billy blog Mon 2010-09-20 09:39 EDT

The consolidated government -- treasury and central bank

...The notion of a consolidated government sector is a basic Modern Monetary Theory starting point and allows us to demonstrate the essential relationship between the government and non-government sectors whereby net financial assets enter and exit the economy without complicating the analysis unduly. This simplicity leads to many insights all of which remain valid as operational options when we add more detail to the model...the mainstream macroeconomics obsession with central bank independence is nothing more than an ideological attack on the capacity of government to produce full employment which also undermines our democratic rights...The vertical transactions which add to or drain the monetary base that I have outlined here are transactions between the government and the non-government sector... These transactions are thus unique -- they change net financial assets in the economy. All the transactions between private sector entities have no effect on the net financial assets in the economy at any point in time...

Billy Blog; central bank; consolidated government; Treasury.

billy blog Wed 2010-09-08 19:04 EDT

Michal Kalecki -- The Political Aspects of Full Employment

...several readers have asked me whether I am familiar with the 1943 article by Polish economist Michal Kalecki -- The Political Aspects of Full Employment. The answer is that I am very familiar with the article and have written about it in my academic work in years past. So I thought I might write a blog about what I think of Kalecki's argument given that it is often raised by progressives as a case against effective fiscal intervention...[Job Guarantee concepts briefly summarized]...While orthodox economists typically attack the Job Guarantee policy for fiscal reasons, economists on the left also challenge its validity and effectiveness. In 1943, Michal Kalecki published the Political Aspects of Full Employment, in the Political Quarterly, which laid out the blueprint for socialist opposition to Keynesian-style employment policy. The criticisms would be equally applicable to a Job Guarantee policy...Kalecki's principle objection then seemed to be that ``the maintenance of full employment would cause social and political changes which would give a new impetus to the opposition of the business leaders.''...the major political blockages are no longer those that Kalecki foresaw. The opponents of fiscal activism are a different elite and work against the ``captains of industry'' just as much as they work against the broader working class. The growth of the financial sector and global derivatives trading and the substantial deregulation of labour markets and retrenchment of welfare states has altered things considerably since Kalecki wrote his brilliant article in 1943...

Billy Blog; full employment; Michal Kalecki; political aspects.

naked capitalism Sun 2010-08-22 09:32 EDT

Auerback: News Flash-- China Reduces US Treasury Holdings, World Does Not Come To an End

Marshall Auerback

In a post titled ``China Cuts US Treasury Holdings By Record Amount,'' Mike Norman makes the excellent observation that while China is moving its money out of Treasuries, interest rates are hitting record lows. In other words, the sky still isn't falling. So, Mike wonders, ``Where is the Debt/Doomsday crowd?'' He rightly concludes: ``They're nowhere to be found because they can't explain this. This is a `gut punch' to them. Their whole theory is out the window. They just don't understand or don't want to understand, that interest rates are set by the Fed...PERIOD!!!''...Also of note today: Tokyo's Nikkei QUICK News reports that the #309 10-year Japanese benchmark government bond, the current benchmark, traded to a yield of 0.920% Tuesday morning, down 2.5 basis points from yesterday's close. This is the lowest yield since August 13, 2003. This, from a country with a public debt-to-GDP ratio of 210%!...These are facts. Inconvenient for those who like to perpetuate the lie that the US or Japan faces imminent national insolvency as a means of justifying their almost daily attacks on proactive fiscal policy...

Auerback; China reducing; comes; ending; naked capitalism; News Flash; Treasury holds; world.

Sat 2010-07-24 16:14 EDT

Krugman versus Ferguson: Round Two -- Telegraph Blogs

Jeremy Warner

Not since Ken Rogoff's famous attack on Joe Stiglitz has the dismal science of economics provoked such pompous, self-important, personalised squabbling. Professors Paul Krugman and Niall Ferguson, of course, have form; they've been at it on and off for nearly a year now over the efficacy of deficit spending in fighting the downturn, and today they return to the fray...

Krugman versus Ferguson; Telegraph Blogs.

billy blog Mon 2010-06-07 19:00 EDT

Central bank independence -- another faux agenda

There are several strands to the mainstream neo-liberal attack on government macroeconomic policy activism. They get recycled regularly. ...Today, I am looking at another faux agenda -- the demand that central banks should be independent of the political process...The agenda is also tied in with the growing demand for fiscal rules which will further undermine public purpose in policy...I find it ironical that the freedom mongers have very limited appreciation of what freedom actually is. Allowing the unemployed to be ``bullied'' by amorphous bond markets is not a path to freedom...inflation targeting countries have failed to achieve superior outcomes in terms of output growth, inflation variability and output variability; moreover there is no evidence that inflation targeting has reduced inflation persistence...Central banks operating under this charter have forced the unemployed to engage in an involuntary fight against inflation and the fiscal authorities have further worsened the situation with complementary austerity...The conclusion that I have reached from studying this specific literature for many years is that there is no robust relationship between making the central bank independent and the performance of inflation...From a MMT perspective, the concept of CBI is anathema to the goal of aggregate policy (monetary and fiscal) to advance public purpose. By obsessing about inflation control, central banking has lost sight of what the purpose of policy is about...under the CBI ideology, monetary policy is not focused on advancing public purpose. Fighting inflation with unemployment is not advancing public purpose. The costs of inflation are much lower than the costs of unemployment. The mainstream fudge this by invoking their belief in the NAIRU which assumes these real sacrifices away in the ``long-run''...

