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

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

William Mitchell — Modern Monetary Theory

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

About This Plane... — Andrei Martyanov

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

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

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

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

Maybe not just a gas station with nukes. 

Reminiscence of the Future

About This Plane...
Andrei Martyanov

See also

Russian industry.

Why PBS Is Full Of...

Inflation Theories — Brian Romanchuk

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

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

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

Bond Economics
Inflation Theories
Brian Romanchuk

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

Yes, you have been waiting all week to see how the Smith Family was faring as they struggle to work out where the government currency comes from. Well, Episode 2 in our new weekly Manga series – The Smith Family and their Adventures with Money – is now available. Have a bit of fun with it and circulate it to those who you think will benefit …

William Mitchell — Modern Monetary Theory

The Smith Family manga continues – Episode 2 is now available
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Theories of Economic Crises — Alessandro Roncaglia

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

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

Video conversation—Seeking Full Employment Without Falling Prey to Neoliberal Traps — Bill Mitchel

I recorded aon September 27, 2023, a fairly long interview with Lynn Fries, who is an American Journalist producing video content at Global Political Economy or – GPEnewsdocs – which is based in Geneva.

The conversations – Seeking Full Employment Without Falling Prey to Neoliberal Traps – contains access and a full transcript of the conversation.

William Mitchell — Modern Monetary Theory
Video conversation – Seeking Full Employment Without Falling Prey to Neoliberal Traps

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

Finding the Money: Winning Awards and Coming to a Theatre Near You — Stephanie Kelton

Latest update.

The Lens
Finding the Money: Winning Awards and Coming to a Theatre Near You
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

Citi closes at lowest price in 3.5 years

Boy the “neoliberal conspiracy!” continues apace… these crafty neoliberals really getting over on the poors… good thing the government is just “an agent of capital!”….  

🤔

BREAKING: Citigroup $C closes at lowest price in 3.5 years pic.twitter.com/ssEEsdeT7r

— Barchart (@Barchart) October 23, 2023

Neoliberalism has not been about applying Chicago-style economic theory — Bill Mitchel

Scottish-born economist – Angus Deaton – recently published his new book – An Immigrant Economist Explores the Land of Inequality – in which he provides a swathing critique of the state of the economics profession, particularly in the way that it impacts on policy making and societal well-being. He is a microeconomist who made a name for himself studying consumer demand, which means he has not contributed anything significant to the field of macroeconomics, where I hang out. The title refers to his migration to the US from Britain in the 1980s and his reflections on what he found and how the economics academy has changed over this 45 years in the profession. His point is that the economics profession has lost its purpose and should return to a focus on advancing well-being. He is particularly critical of Chicago-style economics – or ‘free market’ thinking. The problem though is that the neoliberal era has not been about applying Chicago-style economic theory. The elites just say they are doing that when in fact all they are doing is utilising the immense government capacity to shift the intervention dial in their favour. The government has not given way to the free market – it has just been reconfigured to become an agent of capital....

William Mitchell — Modern Monetary Theory

Neoliberalism has not been about applying Chicago-style economic theory

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

Gold

 

LOL sharp stick in the eye to the gold people! 

Would you rather have a free one-ounce gold coin, or $20 bucks? 🤦🏻‍♂️ pic.twitter.com/efvWzv54fz

— Mark Dice (@MarkDice) October 19, 2023

Price Anchor

 

Here’s your Art Degree figure of speech “price anchor!”  .  Link here.

Multipolarity: China, Russia, Israel, India, and the difficult birth of a new world — Michael Hudson, Radhika Desai and Pepe Escobar

17th Geopolitical Economy Hour, the show that examines the fast-changing political and geopolitical economy of our time. Video and transcript.

Michael Hudson — On Finance, Real Estate And The Powers Of Neoliberalism
Multipolarity: China, Russia, Israel, India, and the difficult birth of a new world
Michael Hudson, Radhika Desai and Pepe Escobar

Russia, China Unite Against US Empire — Dmitri Simes, Jr. interviews Michael Hudson

Transcript. Originally broadcast at New Rules on Rumble.

