Bank of England Governor Mark Carney took aim at the U.S. dollar's "destabilizing" role in the world economy on Friday and said central banks might need to join together to create their own replacement reserve currency.…
In an environment of secular stagnation in the developed economies, central bankers’ ingenuity in loosening monetary policy is exactly what is not needed. What is needed are admissions of impotence, in order to spur efforts by governments to promote demand through fiscal policies and other means.Throwing in the towel (but not endorsing MMT). Politically, this is about control of the Democratic Party after the transition from Clinton-Obama-Third Way. Summers is on the side of the Establishment, while Stephanie Kelton is Bernie's advisor and in league with The Squad.
The insights of this new data series are many, but for this post here I want to highlight a single eye-popping statistic. Between 1989 and 2018, the top 1 percent increased its total net worth by $21 trillion. The bottom 50 percent actually saw its net worth decrease by $900 billion over the same period.…People's Policy Project
“China has a 15-year head start—whatever you want, someone’s doing it,” said Wing Xu, the operations director for Omnidex Group, which helps make large pumps for Pennsylvania-based industrial equipment manufacturer McLanahan Corp....Checkpoint Asia
"Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA."
The bottom line: It should go without saying that Trump doesn't have the authority to order U.S. companies to look for alternatives to China....Axios
@GOP With deficit rising, worries grow the U.S. may be out of tools if recession hits @realDonaldTrump is NOT making America great https://t.co/0SYJvaWg14
— WyssWriter (@WyssWriter) August 23, 2019
For at least a few moments this week, President Trump suggested a payroll tax cut to stimulate the stalling macroeconomy. Although it appears that he has already changed his mind, it’s worth taking a look at the strategy...just in case.
Let’s say for sake of argument that the negative signals we have received of late are accurate. What should we do if we slip into full-fledged recession? Cut interest rates? Lower the budget deficit? Decrease payroll taxes? It turns out that the last one is the clear and easy winner. Why?Forbes — Pragmatic Economics
Wealth disparities between the rich and the poor in the United States have broadened over the past 30 years, according to a new dataset released earlier this month by researchers at the Federal Reserve Board. Their Distributional Financial Accounts is the new dataset that provides quarterly estimates of wealth distribution in the country from 1989 to 2019. 2 The new dataset was created by integrating the Federal Reserve Board’s Financial Accounts with the Survey of Consumer Finances. Together, they contain reliable measures of the distribution of household-sector assets and liabilities from 1989, which gives policymakers and economists alike new insight into how the distribution of wealth has changed since the 1990s.WCEG — The Equitablog
The new Federal Reserve Board dataset confirms that wealth concentration has been growing, consistent with other data series such as the World Inequality Database assembled by academics worldwide. Indeed, the Fed’s new Distributional Financial Accounts open up new opportunities to study close to real-time changes in the U.S. wealth distribution. It provides the necessary data to study fluctuations in the wealth distribution over short time periods, while accounting for changes that occur between times of survey measurement for less frequently collected datasets....
This Labor Day, Our Money will gather 500 participants to host a march for Full Employment and Economic Justice in commemoration of the Civil Rights Movement legacy of advocacy for a Federal Job Guarantee. The march will begin at the MLK Memorial in Washington DC at 11 am and end at the Marriner Eccles Building of the Federal Reserve around 2 pm.
Our Money founder, Rev. Dr. Delman Coates, will use this opportunity to draw the connection for lay audiences between the Civil Rights struggle for Full Employment and Economic Justice, and the importance of understanding our public power of money creation, as illuminated by insurgent school of economic thought, Modern Monetary Theory (MMT). Dr. Coates will call on Congress to pass a Federal Job Guarantee, as well as hold hearings on MMT in order to allow the public to formally interrogate the implications of our public power....
