Absolutely! I Would Say Probability Is Approaching 146%.
Andrei Martyanov, former USSR naval officer and expert on Russian military and naval issues.
http://smoothiex12.blogspot.com/2022/04/absolutely-i-would-say-probability-is.html
Sitrep: Operation Z
Nightvision for the Saker Blog
http://thesaker.is/sitrep-operation-z-7/
NATO sends heavy armaments to Ukraine
http://www.defenddemocracy.press/volodimir-zelenski-le-president-ukrainien-a-ete-invite-par-le-gouvernement-dathenes-extremement-pro-americain-et-pro-otan-a-sexprimer-devant-le-parlement-grec-le-7-avril-il-a-p/
Russian Oil Continues To Flow To India And China
Alex Kimani
https://oilprice.com/Energy/Crude-Oil/Russian-Oil-Continues-To-Flow-To-India-And-China.html
BRICS Ministers of Finance Hold a Meeting – It Is Time to Replace Western Financial Trade Mechanisms and Remove The Dollar
https://theconservativetreehouse.com/blog/2022/04/09/brics-ministers-of-finance-hold-a-meeting-it-is-time-to-replace-western-financial-trade-mechanisms-and-remove-the-dollar/
Russian developers launch service for channels transfer from YouTube to VKontakte
https://tass.com/society/1435345
Bavaria’s PM warns about mass unemployment in case of abrupt rejection of Russian gas
https://tass.com/world/1435349
Jimmy Dore Show - Irish Politician EVISCERATES Pro-Ukraine Warmongers & NATO
ReplyDeletewith Max Blumenthal
https://youtu.be/ANoZI3tpVmA
They go on to discuss the lack of antiwar protests.
That’s because Russia started the war….
ReplyDeleteThat's not an excuse!
ReplyDeleteHonest Government Ad | Carbon Credits & Offsets
ReplyDeletehttps://youtu.be/iCRDseUEEsg
As you can see by the link... ESG compliant!
What is quite extraordinary and what nobody talks about and is completely ignored is how currencies have strengthened under this period of inflation.
ReplyDeleteMike needs to do a video on it.
Inflation has been increasing for 2 years and the $ keeps getting stronger.
That goes against economics 101.
For me this just backs up Chris Cookes thesis about how the $ is the new oil standard.
ReplyDeleteMany people will jump through hoops and do back flips to try and explain why the $ has strengthened during this inflationary period. I expect some of the narratives to be completely ridiculous and outright insane to try and back fit the data.
However, Chris has been adamant in what he described the new link between the $ and oil. Which he highlighted during Trumps early years in office.
So let's remind ourselves what Chris said...
ReplyDeletehttps://seekingalpha.com/article/4121099-energy-dominance-and-america-first
This is the video version which explains exactly how they done it
ReplyDeleteLinked oil to a $ standard
https://m.youtube.com/watch?reload=9&v=-0TCtVCQb4s
ReplyDeleteThe organising principle of US foreign policy has for 100 years been US energy security and independence and President Obama's smart Transition through Gas energy strategy reflected this. The aim of Transition through Gas was to reduce US reliance on Saudi oil by increasing US oil production and to swing domestic and global energy investment to gas & renewable energy production and energy efficiency ('Fifth Fuel').
Obama was a Wall Street president who took an unconventional approach to funding such colossal energy investment. His strategy followed that of Henry Kissinger who convinced the Shah of Iran to agree to a 400% increase in oil prices after the 1973 'Oil Shock' which had the effect of making development of Alaska, US Gulf, and North Sea oil economic. So immediately Obama took office in 2009 he acted to re-inflate, support and hold oil prices above $80/barrel for four years while capping politically sensitive US gasoline prices to avoid putting at risk his 2012 re-election.
This four-year oil boom with prices between $80 & $120/barrel brought a wave of petrodollars from producers flooding into US Federal Reserve Bank (“Fed”) accounts, particularly from Saudi Arabia under an energy security agreement with U.S. made in 1945. To avoid exchange rate problems, the Fed created new petrodollars and swapped them for US Treasury Bills in a neutral asset swap operation termed Quantitative Easing (“QE”). However, the economic myth propagated by the Fed and sustained by uncritical global media was that this neutral financial asset swap could in some magical way act as a “stimulus” for the US economy when the true reason was to quietly accommodate oil producer Petrodollars.
