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A conversation about MMT

Its Wednesday and my blog light day. The Australian Federal government unveiled their grand fiscal statement (aka Budget) last night. I am pretty tied up today and need some time to read the papers and data accompanying the release. As a result I will reserve my commentary until tomorrow. But if one word would suffice then my conclusion is – pathetic. More words would tell you that there is nothing visionary about this statement or strategy. There is lots of cash lollies for people – well not much for the lower-paid and plenty for the top-end-of-town but no longer term investment strategy which would address the other crisis humanity is facing other than the health, unemployment and poverty crises – and I refer to the climate crisis. I also do not support the tax cuts which hand over big increases in disposable income at the top end of the income distribution and very little at the other end. The longer term consequences of that strategy will be to limit the non-inflationary size of government, which, of course, is the conservative strategy. But what will be left of government when things stabilise will not be very progressive. Anyway, I will consider the documents later today and comment tomorrow. Probably.

A conversation with Phil Armstrong – GIMMS event

On September 27, 2020, I recorded a live conversation via Zoom with Dr Phil Armstrong, which was organised by the – GIMMS Team

It was a long session and included questions from the attendees (of which there were about 100).

As usual, with Zoom, the audio quality varies but, in general, the sound is okay.

THe format was that Phil asked questions to provoke discussion and then we talked about the answers.

I enjoyed the interaction, although face-to-face is better by far.

Thanks to the wonderful GIMMs team for their dedication in advancing the MMT education initiative. They are tireless volunteers and I hope more people will see their way to offer support for their efforts.

Music – The Spencer Davis Group

This is what I have been listening to while working this morning. I heard a version of this song by the – Chicago Transit Authority – from 1969 the other day, which was fine.

But then I decided to dig out my old – The Spencer Davis Group – album – I’m a Man (released by Fontana Records in 1967). It was one of four albums they released in that year, which is a testament to their popularity at the time.

Track 1 is the Jimmy Miller and Steve Winwood – song – I’m a Man – which was one of the great songs of that era – beautiful guitar and really magnificent Hammond Organ (with the grunchiest setting on the drawbars that you could imagine).

Here is a snippet from the UK Top 100 for February 9, 1967, which shows the songs that I’m a Man was competing against for attention. It maxed out at number 9.

But look at the other songs – Let’s Spend the Night Together, Hey Joe etc. Classics and among the best of all time.

The whole album has some excellent songs. I hadn’t listened to it for a while and am now committed to converting it into digital form and putting it on my iPhone.

I was young at the time and just getting my music legs but I think, in retrospect, that I had good taste (-: It still sounds fabulous today.

My schoolboy band used to hammer this song out at parties where we played a bit. We thought we had it down but probably didn’t.

That is enough for today!

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

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    This Post Has 30 Comments
    1. Oh dear, dear, you youngsters. We old-timers remember late 1965 in the UK when Spencer Davis released Keep on Running and Otis Redding put out My Girl. THOSE were the days!

    2. Thanks Bill. Spencer Davis Group were more talented than I originally thought. In 1967 I was in 6th class and a Cat Stevens fan. lol!!

