Saturday, October 1, 2022

Busting The Deficit Myth Featuring Dr. Stephanie Kelton — Thom Hartmann (video 12:16)



Video  (12:16), no transcript. Good short intro. Pass it on.

The Thom Hartmann Program
Busting The Deficit Myth Featuring Dr. Stephanie Kelton
Thom Hartmann interviews Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

Friday, September 30, 2022

Primer: Basics Of A Swap Meltdown — Brian Romanchuk

I am now seeing more attempts to dig into what exactly happened in the United Kingdom interest rate market. In this article, I am not attempting to do that. Instead, I am just giving a primer on how interest rate swaps are used to hedge liabilities, and what can go wrong when interest rates rise. The mechanisms I describe were likely part of the issue, but I am not saying that this is “the” explanation. Since most people are unsure what liability-driven investment and swaps are, so I am hoping to cover big picture issues for those readers.…
Bond Economics
Primer: Basics Of A Swap Meltdown
Brian Romanchuk



Thursday, September 29, 2022

Let's Talk Turkey Stephanie Kelton

Today’s post will be short. I spent the day mostly doing interviews and ran short on time. I was planning to write about Turkey at some point, but Brian Romanchuk beat me to it. So I’m just going to set things up and encourage you to read what Brian has written....

The Lens
Let's Talk Turkey [which now prefers to be called by it official name, Tūrkiye]
Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

Bill Mitchell — The last week in Britain demonstrates key MMT propositions

There was commentary earlier this week (September 26, 2022) from an investment banker entitled ‘MMT takes a pounding’. I won’t link to it because I don’t want to send traffic to their site. But it is the narrative that the financial market commentators who desire to politicise public debate and use it to attack their pet hates. Modern Monetary Theory (MMT) apparently is a pet hate of this character and like many with similar biases he has been champing at the bit for some semblance of ‘evidence’ that MMT analysis is flawed. This week’s events in Britain have given them more succour. Except when you understand what has actually happened the events demonstrate key MMT propositions....
Bill Mitchell – billy blog
The last week in Britain demonstrates key MMT propositions
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

The "gilt crisis" — Brian Romanchuk

I have not seen too many longer articles about the “gilt crisis” in the United Kingdom, but have seen a variety of reactions on Twitter. My reaction is that the discussions reminded me why I mainly followed people who used the title “rates forecaster” and not “economist” when I was in finance. (The “rates forecasters” might have had economics degrees, but they knew that if they wanted people like me to take them seriously, they needed to not sound like the people with “economist” in their title.) It is rather impressive how the most interesting part of this crisis has been buried....
Bond Economics
The "gilt crisis"
Brian Romanchuk

Benefit of higher risk free rate


The higher rates provide higher risk free income to critical USD accounts.  

This is and will turn out to be a better policy than the MMT policy of permanent ZIRP with current institutional arrangements of ERISA.

A drawback of the policy adjustment though has been the severe reduction in NPV of all financial assets of moving it from 0.05% in March to the projected 4.5% in December…  9 months…

A 10-yr asset would project a 35% reduction in NPV due to an immediate adjustment from 0 to 4.5%… so with a 9 month adjustment period we perhaps see a bit less than this…

They should have done this a lot slower over multiple years for a more stable outcome for financial assets… but we ofc have Art degree morons in there trying to run it and reduce their figurative “inflation!” so there’s going to be chaos…




Wednesday, September 28, 2022

A Wonky (But Worthwhile) Read — Stephanie Kelton

Link to Randy Wray's "Monetary Policy: An Institutionalist Approach" as an antidote to the poison of monetarism and its policy application.

The Lens
A Wonky (But Worthwhile) Read
Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

Bill Mitchell — Musicians should be paid at least a socially inclusive minimum living wage

It’s Wednesday and I am now ensconced in Kyoto, Japan for the months ahead. I will report on various aspects of that experience as time passes. Today, I reflect on a debate that is going on in Australia about the situation facing live musicians. Should promoters be able to employ them for poverty wages including ‘nothing’ while still profiting or should they be forced to pay the musicians a living wage. You can guess where I sit in the debate.…

We can change that to, "Everyone should be paid a living wage."  Then we could have a debate over the various ways to accomplish this.