ReplyDeleteIn order for oil producers to support high oil prices, they must be able to fund stocks of excess oil held off the market and be able to access bank finance for the flow of oil payments. In order to achieve this, Wall Street used new investment instruments: firstly 'passive' oil funds investing in oil market futures contracts, and secondly, secret Enron-style oil prepay funding.
In this way, Wall Street and North Sea oil producers were able to support the global benchmark price set by ICE Brent/BFOE crude oil contracts, and Saudi Arabia's BWAVE pricing formula based on it. From 2001 to date the North Sea oil market tail has wagged the global oil market dog.
ReplyDeleteSo the vast inflows of petrodollars during President Obama's first term in office enabled US banks to fund shale oil & gas and renewable energy projects, while historically high US fuel prices encouraged energy-efficient vehicles. By 2014 the US had transitioned from natural gas deficit to surplus; US shale oil production had increased by some 5m bpd, while fuel consumption had fallen by 2m bpd. Similar trends elsewhere of increasing supply and falling consumption saw structural global oil deficit quietly transform into a surplus.
In late 2011 in Tehran, with oil prices well over $100/bbl, I forecast to general disbelief that when the Fed ended QE, the oil price would collapse to $45/$50 bbl. This is exactly what happened when the US finally turned off the QE dollar hosepipe in 2014 while opening a massive military base in gas-rich Qatar. The US also commenced overtures to Iran bearing in mind both the greatest global gas reserves and immense development opportunities for low-cost oil long coveted by US oil majors.
In late 2014, Saudi Arabia awoke from a petrodollar coma to see their power over the US vanish along with their energy security. As a result, Saudi Arabia redirected oil proceeds to the Euro, where a main aim of European Central Bank policy since inception has been to back Euro currency with no intrinsic value with lending based on objective utility of oil and gas energy. So as with Fed dollar QE, the true reason for Euro QE in March 2015 was not stimulus but was simply to accommodate purchases of € securities.
However, the unexpected election in November 2016 of President Trump changed everything.
Perhaps the most important of President Trump's motivations, due to an intense personal animosity, is to erase Obama's political legacy and in particular his energy strategy. But it was a surprise to many observers that Gary Cohn (ex-Goldman Sachs and a Democrat) as Director of the US Economic Council and Rex Tillerson (ex-Exxon CEO) as US Secretary of State were willing and able to serve the Trump administration
ReplyDeleteCohn architected and co-founded in 2001 what became the globally dominant Intercontinental Exchange (ICE) through which Wall Street came to dominate and financialise oil markets, while Tillerson was the most powerful US oil executive by far. Together they devised and implemented the US Energy Dominance strategy which was announced by President Trump on 29th June 2017.
As the name suggests, President Trump's 'America First' doctrine when applied to oil and gas markets aimed to massively increase US production in order to dominate global markets with what officials have termed “Molecules of US Freedom” and so take back control of global oil market pricing via oil & gas exports.
So on 1st July 2017 after 16 years of pricing oil using the ICE BWAVE formula, Saudi Arabia switched to prices generated by the Platts reporting service for cargoes of Brent/BFOE oil. For six months huge passive fund investment poured into global oil futures contracts, thereby re-inflating the price. Three months later at the end of March 2018 and nine months to the day after the strategy commenced, Cohn and Tillerson simultaneously left the Trump administration, leaving the strategy to be rolled out over the next two years.
So for the next 18 months, the Fed steadily reduced its balance sheet by selling Treasury Bills to release dollars. Within six months in September 2018, the ECB ended Euro QE, and Fed Treasury Bill sales continued until September 2019.
