On Sraffa and Keynes — Lars P. Syll

Minsky quote that underlies not only Keynes but also MMT.

Lars P. Syll’s Blog
On Sraffa and Keynes
Lars P. Syll | Professor, Malmo University

Escobar: The Roadblocks Ahead For The Sovereign Harmonious Multi-Nodal World — Pepe Escobar

We will need weeks, months, years to fully grasp the enormity of what took place in Kazan during the annual BRICS summit under the Russian presidency.

For the moment let’s cherish arguably the most appropriate definition of BRICS as a laboratory of the future: this lab, against nearly insurmountable odds, is actively engaged in creating a Sovereign Harmonious Multi-Nodal World.

My take is that there were two tracks leading up to the meeting of BRICS+ in Kazan. 

The first track was widely reported in the Alt-Media and was wildly optimistic about the outcome since it focused almost exclusively on the "key players" none of whom had any political clout. It was even speculated that a new monetary system based on a BRICS+ currency would be announced. This turned out to be pie-in-the-sky.

The second track that was taking place behind the scenes and was not reported on or factored in by most of the Alt-Media. This group emerged into view immediately prior to Kazan as a meeting of the heads of the central banks of the the BRICS+ nations. This was a tip off that "the grown-ups" would be managing the proceeding and outcomes, which is what happened. 

The boat did not rock as many had anticipated.  It has now become clear that BRICS+ intends to work within the existing system to reform it rather than to revise it drastically or to shape a new system or to radically "de-dollarize."

In other words, practicality won the day rather than confrontation. Change is likely to be gradual rather than dramatic. The task at hand is to develop alternative means of settlement for international accounts that avoids sanctions and that is already taking place through binary agreements to settle in the currencies of the respective partners.

Pepe gives his take on it.

Zero Hedge
Escobar: The Roadblocks Ahead For The Sovereign Harmonious Multi-Nodal World

Pepe Escobar

Government job creation programs deliver significant (net) long-term benefits — Bill Mitchell

On April 5, 1933, US President Roosevelt made an executive decision to create the – Civilian Conservation Corps (CCC) – which was a component of the suite of government programs referred to as the – New Deal – that defined the Federal government’s solution to the mass unemployment that arose during the early years of the – Great Depression. These programs have been heavily criticised by the free market set as being unnecessary, wasteful and ineffective. Critics assert that no long-term benefits are forthcoming from such programs. However, those assertions are never backed by valid empirical evidence. A recent study by US academics has provided the first solid piece of evidence that the CCC delivered massive long-term benefits to the individuals who participated in it. And these benefits considerably outweigh the dollars outlaid by the government. I discuss that research today. The results also point to the effectiveness of a Job Guarantee program....

William Mitchell — Modern Monetary Theory

Government job creation programs deliver significant (net) long-term benefits
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

MMT — debunking the deficit — Lars P. Syll

Lars comments on a quote from Stephanie Kelton's The Deficit Myth showing the loanable funds theory being inconsistent with stock-flow accounting.

Lars P. Syll’s Blog
MMT — debunking the deficit
Lars P. Syll | Professor, Malmo University

24 per cent annual interest on time deposits: St Petersburg Travel Notes, installment three — Gilbert Doctorow

Not much happening regarding MMT these days.

Herer is an anecdotal report on Russian banking. And, yes, you read that right. You get 24% not the bank.

Doctorow is an American residing in Brussels who spends a good deal of time in Russia. His wife is Russian and he is fluent in Russian. A "Russianist," he has a a PhD in history (Harvard) and is a retired business person. His reporting does not conform to the narrative.

Gilbert Doctorow—International relations, Russian affairs
24 per cent annual interest on time deposits: St Petersburg Travel Notes, installment three

Gilbert Doctorow

Did The Latest BRICS Summit Achieve Anything Of Tangible Significance At All? — Andrew Korybko

The conclusion is that it’s a lot easier to talk about creating truly alternative institutions than actually doing so, which means that BRICS will likely just remain a talking club, or a “multitasking laboratory of global governance” as Kortunov diplomatically described it. That’s not to downplay the group’s role since it’s important for major and developing non-Western countries to discuss pressing issues of the evolving world order, especially economic-financial ones, but that’s not the same as what enthusiasts expected.

A dose of reality. The Alt-Media got a quite a bit ahead of reality with respect to their expectations of the initial outcome.

The Kazan Summit therefore wasn’t a failure, and in fact, it succeeded in its only realistic goal all along of gathering its members and partners together to discuss ways to voluntarily accelerate financial multipolarity processes such as through the increased use of national currencies. The outcome was always going to be more symbolic than tangible due to the group’s purely voluntary nature, though some observers had false expectations and thus feel bitter, but now they know what BRICS is really about.  

