The US has slapped new sanctions on Iran’s construction industry, targeting a number of “strategic” materials – like steel tubes and foil – and making sure the MSM amplify their vague hints of nuclear weapons and terrorism links....Is this further eroding US soft power by coming across internationally as bullying?
I often hear people in my line of work saying “Man, we’re going to look back on all this crazy shit and think about how absolutely weird it was!
No we won’t. Because it’s only going to get weirder.
It’s only going to get weirder, because that’s what it looks like when old patterns start to fall away.
The human mind is conditioned to look for patterns in order to establish a baseline of normal expectations upon which to plan out future actions. This perceptual framework exists to give us safety and security, so disruptions in the patterns upon which it is based often feel weird, threatening, and scary. They make us feel insecure, because our cognitive tool for staying in control of our wellbeing has a glitch in it.
When you’re talking about a species that has been consistently patterned towards its own destruction, though, a disruption of patterns is a good thing....
Carlos Mesa, the opposition candidate in the recent Bolivian presidential election, announced on Wednesday that he would not recognize the legitimacy of the upcoming audit of the election results by the Organization of American States....Venezuela scenario unfolding?
Huawei’s smartphone shipments surged 66% year-on-year in the third quarter, according to research published Wednesday by research firm Canalys, capturing a record 42% of China’s overall smartphone market....Sputnik International
The push for 5G technologies requires a visionary approach as the industry rapidly evolves, causing telecoms to face disruptions to their established biases on how best to apply the budding technology....
There is a continually growing "club of very powerful countries" in the world, which have a strong "motivation to de-dollarize" their trade, co-director at the Institute for the Analysis of Global Security, Anne Korin warned in her interview with CNBC channel. She added that among the members of this "club" are "major movers" such as China, Russia and the European Union.
The pundit explained that the shift was caused by certain practices, adopted by the US government in recent years. Namely, Washington started to actively use extraterritorial jurisdiction, prosecuting and sanctioning countries and companies that have "nothing to do with the US" under American laws. This happened due to the US extending its laws to entities, which either transfer their money through US banks or use its greenbacks.…Sputnik International
If we don't act now to address the solvency of programs like Medicare and Social Security, our government's trust funds will be depleted in 13 years. The TRUST Act will help secure these programs because we can't keep ignoring a preventable crisis. pic.twitter.com/LnXKjDpBRY— Senator Mitt Romney (@SenatorRomney) October 30, 2019
Across the West, usual suspects have been trying to impose the narrative that protests from Barcelona to Santiago have been inspired by Hong Kong. That’s nonsense. Hong Kong is a complex, very specific situation, which I have analyzed, for instance, here, mixing anger against political non-representation with a ghostly image of China.
Each of the outbursts – Catalonia, Lebanon, Iraq, the Gilets Jaunes/Yellow Vests for nearly a year now – are due to very specific reasons. Lebanese and Iraqis are not specifically targeting neoliberalism, but they do target a crucial subplot: political corruption.ConsortiumNews
The US Bureau of Economic Analysis (BEA) released the – Gross Domestic Product, Third Quarter 2019 (Advance Estimate) – data yesterday (October 30, 2019). It shows that the US economy “increased at an annual rate of 1.9 percent in the third quarter of 2019” which was slightly slow than the 2 per cent recorded in the June quarter. As this is only the “Advance estimate” (based on incomplete data) there is every likelihood that the figure will be revised when the “second estimate” is published on November 27, 2019. Underlying the headline figure, however, are shifting expenditure patterns in the US. Household consumption growth is declining and the contribution to growth was down from 3.03 points in une 2019 to 1.93 points. The personal saving rate rose from 8 per cent of disposable income to 8.1 per cent as households tightened up in the face of record levels of debt and sluggish wages growth. Total investment continued to be a negative drain on growth (-0.27 points compared to -1.16 points. Net exports also subtracted from growth (0.08 points compared to 0.68 points in the June-quarter). The increase in disposable personal income was lower (4.5 per cent) than in the June-quarter (4.8 per cent), although in real terms, the growth was 2.9 per cent compared to 2.4 per cent. Overall, and notwithstanding the continued growth, the question for the US growth prospects centre on what will happen to consumption expenditure growth. How much more will it decline and the saving rate rise?Bill Mitchell – billy blog
Influential pundits have argued that under the current situation there is no need for the government to worry about fiscal sustainability. They have found support in the proponents of so-called modern monetary theory, who have cited Japan as real-world proof of their heterodox doctrine. Even some mainstream economists, including Olivier Blanchard, have advocated for fiscal activism in Japan and argued against the consumption tax hike. An important basis of their argument is the absence of inflation and the resulting very low interest rates. Still, most mainstream academic economists in Japan are undaunted, sticking to their guns of prudent fiscal management.East Asia Forum
Unfortunately, discussions of sustainability, including fiscal sustainability, are intrinsically vague because they involve the future. Since the ability to forecast economic conditions over the medium to long term is woefully weak, it is impossible to settle the debate one way or the other. Without taking sides, however, there remain proposals which should receive no objections from both sides....
