Here are the answers with discussion for the Weekend 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 Weekend Quiz, which used to be known as the Saturday Quiz! The quiz tests whether you have been paying attention over the last seven days. See how you go with the following questions. Your results are only known to you and no records are retained.
Today, I am in Madrid for the start of the public events associated with the promotion of the Spanish version of my current book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale. I travelled this morning from Granada to Madrid and am tied up for the rest of the day. So here is a video of a keynote address I presented on April 19, 2016 to the inaugural Australian Unemployed Workers’ Union Conference Solving Our Unemployment Crisis in Melbourne, Australia. You can find out more about the Union from their – homePage – and their – Facebook Page. They need more members and the support (funding, promotion etc) from all employed people who care about the problem of unemployment. The talk and questions go for about 37 minutes.
Yesterday (May 2, 2016), the Reserve Bank of Australia (RBA) dropped the short-term policy interest rate by 25 basis points (1/4 of a percent) to 1.75 per cent, a record low as a result of its assessment of a weakening economy and the deflation that has now been revealed by the ABS. I wrote about the latest CPI data in this blog – Australia enters the deflation league of sorry nations. The fact that the RBA is trying to stimulate growth is a sad testament to the current conduct of the Australian government (and the Treasury), which despite all the lying rhetoric that its corporate tax cuts, revealed in last night’s fiscal statement will stimulate jobs growth, is actually continuing to undermine growth. The fiscal contraction implied by last night’s statement by the Federal Treasurer is modest next year and then gets sharper in the year after (2017-18). Many would conclude that the contractionary shift is benign. However, in the context that the strategy is being delivered, the actual need is for the discretionary fiscal deficit to rise by around 1 to 1.5 per cent of GDP, at least, not contract at all. The federal government has moderated its ‘surplus at all costs’ mania which dominated the macroeconomic policy debate a few years ago but is still aiming for a surplus (or close to it) within 4 years. It will fail in that goal because the non-government spending behaviour will not allow that outcome and the government’s own fiscal contraction over that period will undermine growth further. The early statements by the Federal opposition are also idiotic. It is claiming it would make ‘tougher’ decisions (that is, cut the deficit more sharply). That just means it would end up with higher levels of unemployment than the conservatives will under their current strategy. Both unemployment levels will be unacceptable. Neither major political party in Australia is fit for office!
Today I am in Granada, Spain having an interesting time. Nothing public to report. I will be here until Thursday morning upon which I travel back to Madrid and the public events begin (see below). Today’s blog continues the analysis I have been providing which aims to advance our understanding of why the British government called in the IMF in 1976 and why it fell prey to a growing neo-liberal consensus, largely orchestrated by the Americans. The current book I am finalising with my Italian colleague Thomas Fazi, is tracing the way in which the Right exploited the capacities of the ‘state’ to advance their agenda and how they duped the Left into believing that globalisation had rendered the nation state powerless. There were several turning points in this evolution, and one of those key moments in history, was the assertion by British Labour Prime Minster James Callaghan on September 28, 1976 that Britain had to end its ‘Keynesian’ inclinations and pursue widespread market deregulation and fiscal austerity has been taken to reflect a situation where the British government had no other alternative. His words have echoed down through the years and constituted one of the major turning points in ‘Left’ history. Successive, so-called progressive governments and politicians have repeated the words in one way or another. The impact has been that they have forgotten that their were options at the time that the British government rejected, which would have significantly altered the course of history. Today, we consider the role way in which the IMF reinvented itself after its raison d’être was terminated with the collapse of the Bretton Woods fixed exchange rate system. The next part of the story will examine the growing US influence on the IMF and the way it used the IMF to further its ‘free market’ agenda on a global scale.
I am travelling for most of today on my way to Spain to help launch the Spanish language edition of my current book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale (see details below). I will also be meeting various people at a very interesting period for Spain, the build-up to the June national election that will attempt to resolve the impasse that arose from the election. I will report when I can on what is going on while I am away