Thursday, April 11, 2024

JPMorgan says high interest rates are driving inflation higher

 

But these JPM people are not winning the Art Degree argument though:




This guy is winning the argument:




Wednesday, April 10, 2024

Latest European Union rules provide no serious reform or increased capacity to meet the actual challenges ahead — Bill Mitchell

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
Latest European Union rules provide no serious reform or increased capacity to meet the actual challenges ahead
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Wednesday, April 3, 2024

What is responsible government spending? — Guest post by Scott Baum

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 …
William Mitchell — Modern Monetary Theory
What is responsible government spending?
Guest post by Scott Baum, Professor at Griffith University, Queensland

Death of empires: History tells us what will follow the collapse of US hegemony — Henry Johnston

The turn away from expansion, production and trade toward lending and speculation has precipitated decline for centuries
In the vein of Michael Hudson on the transition from industrial capitalism to financial capitalism, and the implications of this transition systemically. The article is a summary of the work of Giovanni Arrighi, one of a number of economists, economic sociologist and economic anthropologists that have explored the phenomenon of capitalism and its development in terms of the world system.

RT — Question More (Russian state-sponsored media)
Death of empires: History tells us what will follow the collapse of US hegemony
Henry Johnston, an RT editor who worked for over a decade in finance and is a FINRA Series 7 and Series 24 license holder

Millions of simulations show that media companies have too much time on their hands — Bill Mitchell

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.…

William Mitchell — Modern Monetary Theory
Millions of simulations show that media companies have too much time on their hands
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

In Defence Of Discrete Time Models — Brian Romanchuk

Not MMT per se but it has to do with economic modeling that is pertinent to MMT's stock-flow modeling. 

When looking at Steve Keens's claim about continuous and discrete yesterday, it seemed to me to be a bit off given that economic data is discrete despite the fact that it is reported in terms of flows that are assumed continuous. Brian explains the details of the modeling math clearly and briefly without getting overly wonkish. 

Bond Economics
In Defence Of Discrete Time Models
Brian Romanchuk

Thursday, March 28, 2024

Giant Pictures & Kanopy Acquire ‘Finding The Money,’ Documentary That Explodes Myth Of Deficit Spending — Matthew Carey (with Trailer)

 "Finding the Money" Trailer.

Deadline
Giant Pictures & Kanopy Acquire ‘Finding The Money,’ Documentary That Explodes Myth Of Deficit Spending
Matthew Carey

The SDGs are not achievable—Unless we decolonize the global economic architecture — Fadhel Kaboub

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.…

Very clear presentation of the conditions of colonization in neocolonialism and of the requirements for decolonization by an MMT economist, although MMT is not involved in the post specifically. Rather, it addresses structural problems facing the Global South.

SDGs = Sustainable Development Goals. There are 17.

Global South Perspectives—Reflections & Analysis by Fadhel Kaboub
The SDGs are not achievable—Unless we decolonize the global economic architecture
Fadhel Kaboub, Associate Professor of economics at Denison University (on leave) and President of the Global Institute for Sustainable Prosperity. He currently serves as the Under-Secretary-General for Financing for Development at the Organisation of Educational Cooperation in Addis Ababa, Ethiopia.He also held a number of research affiliations with the Levy Economics Institute, the John F. Kennedy School of Government at Harvard University, the Economic Research Forum (Cairo), Power Shift Africa (Nairobi), and the Center for Strategic Studies on the Maghreb (Tunis). Fadhel is Tunisian-American MMT economist. Ph.D. in Economics & Social Science Consortium, 2006, University of Missouri - Kansas City. M.A. in Economics, May 2001, University of Missouri - Kansas City. B.S. in Economics, June 1999, with Distinction

Rinse and repeat–Truss chaos–the new benchmark — Bill Mitchell

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....
William Mitchell — Modern Monetary Theory
Rinse and repeat – Truss chaos – the new benchmark
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Tuesday, March 26, 2024

Mark Blyth: Unionists 'taking my words on independence out of context' — Xander Elliards

 The sequel.

The National (Scotland)
Mark Blyth: Unionists 'taking my words on independence out of context'
Xander Elliards

Philip Pilkington turns the page on MMT?

