As has become abundantly clear during the last couple of years, it is obvious that most mainstream economists seem to think that Modern Monetary Theory is something new that some wild heterodox economic cranks have come up with. That is actually very telling about the total lack of knowledge of their own discipline’s history these modern mainstream guys like Summers, Rogoff and Krugman have.New? Cranks? Reading one of the founders of neoclassical economics, Knut Wicksell, and what he wrote in 1898 on ‘pure credit systems’ in Interest and Prices (Geldzins und Güterpreise) soon makes the delusion go away….
Lars P. Syll’s Blog
MMT — the key insightsLars P. Syll | Professor, Malmo University
https://news.sky.com/story/why-farage-getting-his-dream-of-net-zero-migration-would-probably-not-be-a-good-sign-for-the-uk-economy-13147745 "The (possibly surprising) answer is that for much of Britain's post-war history, it had negative net migration.
ReplyDeleteFor nearly every year from 1947 through to the early 1980s, there were more people emigrating from the country than coming in. This was not seen as a particularly positive story at the time."
Tom Hickey view on Net Zero Immigration steal skilled doctors endmeic malaria brain drain wrong agree wioth N Wilson?
“No MMTer denies that too much government spending can be inflationary”
ReplyDeleteThey somewhat have during the Democrat Biden administration…
None have cited the Democrat spending’s effect on the current figure of speech “inflation”…
Vickrey: “ Any crowding out that may occur is the result, not of underlying economic reality, but of inappropriate restrictive reactions on the part of a monetary authority in response to the deficit.”
ReplyDeleteHe thinks the figure of speech “crowding out!” is real too…
“Any [figure of speech] that may occur is the result, not of [something real] , but of inappropriate restrictive reactions on the part of a monetary authority in response to [a scientific abstraction] …”
ReplyDeleteNot ideal….
You can see how these Art Degree morons operate they start out with a figure of speech.., then contrast that figurative construct to the real … then criticize other Art Degree morons who take action based on those morons reification of a scientific abstraction…
ReplyDeleteSad…
Seasonal inflection points (they may vary a little from year to year):
ReplyDelete#1 3rd week in Jan.
#2 mid March
#3 May 5th
#4 mid-June
#5 July 21st
#6 2-3 week in October
About to hit #4
https://seekingalpha.com/instablog/910351-robert-p-balan/6029103-models-suggest-equities-ready-to-fall-and-10yr-yield-soon-rises-wait-for-post-fomc-to-offload
$ Moved higher to nearly 105 and looking at this seasonal inflection point in June. Looks to be going even higher for the next couple of weeks. Trading economics website still hasn't updated the lower foreign exchange reserves figure.
US second quarter taxes due June 15th …
ReplyDeleteBut that is also a big reserve drain from Depositories …
ReplyDeleteReserve assets move from Depositories to the TGA when taxes are paid …
Lowers Depository leverage allowing for higher values to be assigned to other Depository assets …
Might trade off …
Yup.
ReplyDeleteHow big a drain ?
If you give somebody £100, they spend it which is taxed at 20%, leaving the next person with £80 as income. They then spend that £80 which is taxed at 20%, leaving the next person with £64 as income. And so on until the entire £100 disappears and creates £100 of extra tax. All without changing the tax rate one single percent.
In reality pretty much whatever the tax rate, about 90% of government spending is taxed, and about 10% ends up as additional private sector savings.
All US tax rates haven't changed for about a decade. Infact, some have been cut but none have ever been raised. Those graphs alone would kill the tax payer money myth stone dead. When you think how much has been spent over the last decade and taxes haven't been touched.
Tax is a geometric progression, not a simple sum. So out of that geometric progression how much has been saved ?
With the deficit falling and they are spending $ 6 trillion a year. Will the tax drain be seasonally big again ?
More transactions, deficit falling = looks like it ?
I was going to spread bet the 10 year as per usual. But I'm off on my 2 month break next Sunday. So not going to bother, just going to take it easy and chill out and try and hide from the world for a few weeks.