    3. Until he has the time for more detailed analysis, Bill offers this one-word assessment of Australia’s latest economic plans and policies: “pathetic.” Certainly the same word would apply to the plans and policies of the American government, to the extent that it can be said to have any at all. Isn’t it time for MMT advocates to move beyond further attempts to reason with such governments, hoping to convince them to look through the MMT lens? Indeed, I would argue that, despite the propaganda these governments feed their plebes, they are already peering though that lens and thus using ample amounts of fiat money to enhance the security and power of the plutocrats they serve. So if this is as true as it appears, why don’t MMT advocates shed their sedate academic garb and go populist and prophetic in the biblical sense? Why don’t they lay out in all their glory, in their full breadth and depth, comprehensive visions of what life could be like (at least in currency-sovereign nations) for both average and underprivileged people, were the scope of governmental agency revealed by MMT (constrained only by available resources) to be used on their behalf and that of the planet? Why not lay out complete, vividly-colored packages of what could be done for the people by their governments–actually, what the people could do for themselves through their governments–and how we already have the knowledge and wherewithal to do these things without the risk of hyper-inflation? In the first Gilded Age, Edward Bellamy wrote two utopian novels about a radically egalitarian society, books that shook the world and rivaled “Uncle Tom’s Cabin” in popularity and political impact. Why don’t 21st Century MMT advocates follow Bellamy’s lead and set forth sublime descriptions of MMT-guided societies devoted to the flourishing of the human spirit, the amelioration of the suffering of all living things, and the restoration of the imperiled health of Mother Earth? Seeing how things are going, why the hell not throw caution to the winds and go for it, paint the big, bold, beautiful pictures that lurk behind all the dry economic theory and endless data crunching? The Hebrew prophets painted such pictures, so did Thomas Paine, so did Edward Bellamy, so have many others, and they gripped and moved the men and women of their times, made a difference although often only briefly. Maybe this time around such visions would be more lasting, even more impactful, given our triple existential threats of potential nuclear war, impending ecocide, and now global Covid panic/disruption/depression. If at this point we’re not dying for someone to come along and grip and move us, lift us out of the dystopian mire which has been sucking us down for decades, then I fear we’re already dead. It’s long overdue, I submit and implore, for MMT advocates to up their game, REALLY up their game, and Bill would seem to be a natural, despite his expressed reticence to plunge into populist causes, to blaze this trail of producing MMT-inspired portraits of new and better ways of life. I pray he’s already doing this in the coming sequel to “Reclaiming the State,” and we ALL need to do it, each in our own way, every time we engage with our understandably confused, desperate, and demoralized brothers and sisters.

    4. Newton, as much as I like how MMT explains the economy and explains what is possible for a currency issuing government to do- utilize the idle resources available- this just doesn’t get us to the miracle type changes you seem to be asking for. The real resource constraints exist even if MMT is understood.

      MMT at least proposes one actual policy- the Job Guarantee. And there has been no lack of advocacy for it among any MMT economists I have read. As far as I can tell they are trying to lead to the best they can on this. But it just is difficult. Contra Bill in the video, I think getting the Job Guarantee implemented would be a huge thing in my (your), (our), country. But my point is that they are out there doing their best to get even this one policy implemented. And I think they are getting some traction on it- but it just ain’t easy, even for one policy that makes total economic sense.

      It is up to us to pick up the ball and run with what MMT teaches us.

    5. Jerry, I’m all for the JG but it’s not going to happen without a much larger, more attractive, more compelling context being created to surround it in order to sell it. As you indicate, “there has been no lack of advocacy for (the JG) among any MMT economists I have read. As far as I can tell they are trying to lead to the best they can on this. But it just is difficult.” Yes, it certainly has been and will continue to be so long as ending neoliberalism, a system created by human beings like ourselves, is considered to require something akin to a divine miracle. In other words, the reason I’m suggesting to explain this difficulty in selling even a modest buffer stock JG is the impoverishment of human imagination and vision c/o TINA neoliberalism. BY FAR, the most important thing about MMT is the extraordinary (though not unlimited) scope of agency it reveals to be inherent in currency-sovereign governments. You sell agency and trigger it by laying out a worthy vision that its exercise can achieve. The goal is what impels the belief and the action, not pushing for a first step without describing the ultimate destination.

    6. Yes, you want a salesperson to ‘create’ the attractive compelling context in order to sell it.

      As soon as Bill Mitchell starts ‘creating contexts’ to sell MMT he will be attacked for it and lose credibility as an economist. Social scientist he is. Lays out the logic and framework so that is there to base our aspirations on. And that is very important because while Bill is somewhat constrained as a social scientist- we are not.

      I think you should push your goals Newton. You have been an inspiration to me in the past for sure. Use the framework Bill provides. Lets get some of this done.

    7. “Politics is the art of the possible”.

      Yes, it’s become a platitude – but that doesn’t mean it isn’t correct, one-hundred percent.

