Welcome to the billy blog Saturday quiz. The quiz tests whether you have been paying attention over the last seven days. See how you go with the following five questions. Your results are only known to you and no records are retained.
Today my RSS feed was full of all sorts of information and it took me some time to get through it all. The reason? I just purchased an Amazon Kindle DX and it arrived this morning. As a frequent traveller I seem to carry too many books and papers given I read a lot and so the Kindle is my proposed solution – everything is going to being stored on it – novels, travel documents, bus timetables, academic papers, mp3s, you name it. My bags will now be lighter and that continual shuffling of papers to access the right one at the right time is going to be a thing of the past. So I got to know it a bit today! Anyway, one paper I did read today was from the European Central Bank (ECB) entitled – The Impact of Numerical Expenditure Rules on Budgetary Discipline over the Cycle. It is so bad you would gasp for air reading it. It is replete with statements that just appear without scrutiny and are taken for granted but, which in fact, are at the basis of the whole argument about fiscal rules and are hardly acceptable.
You realise how misguided the economic debate is in the West when you read that the British Opposition has been telling the British people that governance is about to break down and the IMF are poised to take over the country – that is, unless they vote for their austerity plans – and on the same day the UK Office for National Statistics releases the latest unemployment data which shows that unemployment has risen to a 15-year high. And while the British election debate appears to be all about who can cut public net spending the most, the IMF releases its latest World Economic Outlook (WEO), which is far from optimistic about the future and is warning against withdrawing the fiscal support for the very fragile demand conditions around the world. Then you read the Financial Times and see that former Clinton deputy treasury secretary Roger Altman is predicting a debt explosion. The general conclusion: our education systems have failed – and have been pumping out a population that mindlessly believes all this stuff while the elites run us over in their rush to bank the wealth they are harvesting.
In Washington D.C. next Wednesday (April 28, 2010) there will be two separate events where the focus will be on fiscal sustainability. The first event sponsored by a billionaire former Wall Street mogul under the aegis of the Peter G. Peterson Foundation (PGPF) promises to bring the Top leaders to Washington. It will feature a big cast well-known US entities (former central bank bosses; former treasury officials and more). It will be well-publicised and a glossy affair – full of self-importance. It will categorically fail to address any meaningful notion of fiscal sustainability. Instead it will be rehearse a mish-mash of neo-liberal and religious-moral constructions dressed up as economic reasoning. It will provide a disservice to the citizens of the US and beyond. The other event will be smaller and run on a shoe-string. The grass roots The Fiscal Sustainability Teach-In and Counter-Conference is open to all and will actually involve researchers who understand how the monetary system operates. Like all grass roots movements it requires support. I hope you can provide support commensurate with your circumstances.
Today I read another appalling beat-up from the researchers at Société Générale. The fabrications and poor analysis contained in the Report should instigate class actions from their subscribers for grossly misleading them in their investment decisions. But the real problem is that the financial journalists seem content to function as meagre mouthpieces for this hysteria – to use their columns to spread it widely without the slightest introspection or critical scrutiny. The result is that the public are continually confronted with outrageous propositions – which carry not even a skerrick of truth. They then form fallacious perspectives about public policy that ultimately undermine their own welfare. The lies are all presented as being “iron clad laws” and “inevitabilities” and “fundamental truths”. But as I learned as a youngster – lies are lies.
At times some document from the past is discovered that no-one much has read or paid any attention to but which offers fundamental insights into the options facing governments operating a monetary system based on a fiat currency. We have available now one such document which I will discuss in some detail. The essential insight can be summarised by the title of the blog – taxpayers do not fund anything. So when you hear commentators and politicians and the like use terms like “taxpayers’ funds are being mis-spent” etc, you can immediately conclude they do not understand how the monetary system functions. At that point, it is advisable to ignore what they have to say – given it is likely to be erroneous as a result of the initial false premises. The problem is that the public policy debate is largely based on these false premises. As a result, the policy positions that emerge are typically inferior and in many cases extremely damaging to the fortunes of the disadvantaged.
Here are the answers with discussion for yesterday’s quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.
Welcome to the billy blog Saturday quiz. The quiz tests whether you have been paying attention over the last seven days. See how you go with the following five questions. Your results are only known to you and no records are retained.
Australia is becoming caught up again by the rhetoric flowing from the minerals lobby that we are about to enter the “mother of all mining booms”. Almost every day now, the politicians, business spokespersons and the media are beating up this story. The minerals lobby has achieved spectucular success over the years in inflating its importance such that people genuinely believe our prosperity comes from this sector. Somehow we believe that this sector is our vehicle to Shangri La. Corresponding to all this hype is a growing push for significant cuts in public spending to “make room” for the mining boom. The debate is interesting because, like the intergenerational (ageing population) debate, it demonstrates how erroneous understandings about the monetary system and the role of the government within it lead to spurious conclusions. And all the while – labour underutilisation rates remain high.