The Weekend Quiz – January 20-21, 2018 – 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.

Read more

The Weekend Quiz – January 13-14, 2018 – 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.

Read more

The Weekend Quiz – November 18-19, 2017 – 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.

Read more

What matters about the Paradise Papers

A cursory glance at the World’s leading tax havens illustrates the hypocrisy of politicians getting wound up about the revelations in the recently released Paradise Papers and the Panama Papers before them. Many of the havens are within the direct legislative jurisdiction of nations such as the US (which is itself a tax haven) and the UK, for example. And we should not forget that Luxembourg, Switzerland are key European homes of tax avoidance. Remember that the current President of the European Commission “spent years in his previous role as Luxembourg’s prime minister secretly blocking EU efforts to tackle tax avoidance by multinational corporations” (Source) ably supported by the Netherlands, another nation engaged in the practice. If the politicians were truly worried about this issue they could do something about it directly with the stroke of a legislative pen. Britain could, for example, eliminate Jersey, the Isle of Man, and its Overseas Territories from this corporate scam. The US could do similarly. The EU could bring in new rules to stop Luxembourg. But they don’t stop it, which tells you everything. But, the problem of tax avoidance and evasion is not fiscal. Progressives get stuck on that point. It is largely irrelevant. The real issues are inequality, power and macroeconomic stability. That is what this blog is about.

Read more

The Weekend Quiz – September 30-October 1, 2017 – 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.

Read more

Addressing claims that global financial markets are all powerful

The United Nations Trade and Development Report 2017 was published last week and carried the sub-title “Beyond Austerity: Towards a Global New Deal”. It is amazing that 9 years after the crisis emerged we are still discussing austerity and its on-going damaging consequences. Effectively the crisis interrupted the neoliberal agenda to increase the incomes shares of the elites at the expense of the workers, with growth being a secondary consideration if at all. Austerity was the means by which the elites could resume this push and used all sorts of depoliticised arguments to make it look as though there was really no choice. They have been spectacularly successful in their quest. More shame to the rest of us who have stood by and blithely accepted the agenda and, to make matters worse, become mouthpieces of the myths that the neoliberals have constructed to give ‘authority’ to their savage attacks on public purpose. So social democratic politicians lead the austerity charge. Citizens stand around in pubs and cafes mouthing neoliberal nonsense about fiscal deficits etc without the slightest evidence that they know what they are talking about. UNCTAD report on all this in the latest Report. It is a sorry tale and requires a massive return of collective action and as they say – a “global New Deal”.

Read more

Paradigm shift – not from the CORE Econ Project – as mainstream as you will get

Next Friday (September 22, 2017), I will be presenting at a panel on developments associated with the proposed MMT University and our new MMT Macroeconomics textbook, which will be published by Macmillan in April 2018. The panel will present during the First International MMT Conference, to be held in Kansas City. In part, my contribution will be to discuss the general pedagogical concerns that we (Randy Wray, Martin Watts and myself) had as we wrote the textbook over what turned out to be several years. We were confronted with the situation that we want our textbook to be used as widely as possible in the first and second years of a typical undergraduate program, but also didn’t want to fall into the trap of compromising what we considered to be a unified body of theory based upon Modern Monetary Theory (MMMT) for what other colleagues (particularly, mainstream academics) would claim to be necessary material to prepare a student for the labour market. We now have what we believe is a very strong two-year sequence in macroeconomics, firmly founded on MMT principles, with a good balance between discursive narrative, historical context, empirical challenge, and formal (mathematical) reasoning. When one compares it to other post-GFC developments in the pedagogy of macroeconomics, some of which have received the headlines in the past week, I think the curriculum embodied in our text is progressive, consistent, and doesn’t fall into the typical neoliberal default regarding governments and the monetary system.

Read more

Fiscal policy is effective, safe to use, and markets know it

The Federal Reserve Bank of Kansas City has just hosted its annual Economic Policy Symposium at Jackson Hole in Wyoming where central banks, treasury officials, financial market types and (mainstream) economists from the academy and business gather to discuss economic policy. As you might expect, the agenda is set by the mainstream view of the world and there is little diversity in the discussion. A Groupthink reinforcing session. One paper that was interesting was from two US Berkeley academics – Fiscal Stimulus and Fiscal Sustainability – which the news reports claimed suggested that governments should be increasing fiscal expansion even though they may be carrying high levels of public debt. The conclusion reached by the paper is correct but the methodology is mainstream and so progressives should not get carried away with the idea that there is signs that some give is emerging, which will lead to more progressive outcomes. A progressive solution will only come when the neo-liberal dominance of my profession is terminated and an entirely new macroeconomics paradigm based on Modern Monetary Theory (MMT) is established. There is still a long way to go though.

Read more

Another Milton Friedman legacy bites the dust

Milton Friedman and his gang at Chicago, including the ‘boys’ that went back and put their ‘free market’ wrecking ball through Chile under the butcher Pinochet, have really left a mess of confusion and lies behind in the hallowed halls of the academy, which in the 1970s seeped out, like slime, into the central banks and the treasury departments of the world. The overall intent of the literature they developed was to force governments to abandon so-called fiscal activism (the discretionary use of government spending and taxation policy to fine-tune total spending so as to achieve full employment), and, instead, empower central banks to disregard mass unemployment and fight inflation first. Several strands of their work – the Monetarist claim that aggregate policy should be reduced to a focus on the central bank controlling the money supply to control inflation (the market would deliver the rest (high employment and economic growth, etc); the promotion of a ‘natural rate of unemployment’ such that governments who tried to reduce the unemployment rate would only accelerate inflation; and the so-called Permanent Income Hypothesis (households ignored short-term movements in income when determining consumption spending), and others – were woven together to form a anti-government phalanx. Later, absurd notions such as rational expectations and real business cycles were added to the litany of Monetarist myths, which indoctrinated graduate students (who became policy makers) even further in the cause. Over time, his damaging legacy has been eroded by researchers and empirical facts but like all tight Groupthink communities the inner sanctum remain faithful and so the research findings haven’t permeated into major shifts in the academy. It will come – but these paradigm shifts take time.