ReplyDeleteWhoever was responsible for the Abqaiq attack on Saturday, 14th September 2019, the resulting spike in oil and product prices required massive amounts of dollar funding to cover losses on derivative contracts. So Monday 16th September saw an unprecedented 'spike' in the sale and repurchase (“Repo”) of US Treasury Bills through which the Fed supplies dollar liquidity to four major US clearing banks. However, this massive Repo spike was only the beginning: from then on, the programme of exchanging dollars for short term Treasury Bills involving only these four banks which became known as 'NotQE' continued at a rapid rate.
Meanwhile, through the second half of 2019, oil prices were otherwise stable in a range between $55 and $60/barrel. The more the price exceeded $60/bbl the more shale producers sold oil forward, which enabled them to borrow from banks to finance drilling. When prices fell below $55/barrel, financial buyers appeared.
As a result, the US petrodollar funding system has quietly been completely reconfigured, as Saudi PetroEuros returned to U.S. to be swapped for short term Treasury Bill petrodollar holdings. Where petrodollars indirectly funded shale oil producers through bank lending, shale oil production will now be funded via the same three-way prepay mechanism used by Enron for a decade to secretly defraud their investors and creditors. The difference now is that where Enron's third-party funders were two of the Big Four private banks, now it is the Fed itself which is the third party funder.
ReplyDeleteMeanwhile, the waves of debt advanced to the US shale oil industry are beginning to come due and the Big Four banks are all preparing to foreclose on these debts and take ownership of shale oil assets. These banks plan to use production sharing LLC 'capital partnerships' with operating partners while oil majors such as Exxon appear also to be aiming to consolidate distressed shale oil assets using similar funding.
So to cut a long story short, the planned outcome of the US Energy Dominance financial energy strategy, was to support and loosely peg oil prices by controlling the benchmark price around $55 to $60/barrel. By pegging the dollar to an “Oil Standard” in this way prepay funding of US oil reserves has essentially monetised US oil.
ReplyDeleteEnter the dragon
Producers have controlled the oil market for so long they believe this to be their God-given right, forgetting that buyers are also capable of asserting market power. For years China's energy strategy has been to build and fill enormous oil storage capacity, now in excess of 1.2 billion barrels, while a fleet of new and efficient oil refineries has been built with capacity well in excess of China's product needs, and aimed at exports.
As Iran is painfully aware, China's ability to ignore US sanctions means that they have become oil buyer of last resort at distressed prices, and may, therefore, dump cheap oil products into the market with which other refiners cannot compete. China has also discussed cooperation with other major oil buyers, particularly India. Other countries in oil deficit, notably EU nations, also have an incentive to join a cooperative 'buyer's club'.
So in my view, China has been preparing for years to assert 'buy-side' consumer oil market pricing power and the unprecedented demand shock propagating from China has created the perfect opportunity. When the oil market recovers from this cardiac arrest which broke the US/Saudi oil peg I believe that China can and will assert buy-side market power, probably in loose cooperation with other major consumers who see no reason to continue to transfer up to an additional $30/barrel to producers.
When I set up MMT Scotland I asked Chris to chair the Edinburgh event. Discussed this briefly.
ReplyDeleteSo has he been proven right ?
Is the reason the $ keeps getting stronger under this inflationary period and bucks the trend of every economics text book because Cohn and Tilllerson under trump put oil on a $ standard ?
The main plank of US energy dominance strategy.
Merits a Mike Norman podcast discussion.
ReplyDeleteAlong with .....
If inflation increases the money growth. Not the money growth caused inflation narrative.
As explained here by John T Harvey
https://realprogressives.org/money-growth-does-not-cause-inflation/
How reliable are deficits in this inflationary period when you compare them year over year ?
If inflation increases the deficits because more currency is needed to buy goods and services at higher prices.
Is comparing year over year deficits as inflation increases actually telling us anything about the economy.
What does it tell us.
If last year was 1 trillion deficit but this year is 1.5 trillion.
Are more or less goods and services being bought because inflation has increased the money growth ?
Is it the same or less ?
Why the GDP growth figures projections are forecast to be small.
What chunk of the increased deficits are just going to buy The same amount of goods and services compared to the year before because of inflation.
2 topics I would like to hear in a future Mike podcast.
