The Weekend Quiz – May 6-7, 2017

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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    Resistance and change doesn’t come from going along with the (neo-liberal) pack

    I get a lot of E-mails that accuse me of being politically naive. The accusations were rekindled by yesterday’s blog – British labour lost in a neo-liberal haze. I imagine if I wrote a blog where I outlined support for Marine Le Pen in the context of a two-way fight against the worse-of-the-worst neo-liberals Emmanuel Macron the accusations would turn uglier even. My support for Brexit was met with similar hostility from a range of (self-styled) ‘progressives’ as being naive and offensive. Why, Brexit was a conservative plot wasn’t it? How could I have missed that? Progressives are now advocating votes for Macron even though they know he is an archetype neo-liberal – the anathema of what they believe. And they tell me every day in these E-mail tirades and other blogs that I should give people like Jeremy Corbyn some slack because he knows better than me that to advocate a major departure from the neo-liberal macroeconomic narrative would be political suicide. So why don’t I just shut up and recognise that politics is beyond my grasp and I should desist. Basically that is the message I get regularly. Well, I am sorry to say, such views completely misunderstand the role of an academic and the way in which resistance is constructed.
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      Posted in Britain, Debriefing 101, Economics, UK Economy | 65 Comments

      British labour lost in a neo-liberal haze

      There was an exchange in the British House of Commons a few weeks ago (sitting on April 19, 2017), which really summarised why the Tories will win the British election and why Jeremy Corbyn has led the Labour Party there into an abyss of neo-liberal mumbo jumbo where there is no way out but loss. It was during the Parliamentary time when the Prime Minister lists her engagements for the day (a cute aspect of Westminster systems). You can follow the exchange in the Hansard entry – Volume 624. It will make your skin crawl. I guess that is what one gets from reading Parliamentary records. The upshot is that the British labour lost in a neo-liberal haze and marching forthrightly towards its Waterloo. The aftermath will not be pretty.
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        Posted in Britain, Debriefing 101, Demise of the Left, UK Economy | 19 Comments

        The poor are getting poorer in the US

        Yes, the ‘politics of envy’. That is one of the epithets that the neo-liberal apologists use to defend the fact that the top-end-of-town are increasingly seizing the major proportion of any growth in wealth. They claim that shifts in the distribution of wealth and income do not matter if the levels of each distributional cohort (say, a decile or quintile) are all moving up. They ask the question: Why should a poor person care if a rich person is getting much richer as long as the poor are becoming less poor in absolute terms? The facts are that in advanced countries, the wealth accumulation of the last three decades has not been particularly beneficial to the poorest members of society. The rich have experienced massive gains in wealth even if the poor have enjoyed modest gains. But in the US, not only has the wealth distribution moved heavily towards the top end, the bottom 50 per cent now have less wealth than they had before the GFC began and have not increased their wealth since 1989 (when comparable data is available). And further, even if the bottom end of the distribution improved their absolute position, it still remains a major problem for wealth to be increasingly concentrated among the rich. It erodes the democratic process and increases social polarisation.
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          Posted in US economy | 10 Comments

          Common elements linking US and UK economic slowdowns

          Last week, the British Office of National Statistics (ONS) released data that revealed that quarterly growth in real GDP dropped to 0.3 per cent in the March-quarter 2017, down from 0.7 per cent in the December-quarter 2016. Household consumption growth fell in an environment of rising household debt and flat real wages. In the same week (April 28, 2017), the US Bureau of Economic Analysis released the latest National Accounts data for the US for the March-quarter 2017 – Gross Domestic Product: First Quarter 2017 (Advance Estimate). It showed that GDP grew on an annualised rate of 0.7 per cent in the first quarter of 2017, down from 2.1 per cent in the December-quarter 2016. The US result was driven, in part, by a dramatic slowdown in personal consumption expenditure and a negative contribution from government. The common elements linking the slowdown on both sides of the Atlantic are clear – growing and massive levels of household debt, flat growth in personal incomes (real wages etc) and inadequate fiscal support for growth. These elements, in part, were key features leading up to the GFC. Governments haven’t learned that relying on personal consumption expenditure for economic growth in an environment of flat wages growth means that household debt will rise quickly and reach unsustainable levels. How harsh the correction is unclear. The faltering the outlook in the US and the UK suggests that their national governments will need to increase their discretionary fiscal deficits to stimulate confidence among business firms and get growth back on track.
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            Posted in Eurozone, UK Economy, US economy | 4 Comments