Naked Capitalism
Russia, China Unite Against US Empire

Dmitri Simes, Jr. interviews Michael Hudson

Pepe Escobar — Russia, China Map Out New Economic Order in Beijing

Putin, Xi and the guests at the Belt and Road Forum made it quite clear this is essentially about new commodity supply chains; new and improved Maritime Silk Roads; and bypassing Western-controlled choke points – as the (attached) map shows. It’s all leading to an interconnected maze featuring BRI, BRICS, EAEU and SCO.

The Russia-China-led BRICS 11 – and beyond (Putin gave a hint that Indonesia will become one of the new members in 2024) is already turning all Mackinder-drenched fantasies upside down, on the way to uniting Eurasia and configuring Afro-Eurasia as an extended, peaceful, predominant Heartland.

Sputnik

Pepe Escobar: Russia, China Map Out New Economic Order in Beijing

"Paying For Two Wars" — Brian Romanchuk

 Politics rules.

This leaves the left with two options: either accept fiscal orthodoxy and try to win elections on the argument that the other side is being hypocritical, or hop into the Modern Monetary Theory camp and argue that the only real constraint is the tolerance of inflation. Of course, the establishment centre-left is generally going with the first option, and is discovering that electorates do not really care that much about hypocrisy.

Bond Economics
"Paying For Two Wars"
Brian Romanchuk

MMTed goes manga—The Smith Family — Bill Mitchell

"The medium is the message." (Marshall McLuhon) See also The Medium is the Massage.

Taking Warren Mosler's business card analogy a step up in the communications and public education game in an era of "infowar" as an ongoing battle for hearts and minds.

William Mitchell — Modern Monetary Theory
MMTed goes manga – The Smith Family
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Chicken prices hit record highs under Biden administration as US inflation keep beef, pork out of reach

 

Biden people are just going to have to keep telling their CB to increase the overnight risk free rate to reverse this…

Chicken prices hit record highs under Biden administration as US inflation keep beef, pork out of reachhttps://t.co/YjPRc4Lt76

— stanley stack (@stack_stan37447) October 19, 2023

Truflation

 

This index continues to reduce YoY… Biden Fed still very “hawkish!”…

Today's CPI Data by Truflation.

🇺🇸 2.21%
🇬🇧 7.41%

More: https://t.co/xclS0apCd0 pic.twitter.com/d0iS0kJNXL

— Truflation (@truflation) October 18, 2023

Scotonomics — Moving past straw-man version of Modern Monetary Theory

Good summary.

The National
Scotonomics: Moving past straw-man version of Modern Monetary Theory

Scotonomics

Launching the CofFEE Financial Resilience Barometer Version 1.0 — Bill Mitchell

It’s Wednesday and while there is a lot to write about, I am prioritising the release today of our latest research at the Centre of Full Employment and Equity (CofFEE). The release of what we are calling the – CofFEE Financial Resilience Barometer – Version 1.0 – is part of a research collaboration I have with Professor Scott Baum at Griffith University. We have Australian Research Council funding for the next three years to explore regional resilience in the face of economic shocks, particularly after the massive disruptions from the Covid pandemic. Today we release the first output of that research. I also consider other matters today and the usual Wednesday music segment comes with a song from a leading Palestinian singer.

William Mitchell — Modern Monetary Theory
Launching the CofFEE Financial Resilience Barometer – Version 1.0
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

MMT the Movie — Lars P. Sy

Finding the Money follows economist Stephanie Kelton on an exploration of Modern Monetary Theory.

Also appearing in the movie are Pavlina R. Tcherneva, L. Randall Wray, Mathew Forstater and Fadhel Kaboub.

