So what now we have Art Degree MMT Economics people teaching rudimentary Finance and Accounting Science 101 like this is some big revelation or something? Big deal … 🤔
assets___________BANK________liabilities
— Dirk Ehnts (@DEhnts) April 15, 2024
+ reserves + bank deposits
What happened? 🧐
But these JPM people are not winning the Art Degree argument though:
JUST IN: 🇺🇸 JPMorgan says high interest rates are driving inflation higher - Bloomberg pic.twitter.com/ui89mAh6RG
— Radar🚨 (@RadarHits) April 10, 2024
This guy is winning the argument:
.@lhsummers, former US Treasury Secretary and Wall Street Week contributor, says he's not surprised inflation rose again in March, but he says an interest rate cut in June by the Federal Reserve would be dangerous https://t.co/VVbO71W83N pic.twitter.com/enjnKsEm5Z
— Bloomberg TV (@BloombergTV) April 10, 2024
It’s Wednesday and we have discussion on a few topics today. The first relates to the new agreement between the European Parliament and the European Council that was announced on February 10, 2024, which purports to reform the fiscal rules structure that has crippled the Member States of the EMU since inception. The reality is that the changes are minimal and actually will make matters worse. I keep reading progressives who claim the EU fiscal rules are no longer operative. Well, sorry, they are and the temporary respite during the pandemic is now over and the new agreement makes that very clear. I also express disappointment that high profile progressives continue to misrepresent Modern Monetary Theory (MMT) as they advance their own agenda, which effectively provides support to the sound finance narratives. Then some updated health data which continues to support my perspective on Covid. And then some anti-fascist music. What’s not to like.William Mitchell — Modern Monetary Theory
Today, I am fully engaged in work commitments and so we have a guest blogger in the guise of Professor Scott Baum from Griffith University, who has been one of my regular research colleagues over a long period of time. He indicated that he would like to contribute occasionally and that provides some diversity of voice although the focus remains on advancing our understanding of Modern Monetary Theory (MMT) and its applications. Today he is going to talk about what responsible government spending should look like. Anyway, over to Scott …
The turn away from expansion, production and trade toward lending and speculation has precipitated decline for centuries
It’s Wednesday and I discuss a number of topics today. First, the ‘million simulations’ that Bloomberg apparently think show that there is an impending US bond market rout. Second, the way in which neoliberal-inspired legislation ensures the private energy providers can gouge prices and make huge profits in the face of a state-owned alternative. Third, my latest podcast with Real Progressives. Fourth, the crocodile tears from the Australian government concerning Gaza when they are effective supplying the means to kill our own citizens and tens of thousands of others. Finally, to calm down after all that some great jazz.…
Bloomberg published a ridiculous article yesterday (April 2) – A Million Simulations, One Verdict for US Economy: Debt Danger Ahead – which I thought might have been a delayed April Fool’s joke.…
I’m on my way back to Nairobi. I spent the last 3 days in Rome at a UN expert group meeting on SDG2 (Ending Hunger) at the FAO, in preparation for the 2024 High-Level Political Forum that will be help in July 2024. It was a bit ironic that the FAO building where we held the meeting used to be the Italian Ministry of the Colonies under the Mussolini regime, and my main message to the FAO was about decolonizing the global economic architecture is a prerequisite for achieving the SDGs, including SDG2 to end hunger. It is 2024, and the global food system reflects the legacy of colonial and post-colonial hierarchies. This blog is a brief summary of my main message to the FAO.…
For years, those who want selective access to government spending benefits (like the military-industrial complex and other parasitic sectors), while claiming the government cannot afford to provide adequate income support to the most disadvantaged citizens have used various ruses to give an air of authority or legitimacy to their claims. So in the UK, the lie in 1976 by the then Labour government that it was going to have to borrow from the IMF to stay solvent has been regularly wheeled out. In Europe, it was the ‘tournant de la rigueur’ (austerity turn) introduced by the French government of François Mitterrand in 1983 that effectively cancelled the commitment to the progressive – Programme commun – that is often cited as a demonstration of the limited capacity of governments to resist the global power of the financial markets. The fact that it was progressive governments that instigated these events made it more emphatic – the Left essentially swallowed the fictions introduced by the Right and the corporate elites that governments were now powerless against the power of the financial markets. The macroeconomic contest was essentially ceded to the conservatives and it has been that way since. There is now a new ruse that the elites are using that the progressives are also spreading – the Liz Truss Ruse. This apparently tells us that governments must appease the financial markets or face currency destruction and rising bond yields. Like its predecessors, there is no validity to the claims. But the Left is so bereft that it cannot see through the smoke and mirrors. And that is why the world is in the parlous state that it is – the contest of ideas is non-existent. It is a case of rinse and repeat – except all is happening is lies and posturing is being recycled....
