Friday, October 21, 2022

There’s a Whole Ideological Package That Goes With Raising Interest Rates: Fadhel Kaboub — Sowmya Sivakumar

Modern Monetary Theory (MMT) is an alternative economic framework that challenges the conservative neo-liberal narrative of ‘free trade’ and ‘competition’ which has held sway for many decades as the way to global prosperity. In simple terms, MMT makes us see that money is completely a creation of the State, and hence, a sovereign government does not need our money (either through taxes or borrowing) in the first place to strategically spend it, that is, without causing inflation. And that frees the ‘fiscal’ constraint to address the most pressing problems of our times: socio-economic inequality, exclusion and climate change.

Fadhel Kaboub, Associate Professor of Economics at Denison University, Ohio (US), and President of the Global Institute for Sustainable Prosperity, is a leading voice in the global MMT community and among a handful of economists who speaks of MMT’s relevance for emerging countries like India. In this first part of a two-part ilong-distance nterview with independent journalist Sowmya Sivakumar, he explains how MMT is slowly shifting the debate in the US, with important lessons for India and rest of the world. Edited excerpts:
News Click (India)
There’s a Whole Ideological Package That Goes With Raising Interest Rates: Fadhel Kaboub
Sowmya Sivakumar

Fadhel Kaboub is President of the Global Institute for Sustainable Prosperity and Associate Professor of economics at Denison University. 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, and the Center for Full Employment and Price Stability. Dr. Kaboub is an expert on Modern Monetary Theory (MMT), the Green New Deal, and the Job Guarantee. His work focuses on public policies to enhance monetary and economic sovereignty in the Global South, build resilience, and promote equitable and sustainable prosperity. He is a widely published author and his recent work has been presented at many prestigious institutions including the Harvard Kennedy School of Government, Harvard Law School, Cornell University, Columbia University, Duke University, Sorbonne University, and the National University of Singapore. His academic work has been published in the Journal of Economic Issues, Review of Keynesian Economics, Review of Radical Political Economics, Review of Social Economy, International Journal of Political Economy, Middle East Development Journal, and International Labour Review. Some of his recent media commentaries on MMT, climate change, employment, development, finance, and the Middle East economies have appeared in the New York Times, Financial Times, Bloomberg, Le Monde, The Guardian, La Croix, Al-Jazeera, France 24, Deutsche Welle, The Hill TV, Radio France Internationale, Asharq News, Al Hurra TV, CGTN Africa, National Public Radio, New Inquiry, BBC Mundo, Carta Maior, Diwan TV, Saudi Gazette, Express FM, Assabah News, Le Quotidien, and La Presse.

Dr. Kaboub earned his bachelor’s degree in economics from the University of Tunis – El Manar, and his Master’s and Ph.D. in economics from the University of Missouri-Kansas City. Before settling at Denison University in 2008, he taught at Simon’s Rock College of Bard (Massachusetts) and at Drew University (New Jersey) where he also directed the Wall Street Semester Program.

— Global Institute for Sustainable Prosperity 

22 comments:

Ahmed Fares said...

According to my latest research, inflation is actually around 4%. A bit on OER from Paul Krugman:

At this point, however, there’s good reason to believe that measures like core and median inflation are looking at the economy through a cracked rearview mirror and provide little useful policy guidance.

The biggest issue involves housing costs. Two big components of the Consumer Price Index are rents and “owners’ equivalent rent”, which is an imputation of what homeowners would be paying if they were renters and is largely based on market rents. Shelter, which is basically these two components, makes up 32 percent of the C.P.I. and about 40 percent of core inflation. It’s even more dominant in median inflation: While shelter isn’t always the median, it’s such a large part of consumer prices that it’s hard for the median inflation rate to be very different from shelter inflation. Indeed, median inflation has closely tracked shelter inflation in recent years:

Why is this a problem? Because the C.P.I., which is meant to measure the cost of living, looks at the average amount renters pay. But most renters have leases, which means that their rent largely reflects the state of the rental market some time in the past. Indeed, an important new report from the Bureau of Labor Statistics estimates that the official rent measure lags behind market rents by roughly a year.


Further down in the same article:

The New York Fed has an index, the Underlying Inflation Gauge, that is supposed to provide a better gauge of underlying inflation, and it looks a little better than the standard numbers:

Here's a link to the Fed site:

Underlying Inflation Gauge (UIG)

The UIG "full data set" measure for September is currently estimated at 4.4%, a 0.1 percentage point decrease from the current estimate of the previous month.

Those of you who keep saying that interest rate rises cause inflation are right, at least in this regard. Here's how interest rates are driving up rent inflation:

Second, and perhaps counterintuitively, when the Federal Reserve raises rates, as it has recently, rental inflation tends to rise in response, at least at first. This is because rising rates make owning a home less affordable, pushing would-be buyers into the rental market, which in turn further drives up rents. Usually it’s not until housing price inflation starts to cool – as a result of rising unemployment and falling aggregate income growth – that rental market inflation also decelerates.

