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MMTed Q&A – Episode 6

Here is Episode 6 in our weekly MMTed Q&A series. This is the second-part of my discussion on the Job Guarantee with Dr Pavlina Tcherneva and in this episode we discuss the central role that employment buffer stocks play in Modern Monetary Theory (MMT), a point that is often missed by those who think it is just a job creation program and of secondary (and dispensable) importance to the ‘banking’ aspects of MMT. As you will hear (and see), the Job Guarantee is an integral part of MMT and that status is derived from the elemental insights that MMT offers about the way a currency works. If a person thinks the Job Guarantee is an unnecessary add-on to MMT, then they haven’t understood the basics of MMT. It is as simple as that.

MMTed Q&A – Episode 6

This is Episode 6 in the MMTed Q&A series.

This week we continue my Zoom conversation with Dr Pavlina Tcherneva where we answered questions submitted by readers about the Job Guarantee.

Pavlina has just published a book – The Case for a Job Guarantee (published by Wiley) – which provides a really great entree into the world of the Job Guarantee.

In this episode we discuss the intrinsic importance of the Job Guarantee to MMT.

The video goes for 9:37 minutes.

Note the discussion is mostly via Zoom, which means at time the audio and video quality is less than first-class. But we are learning to live with that constraint.

This is the – YouTube link – for the video.

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How Deep is the Ocean

This recording is from 1965 and features pianist – Bill Evans and saxophonist – Lee Konitz – who is one of my favourite alto players.

Lee Konitz died on April 15, 2020 from COVID-19. He was part of the 1940s cool jazz school and by the 1950s was playing with Miles Davis and moving into bebop.

When I first heard him playing in the 1970s I was struck by the length of his melody parts during solos. That was a feature of his playing which set him apart.

Other players on this clip are – Niels-Henning Ørsted Pedersen on bass and on drums – Alan Dawson – both are also deceased.

That is enough for today!

(c) Copyright 2020 William Mitchell. All Rights Reserved.

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    This Post Has 12 Comments
    1. Sunak’s the Tory plan to be announced today is ridiculous.

      Just keeps the dead wood afloat and decreases competition…

      Doing the JG backwards. Like a JG in the private sector and instead of the private sector paying the wages the government does.

      The just love anything that keeps all of the power in the hands of Capital and weakens the hands of Labour any chance they get.

      Crazy !….

    2. Derek,

      It falls into the “better than nothing” category. As Pavlina says on the video we can all point to endless job programmes over the years none of which make much difference.

      Sunak needs to get out the hose pipe, not the eye dropper.

      We need a “From furlough to Full Employment” article.

    3. How can anyone be warm to MMT, yet put off by the JG?

      This perspective might only be popular with unemployed or low income worker advocates of the basic income, extremist anti consumer Greens, seeking to pacify the unemployed, whilst limiting material resource consumption, and capitalists dreaming of laborless production, who are astute enough to understand that without some sort of government funded income for the unemployed people they wish to create, there will be no market for the products they wish to make or the services they wish to provide.

      The next hurdle will be to demonstrate just how myopic and unrealistic those perspectives are.

    4. “In the MMT perpective, why private banks issues certificate of deposit CD?”

      For the same reason you would take out a fixed rate mortgage. It stabilises the banks liability costs and reduces the risk profile of the bank. CDs and Term deposits are usually unsecured, which means the banks collateral is kept free to get better rates in the money market – rather than being tied up potentially in penalty rates borrowing from the central bank.

    5. Don’t forget the “top up my trust fund” brigade, who haven’t quite got enough to avoid having to work for a living. They’re the ones working on a ‘variable basic income’ proposal. They don’t even think they have to bother pretending it’s about helping the poor now. It’s now about their ‘right’ to the excess production.

    6. Breakthrough moment for MMT! When the message of Bill and his colleagues becomes front and center on one of America’s most popular new internet news programs, one that represents and appeals to both the left and the right, then, indeed, Dylan’s famous line leaps from the 1960s to the cusp of this 21st Century moment: “The times, they are a changin.”

    7. So a bank doesnt need reserve deposits to lend but wants to borrow money from people so it can “invest” and keep the difference from rates. What do banks usually do with money they get from CD’s? Banks with excessive reserves and central banks pay the deposit rate, this excessive reserve could be used the same way as the money borrowed as CD’s? banks act differently in countries with low or zero interbank rate and countries with high interbank rate?

    8. For MMT to make any real progress at street level, it has to be got into High Schools. Year 10 – 13 in the UK; Grade 9 – 12 in the USA. The best source so far at that level is https://modernmoneybasics.com/ The home page video and the FACTS section are a superb beginners guide.

    9. I owe it to Yves Smith (credit where credit’s due) that I’ve stumbled upon Thomas Frank’s “The People, No” and it’s been an eye-opener. It’s dissected in a 3-part series of interviews of the author by Paul Jay at theanalysisnews.com website (Google it).

      It’s riveting because despite the fact that it’s written as history, by a historian, its relevance to today is startling. It tells the story of successive episodes (in the USA) of populism – in the original and purest usage of that term – in the shape of the eighteen-nineties People’s Party whose candidate for President William Jennings Bryan narrowly lost the 1896 election against all the odds – and gives the truly repellent reasons for why he did.

      Likewise the rolling-back after Roosevelt’s death of the populist ethos and impetus of the New Deal by a precisely analogous although much more long-drawn-out episode of naked all-out class war conducted by the elites (unified across party lines) against “the deplorables”. Otherwise known as the great mass of the people. History repeating itself.

      We are now in the midst of the latest, contemporary, episode if Krystal Ball (echoing Congresswoman Ilhan Omar) is right – and I believe both of them are dead right and fervently hope that that doesn’t result in either or both of them ending up dead as a result (though in today’s America one can never be sure) – of what Frank describes thus:-

      “…their grand idea was to build a huge…union of all the working-class reform groups. So unions, together with farmer groups, et cetera, and build a gigantic coalition of the working class to challenge the well, the capitalist system.
      That was the idea, and for a while in America, it looked like it might succeed”.
      and:-
      “The founding fathers obviously didn’t have the word populism, but they did have that fear of the majority. That…runs right through the Federalist Papers and the Constitutional Convention. Alexander Hamilton…in an argument with his arch-enemy, Thomas Jefferson … said, ‘your people, sir, are a great beast’, and that’s anti populism.”

      Paul Jay chips in:-

      “… in the context of America and the slave enslavement of black slaves, black African slaves, but that in England, the enslavement was of the Irish and the Welsh and of child labor, which essentially was like child slaves who were white Anglos. The idea of dehumanization, the working class, especially the poor working class, as really being subhuman, it’s connected to this idea that if those people ever got in charge of or supported the kind of politics that serve them, that’s to be feared”.

      You’ll immediately see where this is going, and how it links up with the situation right now – in America most acutely but not only in America. Marshall Blackburn’s tweet responding to Ilhan Omar’s challenge quoted by Krystal Ball could have come straight out of Frank’s historical account of those past episodes of rabid, hysterical, atavistic, elitist attacks on populism – *real* populism NOT what that word has become distorted and misapplied to mean to today’s public and media.

      I urge all to watch – or read the transcript – of these most arresting interviews. They pack a real punch.

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