Regular music spot and other commentary
My blog is on holiday until Monday, January 3, 2022. The baffling quiz at the coming weekend will still appear. While the local beach is enticing I am actually in personal lockdown while I finish some outstanding (and late) writing commitments.
It’s Wednesday and a shorter blog post, which includes the latest from Turkey and some music. The mainstream narrative against Modern Monetary Theory (MMT) has been ramped up significantly in recent weeks as a result of events in Turkey, where, up until yesterday, the currency had depreciated significantly. The screams for interest rate rises from bankers etc (of course! they profit or protect foreign debt exposure) have been deafening. But the most recent monetary policy decision was on December 16, 2021, when the CBRT reduced its policy rate (the one-week repo auction rate) from 15 per cent to 14 per cent. The ‘markets’ can’t really get a handle on the current government’s thinking because it is running against the mainstream in several ways, including cutting rates to reduce inflationary pressures (see Press release on Interest Rates – from the CBRT). Overnight a big swing happened after the government made a significant fiscal policy announcement. That will further confound the markets who were forced to scramble to close out short-selling positions as the lira appreciated by around 25 per cent in one day. The fiscal squeeze worked. You couldn’t make this stuff up.
It’s Wednesday and I load up other things to do on this day and thus write less here. I also am in the process of moving offices at the University – and after some 18 years in different locations, I am now returning to the Social Sciences Building where I first had an office when I came to the University from Adelaide. Which feels sort of okay, given by opposition to economics being treated as a business discipline. But thanks to a deal I made with the University in 2007, my research centre left the ‘business faculty’ and went out on our own. Hence, my office doesn’t have to be with the other economists, which I am happy about. This morning, I read the most stupid thing I think one could ever read about economics. It came from a UK Guardian article (December 14, 2021) – Sunak warns over multibillion cost of booster programme – where the Chancellor basically disqualified himself from office. Once we get through the trauma of that sort of news, I promise there is some great music to finish with.
It’s Wednesday so not much today. I offer some comments on the latest data release from Germany (not good) and the probability that the new German finance minister will be anything other than a dangerous dud. An announcement about the edX MMTed course (coming back). And then Blind Willie Johnson serving up Great Depression angst.
I usually use Wednesday to write less here. But because sometimes a data release is on Wednesday, Thursday then becomes my lighter day. And I also have to travel a lot today. But there is a relatively important issue to address. I have been receiving a lot of E-mails over the last several months that question me about my position on government restrictions with respect to the Covid pandemic. Apparently, it has seeped into the debate that the mainstream Left have been silent while governments around the world have imposed draconian social control on their citizens, which have been targeted against the workers. The questions all seems to suggest that I have been silent on that issue, which is indicative that I have adopted the ‘woke’ Left position. I beg to differ.
It’s Wednesday and only a few items today. It seems that the mainstream economists are emerging again and making all sorts of claims that fiscal policy has to target lower deficits and monetary policy needs to tighten (interest rates rise) to stop our governments going broke and inflation going wild. It really is like a tired broken record, isn’t it. They have sort of gone underground during the crisis and more are thinking it is time to reassert the nonsense of the past. And so it goes. But at least Wednesday brings music to this blog – and what a treat we have today.
It’s Wednesday and today, apart from presenting some great music, I am commenting on the ridiculous notion, that even progressive greenies propagate that we need to harness the financial resources of the markets (Wall street types) to help governments decarbonise their societies. The narrative that has emerged – that the financial CEOs with “trillions in assets” (all at COP26 because they could smell lucre) are a key to solving the climate challenge – is as ridiculous as progressives saying we need to tax them to fund schools and hospitals. Both narratives reflect the dominance of mainstream macroeconomics which has convinced us that currency-issuing governments are like big households and can ‘run out of money’. That is fiction but is part of the reason we have a climate crisis. Read on.
It’s Wednesday, so just a few snippets before some great music from the early 1960s. Over the last few weeks, the commentary in the financial and economic press has been that the ‘market’ has priced in higher inflation and the central banks will have to concede to the market prerogative. Even people I personally like in the media have been running this line and headlines last week included statements like the RBA has run the white flag up. All of this is a self-fulfilling outcome, if every one acts as if there is an imperative to give the ‘markets’ the running, then it will happen. And we should all be clear on what that means. Corporate welfare abounds. And it is not the only example in the last week.
Given my inflation report yesterday, I have shifted my usual Wednesday light blog post day and music feature to today. The economic debate has moved in recent years from ‘when is the government going broke’ to ‘hyperinflation is approaching’. It amazes me how puerile the economic commentary is as journalists and economists seeking headlines trot out headlines about how bad something (insert: insolvency, inflation, whatever is the latest craze) is going to be and what needs to be done about it. Nothing much happens in the real world and they keep their jobs and begin the next mania. Replay. And so it goes. It seems though that within this fictional world, that masquerades as informed economic commentary, subtle changes are underway. Governments worked out that during the GFC, the only weapon they had that would save the system was fiscal policy. They also worked out that large-scale bond buying by their central banks complemented the effective use of fiscal policy and didn’t deliver all the maelstrom that the mainstream New Keynesian textbooks predicted. The pandemic has accentuated that. And now there is this sort of stand-off between the ‘markets’ that were given too much latitude in the pre-GFC period and governments. The market players, who have become accustomed to manipulating government policy to ratify their speculative bets, which delivered massive profits to the hedge funds and the like, are now confronting central banks and treasuries that actually have power and cannot be bullied into delivering such policy ratification. That is progress and interesting to observe.
It is Wednesday and so just a few points today. I obviously like data as it tells me a lot about the world and often forces me to alter my views on things. While I mostly analyse economic and financial data, which is my professional skill, I also like to investigate other data sets on things that interest me. Today, I am looking into the vaccine question, which has been playing on my mind lately as the Australian political class, under pressure from all sorts of business lobby groups who fund their election campaigns, have been ‘opening up’ the economy (states and territories) despite high case numbers in some jurisdictions and despite relatively low vaccination rates. They have come up with a ‘Roadmap’ to ‘living with Covid’ (which will see many people die from Covid) and defined key thresholds in terms of average vaccination rates. The problem is the these thresholds are not very scientific at all and their semblance of ‘safety’ points is an illusion. In effect, the political class has abandoned their pretence to following health advice and are just going for it. It is a difficult period in our history.