Read more

The Weekend Quiz – January 28-29, 2017 – 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.

Read more

Paul Krugman’s ideas are part of the problem

It was always going to happen. Several prominent New Keynesians both in the US and the UK have been hiding behind a smokescreen they erected during the Global Financial Crisis to allow their readers to form the view that they were not part of the problem. That they were different from the more rabid anti-deficit economists and that they had a deep understanding of why the crisis occurred and what the solutions were. For a while they masqueraded under the aegis of promoting the discretionary use of fiscal deficits (increasing them nonetheless) to stimulate growth in output and employment. They were seen by many who have a lesser understanding of economics as being progressive economists. The British Labour leader even had some of them on his inner advisory team. But the masks can only stay on so long. Yesterday, one of the most prominent of these characters, Paul Krugman came out! He is not progressive at all. He is a New Keynesian with all the IS-LM baggage that they cannot let go of. In his New York Times article (January 9, 2016) – Deficits Matter Again – he well and truly shows his colours. And they (to speak American) ain’t pretty!

Read more

The Weekend Quiz – December 3-4, 2016 – 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.

Read more

The ‘World’s Wrongest Man’ at it again – when does credibility evaporate?

The “World’s Wrongest Man”, one Michael Jay Boskin, an economics professor at Stanford and former chairperson of the Council of Economic Advisors under George W. Bush is back with another stunning piece of sophistry. He has been an outspoken Op Ed commentator (particularly in the Wall Street Journal) for many years now, and, is typically completely wrong in the predictions he makes. His latest intervention into the policy debate is via the Project Syndicate banner – which claims it publishes “the Smartest Op-Ed Articles from the World’s Thought Leaders”. Having Boskin writing for them surely negates that claim. His latest offering (October 23, 2016) – Prepare for the next recession – while you can – continues his long career for making ridiculous statements about economic matters. One thinks it is really time he did something else.

Read more

The Weekend Quiz – August 27-28, 2016 – 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.

Read more

The Weekend Quiz – June 18-19, 2016 – 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.

Read more

The Weekend Quiz – May 28-29, 2016 – 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.

Read more

Hype aside – the Juncker Plan – a failure from day one

When Jean-Claude Juncker took over the Presidency of the European Commission in November 2014 – yes, 18 months ago. His record before that should have warned everyone of where his ideological preferences lay. He was the President of the Eurogroup from January 1, 2005 to January 21, 2013, serving two terms and overseeing harsh austerity programs and continually hectoring Member States to obey the rules that would see millions of citizens deliberately rendered jobless. Not only was the Eurozone a deeply flawed construction but the fiscal rules that were enforced for the weaker states (not Germany in 2004) were the anathema of responsible economic policy given the scale of the recession. The Eurozone is still teetering on the brink of crisis some 8 years after the GFC began. It is no surprise that he was termed “the most dangerous man in Europe” by the British press on June 4, 2014 (Source). They noted that he was a “ruthless opportunist” who “admits lying and backs ‘secret’ debate on European finances”. He was previously forced out of his position as Prime Minister of Luxembourg in 2013 as a result of his ‘political responsibility’ for illegal spying by that nation’s secret police on individuals, including rival politicians among other sins. This is the man that is now in charge of the dysfunctional European Commission. When he was eleted to the European Commission Presidency, his main strategic initiative, which was promoted with much fanfare was the so-called €300 billion investment offensive. It was adopted in November 2014 and was accompanied with other plans to fix the banking system and improve productivity growth. The plan has been an abysmal failure like most of the initiatives that come from the neo-liberal Groupthink machine known as the European Commission.

Read more

Don’t fall for the AAA rating myth

We once believed the Earth was flat. Then someone sailed out to the edge and came back the other way or something like that with apologies to Pythagoras and others in 5BC. At some other point in history, alchemists were convinced that they could take base metals (for example, lead) and turn them into ‘noble’ metals (like gold). More recently, the German Nazis convinced a nation that there was a Master Race (them) which had to purify civilisation by exterminating the parasitic (non-Aryan) races. The lowest races were considered to be Lebensunwertes Leben. Millions died unnecessary and cruel deaths as a result of that piece of national deception. Sometimes these demonstrations of national ignorance are relatively benign. Other times, as history shows the outcomes are devastating. The World is, once again, in the grip of another major deception, which is generating negative consequences at the worse end of the scale. As Australia approaches May, fiscal hysteria reaches its apex each year. Add the prospect of a general election (as early as July 2016) and the lying politicians and the media frenzy that support them extend themselves beyond the normal day to day idiocy and prevarication. On the world stage, the IMF prances around, wiping the blood of millions of citizens that it has impoverished over the years with its incompetence and bloody-mindedness, lecturing nations on what they should do next. Whenever, a nation follows their advice unemployment and poverty rises and the top-end-of-town walk off with even more loot. Loot is what pirates stole. These looters, however, do not even have the panache and elan that we associate with the romance of piracy. They are just sociopaths and cheats. Welcome to a new day in neo-liberal hell!

Read more

The Weekend Quiz – April 9-12, 2016 – 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.

Read more

The Weekend Quiz – February 20-21, 2016 – answers and discussion

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.

Read more
Back To Top