 Philip Pilkington turns the page on MMT?


https://twitter.com/philippilk/status/1772538175564447823

Monday, March 25, 2024

Monetary Sovereignty and Mark Blyth’s critique of MMT — Peter May

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 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.
MMT does recognize this constraint by treating it with more nuance.

MMT's basic framework includes the priority or primacy of real resources over government finances for all countries including those that issue their own currency and don't undertake obligations is other currencies.

MMT acknowledges that a country must either be able to produce is own real resources, which implies having the required natural resources and well as the industrial power, technology, etc. that go into production. This necessitates having ample factors that not all countries enjoy and probably every country including the US is exposed to in some way. 

If a country does not have the means of production for self-sufficiency or cannot acquire financial resources from exports, then it will have to either pay for imports by issuance, which may have an effect on the exchange rate, which in turn may affect the inflation rate.

This implies that any country, even through "monetarily sovereign," is constrained by real resources limitations that may the general prices level.

While a monetarily sovereign country can issue all the currency in wants to infinity, there are consequences based on availability of real resources that boil down to an inflation constraint. This includes the exchange rate, hence imported inflation.

There is also the issue of jobs. To the degree that imports are real benefits they also export jobs through labor embedded in imports. MMT addresses that through economic policy and specifically through an MMT JG as a universal job guarantee that also acts as a price anchor.

In other words, it's complicated (highly nuanced).
Peter May

There are other factors involved including geopolitical. From the time of Adam Smith, economics has focused on trade. The objective of economics in the colonial world was for the periphery (colonies) to send natural resources and agricultural produce to the core (colonialist countries) where technology was reserved and industry was developed for producing finished goods. Finished consumer goods were exported by to the colonies to be paid in specie, while capital goods exportation was restricted.

This condition still exists to a degree as the following post shows. China has the needed USD reserves to purchase goods and services from the US but is restricted from doing so in some important cases where the US desires to continue the previous system by protecting the core through keeping the periphery weak. But China can play that game too since it is no longer a colony even though it is not yet considered to be a developed economy. Trade suffers as a consequence, affecting the global economy.
  • 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.
Oilprice
Chip War Escalates as China Bans Intel, AMD Chips in Government Computers
ZeroHedge


Sunday, March 24, 2024

Climate Reparations, not "finance" — Fadhel Kaboub

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 Kaboub
Climate Reparations, not "finance"
Fadhel Kaboub, Associate Professor of economics at Denison University (on leave) and President of the Global Institute for Sustainable Prosperity. He currently serves as the Under-Secretary-General for Financing for Development at the Organisation of Educational Cooperation in Addis Ababa, Ethiopia. He also held a number of research affiliations with the Levy Economics Institute, the John F. Kennedy School of Government at Harvard University, the Economic Research Forum (Cairo), Power Shift Africa (Nairobi), and the Center for Strategic Studies on the Maghreb (Tunis). Fadhel is a Tunisian-American MMT economist. Ph.D. in Economics & Social Science Consortium, 2006, University of Missouri - Kansas City. M.A. in Economics, May 2001, University of Missouri - Kansas City. B.S. in Economics, June 1999, with Distinction

Saturday, March 23, 2024

Untangling the "socialism" vs. "capitalism" dichotomy — Alex Krainer

 Interesting 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 TrendCompass
Untangling the "socialism" vs. "capitalism" dichotomy
Alex Krainer, The Naked Hedgie
"For full disclosure, I do have a university degree, but I’ve worked hard ever since to recover from it."

Friday, March 22, 2024

Entropy, the Theory of Value and the Future of Humanity — James K. Galbraith

In 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 Politics
Entropy, the Theory of Value and the Future of Humanity
James K. Galbraith | Lloyd M. Bentsen Jr. Chair in Government/Business Relations and Professor of Government at the Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin

See also at Post-Neoliberlsm

Whatever it Takes: How Neoliberalism Hijacked the Public Purse
Pavlina Tcherneva | Founding Director of OSUN-EDI, Professor of Economics at Bard College, Research Scholar at The Levy Economics Institute, and Senior Research Associate at the Center for Full Employment and Price Stability

Top 25 Heterodox Economics Books — Lars P. Syll

Chronological order. Randy Wray and Stephanie Kelton each make the list.