The sequel.
The National (Scotland)Philip Pilkington turns the page on MMT?
https://twitter.com/philippilk/status/1772538175564447823
The US, like the UK, can’t go broke in their own currency. But if foreign lenders don’t buy into net bond issuance, USD will have to adjust to shrink the trade deficit. This will put upward pressure on inflation and is what the UK faced under Truss. Will Trump get Trussed?… pic.twitter.com/fDuYrC3Gzx
— Philip Pilkington (@philippilk) March 26, 2024
And there is indeed a ‘current account constraint’ – if you are a small open economy you need things you can sell in order to get the stuff you don’t have.MMT does recognize this constraint by treating it with more nuance.
MMT really applies, as many others suggest, uniquely to the US as it issues the world’s reserve currency.
If you are not the US and your Sovereign Currency is weak, it will drive import inflation so it really means that your currency is not properly sovereign.
- China introduced new guidelines to replace Intel, AMD chips and Microsoft Windows in government computers with domestic alternatives.
- The move is part of China's "xinchuang" strategy to achieve technological independence and reduce reliance on foreign technology.
- Analysts predict faster adoption of domestic server processors compared to PCs due to a less complex software ecosystem.
A brief note on the EU, Egypt, Palestine, and Copenhagen
MMT's man on the ground in the Global South.
Global South Perspectives—Reflections & Analysis by Fadhel KaboubInteresting post that deal with some of the same concepts as MMT but is not MMT. It's an interesting take. He has seen both sides, having grown up in a communist country (Yugoslavia). He is former hedge fund manager, commodities trader and author based in Monaco. He now blogs on geoeconomics and geopolitics at TrendCompass on Substack.
Alex Krainer's TrendCompassIn a keynote address to a conference on “Geopolitical Changes” at Kozminski University, Warsaw, on January 29, 2024, Professor James Galbraith called for economics to break with equilibrium dogma and re-found itself on the life principles that govern physics, biology and every existing mechanical and social system. Noting the distinguished presence of Professors Francis Fukuyama and E.S. Phelps, Galbraith called attention to the spectacular fallacies of “an end to history” and a “natural rate of unemployment,” arguing that these doctrines have helped blind our generation to the damage inflicted by rising resource costs and neoliberal policies of austerity and precarity, with dire consequences for households in wealthy societies, for their reproduction rates, and for the long-term viability of the species.
Transcript.
James K. Galbraith is an MMT-friendly economist.
Post-Neoliberalism—Pathways for Transformative Economics and PoliticsI have received several E-mails over the last few weeks that suggest that the economics discipline is finally changing course to redress the major flaws in the curricula that is taught around the world and that perhaps Modern Monetary Theory (MMT) can take some credit for some of that. There has been a tendency for some time for those who are attracted to MMT to become somewhat celebratory, even to the point of declaring ‘victory’. This tendency is not limited to the MMT public who comment on social media and the like. My response is that we are probably further away from seeing fundamental change in the economics profession than perhaps where we were some years ago – after the GFC and in the early years of the pandemic (which continues). My answer reflects the incontestable fact that the make up of faculties within our higher education systems has not changed much, if at all, and the dominant publishing and grant awarding bodies still reflect that mainstream dominance. There is still a lot of work to be done and a lot of ‘funerals’ to attend (à la Max Planck)....
Summary: Nothing is going to change while the same clique remains in power and controls the educational and publishing process. Same in politics, although it is much more difficult to control the narrative that serves as an instrument of control than the narrative in terms of which the public understands economics. Heterodox economics has a long way to go in disrupting and eventually replacing this "Econ 101" narrative that firmly rules the collective mindset.
There is much more in this post than the title and lede paragraph would suggest.
Here is an example.
[Angus] Deaton then admits that “I have recently found myself changing my mind, a discomfiting process for someone who has been a practicing economist for more than half a century.”
How so?
Well,
1. He now says that the dominance of the “virtues of free, competitive markets” has meant that mainstream economics has ignored corporate power.
