Nobody needs reserves

Stablecoins increasingly replacing reserves for settlements… lol nobody needs any… RRR still 0% …  btw MMT silent on this technological development …  will allow Fed to continue to do their QT system reserve asset balance reduction ie  “destroying  money!”  more than most people realize…  they could probably go to zero reserves …  monetarist brain dead zombies will think  “no money!” …  monetarist morons will be all bearish on their “M1!” or “M2!” gong to zero…  

…

NY FED RECEIVES NO BIDS AT OVERNIGHT REPO OPERATION

— First Squawk (@FirstSquawk) September 2, 2025

The Economy of Narratives-How We Become the Guardians of Our Own Ideological Prison — Robert Cauneau

Why is it that visibly false economic analogies, such as that of the state managing its budget « as a responsible father, » dominate public debate with such unwavering force? How can we explain that the anxiety-inducing narrative of the « wall of debt » or the « burden on future generations » continues to justify austerity policies, even though detailed operational analyses, describing the system’s actual « plumbing, » demonstrate its inadequacy? The paradox is not so much that misconceptions persist despite the facts, but that they impose themselves as organized narratives, conveying emotion, legitimacy, and power. These narratives are not intellectual accidents, but cognitive and political instruments, shaped to be believed and to make alternatives unthinkable.

This article advances a simple thesis: the battle for a better understanding of economics is not simply a battle of facts against errors, but a battle of narratives. Technical reality, however rigorous and demonstrable, struggles to assert itself because it clashes with a dominant narrative that is much older, simpler, and, above all, more emotionally powerful. The main challenge for approaches like Modern Monetary Theory (MMT) is not to prove its technical coherence—it is—but to overcome its own narrative deficit.

This accounts for the persistence of the "fable" of monetarists that underpins the Fed's rationale for interest rates as the single variable "control knob" of the economy, despite not only the lack of evidence but also the admission that there is no justifiable theory of inflation based on the historical data in the present narrative.

MMT France

The Economy of Narratives-How We Become the Guardians of Our Own Ideological Prison
Robert Cauneau

The dollar system in an age of market-based finance - financial globalization beyond banks — Adam Tooze

How, after the GFC, the dollar is of key importance in global finance owing to the role of US Treasuries as a safe, high-liquidity asset.

Chartbook
Chartbook 401: The dollar system in an age of market-based finance - financial globalization beyond banks (The World Economy Now, July 2025)
Adam Tooze, Shelby Cullom Davis chair of History at Columbia University and Director of the European Institute

Grok on “money!”

 

Reply not too shabby… progress in the AI space … now over to Art degree and other uneducated people…

No, the USA isn't "out of money." As of July 2025, national debt is ~$36.6T, with a FY2025 deficit projected at $1.9T (6.2% GDP). It issues its own currency, so default risk stems from political debt ceiling games, not insolvency. Risk of shortfall by August if unresolved.…

— Grok (@grok) July 27, 2025

Michael Hudson: The Economics of a Civilizational Conflict (Transcript)

Full transcript of world-renowned classical economist Prof. Michael Hudson in conversation with Norwegian writer and political activist Prof. Glenn Diesen on “The Economics of a Civilizational Conflict”, July 17, 2025.

Historical backgrounder. It focuses on the history of economic rent — financial rent,  and its implications for the changing world order. The world order is now based on the transition of the West from industrial capitalism to financial capitalism, and the corresponding rise of China as the dominant industrial nation.

The subtext is that the solution involves replacing privately created finance with sovereign funds for public purpose, as MMT economists and proponents also advise. This requires reversing the current order that is based on neoliberalism by recognizing public goods and the ability of monetary sovereigns to provide for them as the currency issuer.

This post also encapsulates what Michael Hudson has been saying in most of his books and interviews.

Hudson self-identifies as a classical economist, a school that focuses on addressing economic rent extraction. The principal exponents of classical economics include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Robert Malthus, and John Stuart Mill. Ricardo is remembered especially for his focus on economic rent. Marx wrote in response to classical economics, among others. Husdon is also a neo-Marxist in the sense that he adapts some of Marx's analysis without the dogmatism of the Marxist schools.

The Singu Post

Michael Hudson: The Economics of a Civilizational Conflict (Transcript)

Pressure on Powell

 

GOP pressure on Powell to resign is relentless and it’s no longer just Trump its expanded to coming from other Admin members and now GOP Congress…. Powell not looking well… ashen coloring.. very thin...

Jay Powell just can’t do the job. He was too late raising rates when Democrats set the economy on fire, refuses to cut rates now that it might help Trump, and may have even lied to Congress about the $3.1bn Taj Mahal he’s building at the Fed.

Time to go. pic.twitter.com/AFc5tp3d9a

— Bernie Moreno (@berniemoreno) July 25, 2025

Someone Is Closely Front-Running Trump's Trade Announcements — Thomas Neuburger

Was someone leaking his information? The timing looks suspicious.

God's Spies
Someone Is Closely Front-Running Trump's Trade Announcements

Thomas Neuburger

Eric Idle: "I'd be proud to be thrown out of America"

Former Monty Python star and bonehead, Eric Idle, says he'd be proud to be thrown out of America. Is he here? If so, then kick him out, or maybe he should just leave and go back to his country, which has become an Islamic caliphate.

Do you see what's going on in Europe?

Europeans think they're so special and enlightened. I lived in Europe for 10 years. I know what it is. Get out if you don't like it here.

MMT: Heuristics versus Paradigm Shift? — Randy Wray

Randy Wray, one of the co-founders, critiques the current way of presenting MMT and finds it wanting. He suggests a path to a more realistic one. 

Randy's presentation of MMT was previously somewhat different from the most prevalent one, owing, for example, to his featuring of Hyman Minsky, under whom he studied. This is a much more radical and thorough break with the "old school" method of presentation.