ReplyDeleteTaking a deep dive into both.
Strengthening $ During this inflationary period is Chris right as the $ tracks the oil price?
Increased deficits caused by the increase in money growth caused by inflation.
It would also be a good time to show these 2 graphs on twitter.
ReplyDeleteJust look at the graphs the real data for proof.
https://d3fy651gv2fhd3.cloudfront.net/charts/russia-interest-rate@2x.png?s=rrefrate&v=202204080901V20220312&url2=/russia/inflation-cpi
Go back over the last 10 years and look.
Every time the raise interest rates inflation follows. Every time they cut interest rates inflation falls.
https://d3fy651gv2fhd3.cloudfront.net/charts/russia-interest-rate@2x.png?s=rrefrate&v=202204080901V20220312&d1=20120411&url2=/russia/inflation-cpi
The Russians should know this by now.
Foot they can just say the USD is strengthening due to the higher US interest rates…
ReplyDeleteAnd this: “ So for the next 18 months, the Fed steadily reduced its balance sheet by selling Treasury Bills to release dollars.”
Completely wrong (Treasury simply redeemed the Fed’s bills) and monetarist…
“ What chunk of the increased deficits are just going to buy The same amount of goods”
ReplyDeleteThe deficit is SAVINGS… iow it is not used to buy anything.., beyond the leading govt purchases…
If the deficit falls that would be indicative of increased sales…
Higher deficit is BAD for economic activity…
Ideally you want to see a zero deficit or balanced budget…. With record govt spending and record taxes … if you want to see higher economic activity…
It would mean no one is saving … everyone is spending all their income.,,
MMT: “if somebody saves (deficit) then we can’t buy all of our output” ie creates unemployment…
ReplyDelete“ Pro-Ukraine Warmongers”
ReplyDeleteThey’re not warmongers they are trying to help Ukraine expel invaders..,
Ukraine not invading Russia, Russia is invading Ukraine…
Sean Penn is a warmonger? Pink Floyd are warmongers? Angelina Jolie a warmonger?
Plan V-TV/Episode 127: "Oh Canada!" with Canadian historian Matthew Ehret
ReplyDeletehttps://youtu.be/BKeETZWRAjA
Of interest for Canucks only.
Russia becoming persona non grata…
ReplyDeleteWill West grant Russian tourist visas in future?
No more mediterranean holidays?
Vlad going to tell his people to go holiday in wang dang or wtf in China instead?
I don’t see it working..,
Matt, the favorite vacation spots of ordinary Russians are Crimea and Turkey. These places have already been benefitting from increased Russian tourism owing to the previous sanctions.
ReplyDeletePlan V-TV/Episode 127: "Oh Canada!" with Canadian historian Matthew Ehret
ReplyDeleteMatt Ehret is a Larouchian if that bothers anyone. Whatever one thinks about Larouches thought, he was a "big thinker" whose work should be considered.
Ehret is also a very brilliant guy and an up and coming geopolitical analyst. He publishes at Rising Tide Foundation, a Canadian alt-think tank.
Cynthia Chung publishes there, too, and is worth following. They both write on a broad range of subjects.
“ Crimea and Turkey.”
