LA Woman

Great breakdown of a great song (by The Doors) by these 2 Millennial black bros… never understood the song as a metaphor for the city of Los Angeles but yeah I get it now… makes it even better…

The Deficit, the National Debt, and why we don’t have to worry about them. — John Rudden

Short article on Stephanie Kelton's The Deficit Myth.

Daily Kos
The Deficit, the National Debt, and why we don’t have to worry about them.
John Rudden

Episode 6 of the Smith Family Manga (Season 2) is now available— Bill Mitchell

Today (October 3, 2024), MMTed releases Episode 6 in the Second Season of our Manga series – The Smith Family and their Adventures with Money. Have a bit of fun with it while learning Modern Monetary Theory (MMT) and circulate it to those who you think will benefit. Episode 6 was delayed by two weeks…

William Mitchell — Modern Monetary Theory
Episode 6 of the Smith Family Manga (Season 2) 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

Modern Monetary Theory film proves finding the cash isn't the problem — William Thomson

As we have been writing for over a year in this newsletter, the UK Government, as the issuer of the UK pound, can never run out of money. They can afford whatever is priced in pounds. There is never a problem finding the money. This leads to a natural and painful conclusion: Continuing austerity policies is a political choice....

The National (Scotland)

Modern Monetary Theory film proves finding the cash isn't the problem

William Thomson, Scotonomics founder

Class origins matter – but who are the agents of change? — Bill Mitchell

Not MMT or economics as such but it is interesting in that Bill is an MMT founder so his stance on economic sociology is relevant. 

There was an interesting article in the UK Guardian the other day September 26, 2024) – Take it from me (and Keir Starmer) – you should never pretend to be more working class than you are. I don’t usually agree with the journalist but this article made me reflect on a lot of things.…

 Aside:

The scrutiny arises because many of these “Labour people” appear to have accumulated wealth (real estate etc), have come from well-paid jobs and network with the elites in society.

For that they are referred to, in a pejorative way, as ‘champagne socialists’.

In the US, they (affected Democrats) are called "limousine liberals" and "latté liberals." A lot of the formerly faithful are fed up with this posturing, but even more so with the corruption that flows from it.

The way the system works is when a person from an ordinary background gains celebrity of whatever sort and can afford a more bountiful lifestyle, then they enter "the bubble." Gradually or swiftly, they lose touch with their humbler roots among "the little people" as characterized by former Sen. Allen Simpson. It's also very American to pretend to a humble background after achieving status when that is not the case. 

In the age of the Internet that hypocrisy is usually quickly exposed.

William Mitchell — Modern Monetary Theory 

Class origins matter – but who are the agents of change?
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

The ball is now in Finance Ministry's court, Chinese economists say — Zichen Wang

Apparently many influential Chinese economists are old-style Keynesians. There is no indication that they understand the basic principle of MMT —  a sovereign currency issuer that doesn't create financial obligation in currency it does not issue has a monopoly on its currency. 

This is especially important considering that China faces deflation rather than inflation.

It's up to the Finance Ministry now. 

Wikipedia:

The Ministry of Finance of the People's Republic of China (Chinese: 中华人民共和国财政部; pinyin: Zhōnghuá Rénmín Gònghéguó Cáizhèngbù) is the constituent department of the State Council of the People's Republic of China which administers macroeconomic policies and the annual budget. It also handles fiscal policy, economic regulations and government expenditure for the state.

The ministry also records and publishes annual macroeconomic data on China's economy. This includes information such as previous economic growth rates in China, central government debt and borrowing and many other indicators regarding the economy of mainland China.

The Ministry of Finance's remit is smaller than its counterparts in many other states. Macroeconomic management is primarily handled by the National Development and Reform Commission (NDRC). State-owned industries are the responsibility of the State-owned Assets Supervision and Administration Commission, and there are separate regulators for banking, insurance and securities. It also does not handle regulation of the money markets or interest rates. These, together with other aspects of monetary policy, are governed by the People's Bank of China (PBC), mainland China's central bank. The Ministry, NDRC and PBC are equal in status, with their political heads all sitting on the State Council.

Pekingnology - CCG
The ball is now in Finance Ministry's court, Chinese economists say
Zichen Wang | Research Fellow & Director for Int'l Comms at Center for China and Globalization (CCG), after 11 years at Xinhua News Agency. Founder & Editor: Pekingnology & The East is Read. Salzburg Global Fellow (2024-)

See also

Strategic Culture Foundation (sanctioned by the US Treasury Department)

Watching the China river flow

Pepe Escobar

How I came to MMT — Robert Cauneau

 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.