It's a big step forward but still lacks inclusion of economic sociology, which emphasizes class as the basis of power asymmetry.

This piece is important for all interested in MMT. It's relatively short, longer than a blog post but shorter than an article. To stay current it is a must-read. Hopefully, it will provoke discussion in the MMT community.

Levy Economics Institute of Bard College
MMT: Heuristics versus Paradigm Shift?
L. Randall Wray | Professor of Economics, Bard College

A (belated) Look at Finding the Money —Steve D. Grumbine

Other than Bill Mitchell, MMT economists largely pass over the implications of MMT for social, political and economic reform, all of which are connected at the foundation. Steve Grumbine argues that without class analysis, the job is incomplete. The problem is not with the superstructure but the foundation.

Real Progressives
A (belated) Look at Finding the Money
Steve D. Grumbine

MMT and Post-Keynesian Economics: A New Paper on Ontological Differences— NeilW

In our new paper we utilise Marc Lavoie’s 2024 critique of Modern Monetary Theory (MMT) to contrast the ontological foundations, methodologies, and policy implications of MMT with those of Post-Keynesian (PK) economics. We argue that disagreements between these schools reflect fundamental ontological divergences rather than technical nuances.

New Wayland Blog
MMT and Post-Keynesian Economics: A New Paper on Ontological Differences—
Comparing Post-Keynesianism and Modern Monetary Theory: The Importance of Ontology and Sociology, Phil Armstrong and Neil Wilson
NeilW

“Debt Ceiling!” increased by $5T

 

Trump finally got his fiscal policy passed which includes $5T “debt ceiling!” increase which btw liberal Democrats shitting all over…

The One Big Beautiful Bill hikes the U.S. debt ceiling by $5 trillion, as per the Congressional Budget Office and reports from The Hill and Washington Post. This accompanies $3.3 trillion in projected deficit spending over the next decade for tax cuts, border security, and…

— Grok (@grok) July 4, 2025

This is going to allow Treasury to again net issue USTs to reduce FRS reserve balances and increase TGA balance back to their $850b target from its current ≈ $350b balance… 

reducing FRS reserve balances from current $3,250b down to $2,750b area which iirc would be a post Covid low…

Will allow Depositories to apply higher PVs to any and all financial assets as they will no longer have to finance the deficit position of the federal government as they have to do at the Art degree moron termed  “debt ceiling!” …. which has been going on since February 20th causing a commensurate reduction in bond and equity values…

Mike epic rant

 

This from Mke years ago but 100% still in play… 100%  still in play… maybe Trump at best delaying it.,,

MMT Art degree morons: you have got Nooooooooo-where in all of these years …. Noooooooooo-where…  proceed according…

Trump should have allowed Israel to kill the fucking Ayatollah

Iran issues fatwa against Donald Trump: "Enemy of God"

Why did Trump let this piece of shit murderous cocksucker live? I have no idea. Israel could have taken him out, but Trump said no. Big mistake.

Sniper kills firefighters! Inexcusable, cowardly, disgusting act of violence.

Who kills firefighters? Our true heroes are there to protect lives and property. Apparently, some crazed lunatic in Idaho started a fire and then picked up firefighters when they arrived to put out the flames. 

What a disgusting, cowardly act of violence. Firefighters. No firefighter should ever have to face something like this.

My father was a firefighter with the FDNY. He was a hero who saved lives. This act of violence is truly disgusting.

Thoughts and prayers out to the families of the two fallen heroes.

Beyond Solvency — Warwick Powell

MMT-based.

Warwick Powell's Substack
Beyond Solvency
Warwick Powell | Adjunct Professor at Queensland University of Technology and a Senior Fellow at Taihe Institute, Beijing. He is the author of "China, Trust and Digital Supply Chains". "Dynamics of a Zero Trust World".

Functional Equation

 

The interest rate is in the denominator…

Plan accordingly…

SLR Review

Apparently the regulatory adjustment is now to lower the overall ratio for the individual institutions rather than exempt reserve assets and USTs… if so then not very helpful and system will still be subject to  periodic Art degree monetarist moron induced reserve asset volatility … 

Previous media reports were suggesting proposed exemption for both reserve assets and USTs…

Perhaps Powell sabotaging the reform to crash the markets at some point when Art degree moron monetarists in Trump admin try to “pump in some money!” under an attempted QE type of  stimmie… 

Disappointing… 🫩

https://x.com/grok/status/1935165702970949927

The proposal to lower the enhanced supplementary leverage ratio (eSLR) from 5% to 3.5%-4.5% was submitted for review on June 6, 2025. It’s currently under OIRA review, followed by a public comment period, likely 30-60 days. Implementation is expected later in 2025 or early 2026,…

— Grok (@grok) June 18, 2025

Rethinking Russia's War Chest — NeilW

A recent BBC headline, “How the West is helping Russia to fund its war on Ukraine,” published on May 30, 2025, presents a familiar narrative: Russia, reportedly awash in foreign currency from its fossil fuel sales, is using these “Western billions” to bankroll its ongoing war. The article starkly points out that “Ukraine’s Western allies have paid Russia more for its hydrocarbons than they have given Ukraine in aid,” highlighting a staggering €883bn earned by Russia since February 2022, despite sanctions.

While the sheer scale of these export revenues is undeniably jarring, and the moral implications of such purchases are deeply unsettling, the BBC’s analysis of Russia’s war funding misses a crucial economic point. The narrative that Russia needs these euros and dollars to pay its soldiers, forge tanks, or churn out shells for military use oversimplifies the fundamental realities of sovereign currency.