ReplyDeleteNo thank you.., wouldn’t take a free trip…
Please promote mind control:
ReplyDeletehttps://www.telegraph.co.uk/news/science/science-news/11199031/Mind-reading-device-invented-by-scientists-to-eavesdrop-on-inner-voice.html
The FBI has possessed mind reading technology since at least 2004, its existence is confirmed here:
ReplyDeletehttps://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqbnNfblJ4LUlXV0RET2haYWZiQkUyWjBWT1hGUXxBQ3Jtc0trYUZyX2xVZlV6YVpUaGZ4YkZ2XzNNOW9ZckhwYUJEZ0VoTnNUcTdTZEdORlU2SmwwdGZyOTZsN0RlSzZJQUxHYmNPZWtqX2VEV1E0TXdUcVpXcE90YjRvWFZGZFAtanlGQTI3ZE5UaHBxZHlZekV4TQ&q=http%3A%2F%2Fwww.telegraph.co.uk%2Fnews%2Fscience%2Fscience-news%2F11199031%2FMind-reading-device-invented-by-scientists-to-eavesdrop-on-inner-voice.html
https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqbHViMkZnMmhDV1I5VWhNMWV3eHRBLWxheldkZ3xBQ3Jtc0trRFVPRnZqeklpTnNOOHhGWlFod0NXSWNFS3dlaXdmeEtuRnYtQ2xpMHFKLUVxS1R4NTRPRXZ2WDJjR1NzbEVnX0FIMFgtbzVrOWZ0dHJiN2JRRUlvNWpJQkpCcFRhUWQwWFRTYzlBWWpJeDN6VGhaMA&q=https%3A%2F%2Fwww.nasa.gov%2Fcenters%2Fames%2Fnews%2Freleases%2F2004%2F04_18AR.html
PDF file download of 2010 private sector research article:
https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqblowZ1g1MFFmNXU1alN2aFR3Tm5melJUc2FuQXxBQ3Jtc0tsM1U3RGkzREswWGJISjFBLXJ3SVl3a0t0cDlIQnZoNjQzMEYtMnhsY2VVaEgyTHVWYlZkdkZha0YzeXBMNjRqeGZyNkpJdzdTTlZ2S0lmSW90dEdaSGMyeDNPbmFRSnVMUzV4ZGl6bTRsUHoydlBscw&q=https%3A%2F%2Fwww.piers.org%2Fpiersonline%2Fdownload.php%3Ffile%3DMDQxMjA4MTAxMzI2fFZvbDFObzJQYWdlMjI3dG8yMzAucGRm
https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqblowZ1g1MFFmNXU1alN2aFR3Tm5melJUc2FuQXxBQ3Jtc0tsM1U3RGkzREswWGJISjFBLXJ3SVl3a0t0cDlIQnZoNjQzMEYtMnhsY2VVaEgyTHVWYlZkdkZha0YzeXBMNjRqeGZyNkpJdzdTTlZ2S0lmSW90dEdaSGMyeDNPbmFRSnVMUzV4ZGl6bTRsUHoydlBscw&q=https%3A%2F%2Fwww.piers.org%2Fpiersonline%2Fdownload.php%3Ffile%3DMDQxMjA4MTAxMzI2fFZvbDFObzJQYWdlMjI3dG8yMzAucGRm
Proof human brain waves can be detected and read without surgically implanted probes:
https://nypost.com/2017/02/01/mind-reading-is-now-very-real/
https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqbTRHSWhDeE1vTVB6dzhPcURYTUJKSEltOXJnd3xBQ3Jtc0trRnc5SFg1Y0lMZXJ5UjB4ZUExMll1aWV5eE03OXRzM3pvbW5BTkFqbTlLV29tbEIwNi03OTBmNmVLdTN6T1BxN0ZBWXlINTZUdXhNam5KRG45bnJyWFVzb0VFRElSWWRrNmJxVU1FbmFVZ0Z4Vi1Ibw&q=https%3A%2F%2Fconsciouslifenews.com%2Fmind-reading-science-magic-trick%2F1190675%2F
Question about grammar:
ReplyDelete1. As if the planet were listening to her thoughts.
2. As if the planet was listening to her thoughts.
I'm undecided as to which "sounds" better.
Planet is singular, and is defined as a celestial body.
A "body" tends to be an agglomeration.
3. As if the celestial body were listening to her thoughts.
4. As if the celestial body was listening to her thoughts.
#3 sounds better. What y'all think?
@Tom
ReplyDeleteI was wondering why their next interview may well be on the topic of eugenics.
@ Peter Pan
ReplyDeleteGrammatically, "were" is subjective mood and "was" is indicative. Subjunctive is called for here grammatically, but the subjective mood is falling into disuse in colloquial English.
How it sounds probably depends on how the listener approaches the English language, more formally or more colloquially. There is also a difference between the way a person speaks and writes. Speech is more colloquial than writing.