            The Weekend Quiz – April 29-30, 2017 – 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 – April 29-30, 2017

              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 | 1 Comment

                The destruction of Greece – “only a down payment” according to the IMF

                On April 22, 2017, the Italian Minister of Economy and Finance, Pier Carlo Padoan presented a briefing to the 25th Meeting of the International Monetary and Financial Committee of the IMF in Washington. He spoke on behalf of Albania, Greece, Italy, Malta, Portugal and the Republic of San Marino. This annual event examines the “macroeconomic outlook” of the nations in question and conditions the IMF policy approach for the year ahead. Padoan, an ardent pro-Eurozone supporter, told the gathering that in the last year, the Greek economy was recovering and that “GDP remained stable in 2016, while for the first time since 2010 two consecutive quarters of growth were reported”. I wonder what data he was looking at. The official national accounts data for Greece doesn’t tell that story. With Greece still wallowing in the depths of recession, it is clear that the IMF hasn’t finished with the destruction of that formerly independent nation. The destruction to date (27 per cent contraction and increased poverty) are considered by the IMF to be “only a down payment” on what Greece has to do so satisfy the Troika. At what point do people start to realise that the on-going costs of this austerity dwarf the significant costs that would accompany exit? And the Troika is not done with Greece yet. They intend to screw it down even further. And the costs of remaining in the dysfunctional monetary union escalate by the day. At some point, the Greeks will realise they have been dudded. What is left is anyone’s guess – but it won’t be pretty. The destruction of Greece is “only a down payment” according to the IMF – keep that mentality in mind when you are working out whether Greece should remain obedient or tell them all to f*ck off and regain their currency independence and restore prosperity.

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                  Posted in Eurozone | 17 Comments

                  Deutsche Bundesbank exposes the lies of mainstream monetary theory

                  On one side of the Atlantic, it seems that central bankers understand the way the monetary system operates, while on the other side, central bankers are either not cognisant of how the system really works or choose to publish fake knowledge as a means to leverage political and/or ideological advantage. Yesterday, the Deutsche Bundesbank released their Monthly Report April 2017, which carried an article – Die Rolle von Banken, Nichtbanken und Zentralbank im Geldschöpfungsprozess (The Role of Banks, Non-banks and the central bank in the money-creation process). The article is only in German and provides an excellent overview of the way the system operates. We can compare that to coverage of the same topic by American central bankers, which choose to perpetuate the myths that students are taught in mainstream macroeconomic and monetary textbooks. Today’s blog will also help people who are struggling with the Modern Monetary Theory (MMT) claim that a sovereign government is never revenue constrained because it is the monopoly issuer of the currency and the fact that private bank’s create money through loans. There is no contradiction. Remember that MMT prefers to concentrate on net financial assets in the currency of issue rather than ‘money’ because that focus allows the intrinsic nature of the currency monopoly to be understood.

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                    Posted in Central banking, Economics | 36 Comments

                    Blog goes on holiday today …

                    Today is a public holiday (ANZAC Day) where we remember the efforts of our past generations who fought in wars. I am not very enamoured by the hype that surrounds these days – commercialisation reigns and the black/white nature of the narrative (we were good they were evil) obscures the reality of war and the political machinations that typically accompany it. In Australia’s case our involvement in several wars has been the product of unnecessary colonial master-servant type arrangements (us being the servant) and/or ridiculous alliances with the war mongering US. But the soldiers certainly did it tough and I have sympathy with that – and personal association with my parents. But for me, I am travelling a lot today and am taking the work time to continue working on the completion of our Modern Monetary Theory (MMT) textbook, which is now in its final stages (2 weeks away). I expect it to be published later this year now through Macmillan. I will post specific information when it is available. While I am working today, I am listening to this …
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                      Posted in Admin, Music | 12 Comments