So, because the Fed gauges OER by calling up people and asking them what their house would rent for, higher rents means that people would report higher OERs.

Wonking Out: What’s Really Happening to Inflation?

If the NYT link is paywalled, and you have Firefox, use this add-on (it's a leaky paywall. They make it leaky on purpose so that some people break through, quote their articles, and this drives subscriptions):

Bypass Paywalls Clean

Matt Franko said...

Ahmed you’re on Team Transitory™️

Matt Franko said...

This is more Art Degree BS…. Ideology has NOTHING to do with it..

The ONLY reason that rates are being increased is that tptb are believing the Platonist thesis of Monetarism…

Matt Franko said...
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Ahmed Fares said...

All of Western philosophy is but a footnote to Plato. —Alfred North Whitehead

Ahmed Fares said...

For Plato, human beings live in a world of both visible (sensible or material) and intelligible things (anything arising from reason alone, including abstract definitions). While the visible world contains material objects, the intelligible world holds the eternal “Forms” of things–the first known statement of the concept that Carl Jung made famous as archetypes.

Jesus said to seek the Kingdom of Heaven, which is all around you, but you do not see it. Do you know what's in the Kingdom of Heaven?

Archetypes.

Matt Franko said...

Ahmed how is this viewed from the Muslim perspective? Platonism, etc?

Matt Franko said...

“ anything arising from reason alone, including abstract definitions”

No you have opposites there.., this is written by a Platonist who employs paradox… eg “stability creates instability “ etc..

Reason (dialog) is opposite abstraction…. ie use the “narrow gate” in Christian scriptural context…

In Art Degree curriculum you are trained to reason (dialog) in Science Degree curriculum you are trained to abstract…

They are discrete methodologies… you have to discriminate between the two…

Matt Franko said...
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Ahmed Fares said...

This is from Al-Ghazali's book titled The Niche of Lights. Translation by . H. T. {William Henry Temple} GAIRDNER.

Here, the world of the archetypes is referred to by the term "Realm Supernal":

PART II.--THE SCIENCE OF SYMBOLISM,

PROLEGOMENA TO THE EXPLANATION OF THE SYMBOLISM OF THE NICHE, THE LAMP, THE GLASS, THE TREE, THE OIL, AND THE FIRE

The exposition of this symbolism involves, first of all, two cardinal considerations, which afford limitless scope for investigation, but to. which I shall merely allude very briefly here.

First, the science and method of symbolism; the way in which the spirit of the ideal form is captured by the mould of the symbol; the mutual relationship of the two; the inner nature of this correspondence between the

[1. Or Idea = in practically the Platonic sense.]

{p. 122}

world of Sense (which supplies the clay of the moulds, the material of the symbolism) and the world of the Realm Supernal from which the Ideas descend.

Second, the gradations of the several spirits of our mortal clay, and the degree of light possessed by each. For we treat of this latter symbolism in order to explain the former.

(i) THE OUTWARD AND THE INWARD IN SYMBOLISM: TYPE AND ANTITYPE


I skip here to the relevant part that describes the relationship between the two worlds, i.e., this world and the world of archetypes:

To return to the subject we were discussing: the visible world is, as we said, the point of departure up to the world of the Realm Supernal; and the "Pilgrim's Progress of the Straight Way" is an expression for that upward course, which may also be expressed by "The Faith," "the Mansions of Right Guidance." Were there no relation between the two worlds, no inter-connexion at all, then all upward progress would be inconceivable from one to the other. Therefore, the divine mercy gave to the World Visible a correspondence with the World of the Realm Supernal, and for this reason there is not a single thing in this world of sense that is not a symbol of something in yonder one. It may well happen that some one thing in this world may symbolize several things in the World of the Realm Supernal, and equally well that some one thing in the latter may have several symbols in the World Visible. We call a thing typical or symbolic when it resembles and corresponds to its antitype under some aspect.

Matt Franko said...

Who made Socrates drink the hemlock?

THOSE are the people you want in charge..

Ahmed Fares said...

...then all upward progress would be inconceivable from one to the other.

Al-Ghazali here is referring to the ascension of the gnostics, from this world which is the world of symbols, to the world of archetypes. This is the same idea of Paul's ascension mentioned in the Bible.

I know a man in Christ who fourteen years ago—whether in the body I do not know, or whether out of the body I do not know, God knows—such a one was caught up to the third heaven. —2 Corinthians 12:2

Matt Franko said...

I’m not a Muhammadist but it appears you are trying to synthesize Muhammad with Plato …

Which is advantage Plato…

Matt Franko said...