Billy Blog; Central bank independence; faux agenda.

Sat 2010-05-22 09:19 EDT

Bridgewater Associates: Be The Hyena. Attack The Wildebeest. <<; Dealbreaker: A Wall Street Tabloid -- Business News Headlines and Financial Gossip

Bess Levin

So, you're going to work for Bridgewater, are you? ...if you didn't know anything about the Bridgewater's Tao of Dalio, which requires all employees to ``probe'' their colleagues (boss's included), you might find yourself asking ``WTF is this shit?'' What this shit-- the Culture of the Probe-- is, is the secret to B-water's success, the tenets of which comprise ``Principles,'' the hedge fund's unofficial handbook, written by founder Ray Dalio...

attacked; Bridgewater Associates; business news headlines; Dealbreaker; Financial Gossip; hyena; Wall Street tabloid; wildebeest.

Sun 2010-05-16 15:59 EDT

billy blog >> Blog Archive >> Doublethink

Yesterday I read an article by Noam Chomsky -- Rustbelt rage -- which documents the decline of the American dream and extends the malaise to Chinese workers. The hypothesis is that the workers in each country signed up for what they thought was a social contract where if they worked hard they would enjoy secure retirements. Then the meltdown undermines their jobs and they are forced to live on pitiful pensions. And while they watch the top-end-of-town enjoying the benefits of billions of bailout money from government the beneficiaries of these bailouts are leading the charge to take the pensions of the workers and turn them into ``financial products'' (privatised social security). This raises the concept of doublethink (a term coined by George Orwell) -- which ``means the power of holding two contradictory beliefs in one's mind simultaneously, and accepting both of them''...I see a lot of that in the mainstream economics debate...whatever suits their political agenda on any particular day. There is no consistency in their attacks -- they shift and slither and creep as facts get in the way.

Billy Blog; blogs Archive; Doublethink.

Thu 2009-11-19 19:43 EST

Jesse's Café Américain: Willem Buiter Apparently Does Not LIke Gold, and Why Remains a Mystery

Dr. Willem Buiter of the London School of Economics, and advisor to the Bank of England, has written a somewhat astonishing broadsheet attacking of all things, gold. I have enjoyed his writing in the past. And although he does tend to cultivate and relish the aura of eccentric maverick, it is generally appealing, and his writing has been pertinent and reasoned, if unconventional. That is what makes this latest piece so unusual. It is a diatribe, more emotional than factual, with gaping holes in theoretical underpinnings and historical example.

Jesse's Café Américain; likely gold; mysteriously; remains; Willem Buiter Apparently.

Credit Writedowns Fri 2009-10-23 08:57 EDT

US angling to get Chinese to revalue renminbi

In what looks to be a central line of attack in the quest to re-balance the global economy, the Treasury Department has ratcheted up the rhetoric against China's currency peg. The Treasury's semiannual report to Congress slammed the Chinese for their lack of exchange rate `flexibility,' but stopped well short of accusing the Chinese of currency 'manipulation' as Tim Geithner had claimed...[dollar losing reserve currency status]

angle; Chinese; credit writedowns; revalue renminbi.

Wed 2009-04-01 00:00 EDT

naked capitalism: Taleb Attacks Wall Street Bonuses

naked capitalism; Taleb Attacks Wall Street Bonuses.

Tue 2008-09-09 00:00 EDT

Joe Bageant: Why Rednecks May Rule the World

``We all understand that there is a political class which dominates in America, and that Sarah Palin for damned sure is not one of them. And the more she is attacked by liberal Democratic elements (translation: elite highly-educated big city people) the more America's working mooks will come to her defence.''

Joe Bageant; rednecks; rules; world.

Fri 2008-02-15 00:00 EST

Money Matters: World Elite Rats Destroy U.S. Sovereignty

by Elaine Meinel Supkis; in comments: "people can't credit a handful of intelligent and very directed and motivated people who desire to launch a war...The 'leaders' mill around, hoping for excuses to draw the sword and attack. But the sort of people who launched the 9/11 attacks were classic in their organization and the way they carried out their plans. The US contribution was to ignore them, not interfere with them and to let them do as the attackers wished. The DESIRE of Bush for an attack was very great."

money matters; World Elite Rats Destroy U.S. Sovereignty.