Regular music spot and other commentary

Banque de France should write off its holdings of State debt

Wednesday today and a short blog. I also have to travel a lot today. But some brief comments on an interesting article from French commentator Michel Lepetit – Nourrir le débat sur une annulation partielle (370 mds€) de la dette publique (April 15, 2019) – which means more or less “Promoting the debate on a partial cancellation (€370 billion) of public debt”. The article proposes that the Banque de France cancels its holding of French government debt (the €370 billion), which could also lead other national central banks in the Eurosystem following suit with respect to their own government debt holdings. He argues that the cancellation (write off) would have no negative social impacts and could help Eurozone governments fund the transition to a low-carbon future. Above all, it reflects an understanding of Modern Monetary Theory (MMT). Michel Lepetit argues that the QE implemented by central banks, especially since the GFC demonstrates the patent failure of the foundations of monetarist dogma (“l’échec patent des fondements du dogme monétariste”).

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Madame Lagarde basically says MMT is correct – not that she knew she was saying it!

Its Wednesday, so just a short blog post. I had a day of meetings and other commitments today. But we have some fun at the IMF to discuss (briefly). On April 11, 2019, IMF boss Madame Lagarde gave a press conference to open the 2019 Spring Meetings. The Transcript – includes the Madame waxing lyrical about Modern Monetary Theory (MMT). And you might have confused the press conference for a stand-up comedy routine except you would have to be ‘in the know’ to laugh. But the significant aspect of the conference came when a question from Japan focused on MMT. In attempting to put down our work, Madame Lagarde actually admitted that a situation where the government runs big fiscal deficits, has a large-scale and on-going public debt-issuance program, where the central bank buys substantial proportions of that issuance, apparently ‘works’ under conditions that the currency-issuing government can always control. MMT 101. QED. Have a laugh.

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Madness on both sides of the Atlantic

Its Wednesday and some snippets only today. I was reviewing some data on public investment in the European Union the other day and up popped an article in Barrons that covered the same issue. The data reveals the stark failure of the Eurozone and the European Union, in general. The consequences of the European Union’s ideological obsession for rules over reality is now clearly undermining the future prosperity of the Member States. While the fiscal austerity has created elevated and persistent levels of mass unemployment, increased poverty rates, widening disparities between wealth and income, divergences in living standards across the Member States, what hasn’t been focused on much is the intergenerational consequences of the austerity. The data makes it clear that public investment in infrastructure has ground to a halt and in many cases, nations are not even replacing existing capital as it wears out. The quality and quantity of public infrastructure in place is crucial for general material prosperity and the future productivity of nations. While starving such expenditure may not have political consequences in the short-run – and this is why the austerity is partially focusing on cuts to investment spending – over times as the extant infrastructure deteriorates the the nation and the future generations lose out badly. Just another day in Europe! And across the Atlantic, the Democrats are proposing a ‘Balanced Budget Amendment’ to the US constitution. Madness on both sides of the sea!

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Bid-to-cover ratios and MMT

It is Wednesday so very little blog writing today. One question I often get asked is what would happen if the bond market investors in a nation stopped bidding for the debt instruments being offered in the regular auctions. Interestingly, overnight I was sent some news from a Deutsche Bank information service written by their New York-based Chief International Economist, who signs himself off as “Torsten Sløk, Ph.D”. It related to these issues. The problem is that Dr Sløk seemed to want to take a snide shot at Modern Monetary Theory (MMT) and just made a fool of himself. It goes on. This is what the point is.

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Travelling across the world today to escape the famine that MMT will cause

I am travelling all day today and I will resurface, in blog terms, on Monday. A quiz will pop up tomorrow as usual. For now a brief excursion into the Dutch press, which has decided to join the wannabees attacking Modern Monetary Theory (MMT). The scenario outlined in the article I read earlier today takes the criticisms to a new level. We are no longer worried about hyperinflation, crowding out, sky high interest rates. No, things are likely to get much worse than that. If any government takes on MMT (noting it is not a regime that can be taken on) to operationalise a Green New Deal then tax rates will have to rise to around 100 per cent, households and firms will stop working and producing, and a massive famine in possible where millions die. Sort of Project Fear stuff that has marked the Remain position in the Brexit debate!