@ Tom
ReplyDeleteI didn't think I had a choice in the matter. Thank-you :)
Matt Franko,
ReplyDeleteMMT: “if somebody saves (deficit) then we can’t buy all of our output” ie creates unemployment…
Deficits are a result of net saving, not saving, net saving being the excess of saving over investment by the non-government sector.
"Saving is the accounting record of investment." —Basil Moore (Shaking the Invisible Hand: Complexity, Endogenous Money and Exogenous Interest Rates
Because S equals I is an identity and always holds true by definition, net saving means a portion of that S is excess inventories, which leads to recession and unemployment. The government should deficit spend that portion into the economy and only that portion, not the full amount of saving, which would of course be inflationary.
So you can have saving and a full employment economy at the same time, the saving being the accounting record of employment in the investment sector.
Further to my comment, it was through struggling with the S=I identity that I discovered MMT. This person had the same experience as I did:
ReplyDeleteS=I: The most misunderstood equation in economics
The saving equals investment identity (S=I) is probably the most misunderstood equation in economics. Achieving the top rank in this highly competitive category requires an extraordinary level of miscomprehension, and the S=I identity does not disappoint. PhD students and many professors frequently misunderstand it, and misrepresent when teaching their students. In fact, it is sometimes difficult to find an explanation of it that is actually correct. The identity puzzled when I first encountered it, and it took me years to finally begin to understand it.
Many of the explanations people offer of the S=I identity are hampered by a lack of understanding of what an identity is. An identity is a mathematical fact that is true in any possible world, with any possible set of behaviours. Often, people’s explanations of the S=I identity are not correct because they are not true under all specifications of consumer and investor behaviour.
Near the bottom of the article, he strikes out at Harvard economist Greg Mankiw:
Probably the most egregiou example of an economist who gets the S=I identity wrong is Gregory Mankiw. Mankiw is commonly regarded as one of the most important macroeconomists, and his macro and micro textbooks are among the most commonly used. In the third edition of his microeconomics textbook he explains the S=I entirely wrong.
He then goes on to explain why Mankiw is wrong.
As for deficits, this from "heteconomist" (Dr. Peter Cooper) who writes that deficits are the norm, not the exception. The article really clarified my thinking about MMT:
ReplyDeleteHaving acknowledged that there are real limits to government deficits (it was never denied), MMT nevertheless makes clear that government deficits are the norm, not the exception. This does not mean that government deficits of any size are okay. They must be consistent with private-sector net-saving intentions. It simply means that ongoing government deficits of some size will be the appropriate policy under normal circumstances. The reason for this is that the non-government sector typically desires to net save. This means, as a matter of accounting, that the government must run deficits.
source: Krugman and Galbraith on Deficits
One more comment on how the saving-investment identity holds true. This from a book titled macroecnomics by Paul Krugman and Robin Wells:
ReplyDeleteWHO ENFORCES THE ACCOUNTING?
The savings–investment spending identity is a fact of accounting. By definition, savings equal investment spending for the economy as a whole. But who enforces the arithmetic? For example, what happens if the amount that businesses want to invest in capital equipment is less than the amount households want to save?
The short answer is that actual and desired investment spending aren’t always equal. Suppose that households suddenly decide to save more by spending less. The immediate effect will be that unsold goods pile up in stores and warehouses. And this increase in inventory counts as investment spending, albeit unintended. So the savings–investment spending identity still holds, because businesses end up engaging in more investment spending than they intended to. Similarly, if households suddenly decide to save less and spend more, inventories will drop—and this will be counted as negative investment spending.
A real-world example occurred in 2001. Savings and investment spending, measured at an annual rate, both fell by $126 billion between the second and the fourth quarter of 2001. But on the investment spending side, $71 billion of that fall took the form of negative inventory investment spending.
Of course, businesses respond to changes in their inventories by changing their production. The inventory reduction in late 2001 prepared the ground for a spurt in output in early 2002. We’ll examine the special role of inventories in economic fluctuations in later chapters.
I know deficits are savings
ReplyDeleteBut worth a deep dive all the same.