Andrew Korybko's Newsletter

Did The Latest BRICS Summit Achieve Anything Of Tangible Significance At All?
Andrew Korybko

Rate policy

 

Democrat rate policy still has US overnight risk free IOR rate at 4.9% so what is so bad about a 10yr risk free UST rate of 4.2%?  

It’s still significantly inverted over time …  usual Art degree moron suspects going apoplectic meanwhile a significantly inverted yield curve… hard to understand how these peoples brains work… 🤔

Pepe Escobar —Date With Destiny–BRICS Offers Hope in a Time of War

Pepe Escobar summarizes the state of play at the outset of the BRICS conference as it begans in Kazan, the capital of Tatarstan, Russian Federation. The heads of the central banks have already met in Moscow in preparation for discussing initial steps in an overhaul of the post WWII Bretton Woods monetary system and associated institutions established by and controlled by the West, the US in particular. Expectations had begun to exceed reality and now they are more modest but still positive.

Sputnik International
Pepe Escobar: Date With Destiny - BRICS Offers Hope in a Time of War

BRICS plans ‘multi-currency system’ to challenge US dollar dominance: Understanding Russia’s proposal — Ben Norton

The BRICS Cross-Border Payment Initiative (BCBPI) will use national currencies, instead of the US dollar. Russia’s finance ministry and central bank released a report detailing plans to transform the international monetary and financial system.

Geopolitical Economy

BRICS plans ‘multi-currency system’ to challenge US dollar dominance: Understanding Russia’s proposal
Ben Norton

BRICS—facts and figures — Peter Hanseler/Denis Dobrin

Introduction

In the first part of this year’s BRICS series, we described the geopolitical environment in which BRICS is currently operating and trying to evolve. This environment has changed for the worse since the last BRICS summit in South Africa last August.

The consequence is that BRICS cannot develop freely, because on the one hand, the decisions – especially those of the USA – regarding the wars in Ukraine and the Middle East, the situation in the financial markets and finally the elections in the USA will have serious consequences for the whole world. On the other hand, the decisions of the BRICS regarding the admission of new members and the introduction of a currency (unlikely) or a payment and settlement system (likely) will also have a major impact on the overall geopolitical situation.

This article deals with the facts and figures of the current state of this organization, the figures including candidates for admission (BRICS+) and an outlook with figures including interested countries (BRICS++). In a subsequent article, we will cover the topic of a new currency and a new payment and settlement system.

Voice from Russia — The trilingual blog about geopolitics and geoeconomics written by a Swiss living in Moscow
BRICS – facts and figures

Peter Hanseler/Denis Dobrin 

The Boy Who Cried Wolf About Government Debt —Yeva Nersisyan, L. Randall Wray

In a New York Times editorial, David Leonhardt recounts Aesop’s apocryphal story about the boy and the wolf, warning that while deficit hawks have so far been wrong, the growing government debt will eventually bite. He reports the economic plans of both presidential candidates would add to the debt that will soon exceed GDP and grow to 130 percent of annual output under a President Harris, or 140 percent with a Trump presidency.

The story of the boy and the wolf was a fable, although it was within the realm of possibility. The fable of the debt wolf is not. While there are real world wolves—Leonhardt mentions climate catastrophe and autocratic leaders, and the authors would add rising inequality and the concentration of economic and political power in the hands of billionaires.

Levy Economics Istitute
Policy Note 2024/1 | October 2024

The Boy Who Cried Wolf About Government Debt
Yeva Nersisyan, L. Randall Wray

Improvement Of The International Monetary And Financial System — The Ministry Of Finance Of The Russian Federation, Bank of Russia, Yakov and Partners

This is what will be presented at the upcoming BRICS + meeting. Download report at link below.

Description on X here. (It's nothing like the cheerleaders have been projecting.)

BRICS Chairmanship Research

Improvement Of The International Monetary And Financial System
The Ministry Of Finance Of The Russian Federation, Bank of Russia, Yakov and Partners

Episode 7 (S2) of the Smith Family Manga is now available–A revealing Zoom session — Bill Mitchell

Today (October 18, 2024), MMTed releases Episode 7 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 7 (S2) of the Smith Family Manga is now available – A revealing Zoom session
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

How Australian Monetary System Favours the Powerful — Denis Hay

MMT to the rescue (from neoliberalism). This applies similarly to other countries running under neoliberalism, which can be broadly characterized as policy formulation based on state capture by elites in a plutocracy masquerading as a democracy. 

Social Justice Australia
How Australian Monetary System Favours the Powerful
Denis Hay

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