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

The Smith Family manga continues–Episode 6 is now available — Bill Mitchell

The Smith Family manga continues – Episode 6 is now available….

William Mitchell — Modern Monetary Theory

The Smith Family manga continues – Episode 6 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

Hedge Fund short sellers sustained losses of approximately $43 billion

 😂😂😂

BREAKING 🚨: Short Sellers

Hedge Fund short sellers sustained losses of approximately $43 billion over the past few days pic.twitter.com/k2FXpsY0cZ

— Barchart (@Barchart) November 22, 2023

What Art Degree Monetarist wouldn’t be short into this:

You’d have to be…

Finding the Money: A Review — Brad Sandler

For the record. Short.

Real Progressives
Finding the Money: A Review
Brad Sandler

Chinese scholar calls on Beijing to raise deficit ratio to 5% — Jia Genliang

Beijing: China needs to decisively ramp up fiscal spending so it can support an economy damaged by Western restrictions on trade, according to a Chinese scholar studying an unconventional school of economic thought.

Jia Genliang – the co-author of the new book Modern Monetary Theory in China and a professor at the Renmin University of China in Beijing – said China should lift its headline deficit ratio to above 5% of gross domestic product on average for the next decade.…

Jia is one of the most prominent Chinese proponents of Modern Monetary Theory (MMT), whose principle is that countries which borrow in their own currencies don’t face a real debt limit because they can print money to pay for it. That theory has attracted attention in China over the past few years as authorities relied more on fiscal stimulus and infrastructure investment to help a slowing economy.

The Star
Chinese scholar calls on Beijing to raise deficit ratio to 5%
Jia Genliang , professor at the Renmin University of China in Beijing and co-author of the new book Modern Monetary Theory in China

The Smith Family manga continues – Episode 5 is now available — Bill Mitchell

Episode 5 in our new weekly 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 5 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

[Branko] Milanovic Gets Feisty — Peter Radford

I have just finished reading the excellent new book by Branko Milanovic. It’s called “Visions of Inequality” and is a tour through the history of economics since the days of Quesnay. More specifically it takes a look at how a handful of prominent economists have treated the topic of inequality. Most of you will have covered this territory before, but examining how people such as Quesnay, Smith, Ricardo, Marx, Pareto and Kuznets discussed the problem of distribution is not only an excellent refresher on their individual thought, but is also a tour through the evolution of economics itself.…

In his very long seventh chapter, where he lays bare the lean years for the study of distribution, he goes on offense. He prefers to call the economics developed during those mid to late twentieth century decades “Cold War” economics because it was ideologically tainted by the preferences of the American ruling class. It also suffered a catastrophic breakdown of method. The two go hand in hand. In order to eliminate power — and thus by definition things such as class — economics reduced its boundaries and focused only on matters that did not disturb its patrons.…

Power matters. The study of inequality allows us to reconnect economics with reality….

The Radford Free Press
Milanovic Gets Feisty
Peter Radford

Modern monetary theory opens range of economic possibilities - Independent Australia — Stephen Hail

NEARLY 30 YEARS AGO, a New York fund manager named Warren Mosler noticed a discrepancy between what he saw day-to-day in his interactions with the Federal Reserve and the way almost all academic economists write about money. The way they write, you would think currency-issuing governments need to tax before they can spend — Mosler noticed it is the other way around.

Getting this wrong is not trivial. It biases policy narratives. It misleads politicians into thinking that there is something inherently good or sustainable about budget surpluses. It misleads them into worrying about finding the money to meet their commitments when that is the wrong question to ask.

Independent Australia
Modern monetary theory opens range of economic possibilities

Stephen Hail, Lecturer in Economics at the University of Adelaide

US inflation rate falling fast — Bill Mitchell

It’s Wednesday, and today I discuss the latest US inflation data, which shows a significant annual decline in the inflation rate with housing still prominent. But for reasons I discuss, we can expect the housing inflation to fall in the coming months. I also discuss how on-going fiscal ignorance allows the Australian government to avoid investing in much-needed fast rail infrastructure which would solve many problems that are now reducing societal well-being. And then some of the best guitar playing you will ever hear.…

William Mitchell — Modern Monetary Theory
US inflation rate falling fast
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Fiscal austerity does not on average reduce public debt ratios — Bill Mitchell

The resurgence of economic orthodoxy is a great example of how declining schools of thought can maintain dominance in the narrative for extended periods of time if the vested interests are powerful enough. In the case of the economics profession, mainstream New Keynesian theory persists because it serves the interests of capital. Recently, the IMF urged the Australian government to engage in ‘fiscal consolidation’ in order to support further interest rate hikes by the RBA aimed at reducing inflation quickly. In general, the IMF is urging nations to engage in fiscal austerity in order to bring their public debt ratios down. The problem is that even their own research shows that these fiscal adjustments on average do not succeed. And, usually, they leave a damaged society where the lower income and disadvantaged cohorts are forced to endure the bulk of the negative effects....

