US labour market improving but it is not all good

Last week (July 3, 2013), the – US Bureau of Labor Statistics – released their latest – Employment Situation -June 2014 – which showed that in seasonally adjusted terms, total payroll employment increased by 288,000 in June while the Household Labour Force Survey data showed that employment rose by 407 thousand. The essence to be extracted from the data is that total employment in the US is now outpacing the underlying population growth by a considerable margin and the official unemployment rate is dropping quickly (from 6.3 per cent in May to 6.1 per cent in June). Over the last year, the official unemployment rate dropped by 1.5 percentage points. There has been an acceleration in employment growth in the last 6 months. But the unemployment rate has benefited not only from stronger employment growth but also from a continued decline in the labour force participation rate. As a result the labour force shrunk has fallen by 128 thousand people over the last year. There is also evidence that a significant proportion of the jobs created are in low pay, precarious areas of the labour market.

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Saturday Quiz – July 19, 2014 – answers and discussion

Here are the answers with discussion for yesterday’s quiz. The information provided should help you understand the reasoning behind the answers. 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.

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Friday lay day

Its my Friday blog lay day which today means a short blog day. Yesterday, July 17, 2014, the Australian government voted to scrap the Carbon Tax as the climate change denialists proved that the destiny of our nation is in the hands of those who are ignorant of reality. We shouldn’t be surprised by that. The abandonment of respect for knowledge in favour of sham works in favour of the financial and corporate elites who fund the political parties. Society used to value education. Now it rejects the research findings that educated people, who know far more about things in specific areas, in favour of views propagated by morons. I wasn’t a great fan of the Carbon Tax (I prefer regulative approaches aka telling the coal industry it has 20 years to close down, no questions), but Australia now has no official position on combatting global warming. That will make us the pariahs of the world in years to come.

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Macroeconomic textbooks ripe for composting

I have been travelling a lot today – train, car, plane, car – and in between speaking and other commitments so not much time to type some thoughts. Also a detective novel I am reading was quite interesting on the plane, which didn’t help. But I have been thinking about our upcoming textbook and what will differentiate it from the others apart from nearly everything. I have also been looking into what has been sponsored by George Soros’s iNET initiative (the so-called CORE curriculum) and the latest versions of the dominant macroeconomics book Mankiw’s textbook (now in its 8th edition). Juxtaposing those developments (if we can call retrogression development) with some papers that have come out recently from central bank economists and then thinking about my own project with Randy Wray makes it seems as though the so-called progressive development (iNET) is a ‘try hard’ effort to disguise a neo-liberal heart with some comforting concessions to reality, while the avowedly mainstream approach represented by Mankiw has barely learned a thing about reality and essentially aims at business as usual. That business is the business of deception. Here are some thoughts on this.

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A Brussels-run unemployment insurance scheme is no fiscal solution

The new European Commission president Jean-Claude Juncker is a federalist. He claims in his new role that his first priority is “to put policies that create growth and jobs at the centre of the policy agenda of the next Commission”. Juncker was also the Prime Minister of Luxembourg and the head of the so-called Eurogroup (2005-2013) which comprised of the Eurozone Finance Ministers, the European Commission’s Vice-President for Economic and Monetary Affairs and the President of the ECB. Juncker and the Eurogroup were vehemently pro-austerity. He also reaffirmed last week at a – Meeting in Brussels of the Alliance of Liberals and Democrats for Europe, that “we need to keep austerity going”. Remember he was Angela Merkel’s choice for the EC Presidency! But there is new talk of federalist type fiscal innovations in Europe under the new Commission. The problem is that they are just neo-liberal smokescreens and will do very little to change the underlying problems that have prolonged the crisis and will ensure there is a repeat down the track.

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IMF wrong on QE

Yesterday the IMF released new analysis of Quantitative Easing, specifically in relation to the Euro Area – Euro Area – Q&A on QE. This is in the context of the ECB beginning to discuss the possibility of introducing a large sovereign debt buy-up as the euro-zone inflation rate looks to be close to deflating (negative inflation). Once again, all the financial commentators are rehearsing their usual claims about driving up inflation etc. The reality is the QE will not provide much help for the euro-zone economies which are mired in recession or stagnant, low growth. What is needed are fairly substantial increases in the fiscal deficits in all Member States and none of the neo-liberal ideologues want to face up to that. So, instead, we get these ridiculous debates and analyses of QE – good and bad and all the rest. The IMF is wrong on QE. But then why should we be surprised about that. An apology or admission of error will be issued down the track, notwithstanding that in between all sorts of spurious forecasts about inflation, inflationary expectations and growth will be issued by them.

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Financial elites win with growth and austerity

I was thinking over the weekend about the concept of post nationalism in relation to the evolution of the Economic and Monetary Union (EMU) in Europe. As I complete my current book project on the euro-zone it is clear that by the end of the 1980s, the European financial and political elites were designing a system that they must have known would undermine the prosperity of their own nations. It was obvious at the time that the EMU would fail badly and so the question arises as to what was motivating them to act in this way. The is where ‘post nationalism’ comes into play. Characters such as Jacques Delors had moved from being a major promoter of French interests within the Franco-German rivalry to pushing the interests of international capital by the time he formed the Committee in 1989 to design the EMU. By then Monetarism, which came out of the American academy, had taken over the policy debate and was usurping national economic interests. The EMU was a major vehicle for transferring national income from workers towards capital interests. It allowed the banksters to reap financial harvests that were unprecedented in history. These ideas, which play out in my book, also links in with recent research published by Oxfam on income and gender inequality.

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Saturday Quiz – July 12, 2014 – answers and discussion

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.

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