New Wayland

Rethinking Russia's War Chest

NeilW

Bessent: could change SLR over summer

 Significant in helpful way:

See here entire US banking system added about $500B loans and lease Assets in over an entire year:

While Treasury added $550B of reserve assets in just a few weeks starting February 20th this year reducing TGA from $850B to $300B at the morons “debt ceiling!” … causing a corresponding precipitous drop in all other financial asset prices as Depositories don’t have the regulatory capital to comply with leverage regulations in these situations where the second rate Art degree monetarist morons think they literally “inject money!” like this:

Policy discussion around the SLR reform has previously addressed only these reserve assets at the Depositories but lately the discussions have expanded to also include USTs …. 🤔

This could be related to the advent of USD stablecoins and the threat these coins pose to traditional Depository businesses… we have to see how this part works out..

The important part is getting the reserve asset exemption … this will eliminate the effect of what has been the most destabilizing Art degree monetarist moron monetary policies in our lifetimes..

Trump stablecoin off and running

Trumps USD1 now up to $2.2B issued in just a couple of weeks on an exchange… at the Fed’s current screw Trump 4.40% risk free rate he’s already making $88M annual rate … if he can get issuance up to $100B then he’s grossing >$4B annual which would probably be his most valuable enterprise … iirc Tether is at >$160B…

With the Art degree “money pumping!” Fed morons obviously trying to screw him (and with him all US borrowers) with their current unprecedented high risk free rate he’s now able to take advantage of that via his stablecoin…

So with the higher rates he makes bazillions in his stablecoin while if they lower rates he’ll make bazillions in his CRE and DJT shares…

BULLISH: Trump-backed $USD1 has skyrocketed to a $2.2B market cap in just 2 months, now the 7th-largest stablecoin globally.

Politics meets stablecoin adoption, fast.#USD1 #Stablecoins #Trump pic.twitter.com/7RaXbEfwpX

— Bitcoin Magazine NL (@BitcoinMagNL) May 8, 2025

US National Accounts – growth contracts but likely to be temporary — Bill Mitchell

 People are closely watching the US data at present to see what the impacts of the recent tariff decisions by the new US President might have. I am no exception. Yesterday (April 30, 2025), the US Bureau of Economic Analysis published the latest US National Accounts figures – Gross Domestic Product, 1st Quarter 2025 (Advance Estimate) – which provides us with the first major data release since the new regime took office. The fact though is that this data cannot tell us much about the tariff decisions, given that Trump’s – Executive Order 14257 – only really became operational on April 4, 2025, although there had been some earlier tariff changes before then....

William Mitchell — Modern Monetary Theory
US National Accounts – growth contracts but likely to be temporary
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

A Wake for a Dying System—Spring Meetings, Sovereign Debt & ChangeNow Summit — Fadhel Kaboub (MMT economist)

This week's gathering in Washington DC for the annual meetings of the World Bank and the IMF should be a wake for a dying global economic architecture, but unfortunately, a New International Economic Order cannot be born without African leadership to reposition the continent and the rest of the Global South away from the bottom of the global value chain. This is what I told the BBC Newsday on Monday....

Global South Perspectives
A Wake for a Dying System—Spring Meetings, Sovereign Debt & ChangeNow Summit
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

Misreading the Signs: Why High UK Borrowing Doesn't Mean Financial Crash — NeilW

 Matthew Lynn’s recent article (“The UK is heading for a full-blown financial crash, and nothing can stop it now”) paints a dramatic picture of fiscal doom, arguing that rising government borrowing figures signal an inevitable economic collapse. While the borrowing numbers themselves are significant, the conclusion that they spell imminent disaster fundamentally misunderstands how government finance works in a country like the UK, which issues its own floating-rate currency. Lynn’s analysis, focused solely on the government’s deficit, misses the other side of the equation: the non-government sector’s surplus....

New Wayland

Misreading the Signs: Why High UK Borrowing Doesn't Mean Financial Crash
NeilW

Capital Flight: A Misconception — NeilW

Recent commentary has expressed concern that investors are “taking their money out of America”. Such claims invoke the idea of capital flight, a concept historically relevant under fixed exchange rate systems. However, applying this term to modern floating exchange rate systems is misleading. While significant shifts in investment preferences can have major economic impacts, no actual “flight” of capital, in the sense of a net reduction, can occur—only balanced exchanges....

New Wayland
Capital Flight: A Misconception
NeilW

DOGE Goons Physically Drag Social Security Worker From Desk

 DOGE "goons?" Seriously? A bunch of computer geeks? How tough can they be? This shit's getting ridiculous.

Dimon implying an upcoming Treasury auction failure

 

Dimon seeing another regulatory snafu coming up and Fed going to have to suspend SLR again… same thing as spring 2020 … they never learn... buckle up for more chaos… 

Jamie Dimon now saying he expects the Fed to have to step in and rescue the bond market.

Unprecedented times.

We had +3% real GDP a quarter ago. pic.twitter.com/KQosKC3UhY

— Spencer Hakimian (@SpencerHakimian) April 11, 2025

“Tariff” reprieve

 

Maybe Cook and the other US multinational CEOs had to finally break the news to the Art degree morons in Trump & Co that the “trade deficit!” was their overseas retained earnings ? 

🤔

BREAKING: Treasury Secretary Bessent was instrumental in getting President Trump to back down on Chinese phone and computer tariffs after multiple calls with Apple CEO Tim Cook and other CEOs. Navarro and Lutnick sidelined and Navarro likely to be fired as scapegoat - SOURCES

— Mike Alfred (@mikealfred) April 12, 2025

The Accursed Tariffs — NeilW

Many electrons have been inconvenienced over this topic, and most have been in vain. I’ve wondered all week whether I had anything meaningful to add. However, a few points that have emerged in discussions are worth highlighting....