Lars P. Syll’s Blog
MMT the Movie
Lars P. Syll | Professor, Malmo University

The de-risking narrative – another in the long line of neoliberal ruses — Bill Mitchel

There have been several interrelated strands in research and practice associated with the dominance of neoliberalism over the last decades. The problem has been that these approaches have been as much enthusiastically promoted by social democratic or progressive forces as they have conservatives. Indeed, conservative political forces have gone down the ‘Trumpian’ far right sink hole and the social democratic parties have moved into the political space vacated – that is, further right than centre. Over the years we have been confronted with social entrepreneurship, new regionalism, corporate social responsibility and self regulation, volunteerism, light touch regulation and more – as part of a so-called ‘Third Way’ where class divisions are dead and the ‘market’ is supreme. More recently, so-called progressive politicians have been touting the ‘de-risking’ narrative as a way of fixing the mess left by the other Third Way approaches. Accordingly, the role for government is to de-risk the vagaries and flux of capitalism, so the entrepreneurs can make profits with surety and if there are issues the government will bail them out. It is a disastrous denial of government responsibility and will fail just as surely as all the rest of the ruses have combined to create the mess societies are in around the globe....

William Mitchell — Modern Monetary Theory

The de-risking narrative – another in the long line of neoliberal rusesThe de-risking narrative – another in the long line of neoliberal ruses
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

The geopolitics of Al-Aqsa Flood — Pepe Escobar

Global focus just shifted from Ukraine to Palestine. This new arena of confrontation will ignite further competition between the Atlanticist and Eurasian blocs. These fights are increasingly zero-sum ones; as in Ukraine, only one pole can emerge strengthened and victorious.

More on the intersection of geopolitics and geoeconomics. Unfortunately, the direction is toward military-technical solutions.

The Cradle

The geopolitics of Al-Aqsa Flood

Pepe Escobar

Xu Gao: China's historical, unitary framework implies central govt responsibility for local govt debt — Jia Yuxuan, Peiyu Li, and Zichen Wang

There's no moral hazard: Chief Economist of Bank of China International (China) breaks down China's local govt debt into three dimensions: data, the "China model", and central-local govt relationship.

Long and detailed article on how China's government finance works.

In reality, the key determinant of government debt sustainability does not lie with the size of the debt but rather factors like inflation and international trade balances. As long as inflation remains subdued and international trade remains robust, domestic demand will not outstrip supply capacity, ensuring sustainability of domestic government debt. Presently, China faces deflationary pressures and consistently maintains a current account surplus, so the sustainability of China's government debt does not pose as a problem.

However, within the context of an overall healthy government debt level, the significant disparity between central government debt (low) and local government debt (high) in China merits attention. Based on data from the IMF's Global Debt Database (GDD), the 2022 average share of central government debt in total government debt worldwide stands at 89%, with a median of 96%. This means that in most countries, government debt is primarily composed of central government debt. In contrast, the share of central government debt to total government debt in China ranges from 19% to 27%, by different calculation methods — significantly lower than the global norm. Even if local government bonds issued by the central government were categorized as part of central government debt, this ratio would only increase to a range of 46% to 65%, still below the international average.

Compared to national bonds issued by the central government (including local government bonds issued by the central government), local government debts in China are incurred through myriad channels, suffer from a lack of transparency, and carry relatively high financing costs. Consequently, while the overall volume of China's government debt may not be problematic, there is indeed significant debt risk in the local governments of certain regions. Starting in 2020, interest rates on local government investment bonds in some regions have witnessed sharp increases, leading to widened yield spreads and indicating the local government debt risks in these areas....

The East Is Read

Xu Gao: China's historical, unitary framework implies central govt responsibility for local govt debt
Jia Yuxuan, Peiyu Li, and Zichen Wang

Keynes and the Marxists — Nathan Tankus

For those interested in Keynes and "Keynesianism," and Marx and "Marxism." Nathan Tankus displays  his characteristically impressive grasp of the subject he is analyzing.