      Visions (including evil visions) can inspire people (if they’re evil visions, with evil intentions). But – good or bad – getting them translated into action can only be done through political action. The most extreme form of that is revolution which – whether bloody or not – always leads to unintended consequences, among them some which are the opposite of those the visionaries envisaged. Orban’s Hungarian dystopia for instance.

      Capitalism is at the root of everything that is wrong with our society – but also with much of what is right with it and, incidentally, for the vast majority of us today much better materially and socially than would have been our lot had capitalism never developed. (Even Marx grudgingly conceded that, as a prelude to going on to reject it as a final destination).

      If you want to overthrow it you had better be damn certain that whatever you aspire to replace it with will improve mankind’s lot not worsen it.

    8. Newton Finn writes:

      ” Isn’t it time for MMT advocates to move beyond further attempts to reason with such governments, hoping to convince them to look through the MMT lens? ”

      (In desperation, looking around for the required charismatic leader to convince….)

      What about a leader who already seems genuinely committed to the MMT vision of universal prosperity and sustainable development of his people, by reason of his Marxist philosophy, without having apparent ambitions of global (military) hegemony?

      eg, does Xi Jinping know about MMT? He could banish the misplaced concerns about Chinese debt overnight with a wave of his hand, create a sustainable, full-employment economy via “socialism with Chinese characteristics” (combining *state planning* with the creative vitality of profit-driven individual enterprise within limited “invisible hand” – and as we know, dumb – markets); and reveal the secret of his nation’s resulting astounding success at the UN…..

      I wonder if Kevin Rudd would be interested in making a phone call to Xi….but I forget, I suppose Kevin doesn’t know about MMT either…..

    9. There is no ” MMT vision of universal prosperity and sustainable development”. MMT is a potent means for identifying precisely what are the possibilities for action open to any currency-issuing government *within the constraints of the real resources actually at its disposal* – nothing more.

      But nothing less either! Achieving that – vastly improved – degree of clarity would *alone* be, for all governments including even the Japanese, a quantum leap forward opening up the possibility of extensive and radical reform of existing politics and institutions. That is the enticing potential which MMT (which is a theory not a political manifesto) holds out and which deserves to be evaluated as ground-breaking in itself – especially in comparison with the fairy-tale “models” which are all that the pathetically-impoverished thinking of the dominant mainstream economics paradigm can come up with.

      Realising that potential belongs in the realm of politics.

    10. @ Neil Halliday

      What has
      “combining *state planning* with the creative vitality of profit-driven individual enterprise within limited “invisible hand” – and as we know, dumb – markets”
      got to do with “socialism”?

      It’s classical economics transposed to a post-industial-revolution context.

      It also happens to resemble pretty closely the economic paradigm applied pre-WWII in Italy by Mussolini and by the Nazis in Germany. The political movements involved claimed (nominally) in both those cases too to be “socialist” whilst working hand in glove with big business. Both of them precursors of your poster-child, Xi’s and the CPC’s 21st-century China.

    11. @ Robert H:

      China is quite a different country to 1930’s Italy and Germany, regardless of labels like ‘socialism’ and ‘fascism’.

      1. As of 2020, 138 nations have joined the ‘Belt and Road’ initiative, including a rail connection between China (with the 2nd largest economy in the world) and Europe.

      2. China actually supports peaceful co-operation and development, and multi-lateralism at the UN, unlike the US which wants to maintain global hegemony.

      (This is the reason why , despite 50 years of good relations with the West until 2016, China has suddenly become public enemy number one …ie, when Trump realized the Chinese economy would soon be twice as large as the US if left unmolested……).

      [Note: China is entitled to regard Taiwan as an internal dispute, and I suspect the artificial islands in the S. China Sea are part of a forced–reconciliation plan…but we can only hope cool heads in Washington and Beijing prevail].

      3. Poverty alleviation in (non-urban) China is prosecuted at the local level by Party officials tasked with identifying profitable enterprises for each local family.