Headed to first day of #mnstatefair2019. Excited for @MinneapolisFed booth in the education building. If I restrain myself from eating at the Fair, did I really go? #fedatthefair— Neel Kashkari (@neelkashkari) August 22, 2019
Jerome Powell, June 25: “The Treasury Department -- the administration -- is responsible for exchange rate policy -- full stop.''https://t.co/7oe1uoDxy1 https://t.co/Vm1h53tJ1F
— Katherine Greifeld (@kgreifeld) August 5, 2019
I keep reading ridiculous articles about Brexit in the UK Guardian. The latest was comparing it to pre-WWI Britain and suggesting there were no signs of a “Damascene moment remainers hoped for”. I thought that reference was apposite – given the reference invokes St Paul’s conversion after he was struck blind. Good analogy – blind and remainer. The Brexit imbroglio is all the more puzzling because it seems to be a massive mismatch of scale – a currency-issuing nation and an organisation with no currency and no democratic legitimacy. And that is before one even contemplates the nature of that organisation. On August 20. 2019, the European Union provided us with a perfect example of why no responsible government would want to be part of it. In its – Daily News 20/08/2019 – there were three items. The last item told us that construction output in the EU28 had declined by 0.3 per cent in June 2019. The first item was a sort of cock-a-hoop boast about how great Greece is after the EU saved it from disaster. Parallel universe sort of stuff. Britain will thank its lucky stars after October 31, 2019 when it goes free from that madness. Even though the remainers remain ‘blind’ without their Damascene moment”….Bill Mitchell – billy blog
....WHERE IS THE FEDERAL RESERVE?— Donald J. Trump (@realDonaldTrump) August 21, 2019
So Germany is paying Zero interest and is actually being paid to borrow money, while the U.S., a far stronger and more important credit, is paying interest and just stopped (I hope!) Quantitative Tightening. Strongest Dollar in History, very tough on exports. No Inflation!.....— Donald J. Trump (@realDonaldTrump) August 21, 2019
.....We are competing with many countries that have a far lower interest rate, and we should be lower than them. Yesterday, “highest Dollar in U.S.History.” No inflation. Wake up Federal Reserve. Such growth potential, almost like never before!— Donald J. Trump (@realDonaldTrump) August 21, 2019
“The speed bump has been missteps by the Federal Reserve.” @cvpayne @foxandfriends So true!— Donald J. Trump (@realDonaldTrump) August 21, 2019
Doing great with China and other Trade Deals. The only problem we have is Jay Powell and the Fed. He’s like a golfer who can’t putt, has no touch. Big U.S. growth if he does the right thing, BIG CUT - but don’t count on him! So far he has called it wrong, and only let us down....— Donald J. Trump (@realDonaldTrump) August 21, 2019
President Trump Impromptu Remarks Departing White House – (Video and Transcript)… https://t.co/rLrnZ0gITg pic.twitter.com/suIY5xfpTs— TheLastRefuge (@TheLastRefuge2) August 21, 2019
As policymakers, academics, and activists prepare for next month's United Nations climate summit in New York, they should consider precisely what it will take to build a truly sustainable global economy. First and foremost, the world needs a new multidisciplinary approach that is broad enough to tackle the challenge....Project Syndicate
California is facing yet another real estate-related crisis, but we’re not talking about its sky-high home prices. According to newly released data, it’s simply become too risky to insure houses in big swaths of the wildfire-prone state.
Last winter when we wrote about home insurance rates possibly going up in the wake of California’s massive, deadly fires, the insurance industry representatives we interviewed were skeptical. They noted that the stories circulating in the media about people in forested areas losing their homeowners’ insurance was based on anecdotes, not data. But now, the data is in and it’s really happening: Insurance companies aren’t renewing policies areas climate scientists say are likely to burn in giant wildfires in coming years....I had friends burned out in the recent fires and insurance paid for it. With insurance it was still a disaster, not only materially but also psychologically. Without insurance?
The fate of pegs is always the same because there is this thing we call the business cycle.
Abstract
The problems with the design of the Eurozone came into focus when, late in 2009, several member nations– notably Greece – failed to refinance their government debt. The crisis that followed was not entirely asurprise. When the Euro was launched in 1999, many economists warned that the single currency was unworkable. Even Eurozone optimists argued that the Euro project would eventually need to be completed. More than 10 years after the crisis, unemployment rates remain elevated and continue to threaten the social, political and economic stability of the Eurozone. The institutional constraints of the single currency however preclude bold action to address these challenges. In this paper, we suggest that tackling the twin problems of the Eurozone – its institutional flaws and mass unemployment – could be addressed by creating a Euro Treasury that would finance a Job Guarantee program, which would eliminate mass unemployment, enhance price stability, and foster social and economic integration across Europe.
Researchers found that PV systems could produce electricity at a lower price than the grid in 344 cities.Good news for air quality and climate. China has been relying on coal-fired plants (72% in 2016).
The domestic outsourcing of jobs in the United States is fast becoming a dominant explanation for the destruction of the social contract of work, a historic concept in which norms of fairness and solidarity between firms and their employees played a major role in wage setting and workplace standards for some U.S. workers—though of course many others such as African American workers were consistently more marginalized. The destruction of this social contract, detailed in Brandeis University economist David Weil’s book The Fissured Workplace, describes a labor market structure in which workers are employed at firms with core competencies and then those firms subcontract out all other duties or specific functions in the production process.
Within daily work activities, U.S. workers may directly interact with other workers across a variety of firms with different levels of job quality. One prototypical example is janitorial work, where most office cleaners today are employed by a janitorial services company that is contracted by the building owner where individual office places lease their space. These kinds of fissured employment patterns have led economists and other social science researchers to examine a variety of empirical research questions about what has caused domestic outsourcing, what the impacts have been and for whom, and what the future of the firm will be.
