China is ‘world’s sole manufacturing superpower’, with 35% of global output — Ben Norton

China’s state-led economic development model and robust industrial policy has transformed it into what an influential European think tank calls “the world’s sole manufacturing superpower”, making up 35% of global gross production – more than the 9 next largest manufacturers combined.…

China has overseen world-historic economic growth through a government-led development model, in which state-owned enterprises control the natural monopolies and “commanding heights” of the economy, state-owned banks give favorable loans to strategic industries, and the state’s robust industrial policy helps the country move up the value chain toward higher value-added forms of production.

Geopolitical Economy

China is ‘world’s sole manufacturing superpower’, with 35% of global output
Ben Norton

See also

Chartbook

Chartbook Carbon Notes 10: In China, clean energy is now THE driver of overall economic growth

Adam Tooze

Wishful thinking

 

It’s wishful thinking to think it’s being driven by wishful thinking…

The EU's idea of the reform of the fiscal framework is unworkable in practice. It will lead to recession and crises and higher public deficits and debts. Instead of building the reform on hard science (incl. accounting & empirical observation), it is driven by wishful thinking.

— Dirk Ehnts (@DEhnts) January 30, 2024

It’s being driven by a type of academic practice that doesn’t exist in the “hard sciences “…

Anything we can actually do, we can afford — Bill Mitchell

I often make the point in talks that the fictional world that mainstream economists promote leads to poor decisions in the real world by our policy makers. We saw that in the 1980s and 1990s with the large scale privatisations of public enterprises, touted as employment-enriching, productivity-boosting strategies to provide ‘more money for government to spend on welfare’. We now have enough data to know that in almost all the examples the promises have not been fulfilled and the outcomes worse than what would have been had the enterprises been maintained in the public sector and motivated to provide public service rather than private profit. The same mistake is being made with the response to the climate emergency. Economists and commentators are claiming we need to ‘repeat the privatisations’ to get enough investment cash to facilitate the necessary restructuring. They are wrong and if governments, operating on the assumption that they do not have ‘enough cash’, rely on private funding for climate initiatives then the outcome will be poor for societies.

I have been in London for the last several days and my conversations with people in politics and related have all suggested to me that there are very few people who are prepared to challenge the mainstream economic consensus….

William Mitchell — Modern Monetary Theory

Anything we can actually do, we can afford
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Pepe Escobar: Five Variables Defining Our Future

 Pepe Escobar relies heavily on Michael Hudson's economic analysis for his five "variables."

Sputnik International

Pepe Escobar: Five Variables Defining Our Future
Pepe Escobar

This Is How Money Works (Video) — Dave Johnson

For the record. Warren Mosler.

Seeing the Forest
This Is How Money Works (Video)
Dave Johnson

Lower British fiscal deficit gives the central government no more or no less capacity to net spend to reduce unemployment — Bill Mitchell

Today, I reflect on the latest public finance data released by the British Office of National Statistics which shows the fiscal deficit is smaller than expected. Even progressive journalists have written this up as providing more scope for pre-election largesse to be provided. The fact that the fiscal balance is lower provides no more or no less scope for the government to net spend. The relevant questions that should be answered before such an assessment can be made are ignored by the journalists, including the fact that the unemployment rate is rising and the supply-driven inflation is falling fast.

William Mitchell — Modern Monetary Theory

Lower British fiscal deficit gives the central government no more or no less capacity to net spend to reduce unemployment
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Civil society is in jeopardy in the UK as funding cuts erode local government capacity — Bill Mitchell

I keep hearing from friends who live in Britain that I will be shocked when I get there on Thursday of this week after a nearly four year absence. One friend, who has just returned said that the deterioration in the public infrastructure is now fairly evident. Despite my absence, I have been keeping a regular eye on the data and so these anecdotal reports and reflections come as no surprise. It is obvious that the Tory government has sought a depoliticisation strategy by cutting local government spending capacity as a way of diverting blame for the consequences of their austerity push. The problem now is that after 13 or so years of Tory rule, the cuts are eating into the very essence of civil society in Britain. Like all these neoliberal motivated cuts, the cuts to council grants will prove to be myopic. The dystopia they are creating will come back to haunt the whole nation.