      4.. This is different to the neoliberal democracies which throw money at businesses, or worse, private banks, in a recession (eg QE), and hope the money “trickles down”, but then leave workers to survive in “invisible hand” free markets subject to market failure, while navigating the NAIRU….

      5. According to a recent Harvard study, >90% of mainland Chinese are satisfied or moderately satisfied with their government. No government in a two-party ‘blind leading the blind’ neoliberal democracy can ever achieve that level of satisfaction.

      So, just as I had hoped Trump – who had/has the power and who showed signs of radical leadership before his election – to walk into the UN and offer the abolition of the veto in the SC, now I would like Xi Jinping, who also has the power, to properly exercise his nation’s currency-issuing capacity on behalf of the sustainable development and prosperity of the Chinese nation.

      Potentially a lot easier than convincing the the West’s neoliberal central bankers of the merits of MMT .

    12. Newton Finn,
      My God, so well said.
      what a great idea.
      I’m going to post it in the name Newton F. on the POFO site.
      .

    13. “China actually supports peaceful co-operation and development, and multi-lateralism at the UN, unlike the US which wants to maintain global hegemony. ”

      Yes of course, that’s why it has:

      – unilaterally assumed control of South China Sea islands by military force

      – virtually imprisoned huge numbers of Uighurs and Tibetans

      – has made military incursions into Indian controlled border regions

      – without recourse to any outside consideration, broken agreements and subsumed total control of Hong Kong

      – on a daily basis, threatened Taiwan with invasion

      – sought to build naval bases in Cambodia and the south western Pacific

      – taken, without consultation, to establishing bases in Australian Antarctic territory over several decades

      – sought to corrupt the Australian political process and polity

      – routinely brutally suppressed internal dissent.

      It’s just the kind of peace loving nation that the region and the world craves for.

    14. “According to a recent Harvard study, >90% of mainland Chinese are satisfied or moderately satisfied with their government. No government in a two-party ‘blind leading the blind’ neoliberal democracy can ever achieve that level of satisfaction. ”

      See *https://justthenews.com/world/asia/harvard-uses-polling-company-run-former-ccp-official-test-support-chinese-government*:

      “..the poll was run by a company, Horizon Research Consultancy Group, that is led by a former Chinese government official, a fact which Harvard failed to acknowledge in its report of the results..”

      and

      “Daniel Harsha, a Harvard spokesman, said the potential for government intimidation being a factor in the poll’s results is “always a possibility in authoritarian or semi-authoritarian country, but it does not make attempts by social scientists to measure public opinion illegitimate.”

      Horizon Research is run and was founded by Yuan Yue, a former Chinese Ministry of Justice official.

      Harvard has acknowledged receipt of at least $74 million in donations from China since 2014. “

    15. Robert:
      1. I already raised the S.China sea issue: in relation to Taiwan.
      2. Uighurs and Tibetans; backward cultures in lands historically under Chinese hegemony. Necessity to deal with present day Muslim extremism etc.
      Meanwhile blacks in the US and Oz suffer egregious “human rights” abuse in the form of entrenched poverty and social disadvantage.
      3. border line with india has never been established. (Just shows humans require an international adjudicator ie a UNSC without veto….).
      4. The CPC knows the lovers of the adversarial, two-party ‘blind leading the blind’ democracies have to be resisted, to achieve the sustainable development of China
      5. Taiwan…addressed above.
      6. Naval basis in the SW pacific to resist US hegemony in the region….
      7. So Australia has a natural right to vast expanses of Antartica?
      8. No doubt you are a spokesperson for the ASPI and the ASIO and CIA spooks who have crucified Assange on behalf of US global hegemony
      9 Australia is quite capable of corruption without any assistance from China

      Which all demonstrates a case of the pot calling the kettle black.

      So…who is best placed to teach the world about MMT? You ignored this vital question.

    16. or rather, who is best placed to establish MMT around the globe, on behalf of the sustainable development of all countries?

      Time being of the essence?

    17. In the video, at about 55 minutes in, I find out that I just have ‘pretentions’ to be a MMT supporter. But I guess I am not actually. Because I don’t understand how it is always beneficial to have the labor standards and environmental standards your country has implemented avoided by importing goods from another country where those standards are not existent. Just because we end up with the product- that makes it beneficial?