Interesting personal story.

MMT France
How I came to MMT
Robert Cauneau

The article is available in French here.

China shit market

 

Commies dilute their productive capital with unproductive commie bullshit = 0…

Here is a wild chart. The total return on Chinese stocks since 1993 is negative. In contrast, India is a 13-bagger. pic.twitter.com/SPvczZxkld

— Jeff Weniger (@JeffWeniger) September 20, 2024

The 20 EMU Member States are not currency issuers in the MMT sense — Bill Mitchell

For some years now (since the pandemic), I have been receiving E-mails from those interested in the Eurozone telling me that the analysis I presented in my 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale (published May 2015) – was redundant because the European Commission and the ECB had embraced and was committed to Modern Monetary Theory (MMT) so there was no longer a basis for a critique along the lines I presented. I keep seeing that claim repeated and apparently it is being championed by MMT economists. While there are some MMTers who seem to think the original architecture of the Economic and Monetary Union has been ‘changed’ in such a way that the original constraints on Member States no longer apply, I think they have missed the point. They point to the fact that the ECB continues to control bond yield spreads across the EU through its bond-buying programs (yes) and that the Commission/Council relaxed the fiscal rules during the Pandemic (yes). But the bond-buying programs come with conditionality and the authorities have now ended the ‘general escape clause’ of the Stability and Growth Pact and are once again enforcing the Excessive Deficit procedure and imposing austerity on several Member States. The temporary relaxation of the SGP rules (via the general emergency clause) did not amount to a ‘change’ in the fiscal rules. Indeed, the EDP has been strengthened this year. The Member States still face credit risk on their debt, still use a foreign currency that is issued by the ECB and is beyond their legislative remit, and are still vulnerable to austerity impositions from the Commission and their technocrats. To compare that situation with a currency-issuing government such as the US or Japan or Australia, etc is to, in my view, commit the same sort of error that mainstream economists make when they say that ‘the UK is at risk of becoming like Greece’ or similar ridiculous threats to discipline fiscal authorities in currency-issuing nations.

There are various interrelated questions that bear on this subject....

    

William Mitchell — Modern Monetary Theory
The 20 EMU Member States are not currency issuers in the MMT sense
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

(II) Xu Gao's case for Beijing to spend — Yuxuan JIA and BU, Xiaoqing

Xu Gao, the Chief Economist and Assistant President of Bank of China International Co. Ltd., and an adjunct professor of the National School of Development (NSD) at Peking University, has been featured on The East is Read several times.

On August 19, 2024, Xu published a new essay on his personal WeChat blog 徐高经济观察 Xu Gao Economic Observation. This long essay, essentially making a case for Beijing to adopt stimulus measures, will be rolled out in three parts.

Amid cautious signals from the Chinese government and the widespread belief in saving policy "ammunition," Xu Gao calls for a shift to macroeconomic thinking. He contends the government shouldn't be tethered to the belief that money spent is money lost, as a company might. The government revenue isn't fixed or exhaustible but "endogenous," says he, driven by government spending, which boosts private income, consumption, and investment. Unlike individuals and businesses who see income as beyond their control, the government, following Keynesian principles, can step in when demand falters. By increasing fiscal spending and liquidity, it can generate demand where the private sector won't, matching purchasing power with the willingness to spend.

Xu argues that the real limit on stimulus isn't money supply—it's supply capacity. Rising inflation and trade deficits mean domestic supply can't keep up with demand, making further stimulus risky. But when inflation is low and there's a trade surplus, it signals excess supply, making stimulus "not only feasible but also essential."….

The East is Read
(II) Xu Gao's case for Beijing to spend: stimulus now doesn't hinder structural reforms-Chief Economist of Bank of China International continues with the sustainability and necessity of stimulus.

Yuxuan JIA and BU, Xiaoqing

Trump to roll out DeFi project this week

Looks like Trump going to start a crypto exchange and a USD stable coin… 🤔

.@WorldLibertyFi is helmed by @realdonaldtrump's sons, @EricTrump and @DonaldJTrumpJr and the 18-year-old Barron Trump is the project's "DeFi visionary.” https://t.co/PSKhQWyQKu

— CoinDesk (@CoinDesk) September 13, 2024

Xu Gao's case for stimulus—Chief Economist of Bank of China International tears apart the opposition — Yuxuan JIA and BU, Xiaoqing

 MMT without naming it.

Xu Gao, the Chief Economist and Assistant President of Bank of China International Co. Ltd., and an adjunct professor of the National School of Development (NSD) at Peking University, has been featured on The East is Read several times.