Jesus: “Plato is the gate that leads to destruction “

and Jesus commissioned Paul so raise to you…

imo you would probably do better to just stick to Muhammad alone…

Plato doesn’t work so then if you try to synthesize Plato with Muhammad then Muhammad isn’t going to work…. It’s corrupted…

Ahmed Fares said...

Jesus: “Plato is the gate that leads to destruction “

Jesus never said that. Now you're just making stuff up.

Matt Franko said...

https://www.scripture4all.org/OnlineInterlinear/NTpdf/mat7.pdf

Mat 7:13

The word describing the gate is plato… literally: “ plato is the gate… that leads to destruction “… hello…

Then you can see it everything these people get involved in gets all F-ed up….

What are these people going to do? Increase the rate to 10% to get their inflation down?

There’s 25T in USD Securities accounts., this would create an additional 2.5T fiscal transfer …. Entire Social security transfers were 1T last year… this would be like adding 2 1/2 more social security programs..,

They think that will reduce their inflation?

I don’t see it..l

Ahmed Fares said...

re: Mat 7:13

“The spiritual differs from the religious in being able to endure isolation. The rank of a spiritual person is proportionate to his strength for enduring isolation, whereas we religious people are constantly in need of ‘the others,’ the herd. We religious folks die, or despair, if we are not reassured by being in the assembly, of the same opinion as the congregation, and so on. But the Christianity of the New Testament is precisely related to the isolation of the spiritual man.” — Kierkegaard

Religion is the gateway to spirituality. Most people who are believers do not progress to spirituality. On the contrary, they attack it, because they fear being apart from the crowd. This is true for every religion. Here, a quote:

The metaphor of "way, path" is to be understood in connection of the term sharia which also has the meaning of "path", more specifically "well-trodden path; path to the waterhole". The "path" metaphor of tariqa is that of a further path, taken by the mystic, which continues from the "well-trodden path" or exoteric of sharia towards the esoteric haqiqa. A fourth "station" following the succession of shariah, tariqa and haqiqa is called marifa. This is the "unseen center" of haqiqa, and the ultimate aim of the mystic, corresponding to the unio mystica in Western mysticism. Tasawwuf, an Arabic word that refers to mysticism and Islamic esotericism, is known in the West as Sufism.

haqiqa - Reality

marifa - gnosis

Here, in the movie Star Wars, one who finds the narrow gate. "path" here is a reference to "tariqa":

"Brought you here, the galaxy has. Your path, clearly, this is."
"You know what I'm looking for."
"Something lost. A part of yourself, perhaps. That which you seek, inside, you will find."

―Yoda and Galen Marek's clone

"inside" is a reference to the "Cave", because Yoda lives next to the Cave of Dagobah, the Cave mentioned in the 18th Surah of the Qur'an.

Ahmed Fares said...

re: unio mystica

Union with the Divine or Absolute and mystical experience

Deriving from Neo-Platonism and Henosis, mysticism is popularly known as union with God or the Absolute. In the 13th century the term unio mystica came to be used to refer to the "spiritual marriage," the ecstasy, or rapture, that was experienced when prayer was used "to contemplate both God’s omnipresence in the world and God in his essence."in the 19th century, under the influence of Romanticism, this "union" was interpreted as a "religious experience," which provides certainty about God or a transcendental reality.

An influential proponent of this understanding was William James (1842–1910), who stated that "in mystic states we both become one with the Absolute and we become aware of our oneness." William James popularized this use of the term "religious experience" in his The Varieties of Religious Experience, contributing to the interpretation of mysticism as a distinctive experience, comparable to sensory experiences. Religious experiences belonged to the "personal religion,"which he considered to be "more fundamental than either theology or ecclesiasticism". He gave a Perennialist interpretation to religious experience, stating that this kind of experience is ultimately uniform in various traditions.
—Wikipedia

And we're back to Plato again...

Peter Pan said...

The Saudis use beheadings to get their miscreants started on their spiritual journeys...

Matt Franko said...

Yo, It’s not the gate or path… it’s the width of the gate or path…

Jesus is trying (failed) to teach Israelites the concept of discrimination…. They were too dumb…

In that sorting system, The narrow gate only lets the small livestock thru… BOTH large and small livestock can pass they the Plato gate..,

Platonism is non discriminatory…

Matt Franko said...

It’s non discriminatory to the point where it cannot discriminate between truth and false…

We see this with these people EVERY FUCKING DAY…

Jesus: “I am the truth”…

To understand this you first have to be able to discriminate between the true and the false,,,

If you can’t discriminate AT ALL you can’t understand this..,

this is where these people are…

Peter Pan said...

According to the theory of evolution, there is no higher power.

We are not creations, we are products of long-running processes.

There is no purpose in life, other than procreation.

But that is not enough for you religious types. You have to invent something more fanciful.

And then you end up controlling people's sexuality.

Mission accomplished.