Something similar happened in the US since the 60s (Vietnam era). The deterioration in public infrastructure has continued. The problems have bipartisan recognition but they have not yet been dealt with effectively because of an erroneous notion of affordability. Ironically, funding existing and projected needs adequately would draw forth increased supply of resources, create new jobs, and stimulate demand without necessarily being inflationary.

MMT shows how financial affordability is never the problem for a monetary sovereign if real resources are available to address the issues. Of course, this is some competition in allocation of real resources to consider also.  The constraint is not the availability of funding but rather of inflation if demand outstrips the availability of resources to meet it.

Then it becomes a matter of setting priorities. This is a political matter involving many influences. A big reason that analysis of priorities differs among interest groups is incentives and in addition, different parties use different frameworks for framing the analysis.

William Mitchell — Modern Monetary Theory
Civil society is in jeopardy in the UK as funding cuts erode local government capacity
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Why The "Friedman Thermostat" Analogy Should Be Uncomfortable For The Mainstream — Brian Romanchuk

 More on "inflation" and the policy rate.

Bond Economics
Why The "Friedman Thermostat" Analogy Should Be Uncomfortable For The Mainstream
Brian Romanchuk

Russia And Iran Finalize 20-Year Deal That Will Change The Middle East Forever — Simon Watkins

• Iran’s Supreme Leader Ayatollah Khamenei gave his official approval to a new 20-year comprehensive cooperation deal between the Islamic Republic of Iran and Russia.
• The agreement will replace the 10-year-deal signed in March 2001 and has been expanded not only in duration but also in scope and scale.
• The new deal includes far-going agreements on defense and energy.

Iran previously concluded extensive trade deals with China, as well as a "strategic partnership." Iran is also approved for membership in BRICS, SCO and BRI.

Oilprice.com
Russia And Iran Finalize 20-Year Deal That Will Change The Middle East Forever
Simon Watkins

QT

 

We can’t forget this QT is still happening in the background too… in view of S&Ps recovering back to a old 2 year high this week…

Fed steadily keeps working this balance down and it at least takes some reserve asset pressure off “money center” banks that have ample/excess reserves… 

This “unprinting money!” is supposed to be bearish according to monetarists… yet equity index values are currently back to all time highs after a 2 year hiatus…

Concomitant the daily RRP sub-account is being reduced… daily RRP account balance is down to $600B having been $2.3T a year ago …. but still any non zero RRP balance means reserve assets are flowing towards banks that don’t have the regulatory capital to posses them and accordingly have to figure out how to divert them or otherwise apply reduced values to other assets they posses… but at least this daily RRP amount has been significantly reduced over the past year…

Fed has no stated plans to modify the current QT policy…

The Fed's balance sheet is now at its lowest level since March 2021, down $1.3 trillion from its peak in April 2022.

How much more QT is needed to unwind the massive QE from March 2020- April 2022?

$3.5 trillion. pic.twitter.com/9KVuF6efM1

— Charlie Bilello (@charliebilello) January 19, 2024

Waller Comments — Brian Romanchuk

More on "inflation."

Bond Economics
Waller Comments

Brian Romanchuk

Stephanie Kelton Thinks the Conventional Wisdom Is Changing — Jacobin's Lukas Scholle interviews Stephanie Kelton

Economist Stephanie Kelton has made a name for herself by insisting that deficits don’t matter. In an interview with Jacobin, she argues that we're seeing a paradigm shift away from free-market dogmas and austerity.

Jacobin
Stephanie Kelton Thinks the Conventional Wisdom Is Changing
Lukas Scholle interviews Stephanie Kelton, professor of public policy and economics at Stony Brook University,

Michael Hudson on the state of the world

Danny Haiphong interviews Micheal Hudson. Video and transcript.

Michael Hudson — On Finance, Real Estate And The Powers Of Neoliberalism
Credit the Economic Planner
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

India and Global Left interviews Michael Hudson. Video and transcript.

India and Global Left
Perfecting Imperialism

Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

The Smith Family manga continues—Episode 10 is now available — Bill Mitchell

Episode 10 in our new Manga series – The Smith Family and their Adventures with Money – is now available. We are approaching the climax for Season 1.

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 10 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

Bidenomics

 Nice rant… Dems in big trouble….