Jacobin
Keynes and the Marxists
Nathan Tankus, MMT economist

The story behind Fiat Socialism — Carlos García Hernández

Carlos García Hernández explains how he came up with the idea for his concept of fiat socialism that led to writing book based on MMT.

Fiat Socialism was recently published and it is also available for subscribers to read as an ebook at Scribd.

The Gower Initiative for Modern Money Studies
The story behind Fiat Socialism
Carlos García Hernández, author of Fiat Socialism: Achieving the goals of socialism through modern monetary theory. Carlos lives in Spain.

See also

The Gower Initiative for Modern Money Studies
Fiat Socialism

Carlos García Hernández

Also

Brave New Europe
Carlos Garcia Hernández – Spain’s New Coalition: Neo-liberalism with a Heart

Summers Says ‘Energizer Bunny’ Economy Signals Fed Hikes Failing

 

“Energizer Bunny economy!”  Another figure of speech…   This is what you get from these people… every time…

Michael Hudson — A BRICS+ Bank: How Would It Really Function?

The issue is an alternative payments system and not an alternative currency.

Naked Capitalism
Michael Hudson: A BRICS+ Bank: How Would It Really Function?
With introduction by Yves Smith

Debt-pushing as financial inclusion — Jomo Kwame Sundaram

Like most U.S. appointees to head the [World] Bank, Banga had no experience or earlier interest in development finance. Now, he is obliged to pursue U.S. interests and agendas. He has already announced he will rely on the private sector for funds and ideas....

Neo-feudalism. 

MR Online
Debt-pushing as financial inclusion
Jomo Kwame Sundaram
Originally published: IPS News on October 4, 2023

Yu Yongding calls on Beijing to stimulate growth via fiscal expansion, believes 6% growth achievable — Yixiu Wei, Shangjun Yang, and Zichen Wang

The former adviser to China's central bank laments policy was influenced by supply-siders and the Maastricht criteria.

Pekingology
Yu Yongding calls on Beijing to stimulate growth via fiscal expansion, believes 6% growth achievable
Yixiu Wei, Shangjun Yang, and Zichen Wang

IMF paper on Africa exemplifies why the mainstream approach is problematic — Bill Mitchell

During the – 1997 Asian financial crisis – when the IMF intervened and imposed harsh structural adjustment packages on the impacted countries (cuts in spending and interest rate hikes), we learned that IMF officials would swan in from Washington to, for example, Seoul, for a weekend, hole up in expensive hotels and by the end of the weekend profess to know everything about the country and what was good for it. Austerity followed. This is the way the IMF work. They apply mainstream New Keynesian macro theory on a one-size fits all basis ignoring history, culture, institutional specificity and all the rest of the nuances and complications that should be taken into account when appraising a situation in some nation. So for them, spending a day or so in some expensive hotel was the perfect place for them to ‘know the country’ – good food, good wine, air conditioning – what more is required. The problem is that besides the specifics that always need to be considered, the overriding theory is not fit for purpose, which is why the application of the IMF-model with the SAPs has been a uniform disaster for nations. The IMF though continues to operate in this vein. I read a report yesterday about sub-Saharan Africa written by a series of IMF officials most of whom seem to be French citizens who have gone to the best universities, who advocate harsh fiscal policy shifts in the poorest nations. I am sure none of their jobs or wages are at stake.…

William Mitchell — Modern Monetary Theory

IMF paper on Africa exemplifies why the mainstream approach is problematic
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bard — Finding the Money: New Documentary on the Paradigm-Shifting Modern Monetary Theory Features Levy Scholar Stephanie Kelton and Bard Economists

Finding the Money, a new film by Maren Poitras, follows economist Stephanie Kelton, research associate at the Levy Economics Institute of Bard College, on an exploration of Modern Monetary Theory—the heterodox economic policy model that reframes our understanding of government funding, spending, and national debt. “An alternative story of money will revolutionize our conception of what we as a society believe we can afford and can achieve,” says the filmmaker. Bard economists featured in the film include economics professors and Levy scholars Pavlina R. Tcherneva and L. Randall Wray, and Levy research associates Mathew Forstater and Fadhel Kaboub. This past weekend, Finding the Money had its world premiere at the 2023 Woodstock Film Festival with Kelton, Wray, Tcherneva, and Forstater all in attendance. 