New Wayland
The Accursed Tariffs
NeilW

IRS has agreed to share migrants’ tax information with ICE

 

So imminently employers of  millions of illegals are gonna be submitting their FICA tax reports containing those now DOGE deleted 9M SSNs and IRS is gonna immediately flip that information over to ICE for immigration raids probably to the largest offenders first…

Could be a mass firing event which probably won’t show up in UE claims because the current employees are illegal… maybe job openings will spike up … while UE rate appears constant…

So Art degree Fed morons will interpret that as “inflationary!” and will be EVEN LESS inclined to reduce the policy rate for Trump…

I’m more worried about this whole thing than the whole “tariff!” BS…

You may want to load up on some frozen chicken beef or pork products this week just in case..

IRS has agreed to share migrants’ tax information with ICE, to help find immigrants they are trying to deport, per NYT

— unusual_whales (@unusual_whales) April 8, 2025

Trump's "Liberation Day": Another PR Gag, or Global Reorientation Turning Point? — Simplicius

 I am a bit late with this. I have been jammed this week and just got to. It's an explanation of the Trump tariffs. 

It's the brain child of Stephen Miran, chair of the Council of Economic Advisors. Miran lays it out in  A User’s Guide to Restructuring the Global Trading System. Simplicius summarizes it briefly.

Bill Mitchell deals with this from the MMT point of view in today's post, which I linked to earlier.

Simplicius the Thinker

Trump's "Liberation Day": Another PR Gag, or Global Reorientation Turning Point?
Simplicius

US government is pinning its tariff hopes on some unlikely to be realised assumptions— Bill Mitchell

 Last week, the US President honoured his election promise, indeed his long-held commitment, to increase tariffs on imported goods and services to the US. The formula they came up to differentiate between countries was bizarre but I don’t intend commenting on that here, except to say, the imposition of tariffs on the – Heard Island and McDonald Islands – which are an ‘Australian external territory’ that is a ‘a volcanic group of mostly barren Antarctic islands, about two-thirds of the way from Madagascar to Antarctica’ (where penguins live) ranked up there with their Signal chaos. These guys have access to the ‘red button’ after all. That’s the scary thing. Anyway I was sent a document that seemingly is the theoretical rationalisation for the tariff decision (thanks Mahaish, appreciated) and so I thought I would give it some time...

William Mitchell — Modern Monetary Theory
US government is pinning its tariff hopes on some unlikely to be realised assumptions
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

The Hidden Power of Sovereign Wealth Funds — NeilW

A recent UnHerd article warns of a “crypto time bomb,” suggesting that stablecoins could become a geopolitical tool to undermine the U.S. economy by redirecting foreign dollar reserves into U.S. Treasuries. The core assumption is that countries like Japan are sitting on idle piles of dollars, waiting for a stablecoin intermediary to put them to use.

This misreads how international finance operates. Like other major dollar holders, Japan doesn’t need help managing reserves. Dollars earned from trade surpluses are immediately reinvested, often into U.S. Treasuries. There are no dormant pools of dollars needing a middleman. The real action lies not in crypto or stablecoins but in how governments use their currency-issuing powers to actively manage currencies and reserves.
The Real Mechanism: Sovereign Wealth Funds

The real geopolitical financial weapon is the sovereign wealth fund (SWF), not digital tokens. Governments have long used SWFs and their variations to manage foreign exchange reserves, intervene in markets, and subtly manipulate currency values....

New Wayland

The Hidden Power of Sovereign Wealth Funds
NeilW

DOGE deletes 7M Federal ID numbers

If these numbers represent illegal alien people currently working using other dead peoples ID numbers, when the payroll taxes are paid this week and 7M fraud notices go out to the employers it could turn out Elon actually threw 7 million people out of their jobs this week … it could create a mass firing event of 7 million people who are currently working (albeit illegally but nevertheless) in the economy, …. causing a collapse in output and a collapse in tax receipts going forward…

Mike will immediately see the corresponding drop in YoY tax receipts in his reporting data if this is what is really happening… we have to wait and shortly see if this is the real effect is of this policy…

If so, the benefit to Trump politically might come when they rerun the SS actuarial numbers without the future accrued liabilities of the 7 million now marked as dead people… Then he may be able to give current recipients a boost because the SS  “trust fund!” might appear over funded…

For the past 3 weeks, @SocialSecurity has been executing a major cleanup of their records. Approximately 7 million numberholders, all listed age 120+, have now been marked as deceased.
Another ~5 million to go. https://t.co/wtfYvYMIeW pic.twitter.com/z2GUQnPkhd

— Department of Government Efficiency (@DOGE) March 25, 2025

The Effects of Modern Monetary Theory on the Structure of Production — Patrick Newman

 For the record. From an Austrian economist.

Abstract

This paper analyzes the debt monetization proposals of Modern Monetary Theory from an Austrian structure of production perspective. It shows that this policy raises societal time preferences and reduces the number of higher order stages in the economy, leading to a higher interest rate, lower economic growth, and increased prices of consumer goods. In order to demonstrate this, it goes back to the basics and investigates the nature of government spending and how it differs from investment. I argue that Murray Rothbard, a staunch critic of Keynesian economics who would have also fiercely opposed MMT had he lived to see its rise, was correct to classify government expenditures as unproductive consumption that detract from genuine marketplace economic output. I then defend Rothbard’s position by explaining the very serious concerns some economists had in the 1930s and 1940s regarding how to measure government’s contribution to aggregate production statistics. Armed with a proper understanding of government’s antithetical nature to investment, the chapter is then able to explain why MMT’s proposal to expand the money supply to finance government spending shortens the production structure.

"I argue that Murray Rothbard, a staunch critic of Keynesian economics who would have also fiercely opposed MMT had he lived to see its rise, was correct to classify government expenditures as unproductive consumption that detract from genuine marketplace economic output."

