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.
Welcome to the Billy Blog 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.
Its the Friday lay day blog. I was travelling back from the South coast of NSW one Sunday a few years ago after giving a talk to a workshop on regional development. We stopped for a break in South Sydney where there was a street fair going on – the normal run-of-the-mill affair. It was centred in the main street of the electorate where Scott Morrison was (and remains) the Member of the Federal House of Representatives. He had a stall at the fair, touting his policies – then as the Opposition spokesperson for immigration. His helpers were nasty types who were raving on about illegal boat people and what Morrison would do to them once they won the next election. They did win it, and he did do it to them. As he shifts his ministerial portfolio from immigration to become the Minister for Social Services, it is worth recalling what his record has been in his last job. Julian Burnside captures it beautifully in his article last Tuesday (December 23, 2014) – Morrison’s calculated cruelty is his legacy – although the sociopathy revealed is anything but beautiful. But there is worse to come.
I am not doing much work today. But in the early quietness I was able to finalise an edit of a presentation I gave in Rome on November 24, 2014 on Framing Modern Monetary Theory. So among other things I include today that video is now available. All the best for today.
When I was in Europe recently, I had interesting discussions about the future of Italy, Greece and Spain with various people, particularly in relation to trying to understand the apparent dissonance between the strong support for the euro and the devastation that membership of the common currency has created in these countries. It is, of course, a very complex issue that goes well beyond economics (as most things do). I formed two alternative views from what I was heard from those on the so-called progressive side of the debate. Either they are kidding themselves or that they have crafted a plan to force Germany (mainly) to break up the currency union. The alternative scenarios was also quite distinct along national lines with Italians more likely to be in the former group and Greeks in the latter group, although my sample sizes were relatively small.
Let it be noted that the Japanese government 10-year bond yield hit 0.33 per cent overnight. That tells you that all the scaremongering that has been going on over the last twenty years about hyperinflation, the Japanese government running out of money, the bond markets dumping the yen, and the rest of it were self-serving lies designed to advance a particular ideological position at the expense of the broader social well-being. A year ago, the yields were 0.88 per cent – so they are going in the opposite direction to that predicted by many mainstream economists, blinded by their irrelevant textbook theories about how markets work. In that neo-liberal textbook fairyland, the yields should be sky high now, inflation accelerating out of control and the government forced to admit it had run out of money. Get over it, it won’t happen because the real world doesn’t operate like that. Students of macroeconomics are continually being taught a myth, which is detrimental to their education and life experiences. Many turn into the future doomsayers and sociopaths in organisations such as the IMF, the European Commission and other like policy making institutions. They always rave on about the need for more central bank independence to insulate monetary policy from political decision-making as if that will foster the well-being of the population. The idea of central bank independence is a sham and in the last week there has been stark evidence to support that view.
Canberra is Australia’s capital city – a created city located in the Australian Capital Territory (ACT) to house the federal government and its bureaucracy. Official – data – shows that in 2013, the ACT has the highest household incomes of any state/territory, the highest household net average net worth and is heavily dependent on its wage and salary income. It is now a focus of federal government employment cuts which are forcing thousands of workers onto the unemployment queue, with little prospect of alternative employment at this stage given the general state of the economy. Over the weekend, I saw a news segment which documented the increased access of Canberrans for emergency food relief over the last 12 months. More than 10 per cent of the population in one of the highest income per capita cities in the world are below the poverty line. How can that be?
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.
Welcome to the 300th Edition of the Billy Blog 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.
It is my Friday lay day and that means brevity, even if that is a relative concept. I have received several E-mails lately about claims that Modern Monetary Theory (MMT) economists are zealots who overstate their case and are nothing much more than Keynesians with some fancy jargon. It is lovely how complete strangers feel it is their place to write abusive E-mails to you as if you are some sort of inanimate object. But that is not the point here. Several of these E-mails noted that a prominent Australian economist had largely dismissed MMT, despite his progressive leanings, because “it doesn’t change the basic equation that, in the long run, public expenditure is paid for by taxes”. Apparently, this criticism was made in the context of the Russian problems at present, which I may or may not deal with in another blog, depending on whether I get time to research a few things. The Russian situation is not central to my research at present and I do not have a lot of time to really delve into it. But what about this “long run” failing of MMT?