Discussions about fiscal statements, analysis and controversies from an MMT perspective

Video – Japan at a Crossroads: Fiscal Policy, China, and the Growth

I have limited time today to write a blog post and last night I was sent a new video that I recently recorded with my research colleague at Kyoto University, Professor Fujii where we talk for some hours on the topic – Japan at a Crossroads: Fiscal Policy, China, and the Growth. It was a conversation we had via Zoom that was recorded on Friday, December 5, 2025. We reflect on recent developments in Japan and its relationship with other major countries (US, China, etc) and consider the policy challenges facing the new Takaichi Cabinet. It is a very long session. The transcript was generated by YouTube AI I believe and then edited and is not perfect. A lot of unnecessary aspects are edited out and the latter part of the transcript is really just an AI summary. But I think the record is acceptable. At times, the discussion changed from English to Japanese, where there was some ambiguity in terminology etc, and those segments have been cut from the transcript. I put in timestamps during the transcript to help you zoom into topics of interest. I hope you find something useful in our long discussion.

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The US attack on Europe misses the point entirely

The other day I was asked whether I was happy that the US President was finally saying things that I have been noting for years. The reference to Trump was, on interrogation, based on the US government analysis of Europe that appeared in the so-called – National Security Strategy of the United States of America – November 2025 (hereafter NSS) – which was released to the public on December 4, 2025. When I finally got around to reading the document, it was clear that the person who put that proposition to me didn’t understood Trump’s position and certainly didn’t understand my position. While the Trump Administration is critical of the European Union, as I am, the respective bases for those criticisms couldn’t be farther apart.

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British Labour’s obsession with fiscal rules is untenable and ignores the reality of the situation

I have been a consistent critic of the way in which the British Labour Party, both in opposition and in government, is obsessed with rigid fiscal rules, thinking it is the only way that it can demonstrate fiscal credibility (whatever that is in their minds). The result is that they get cornered into situations that either lead them to make poor decisions which lose them votes and give the likes of Nigel Farage more fuel for his crusade or they are forced to admit they cannot achieve the (unachievable) fiscal rules. Either way it is a clusterf*)@. In the last week or so, we have witnessed the ludicrous situation of the British Office of Budget Responsibility failing to protect its own file systems and leaking information before the Chancellor presented her official fiscal statement. The leaked information just happened to contradict the messaging of the Chancellor which was a bit inconvenient. But the important issue that all this raises is not whether OBR can run a secure WordPress site (evidently it cannot), but that the information it generates is so inaccurate and systematically biased that it cannot realistically be used as the basis for assessing fiscal policy. Which means that the obsession with the fiscal rules leads to policy changes that damage things that matter – such as employment and services – but those policy changes are based on information (OBR forecasts) that subsequent revelations tell us would not justify those policy shifts. As I said – clusterf8x@.

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Panel of Japanese economists mired in erroneous mainstream constructions and logic

Last Friday, I met a journalist in Tokyo and we discussed among other things, the results of the latest Nikkei/JCER ‘Economics Panel’, which was conducted between November 13 and November 18, 2025. The panel involves “questionnaires” being “sent to approximately 50 economists to gather their evaluations of various economic policies. The aim is to promote deeper and more active discussions on economic policy by clearly conveying the consensus and differences of opinion among experts, along with presenting individual comments from each economist.” The results are quite striking and demonstrate that the Japanese academic economics profession is mired in destructive Groupthink that means the profession is failing to contribute in any effective and functional way to advancing the well-being of the Japanese population or providing insights into how the nation can meet its considerable and immediate challenges.

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Supply-side employment services models fail and promote sociopaths

One of the ways in which neoliberal dogma altered the relationship between government and the citizens in Australia was in the way employment services were delivered. Before this dogma gained traction, the Australian government operated the – Commonwealth Employment Service (CES) – which was created in 1946 as part of the grand plan to sustain full employment and improve the material standards of living after the travails of the Great Depression and then World War 2. It was created by the – Re-establishment and Employment Act 1945 – which was “designed to help members of the forces transition back to civilian life by providing for their re-establishment in employment and civil life”. The CES was an integral aspect of this process and provided job matching services, occupational planning, vocational training and support, income support payments, and career guidance. It was a very effective service that operated over many decades after its introduction. There were spin-off services to help those with disabilities (particularly chronically injured service men and women). As neoliberalism took hold in Australia, the narrative shifted towards blaming the unemployed for their plight rather than understanding that the unemployment was due to a systemic lack of jobs being created because aggregate spending was insufficient. Parts of its operation were hived off to (grasping) private operators and eventually the whole operation was privatised in 1998. It has been downhill ever since and the problems arising from this decision by government continue to serve as a blight on the civility and decency of Australian society. The latest news, which I canvas in today’s post is just more of the same.