This is a huge assumption that Keynesians of all types, many if not most institutionalists and Marxists and neo-Marxists would reject. Some neoclassical economists would agree with this assumption although perhaps in a weaker form. 

This assumption is pertinent at present since it lies at the foundation of DOGE and seems to reflect Elon Musk's monetarist thinking about economics and finance. 

Libertarians would of course agree with the assumption that government expenditure is unproductive and that they should be cut in favor of lower taxes. This is assumption correlates with the assumption that there are no public goods, only private goods.

The market-based state is also foundational for neoliberalism.

SSRN

The Effects of Modern Monetary Theory on the Structure of Production
Patrick Newman, Assistant Teaching Professor of Economics, University of Tampa

An Explanation Of Why Taxes Don’t Fund Spending—And Why Elon Musk Is Wrong About The US Government Deficit — Jim Byrne

Pass it on.

MMT101.ORG - Learn Modern Monetary Theory (MMT)
An Explanation Of Why Taxes Don’t Fund Spending—And Why Elon Musk Is Wrong About The US Government Deficit
Jim Byrne - MMT101.ORG

Reserve flows under debt ceiling

 

TGA down at 450b area now … 

So let’s assume they keep screwing around and eventually bottom it out at 50b leaving the current threat at 400b reserves in TGA that could be forced upon the banking system … 

To cover that 400b, banks would need at least 1/10th of that in capital for SLR of 0.1 … (might be a bit less) but we’ll be conservative …

 1/10th is 40b… so eg if banks were given 40b of additional free capital right now,  then they could cover those additional 400b reserve assets without effecting any other asset levels/prices at the banks…

IOR is providing additional free capital to the banks every month…

H.4.1 this week has reserves now up at >3.4T and IOR is 4.40% so that is approx 12b per month of capital flowing to banks every month … 40b/12b per month = 3.333 months so in a bit over 3 months the banks will have been given the additional capital to potentially support a TGA drawdown to 50b … 

We are about to head into a period of at least fiscal balance as taxes are paid (maybe even surplus) … so if we can stabilize TGA here for 3 months then banks might have near the additional 40b of additional capital by then that they will need to cover an additional 400b of reserve flow from TGA  .. 

So we could stabilize here at the current 10% drop in equities level for a while here if TGA stabilizes…

Then quickly recover this 10% drop when ceiling raised (allowing restart of reserve asset “drains!”) and Fed starts to cut rates in May or June (increasing all bank asset NPVs and capital) … 

The problem has been TGA has dropped from 800b to 450b in just the short period since ceiling hit on Fed 20th forcing non risk reserve assets to flow towards the banks and  negatively effecting the values/quatity of risk assets to maintain a required constant regulatory ratio…

Not out of the woods yet but maybe some relief from the constant liquidation on the way due to the typical fiscal calendar seasonality…. 

🤞

The Loan Lock Paradox — NeilW

It’s been over ten years since the Bank of England published Money creation in the modern economy, yet despite that, I run into people daily parroting untruths about how banking works. As part of the update to the UK Accounting Model, we will enhance the banking chapter to cover how lending institutions work and highlight some of the intriguing artefacts that a proper understanding reveals....

New Wayland

The Loan Lock Paradox

NeilW

Grok: “cash injection pumping liquidity!”

 

Musk’s “AI” can’t apply regulatory math (maybe THIS is where he gets it?):

The graph shows the Treasury General Account (TGA) balance dropping sharply recently, hitting its lowest since COVID. This $170B cash injection over 3 days signals the U.S. Treasury exhausting debt ceiling measures, pumping liquidity into the economy. Risk assets like stocks may…

— Grok (@grok) March 8, 2025

This is funny from it: “Risk assets like stocks may get a short-term boost…” 

LOL stocks are in a free fall!  Grok: “down is the new up!”…

How does a constant proportional (simply numerator divided by denominator) financial leverage system get a risk price increase when non-risk is being added?  It’s 8th grade Algebra… grok can’t apply it…

I think grok is based on language so it’s apparently susceptible to the same reification errors that typical liberal Art (discussion) method Econ is susceptible to… we see it all the time… it just picks up the popular language … is this really valuable?

We in big trouble with these people and their “AI” so-called…

It’s finally March 2025, and I can hardly believe that a date I’ve had in the diary for such a long time has finally arrived. It means, at long last, I can call time on a 30-year contracting career and retire from full-time work….

Congratulations on your retirement. Looking forward to your new focus on MMT research.

New Wayland
Time for a Change
NeilW

Treasury “injects cash!”

 

LOL … yo risk prices went DOWN you fcking idiots… it caused a sell off… forcibly adding non-risk to same system balance sheet causes risk prices to REDUCE… 

Here comes the flood: Treasury injects avalanche of cash into the economy ($170BN in 3 days, the most since covid) as debt ceilling extraordinary measures are exhausted; Should prop up risk pic.twitter.com/N3sDuQG70w

— zerohedge (@zerohedge) March 2, 2025

Zero Interest Rate Policy (ZIRP) Primer — NeilW

This primer outlines why the Zero Interest Rate Policy (ZIRP) is the most effective and equitable approach for the UK economy. It explains why interest rates should be permanently set to zero, how banking reform can create a more stable and fair financial system, and why clear, enforceable, and accountable loan regulation is essential for long-term prosperity.