Bill goes on to say this.

My position is clear – any worker should be paid a living wage at a minimum.

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

Gilt Market Mayhem! — Brian Romanchuk

Bond markets are finally getting interesting, with the Bank of England launching emergency purchases to restore order in the gilt market. Since I am not in constant contact with people trading gilts, I will just offer a tentative description of what seems to be going on, and what it “really means.”...
Bond Economics
Gilt Market Mayhem!
Brian Romanchuk

Tuesday, September 27, 2022

European Energy Security Faces New Risks With Nord Stream Explosions — Cyril Widdershoven

  • The leakages and explosions at the Nord Stream and Nord Stream 2 pipelines take the European energy crisis to another level.
  • Analysts are worried that the leakages and explosions on both lines are not an incident but linked to the launch of the Baltic Pipe.
  • A disruption of Norwegian energy supplies to the European Union or the UK could lead to faster depletion of natural gas storage facilities in Europe this winter.
Taking economic warfare to a new level.

Oilprice
European Energy Security Faces New Risks With Nord Stream Explosions
Cyril Widdershoven

Should We Be Raising Taxes to Fight Inflation? — Stephanie Kelton

Some specifics about the MMT position on addressing inflationary pressure based on analysis of relevant causal factors — albeit without details owing to the scope of a post. For example, there are demand side reasons for rising inflationary pressure and also supply side. Stephanie Kelton claims that the predominant causal factors now are supply side and so addressing the issue from side of demand is the wrong approach, whereas expanding supply where there are shortfalls and bottlenecks is the way to go.

Raising taxes to fight inflation is a single-variable approach based on addressing the demand side and as such it is simplistic. "Raising taxes" is not the preferred MMT solution to inflation although in some cases it is indicated. When it is, then the specifics of tax policy to reduce demand become crucial.

While she doesn't address it specifically, a systems approach is called for. "The economy" is embedded in a socio-economic system and this means that the issues involved in economics are not purely economic but include the social and political, which brings in values and involves ideology in addition to purely economic considerations. Therefore, "show me the bill" to be submitted to the legislature for a vote becomes more important than "show me the (economic) model."

The Lens
Should We Be Raising Taxes to Fight Inflation?
Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

Paper On Türkiye — Brian Romanchuk

I was passed a link to the paper “Exchange Rate and Inflation under Weak Monetary Policy: Turkey Verifes Theory” by Gürkaynak, Refet S. and Kısacıkoğlu, Burçin and Lee, Sang Seok. (They used Turkey, and not the apparently preferred Türkiye.) It was claimed by a well known blowhard economist to tell us something about MMT — but to be clear, that was an assertion by someone who makes a living by being wrong about macroeconomics, and not the authors of the paper. Although it has some relevance to some debates about MMT, it is a stretch to say that is telling us much that is useful.…
Bond Economics
Paper On Türkiye
Brian Romanchuk

Monday, September 26, 2022

Bill Mitchell – Off to Japan I go

Today, I am skipping my Japanese language class and heading to the airport. I am taking up a position at Kyoto University under a JSPS Invitational Fellowship. I am working with the team in the Resilience Unit there on a project studying the design of fiscal policy for building national resilience using Modern Monetary Theory (MMT) principles. Resilience is an important part of the degrowth and deep adaptation agenda and I will spend some months there working on with other researchers. The – Japan Society for the Promotion of Science (JSPS) is ‘Japan’s sole independent funding agency dedicated to the advancement of science’ and is overseen by the Ministry of Education, Culture, Sports, Science and Technology. I am very privileged to receive one of the invitations. So from tomorrow I will be in Kyoto and depending on commitments my blog posts might be a little less regular although I think I will be able to continue the usual output. Now, it is time to put my Tuesday languages class into action – along with Google translate! Some travelling music follows....
Bill Mitchell – billy blog
Off to Japan I go
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Government shutdown looms

 

No bueno….