Lars P. Syll’s Blog
Top 25 Heterodox Economics Books
Lars P. Syll | Professor, Malmo University

Monday, March 18, 2024

Claims that mainstream economics is changing radically are far-fetched — Bill Mitchell

I 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. 

It continues.

This inquiry requires distinguishing two kinds of approach to economics.

1. One based on a "for-profit model" which assumes that a "free market" maximizes efficiency so that everyone gets more of a growing pie, which increasing inequality belies.
2.  The other based on a "fo- purpose model" that is designed and operated as the life-support system of a society. 

The former is a purely economic model while the latter is a socio-economic model that incorporates everything relevant, considering not only economics but also economic sociology and anthropology, economic geography, and comprehensive history, as well as psychology and evolutionary theory. Moreover, the scope of economics in a for-purpose model needs to include so-called heterodox approaches to economics in addition to the now dominant conventional model on which neoliberalism is based and which delivers ongoing control to the wealthy and powerful, creating plutocratic oligarchy in the place of actual democracy and government of the people for the people and by the people.

William Mitchell — Modern Monetary Theory
Claims that mainstream economics is changing radically are far-fetched
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Friday, March 15, 2024

Will BRICS launch a new world in 2024? — Pepe Escobar

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 Cradle

Joe Stiglitz really should not talk about modern monetary theory when he so obviously has no clue about what it actually says — Richard Murphy

Joseph 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.


Funding the Future (formerly Tax Research UK)
Joe Stiglitz really should not talk about modern monetary theory when he so obviously has no clue about what it actually says
Richard Murphy | Professor of Practice in International Political Economy at City University, London; Director of Tax Research UK; non-executive director of Cambridge Econometrics, and a member of the Progressive Economy Forum

Thursday, March 14, 2024

Keynes was wrong because he failed to consider class conflict — Bill Mitchell

 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
Keynes was wrong because he failed to consider class conflict
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Disclaimer

 

LOL… Need a similar disclaimer when reporting on the debt doomsday morons who have been continuously wrong for 40 YEARS…




Wednesday, March 13, 2024

EU: Austerity for the people and Keynesianism for the war — Riccardo Zolea

MMT-related.

Monetary Policy Institute
EU: Austerity for the people and Keynesianism for the war
Riccardo Zolea, Sapienza University of Rome

Global South Repositioning — Fadhel Kaboub

Not MMT per se, but a post on recent doings in the real world by an MMT economist of rising prominence in the Global South. This post is broadly about a strategy for decolonization and leveling the playing field.

Global South Perspectives—Reflections & Analysis by Fadhel Kaboub
Global South Repositioning
Fadhel Kaboub, Associate Professor of economics at Denison University (on leave) and President of the Global Institute for Sustainable Prosperity. He currently serves as the Under-Secretary-General for Financing for Development at the Organisation of Educational Cooperation in Addis Ababa, Ethiopia.He also held a number of research affiliations with the Levy Economics Institute, the John F. Kennedy School of Government at Harvard University, the Economic Research Forum (Cairo), Power Shift Africa (Nairobi), and the Center for Strategic Studies on the Maghreb (Tunis). Fadhel is Tunisian-American MMT economist. Ph.D. in Economics & Social Science Consortium, 2006, University of Missouri - Kansas City. M.A. in Economics, May 2001, University of Missouri - Kansas City. B.S. in Economics, June 1999, with Distinction

Tuesday, March 12, 2024

How Sustainable is our National Debt? — NeilW

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....
New Wayland
How Sustainable is our National Debt?
NeilW

Monday, March 11, 2024

The Trouble with Words — Peter Radford

The title of the post should be "The Trouble with Economics." Words. The point is well-taken.

The Radford Free Press
The Trouble with Words
Peter Radford

Friday, March 8, 2024

Why and how economics must change — Jayati Ghosh

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 influence of power on economics and finance has been institutionalized legally in spite of blatant conflicts of interest and double standards.

