Admin note: Server Change

To all readers of my blog – I have just changed the Virtual Machine that I run my blog off and it now seems to be working fine. If you encounter any problems please let me know. The address remains the same (although soon I will be altering that to be www.billmitchell.org/blog but for now all is unchanged except the VM that is serving the files.

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    Saturday Quiz – October 4, 2014 – 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.
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      Saturday Quiz – October 4, 2014

      Welcome to the Billy Blog Saturday Quiz. The quiz tests whether you have been paying attention over the last seven days. See how you go with the following questions. Your results are only known to you and no records are retained.
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        Friday lay day

        The Friday lay day comes around again. I am at present working on a paper on European unemployment clustering (a spatial econometric analysis commissioned by a leading academic journal). When we have finished I will post results in a layperson’s type of blog. I also am working on the Modern Monetary Theory (MMT) book (a collection) for Edward Elgar which will come out early in 2015 (as well as my other Eurozone Groupthink book). So I need more time and hence the easier Friday. But I was watching a program on the plane yesterday about the number of people being displaced from Syria and the crisis that nations such as Turkey are now facing trying to house and feed them. Guess what? They lack basic resources because the governments claim they haven’t enough money. Austerity strikes again and as winter approaches in that region, many people including children are going to die through lack of basic care that could be at the fingertips of any number of government officials if they cared escape the neo-liberal world they are locked up within.
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          Posted in Friday | 3 Comments

          Direct central bank purchases of government debt

          There was a recently published Federal Reserve Bank of New York Staff Report – Direct Purchases of U.S. Treasury Securities by Federal Reserve Banks – by Kenneth D. Garbade, which recounts the way the central bank in the US could purchase unlimited amounts of treasury debt by creating funds out of thin air and how that capacity was eventually constrained. The Report is an understated account of the way in which the conservative ideological forces eventually prohibited this capacity and forced the US government to only issue debt to the private sector. He shows that between 1917 and 1935, this capacity was used often “without incident” but as the conservative antagonism grew it was limited (in 1935) and then abandoned altogether in the early 1980s. The Report demonstrates there were no intrinsic financial reasons for abandoning this capacity.
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            Posted in Economics, US economy | 23 Comments

            British economic growth shows that on-going deficits work

            In Australia, the Federal Treasurer announced today that they would be making further spending cuts to the fiscal position of the government in the mid-year statement to pay for “an increase in funding for security agencies” and its onslaught against ISIL. So education, health spending, income support etc will get the chop so we can make the world an even more dangerous place than it is currently at a time when unemployment is rising and economic growth falling. Another case of austerity madness combined with the mindless approach to dealing with the external threats from extremist groups. He should take a note from the British Chancellor’s book who is overseeing an expanding fiscal deficit and public debt ratio, despite the rhetoric to the contrary, and that on-going deficit is supporting growth, helping private households increase their saving ratio and is generally a good thing to behold. Austerity in the UK?- not if you consider the current data!
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              Posted in UK Economy | 7 Comments

              Another Eurozone plan or two that skate around the edges

              There was an article in UK Guardian last week (September 26, 2014) – Debt forgiveness could ease eurozone woes – which was interesting and showed how far the debate has come. The outgoing European Commissioner for Employment, Social Affairs and Inclusion, László Andor also gave a speech in Vienna yesterday – Basic European unemployment insurance: Countering divergences within the Economic and Monetary Union – which continued the theme from a different angle. While all these proposals will be positive rather than negative they essentially are not sufficient to solve the major shortcoming of the Eurozone – its design will always lead it to fail as a monetary system because they have not accepted that all citizens in each country have equal rights to avoid economic vulnerability in the face of asymmetric aggregate spending changes. That lack of acceptance means the political leaders will never create an effective federal fiscal capacity and the member nations will always be vulnerable to major recessions and wage deflation, which undermine living standards.
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                Posted in Eurozone | 13 Comments

                Strong public benefit from tertiary education in Australia

                There was an interesting article this morning in the Fairfax press (September 29, 2014) – OECD figures show public benefits more than individuals from tertiary education – which used the recently released – Education at a Glance 2014 – to compare private and public (social) returns from tertiary education. The results are that private net returns outweigh social returns in the majority of nations but not for the UK, Australia, Japan and Korea. The results have implications for the debate about who should fund tertiary education – the private individuals (or families) of those undertaking it or the government. They also highlight that one should be somewhat protean in outlook and avoid falling into Groupthink.
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                  Posted in Economics, Higher Education | 6 Comments

                  Saturday Quiz – September 27, 2014 – 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.
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                    Saturday Quiz – September 27, 2014

                    Welcome to the Billy Blog Saturday Quiz. The quiz tests whether you have been paying attention over the last seven days. 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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