Real Progressives announced today the creation of a new nonprofit corporation to help match activists and progressive causes with policymakers, media outlets and academic experts to help create an actionable policy from a sound financial framework.Digital Journal
Real Progressives launches this unprecedented effort with a mission to facilitate dialog and workgroups to assist academics within the Modern Monetary Theory discipline to fundamentally address the ubiquitous question of how progressive policy can be paid for within a sovereign fiat currency system.
We have all seen the pushback from members of Congress and pundits who insist that programs like Medicare for All, the Federal Jobs Guarantee and the Green New Deal are, ‘too expensive.’ They ask, ‘how do we pay for it?’” said Steve Grumbine, Chief Executive Officer of Real Progressives.
“The truth is, we cannot afford to do nothing or undertake half measures,” he said. “Through this venture, we provide a platform for dissemination of honest macroeconomic study with global experts collaborating with activists and groups pushing for a true caring economy that works for everyone.”…
Only a short blog post today as it is Wednesday. My father, in fact, used to say that ‘leopards do not change their spots’, when referring to people who in one period behaved one way and then when sprung would pretend they were reformed. I was thinking about that when I noted that the queue to the magical reinvention door is getting longer by the day. This is the process, whereby a person, who previously advocated neoliberal macroeconomic policy interventions from the sidelines (as an academic economist or media commentator) and/or executed them from a position of power (say, as a Treasurer or Minister of Finance), starts attacking present day governments, who inherited their own fiscal surplus obsessions, and are, like they did themselves, driving their economies into the ground as a result of the same obsessions. Who is in the spotlight today? None other than the former Australian Treasurer, Paul Keating who was reported in the press this morning (October 30, 2019) – Paul Keating slams Liberal party ‘surplus virus’ (paywall) – as being critical of the current government for keeping the “Australian economy ‘idling at the lights'” as a result of “running Australia’s budget like a ‘corner shop'”. He urged the government to stimulate the economy with fiscal policy. Now before we get too excited, and this applies to all the goons who come out claiming they wanted fiscal stimulus all along, these characters typically blow their cover and reveal their true DNA when they reflect on their own track records on the subject. But it is an interesting, if not amusing, pastime watching these characters try to revise their CVs to look like they ‘knew it all along’ as they try desperately to retain relevance and get on the right side of history. We are not that stupid though.…
The 2008 financial crisis, together with failed efforts to combat climate change and sharply rising inequality, has frayed the neoliberal consensus that has prevailed in the United States and much of the West for more than two generations. Three issues must be considered in weighing what comes next....Project Syndicate
Greg Mankiw, who served as chief economist to former President George W. Bush, quits the Republican party because too many of its members are ignoring Trump’s “misdeeds” https://t.co/Psiwgh5U4x
— Bloomberg (@business) October 29, 2019
This is Part 2 of my blog posts on population shifts in Japan. In – What is the problem with rising dependency ratios in Japan – Part 1? (October 28, 2019) – we considered the evolution of dependency ratios in Japan as a precursor to considering the nature of problems that accompany a rising dependency ratio. The purpose is to disabuse the public debate of the idea that rising dependency ratios constitute a fiscal crisis and point to the increasing prospect of fiscal insolvency. That erroneous assertion has been used as one of the justifications for pursuing austerity policies, which damage growth, cause rising unemployment and generally miss the point. The problem with this construction is that the solution adopted by the ‘sound finance’ lobby (austerity) to their ‘non problem’ only serves to exacerbate the real problem. Today, we will consider the productivity challenge that lies at the heart of the issues a nation with a rising dependency ratio will face.