On August 19, 2024, Xu published a new essay on his personal WeChat blog 徐高经济观察 Xu Gao Economic Observation. This long essay, essentially making a case for Beijing to adopt stimulus measures, will be rolled out in three parts.

Amid cautious signals from the Chinese government and the widespread belief in saving policy "ammunition," Xu Gao calls for a shift to macroeconomic thinking. He contends the government shouldn't be tethered to the belief that money spent is money lost, as a company might. The government revenue isn't fixed or exhaustible but "endogenous," says he, driven by government spending, which boosts private income, consumption, and investment. Unlike individuals and businesses who see income as beyond their control, the government, following Keynesian principles, can step in when demand falters. By increasing fiscal spending and liquidity, it can generate demand where the private sector won't, matching purchasing power with the willingness to spend.

Xu argues that the real limit on stimulus isn't money supply—it's supply capacity. Rising inflation and trade deficits mean domestic supply can't keep up with demand, making further stimulus risky. But when inflation is low and there's a trade surplus, it signals excess supply, making stimulus "not only feasible but also essential."

The East is Read

Xu Gao's case for stimulus—Chief Economist of Bank of China International tears apart the opposition
Yuxuan JIA and BU, Xiaoqing

Wholesale Payments Systems and Bank Reserves — Brian Romanchuk

Some of the nity-gritty involving payments systems that underlies some institutional arrangement needed to understand MMT's analysis.

Bond Economics
Wholesale Payments Systems and Bank Reserves
Brian Romanchuk

The Myth That the US is Rapidly Approaching Bankruptcy — Michael Hudson

 Yves Smith's introduction

Yves here. It is frustrating to see a normally solid YouTuber almost go off the rails by getting outside his area of expertise, geopolitics, and fall for libertarian scaremongering. We’ve commented before on the tendency of certain schools of commentary to fall into belief clusters, so anti-globalists are anti-dollar hegemony (and often crypto fans) to the degree that they have not bothered understanding how a currency issuer like the US operates. A currency issuer can never suffer an involuntary bankruptcy. They can always create more currency. What they can do is generate too much demand compared to the real resources of their economy, as in inflation.

In the discussion below, Micael Hudson has spend [spends] a significant portion of the interview debunking US budget myths to Nima of Dailogue Works. Hudson not only got Nima to agree to a more accurate title but also Hudson starting by laying out MMT basics in his extended opening discussion. As Hudson said via e-mail:

Nima had a sensationalist title, “Is the US rapidly approaching bankruptcy.” I showed that this is a myth and the US can’t go bankrupt.

We pre-arranged that I would give a 25-minute lead-in discussing just whom the US Treasury debt is owed to, and why most of it has no intention of being paid (paper currency, debts to foreign central banks and to the US Fed), and as for debts to bondholders, US Treasury debt continues to be a flight to safety, not to risk...

Naked Capitalism
The Myth That the US is Rapidly Approaching Bankruptcy
Michael Hudson

Modern Monetary Theory: Economics for the 21st Century – MOOC – now available via MMTed.org — Bill Mitchell

I am travelling all day tomorrow so I am bringing forward the normal blog post to today. I am pleased to announce that from today the MMT MOOC which we ran through the University of Newcastle’s edX facility over the last few years is now available through MMTed on an on-going basis. Read on to get the full details and access. 

William Mitchell — Modern Monetary Theory
Modern Monetary Theory: Economics for the 21st Century – MOOC – now available via MMTed.org
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Trump 3% Mortgage Policy

 

Trump promising a return to 3% mortgages if he can get back in…

He’ll have to tell his Central Bank to lower the policy rate down to at least 2% to hope to get his 30-yr fixed back to 3%…

Donald Trump says his plans to slash regulations will get mortgage rates 'back down' to 3%, per FORTUNE

— unusual_whales (@unusual_whales) September 9, 2024

Episode 5 of the Smith Family Manga (Season 2) is now available – the Finance Report hots up Bill Mitchell

Today (September 6, 2024), MMTed releases Episode 5 in the Second Season of our Manga series – The Smith Family and their Adventures with Money. Have a bit of fun with it while learning Modern Monetary Theory (MMT) and circulate it to those who you think will benefit …

William Mitchell — Modern Monetary Theory

Episode 5 of the Smith Family Manga (Season 2) is now available – the Finance Report hots up
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Short term interest rate characteristics…

Some concern by Monetarists out there that current short term risk free rate of interest compared to the average of a past period of the short term risk free interest rate is a cause for serious concern wrt equity prices…

Think of financial asset prices as a function of the equation P = (A-L)/A where A and L are Depository system Assets and Liabilities…

At point 1 the fiscal surpluses were being saved in the TTL accounts at Depositories increasing system L by $100Bs … at point 2 the Fed increased Depository system A by hundreds of billions in September 2008, causing credit provision to cease and the GFC …. and at point 3 they again did the same thing as 2 establishing over $1 trillion of A in March 2020 causing the credit function to again cease until this regulatory function was suspended …. 