Households use savings to to spend it they don't borrow.
Let's call it government spending then or bank loans rather than comparing deficits year over year.
In March 2021 government spent £10
In March 2022 government spent £30
Discuss.
In March 2021 households borrowed £100
In March 2022 households borrowed £150
Discuss.
When inflation increases money growth as more currency is needed to buy goods and services at higher prices.
Especially when we MMT'rs look at increased deficits and increased loans and increased government spending and increased household and business spending as good things.
I think you know what I am getting at.
Mike will know what I'm saying he looks at these metrics in MMT trader. With inflation rising how reliable are these metrics during this time. Wether it is month over month or year over year.
The growth in these metrics are not the same when money growth has to increase automatically due to inflation. Compared with those metrics in periods of low inflation.
Is Chris right ?
ReplyDeleteAs the $ keeps rising with at least 2 years of increased inflation.
It is a question worth asking.
I think you have to take into account inflation automatically increases money growth. All types of money growth.
ReplyDeleteBut no idea how much you have to take into account of how you would measure it. Especially when we are dealing with deficits in the trillions and not billions. Does it even matter with the huge amounts of government spending we have had over 3 - 4 years.
Why even though the environment looks good from a MMT perspective. The GDP forecast is low balled in the forecast.
“ "Saving is the accounting record of investment." —Basil Moore (Shaking the Invisible Hand: Complexity, Endogenous Money and Exogenous Interest Rates”
ReplyDeleteThat’s an Art Degree thesis… non scientific…
Dont mix methodologies.,,
“ I think you have to take into account inflation automatically increases money growth. ”
ReplyDeletelol that’s monetarist right there..
YOU can take it into account if you want to… Im not..
Nope that is a MMT insight Matt.
ReplyDeletehttps://realprogressives.org/money-growth-does-not-cause-inflation/
I didn't say Money Growth Causees Inflation.
I said inflation causes money growth.
Or if you like you can read Warren and Phil's take on the Weimar Republic
https://gimms.org.uk/2020/11/14/weimar-republic-hyperinflation-through-a-modern-monetary-theory-lens/
Told ya spending too much time in right wing blogs shrinks yer brain.
You went for a loan in 2019 to buy a car.
ReplyDeleteThought about it and thought I will buy it in 2022.
You go for a loan in 2022 to buy a car.
Due to inflation the price of the car has increased by 40%.
You take the loan - inflation has increased the money growth by a certain %. Compared to under normal circumstances between 2919 and 2022 if say the price of the car was reduced slightly or increased slightly.
So what value do you get out of comparing loan growth in 2019 compared with !own growth in 2022. If parts of the loan growth is due to inflation?
Is it not comparing Apple's with oranges?
Do you not have to take inflation into account when you do the comparison ?
When 40% more money is needed to buy the same car ?
So when it comes to GDP loans might have increased 25% between 2019 and 2022. However, does that mean more or less goods and services have been bought ?
Loan growth might have increased 5% year over year from April last year to April this year. How positive or negative is that in an inflationary period.
Government spending might have increased 15% year over year from April last year to April this year. How positive or negative is that in an inflationary period.
Has the 15% increased the sale of goods and services ?
Or is the government buying less goods and services with a 15% increase due to many things being more expensive?
Why maybe though the conditions of the Economy via the MMT lens looks strong the forecast for GDP looks weak.
When talking about month over month or year over year loans and government spending growth shouldn't there be a caveat for an inflationary period?
Because inflation increases the money growth automatically. As more money is needed to buy the same good or service in an inflationary period ?
As the price of oil skyrocketed, so costs of production rose for many, many US businesses. Because there is a lag between purchasing inputs and selling output, most firms have to borrow money (working capital) to bridge the gap.
As the ripple effect of the OPEC price increases moved throughout the economy, the demand for cash by these businesses rose.
Quite reasonably, private banks and the Fed did what they could to accommodate. These were fair requests on the part of US entrepreneurs. Loans were extended and government debt sold by the private sector to the central bank.
This raised the supply of money.
So the Question becomes if there is an increase in both loans and government spending during an inflationary period.