William Mitchell — Modern Monetary Theory
Fiscal austerity does not on average reduce public debt ratios
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 Japan is light years ahead in sophistication relative to the West — Bill Mitchell

Given yesterday’s detailed monetary policy analysis, I am using today to present an array of news items and some brief analytical thoughts on central bank monetary policy. The latter is based on a very interesting speech that the governor of the Bank of Japan gave in Nagoya earlier this week. The juxtaposition with the way the Western central banks are behaving at present is stunning. There is also some self promotion and some announcements. Then we get to listen to Ron Carter. A good day really.

William Mitchell — Modern Monetary Theory
The Bank of Japan is light years ahead in sophistication relative to the West
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, AustraliaThe Bank of Japan is light years ahead in sophistication relative to the West

The Smith Family manga continues – Episode 4 is now available — Bill Mitchell

Episode 4 in our new weekly 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 4 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

MMT and the Deficits That Matter — Bethesda 1971

For the record, a MTT promo piece on the "left." 

Daily Kos
MMT and the Deficits That Matter
Bethesda 1971

Yes, we can afford democracy — and it should be up to voters to decide what a government should do — Dirk Ehnts

It follows from what has been said that a “shortage” of money with the state is not a technical shortage. Thus, it is never the lack of “money” that causes the state to be unable to spend, but always the lack of resources that causes the state to be unable to get what it wants. Money moves resources. If there are no resources, nothing is moved. However, if resources are the monopolist of money — the government with its central bank — can move it even when the political will is there. This applies to wars, but also to social programmes. The state can always afford to pay money to the poor or create employment for the unemployed. It is always a question of political will....

Monetary Policy Institute Blog #106

Yes, we can afford democracy — and it should be up to voters to decide what a government should do
Dirk Ehnts, Torrens University, Australia, adjunct lecturer

U.S. hiring slowed to 150,000 jobs in October. The unemployment rate rose to 3.9%

 

Whoa!  October employment report… 

What about all the MMT free munnie interest income (to people who are already bazillionaires) from the higher rates somehow creating a Democrat regime economic nirvana?  Perhaps not? 🤔

This and the initial 1.2% Q4 from the Atlanta Fed has this thesis not looking too good so far I’d say…

U.S. hiring slowed to 150,000 jobs in October. The unemployment rate rose to 3.9% https://t.co/7dLb8rYpLg

— Real Time Economics (@WSJecon) November 3, 2023

Uganda's leadership role in the Global South — Fadhel Kaboub

Greetings from the Pearl of Africa!

Today, I had a very productive visit to Kampala, Uganda, the Pearl of Africa, with my dear friend Julius Mucunguzi (we were colleagues in Addis Ababa, Ethiopia). I had two long deep-dive conversations with senior government officials, Minister of State for Industry, the Hon David Bahati, and Uganda's Permanent Representative at the United Nations, Ambassador Aadonia Ayebare.…

The effects of colonialism in Africa and how to break out of the persistent pattern. Formerly colonized countries are stuck in the economic/financial trap of producing low value goods for domstic consumption and export and importing high value goods, which necessitates borrowing in foreign currency (typically USD,).thereby de facto forfeiting monetary sovereignty even if they have their own central bank and issue their own currency. The issue is how to break out of this cycle resulting from path dependency.

Global South Perspectives — Reflections & Analysis by Fadhel Kaboub
Uganda's leadership role in the Global South
Fadhel Kaboub, Associate Professor of economics at Denison University (on leave) and President of the Global Institute for Sustainable Prosperity. He currently serves as the Under-Secretary-General for Financing for Development at the Organisation of Educational Cooperation in Addis Ababa, Ethiopia.He also held a number of research affiliations with the Levy Economics Institute, the John F. Kennedy School of Government at Harvard University, the Economic Research Forum (Cairo), Power Shift Africa (Nairobi), and the Center for Strategic Studies on the Maghreb (Tunis). Fadhel is Tunisian-American MMMT economist. Ph.D. in Economics & Social Science Consortium, 2006, University of Missouri - Kansas City. M.A. in Economics, May 2001, University of Missouri - Kansas City. B.S. in Economics, June 1999, with Distinction

The Smith Family manga continues—Episode 3 is now available — Bill Mitchell

Episode 3 in our new weekly 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 3 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

Monetary Foundations of Education w/ Larry Johnson — Scott Ferguson

This month, we speak with Larry Johnson, associate professor in the Social Foundations of Education Program at the University of South Florida, Saint Petersburg. In his pedagogy, Johnson focuses on the complex relationship between education, culture, and society with the goal of exploring policies and practices from historical and contemporary perspectives that address structural inequality, and transforming educational institutions into sites for social justice. Johnson is notably a long-time proponent of Modern Monetary Theory (MMT) and variously mobilizes MMT’s insights when training our teachers-to-be....