Today Treasury no longer utilizes TTL accounts and we are in large fiscal deficit anyway, and no where have I seen currently is the Fed proposing to increase A at this time rather their stated policy is to continue to gradually “normalize” system A at much lower levels…

“Correlation is not causation” etc… 

Some debriefing on continuous fiscal deficits and debt issuance — Bill Mitchell

A government cannot run continuous fiscal deficits! Yes it can. How? You need to understand what a deficit is and how it arises to answer that. But isn’t a fiscal surplus the norm that governments should aspire to? Why frame the question that way? Why not inquire into and understand that it is all about context? What do you mean, context? The situation is obvious, if it runs deficits it has to fund itself with debt, and that becomes dangerous, doesn’t it? It doesn’t ‘fund’ itself with debt and to think that means you don’t understand elemental characteristics of the currency that the governments issues as a monopoly. These claims about continuous deficits and debt financing are made regularly at various levels in society – at the family dinner table, during elections, in the media, and almost everywhere else where we discuss governments. Perhaps they are not articulated with finesse but they are constantly being rehearsed and the responses I provided above to them are mostly not understood and that means policy choices are distorted and often the worst policy decisions are taken. So, while I have written extensively about these matters in the past, I think it is time for a refresh – and the motivation was a conversation I had yesterday about another conversation that I don’t care to disclose. But it told me that there is still a lot of work to be done to even get MMT onto the starting line.... 

William Mitchell — Modern Monetary Theory
Some debriefing on continuous fiscal deficits and debt issuance

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

Episode 4 of the Smith Family Manga (S2) is now available — Bill Mitchell

Today (August 23, 2024), MMTed releases Episode 4 in the Second Season of our Manga series – The Smith Family and their Adventures with Money. Have a bit of fun with it while learning Modern Monetary Theory (MMT) and circulate it to those who you think will benefit …

William Mitchell — Modern Monetary Theory

Episode 4 of the Smith Family Manga (S2) 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

Chartbook 310 The shock of the new: Dollar dominance and modern monetary macro in the 1920s. — Adam Tooze

Not MMT but relevant historically. How the world got here ((to dollar hegemony), as well as to monetarism, the accounting identity that is, as the basis of macro.  

Adam Tooze is a historian rather than an economist, so he is able to shine a different light on the subject.

Chartbook
Chartbook 310 The shock of the new: Dollar dominance and modern monetary macro in the 1920s.
Adam Tooze | Shelby Cullom Davis chair of History at Columbia University and serves as Director of the European Institute

NDX100 EPS

 

Something happened after the 2022 Biden unprecedented rate increases to really crush (-32%) the EPS of the NDX100… 🤔

With the implication that this one time discount after the unprecedented Biden rate increases in 2022 might be reversed if those said rate increases were to be reversed…

An Economic program for Kamala that will benefit everyone, and win the Presidency in November! — John Rudden

MMT.

Daily Kos
An Economic program for Kamala that will benefit everyone, and win the Presidency in November!
 John Rudden

Major macroeconomic policy reform is needed to reduce the reliance on monetary policy — Bill Mitchell

There is some commentary emerging that is finally starting to question the reliance on monetary policy (setting interest rates) as the primary macroeconomic policy tool with fiscal policy forced into a passive role. In Australia, this debate has intensified in the last week following the hubris from the new Reserve Bank governor, who thinks her role is to sound like a ‘tough guy’ dishing out threats of ever increasing interest rate rises even as inflation falls. There was an Op Ed in the Sydney Morning Herald today (August 12, 2024) – Maybe only a recession will fix macroeconomic management – by the Economics Editor Ross Gittins, which challenges the current macroeconomic consensus. Some of this argument is acceptable. But when he advances his alternative proposal of “a new independent authority” to set monetary and fiscal policy, the reality is that this would be as bad as we have now. More on that later....