With the global economy experiencing a synchronized slowdown, any number of tail risks could bring on an outright recession. When that happens, policymakers will almost certainly pursue some form of central-bank-financed stimulus, regardless of whether the situation calls for it.Project Syndicate
Explaining persistently low interest rates despite large deficits and rising debt has been one of the central challenges of macroeconomists since the end of the Great Recession. This dynamic has led to increasing attention to Modern Monetary Theory (MMT), presented as an alternative to the mainstream macroeconomic way of thinking, in some fiscal policy discussions. Such discussions are at times restricted by a difficulty, expressed by policymakers and economists alike, in understanding MMT’s core principles and how they inform MMT’s views on fiscal policy. MMT suggests that deficit financing can be used without harmful economic effects in circumstances of low inflation rates and low interest rates, conditions that currently exist despite indications that the country is at full employment.
This report surveys the available MMT literature in order to provide a basic understanding of the differences (or lack thereof) between the defining relationships established in MMT and mainstream economics. It then explores how such distinctions may inform policy prescriptions for addressing short- and long-run economic issues, including approaches to federal deficit outcomes and debt management. Included in this analysis are observations of how policy recommendations from MMT and mainstream economics align with current U.S. economic and governance systems.
In mainstream macroeconomic models, the asset market is characterized by the sensitivity of investment to interest rates, a determinant of investment returns. Money is typically defined as cash and close substitutes, and used for transactions and held as an asset. In the short run, the capital stock (equipment and other factors of production outside of labor) is assumed to be fixed, and output is dictated by the employment level. Fiscal and monetary policy decisions can be used to expand or contract the short-run economy (with distinct effects for each), and those decisions help to inform growth, the stock of capital and labor, and other decisions in the long run. In general, expansionary fiscal policies, including stimulus policies and other programs that increase net deficits and debt, are thought to be helpful when addressing negative shocks in demand, but they may crowd out private investment and reduce long-term growth if used when the economy is otherwise in balance. Persistent increases in real debt (which occurs when the stock of debt grows more quickly than the economy) are viewed as unsustainable, as they would eventually lead to a lack of real resources to borrow against.
Though some MMT adherents have disputed the notion that the model can be viewed through the basic macroeconomic framework, efforts to do so reveal a few key distinctions. In the MMT model of short-run behavior, investment decisions are insensitive to interest rates, and are instead a function of current consumption levels. MMT holds a much broader view of money, asserting that monetary value can be created by financial institutions in a way that renders monetary policy ineffective in dealing with short-run economic fluctuations. MMT supporters therefore prefer a larger fiscal policy role in managing business cycles than mainstream economists, generally claiming that fiscal borrowing constraints are less imposing than mainstream economists believe in countries with a sovereign currency, and call for direct money financing of fiscal policy actions by the central bank. The translation of the MMT approach to long-run output is unclear, though a jobs guarantee supported by MMT adherents would likely change the nature of the relationship between employment and output levels.
Full alignment with the economic and political system supported by MMT would likely involve a dramatic shift in the roles and powers of U.S. fiscal institutions. Adopting an MMT framework would involve much more fiscal policy to account for a reduced monetary policy role. Policymakers would also likely need to execute fiscal policy decisions more quickly than has been done in the past in assuming an increased role in economic management.
Projections of future debt growth due to spending pressures from social programs have led to a current concern about deficit financing, recognizing the institutional challenges in conducting tax and spending fiscal policy. MMT is largely focused on short-run management of the economy, with tax and spending policies aimed at maintaining a fully employed economy without inflation. The MMT approach appears to implicitly assume that a high level of debt will not be problematic because it can be financed cheaply by maintaining low interest rates. Underlying this policy is the assumption that Congress can act quickly to counteract deficit-driven inflation with tax increases or spending cuts that would allow the economy to maintain low interest rates on public debt.I have not read the complete report yet, but I would be surprised if the MMT economists and legal scholars don't respond to it.