Best rant ever. 🔥🔥🔥

“4 years ago my rent was $1,200 a month… it’s now $2,100!”

“My car insurance from 4 years ago until now…has gone from $130 to $240 per month!”

“My electric bill was averaging $45, now it's averaging $125!”pic.twitter.com/5Zo06zIqNp

— I Meme Therefore I Am 🇺🇸 (@ImMeme0) January 17, 2024

Inequality Inc. How corporate power divides our world and the need for a new era of public action — OXFAM International

Overview

Since 2020, the richest five men in the world have doubled their fortunes. During the same period, almost five billion people globally have become poorer. Hardship and hunger are a daily reality for many people worldwide. At current rates, it will take 230 years to end poverty, but we could have our first trillionaire in 10 years.

This report shows how a huge concentration of global corporate and monopoly power is exacerbating inequality economy-wide. Seven out of ten of the world’s biggest corporates have either a billionaire CEO or a billionaire as their principal shareholder. Through squeezing workers, dodging tax, privatizing the state and spurring climate breakdown, corporations are driving inequality and acting in the service of delivering ever-greater wealth to their rich owners. To end extreme inequality, governments must radically redistribute the power of billionaires and corporations back to ordinary people. A more equal world is possible if governments effectively regulate and reimagine the private sector.…

OXFAM Policy and Practice

Inequality Inc. How corporate power divides our world and the need for a new era of public action
Rebecca Riddell et al, OXFAM International

China is the world’s sole manufacturing superpower — Richard Baldwin

Read Yves Smith's intro for a significant qualifier.

Naked Capitalism

China is the world’s sole manufacturing superpower

Richard Baldwin | Professor of International Economics IMD Business School, Lausanne; VoxEU Founder & Editor-in-Chief VoxEU.org

Originally at VoxEU

Japan inflation now falling fast—monetary and fiscal policy settings have been vindicated — Bill Mitchell

The latest information from Japan suggests that in December 2023, its inflation fell sharply for the second consecutive month and that one might conclude the inflation episode is coming to an end. The Bank of Japan made the assumption that this supply-side inflation was temporary and would subside fairly quickly once those constraints eased. And they were right. All the other central banks somehow convinced themselves that the inflation was demand-driven and have been needlessly pushing up interest rates. The experiment is nearly over and I think it is clear that the Japanese path was the sound one. At that point, the New Keynesian academics and officials should resign. After that, as it is Wednesday, we have some music to soothe our souls....

William Mitchell — Modern Monetary Theory
Japan inflation now falling fast – monetary and fiscal policy settings have been vindicated
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Links — 17 Jan 2024

Economics fails not merely to account for biophysical limits to growth but to account for actual and potential alternative provisioning systems. Instead, talk of ‘the economy’ makes an implicit ontological claim that there is only a singular form of modern economy: the capital accumulating, price-making market economy. Economics has then become limited to a discussion of market capitalism and how it can be maintained in light of its evident failings. Hence, a new critical orthodoxy has arisen that seeks to maintain ‘business as usual’. Recognising that there is considerable potential for alternatives to current economic systems is a first step beyond this orthodoxy. Economics must go much further to become a science of social ecological provisioning that recognises and provides for diverse alternatives to be actualised.

The bottom line is how alternative economies as ethical social provisioning systems can be made to work, how current economic and political structures operate to prevent change to such systems and how we get from here to there.

Real-World Economics Review Blog
Alternative provisioning systems

Clive Spash and Clíodhna Ryan and RWER issue 106

The lead story today is about Xi Jinping’s speech at the opening of a study session at the Central Party School. Xi said that the path of financial development with Chinese characteristics not only follows the objective laws of modern financial development but also has distinctive characteristics that are suitable for our country’s national conditions. It is fundamentally different from the Western financial model. We must strengthen our self-confidence and continue to explore and improve in practice to make this path wider and broade…

"With Chinese characteristics" means primarily is controlled by the Communist Party. While this sounds nefarious to Western ears in capitalist countries, what is means is that the party tasked with representing the needs of the people is in control of the commanding heights of the economy, which includes finance. The implies that the capitalist class cannot control the commanding heights and thereby the provisioning system, as it capitalist countries under the command of the ownership and managerial classes, with "democracy" being a veneer over the control of the donor class through campaign finance and lobbying.