New Wayland

Zero Interest Rate Policy (ZIRP) Primer
NeilW

The Introduction of the Euro–A Catalyst for Eurozone Economic Decline? The Effects of the Euro: An Analysis from a Modern Monetary Theory (MMT) Perspective — Jim Byrne

“…whenever I am studying European data I think how stupid the European Monetary Union (EMU) is from a modern monetary theory (MMT) perspective.“ MMT Economist Bill Mitchell

MMT101.ORG - Learn Modern Monetary Theory (MMT)

The Introduction of the Euro – A Catalyst for Eurozone Economic Decline?
The Effects of the Euro: An Analysis from a Modern Monetary Theory (MMT) Perspective.
Jim Byrne - MMT101.ORG

You Know Nothing About Economics—But there is no shame in that — Thomas Swan

Good short explanation of MMT by an educator. (10 min. read)

Pass it on.

Education
You Know Nothing About Economics—But there is no shame in that
Thomas Swan

The Rise of the Modern Monetary System: An Integration of the Credit and State Money Approaches— L. Randall Wray

 This working paper integrates the credit money approach (associated with Post Keynesian endogenous money theory) with the state money approach (associated with Modern Money Theory) by drawing on Wray’s 1990 book (Money and Credit in Capitalist Economies: The Endogenous Money Approach, Edward Elgar), his 1998 book (Understanding Modern Money: the Key to Full Employment and Price Stability, Edward Elgar), and his 2004 edited book (Credit and State Theories of Money: The Contributions of A. Mitchell Innes, Edward Elgar). New sources and interpretation of the history of money make it clear that there is no contradiction between state money and private credit money—each played a role in the creation of the modern monetary system. Indeed, today’s system was created by bringing state money into the private money giro, thereby strengthening both.

Levy Economics Institute of Bard College
The Rise of the Modern Monetary System: An Integration of the Credit and State Money Approaches
L. Randall Wray | Professor of Economics, Bard College

Episode 11 (S2) of the Smith Family Manga is now available–intergenerational tensions arise within the Smith household — Bill Mitchell

Today (February 13, 2025), MMTed releases Episode 11 in the Second Season of our Manga series – The Smith Family and their Adventures with Money. Have a bit of fun with it while learning Modern Monetary Theory (MMT) and circulate it to those who you think will benefit....

William Mitchell — Modern Monetary Theory

Episode 11 (S2) of the Smith Family Manga is now available – intergenerational tensions arise within the Smith household
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

DOGE rant

Mike with epic rant against the DOGE propaganda .. instant classic!

Trump's Executive Order to Rename Debt and Deficits — Stephanie Kelton

Rename "debt" and "deficit" to reflect reality.

The Lens
Trump's Executive Order to Rename Debt and Deficits
Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

Bessent says he and Trump focusing on 10-year Treasury yields—not Fed policy

 

This is 100% pure BS…. They surely want the Fed to lower the rates… don’t believe it…

Bloomberg: Treasury Secretary Scott Bessent says he and Trump are focusing on 10-year Treasury yields—not Fed policyhttps://t.co/rIUuEBHUAK pic.twitter.com/quBnoYdwsg

— Lance Lambert (@NewsLambert) February 6, 2025

The US Needs a Sovereign Wealth Fund Like a Fish Needs a Bicycle — Stephanie Kelton

It was 2020, and Trump was responding to a question about a $6.2 trillion fiscal package (emergency COVID spending plus day-to-day operations). The reporter might have been confused about where the money was coming from, but Trump wasn’t. “The beautiful thing about our country is…we can handle that easily because of who we are—what we are—it’s our money…it’s our currency,” he explained.…

Understanding what it means to issue a sovereign currency is at the core of Modern Monetary Theory (MMT). If you’re new to MMT, click this link and watch Professor L. Randall Wray explain. The bottom line is that a currency-issuing government, like the United States, never has to worry about “finding the money.” As Wray explains, the money gets spent into existence when Congress authorizes a budget and the payments are made. (Incidentally, it works that way in the UK and in other countries with sovereign currencies as well.)

If you’ve been following MMT for a while, you’ve probably heard Warren Mosler refer to the U.S. as the “scorekeeper” for the US$. His point is that we shouldn’t think of a currency-issuing government as “having” or “not having” any dollars. The scorekeeper maintains the spreadsheet by crediting and debiting bank accounts as the government spends (adds) and taxes (subtracts) dollars from the various “players” in the game. When there’s a Congressional appropriation for $6.2 trillion, the government creates $6.2 trillion. It literally spends the money into existence. That’s the power of a sovereign currency.

It’s hard to see why anyone who understands how a sovereign currency works would be pushing a sovereign wealth fund. Even if it became “one of the biggest funds” in the world, as Trump envisions, it wouldn’t give the federal government any spending power it doesn’t already have. 

So what exactly does the president intend to do with a sovereign wealth fund that can't be done without one, or at least not as effectively or efficiently? Or did he forget what he knew?

The Lens
The US Needs a Sovereign Wealth Fund Like a Fish Needs a Bicycle
Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

Your 4-Step Guide to Understanding the 2008 Financial Crash & Subsequent Recession From a Modern Monetary Theory (MMT) Perspective — Jim Byrne

Politicians on both sides of the Atlantic are once again talking about rolling back banking regulations to kick-start growth. This article is a timely reminder of why those regulations exist.

