there's an agenda. Let's see.
Jason J. Fichtner is a fellow with the Bipartisan Policy Center and also a senior lecturer at the Johns Hopkins University School of Advanced International Studies. His research focuses on Social Security, federal tax policy, federal budget policy, retirement security, and policy proposals to increase saving and investment.
Then the Tell. "Previously, he was a senior research fellow at the Mercatus Center at George Mason University." The Mercatus Center is a Libertarian think tank that promotes Austrian Economics.
Jason J. Fichtner's PhD is in public administration and policy, not economics.
Kody Carmody is also a policy type with no degree in economics.