      There is a real problem with your explanation here Bill. It doesn’t fit in with your book “Reclaiming the State” for one thing. And it is not ‘so obvious’ Bill. And I don’t understand why this is an important issue for MMT to have a position on in the first place- why is it important? Why when my country sets a minimum wage for workers, why then is it that goods that can be imported for less because workers make nowhere near that wage in another place- why is that a good thing? Are you saying a country should not set a minimum wage in the first place? That if it does, it should still welcome goods produced elsewhere below that wage? Isn’t that an end run around the purpose of the minimum wage law? I don’t understand this position you take on this.

      You should stick with the idea that the whole issue is very “nuanced”. In my opinion. Or come up with a better argument.

    18. Neil,

      Just because the US is “bad” does not mean that China is “good”. What the US does is irrelevant to judging the behaviour of the Chinese.

      Re Chinese incursions into Antarctica: Antarctic territories are set up by international treaty. China blithely ignores them.

      It has also blithely ignored the rulings of the International Court regarding the South China Sea.

      It is not a trustworthy international citizen. It plays by its own rules and totally does what it perceives to be in its interest irrespective of international protocols. In other words, it is a rogue state. Your assertion that “China actually supports peaceful co-operation and development, and multi-lateralism at the UN,” is just patent bullshit.

      “..who is best placed to establish MMT around the globe, on behalf of the sustainable development of all countries? ”

      Supposedly those who are willing to appease and apologize for totalitarianism know the answer to this question.

    19. Henry

      “Just because the US is “bad” does not mean that China is “good”

      We agree on that (Iv’e been at pains to stress that, but you don’t see it).

      Re the International Court: it needs the backing of a UNSC without veto…..

      Failing that , we see EVERYONE ignoring “international protocols”, depending on perceptions of national self-interest (eg the uni-lateral sanctions and war in Iraq and their terrible aftermath for the Iraqi people) .

      Re totalitarianism: a recent TV program interviewed several Australian expats. living in China. They all said they felt safe living there, and were not hassled by the authorities. Obviously if you insist on pushing the supposed superiority of democracy, you might get an interview from the police.

      I don’t know the answer to the question, but I want to explore all the possibilities, unhindered by ideology.

    20. Neil,

      “re totalitarianism: a recent TV program interviewed several Australian expats. living in China. ”

      This is more nonsense like the socalled Harvard survey you cite. I don’ doubt you could find plenty of people on the payroll of the Chinese regime or the benefactors of its largesse who are willing to extoll its graces.

    21. “Why when my country sets a minimum wage for workers, why then is it that goods that can be imported for less because workers make nowhere near that wage in another place- why is that a good thing? ”

      Because the floating rate exchange system sorts that out – unless the other side is using mercantilism. In which case you feed them as much fiat money as they can eat to defeat that process. At that point they then have to buy from you and buy things produced at your minimum wage, which then shifts the exchange rate to ensure their minimum wage is the same – adjusted for the productivity differential which is what the real terms of trade is ultimately based upon.

      Imports will only come into a country if they fit the standards of sale of that country. A retailer cannot sell something substandard if they are liable for it. And since they are liable for it they will not order anything that is substandard.

      If you put the standards requirements on the retailer in your country, make them assert those standards on the label and be both legally and morally liable for them, then simple supply and demand will sort the rest out – worldwide.

      You cannot fix the politics of the entire world, because you are not in charge of the entire world. It is for people in other parts of the world to put the politics in place to correct their bit. All we can do is nudge them in the right direction.

    22. Referring to:-
      Neil Halliday
      Friday, October 9, 2020 at 0:31

      “China is quite a different country to 1930’s Italy and Germany…,”
      – Obviously, but just stating that doesn’t address the politico-economic analogy I made, which you just skirt around. In so doing you implicitly concede my point, namely that far from being “socialist” the current Chinese regime is in its own way every bit as corporatist (and, by extension, just as despotic) as were the Italian Fascist and German Nazi regimes.