The relationship of economics and power is studied specifically by economic sociology. For example, neoliberalism is a political theory based on economic liberalism. For example, state capture results from economic liberalism in a democracy through the influence of the donor class on institutions and policy. This also results in the capture of academia, resulting in "orthodox" quasi-religious doctrine.  

Real-World Economics Review Blog
Why and how economics must change
Jayati Ghosh | Professor of Economics at the Centre for Economic Studies and Planning, School of Social Sciences, at the Jawaharlal Nehru University, in New Delhi

Thursday, March 7, 2024

America Enters the Samizdat Era — Matt Taibbi

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….
On the emergence of gatekeepers.

Racket News
Matt Taibbi

"The Debt Crisis Is Here": The Conference Board Is At It Again — Brian Romanchuk

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.….

Pavlina Tcherneva – Whatever it Takes: How Neoliberalism Hijacked the Public Purse — Pavlina R. Tcherneva

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
Pavlina Tcherneva – Whatever it Takes: How Neoliberalism Hijacked the Public Purse
Pavlina Tcherneva | Founding Director of OSUN-EDI, Professor of Economics at Bard College, Research Scholar at The Levy Economics Institute, and Senior Research Associate at the Center for Full Employment and Price Stability

MMT sees America through rapid economic recovery — Stephanie Kelton

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

Tuesday, March 5, 2024

After Nigeria’s eNaira Disaster, Another “Live” Central Bank Digital Currency, Jamaica’s Jam-Dex, Founders — Nick Corbishley

Just three countries have so far introduced CBDCs, according to the IMF, and two of them are already having serious issues.

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.”...
Naked Capitalism
After Nigeria’s eNaira Disaster, Another “Live” Central Bank Digital Currency, Jamaica’s Jam-Dex, Founders
Nick Corbishley

Google Demands That We Censor Our Content — Yves Smith

FYI. The information space is narrowing.

Naked Capitalism
Google Demands That We Censor Our Content
Yves Smith

Voters Say Biden Will Make Inflation Worse

 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.




Biden still using Larry Summers’ monetarist playbook to get himself out of his political problem:




Which will mean the continued regressive high interest rate policy during this election year…. Democrats sacrificing their political prospects on the alter of monetarism…



Monday, March 4, 2024

British government designs fiscal policy within a flawed framework – result = poor policy — Bill Mitchell

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
British government designs fiscal policy within a flawed framework – result = poor policy
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

See also

 Simplicius comments on a recent Rasmussen article. The polling data reinforce similar conclusions others have drawn as well about the great class divide that is is worsening under the neoliberal framework.

One wonders whether some cognitive bias may be responsible or is it more the result of pursuing class interest. Or rent-seeking behavior. Or was it more the deadly combination of wealth and power that already destroyed the Empire on which "the sun never sets" and shifted it to the American elites. Now the British elites appear to be at least as enclosed in their bubbles as their American counterparts as the remants of empire are being challenged.

Dark Futura
America's Super-Elite Disconnect
Simplicius

See also the Tory reaction to George Galloway's win. Speaking truth to power.

Consortium News
MSM Target Galloway at Victory Party
Joe Lauria reporting from Rochdale, England


Friday, March 1, 2024

Prince: How to flood Hamas tunnels

 

Prince is ripping off my stuff! … I was saying this a week after the attack duh…. sheesh no brainer..





Saturday, February 24, 2024

As US Modern Monetary Theory advocates make their case in Australia, Gareth Vaughan explains the world through their lens and how it might go down in New Zealand — Gareth Vaughan

 This article, which is favorable to MMT, contains a good explanation of what MMT is and isn't.

interest.co.nz
As US Modern Monetary Theory advocates make their case in Australia, Gareth Vaughan explains the world through their lens and how it might go down in New Zealand
Gareth Vaughan

Another side of the story.
[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.”
RT — Question More (Russian state-sponsored media)

Friday, February 23, 2024

Argentina Economy Shrank in December by Most Since Pandemic

 

“Oh sheeeeeeeeeeit!”….  😂😂😂





Monday, February 19, 2024

Japan sinks into recession – but there is more to the story than the mainstream narrative would care to admit — Bill Mitchell