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Japan – the challenges facing the new LDP leader – Part 3

This is a third part of an as yet unknown total, where I investigate possible new policy agendas, which are designed to meet the challenges that Japan is facing in the immediate period and the years to come. The first two parts were written in the context of the elevation of Ms Takaichi to the LDP presidency. It was anticipated that she would then become the Prime Minister as a result of commanding a majority on the floor of the Diet, with help from long-standing coalition partner Komeito. However, in the last few days, things have changed considerably in Japan with Komeito withdrawing from the ruling coalition and throwing the question of who will become the Prime Minister up in the air. One of the issues that are shaping what happens next is the question of social security sustainability as the society ages. This divides the parties and will help to determine the configuration of the next government in Japan.

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Japan – the challenges facing the new LDP leader

This will be a series of blog posts where I analysis the period ahead for Japan under the new LDP leadership of Ms Sanae Takaichi. The motivation is that on November 7, 2025, the research group I am working with at Kyoto University will be staging a major event at the Diet (Parliament) Building in Tokyo where I will be one of the keynote speakers. The strategic intent of the event is to outline a new policy agenda to meet the challenges that Japan is facing in the immediate period and the years to come. It is highly likely that the Lab Director here at Kyoto, who promotes and Modern Monetary Theory (MMT) perspective and was formerly the special advisor to the Shinzo Abe, will return to that position under Ms Takaichi. This gives the event increased importance for outlining an Modern Monetary Theory (MMT)-based perspective. Today, I examine the inflation issue in Japan.

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My current number one candidate for the worst economics article of the year

Unfortunately, the so-called progressive UK Guardian has an Australian economics editor who is anything but if his economic analysis is anything to go by. The economic news for this week started with the release of the – Final Budget Outcome – (FBO) for the 2024-25 fiscal year for the Federal government (released September 29, 2025). It showed the actual fiscal deficit for the year just gone was slightly lower than had been predicted in earlier official statements. The government celebrated claiming a lower deficit was a sign not only of its good management but was also virtuous. The journalists, however, had a different spin, claiming that while the situation could have been worse, it was still bad. The discussion in the media and the official statement from the Treasurer seemed to omit one rather important fact. The context. This allows us to understand the distinction between ‘good’ and ‘bad’ fiscal deficits, a distinction that the commentariat seems unable to grasp. Anyway, this UK Guardian article is my current number one candidate for the worst economics article of the year. Why discuss it? Because it helps illustrate the essentials of macroeconomics that people need to understand.

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Argentina entering the usual doom loop that austerity inevitably creates

‘A picture is worth a thousand words’ is an old adage, which means that some image can express a very complex message more quickly than a written tract – of the sort that will follow in this blog post. At the Spring 2025 meetings of the IMF in Washington, the IMF boss Kristalina Georgieva was ebullient about how well Argentina was doing as a result of the harsh austerity (‘shock therapy’) that the current President Javier Milei has unleashed on his nation. If you watch the IMF boss please also have a brown bag handy for the obvious nausea that will follow. The scene became even more bizarre when the new Minister of Deregulation and State Transformation. aka El Coloso, one Federico Sturzenegger, during a panel with others including Rachel Reeves, pinned a little badge of a chainsaw to Georgieva’s lapel. It was all very lavish and symbolic and ignored the plight that these elites have imposed on ordinary citizens back in Argentina. What is happening back in Argentina is once again demonstrating how the ideology of austerity initially promises the world to the citizens only to backfire and turn to crisis.

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Some discussion about taxation

Over the weekend, I was a presenter at a Fabian’s Society meeting which sought input on ‘alternative taxation policies’ under the general tenet of the need for the Australian government to raise revenue to ensure a socially just society. The other presenter was John Quiggin and I think we provided a good complementarity for the relatively large audience (for a Saturday afternoon – with football finals in progress!). Of course, my opening salvo was to reject the fundamental premise of the workshop – which is a premise that progressive commentators and activists seem unable to shed to the detriment of their argument. I indicated to the audience at the outset that the aim of taxation is generally not to raise more revenue for government, but, instead, to ensure the non-government sector has less spending capacity. More is not less. That is a fundamentally different frame in which to discuss the topic and I closed the workshop by suggesting that one of the single most important things that progressives can learn is to stop using terms like ‘taxpayers’ money’ when discussing fiscal policy. Using those type of terms immediately frames the discussion against progressive goals.

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