      “…regardless of labels like ‘socialism’ and ‘fascism’”.
      – It was you who introduced both those labels into the discussion, not me.

      IMO both labels are inapplicable to present-day China, and the only terms in the present-day political lexicon that can aptly be applied to it are “authoritarian” (being circumspect) and “totalitarian” (being blunt).

      It beggars belief IMO that anyone living in a Western-style democracy – with all its glaring inadequacies – can give credence to the “results” of opinion surveys conducted in a totalitarian society. What other choice will most respondents perceive themselves as having than to express more-or-less unqualified approval of the regime? And please don’t tell me that respondents can have confidence that their identity will be safeguarded. In a police-state – no matter how cuddly you seem to think this one is – how can anyone believe that they will remain anonymous if the regime decides it wants to identify them? (think the (East) German Democratic Republic, with its Stasi…). And as to “cuddly” (my term) – tell that to people in Hong Kong, or Tibet, or the Xinjiang Uygur Autonomous Region of China.

    23. Neil Wilson @ 18:38 ,
      Thank you, I do appreciate the response. Even if I don’t agree with it.

      I have no faith that the floating exchange rate system will sort trade imbalances out. About as much confidence in that as in the idea that changes in interest rates will automatically balance investment and savings and ensure full employment. Doesn’t work all that well in other words.

      I was upset earlier because Bill seemed to say that people who question whether all imports are always a benefit suffer from ‘pretensions’ of understanding MMT. And first of all, I think there is room for disagreement here. And second, I don’t see why this is even very important as far as MMT theory is concerned. And if it is very important for some reason, then he should come up with some better arguments or at least explain it better than saying ‘I like my iPhone’.

      But it was a short answer in a long interview to what may have been a sort of surprise question, so it’s probably unreasonable for me to get upset about it. But it does seem to be an issue that should not be dismissed with a ‘it’s obvious- it is always good’ type response.

    24. “I have no faith that the floating exchange rate system will sort trade imbalances out”.

      I must say that – as *logically* conclusive as Neil’s argument may well be – I agree with Jerry’s response.

      When, I ask myself, has the idealised conception Neil propounds ever operated in our less than ideal world of realpolitik? When have some governments ever NOT been engaging in managing their exchange-rates vis-a-vis trade and/or power-political rivals? What else has Germany been doing over the last five decades, or China since it began its drive towards super-power hegemony in opposition to America’s?

      Or, above all, the USA itself – except during the brief period during which it was via Marshall Aid anxiously nursing the economies of a western Europe devastated by war (its protegé West Germany’s above all) back to becoming so economically self-reliant as to be able to thwart Stalin’s aim of adding them too to his bag along with all of eastern Europe?

      The Bretton Woods fixed gold-exchange-rate system was just the management by the USA of its own currency’s exchange-rate against those of all of its client-states – naturally in its own sole interests strategically and economically until the Korean War caused that plan to backfire (but US representative at Bretton Woods Harry Dexter White who killed Keynes’s technically far superior, non-hegemonic dollar-based, alternative could scarcely have been expected to have foreseen that!).

    25. @ Jerry Brown

      Apropos floating exchange-rates not sorting-out trade imbalances:-

      It’s intriguing I think to reflect on the fact that Keynes’s (together with E.F.Schumacher) proposed scheme was targeted at precisely that – ie sorting-out trade-account imbalances – which the Bretton Woods system signally failed to do and which, as soon as it led to America haemorraging its own gold-reserves – previously a multiple of the rest of the world’s – its sole begetter the USA summarily abandoned.

      The “bancor” like the Bretton Woods system was conceived-of as based on fixed exchange-rates*, only not against any particular country’s currency but against the supra-national “bancor” monetary unit, in terms of which all participants’ balances would be denominated and cleared, functioning at supra-national level in like fashion to “central bank reserves” within any single country’s internal clearing-system. It thus would have precluded any single country’s currency from being dominant – which was precisely what damned it in the eyes of American policy-makers intent upon having the USD displace sterling as, effectively, the (western) world’s currency.