MMT101.ORG - Learn Modern Monetary Theory (MMT)
Your 4-Step Guide to Understanding the 2008 Financial Crash & Subsequent Recession — From a Modern Monetary Theory (MMT) Perspective
Jim Byrne | MMT Scotland

Canada response to tariffs

 

Where was this play in the Art degree Keynesian free market fundamentalism playbook?  I thought the Canada people were just supposed to add the tariff onto the price of the products?  Instead they are removing the products from inventories… going to create a glut of these products in the US and US prices are going to fall to get rid of it … no “inflation!”… 🤔

Canada’s biggest province said it will remove American products from its government-run liquor stores as part of its response to President Donald Trump’s 25% tariffs on Canadian imports https://t.co/a2sCx4ajuE

— Bloomberg Economics (@economics) February 2, 2025

Fed on tariffs

 

LOL … then according to Art degree monetarists they should reduce the rate to figure of speech  “counter the headwinds!”.. which is what Trump wants them to do in the first place… 

We read the transcripts of the Fed's 2019 meetings so you don't have to, and here's the main takeaway: The headwinds they felt from Trump's tariffs were strong https://t.co/57LOVFGjbn

— Bloomberg Economics (@economics) February 2, 2025

2025 Fiscal

 

Looks like DOGE/Elon trying to reduce top line by $1T by September… US GDP $27T/yr…. So no multiple that’s a direct 3.7% … 

I guess they think they’re only reducing govt spending on unnecessary regulatory activities or something… climate nutter stuff etc… maybe the “Argentina model”… 🤔

Reducing the federal deficit from $2T to $1T in FY2026 requires cutting an average of ~$4B/day in projected 2026 spending from now to Sept 30.

That would still result in a ~$1T deficit, but economic growth should be able to match that number, which would mean no inflation in…

— Elon Musk (@elonmusk) January 31, 2025

He seems to understand the Art degree figure of speech “money!” as rather a scientific abstraction:

The real economy is not money, it is goods & services.

Money is simply an abstract representation of real things. https://t.co/mmOHBdTmkr

— Elon Musk (@elonmusk) January 31, 2025

The Case of the Missing Report–Part 2 — Bill Mitchell

Today, we solve the ‘Case of the Missing Report’. Recall from – The Case of the Missing Report – Part 1 – that the Asian Development Bank published a report I had written (with Randy Wray and Jesus Felipe) – A Reinterpretation of Pakistan’s ‘economic crisis’ and options for policymakers (draft version) – in June 2009 as part of work I was undertaking for the Bank at the time on economic development in Central Asia. The report was published on June 1, 2009 as an official ADB Economics Working Paper No. 163 after our presentations were enthusiastically received at the Bank during seminars we gave. The Report was indexed by the major bibliographic and indexing services and evidence of that report still exists today. For example, the Asian Regional Integration Center provides a link to some 30 records covering – Pakistan – including our ADB paper with the official publication date. The ‘official’ link to the publication – https://www.adb.org/Documents/Working-Papers/2009/Economics-WP163.pdf – however, now returns a ‘Page not Found’ error. Then, if you search for ADB Economics Working Paper No. 163 on the ADB WWW Site you will find another paper – The Optimal Structure of Technology Adoption and Creation: Basic Research vs. Development in the Presence of Distance to Frontier – which somehow became Working Paper No 163 and was also published in June 2009. So what gives? How did our ADB Economics Working Paper No. 163 disappear from the face of the Earth to be replaced by another ADB Working Paper No. 163, all in the space of a day or so? In this Part 2 of the ‘Case of the Missing Report’, I provide the solution to the mystery....

William Mitchell — Modern Monetary Theory

The Case of the Missing Report – Part 2
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

NVDA exports

 

Art degree morons as usual can’t understand the Accounting abstractions… think NVDA has to be shipping the REAL units to where the Accounting ABSTRACTIONS are recorded…

Like I guess they think we’re importing $300B net of Guinness, Jameson and potatoes from Ireland…

It’s the same as the current Trump “tariffs!” womanish soap opera… A LOT of people are going to get that wrong for the same reasons…

Looks like $NVDA GPUs have never been physically in Singapore ⚠️

So, according to $NVDA 10-Q disclosures “For example, most of the shipments associated with Singapore revenue went to either the United States or Taiwan in the first quarter of fiscal year 2025.”

Guess what..… https://t.co/n0Wr9IEz8M pic.twitter.com/plgg6ZdA7K

— JustDario 🏊‍♂️ (@DarioCpx) June 29, 2024

The Case of the Missing Report – Part 1 — Bill Mitchell

 This blog post is a long time in gestation and I could have written in 2009 which is the relevant year of the events that I will document in this two-part series. My conversations with government officials during my working trip to the Philippines last week highlighted several things, including their sheer terror of IMF intervention and the ratings agency. I will write separately about that in a later post. But the IMF watches these types of nations like a hawk and is ready to pounce to enforce their authority at the slightest departure from the neoliberal macroeconomic policy line. As long as these types of nations concede to the IMF bullying they have very little hope of developing towards being advanced states. And IMF bullying is what this blog post is about. This is Part 1 of a two-part story that might be summarised as the ‘Case of the Missing Report’. I will solve the mystery in Part 2, which will be published on Thursday of this week.

William Mitchell — Modern Monetary Theory
The Case of the Missing Report – Part 1
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

The Impact of 25% Tariffs on Canadian GDP—The Bank of Canada vs Deepseek — Stephanie Kelton

Stephanie asks Deepseek.

The Lens
The Impact of 25% Tariffs on Canadian GDP—The Bank of Canada vs Deepseek

Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

What is the University of Michigan Survey of Consumer Sentiment Telling Us? — Stephanie Kelton

 Expectations.

The Lens
What is the University of Michigan Survey of Consumer Sentiment Telling Us?
Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

Source of funds for tariffs

 

This statement/tweet isn’t exclusively true:

MAGA will do whatever, but tariffs are taxes we pay on imports. It's time media outlets called them that. https://t.co/OZnlnS5YvU

— Dean Baker (@DeanBaker13) January 26, 2025

the foreign entities can simply lower their import prices in USD terms and access these foreign USD account balances as source of USDs to pay any new tariffs:

 

A Framework for a Basic Bank — NeilW

In analysis, it’s helpful to simplify and focus on the core elements of a system. Today, we will identify the essential processes and structures required to create a functional bank, accompanied by diagrams to illustrate these key processes.