ReplyDeleteWe'll know more tomorrow, but it looks like the Russians have opened up another front in the Sumy region to stretch the Ukrainians even further.
ReplyDeletehttps://m.youtube.com/watch?v=q0vcuMtr420
$ Moved from 104.62 to 105.33
ReplyDeleteAnother 29 pips and there is the 100 pips profit. The seasonal inflection point coming up should help it.
I just wanna throw something out there .....
I dunno if tracking the foreign exchange reserves release at the end of every month works or not. They defo mirror the $.
Because of Chris cooks oil $ standard theory.
I've been tracking intra day, weekly, monthly and yearly crude oil prices, graphed against the $. One definitely leads the other no matter what time series you use. Could be a licence to print money. You could even day trade it no problem at all. They also defo track each other after a very short lag.
Does one complement the other ?
How does the foreign exchange reserves complement Chris cooks oil $ standard theory ? Is it because the majority of foreign exchange reserves are driven by oil ?
In my head, my head is saying both can't effect the $ the way they do ? Yet, the real data shows they always do.
The crude oil price leads the $ since Trump was president and Chris cook says they moved to a $ oil standard.
Graph 1 year, graph 5 year, crude v's the $ and is as clear as day.
The foreign exchange reserves mirror the $
Just graph them against each other.
So the question has to be the following ....
A drop in crude oil prices produces a drop in the $ going by the real data. Does that then mean a drop in crude oil prices increases foreign exchange reserves which then mirrors the $ ?
If that theory is sound that a drop in the crude price increases foreign exchange reserves. Then it will make perfect sense. The question is does it ?
Is the US now on an oil $ standard ?
Always happens on the intra day as well when you follow it.
ReplyDeleteCrude oil goes from 75.898 to 78.258 between 15.00 and 21.00 pm.
From 23.00pm the $ goes from 105 to 105.38 the following morning.
It is a licence to print money if true gentleman.
ReplyDeleteAll the real data since Trump was president points in that direction.
This would also explain why MMT Macro 101 simply vanished.
ReplyDeleteHike interest rates weakens $.
Higher inflation weakens $.
None of this happened for the first time in years. It wouldn't if we are now on a oil $ standard.
"Hike interest rates weakens $."
ReplyDeleteAgainst what?
Why would higher interest rates weaken a currency? The purpose is to generate more savings exports. You only get a dynamic effect when the interest spending feedback overwhelms the production, taxation and loan repayment systems.
Because it helps with the inflation.
ReplyDeleteAs the increase cost of credit gets passed onto the consumer as higher prices. Ask Argentina or Turkey or Russia who's debt to GDP ratio is 17%.
Russia's core inflation rate is tracking their 16% interest rate and interest payments pay a very limited role in it. Interest payments only play a role if the debt to GDP is large enough to have an effect ?
The $ has not acted as we always predicted during previous rate hike cycles. It got stronger.
Here's Mike 7 years ago saying the exact same thing
https://m.youtube.com/watch?v=AFs4Bt8A33g&t=40s
Something has changed, this didn't happen this time around. I'm Just throwing out there using the real data what I think has changed. If it is true it is a licence to print money.
If US net exporter of crude in USD at higher prices then US seeing increased terms of trade…
ReplyDeleteShould soon be reflected in USD exchange rate…
"As the increase cost of credit gets passed onto the consumer as higher prices."
ReplyDeleteOnly if the cost is spent by those receiving the payment, otherwise it won't. Everybody wants higher prices. They have to be paid by somebody with money to be confirmed, otherwise there simply isn't a sale in the first place.
Again weaken against what? What pair are you tracking?
It is spent, that's why they are taking out the loan to spend it. If Coca Cola take out a loan and increase their prices to cover the increased cost people will still buy it. There are monopolies on so many things now with a few big players in each sector rigging prices between themselves it is very hard for consumers to avoid it. In both the public and private sectors. Consortium's rig prices between them on the high street.