      Had it been adopted and had it lasted, it might have proved attractive both to Russia in the immediate briefly democratic interlude before Putin and China under Deng Xiaoping after Mao’s death and the fall of “the Gang of Four”. Who knows?

      If it had, what a different world we might now be living in! Maybe no Putin, or Xi Jinping, either? And, just maybe, no Donald Trump – now there’s a thought.

      And no Maastricht and no Euro…?

      * As envisaged. But there need have been no obstacle to its changing over to floating rates, set by the FX market just as they are now, if that had been the wish of the participants at any subsequent juncture.

    26. Robert H wrote:
      “It beggars belief IMO that anyone living in a Western-style democracy – with all its glaring inadequacies – can give credence to the “results” of opinion surveys conducted in a totalitarian society”.

      The SBS TV program I referred to was conducted by Australian, not Chinese reporters.. I trust the report .

      My chief interest in China is that a national public banking system, with control over money creation, is already in government hands, whose goal is the eradication of poverty, with national development that seeks prosperity for all via full employment. That’s the communist vision.

      The vested interests in democracies determined to hold onto their private banking money-creation privileges don’r give a ***t about such goals. That’s the nature of private sector interests.

    27. ” have no faith that the floating exchange rate system will sort trade imbalances out”

      Nobody said anything about sorting trade imbalances out. Trade is never imbalanced. It is always balanced by definition in a floating rate system. Unless the financing arrangement line up end to end the deal never happens in the first place. What we see is what succeeded.

      If a nation wants to send you boatloads of stuff for etchings on green bits of paper, that’s their choice. They can alter that within their own politics if they wish.

      What you do is defend your own economy – by making sure they can’t use mercantile tricks to drain your economy of financial demand and thereby make room for their own exports to your nation by crippling the internal production system.

      Currently, China, Germany, Norway, even occasionally Japan, amongst others are playing the demand drain game. MMT says, offset that and take what they are giving while that is on offer. They’ll then soon stop doing it and switch to domestic demand stimulation.

      And if everybody does that, then it all sorts itself out. All the international trade systems failed because they never found a way of forcing surplus nations to spend their loot. MMT has found a way – just accommodate it and stop paying them for hoarding financial assets.

      Remember that getting into orbit is about falling to earth and missing. Sometimes what seems illogical is what works.

    28. “MMT says, offset that and take what they are giving while that is on offer. They’ll then soon stop doing it and switch to domestic demand stimulation.”

      Neil, what is your idea of ‘soon’- one month? 20 years? A worker’s lifetime?

      And that is all besides the point anyway. What I am saying is if a nation allows imports of goods that are produced less expensively because the external producers do not have to meet the standards it has set by law in its own country, then in effect, those goods are allowing those laws to be subverted.

      Would that iPhone Bill loves still be a total benefit if it had been assembled by forced child labor in a way that terribly polluted the environment in some other country? I don’t think so.

    29. “All the international trade systems failed because they never found a way of forcing surplus nations to spend their loot”. (Neil Wilson)

      As you so rightly say, they’ve failed. That’s the point that Jerry makes, and I’m seconding.

      “MMT has found a way”.

      In theory, perhaps. But the theory only gets activated if all or most governments adopt trade policies which obey MMT axioms. None have to date SFAIK. nor can anyone predict how long it might take for them independently and singly to get around to falllng into step, which the Keynes/Schumacher bancor scheme would have obliged them to do immediately from the outset. That’s why it’s such a tragedy that it was thwarted by the Americans: a unique opportunity missed, for which we’re all still suffering.

      In the meantime, the problem Jerry pointed to can’t just be assumed away can it.

    30. robertH,
      You wrote, “In the meantime, the problem Jerry pointed to can’t just be assumed away can it.”

      I think you totally underestimate the ability of humans to assume any problem away. Look at climate change deniers. Look at every Libertarian who lives in a fantasy world, where vigilante justice will work just fine.

      I think Neil W. can assume that problem away.

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