How Donald Trump got his Deutsche Bank loans — Nate DiCamillo & Scott Nover

The title should contain "allegedly." The facts will likely be decided in court.

Quartz
How Donald Trump got his Deutsche Bank loans
Nate DiCamillo & Scott Nover

Zero Hedge— 'Black' Monday 2.0

Numbers.

Zero Hedge
'Black' Monday 2.0
Tyler Durden

Moon of Alabama — The U.S. Is Winning Its War On Europe's Industries And People

Relies on Michael Hudson's economic analysis.

Moon of Alabama
The U.S. Is Winning Its War On Europe's Industries And People
b

The Bank of England Had to Say Something — Stephanie Kelton

Everyone insisted that the Bank of England (BoE) needed to say something following the financial turmoil that began on Friday and continued over the weekend. The BoE has now spoken. Sounds pretty dovish to me....

Actually, the Bank concludes with, "accordingly. The MPC will not hesitate to change interest rates by as much as needed to return inflation to the 2% target sustainably in the medium term, in line with in its remit." (emphasis added). This is not all that "dovish." The BoE is saying it will act aggressively through monetary policy, which markets generally want to hear. 

This is an example of single-variable-in a-linear-equation thinking, which is the basis of contemporary monetarism. This hypothesis (in a discredited theory) is that the interest rate set by the central bank as the independent variable determines the inflation rate as dependent variable in a linear function.  While it is not a directly linear relationship owing to "friction," monetary policy is assumed to work with some unforeseeable lag as it works through the system (the same assumption as sanctions).

Single-variable thinking when dealing with complex adaptive systems like socio-economic systems is a logical fallacy underlying a "dogwhistle" or "meme" cognitive-affective bias. Central banks use it to influence expectations.  It is a fallacy since, as Keynes observed, many more causal variable as involved as well as shifting circumstances, some of which are unforeseeable owing to emergence in a complex adaptive system. The number of variable and their relationships are unknown (epistemological uncertainty) and the emergence cannot be known from the initial conditions (ontological uncertainty).

The question is whether central bankers know this is a just dogwhistle that will influence the market even though there is little substance to it, or they actually think it works as assumed.

The Lens
The Bank of England Had to Say Something
Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

The Oldest Trick in the Book — Stephanie Kelton

Cut taxes. Cry Broke. Defund the public sector....
The Lens
The Oldest Trick in the Book
Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

The EU is sleepwalking into anarchy — Thomas Fazi

The economic situation in Europa resulting from not thinking sanctions through failure to take the availability of real resources sufficiently into account, and lack of awareness of the national and global economies as subsystems in the world system. Since the world system is complex adaptive system, it's complicated. Now they are lost in a maze of their own construction.

Thomas Fazi is the co-author with Bill Mitchell of Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World  (Pluto Press, 2017),

Unherd
The EU is sleepwalking into anarchy
Thomas Fazi

See also

Evonomics (10 Sep 2022)

#duh


GOP has goaded the Dems to sacrifice the current benefit to their political party in a defense of the Platonist theory of Monetarism…  





Sunday, September 25, 2022

Tax reform in Australia is needed but not because the government needs more of its own currency to spend — Bill Mitchell

The public debate is conditioned by who gets a platform in the mainstream media. Even those publications that purport to be informed and appeal to a more reasoned type of reader are highly selective in who they give a voice to. I see this as a huge constraint in advancing alternative ideas that challenge the mainstream narrative and the vested interests that support it. The problem is that on economic matters these vested interests have not only captured what we might call the conservative voice. They also dominate and craft the so-called progressive agenda such that Green groups and movements, for example, are indistinguishable on macroeconomic matters, which makes it hard to contest ideas that are abroad. The UK Guardian, for example, thinks it presents a progressive angle on issues and is ‘above’ the crudity of the tabloids. But it regularly gives voice to writers who promote macroeconomic fictions and refuse to give space to those who challenge these fictions. Today (September 26, 2022) for example, it published am article – Without radical tax reform, Australia faces an insoluble public finance problem – by one Satyajit Das, who gets regular Op Ed columns in the Guardian and appears regularly on Australian public radio. His analysis distorts the public debate. Selective platforming is a blight in our media....
Media capture is essential to narrative control. Since overt government censorship is ruled out in liberal democracies, other means need to be adopted, and they have been.

