skip to Main Content

Apparently, MMT says there are no inflationary threats – which planet?

It’s Wednesday and we have the music feature to enjoy following some other news snippets. Here is an argument: Modern Monetary Theory (MMT) tells us that when there are fiscal deficits there is no problem with inflation. At present, inflation has been rising and there are deficits left over from the pandemic. Therefore “Tick off a loss for the modern monetary theorists amid rising inflation” because “Under MMT, the risk of inflation is considered minimal as governments that fully control their fiat currencies are believed to be able to control price levels”. Okay? So I think I better just terminate this blog today, say sorry for being so stupid, and start writing Op Eds demanding interest rates rise and governments cut their fiscal deficits immediately. But I won’t. Why? Because I am not stupid enough to mount that argument in the first place like some, who have the audacity to write financial columns that only demonstrate their ignorance. Good. Let’s have some music.

Read More

Myopic meanness – Australia’s ODA cuts to its neighbours in the Pacific

Neoliberal governments and their supporters have a habit of spruiking gee whiz solutions to the world’s problems, where gee whiz means make it easier for corporations to make profits and harder for workers to get pay rises, claiming that the destiny of individuals is in their own hands (denying systemic failures), and reducing regulations that ensure equity is enhanced. Australia added another dimension to that list (which is not exhaustive) – being mean spirited when it comes to the less well-off nations in the world. The problem with this approach is that it does not live up to promise – it certainly enriches those who are already well-off – but when the rest of us realise something is wrong, the horse has already bolted and picking up the pieces becomes more ‘costly’ than before. In the last few weeks, our government has been bellowing again about China. China is a threat, China is a crook, China is this, China is that. The trigger point this time is the revelation that China’s external strategy has come to the Solomon Islands and the anti-China paranoid gang within the Australian government has a problem. The Solomon Islands are less than 1,700 kms from our mainland and the fear that China will establish a military base there is sending shivers up the spines (euphemism) of our conservative government. Perhaps if we had have been more generous to this region, the Chinese would not have so easily been able to invest there.

Read More

US employment continues to grow but still 1.6 million jobs short of pre-pandemic levels

Last Friday (April 1, 2022), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – March 2022 – which reported a total payroll employment rise of only 431,000 jobs. Fortunately, employment growth was strong enough to drive the unemployment rate down by 0.2 points to 3.6 per cent. But there is still room for the unemployment rate to fall even further. The US labour market is still 1,579 thousand jobs short from where it was at the end of March 2020, which helps to explain why there are no wage pressures emerging. Real wages continued to decline. Any analyst who is claiming the US economy is close to full employment hasn’t looked at the data.

Read More

The Weekend Quiz – April 2-3, 2022 – 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 – April 2-3, 2022

Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.

Read More
Back To Top