Tracking People's Daily

What is the Path of Financial Development with Chinese Characteristics? - Li Qiang's Pitch to MNCs in Davos

Manoj Kewalramani

The path for financial development with Chinese characteristics is different in nature from the mode of Western financial development.

Ginger River Review

A quick review Xi Jinping's speech on the development of China's financial sector

Jiang Jiang, Giustino Jiao, and Yiting Zhang

I apologize for the length and somewhat arbitrary nature of the following, it is an accumulation of thoughts as I react to the notion expressed by an acquaintance that the term “neoliberalism” has little to no explanatory power for the development of American policy since the Johnson years …

The Radford Free Press

Pondering Neoliberalism

Peter Radford

But what about the resource side? Where did all this money go? Why, for example, can the Lebanese Armed Forces, not the wealthiest military in the world, have a dozen Brigades deployed on operations, as well as numerous independent regiments, whereas the British, with their massively greater resources and a larger Army, would be pushed to deploy two? And in this, the British are the norm, rather than the exception.

The paradox has no one single cause, but is probably due more than anything else to the move since the 1980s towards managing defence as budgets, rather than programmes. Let me expand on that slightly gnomic statement. In the private sector, it is accepted that companies can and will manipulate their financial statements to inflate their profits and minimise their losses where possible. It’s also accepted that there is a distinction between the financial picture (a company makes increased profits by selling off assets) and the reality (it is doing so in a desperate attempt to avoid going out of business.) In a world where only profits and the share price matter, it is at least a coherent strategy for the short term. If you think about it, it’s also a ridiculous strategy for the public sector, since what matters, and what the voters want, is output for the long term. But from the 1980s onwards, beginning in Britain and spreading rapidly, the idea of managing the defence programme in terms of budgets, and the “efficient” spending of money took over. This meant, in effect, abandoning the previous pattern of managing programmes for capability output, and managing them instead according to budgetary limits. And as time passed, the poisonous theories of management consultants about “efficiency” began to seep into the public sectors of a number of countries....

Trying to Understand the World

The Wrong Stuff — Don't even think about rebuilding western militaries.

Aurelien

A rentier economy under financial and managerial capitalism has replace the former productive economy under industrial capitalism.

Michael Hudson

Debt Makes the World Go Around

Radhika Desai and Michael Hudson

The social costs of greenhouse gas emissions in health care are astounding — and we’ve been ignoring them completely — David Introcaso

The social cost of greenhouse gas (GHG) emissions, considered the single most important measure in addressing the climate crisis, is generally defined as an estimate of societal damages, including health harms, resulting from unpaid or externalized GHG emissions. Researchers have been calculating this cost for several decades. Federal agencies began regularly incorporating the social cost of these emissions in 2008 — today, more than 80 federal regulations reflect its use.

Despite the fact that GHG emissions are defined as the greatest threat to human health this century, the social cost of the health care industry’s emissions has somehow escaped the interest of the Department of Health and Human Services (HHS).

Negative externality. "Privatize the gains, socialize the losses."

While not MMT directly, although it concerns MMT as a matter of accounting, the article is illustrative of the consequences of ignoring true cost in setting the market price. The result is negative externality, the cost of which falls on society.

The Hill
The social costs of greenhouse gas emissions in health care are astounding — and we’ve been ignoring them completely 

David Introcaso

h/t Naked Capitalism

A Response To A Question About Post-Keynesian Interest Rate Theories (...And A Rant) — Brian Romanchuk

I got a question about references for post-Keynesian theories of interest rates. My answer to this has a lot of levels, and eventually turns into a rant about modern academia. Since I do not want a good rant to go to waste, I will spell it out here. Long-time readers may have seen portions of this rant before, but my excuse is that I have a lot of new readers....

Bond Economics

A Response To A Question About Post-Keynesian Interest Rate Theories (...And A Rant)
Brian Romanchuk

Year of the Dragon: Silk Roads, BRICS Roads, Sino-Roads — Pepe Escobar

Pepe Escobar's forecast on Eurasian development in the coming year.

Strategic Culture Foundation (sanctioned by the US Treasury Department)
Year of the Dragon: Silk Roads, BRICS Roads, Sino-Roads

Pepe Escobar

If SCF is blocked, you can access the article at The Alternative World here.