ReplyDeleteHow positive is it compared with how positive it is in a non inflationary period.
How do you take it into account and talk about it when discussing month over month, year over year figures.
Or do you have to wait on the GDP figures as the true guide ?
Which could be dangerous if you are long stocks based on government spending and loan growth.
You say “ You go for a loan in 2022 to buy a car. Due to inflation the price of the car has increased by 40%.”
ReplyDeleteHere let me correct it for you, should be : “ You go for a loan in 2022 to buy a car. the price of the car has increased by 40%.”
Fixed it for you.., “inflation!” is a figure of speech…. figures of speech don’t “do” anything… you are making a reification error it’s a well known cognitive error.,, you think the figurative is real…
https://en.wikipedia.org/wiki/Reification_(fallacy)
Looking at the figurative “money supply” is also a reification error.., you think the figure of speech “money” is real…,
ReplyDelete“S=I” is not a functional equation…. It is an Art Degree/Platonist thesis… you can either agree with it or argue it’s anti thesis…
ReplyDeleteThey think the non govt purchasing a US treasury security is “investment”…. they think Non govt is “investing” in a govt bond….
ReplyDeletehttps://en.wikipedia.org/wiki/Investment
ReplyDelete“ In finance, the purpose of investing is to generate a return from the invested asset. The return may consist of a gain (profit) or a loss realized from the sale of a property or an investment, unrealized capital appreciation (or depreciation), or investment income such as dividends, interest, or rental income, or a combination of capital gain and income.”
So what?
ReplyDeleteMatt Franko,
ReplyDelete“S=I” is not a functional equation….
Straw man argument. I didn't say it was an equation, i.e., an equality. I said it was an identity.
Dr. Peter Cooper again:
Macroeconomists often start their analysis from an accounting identity or set of identities. Since identities are true by definition, they can provide a good framework for analysis, including a way to detect any errors in logic or inconsistent conclusions. A theory that conforms to an identity is not necessarily correct but is at least potentially correct. To constitute a theory, though, it is necessary to do more than just invoke identities. This is because identities in themselves tell us nothing about causation.
Once we begin to make behavioral assumptions, the ground becomes contestable. Identities are incontestable, at least if we accept the principles of double-entry book keeping, whereas behavioral assumptions are not.
Identities are incontestable...
Inflation causes money printing and not the other way around.
ReplyDeleteYes, that is true; Henwood adopts the Monetarist explanation that “too much money” causes inflation. He confuses causation and correlation. Severe supply constraints can push up prices, increasing the amount of money that needs to be created both publicly and privately to finance purchases. Tax revenues fall behind spending so a deficit opens up as spending tries to keep pace with inflation. The money stock is a residual and it will grow rapidly with hyperinflation. That does not mean it is the cause. Mitchell has closely examined the hyperinflation cases from the MMT perspective; the argument is not at all odd and has the advantage that it is fact-based, unlike Henwood’s Monetarist linking of money and inflation that has been so thoroughly discredited that even central bankers have dropped it. —L. Randall Wray
they think Non govt is “investing” in a govt bond….
ReplyDeleteI don't know who this "they" is but I'm using the economic definition of "investing" which "capital formation". That's what the "S = I" identity refers to.
“ Severe supply constraints can push up prices, increasing the amount of money that needs to be created ”
ReplyDeleteThat’s monetarist right there…
“ To constitute a theory, though, it is necessary to do more than just invoke identities. This is because identities in themselves tell us nothing about causation.”
ReplyDeleteThere is no requirement that any thesis or theory has to include causation and can be accordingly tested…
Monetarism has a thesis that “printing money causes inflation” it’s never tested you just either agree with it or you agree with its antithesis…
So when some Art degree person says “s=I” that’s an identity within their theory.. you either agree with it or you have to agree with its antithesis.,,
Tom went over this a week ago how the Socratic/Platonist method works…
The theory necessarily creates its anti theory…
It’s then argued back and forth..,
Tom,
ReplyDeleteTrump is the GOP establishment.., you don’t really know what is going on in the GOP…