He wrote: “Without an analysis of power, it is hard to understand inequality or much else in modern capitalism.”
That is, without beginning with class conflict, an analyst has zero chance of gaining an understanding of the dynamics of capitalism, where capital seeks to influence outcomes in any way that advances their cause to retain their hegemony.
But if we introduced that into economic analysis there would be no mainstream elements worth retaining.
The dominance unit of analysis in mainstream economics is the individual.
Society is not considered.
Collectives are not considered.
Conflict is played down.
And when power does come up in mainstream economics the focus has been of trade unions as perverting the free workings of the labour contracting process.
BRICS doubled its membership at the start of 2024, and faces huge tasks ahead: integrating its newest members, developing future admission criteria, deepening the institution's groundings, and most importantly, launching the mechanisms for bypassing the US dollar in international finance.
The financial plans are toward the end of the post. No details yet, but a plan is supposed to be presented at the BRICs meaning in the fall of this year. An alternative BRICs currency is not being planned at this stage when BRICs is just getting off the ground and has yet to be adequately institutionalized yet itself. It still just "a club" at this point. Lots of work to be done, especially with many more countries already lining up for membership.
The CradleJoseph Stiglitz makes freshman mistakes about MMT in addressing the House of Lords Economic Affairs Committee on the sustainability of the UK’s national debt. Richard Murphy calls him out on it.
Important for MMT aficionado's.
I was asked during an interview the other day from Paris whether I was a Post Keynesian. I replied not at all and explained that I have never felt that my ideas fit into that category although in a facile sense we are all post keynesian in a temporal sense. Most progressive economists would answer yes if confronted with that question, even most of the economists involved in advancing Modern Monetary Theory (MMT). My point of departure is that while there was a lot of important analytical material in Keynes’ writing that is worth preserving and integrating into, say, MMT, where Keynes went astray was his antipathy to the insights provided by Karl Marx. In particular, I consider that Keynes seriously misunderstood what the dynamics of the class conflict were within a capitalist mode of production. Keynes made major errors in his predictions that one can directly attribute to this blinkered approach to capitalism. I was reminded of this when I read an Op Ed in the Japan Times this week (March 10, 2024) – The economic future of our overworked grandchildren. This blinkered approach, which has fed into the modern Post Keynesian literature – which examines capitalism as if it is an ahistorical, neutral system of production and distribution – is a major reason that I do not associate my work with that school of thought.
Failing to note the economic importance of class and class conflict is a foundational error.
"Class struggle" is foundational for Marx. Keynes knew this, of course. R. H. Tawney's Religion and the Rise of Capitalism was published in 1926. Keynes would have been aware of Weber and Tawney as well as Marx, all of whom viewed economic systems as historically determined socio-economic artifacts rather than natural systems. Keynes acknowledge this in calling economics a "moral science," which was also Adam Smith's view. The big three — Smith, Marx, and Keynes — were on the same page here.
Class is something that Keynes could not have missed being a member of the British upper class in a highly class-ridden society. Not only that the rise of Marxism in Russia and it's challenge to the West by socialists and communists in in the West had a particular salience at the time that Keynes was writing.
Did he miss the importance of class conflict to economics, or was he intentionally countering Marx in the West as the time that socialism was rising as an option to capitalism ("bourgeois liberalism").
In other words, was Keynes at apologist for capitalism that tried to put a better face on a fundamentally flawed socio-economic system by tweaking it.
Where Keynes came down on this is still debated, and there is wide disagreement about what role Keynes played and how he actually viewed it himself.
On the other hand, Keynes also was working in what he terms the "classical" paradigm prevalent at the time, which is now called "neoclassical." As Bill says, Keynes's "blinkered approach ... examines capitalism as if it is an ahistorical, neutral system of production and distribution."
Keynes seems to have had a foot in two boats. Bill claims that this results in major issues.
How does Bill's position affect MMT, as he admits that he difference from some other MMT economists on such issues.
William Mitchell — Modern Monetary Theory
LOL… Need a similar disclaimer when reporting on the debt doomsday morons who have been continuously wrong for 40 YEARS…
I find it hilarious that Bloomberg feels it necessary to include this disclaimer every time Kolanovic makes a market call. pic.twitter.com/sclIvqZm9V
— wu wei (@wu_wei_invest) March 12, 2024
The UK House of Lords Economic Affairs Committee is running an inquiry entitled “How sustainable is our National Debt?”