William Mitchell — Modern Monetary Theory

Major macroeconomic policy reform is needed to reduce the reliance on monetary policy
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Episode 3 of the Smith Family Manga (S2) is now available — Bill Mitchell

Today (August 9, 2024), MMTed releases Episode 3 in the Second Season of our Manga series – The Smith Family and their Adventures with Money. Have a bit of fun with it while learning Modern Monetary Theory (MMT) and circulate it to those who you think will benefit …

William Mitchell — Modern Monetary Theory

Episode 3 of the Smith Family Manga (S2) 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 labour force data provides no basis (yet) for recession panic — Bill Mitchell

The financial markets around the world have over the last week demonstrated, once again, that they are subject to wild swings in irrationality despite mainstream economists holding out the idea that these sorts of transactions exhibit pure rationality. Some of the capital movements are explained by a shift in the interest rate spread between Japan and the US as the former nation decided to increase interest rates modestly. That altered the profitability of financial assets in each currency and so there were margins to exploit. But the big seings came when the US Bureau of Labor Statistics (BLS) released their latest labour market data last Friday (August 2, 2024) – Employment Situation Summary – July 2024 – which showed payroll employment increasing by only 114,000 (well down on expectation) and the unemployment rate rising by 0.2 points to 4.3 per cent. Suddenly, the headlines were calling an imminent recession in the US and that triggered a flight into safer assets (government bonds) away from shares etc, which drove down bond yields (as bond prices rose) and left some short-run carnage in the share markets. A few days later the panic subsided and one has to ask what was it all about. In this blog post, I examine the labour force data and add some new extra ‘recession predictors’ to see whether the panic was justified. The conclusion is that it was not....

William Mitchell — Modern Monetary Theory

US labour force data provides no basis (yet) for recession panic
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

The Bank of England does not need a tiered reserve system for the Government to avoid austerity — Bill Mitchell

There is an interesting debate going on in the UK at present about the concept of tiered bank reserves. The concept is now being used by commentators to argue that the new British government does not need to inflict the austerity that the Chancellor has now announced (even though she is denying that is what the government is up to) because the government can simply reduce outlays to the commercial banks in order to meet the fiscal rules. The discussion is rather asinine really and features all the missteps that commentators make when trying to appear progressive but falling into the usual mainstream macroeconomic fictions....

William Mitchell — Modern Monetary Theory
The Bank of England does not need a tiered reserve system for the Government to avoid austerity
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Trump: No tax on tips, no tax on Social Security

If he can get back in, would be substantial fiscal stimulus… Trump at least talking about economic proposals Dems just talking about all the transgender and climate nutter stuff while prices for real items remain elevated, unemployment rate keeps rising and rate of job creation keeps falling…

Trump telling Powell at the Fed not to modify the policy rate before the election if he wants to finish his term if Trump gets back in…. Prediction markets now 100% probability of a cut in September so looks like Fed is going to reduce the rate before the election…

Trump will then claim “election interference!” and will probably then get in front of it by promising to fire Powell on day one and guarantee a new Fed chairman who will immediately lower the policy rate to a point where the 30-year mortgage rate immediately goes back to 3% where it was when he left…

So Trump proposals will be: no tax on tips, no tax on Social Security, and a return to the 3% 30-year mortgage rate…

British Chancellor fails the basic test – language is meant to impart meaning — Bill Mitchell

Language is meant to bring meaning to discourse. That means we want to use terms that convey information that is of use to us in making our way in the world. The problem is that economists have perverted that process and introduced a metaphorical language that is intended to persuade the reader/listener to accept a particular view of the world but which undermines their ability to actually understand the phenomenon in question. Marx knew long ago how language could be constructed to advance the interests of the ruling class. The mainstream economics commentary that is also used by politicians falls into this category. Terms are used that have no meaning in an elemental sense but provide support for ideological agendas. We, the public, allow that to happen because we are ignorant about the context. It becomes a vicious cycle of lies and fictions which undermine human and environmental sustainability but certainly transfer income to the top-end-of-town. A recent path setting address to the House of Commons by the new Chancellor is a classic example of this reality denial....

William Mitchell — Modern Monetary Theory
British Chancellor fails the basic test – language is meant to impart meaning
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Trump Embraces the “Bitcoin-Dollar”, Stablecoins to Entrench US Financial Hegemony — Whitney Webb

Where all this may be going is anyone's guess. Wherever, it looks like down the rabbit hole. The UK is "broke." The USD is being crushed under "a mountain of debt." De-dollarization is "in full swing."

The Alternative World
Trump Embraces the “Bitcoin-Dollar”, Stablecoins to Entrench US Financial Hegemony
Whitney Webb