It's Wednesday and we have discussion on a few topics today. The first relates to…
MMTed Q&A – Episode 4
Here is Episode 4 in our weekly MMTed Q&A series. There will also be some music for those who like to find some different music. This week we experimented with a different format and further reduced the length.
MMTed Q&A – Episode 4
This is Episode 4 in the MMTed Q&A series.
This week I met up with the convenor of the Melbourne MMT Discussion Group, Joshua Dalton while I was working in Melbourne.
He came into MMT from a scientific background and was curious about why opportunities for his generation and society in general were not being taken and the wastage was justified by economists under the guise of fiscal constraints and all the rest of the mainstream smokescreens.
He had many questions that he sought answer to.
In this Episode we start at the beginning.
The two questions we discuss in this episode are:
1. Where does the money come from?
2. Why does the Australian federal governments issue debt?
The video goes for 18:265 minutes. We are working towards making the segment shorter.
This is the – YouTube link – for the video.
We are still experimenting with format, environments, etc.
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Music today – Bunny Lee and the Aggrovators
The Aggrovators – were a session band in the studio of – Bunny Lee – in Jamaica during the late 1970s into the 1980s.
It was a loose group of musicians that came together when Lee was producing new artists.
It included all the great reggae/dub musicians of the era (check them out if you are interested).
This song – Raving Sound – was taken from a 1977 album – Sticky Fingers – released by the studio with the feature artist – Earl ‘Chinna’ Smith – one of the great Jamaican guitar players who worked with The Aggrovators.
His style defined the guitar playing of the era and he appeared on many albums as a studio musician.
He also was the mainstay of the band – Soul Syndicate – which produced several memorable albums (many of which are on my regular playlist).
His first guitars were made from sardine cans and fishing line!
That is enough for today!
(c) Copyright 2020 William Mitchell. All Rights Reserved.
One of the tricks I’m finding useful is to use the “government budget analogy” with individuals. Get them to imagine what they could do if they could “borrow” like a government can borrow.
What could you do if you owned the bank outright and you would fire anybody working there who tried to turn your requests down.
Reversing the trick does work.
Alan Kohler betrayed your best efforts tonight by agreeing with Peter Costello that the printing of money will devalue the currency. These people cannot be trusted. Their pay depends on it.
“that the printing of money will devalue the currency”
Did they explain how? Or why it matters if you have diverse import supply across currency areas. (Currencies don’t go down. They go down against other currencies – variably. And those other currencies go up – hurting their exports).
Bill,
Sorry, but I could understand about half the words.So, I gave up.
Sound was too low or of poor quality.
I used ear buds and sound at maximum.
You can easily add auto-translated English, and then I could read it.
Steve
Hi Warren,
What was puzzling about Kohler agreeing with Costello tonight was that yesterday he wrote an article in the “Australian Business Review” endorsing MMT, even quoting from Stephanie Kelton’s “The Deficit Myth”.
The last episode in this 4-parter is tomorrow night; he may yet redeem himself.
I think Mr Kohler is trying to understand, and apply MMT, and is in the learning and unlearning phase, that most of us go through when coming to an MMT understanding.
He has made some accurate MMT observations but then in the next statement not-so. And I have made simliar statements at the beginning of my MMT re-education. Then read a bit more and come to a better understanding.
Time and repetition and correction when needed all help.
In his defence, Mr Kohler did make very good point right at the very end tonight. He explained, a little too quickly, that when the gov implements austerity policies and reduces spending, the slack will have to be taken up by households. A point he should have put to the unceasingly smug Mr Costello.
It was a pleasant and encouraging discovery for me yesterday when I stumbled upon an American black megachurch near D.C., pastored by Rev. Delman Coates, whose ministry is centered on preaching not only the Christian gospel but also the gospel of MMT, which he sees as a crucial focus of civil rights and liberation theology. Rev. Coates has developed an effective mode of communicating the fundamentals of MMT to his congregation and to the other religious and civic groups he regularly addresses. And to top it off, Stephanie Kelton serves on the advisory board of his nonprofit: “ourmoneyus.org.” It might provide a needed lift to other flagging spirits (like mine), during these pandemic days, to search YouTube for videos featuring Delman Coates or to visit his nonprofit’s website.
Thanks Newton, an invaluable resource. The Christian church is on-side at last, (as opposed to the phony “prosperity gospel”), and pastor Delman is a wonderful speaker.
“The Christian church is on-side at last”,
That depends on which part of “the Christian church” you’re talking about:-
“‘They want to throw God’s wonderful breathing system out’
“Before holding a vote to mandate the wearing of masks in public places to stop the spread of coronavirus, Palm Beach County commissioners were harangued by residents who accused them of obeying the devil, imposing a communist dictatorship and dishonouring the American flag.
“Florida has just reported a daily record of 5,508 new coronavirus infections, bringing its total number of confirmed infections to 109,014, with 3,281 deaths”. (BBC News, today)
Obviously i was referring to the socialist branch, not the Conservative Right branch with its ‘rapture’ fundies….
Mr Kohler suggested to Mr Costello that over this Covid period, the Australian government can issue as much currency as it needs to. Mr Costello replied that would devalue our dollar and cut the value of people’s savings. What could Mr Kohler have said in reply (instead of agreeing with Mr Costello). ( In as few words as possible)?
Dear Paula Samson (at 2020/06/26 at 9:57 pm)
Thanks for your enquiry.
He could have said: Well as long as their is idle capacity which can be used to produce more goods and services in response to the increased spending growth then there is no inflation threat.
All spending sources carry a risk of devaluing our currency. But typically firms will respond to spending growth with output and income growth rather than pushing prices up because that is the way they can make profits without losing market share to competitors.
best wishes
bill
Paula Samson,
I think he could have said, “So you think it is better to do nothing *and* have children starve, than to see a little inflation that can be fixed by paying higher interest for just a little while.”
Most people don’t have savings. He is thinking about the top 20% and ignoring the bottom 80%/
Greetings All,
A couple of questions.
Firstly, at 12:20, Bill said that, before 1983, a Federal deficit would lead to too much currency in the economy and, consequently, drive the value of the AUD down. How did capital inflow from overseas, as a result of pushed up interest rates in Australia, reduce the supply of AUD? Is this relevant in today’s fiat current reality?
Secondly, at 15:20, Bill discussed the issuance of Federal Government Bonds. I understand the term “issuing debt” to mean that the Federal Government offers Bonds for its citizens to buy, thereby taking money out of the economy. Is that correct? if so, what happens when those Bonds reach maturity and the currency that purchased them has to be given back to the Bond purchaser and, therefore, re-enter the economy thereby ending up with the same problem that caused the Bonds to be offered initially?
Thanx. 🙂