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The NAIRU/Output gap scam reprise

It is Wednesday and despite being on the other side of the Planet than usual (in Helsinki at present) I am still not intending to write a detailed blog post today. I am quite busy here – teaching MMT to graduate students and other things. But I wanted to follow up on a few details I didn’t have time to write about yesterday concerning the role that NAIRU estimates play in maintaining the ideological dominance of neoliberalism. And some more details about the Textbook launch in London on Friday, and then some beautiful music, as is my practice (these days) on Wednesdays. As you will see, my ‘short’ blog post didn’t quite turn out that way. Such is the tendency of an inveterate writer.

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Travelling mostly today … but we have events and music

Today I am in Finland after a long flight and have to catch up on things. My usual blog posting will resume tomorrow. Over the page, I have listed the speaking events that I will be involved in over the next two or so weeks. I hope to see some regulars at these events. And I will be back in early May for another solid speaking tour of Scotland and England with several opportunities to meet people and talk about MMT and the future. For now, it is cold, icy and there is a lot to organise.

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Those Imbecilic Keynesianisticists are loose – lock up your … whatever!

It is Wednesday – a blog lite day – sort of. I am travelling a lot today and I have a large report to finish. But I couldn’t resist typing out the term “Keynesianisticists”, which refers to those imbeciles who think Modern Monetary Theory (MMT) has any credibility – it hasn’t!. These MMTers types – imbecilic is being kind – are parading around telling people that governments cannot run out of spending power as long as there are things for sale in the currency they issue on a monopoly basis. I have only one word for them – Zimbabwe – well two words – add Venezuela. And Lebanon thrown in! And I should know. I have predicted “9 of the Past 5 Recessions” (a Paul Samuelson quote from 1966). I told people that bond yields would rise sharply, they fell. I told people the share market would collapse, it boomed. I told people the gold price would soar, it fell. But that is nothing compared to what those Imbecilic Keynesianisticists want us to believe. Believe me, I know what I am talking about. They are imbeciles, they are imbeciles, imbecile is too kind a word, they are imbeciles, imbeciles, I am an imbecile … stop the record. Time to catch an aeroplane!

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Nations heading south as austerity continues

On the back of a decelerating inflation rate, Italy in recession, Germany not far behind, terrible PMI in Europe, Eurostat released the latest retail sales data yesterday (February 5, 2019) – Volume of retail trade down by 1.6% in euro area. Not good news. Remember all those Europhile Left reformers telling us that now was the time to reform the EU while the ‘sun was shining’. Well, its black clouds again and they didn’t get to first base in the reform basis. Lots of hot air – none of it got near disturbing the neoliberal austerity bias. But this austerity bias is not just a feature of the currency union. Yesterday, the Australian Bureau of Statistics released two data sets – Retail Trade and Balance of International Trade – and they both tell the same story. The interesting thing was that the trade data recorded a “record trade surplus” and I heard commentators actually claiming this was a great result. Wrong. Exports declined, but more slowly than imports. And imports declined because consumer spending and business investment was weak. Not a great result at all. At some point, the austerity bias around the world has to stop. But nations are heading south again in the meanwhile. With all that gloom, the best thing to do is enjoy my regular Wednesday music spot (if you like). And if you don’t like it, then maybe, appreciate the artistry of the musicians.

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The mindless and myopic nature of neoliberalism

A short blog post as per my usual Wednesday behaviour these days. Fiscal austerity manifests in many ways, all of them unpleasant, destructive and unnecessary. Here is one of the more insidious ways that mindless cuts in government programs have long-term damaging impacts. In 2013, the Queensland State Government was taken over by a conservative extremist as Premier who thought it was a good idea to hack into sexual health programs targetted at indigenous communities. Over a few short years, this was just one of a huge number of social and health cuts that were made by that particular state government. More than 14,000 public service jobs were cut (a huge relative number). The State government fiscal deficit fell from a predicted $A6 billion in 2013-14 to $A2.58 billion. But like all these austerity cuts which deliver short-run reductions in public spending, the longer-term effects of the cuts lead to much higher amounts of public spending. Neoliberalism is not only mindless but myopic. I have made this point often in regard to infrastructure cuts. In the end, the government has to spend much more fixing the crisis the initial cuts create. Not a sensible strategy at all. The ‘chickens’ (manifestation) of those cuts in Queensland a few years ago are now coming home to roost. As predicted at the time, there is now a health crisis in the form of a STD epidemic moving across the north of Australia from east to west, purely because this idiot wanted to ‘save’ a few pennies. Now serious public cash is being required to put a brake on the health crisis he created. There are countless examples across the world over this neoliberal era of this same phenomena. Myopic and mindless.

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