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....
William Mitchell — Modern Monetary Theory
Japan sinks into recession – but there is more to the story than the mainstream narrative would care to admit
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Friday, February 16, 2024

The Smith Family manga–Episode 12– the Season 1 finale–is now available — Bill Mitchell

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 …
William Mitchell — Modern Monetary Theory
The Smith Family manga – Episode 12 – the Season 1 finale – 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

Wednesday, February 14, 2024

Job Guarantee and Employer of Last Resort schemes: the political constraints on maintaining full employment — Nick Johnson

Kalecki

The Political Economy of Development
Job Guarantee and Employer of Last Resort schemes: the political constraints on maintaining full employment
Nick Johnson

US inflation rate is declining – no case for further rate rises — Bill Mitchell

 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....
William Mitchell — Modern Monetary Theory
US inflation rate is declining – no case for further rate rises
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Sunday, February 11, 2024

Why economics is an impossible science — Lars P. Syll

 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 Blog
Why economics is an impossible science
Lars P. Syll | Professor, Malmo University

Saturday, February 10, 2024

Yi Gang on China's Digital Yuan — Zichen Wang

Former Central Bank governor lectures on the theories and practices of China's ambitious central bank digital currency.

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....

Almost everything you wanted to know about the digital yuan. 

Pekingnology
Yi Gang on China's Digital Yuan
Zichen Wang

Tuesday, February 6, 2024

What is Yi Gang trying to say in his 1st interview after retiring from PBoC? — Zichen Wang

Not about MMT but rather about "money."
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.

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.”
Pekingology
What is Yi Gang trying to say in his 1st interview after retiring from PBoC?
Zichen Wang

See also
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.
Dances with Bears

Yves Smith comments on the above post here. She has some issues with it.

Saturday, February 3, 2024

Samuelson on the legacy we leave for grandchildren — Richard Murphy

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.
Funding the Future
Samuelson on the legacy we leave for grandchildren
Richard Murphy

Bear demoted

 

This guy has been really wrong in hindsight … those that took his advice paid a high opportunity cost…



Friday, February 2, 2024

The Smith Family manga continues–Episode 11 is now available — Bill Mitchell

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 …

William Mitchell — Modern Monetary Theory
The Smith Family manga continues – Episode 11 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

Thursday, February 1, 2024

Moving to a sustainable system of food production within a degrowth paradigm — Bill Mitchell

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 Theory
Moving to a sustainable system of food production within a degrowth paradigm
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Will the Hegemon Ever Accept a New Westphalian World Order? Pepe Escobar

Pepe Escobar reviews Prof. Glenn Diesen's new book, The Ukraine War & The Eurasian World Order. 

Escobar recently reviewed Emmanuel Todd's La Défaite de L’Occident (“The Defeat of the West”).

The reviews are short and present views that suggest the world order is changing not only politically but also economically as a result of decolonization. 

This emerging trend portends to grow the pie for all albeit not without growing pains as the dominant parties attempt to maintain their hegemony.

Strategic Culture Foundation (sanctioned by the US Treasury Department)
Will the Hegemon Ever Accept a New Westphalian World Order?
Pepe Escobar

If this site is blocked for you, try Global South here and here.

Wednesday, January 31, 2024

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

See also

Chartbook
Adam Tooze

Tuesday, January 30, 2024

Wishful thinking

 

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



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



Monday, January 29, 2024

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

Friday, January 26, 2024

Pepe Escobar: Five Variables Defining Our Future

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

Sputnik International

Wednesday, January 24, 2024

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

Monday, January 22, 2024

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

Saturday, January 20, 2024

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…




Friday, 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,

Thursday, January 18, 2024

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….





Wednesday, 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

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

Read Yves Smith's intro for a significant qualifier.

Naked Capitalism
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

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

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

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


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

Michael Hudson
Radhika Desai and Michael Hudson




Monday, January 15, 2024

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.

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

Saturday, January 13, 2024

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.

Tuesday, January 9, 2024

“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…







Monday, 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

Sunday, January 7, 2024

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