“Inflation”

This aggregate general price increase isn’t going to be reversed by November by keeping the current risk free rate static… so the Biden people are stuck with this politically … and the inequity of economic outcomes being caused by this high risk free policy rate they continue to impose…

Democrats sacrificing their political prospects in a deranged defense of art degree monetarism…

🇺🇸US Inflation Rate: Aggregated

Average American purchasing power eroded by 22.37% Since Jan 2020. pic.twitter.com/1TreF01Air

— Truflation (@truflation) January 8, 2024

"Medieval doctors drew blood; modern central bankers raise interest rates" — Bethesda 1971

Daily Kos? Yep. At least some of the so-called "left" are waking up?

The quotes is from a recent piece by James K. Galbraith and the post refers to Stephanie Kelton for explanation.

Daily Kos

"Medieval doctors drew blood; modern central bankers raise interest rates"
Bethesda 1971

So-called ‘Team Transitory’ declared victors — Bill Mitchell

On June 8, 2021, the UK Guardian published an Op Ed I wrote about inflation – This article is more than 2 years old:

Price rises should be short-lived – so let’s not resurrect inflation as a bogeyman. In that article, and in several other forums since – written, TV, radio, presentations at events – I articulated the narrative that the current inflationary pressures were transitory and would abate without the need for interest rate increases or cut backs in net government spending. In the subsequent months, I received a lot of flack from fellow economists and those out in the Twitter-verse etc who sent me quotes from the likes of Larry Summers and other prominent mainstreamers who claimed that interest rates would have to rise and government net spending cut to push up unemployment towards some conception they had of the NAIRU, where inflation would stabilise. I was also told that the emergence of the inflationary pressures signalled the death knell for Modern Monetary Theory (MMT) – the critics apparently had some idea that the pressures were caused by excessive government spending and slack monetary settings which demonstrated in their mind that this was proof that MMT policies were dangerous. Of course, they were just demonstrating their ignorance (deliberate or otherwise) of the fact that there are no MMT policies as such. MMT is an analytical framework not a policy regime. Anyway, in the last week, on mainstream economist seems to have recanted and has admitted that “Those who believed inflation would be transitory were proven right, and those who demanded the sacrifice of mass unemployment proven wrong”. For those E-mail warriors who think it is okay to send abusive messages to people you don’t know (or abusive messages in general) please do not send me apologies!...

William Mitchell — Modern Monetary Theory
So-called ‘Team Transitory’ declared victors
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Also at Bill's

Welcome to 2024 – the 20th year of my blog

The Conceptual Roots of the Global South’s Debt Crisis — Ndongo Samba Sylla

Modern Monetary Theory provides a useful lens through which to view the mounting sovereign-debt crisis in the developing world. It sheds light on why low- and middle-income countries borrow in foreign currencies, while also suggesting that rich countries could provide significant relief if they so desired....

MMT to the rescue from the debt trap. Is the debt trap due to a misunderstanding of economics and finance, or is it policy? 

Project Syndicate
The Conceptual Roots of the Global South’s Debt Crisis

Ndongo Samba Sylla

Central bankers on their ability of banks to create money out of thin air — Richard Murphy

Quotes and links to sources.

Funding the Future
Central bankers on their ability of banks to create money out of thin air
Richard Murphy

See also by Richard Murphy

Shouldn’t bankers know how banking works?

Predictions 2024 — Michael Hudson

Video and transcript.

Michael Hudson — On Finance, Real Estate And The Powers Of Neoliberalism
Predictions 2024
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

The Smith Family manga continues – Episode 9 is now available Bill Mitchell

Episode 9 in our new Manga series – The Smith Family and their Adventures with Money – is now available. We are approaching the climax for Season 1.

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 9 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

MMS London Event – Friday, January 26, 2024 — Bill Mitchell

As I previously indicated I am returning to Europe and the UK in a few weeks for the first time since the Covid pandemic began. I will provide further details in due course, but for now, here is a link to the first event I will be speaking at in London on Friday, January 26, 2024 that is organised by the wonderful women from GIMMS. See over for details and how you can get tickets to the event.

William Mitchell — Modern Monetary Theory

GIMMS London Event – Friday, January 26, 2024
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia