How Noah Smith Should Have Criticised Austrian Economics

by Lord Keynes

How Noah Smith Should Have Criticised Austrian Economics

…….It is even possible to point out that both Austrians and Post Keynesians share a number of common beliefs about economics, as follows:

(1) both think money is always non-neutral, whereas neoclassical economists think that money is neutral in either (a) both the long-run and short-run (as in the fantasy world models of the New Classical Chicago school) or (b) at least in the long-run (as in New Keynesian and monetarist theory);

(2) both Post Keynesians and (at least some) Austrians have criticisms of the quantity theory of money; while the Austrians criticise the quantity theory on the basis of Cantillon effects, the Post Keynesian critique is much more radical;

(3) both Post Keynesians and Austrians reject rational expectations and think expectations are subjective;

(4) both Post Keynesians and Austrians stress the role of irreversible time and fundamental uncertainty in economics, and the limitations of probability theory in economic decision making (indeed some Austrians see Keynes’ and Mises’ views on probability as complementary;

(5) both Post Keynesians and Austrians have criticisms of the neoclassical theory of capital, though they part company on exactly what that the critique is.

So what are the serious problems with Austrian theory?

Let us present a case below of some issues point by point:

(1) Misesian apriorist praxeology
Misesian apriorist praxeology as a method for economics is severely flawed.

Mises needed synthetic a priori knowledge and a type of Kantian epistemology to justify his praxeology, but the arguments for synthetic a priori knowledge are unconvincing and must be rejected. Misesian praxeology does not yield universally and necessarily true empirical statements about economic reality.

Furthermore, not even the human action axiom can be known a priori: it is clearly a synthetic a posteriori proposition.

In addition, the very idea that Mises in Human Action succeeded in deducing all his theories by deductive logic is manifestly untrue, and Misesians and Rothbardians have never answered the challenge of George J. Schuller to formally set out Human Action in a formal symbolic form in which all axioms, premises, and deductions are shown formally and proven.

Even modern Kantians have rejected Mises’ attempt to ground his praxeology on Kant’s epistemology.

There has also arisen amongst modern Austrians a feeble and ignorant belief that Mises was not really using a synthetic a priori epistemology. This is simply untrue, as I have shown here and here, and even if it were true and praxeology were simply analytic a priori, then it would follow logically that praxeology cannot give necessary truth about the real world……..


…….(2) the Rothbardian interpretation of fractional reserve banking
The Rothbardian interpretation of fractional reserve banking is flawed and ignorant.

The idea that fractional reserve banking is inherently fraudulent or results in two property titles to the same money is false. Demand deposits and indeed all callable loans in the legal systems of Western civilisation are based on the mutuum contract, which is not, and has never been, the same thing as a bailment (or depositum regulare).

The callable mutuum (or loan for consumption) consists of a contract in which a lender transfers ownership of goods/money to a borrower, who then becomes the sole legal owner of that good/money and has the right to dispose of it in whatever way they wish. In return, the lender gets a debt/credit/IOU owed to them by the borrower: the promise to repay the debt on demand. This rules out any situation where the money is jointed owned by two people, as the Rothbardian ignorantly claim.

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Krugman Now Disagrees with His Earlier Critique of MMT

by Scott Fullwiler

Krugman Now Disagrees with His Earlier Critique of MMT

…..And then he hits the key point:

As many of us pointed out, however, such results were driven almost entirely by the euro crisis; high-debt countries that borrow in their own currencies haven’t seemed to face anything like the same costs. And a funny thing has happened to the euro area itself since the ECB started doing its job as lender of last resort: not only have rates come down, but the relationship between debt and borrowing costs has become much flatter.

Interesting that he says “as many of US pointed out,” since back in July 2011 Krugman openly wondered why interest rates on government debt in Italy were rising while remaining very low in Japan”…….

……At any rate, the key point is that (a) Krugman 2011 did not recognize the importance of a currency issuer vs. a currency user in setting interest rates on the national debt, and based his argument against MMT on the potential for bond vigilantes to raise US Treasury rates “for whatever reason,” but (b) Krugman 2014 does recognize this distinction and now appears to view its significance for interest rates on the national debt in much the same way as MMT.

It seems that Krugman’s current view started somewhere in late 2012, such as in posts here and here discussing “invisible bond vigilantes.”  Again, it’s quite clear from that post that there’s been a significant change from Krugman’s 2011 view of bond vigilantes’ powers relative to a currency issuer and his related critique of MMT.

In closing, while there are still significant differences between MMT and Krugman’s neo-liberal-based views of the monetary system—see my links above as well as MMT critiques of his views on banking by myself here and by Randy Wray here—there have been important areas of continuing convergence regarding interest on the national debt and also (interestingly) the government’s consolidated financial statements (see this post from Stephanie Kelton and me here and the NEP version here).  This is a positive development.

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Koer ja tema saba

Kas president Ilvesega sõnasõda pidanud Krugman lahkub Princetonist häbistatult?