The GIMMS written evidence to the inquiry has now been published....
While this post is not MMT, it is consistent with MMT and implies that MMT is needed to address the issues that stem from wrong assumptions about the relationship of economics, finance, money and banking, as well as the mistaken view that money is neutral, being only a veil over what is at bottom a barter economy under the veneer of a monetary economy.
While MMT doesn't deal directly with the relationship of economics and power, being an institutional approach is incorporates the role of power implicitly in its analysis of the the relationship of economics and finance.
Much of what is presented as received economic wisdom about how economies work and the implications of policies is at best misleading and at worst simply wrong. For decades now, a significant and powerful lobby within the discipline has peddled half-truths and even falsehoods on many critical issues for example, how financial markets work and whether they can be “efficient” without regulation; the macroeconomic and distributive implications of fiscal policies; the impact of labor market and wage deregulation on employment and unemployment; how patterns of international trade and investment affect livelihoods and the possibility of economic diversification; how private investment responds to policy incentives such as tax breaks and subsidies and to fiscal deficits; how multinational investment and global value chains affect producers and consumers; the ecological damage wrought by patterns of production and consumption; whether tighter intellectual property rights are really necessary to promote invention and innovation; and so on.
Why does this happen? The original sin could be the exclusion of the concept of power from the discourse, which effectively reinforces existing power structures and imbalances. Underlying conditions are swept aside or covered up, such as the greater power of capital compared with workers; unsustainable exploitation of nature; differential treatment of workers through social labor market segmentation; the private abuse of market power and rent-seeking behavior; the use of political power to push private economic interests within and between nations; and the distributive impacts of fiscal ani.e. monetary policies.
The bloodiest period of Soviet totalitarianism ended in the fifties, but the habits remained long after, including the advanced system of alternative media that ultimately broke the state: samizdat.
Tonight, along with Stanford’s Dr. Jay Bhattacharya and New York Post reporter Miranda Devine, I’ll be accepting the inaugural Samizdat Prize, given by the RealClear Media Fund. Samizdat is a bit of a play on words, since like a lot of politically oppressive groups the Soviets had a mania for reducing beautiful language to state-acceptable ugly compound words (GosPlan, GULAG, etc.), so in place of GosIzdat (State-Publish, the official publisher) dissidents created Sam- or “Self” Izdat: “Self-Publish.”
Ten years ago PBS did a feature that quoted a Russian radio personality calling Samizdat the “precursor to the Internet.” Sadly this is no longer accurate….
The Committee for Economic Development (CED) of Conference Board recently put out “Explainer: The National Debt” which is pretty much a greatest hits of debt scare mongering. Other than the references to recent events and data, it is timeless: the authors could have put out the same report in any year since the mid-1980s and not much of the contents would have changed. Anyone who thinks that the MMT debate would improve things just needs to read the report to see that progress in conventional economics is largely illusionary.….
The spectacular government spending post-2008 and post-2020 appeared to upend the neoliberal logic of the past decades, enabling bold public action and opening the door to a more just and democratic social order. Specific policy choices stamped out this opportunity. These pivotal moments did, however, point to policy levers that can facilitate a breakthrough....Brave New Europe
Modern monetary theory has been influential in helping America rise out of the recession that crippled the economy during the pandemic, writes Professor Stephanie Kelton and Dr Steven Hail.
The overwhelming number of articles appearing attack MMT pretty much as the work of the devil. Regarding the the quote, "first they ignore you, then they laugh at you, then they fight you, then you win" (misattributed to Mahatma Gandhi), we seem to be at the attack stage.
Independent Australia
MMT sees America through rapid economic recoveryStephanie 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
Just three countries have so far introduced CBDCs, according to the IMF, and two of them are already having serious issues.Naked Capitalism
The roll-out of central bank digital currencies (CBDCs), while still in its early stages, is not going as smoothly as the central banking community may have hoped. The latest central bank to admit to serious difficulties is the Bank of Jamaica (BOJ) whose governor Richard Byles has acknowledged that the rollout of the country’s CBDC, the Jam-Dex, has been a lot slower than originally anticipated. In fact, the total amount of Jam-Dex in circulation has remained stuck at just 230 million Jamaican dollars (USD 1.47 million) since the first — and so far only — batch of the digital currency was “minted” 19 months ago.
The Jam-Dex is one of just three fully-launched retail CBDCs in the world, according to the IMF, alongside the Bahamian sand dollar and Nigeria’s eNaira.
“Being one of the first in the world has its unique challenges,” Byles said at the BOJ’s quarterly monetary policy report press conference last Wednesday. “What we are finding in the roll-out is that as we address an issue and move ahead, another one pops up. I guess that’s what you get for being amongst the first; you don’t have a road map set out by others, but we are determined.”...
Biden still has a big “inflation!” political problem…. Story at National Pulse:
As the U.S. economy braces itself for the third year of an inflation surge that has substantially hiked the cost of living and sharply depressed real wages, most registered voters believe President Biden’s policies will cause prices to rise.
A poll by CBS News and YouGov released Sunday shows that 55 percent of registered voters believe Biden’s policies will trigger price increases.
Only 17 percent of registered voters believe his policies will cause prices to decline.
Twenty-seven percent believe his policies won’t impact prices either way, suggesting that 82 percent of voters believe Biden is ineffective at controlling inflation or is actively making it worse.
Voters Say Biden Will Make Inflation Worse, But He Says 'I'm Really Proud of My Record.'
— The National Pulse (@TheNatPulse) March 5, 2024
Read more:https://t.co/hBBMoSDSGN
As the U.S. economy braces itself for the third year of an inflation surge that has substantially...
Biden still using Larry Summers’ monetarist playbook to get himself out of his political problem:
Joe Biden's chief of staff says Biden is not isolated, and in fact regularly speaks with critics with such wide ranges of view as Larry Summers, Thomas Friedman and Mitch McConnell https://t.co/Aa2VLuqsYz by @EvanOsnosz pic.twitter.com/A9sIUQDwt6
— ☀️ Jon Schwarz ☀️ (@schwarz) March 4, 2024
Which will mean the continued regressive high interest rate policy during this election year…. Democrats sacrificing their political prospects on the alter of monetarism…
This week, the UK Chancellor releases the latest fiscal statement (aka ‘the budget’) and will also have a eye to the general election which must be held before January 28, 2025. One would expect the government would stall the announcement and delay the election for as long as is possible, given the current situation and the cumulative impacts of 12 years of Tory rule, which are plain to see at all levels of British society. All the talk is of tax cuts, that typical ‘sugar hit’ approach to winning votes that soon works it way out of the system. The debate as to what the British government should now be doing is clouded, as these debates are always clouded, by the input of organisations such as the Office of Budget Responsibility, which claims its charter is to “to examine and report on the sustainability of the public finances”, yet consistently provides input which is irrelevant to the substance of the issue and just feeds the flawed political scrum. In the end, the policy choices are not based on the actual opportunities and threats that are available to and confront the currency-issuing government but rather a fictional mindset that all the players are trapped within.William Mitchell — Modern Monetary Theory
Prince is ripping off my stuff! … I was saying this a week after the attack duh…. sheesh no brainer..
This article, which is favorable to MMT, contains a good explanation of what MMT is and isn't.
interest.co.nz[US] Conservatives, [El Salvador’s President Nayib Bukele] said, “always tell me that the problem is high taxes, but they are wrong.”
“The real problem is that you pay high taxes only to uphold the illusion that you are funding the government, which you are not,” he claimed, before describing how the government is financed by Treasury bonds, which are purchased by the Federal Reserve with printed money backed by the bonds themselves.
“The government is funded by money printing, paper backed by paper. A bubble that will inevitably burst,” he said, adding that “the situation is even worse than it seems, because if most Americans and the rest of the world were to become aware of this farce, confidence in your currency would be lost. The dollar will fall, and Western civilization with it.”
“Oh sheeeeeeeeeeit!”…. 😂😂😂
Argentina’s economy contracted more than expected in December as newly elected President Milei put in motion shock austerity measures https://t.co/HHMFKEqo1v
— Bloomberg Economics (@economics) February 22, 2024
Last week (February 15, 2024), the Japanese Cabinet Office released the latest national accounts estimates for the December-quarter 2023 – Quarterly Estimates of GDP for Oct.-Dec. 2023 (The First preliminary) – which showed that the economy had slipped into an official recession (two consecutive quarters of negative GDP growth) and in the process had moved from being the third largest economy in the world to become the fourth behind the US, China and Germany. According to the media release – 2023年10~12月期四半期別GDP速報 – the quarterly growth rate was -0.1 per cent (annual -0.4 per cent). Domestic demand was weak, contributing -0.3 per cent while net exports contributed +0.2 per cent. Part of the story is related to a ‘valuation drop’ because the yen has depreciated in recent months, undermining the value of exports and increasing the value of imports. But while there is some hysteria in the ‘markets’ and the mainstream economics commentary about the result, caution is required because the data will be revised (it was only preliminary) as more data comes in and it is highly possible for the negative to become a positive. But, I also take a different perspective on this from the dominant narrative in the media as you will see if you read on.