New Wayland Blog

A Framework for a Basic Bank
NeilW

Climate nutters useful idiots for insurance scammers

 

Can’t even make it up… moron intellectual degenerate Art degree climate nutters (who couldn’t tell you the atomic number of hydrogen) running interference for the insurance scammers…

California's insurance system is broken for a variety of reasons, but climate change is not one of them.

There is no greater consumer scam underway than insurance industry trade groups blaming climate change for skyrocketing rates. The media is complicit, on the take. https://t.co/VN9RU7F7Oz

— Ryan Maue (@RyanMaue) January 25, 2025

Field trip to the Philippines–Report — Bill Mitchell

I have been working in Manila this week as part of a ‘knowledge sharing forum’ at the House of Representatives which was termed ‘Pathways to Progress Transforming the Philippine Economy’ that was run by the Congressional Policy and Budget Research Department, attached to the Congress (Government). I am also giving a presentation at De La Salle University on rogue monetary policy. It has been a very interesting week and I came in contact with several senior government officials and learned a lot about the way they think and do their daily jobs. I Hope the interactions (knowledge sharing) shifted their thinking a little and reorient to some extent the way they construct fiscal policy. This blog post reports (as far as I can given confidentiality) what went on at the Congress.

William Mitchell — Modern Monetary Theory

Field trip to the Philippines – Report
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

What I've Been Up To — Stephanie Kelton

I am back in New York after an extended trip to California. Before I left town, I joined Scarlet Fu on Bloomberg Markets. We talked about the GOP plan to pass “one big beautiful bill” as quickly as possible and how much of it they’re going to try to offset/“pay for” (versus adding to the deficit)....

The Lens

What I've Been Up To
Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sand…

See also

The following mentions MMT and Stephanie

NTD

5 Key Points From Biden’s Final Interview as President

Nathan Worcester

The Reserve Requirements Fad: A Solution in Search of a Problem NeilW

The Latest Epicycle in Interest Rate Mythology

Every so often, a new fad emerges to prop up the fantasy that interest rate targeting is some economic panacea. The latest contender? Reserve requirements.

The premise is simple: if we stop paying interest on massive excess reserve quantities held by banks, we won’t have to hand over vast sums to them. The stunning amount of intellectual effort required to come to this conclusion is why economists earn the big money. Predictably, it has been seized upon by those Right-Thinking Lefties who detest bank profits but remain wedded to the mystical notion of an all-controlling interest rate.

Misunderstanding Banking—Again

Since economists construct their banking theories on layers of myths, they inevitably arrive at the wrong conclusions. Yanis Varoufakis fell into precisely this trap when applying the reserve requirement argument to the UK.

So, let’s take a step back and examine reserve requirements in the context of UK banking—without the distortions of mainstream economic dogma....

New Wayland Blog

The Reserve Requirements Fad: A Solution in Search of a Problem
NeilW

The Gower Intitiative for Modern Money Studies newsletter – January 2025

Report on happenings in 2024 with some links.

The Gower Initiative for Modern Money Studies
The Gower Intitiative for Modern Money Studies newsletter – January 2025

Trump plan to reduce “inflation!”

 

Trump plan to reduce “inflation!”…. 1.  Get energy production costs down (ie euthanize the “climate!” nutters) … 2. Reduce the policy interest rate (ie order the Fed to reduce FFR/IOR)…

Nooooooooooobody right now thinking he can do any of this …

Fed withdraws from global “Climate!” group

 

This is a good sign the Fed may be generally acquiescing to Trump admin policies….

🇺🇸Fed Announces Withdrawal from Global Climate Coalition. pic.twitter.com/xjSgOFPRwi

— Update NEWS (@UpdateNews724) January 17, 2025

Episode 10 (S2) of the Smith Family Manga is now available—Coal Port Blockade but the progressives want to tax the rich — Bill Mitchell

Today (January 17, 2025), MMTed releases Episode 10 in the Second Season of our Manga series – The Smith Family and their Adventures with Money. Have a bit of fun with it while learning Modern Monetary Theory (MMT) and circulate it to those who you think will benefit.

William Mitchell — Modern Monetary Theory

Episode 10 (S2) of the Smith Family Manga is now available – Coal Port Blockade but the progressives want to tax the rich
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

“Hydrants out of water!”

This is funny the Art Degree morons all think fire hydrants contain a fixed amount of water (rather than control pressure) i.e.  “the hydrants ran out of water!”  … meanwhile they think govt treasury can “pump in money!” … both AT THE SAME TIME…   😂😂😂😂😂

Gov. Newsom on LA not having water in its fire hydrants: Not my job pic.twitter.com/2SzW3Az1D8

— End Wokeness (@EndWokeness) January 9, 2025

Return to a "Appropriate and Positive Interest Rates" ーInterpreted through the Lens of Monetary Theory — Masashi Chikahiro

MMT influence is spreading.

Chuo University

Return to a "Appropriate and Positive Interest Rates" ーInterpreted through the Lens of Monetary Theory ー Sixth Collaborative Course with "Otemachi Academia"
Masashi Chikahiro, an associate professor at Chuo University's Faculty of Economics (Japan)

See also

Based on Japanese studies.

William Mitchell — Modern Monetary Theory

Shifts in societal attitudes towards well-being mean that a degrowth strategy does not necessarily have to be political suicide

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

The currency message from BRICS leaders amarynth

To calm shattered nerves in the west, the message is out: BRICS is not floating a new currency; BRICS is providing alternative economic structures and systems (and currencies) to trade with one another....

Michael Hudson noted three challenging points — foreign debt exposure, economic rent extraction, and the need to raise living standards and labor productivity….

 Indonesia, the fourth most populous nation, is now also a member of BRICS. 

Global South

The currency message from BRICS leaders

amarynth