This body of research lays the groundwork for U.S. policymakers to understand the impact of this domestic outsourcing phenomenon and what sort of policy solutions can ensure that economic prosperity is broadly shared as workers and firms alike consider “the future of work” in the United States....
Only a short blog post today – in terms of actual researched content. Plenty of announcements and news though, a cartoon, and some great music. I have been meaning to write about the household income and wealth data that the ABS released in July, which showed that real income and wealth growth over a significant period for low income families has been close to zero, while the top 20 per cent have enjoyed rather massive gains. These trends are unsustainable. A nation cannot continually be distributing income to the top earners who spend less overall while starving the lower income cohorts of income growth. A nation cannot also continually create wealth accumulation opportunities for the richest while the rest go backwards. These trends generate spending crises, asset bubbles and social instability. That is what is emerging in Australia at present.While Bill's analysis in this post is Aussie-centric, the rationale is applicable to the whole neoliberal world. It's basically what neoliberalism is about. The contemporary difference is that now the domestic populations of the neoliberal nations are being colonized as well. Even some of the top tier that are receiving most of the benefits are getting squeamish, realizing that an unsustainable process cannot go on forever and that eventually the bill will come due.
Abstract: Using historical sources, we attempt to unravel and elucidate the economic worldview held by the United States Treasury Department during World War II. We analyze the Treasury’s view of taxation, bond sales, and interest rates. We consider whether and in what ways this worldview is compatible with Modern Monetary Theory, finding that, in most regards, the two align closely, the differences being primarily attributable to the peculiarities of war finance. Finding a less clear view of national debt, an interpretation is offered based on Treasury’s statements. We also offer evidence that this view had a foothold in the era’s news outlets.Global Institute for Sustainable Prosperity
In 2017 when a nurse pointed out that her wages had not increased for several years, then-prime minister Theresa May quipped: “There is no magic money tree.” Well, maybe Mrs May was wrong. I believe there is a magic money tree and it is coming to western economies very soon. I am talking about MMT. And strangely, MMT doesn’t stand for “magic money tree”; it’s Modern Monetary Theory....
So MMT is flawed, not by economics but by human nature. They say central bankers should take away the punch bowl just as the party gets going. While we may trust central bankers to do so, I haven’t been to a party yet where the party goers themselves elected to remove the punch bowl.
I’d been stewing for a few months in the melange of blogs and YouTube videos and white papers that make up much of the M.M.T. world. Some intricacies lay beyond me—a hazy blur of literature about floating exchange rates and reserve currencies addled my brain. But the basic principle of M.M.T. is seductively simple: governments don’t have to budget like households, worrying about debt, because, unlike households, they can simply print their own money....This illustrates a major difficulty in public education about MMT. On one hand, the financial and economic concepts are beyond many laypersons, while on the other, the body of literature with which one must be familiar is daunting to non-specialists. So the commonly held view is that MMT is about "printing money," which sounds irresponsible to much of the public.
I asked Ann whether she found Kelton convincing. “I mean, kind of!” she said. “I know what she said was brilliant, I just can’t believe her. She’s gotta be wrong.”It's not just the public either.
Still, most mainstream economists view M.M.T. as the Cult of the Magic Money Tree, deriding what they see as its theorists’ preference for analogy over mathematical modelling or empirical evidence. “What most concerns me is I can’t actually quite figure out what it is,” Paul Krugman, the Nobel Prize-winning economist and Times columnist, told me. Krugman is a political progressive, and he agrees with many of the spending programs that M.M.T. proponents support. But, he said, “I’ll be damned if I can figure out what it is exactly that they think.”But this is a whole article on MMT that focuses on Stephanie Kelton as MMT's chief media spokesperson, and "there's no such thing as bad publicity." Free publicity is always a gift, especially in an environment in which the media tends toward marginalization of politically incorrect ideas and people that espouse them.
I asked Kelton if she worries at all about these fights, further over the horizon. “At the end of the day, what I really hope for is just a better debate,” she told me. “Let both sides put forward their best ideas.”
This is the ultimate dream of M.M.T.: freed from false financial shackles, we could debate, on honest terms, the most fundamental political questions. If money weren’t an issue, would we want to scrub carbon from the atmosphere? Pay for reparations? Expand ice? Maybe we just want to be left alone, with our tax money in our pockets and some Social Security checks when we age. M.M.T.’s architects describe their vision as encompassing not just a better economy but a better, healthier body politic—a goal that is, given the state of things, almost certainly doomed, but is admirable nonetheless. Deficits do matter—not just the financial ones.The critique is "fair and balanced," with the proviso that the author admits limited knowledge of MMT as a macroeconomic theory. Actually, not a surprising limitation when Paul Krugman admits that he can't figure it out either, based on conventional economic training.