ReplyDeleteNo pair just the $, you can just trade it on many platforms in different ways. Perfect if we are now indeed on a oil $ standard. Using a pair will just complicate things.
The real data shows the $ is tracking the oil price. If the price of oil when it decreases increases foreign exchange reserves then we have two data points to prove it.
Let's see what happens. I could be right going by the 5 year data oil v's the $ and all the data of $ v's foreign exchange reserves. It is very clear what is happening there.
Let's see what happens.
Meanwhile, back at the ranch Some very good graphs here supporting MMT theory.
https://seekingalpha.com/article/4698583-us-private-domestic-sector-prints-321-billion-surplus-pointing-to-better-markets-in-june?source=content_type%3Aall%7Cauthor_id%3A75635%7Cauthor_slug%3Aalan-longbon%7Cfirst_level_url%3Aauthor%7Csection_asset%3Aprofile_page_author_analysis%7Csection%3Aprofile_page_author
I missed the latest Levy Institute paper within the link but Alan spotted it.
The vast majority of consumers who go to out of town shopping centres for their monthly grocery shop and retail therapy are not faced with very much competition.
ReplyDeleteThey have about 3 supermarkets to choose from and 95% of the stores and restaurants in the shopping centre are run by consortiums.
Very hard for them to avoid the price increases overall.
"If Coca Cola take out a loan and increase their prices to cover the increased cost people will still buy it."
ReplyDeleteThat's a fallacy of composition. Aggregate that and people won't have the extra money to "still buy it".
The bankers have to spend their earnings to complete the circuit, or you get a flow drop that kills quantity.
"No pair just the $, you can just trade it on many platforms in different ways."
There has to be something it is trading against on whatever platform you're using. There has to be a denomination or it doesn't move at all. $1 is always worth 100 cents.
It's foreign *exchange* remember. Are you sure you're not seeing an artefact of a synthetic?
Back in the 1920’s a guy called Hotelling started to look at Monopolistic competition in terms of location and used the example of where would 2 ice cream sellers on a beach locate themselves. From a social point of view you would think they should locate themselves about one quarter way in on one side of the beach. The other seller would do the same at the other end of the beach. So that they divided the market in two and the consumers could access the ice cream. You would end up with a long beach with a seller at each end a quarter way in on the beach.
ReplyDeleteHotelling then says let’s assume the ice cream sellers are mobile and one ice cream sellers moved a bit closer to the centre. In terms of distance starts to steal some of the consumption of the other seller. Which then forces this seller to move a bit closer to the middle of the beach to try and get it back. Hotelling noticed that what happens is eventually you end up with both sellers right in the centre of the beach beside each other. This is not optimal from the stand point of those in the long beach that would like to buy ice cream. The social optimum for the consumers and that is have the seller’s spread out across the beach has been destroyed by the competition between the 2 sellers. The 2 sellers will eventually come to a monopolistic agreement regarding their prices.
Then Hotelling says what happens if a 3rd seller sets up on the beach. Everything becomes unstable as the 3 sellers set up in different places on the beach every day and prices become unstable. Until eventually all 3 end up in the same place in the beach and work together.
Why in cities you have districts that sell the same product. You would expect them to be all over the city but you end up with Jewellers all in one area. Pubs and nightclubs, shopping centres, DIY stores.
So when you get a big 3 or 4 in any sector what do they do. What do the energy companies do ?
They head to the centre of the beach and form a MONOPOLY and work it between themselves how to extract the most rent as possible and take turns at hiking prices for their services.
They turned the public sector into a rent extracting MONOPOLIES.
These out of town shopping centres are deliberate. It allows them to all move to the centre of the beach like the ice cream sellers.
It's foreign *exchange* remember. Are you sure you're not seeing an artefact of a synthetic?
ReplyDeleteThat's what I've been asking
I'll let you know how I get on. I'm just going to bet the movement of the $ index.
"Competition" is a mainstay of sports, not markets.
ReplyDelete