Ma ei taha üldse diskuteerida selle üle, et kas Krugman lahkub häbistatult või mitte. President Ilvesega aga pole Krugman  mingit sõnasõda pidanud. Kes ikka koera saba kergitab kui mitte koer ise ja meile ilmselt meeldiks, et meil oleks piisavalt intelligentne president, kes peab sõnasõda Krugmaniga, kahjuks pole see tõsi.

sündmustik oli minu mäletamist mööda selline, et Krugman avaldas oma blogis kasinuse vastase postituse, kus muuhulgas mainis ka Eestit(postitus ei olnud Eestist). Seepeale kommenteeris toda postitust end vulgaarselt väljendades meie president twitteris(täiesti teemaväline jutt kasinuse või stimuleerimise kohta ja ükskõik milliste Krugmani majandusteoreetiliste väidete kohta) ja Krugman mainis mõni päev hiljem oma blogipostituses umbes nii, et isegi Eesti President läks pöördesse tema postitusest. Oligi kõik.  Kas seda saab nimetada sõnasõjaks? Ei, mina arvan, et meie president tegi lihtlabaselt margi täis Eestil. Kas ta oli purjus öösel Riias noid kommmentaare kirjutades, selle üle ei soovi mina spekuleerida, aga targa peaga kommentaarid nad mulle ei tundunud küll.

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Rootsi pangad püüavad ühiselt võlgu ohjata

Rootsi pangad püüavad ühiselt võlgu ohjata

Rootsi SEB panga juht Annika Falkengren, kes on ühtlasi Rootsi pangaliidu juht, peab teiste Rootsi suurpankadega kõnelusi ühise lahenduse leidmiseks rootslaste kõrge võlakoorma probleemile.

Probleem on selles, et väga vähesed laenuvõtjad maksavad tagasi laenu põhisummat – piirdutakse vaid intressimaksete tasumisega. Nii on rootslaste võlakoormus kerkinud juba 370 protsendile majapidamiste kasutada olevast sissetulekut, mis ohustab Rootsi finantssüsteemi stabiilsust ja on ohukoht ka Eesti finantssüsteemi stabiilsusele……

huh, õudne 8O

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IMF warns ECB credibility at risk over deflation paralysis

By Ambrose Evans-Pritchard

IMF warns ECB credibility at risk over deflation paralysis

The International Monetary Fund has issued a blistering attack on Europe’s authorities for allowing the eurozone to remain stuck in a low-growth trap, warning that they may have to print money with “full conviction” to head off deflation.

“Inflation has been too low for too long. A persistent failure to meet the inflation target could undermine central bank credibility,” said the IMF with remarkable bluntness in its annual health report on the currency bloc.

“A negative external shock could tip the economy into deflation. The recovery is neither robust nor sufficiently strong. Financial markets are still fragmented, with contracting credit and high borrowing costs constraining investment in countries with large output gaps, large debt burdens and high unemployment,” it added.

The fund called for a “large-scale asset purchase programme” if inflation fails to pick up, as well as a concerted push to boost demand, arguing that 70pc of youth unemployment in the eurozone is caused by slump conditions rather than rigid labour markets or lack of skills, as often claimed.

The plea for action came as fresh data showed eurozone industrial output fell by 1.1pc in May, the latest evidence that recovery is close to stalling. The region’s industrial production is still down 12pc from its pre-crisis peak six years ago.

The IMF expects growth of 1.1pc this year and 1.5pc next year but warned that risks are “to the downside”, with the region vulnerable to fallout from monetary tightening by the US Federal Reserve or from a fresh storm in emerging markets.

Reza Moghadam, the IMF’s European chief, said the European Central Bank’s preferred tool of cheap loans to banks (LTROs) has not prevented a contraction of private credit or the stagnation of broad M3 money. It should not be confused with monetary creation under quantitative easing.

Asset purchases would have “wider and larger effects”, provided they were launched with the “full conviction” needed to change investor psychology. Japan’s failed attempts at QE in the years before the Abe era show that half-measures are almost useless when dealing with a balance sheet recession in which shell-shocked households and firms are trying to dig their way out of debt.

The IMF said the EU banking union is not yet fit for purpose, calling for a “common fiscal backstop” to break the “doom-loop” between banks and sovereign states, each dragging the other down in a crisis. This failing was starkly exposed again last week when minor troubles at Portugal’s Banco Espirito Santo triggered a systemic spike in Portuguese bond yields, with tremors reaching Spain, Italy anGreece…..

Selline rünnak IMF-lt on igal juhul positiivne. Fiskaalset oleks muidugi vaja :)

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Steve Liesman demolishes Rick Santelli’s inflation fearmongering live on CNBC

This idiot gets destroyed :)

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Kvantitatiivsest lõdvendamisest MMT vaatepunktist lähtuvalt

Pangareservid on funktsionaalselt ühepäevased valitsuse võlakirjad. See, et me pangareservidest ei räägi kui võlakirjadest, tuleneb sellest arvatavasti, et nad on lõplikuks maksevahendiks meie süsteemis. Tegelikult ma võiksin sinuga makses kokku leppida ka nii, et annan sulle valitsuse võlakirja. Seetõttu ühepäevaste võlakirjade ja näiteks 1 kuuliste võlakirjade väljastamise erinevus on üsna tähtsusetu.

Me saaksime võrreldava efekti QE-ga, kui näiteks valitsus väljastaks 3 kuulisi võlakirju 10 aastaste asemel (või misiganes võlakirju fed ostis/vahetas lühemaajaliste võlakirjade vastu). Nüüd kohe tekibki küsimus, et kui valitsused väljastaksid ainult lühemaajalisi võlakirju, siis kas see oleks inflatsiooniline või koguni hüperinflatsiooniline?

Keskpank ei sunni kedagi QE käigus valitsuse võlakirju müüma, vaid intressimäärad on pidevalt või liiguvad pidevalt ükskõiksustaseme suunas. See tähendab, et iga kombinatsiooni pangareservide ja valitsuse võlakirjade  juures on mingisugune intressimäärade ajaline struktuur, mis väljendab investorite eelistusi. Näiteks kui investorid ootavad intressitõusu keskpangalt tulevikus, siis lühiajaliste võlakirjade intressid suhtena pikaajalistesse väljendavad seda. Et üldse keskpank saaks osta võlakirju, peavad intressitasemed olema sel ükskõiksustasemel.

QE ei pruugi üldse tähendada, et intressid alanevad. No näiteks, kui turg usub, et keskpank tõstab intresse lähitulevikus ja nüüd keskpank hakkab massiivselt võlakirju ostma, siis intressid võivad hoopis tõusta. Muidugi mingit tehnilist rolli mängivad ka kogused, sest investorid on ettevaatlikumad 30 aastasi võlakirju ostes versus 3 kuulisi võlakirju ostes ning 30 aastasi võlakirju rohkem pakkudes muutuvad 30 aastaste võlakirjade intressid rohkem kui näiteks 10-e aastastel ja 5-e aastastel võlakirjadel. Niisugust kogust 3-e kuulisi võlakirju ei pruugi olemas olla, mis nende intressid üles viiks, samas võib suhteliselt väike kogus 30-e aastasi võlakirju mõjutada nende intresse, sest turg on palju õhem pikaajaliste võlakirjade osas.

Seega QE muudab investoritele pakutavat investeeringute kompositsiooni.

Muudab intressimäärade ajalist struktuuri, võimalik, et ka ootusi.

Mida see tähendab valuutakursile ja inflatsioonile? Mida tähendab intressimäärade ajaline struktuur valuutakursile ja inflatsioonile? Me ei räägi kunagi, et valitsus hakkas väljastama 3-e kuulisi võlakirju 10-e aastaste asemel ja nüüd valuutakurss kukub või tuleb hüperinflatsioon.

Kui keskpangad täna saaksid aru, et asi on hinnas ja mitte koguses, siis nad võiksid pakkuda, et ostavad piiramatus koguses ükskõik millise kestusega võlakirju, kuni saavutavad enda poolt ihaldatud intressi näiteks 10 aastase võlakirja segmendis. Näiteks fed teeb seda fed funds rate puhul.  QE on intressimäärade muutmine, mis muudab erinevate tähtaegadega võlakirjade pakkumist ja intressimäärade muutmisel pole ta eriti hea tööriist.

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Ameeriklaste võime tulevikus digitaalselt suhelda võib olla kompromiteeritud

BREAKING NEWS- CBO warns of impending email scarcity

Washington- The Congressional Budget Office today released a report warning of an impending scarcity of electronic messages and digital data communications, commonly known as ‘emails”. “For too long, Americans have been recklessly sending emails, with no regard to future emails”, said CBO director Douglas Elmendorf. “We are now downgrading our Outlook outlook for the next 10 years. Unless Congress can get it’s emailing under control, our nation’s ability to send digital communications in the future will be compromised.” ….

…..However, notable economist Paul Krugperson had a slightly different view. “Right now, email interest is too low, because the NSA has been pumping trillions of emails into the economy. We actually need to send more emails in the short term, not less. As long as we eventually balance our emails in the long run, we should be fine……


Selgub, et ameeriklased on liiga palju emaile saatnud ja see võib kompromiteerida nende võimet tulevikus digitaalselt suhelda omavahel. Teisiti arvab majandusteadlane Paul Krugperson, kes väidab, et praegu võiks rohkem e-poste saata isegi ja muretseda pole tarvis, kui pikaajaliselt hoitakse e-postid tasakaalus. Igal juhul huvitav teema.

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Inclusive Capitalism Conference – Christine Lagarde

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Kvantitatiivne lõdvendamine ja inflatsioon

Need on pangareservid Fedis, mille pärast nii paljud on amokki jooksnud meedias, kulda kokku ostnud jne. Nagu näeme on fed “trükkinud nii palju raha”, et selle hulk on viiekordistunud  võrreldes kriisieelse ajaga :), aga tavalisest kõrgemat inflatsiooni pole.



Peavoolu teoreetikul on üliraske neid fakte aktsepteerida, sest ta on harjunud aastaid nägema korrelatsiooni monetaarbaasi ja inflatsiooni vahel. Loomulikult ta ei saanud aru raha endogeensusest ja nii ei jäänudki tal muud üle, kui aktsepteerida, et fedi rahatrükk põhjustab inflatsiooni. QE-d mõlemis riikides muidugi näitavad talle selgelt koha kätte. Kui enne rääkis postkeinsist raha endogeensusest ja väitis, et korrelatsioon ei ütle meile midagi põhjuslikkuse kohta, kas inflatsioon põhjustab suurema rahapakkumise või vastupidi, siis see tundus kuidagi keeruline jama olevat, lihtsam ja selgem oli ikka see, et baasraha hulga suurenemine põhjustas inflatsiooni, seda kinnitas ka korrelatsioon. Selgub, et selline mõtlemine osutus täiesti valeks ja MMT oli siin esirinnas sellest rääkimas. Nüüd olen lugenud mõnede monetaristide agoonias tõmblemisi veel, et turud arvavad, et baasrahapakkumise suurenemine pole permanentne ja sellepärast polegi inflatsiooni, see on naeruväärne :)


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Pooleliolev kruiisilaev

Eesti Päevaleht

Mario Draghi tsiteeris Eesti majandusteadlast

…..See viide oli siiski tehtud vaid tagasivaatena euro sünnile, enne kõne põhisõnumit, et rahaliidu ehitus on pooleli ja eeldaks ühist ja rangemat järelevalvet ka euroala riikide struktuursete reformide üle….

Mina kuulsin loosungeid, et euro on soe kruiisilaev, nüüd tuleb välja, et see laev on veel pooleli. Jürgen Ligi kutsus meid kruiisima pooleliolevale laevale, mõni ime siis, et reisijatel jalad märjad on.

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Michael Hudson Krugmanist

Michael Hudson:

The simple answer is that Krugman is a neoclassical economist. Neoclassical means anti-classical. He does not recognise that there is such a thing as economic rent. He also got in a big argument with your Australian Steve Keen two years ago saying that banks don’t create credit. “All banks do,” Krugman said, “is lend out savings.” He said it’s inconceivable that a bank can actually create credit or inflate asset prices.

So Krugman is applauded by the right-wing to be their liberal of choice not because he understands the economy, but because he doesn’t understand the economy. If he understood how the economy worked he wouldn’t have won the Nobel Price, because that’s a prize for people pretending that there’s no such thing as economic rent; there’s no such thing as unearned income. And that’s why Krugman’s focus is on, well, the real problem is that these managers of companies are paid so much more and they earn so much more income. But he’s even wrong as to his statistics and, remember, he’s a professional bank lobbyist. He’s paid by the banks. He went to Iceland to support the banks against the government trying to rein them in. So, of course the bankers love Krugman because he’s their lobbyist.

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Eesti majandus sai koolipoisi hinde

Eesti majandus sai koolipoisi hinde

Eesti Konjunktuuriinstituut andis täna ülevaate praegusest Eesti majandusolukorrast. Kümne palli skaalal sai riigi majanduskliima hindeks viie.

Majandusarengut takistavad eelkõige nõudluse ja kvalifitseeritud tööjõu puudus. Samuti ei suuda ettevõtted konkureerida rahvusvahelistel turgudel. 2012. aasta seisuga võrreldes ei peeta aga enam tööjõupuudust ja inflatsiooni majandusarengut märkimisväärselt takistavateks teguriteks.

Samuti on languses Eesti majandususaldusindeks, mis on praegu pikaajalise keskmise (=100) suhtes 98,5 punkti. Selle tulemusega on Eesti halvem Euroopa Liidu keskmisest, mis on 106,4 punkti. Pikaajalise keskmisega võrreldes on halvenenud ka tööstus- ja ehitussektori kindlustunne, paranenud on aga vastav näitaja kaubandussektoris

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Elu Eestis läks aastaga odavamaks

Tarbijahinnaindeks muutus 2014. aasta juunis võrreldes maiga 0,0 protsenti ja võrreldes eelmise aasta juuniga –0,4 protsenti, teatas statistikaamet. Deflatsioon oli esmakordne üle nelja aasta……

Artikli pealkiri on muidugi eksitav. See, et tarbijahinnaindeks langes, ei tähenda, et elu odavamaks läks. Et kui see naftahinna tõus oleks realiseerunud, siis usun, et nad oleksid inflatsiooni käima saanud ja ECB oleks saanud kelkida, et ta teab, mida ta teeb. Praegu paistab ikkagi Jaapani stsenaarium või õigemini siis 10 korda hullem, mitte kunagi ei olnud Jaapanis nii kõrget tööpuudust selle 20 aasta jooksul.

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Sectoral Balances

Sectoral Balances

by JP Hochbaum

I know it may seem unbelievable but there was a time when I was a follower and avid fan of the Austrian school of economics. I believed that government spending crowded out private sector spending, that all government expenditures were somehow passed onto my grandchildren, that government spending lead to inflation, and a myriad of other beliefs that stemmed from what I thought was a logical approach to economics. I read Ayn Rand, listened to John Stossel, almost voted for Ron Paul in 2008, and I drank beers with fellow libertarians.

So what happened between then and now? Back in 2008, after the election, I told myself I would suspend any ideology I had when it came to economics and other political issues and refocus on just finding what was really going on with our country. During many years of engaging with people via blogs and forums I collected a myriad of economics experts as friends and so I had plenty of information to digest, to come to where I am at today as an MMT’er. My “conversion” (not to be confused with a religious or ideological conversion that relies on morals and faith) came about in a gradual way, but one particular fact really gave me that “A HA!” moment, and that was seeing a “sectoral balances graph”, like the one below.

Sectoral Balances

In the above graph the blue line represents the private sector, the red is the government sector and the green is the capital account (aka the trade balance). What is amazing, and what gave me the “A HA!” moment, was how mirror like this relationship is. Not many things in economics are as perfect as this.

This is what economists call an accounting identity, it is factual and can’t be disputed. It is as basic in economics as debits and credits are to accounting, it allows for accurate predictions, and is being used that way more and more by the financial industry.

And what this means on the most basic level is that one sectors income is another sectors spending. So when the government spends it becomes income for the private sector. Or when the U.S. has a deficit on the trade balance with other countries it removes income from the private sector. And as seen in the graph these accounts ALWAYS have to balance, and ALWAYS do.

So why haven’t economists and politicians caught onto this? Well it is fairly new in the economic world and has yet to become mainstream, so it is likely they are unaware of it. It wasn’t until the early 1990′s that Wynne Godley first pointed out this identity. With the stranglehold that neo-liberals have on the media and in most of academia it takes time or a crisis for concepts like this to gain traction. In fact it was the crisis that made me rethink my previous economics ideology, and it is doing that for many people I have ran into.

The one important thing to take away from this is that only one sector, the public sector, can run deficits forever and always be able to pay it back.

The government can print currency to pay off any of its debts, the private sector can’t. Yet all the media and political outrage is focused on the government debt, at $16 trillion, and the total private sector debt, at $38 trillion, is completely ignored! It appears our media and politicians have their concerns confused, and they completely misunderstand which sectors total debt is news worthy.

I still consider myself a libertarian, a small government libertarian as well, but as a libertarian I pride myself on economic freedom as well, and burdensome private debt is not economic freedom in any sense of the word. The more we try to reduce the government debt, the more we put pressure on the private sector to go into a deficit.

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Berliin paindlikkust ei usu

Berliin paindlikkust ei usu

Itaalia ja Saksamaa vahel on vallandunud terav sõnasõda selle üle, kas Euroopa peaks asuma «paindlikkuse» ja uljama laenuvõtmise abil «kasvuteele» või jääma kindlaks kasinusele, kuni õpib elama vastavalt oma võimetele……


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Epic Rant – ‘Nigel Farage Was Right!’

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Thus for a country debating whether to join a monetary union, it would be wise to examine the U.S. history first.

How Long Did It Take the United States to Become an Optimal Currency Area?

…..The incentive for a region to join a monetary union is the minimizing of transaction costs. But the costs of uniting include giving up the exchange rate and changes in the money stock as policy tools. Whether a specific area composes an optimal currency area, or whether it would be better off as a segment of a larger monetary union, depends on the net sum of the costs and benefits. During the first 150 years of the U.S. monetary union, regional battles over monetary policy and institutions were widespread. Simply put, what was beneficial monetary policy for one region was not necessarily beneficial for another.

Rockoff finds numerous examples of regional shocks magnified by monetary reactions. The typical scenario involves a shock in financial or agricultural markets which would hit one region particularly hard. The banking system in the region would lose reserves resulting in a monetary contraction. A political battle would often erupt, and the regions that had experienced the contraction would demand a reform of the monetary system. The resulting uncertainty about the future of existing monetary institutions would further intensify the initial contraction.

In the 1930s institutional changes, such as the adoption of interregional fiscal transfers and bank deposit insurance, overcame the problem of regional banking shocks. Federally funded transfer programs, such as unemployment insurance, Social Security, and agricultural price supports, cushioned regional shocks and pumped high-powered money into regions losing reserves. Deposit insurance tended to reduce regional banking problems that characterized recessions.

So, how long did it take the United States to become an optimal currency area? Rockoff concludes that a reasonable minimum may be 150 years. It was not until the 1930s that all regions in the country could be said to be components of a single optimal currency area, the United States. Thus for a country debating whether to join a monetary union, it would be wise to examine the U.S. history first.

Great news for the Eurozone!


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No mis sa oskad öelda sellistele lammastele?

Kujutame ette, et on üks riik, kus valitsus on raha väljaandja ning kulutab ja maksustab nii, et 80% tööealistest on töötud ja 90% on kodutud, kes elavad soodes ja metsades. Nüüd tulevad mõned MMT-lased ja ütlevad, et nii ei pea see olema, me võime kõik töötada ja keegi meist ei pea kodutu olema. Algab sõimlemine: MMT-lased tahavad, et valitsus majanduse üle võtaks, kuradi kommunistid, palkasid tuleb alandada, et kõigil tööd oleks, meil on vaba turumajandus ja üle enda võimete ei saa elada. No mis sa oskad öelda sellistele lammastele?

wolf lion

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Itaalia peaminister: Euroopa kuulub selle kodanikele, mitte Saksa pankuritele

Itaalia peaminister: Euroopa kuulub selle kodanikele, mitte Saksa pankuritele

Itaalia peaminister Matteo Renzi kritiseeris täna Saksa keskpanka, väites, et Euroopa kuulub selle kodanikele mitte Saksa pankuritele.

«Bundesbanki töö on kindlustada, et selle statuutidest peetakse lugu, mitte osaleda Itaalia poliitdebatis,» ütles peaminister pressikonverentsil Roomas pärast kõnelusi Euroopa Komisjoni juhi José Manuel Barrosoga.

«Euroopa kuulub selle kodanikele, mitte Saksa ega Itaalia pankuritele,» lisas ta.

Itaalia on hädas suure riigivõlaga ning taotleb suuremat eelarvepaindlikkust, mis on Rooma väitel oluline kasvu suurendamiseks ning töötusemäära vähendamiseks noorte seas.

Saksa Bundesbanki juht Jens Weidman ütles neljapäeval, et eelarvepaindlikkust taotlevad riigid peaksid kõigepealt läbiviima laialdased struktuurreformid.

«Paindlikkus pole Itaalia palve, see on mis Euroopa vajab,» vastas Renzi Weidmani kommentaarile.

Aga mäletame ju küll, et paar aastat tagasi olid jutud, et raha pole ja turgude usaldust on vaja võita? Tuleb välja, et nood jutud olid kodanikkonna lollitamiseks. Mis paindlikkusest saab rääkida, kui raha pole? Ikka on küll raha järelikult. Vahepeal on ju võlgnikriikide võlg vaid kasvanud, tähendab veelgi rohkem raha on ära kulutatud, no kust siis nüüd seda raha võtta. Lisaks sellele tekib üks oluline vastuolu, kui nüüd paindlikult kulutama hakata, siis oleks ju võinud kohe seda teha, vahepealne on siis täielik nurjumine ja mõttetus poliitikas. Kõik need öised kriisikohtumised jne, no milleks küll? Meie poliitika on sellisel juhul täiesti mittefunktsionaalne ja meie poliitikutel peaks sügavalt piinlik olema sellise komejandi korraldamise pärast. Meil sai ju raha otsa, tekkis ligi 20%-ne tööpuuudus, pidime oma inimesed tööpuuduse ja vaesuse pärast välismaale elama saatma, kas see oli kõik pettus?

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Bernanke Obfuscation Continues the Fed 29 Trillion Bail-out of Wall Street

sk408-ga oli juttu sel teemal, siin on Randy Wray postitus:

Bernanke Obfuscation Continues the Fed 29 Trillion Bail-out of Wall Street

Another way would be to take the total of commitments made over a short period of time — say, a week or a month. That would be a measure of systemic distress and would help to identify the worst periods of the GFC (global financial crisis). Obviously, this will be a bigger number and will depend on the rate of turn-over of Fed loans. For example, many of the loans were very short-term but were renewed. Bernanke argues that it is misleading to add up across revolving loans. Let us say that a bank borrows $1 million over night each day for a week. The total would be $7 million for the week. In a period of particular distress, the peak weekly or monthly lending would spike as many institutions would be forced to continually borrow from the Fed. Bernanke argues we should look only at the lending at a peak instant of time. While that measures the Fed’s risk, it does not tell us how much intervention was required.

And that leads to the final way to measure the Fed’s commitments to propping up Wall Street: add up every single damned loan, guarantee and asset purchase the Fed made to benefit banks, banksters, real Housewives on Wall Street, fraudsters, and their cousins, aunts and uncles. This gives us the cumulative Fed commitments.

The final important consideration is to separate “normal” Fed actions from the “extraordinary” or “emergency” interventions undertaken because of the crisis. That is easier than it sounds. After the crisis began, the Fed created a large alphabet soup of special facilities designed to deal with the crisis. We can thus take each facility and calculate the three measures of the Fed’s commitments for each, then sum up for all the special facilities.

And that is precisely what Nicola Matthews and James Felkerson have done. They are PhD students at the University of Missouri-Kansas City, working on a Ford Foundation grant under my direction, titled “A Research And Policy Dialogue Project On Improving Governance Of The Government Safety Net In Financial Crisis.” To my knowledge it is the most complete and accurate accounting of the Fed’s bail-out. Their results will be reported in a series of Working Papers at the Levy Economics Institute ( The first one is titled “$29,000,000,000: A Detailed Look at the Fed’s Bail-out by Funding Facility and Recipient.”

Here’s the shocker. The Fed’s bail-out was not $1.2 trillion, $7.77 trillion, $16 trillion, or even $24 trillion. It was $29 trillion. That is, of course, the cumulative total. But even the peak outstanding numbers are bigger than previously reported. I do not want to take any of their fire away — interested readers must read the full account. However, I will use their study as the source for a brief summary of total Fed commitments.

Here I am only going to focus on the final measure of the size of the bail-out: the cumulative total. This is not directly comparable to the Fed’s $1.2 trillion estimate, which is peak lending.

I will post more on the important research done as part of this Ford Foundation grant; in coming blogs I will also explain why all Americans should be horrified at the Fed’s actions, and by Bernanke’s continued attempt to cover-up what the Fed has done.

When all individual transactions are summed across all facilities created to deal with the crisis, the Fed committed a total of $29,616.4 billion dollars. This includes direct lending plus asset purchases. Three facilities — CBLS, PDCF, and TAF — overshadow all other facilities, and make up 71.1 percent ($22,826.8 billion) of all assistance. Totals (in billions) and percent of total, by facility are as follows. Any outstanding loans are in in parantheses.
Term Auction Facility: $3,818.41, 12.89%
Central Bank Liquidity Swaps:10,057.4 (1.96), 33.96%
Single Tranche Open Market Operation: 855, 2.89%
Terms Securities Lending Facility and Term Options Program: 2,005.7, 6.77%
Bear Stearns Bridge Loan: 12.9, 0.04%
Maiden Lane I: 28.82, (12.98) 0.10%
Primary Dealer Credit Facility: 8,950.99, 30.22%
Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility: 217.45, 0.73%
Commercial Paper Funding Facility: 737.07, 2.49%
Term Asset-Backed Securities Loan Facility: 71.09, (.794) 0.24%
Agency Mortgage-Backed Security Purchase Program: 1,850.14, (849.26) 6.25%
AIG Revolving Credit Facility: 140.316, 0.47%
AIG Securities Borrowing Facility: 802.316, 2.71%
Maiden Lane II: 9.5 (9.33) 0.07%
Maiden Lane III: 24.3, (18.15) 0.08%
AIA/ ALICO: 25, 0.08%

Totals $29,616.4, 100.0%

Source: “$29,000,000,000,000: A Detailed Look at the Fed’s Bail-out by Funding Facility and Recipient” by James Felkerson, forthcoming, Levy Economics Institute, based on data analysis conducted with Nicola Matthews for the Ford Foundation project “A Research And Policy Dialogue Project On Improving Governance Of The Government Safety Net In Financial Crisis”.

Et need ei ole otseselt päästmisoperatsiooni nimetuse all, mida kongress peaks tegema, aga laenab neile keskpank ja mida sul Bernanke nahas tehagi oleks, kas tahad ajalukku minna Fedi juhina, kes lasi rahandussüsteemil kokku kukkuda? Neoliberaalsed “vabad turumajandajad” on meie rahandussüsteemi ärandanud ja ka keskpank on nende pantvang sisuliselt. Selliste asjade kohta keegi küsimusi ei küsi tavaliselt, see on liiga keeruline, küll aga räägitakse vabast turumajandusest, kui pangandus on vaja dereguleerida, et uuesti saaks sigadusi korraldada meie ülejäänute arvel.

And that leads to the final way to measure the Fed’s commitments to propping up our drunks on Wall Street: add up every single damned loan, guarantee and asset purchase the Fed made to benefit banks, banksters, real Housewives on Wall Street, fraudsters, and their cousins, aunts and uncles. This gives us the cumulative Fed commitments.

The final important consideration is to separate “normal” Fed actions from the “extraordinary” or “emergency” interventions undertaken because of the crisis. That is easier than it sounds. After the crisis began, the Fed created a large alphabet soup of special facilities designed to deal with the crisis. We can thus take each facility and calculate the three measures of the Fed’s commitments for each, then sum up for all the special facilities.

And that is precisely what Nicola Matthews and James Felkerson have done. They are PhD students at the University of Missouri-Kansas City, working on a Ford Foundation grant under my direction, titled “A Research And Policy Dialogue Project On Improving Governance Of The Government Safety Net In Financial Crisis”. To my knowledge it is the most complete and accurate accounting of the Fed’s bail-out. Their results will be reported in a series of Working Papers at the Levy Economics Institute ( The first one will be posted soon, and is titled $29,000,000,000,000: A Detailed Look at the Fed’s Bail-out by Funding Facility and Recipient. Watch for it!

- See more at:

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Eeskuju: Saksamaa ei võta enam laenu

Eeskuju: Saksamaa ei võta enam laenu

Saksa valitsus kinnitas 2015. aasta riigieelarve, mis kujutab endast tähtsat verstaposti: esimest korda alates aastast 1969 ei võeta enam juurde uut laenu.

Nüüd on huvitav jälgida, et kui kaugele nad lähevad sellega, et kui tõsist majanduslangust võib oodata. Itaalia jutt kasvust tundub ka olevat tühi retoorika.

Samas pole mujalt ka paista stimuleerimist:

Obama’s greatest failure: The rapidly falling deficit

Ever since 2009, when the recession and the stimulus package pushed the annual budget deficit to a peak of nearly $1.5 trillion, it has been falling steadily. Last year it came in at $680 billion; this year it is projected to total $492 billion.

This is an absolute disaster. It is President Obama’s single greatest failure, representing the fact that he, and the rest of the American government, did not adequately respond to the Great Recession. It means that millions of Americans were kept out of work, that trillions in potential output was flushed down the toilet, and that the American economy was very seriously damaged, probably permanently, for no reason at all……

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“Wherever Juncker goes in Europe, the grass no longer grows,” :)

Juncker is galling for Britain, but life-threatening for France and Italy

The sovereign parliaments of Europe are victims of a constitutional sleight of hand, though some acquiesce more easily than others. The Cromwellian method by which Jean-Claude Juncker was foisted upon the nation states is a breach of the Treaties.