MR Online

Monetary Foundations of Education w/ Larry Johnson
Scott Ferguson interviews Larry Johnson, associate professor in the Social Foundations of Education Program at the University of South Florida, Saint Petersburg

Just Money — MMTed–The Smith Family and their Adventures with Money

Artist Spotlight

Episode One image: "If the taxpayers fund the government spending and they get the money from businesses who get it from the taxpayers when they buy things, then were do the taxpayers get it from?

Episode One

The Centre of Full Employment and Equity’s MMTed project has recently launched a new manga comic book series entitled “The Smith Family and their Adventures with Money”. A collaboration between Modern Monetary Theory (MMT) pioneer and Economics Professor William Mitchell and Japanese manga artist and designer Mihana (@mihana07: https://twitter.com/mihana07), the series explains the fundamentals of MMT in a straightforward, nontechnical way through the experience of the middle-class Smith family. Professor Mitchell works on the scripts and website code and layout, while Mihana works on the graphics and layouts of cartoon. Mihana’s artistry here comes into its own. Their characters operate on the ground of everyday life with spell-binding animation and esprit. As they interact, they transform arcane economic questions into accessible issues relevant to all of us....

Just Money Featured Artists
MMTed – The Smith Family and their Adventures with Money

Atlanta Fed

 

Oops!  Down to 1.2% projected for Q4…. Let’s see if the MMT people repost this one … (Tip: don’t hold your breath waiting doesn’t fit the Democrat narrative).

On November 1, the initial #GDPNow model nowcast of real GDP growth in Q4 2023 is 1.2%. https://t.co/OnYxN0CQUF #ATLFedResearch

Download our EconomyNow app or go to our website for the latest GDPNow nowcast. https://t.co/ISzNblWfFW pic.twitter.com/u9CweBwBaD

— Atlanta Fed (@AtlantaFed) November 1, 2023

Hard to see how a few $100B of additional free interest munnie paid  to people who probably have zero propensity to spend it is somehow going to create this wonderful economy after same said rate increases destroy over half a $1T of bank capital…  🤔

Atlanta Fed was fairly prescient in Q3 and was bumping up their 3Q GDP Nowcast most of 3Q coming out pretty close when all was said and done for Q3 …… going to have to see if this happens again in Q4 … but they are now starting from a pretty shitty +1.2% 

Scotonomics — Why the UK Government's fiscal deficit is our surplus

One of the founding concepts of Modern Monetary Theory is sectoral balances. And its power lies in its simplicity. Every economy can be broken down into three sectors: The government sector, the private sector (which includes me and you) and the foreign sector. Assuming a balanced budget, then government spending increases our net-wealth. A government deficit is our surplus.

The National (Scotland)

Scotonomics: Why the UK Government's fiscal deficit is our surplus

No, QE Is Not Costless — Brian Romanchuk

I ran across a couple lame attempts at blaming the U.S. Treasury for not extending the duration of issuance during the pandemic low in yields. This is entirely typical for market commentary — going after fiscal policymakers and ignoring the major culprit, which is the central bank. To the extent that the United States has put itself into an awkward macro stabilisation situation with respect to interest rate expenditures, it is the result of the brain trust at the Federal Reserve.

One could try arguing that if the Treasury lengthened issuance maturities and the Fed buys those bonds back, the Treasury has locked in their funding cost and that is all that matters. The problem is that approach ignores that the Fed is a wholly-owned subsidiary of the Treasury1, and so when the Fed blows itself up on hare-brained levered rates positions, the Fed losses will work its way into the fiscal accounts via reduced dividends. Financial accounting consolidates wholly-owned entities for a reason....

Note that some critiques of MMT, including Post Keynesian, fault MMT for consolidating the Treasury and Fed accounts.