The MMT approach appears to implicitly assume that a high level of debt will not be problematic because it can be financed cheaply by maintaining low interest rates. Underlying this policy is the assumption that Congress can act quickly to counteract deficit-driven inflation with tax increases or spending cuts that would allow the economy to maintain low interest rates on public debt.This is misleading. Actually, MMT proponents, both economists and legal scholars, have shown how ad hoc Congressional action is not the only factor involved. Nor is it the most salient one.
Recognizing that global engagement is in its interests, China's leaders have been working to counter the backlash against globalization and have reconfirmed their commitment to continued reform and opening up. But China does not need the world nearly as desperately as US President Donald Trump and his advisers seem to believe.Project Syndicate
And did I mention the Automatic Earth has been almost wholly demonetized by Ad Sense? We’re going to need a lot more donations, the entire model for sites such as this one is rapidly changing. And I don’t want to also disappear behind a paywall, that defeats the purpose. More on that later as well. It’s not the direct reason behind halting the Debt Rattles, but it has crossed my mind. We can’t go on like this. Losing 85% of ad revenue is lethal at some point. Donations via Paypal and Patreon can be made at the top of the left and right sidebars.
Later this week I will be in Japan for a series of presentations and meetings with a broad spectrum of Japanese politics. The various hosts of the events which I will confirm in Wednesday’s blog post are all committed to advancing an MMT understanding in Japan and ending the hold that ‘sound finance’ has on the public policy debates and regularly lead to poorly contrived policy shifts (such as the recent sales tax hike) in pursuit of lower fiscal deficits. As part of my preparation for my presentations I have been studying various aspects of the Japanese situation so that I can address the issues with a solid evidence base. One of the recurring themes put forward by the ‘sound finance’ lobby (which includes much of the economics profession both inside and outside of Japan) is that its ‘challenging’ demography demands that the Government move to surplus to ‘save up’ to avoid the impending fiscal disaster associated with a rising dependency ratio. This issue is not confined to Japan, of course. It is just that Japan’s demography is a little further down the ageing road than other nations. But while rising dependency ratios matter and need attention, the construction of the problem by the ‘sound finance’ lobby misses the point completely and their ‘solution’ to their ‘non problem’ only serves to exacerbate the real problem. That is what today’s blog post is about. In Part 2, I will elaborate more on the nature of the productivity challenge and some of the options that have been suggested to deal with it.Bill Mitchell – billy blog
"I had ridiculous access to the networks of the NSA (National Security Agency), the CIA, the military, all these groups. I couldn't find anything".
The situation in China apparently heralds an era of ubiquitous facial recognition, when greater tech-supported convenience comes at the cost of privacy. In China, however, the name of the game is "ease to use." There is no particularly strident criticism in the country, at least for now, about the use of the software by the government or companies.…But most people read only the headlines, and if they read the body at all, it's not past the first couple of paragraphs. So this is used as a tool in narrative control.
After napping on it, I have a theory of what ails capitalism: it is not Darwinian enough.
— Venkatesh Rao (@vgr) October 26, 2019
The “selfish” motive in Adam Smith corresponds to personal fitness rather than inclusive fitness. Taxation is a crude and insufficiently precise mechanism to add inclusive fitness back in. https://t.co/JWLNC8egy3
It is not common for an OECD county to shoot and kill 16 people in two days of socially motivated riots. (Perhaps only Turkey, in its unending wars against the Kurdish guerilla, comes close to that level of violence.) This is however what Chilean government, the poster child of neoliberalism and transition to democracy, did last week in the beginning of protests that do not show the signs of subsiding despite cosmetic reforms proposed by President Sebastian Piñera.Global Inequality
The fall from grace of Chile is symptomatic of worldwide trends that reveal the damages causes by neoliberal policies over the past thirty years, from privatizations in Eastern Europe and Russia to the global financial crisis to the Euro-related austerity....
“For quite a number of years Exxon understood the impact of fossil fuels and climate change,” the expert says, adding that the company recognized “the cost of carbon was going to be going up.”