Bill Mitchell – billy blog
Tax reform in Australia is needed but not because the government needs more of its own currency to spend
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Related 

When information is politicized.

A Son of the New American Revolution
Larry Johnson

Can “It” (1976) Happen Again? — Stephanie Kelton

This morning, I went (back) down the rabbit hole on the sterling crisis that supposedly drove the British government into the arms of the IMF in 1976. I’m not a historian of British economic history, but other MMT economists (and some non-economist MMT scholars) have written at length about the period. And I mean at length.…
The Lens
Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

Saturday, September 24, 2022

Greatest scene in motion picture history

 

This might be it:





Stallone greatly underrated..



The Infinite Money Glitch — Mike Hassaballa

Positive assessment of MMT, but misinformed on several key points.

DastaDrivenInvestor
The Infinite Money Glitch
Mike Hassaballa

Squawking About MMT — Stephanie Kelton

It’s one thing when a bombastic TV personality goes on a mini-rant about “printing money” but it’s another when fellow scholars and academics go along with the misrepresentation of MMT. Pointing to some basket case economy—the Weimar Republic, Zimbabwe, Argentina, Venezuela, Sri Lanka, Turkey, or even the UK—and squawking about MMT might make for entertaining television, but you’re telling on yourself when you demonstrate such willful ignorance....
How much is due to ignorance and how much about attacking a challenge to the conventional narrative?

The Lens
Squawking About MMT
Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

The typical Chinese adult is now richer than the typical European adult, a new wealth report finds — Jyoti Mann

  • Credit Suisse found China's median wealth outpaced Europe's in its 2021 Global Wealth Report.
  • The average Chinese citizen has a wealth of $26,752, around $60 more than the average European.
  • Chinese wealth has surged in the past two decades, with median wealth per adult growing more than eight-fold.
Credit Suisse's annual Global Wealth Report.
h/t Naked Capitalism

Also at Insider
  • China cut US debt holdings by 9% from the end of 2021 to July this year, according to Nikkei Asia.
  • Meanwhile, the Cayman Islands saw a $38.5 billion rise in China's Treasury holdings, and Bermuda saw a $7 billion increase.
  • China may be protecting dollar-denominated assets from any future sanctions like the kind that froze Russia's foreign currencies.
China shifts US bond holdings offshore, potentially beyond the reach of any future currency sanctions, report
Brian Evans

Also

Further precedent for Russian selling subs and sub technology to China?

Sydney Morning Herald
Australia considering buying first few nuclear submarines from the US instead of building them onshore 
Anthony Galloway

Liz Truss wants to review BOE mandate

 

Liz Truss perhaps looking to do a Trump/Erdogon style smack down on the BOEs monetarist morons…




NPV of 10 year financial asset at 1.6% vs 3.7%


Effect on 10 year financial asset prices of dumb monetarist Democrat people directing their dumb monetarist central bank people to increase the risk free policy rate to “fight inflation!” due to the goading of dumb monetarist GOP people whereby the US 10-yr this year goes from 1.6% in January to now 3.7% yesterday:


1.6%


3.7%



Same financial asset, price falls from 853 to 695 or about a 18.5% reduction… simply due to an adjustment in govt interest rate policy no “inflation!” fairy responsible or wtf these deranged monetarist morons brains can conjure up for them…

This policy adjustment has a similar effect on all financial assets stocks, bonds, CRE, annuities, etc… so here we are… 






Friday, September 23, 2022

MAGA: The Dow Jones Is Heading For 25,000

 

MAGA victory lap…. monetarist GOP 100% goaded the monetarist Democrats into trashing the US financial economy now a month before the midterms… UFB how dumb the Democrats are…