The Weekend Quiz – November 26-27, 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.
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    The Weekend Quiz – November 26-27, 2016

    Welcome to The Weekend Quiz, which used to be known as the Saturday Quiz! The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.
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      Posted in Saturday quiz | 5 Comments

      The case against free trade – Part 4

      I am travelling most of today and do not have much time. However, there were a few more issues I wanted to raise in relation to the ‘Free Trade’ mini-series of blogs but on Tuesday I ran short of time and thus I thought I would take this chance to round the discussion off. So this blog might be considered Part 4 in that series on free trade. In Part 1, I showed how the mainstream economics concept of ‘free trade’ is never attainable in reality and so what goes for ‘free trade’ is really a stacked deck of cards that has increasingly allowed large financial capital interests to rough ride over workers, consumers and undermine the democratic status of elected governments. In Part 2, I considered the myth of the free market, the damage that ‘free trade’ causes’. In Part 3, fair trade was considered along with so-called ‘free trade’ agreements. Today, some nuances and additional thoughts are provided. The aim of this mini-series is to build a progressives case for opposition to moves to ‘free trade’ and instead adopt as a principle the concept of ‘fair trade’, as long as it doesn’t compromise the democratic legitimacy of the elected government. There is also a video of my keynote presentation at UMKC in September 2016 available in this blog.
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        Posted in Demise of the Left | 9 Comments

        Australia records another quarter of record low wages growth

        In the last few weeks, three sets of economic data released by the Australian Bureau of Statistics reveal just how bad the Australian economy is performing and exposes the lies that the mainstream media pedals on behalf of the conservative government and the establishment that seeks to defend the disastrous neo-liberal policy regime. Last week (November 17, 2016), I analysed the recent labour market data for October (see Australian labour market – staggering along and in trend deterioration). The ABS said the data represented a Continuing shift to part-time employment . On November 10, 2016, the ABS released its latest – Participation, Job Search and Mobility, Australia, February 2016 – data, which reveals that 1 million Australians were underemployed in February 2016 and on average wanted an additional 13.5 hours of extra work per week. Do the multiplication – an enormous amount of wasted labour. Further, of the 6.4 million Australians not classified as being in the labour force, 954,800 wanted to work and were available to work. Finally, last week (November 16, 2016), the ABS released the latest – Wage Price Index, Australia – for the September-quarter 2016. For the fourth consecutive month, annual growth in wages has recorded its lowest level since the data series began in the December-quarter 1997. Real wages are barely growing and trailing productivity growth. The flat wages trend is intensifying the pre-crisis dynamics, which saw private sector credit rather than real wages drive growth in consumption spending. The lessons have not been learned.
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          Posted in Labour costs, Labour Force | 3 Comments

          The case against free trade – Part 3

          This blog continues my mini-series of free trade. In Part 1, I showed how the mainstream economics concept of ‘free trade’ is never attainable in reality and so what goes for ‘free trade’ is really a stacked deck of cards that has increasingly allowed large financial capital interests to rough ride over workers, consumers and undermine the democratic status of elected governments. In Part 2, I considered the myth of the free market, the damage that ‘free trade’ causes’. The aim of this mini-series is to build a progressives case for opposition to moves to ‘free trade’ and instead adopt as a principle the concept of ‘fair trade’, as long as it doesn’t compromise the democratic legitimacy of the elected government. This is a further instalment to the manuscript I am currently finalising with co-author, Italian journalist Thomas Fazi. The book, which will hopefully be out soon, traces the way the Left fell prey to what we call the globalisation myth and formed the view that the state has become powerless (or severely constrained) in the face of the transnational movements of goods and services and capital flows. In this blog (Part 3 and final) I consider the concept of ‘fair trade’ as an alternative to the current situation where modern democracies demonstrate an unwillingness to resist the ever-increasing demands of global capital to cede democratic legitimacy in favour of corporate profits.
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            Posted in Demise of the Left | 8 Comments

            Bank of Japan is in charge not the bond markets

            I read a report on the American news network CNBC the other day (November 15, 2016) – The bond vigilantes are back, and Trump better pay attention – which included some so-called experts in a video claiming to know something about bond markets. The report asserted that “bond vigilantes” might return to force the new US President to “tone down his spending” (as they allegedly did when Bill Clinton was in office). One expert said “we’ve got fiscal policy again and … the prospect of higher interest rates and inflation could even herald the return of the bond vigilantes”. Idiot is a polite term for him. The journalist and the commentators invoked should take time out and learn about what is happening in Japan, which remains the best Modern Monetary Theory (MMT) ‘laboratory’ there is. The Bank of Japan in now putting into operation the decision it took in September 2016 to buy unlimited amounts of Japanese government bonds at a fixed-yield. Which means? In short, it will control the yields across all bond maturities from 2-year out to 40-year and will set them at whatever level they choose. Oh, won’t the bond markets prevent that happening? How? For the bond markets it is a case of “like it or lump it”. Once again Japan demonstrates that mainstream macroeconomic theory is devoid of understanding.
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              Posted in Central banking, Japan | 10 Comments

              The Weekend Quiz – November 19-20, 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.
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                Posted in Saturday quiz | 6 Comments

                The Weekend Quiz – November 19-20, 2016

                Welcome to The Weekend Quiz, which used to be known as the Saturday Quiz! The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.
                Read the rest of this entry »

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                  Posted in Saturday quiz | 2 Comments

                  Australian labour market – staggering along and in trend deterioration

                  Yesterday, the ABS released its Wage Price Index data for the September-2016, which showed the record low wages growth is continuing. The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for October 2016 shows that predictions that this low wages growth would be good for employment were, unsurprisingly, false. Total employment barely increased and the ABS said the trend to part-time work has intensified. Over the last 12 months, Australia has produced only 102.2 thousand (net) jobs with 136.9 thousand of them being part-time jobs. In other words, full-time employment has fallen by 34.7 thousand jobs over the same period. Australia maintains its status as the nation of part-time employment growth with all the attendant negative consequences. The teenage labour market remains in a poor state and contracted sharply again in October. It requires urgent policy intervention. Overall, with weak private investment now on-going, the Australian labour market is looking in pretty dismal shape and the Federal government should immediately renounce its ill-informed austerity narrative and announce a rather sizeable fiscal stimulus to provide some fiscal leadership to the nation. This should include a large-scale public sector job creation program which would ensure teenagers regained the jobs that have been lost due to the fiscal drag over the last several years. The deteriorating data is staring us all in the face now! There is no room for nuance.
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                    Posted in Labour Force | 7 Comments

                    Australia’s new central bank governor chooses to dissemble on fiscal issues

                    The new governor of the Reserve Bank of Australia (our central bank) gave a speech in Melbourne yesterday (November 15, 2016) – Buffers and Options to the annual dinner of the Committee for Economic Development of Australia (CEDA). CEDA is a seedy type of organisation that typically advances the neo-liberal agenda. Please read my blog – The CEDA Report – one of the worst ever – for more discussion on this point. But that is not the topic today. The new governor has already began his tenure in disappointing fashion. I discussed his first foray into public life in this role in the blog – First appearance by Australia’s new central bank governor disappointing. His latest public intervention suggests he is hardening this stance – perpetuating the myths that a currency-issuing government is dependent on bond markets for its spending capacity and that public borrowing puts a burden on future generations. While today’s blog is about Australia, the principles elucidated are universal.
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                      Posted in Central banking, Fiscal Statements | 8 Comments