There is quite a deal of misunderstanding about the so-called ‘lost decade’ in Japan, following its dramatic real estate crash in the early 1990s.
The current narrative builds on those misunderstandings and constructs the GDP outcomes as if low growth is a problem.
If you look at the next graph you will start to get the point....
Episode 12 – the finale for Season 1 in our new Manga series – The Smith Family and their Adventures with Money – is now available. We will let everyone calm down from the excitement for a little while to give us time to write and draw Season 2, which will begin on May 24, 2024.
In the meantime, have a bit of fun with it and circulate it to those who you think will benefit …
The US CPI data released yesterday showed that inflation continues to decline and the so-called ‘surprise’ that seems to have shocked the ‘markets’ are mostly down to the eccentric way the US Bureau of Labor Statistics calculates housing costs. The data provides no justification for further rate hikes in the US or anywhere else for that matter....
The title might better read, Why orthodox economics is an impossible science. While so-called orthodox economics fits this bill, it doesn't necessarily apply to so-called heterodox schools like MMT.
One of the characteristic criticisms of MMY economists by so-called orthodox economists (like Paul Krugman) is "Where's your model?" For neoclassical" economists, who assume formalization as a sine qua non of doing economics, required methodological assumptions include "equilibrium and maximization" as Krugman is fond of saying.
The post linked to below objects that this not even possible given the attendant conditions, other than as a "toy model" serving as "a teaching tool." Such models cannot underlie a casual explanation of real change in the world of events that economists then assume themselves perfectly capable of not only explaining but also prescribing. Their results speak for themselves.
Instead, MMT adopts an historical and institutional approach which recognizes economics as a study of events from particular perspectives that are conditioned by both subjective and objective considerations instead of presuming that economics is based on invariant principles similar to the natural sciences.
Economics is unlike physics and chemistry as natural sciences but it partakes of the life sciences including their extensions as the social sciences. While these "science" qualify as "science" owing to their assumption of naturalism and use the scientific method, the application of method is determined by the type of subject matter. The life and social science differ from the natural sciences in approach in that they types of data they study and seek to explain are quite different from the phenomena studied by natural sciences.
A good example of this is an unsourced quote widely attributed to Richard Feynman, "Imagine how much harder physics would be if electrons had feelings." However, the issue goes much deeper institutionally since economics and finance are joined at the hip, economic data being reported not only in real terms but also nominal with the nominal taking precedence since monetary value in exchange is the basis of reporting about economic data. As a result, conditions that affect this supervene in economics, as MMT economists recognize. These conditions are historical and institutional.
Lars P. Syll’s BlogFormer Central Bank governor lectures on the theories and practices of China's ambitious central bank digital currency.Almost everything you wanted to know about the digital yuan.
China appears to be the most ambitious among major economies to develop its central bank digital currency - the digital yuan, and we have covered its development before.
On October 10, 2023, Yi Gang, China’s central bank governor between 2018 and 2023 gave a public lecture at Tsinghua University entitled 数字人民币的相关理论与实践 Theories and Practices Related to the Digital Yuan....
Today, I am sharing a January 12, 2024 interview of Yi Gang, former Governor of the People’s Bank of China, by 金融时报 Jinrong Shibao (literally Financial Times), a newspaper by the central bank.Pekingology
Yi obtained his Ph.D. in Economics from the University of Illinois Urbana–Champaign and became an Associate Professor with tenure at Indiana University–Purdue University Indianapolis, before going back to Peking University, his alma mater. He later joined the People’s Bank of China and rose through its ranks until heading it between 2018 and 2023.
Yi retired in July last year and his five-year tenure at the helm of China’s central bank is known for, according to Bloomberg, “a restrained policy approach focused on moderate stimulus and reducing financial risks in the economy.”