Bond Economics

No, QE Is Not Costless
Brian Romanchuk

Bank of Japan shifts ground – just a little but there is no sign of a major adjustment any time soon — Bill Mitchell

It’s Wednesday and I use this space to write about any number of issues or items that have attracted my interest and which I consider do not require a detailed analysis. The issues discussed may be totally unrelated. Today, I provide my response to yesterday’s decision by the Bank of Japan to vary its Yield Curve Control (YCC) policy, which some commentators are frothing about. The change was very minor and is not a sign that the expansionary position of the Bank is shifting significantly. I also discuss the culture of denial in the US State Department and then rock out to come classic swamp....

William Mitchell — Modern Monetary Theory

Bank of Japan shifts ground – just a little but there is no sign of a major adjustment any time soon
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

“Inflation” Now

Cleveland Fed now at 0.07% for October:

Projects to less than half their alleged “inflation” target… 

Meanwhile these psychos want to still appear “hawkish”… 🤔

US national accounts data – no sign that interest rates are working the way economists think they work — Bill Mitchell

On October 26, 2023, the US Bureau of Economic Analysis published the latest US National Accounts figures – Gross Domestic Product, Third Quarter 2023 (Advance Estimate) – which showed that “Real gross domestic product (GDP) increased at an annual rate of 4.9 percent in the third quarter of 2023”. The June-quarter 2023 growth rate was 2.1 per cent. There was broad-based growth in all the expenditure components, including those that would be most sensitive to interest rate rises. My prior, of course, is that the interest rates would not significantly reduce growth in the short run, whereas mainstream New Keynesian theory considers interest rate rises to be an effective tool in moderating total spending, and, in turn, reducing inflation. The reality does not support the mainstream proposition. Consecutive national accounts releases from the US, however, have shown that aggregate expenditure is resilient in the face of the interest rate increases....

William Mitchell — Modern Monetary Theory

US national accounts data – no sign that interest rates are working the way economists think they work
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

About This Plane... — Andrei Martyanov

Russia continues with her program of updating IL-96 line, as an intermediate wide-body solution, to IL-96-400M. This is the first aircraft of this limited series doing its take-off regime runs yesterday.

Its four engines are advanced PS-90A3--a further development of venerable high-bypass ratio PS-90A. This aircraft is fully Russian made, from systems to avionics.

 The Russian commercial aircraft industry is self-sufficient and unaffected by sanctions.

And here we are, in the new geopolitical and economic reality and here is the trick--there is ONLY one country which can and does provide, completely out of own resources, the alternative to Western commercial aerospace giants and you already guessed it--Russia.

Maybe not just a gas station with nukes. 

Reminiscence of the Future

About This Plane...
Andrei Martyanov

See also

Russian industry.

Why PBS Is Full Of...

Inflation Theories — Brian Romanchuk

I have been editing sections of my manuscript, and nothing out of that writing output is publishable here (since it is just a rehash of an earlier article). However, I am adding a new section on inflation theories that I will need to think about. This article summarises what I think I will cover.

My manuscript is somewhat unusual in that I am mainly discussing the “known properties” of inflation, without offering a theory of inflation. The more usual situation is that people have extremely strong views on what explains inflation (and more often than not, these views contradict “known properties” of inflation). I decided to not cover inflation theories on the basis that it somewhat difficult to get good introductory information due to the huge mass of disinformation. By avoiding theory, the manuscript statements are relatively safe to make, and so my manuscript itself hopefully stays out of the “disinformation” category.

Note that I when I refer to “inflation theory” I mean “a means to predict future inflation rates” and not things like “how to calculate inflation?” or “what are the side effects of inflation?” Furthermore, when I refer to “inflation” I have the annual rate of change of CPI (or equivalent) in mind....

Bond Economics
Inflation Theories
Brian Romanchuk

The Smith Family manga continues–Episode 2 is now available — Bill Mitchell

Yes, you have been waiting all week to see how the Smith Family was faring as they struggle to work out where the government currency comes from. Well, Episode 2 in our new weekly 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 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

Theories of Economic Crises — Alessandro Roncaglia

Yves here. This post and its companion piece on neoliberal ideology illustrate the hold that economic belief systems have on policy. One big one that does not get enough mention is that neoliberal theories posit that economies have a native propensity towards equilibrium….oh, and at full employment! This charming story serves to justify capitalist systems as virtuous and self regulating. The reason this clearly false view has been successfully and aggressively promoted is not just that it suits corporate interests. It also has long served US opposition to Communism by depicting what was once called the free enterprise system as producing better outcomes than public ownership of assets. Of course, the reality that the US and even more social democratic economies are mixed systems, but the propagandists like to obscure pesky details like that.

Naked Capitalism
Theories of Economic Crises
Alessandro Roncaglia, Emeritus Professor of Economics at La Sapienza University in Rome, a member of the Accademia Nazionale dei Lincei in Rome