The Weekend Quiz – April 27-28, 2019 – answers and discussion

Here are the answers with discussion for this Weekend’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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Debt, deficits and good housekeeping: what’s the fuss about?

I appeared on the ABC radio program – The Economists – today (April 25, 2019). The topic of today’s shows is – Debt, deficits and good housekeeping: what’s the fuss about?. The presenters talked among themselves for about 10 minutes and then brought me on for an additional 20 minutes to provide more commentary and detail. Australian listeners can listen to the repeat program on Radio National at 13:30 on Friday. Overleaf I provide details of how anyone can access the program audio. Given the topic, it starts off with a great 8-second snippet from AC-DC (a great band).

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Eurozone horror story continues

Eurostat released the latest fiscal data for 2018 on Tuesday (April 23, 2019) which showed that – Euro area government deficit at 0.5% and EU28 at 0.6% of GDP – apparently a cause for celebration if you can believe the news reports that have accompanied the data release. The problem is that these numbers are meaningless without a context. And a relevant context is how well the monetary system is accommodating the advancement of material well-being among the citizens of Europe. On that ‘functional’ criterion, the horror story, more or less continues. Data relating to the real world (as opposed to the world of fiscal numbers on bits of paper) tell us that the damage from the GFC interacting with a dysfunctional monetary system design still lingers and the 19 Member States are still highly vulnerable to the next crisis. The austerity mindset remains and these fiscal outcomes indicate a failure of policy. Nothing to celebrate at all.

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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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Ridiculous MMT critiques distorting Scottish independence debate

In a few weeks I am off to Britain again to participate in a series of events. Two of these events will be in Scotland where we (Warren and I) will discuss, as outsiders, issues pertaining to the monetary arrangements that might accompany a move to Scottish independence. It is a controversial issue in itself, but, unfortunately, is also intertwined with the vexed issue of EU membership. And the complication then becomes that progressives, who might otherwise be attracted to the Modern Monetary Theory (MMT) way of understanding the monetary system, also exhibit the standard misconstrued Europhile view that the EU, neoliberal though it is, can be reformed and that an independent Scotland should be part of that mess. And, in doing so, they then take problematic positions on the currency question. So a sort of ‘nest of vipers’ sort of situation, from the Aesop’s fable – The Farmer and the Viper. As in the Fable, the Europhiles embrace of the EU will always pay them back in grief. Anyway, while I am always cautious discussing the pro and con of situations where I have no direct material stake and a less than full understanding of specific cultural and historical influences that are at work, the Scottish question is interesting and demonstrates many of points that nations should be cogniscant of when discussing monetary sovereignty. And besides I have to get up in Edinburgh and Glasgow in a few weeks so as a researcher I am trained to be prepared and seek the best understanding that I can of the complexity of the situation. I will be writing a few posts on the Scottish issue as I prepare for that speaking tour.

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My blog is on holidays

My blog is on holiday today. And with the ridiculous temperatures (high) that we are enjoying deep into Autumn, it is all the best from my local beach (Bar Beach today). Back tomorrow.
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The Weekend Quiz – April 20-21, 2019 – answers and discussion

Here are the answers with discussion for this Weekend’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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Australian labour market stronger month but the underutilisation rate rises

The Australian Bureau of Statistics released the latest data today – Labour Force, Australia, March 2019 – which reveals a stronger labour market with notable growth in full-time employment. The unemployment rate rose by 0.1 points to 5.0 per cent, but, only because the participation rate rose by 0.1 points. However, there is still underlying weakness in the labour market with underemployment rising by 0.1 points to 8.2 per cent and the total labour underutilisation rate (unemployment plus underemployment) rising by 0.2 points to 13.2 per cent. There were a total of 1,782.8 thousand workers either unemployed or underemployed. The other disturbing outcome was that, despite the stronger overall employment growth, the teenage labour market deteriorated further (particularly full-time work). My overall assessment is the current situation can best be characterised as in a moderate state. The Australian labour market remains a considerable distance from full employment. There is clear room for some serious policy expansion at present. In the current federal election campaign there is only talk of bigger fiscal surpluses.

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