In attrition war, on the economic front just like the Gaza and other fire fronts, the Axis of Resistance wins by maintaining its offensive capacities and operations for longer than the US and US-backed Israeli forces can defend. Like troops, tanks, and artillery pieces, the operational goal is to grind the enemy slowly but surely into retreat, then capitulation.How to measure if this is happening now to the Israelis in the international money markets?An international currency and bond trader answers by providing, first, a primer for each of the market indicators, and how to read them; and then a ready reckoner for the damage being done to Israel’s economic resources as those who operate in the money markets gauge their opportunity.For making money, you see, the opportunity of capitalizing on Israel’s defeat may soon be more profitable than investing in its success. When the markets see this chance at profit-making, usually long before the politicians and their captive media acknowledge it, there is an inflection point in the flow of money. That does its damage, not by hitting the Israelis and Americans in their bunkers with bullets and bombs, but by moving the money the US-backed Israeli entity needs out of reach, and cutting them off, both the US and Israel, from market confidence that they can win their war, genocide or not.The writer of this primer and money-market assessment has requested anonymity to protect against retaliation from the US, Israel or their allies.
Paul Samuelson, the author of what still might be the most-sold textbook of the post-war era had this to say on page 427 of his first edition, addressing a subject then very close to the thoughts of many of his readers:Can it be truthfully said that “internal borrowing shifts the war burden to future generations while taxing places it on the present generation”? A thousand times no! The present generation must still give up resources to produce the munitions hurled at the enemy. In the future, some of our grandchildren will be giving up goods and services to other grandchildren. That is the nub of the matter. The only way in which we can impose a direct burden on the future nation as a whole is by incurring an external debt or by passing along less capital equipment to our posterity.
This guy has been really wrong in hindsight … those that took his advice paid a high opportunity cost…
THE BIGGEST BEAR ON WALL STREET HAS FINALLY CAPITULATED
— GURGAVIN (@gurgavin) February 3, 2024
MIKE WILSON THE CHIEF STRATEGIST & CHAIR OF MORGAN STANLEY’S GLOBAL INVESTMENT COMMITTEE IS STEPPING DOWN AFTER YEARS OF BEING WRONG & INCOMPETENCE
MIKE WILSON HAS BEEN PREDICTING A MAJOR STOCK MARKET CRASH FOR YEARS NOW pic.twitter.com/aLey57rNj5
Episode 11 in our new Manga series – The Smith Family and their Adventures with Money – is now available. We are approaching the climax for Season 1. The final episode in the series will be published on February 16, 2024.Have a bit of fun with it and circulate it to those who you think will benefit …
As the title says, the post is about "moving to a sustainable system of food production within a degrowth paradigm." The basis of the discussion is whether this can take place within the context of "capitalism."
Bill argues for the position that it cannot. I have set for reasons previously explaining my agreement with this view. A major reason can be summarized as "perverse incentives." Of course, it is more complicated than that but the rubric "perverse incentives" sums up Marx's notion of internal contradictions inherent in the capitalism system.
However, even granting a critique of capitalism, the fundamental question remains unanswered, namely, how does global production get from here to there. Without specifying a potentially fruitful route the project remains utopian. Bill proposes to undertake at this from the perspective of André Gorz, a project on which he is now working.
William Mitchell — Modern Monetary TheoryChina’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
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 “…
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….
Pepe Escobar relies heavily on Michael Hudson's economic analysis for his five "variables."
Sputnik InternationalToday, 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.
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.
More on "inflation" and the policy rate.
Bond Economics
Why The "Friedman Thermostat" Analogy Should Be Uncomfortable For The Mainstream
Brian Romanchuk
- 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
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.
— Charlie Bilello (@charliebilello) January 19, 2024
How much more QT is needed to unwind the massive QE from March 2020- April 2022?
$3.5 trillion. pic.twitter.com/9KVuF6efM1
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
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 …
Nice rant… Dems in big trouble….
Best rant ever. 🔥🔥🔥
— I Meme Therefore I Am 🇺🇸 (@ImMeme0) January 17, 2024
“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
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.…
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
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.
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…
The path for financial development with Chinese characteristics is different in nature from the mode of Western financial development.
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 …
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....
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.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....
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
— Truflation (@truflation) January 8, 2024
Average American purchasing power eroded by 22.37% Since Jan 2020. pic.twitter.com/1TreF01Air
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!...
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