Bard
Finding the Money: New Documentary on the Paradigm-Shifting Modern Monetary Theory Features Levy Scholar Stephanie Kelton and Bard Economists

How to pay for saving the world: Modern Monetary Theory for a degrowth transition — Christopher Olk, Colleen Schneider, Jason Hickel

Highlights

• Degrowth and Modern Monetary Theory form a strategic symbiosis for addressing social and ecological crises 
• Public spending on social and ecological objectives is not constrained by tax revenues or GDP 
• MMT needs to incorporate ecological limits to production and productive capacity
• Targeted fiscal and monetary policies can ensure macroeconomic and price stability during a degrowth transition 
• Policy priorities include a job guarantee, credit regulation, price controls, tax reforms, and universal public services
• An MMT-informed degrowth transition requires more democratic control over monetary policy and financial system governance

Abstract

Degrowth lacks a theory of how the state can finance ambitious social-ecological policies and public provisioning systems while maintaining macroeconomic stability during a reduction of economic activity. Addressing this question, we present a synthesis of degrowth scholarship and Modern Monetary Theory (MMT) rooted in their shared understanding of money as a public good and their common opposition to artificial scarcity. We present two arguments. First, we draw on MMT to argue that states with sufficient monetary sovereignty face no obstacle to funding the policies necessary for a just and sustainable degrowth transition. Increased public spending neither requires nor implies GDP growth. Second, we draw on degrowth research to bring MMT in line with ecological reality. MMT posits that fiscal spending is limited only by inflation, and thus the productive capacity of the economy. We argue that efforts to deal with this constraint must also pay attention to social and ecological limits. Based on this synthesis we propose a set of monetary and fiscal policies suitable for a stable degrowth transition, including a stronger regulation of private finance, tax reforms, price controls, public provisioning systems and an emancipatory job guarantee. This approach can support broad democratic mobilization for a degrowth transition.

Science Direct

Ecological Economics
How to pay for saving the world: Modern Monetary Theory for a degrowth transition
Christopher Olk, Colleen Schneider, Jason Hickel

ht/ Naked Capitalism

 

Are the talk shows on Russian state television just yes-men to power? Are the Duma parties other than the governing party United Russia just poodles that never bark, much less bite? Gilbert Doctorow

This post segués into being mostly about the Russian economy and specifically, the neoliberal versus "other" factions. The Putin government is mostly neoliberal economically. Gilbert Doctorow sees that as on the way out, which would be a good thing from the MMT point of view. The central bank head, Elivira Nabiullina, is the chief neoliberal and a diehard monetarist.

Gilbert Doctorow — International relations, Russian affairs
Are the talk shows on Russian state television just yes-men to power? Are the Duma parties other than the governing party United Russia just poodles that never bark, much less bite?
Gilbert Doctorow

An Order of Men — Peter Radford

Peter Radofrd plumbs what is really going on in economics?

The Radford Free Press
An Order of Men
Peter Radford

See also

Open Democracy

Conspiracy theories aside, there is something fishy about the Great Reset

Ivan Wecke

Naked Capitalism

No Energy Transition Unless Tech Can Make It Cost Competitive: BlackRock

Julianne Geiger, Oilprice.com

Russia in Global Affairs

Global Encirclement and Prospects of Socialism in the 21st Century

Annamaria Artner, Institute of World Economics, Budapest, Hungary

Centre for Economic and Regional Studies, Senior Research Fellow

Why The Government Has Infinite Money — Second Thought (video 18.35)

MMT-based. 

Why The Government Has Infinite Money
Second Thought

h/t Peter Pan in the comments