The episode clarifies the need for British withdrawal from the Union, or the withdrawal of France or any other country that wishes to remain self-governing under a rule of law……

…..You have to be politically unhinged to think it wise or proper now to entrust the EU machinery to an arch-insider, as responsible as any man alive for the calamitous decisions that have led Europe into its current cul de sac, and a master of the Monnet Method to boot. “We take a decision, then put it on the table and wait to see what happens. If there is no protest, because most people have no idea what we are doing, we take step after step until we are beyond the point of no return,” he once told Der Spiegel.

He is a gift to the Front’s Marine Le Pen, now vowing to boycott the Strasbourg ratification as her first act of protest. “I will not participate in a vote for the prison gaoler: I will try the escape the prison,” she said.

He is a gift too to the Five Star Movement of Italy’s Beppe Grillo, seizing on Mr Juncker as the face of the scorched-earth policies that have trapped Europe in a Lost Decade. “Wherever Juncker goes in Europe, the grass no longer grows,” he said……..

…..Greater forces are at work in any case. Perma-slump is already written into law under the EU Fiscal Compact. Each country must cut its public debt mechanically for twenty years until the ratio reaches of 60pc of GDP, regardless of monetary policy or the state of the world. This is already haunting France as it slips deeper into a debt-deflation trap, with zero growth causing the debt trajectory to spiral upwards, despite one austerity package after another.

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Plaan on selline, et plaani pole



  • Kristjan AndreKas Jürgen Ligile on teada, et võrreldes eurosüsteemiga toimuvad fiskaalsed transaktsioonid osariikide vahel USA-s? Muuseas USA-s olid kunagi sarnased probleemid lõuna ja põhja vahel. Millisena näeb Jürgen Ligi eurotsooni tulevikku? Kas 25%+ tööpuudusega jooksevkonto defitsiidiga riikides, poliitiliselt niisugust liitu eriti kaua koos ei hoia. Kas euro on endiselt soe kruiisilaev või tuleb möönda, et ikka vigaselt on loodud see valuutaliit?
  • Jürgen LigiKristjan Andre. US ei päästa osariike, EL laenuprogrammidega küll. Tulevik on eurotsoonil tugev, poliitiline tahe ja uus raamistik aitavad. Aga demokraatia on võimas ja inimkatsetes lõpuni testimata.
  • Kristjan Andrema ei rääkinud osariikide päästmisest Jürgen, USAs on toimiv fiskaalsete transaktsioonide liit, kus Kreeka võlg oleks köömes võrreldes New Mexico “võlaga” kui sellist arvestust peetaks, ühed osariigid maksavad rohkem kui teised, see on ainuke viis, kuidas niisugune valuutaliit saab toimida, see toimib meil Eestis ka, kus Piirissaare elanikud saavad pensioni olenemata sellest palju Piirissaarelt makse laekus. Kurb on see, et meie poliitiline eliit isegi ei teadvusta probleemi olemasolu. Tööpuudus mõnedes võlgnikriikides on kõrgem kui USAs Suure Depressiooni ajal…/2011/08/americas-fiscal-union

    Where federal taxes are raised and spentSOME American states receive more in fed
  • Jürgen LigiKristjan Andre sõltub, kust analoogi otsid. Probleeme teadvustatakse, aga riigi sees (USA, Eesti, Saksa) on tasandused realistlikud, riikide vahel on ent vaid laenud ja pisike (1% SKPst) ümberjagamiseelarve.
  • Kristjan AndreIgati positiivne muidugi, et minister rahvaga suhtleb niiviisi. mina arvasin, et Jürgen on ikka kõik skeptikute mõtted ka läbi lugenud eurotsooni kohta. Ongi liiga väike see ELi eelarve, et ta saaks toimida USA-le sarnaselt, samas me ju föderalismi ei taha ka või tahame? Euroopas seda ei taheta. See on aga väga tõsine probleem, millest kahjuks meil igasugune avalik diskussioon puudub. Et jah, saab toimida see euro, aga siis peame lubama tasakaalutust liikmesriikide vahel(et siis jäämegi Kreekale raha saatma) või kannatama ülikõrge tööpuuduse käes jooksevkonto defitsiidiga riikides, kumbki ei ole poliitiliselt jätkusuutlik. Praegune igal juhul ei tööta, kus Saksamaa arvab, et kõik peaksid tema kombel netoeksportijad olema, see ei ole ju võimalik. Nüüd on pangandusliit loodud ilma keskse deposiitide kindlustuseta muuseas, see kõik lõhnab katastroofi järele, sest liikmesriikide valitsused on kindlustanud deposiidid. Tekib pangas jama, peab valitsus IMF-i uksele koputama nagu Läti. Samas on olukord enam kui imelik, kus liikmesriikide valitsustel ei ole vabad käed pankade regulatsioonide kehtestamiseks, aga deposiidid kindlustavad nemad, no miks siis mitte ECB, kui ECB teostab järelvalvet nende üle ja kehtestab regulatsioonid? Ma ei tea ka, et mis Eesti seiskoht oli nendes küsimustes, kui temalt üldse küsiti.


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Alexis Tsipras on how to save the Eurozone

Tsipras tahab võlgu korstnasse kirjutada ja euroga jätkata, no erasektorilt tahab sisuliselt finantsvarad konfiskeerida. Me juba nägime millise jamaga Kreeka juukselõikus lõppes Küprosel.

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