Modern Money and the Obsession Over Fiscal Consolidation

by Wire

Modern Money and the Obsession Over Fiscal Consolidation

…In an earlier article in The Wire, I had elaborated one of the most fundamental tenets of modern money theory (MMT): the state, unlike households and firms, does not face a budget constraint. Financially speaking, a state which issues its own fiat currency (like India, Japan or the US but not Greece or Spain) can run deficits in its own currency of 3%, 15% or even 150%. It does not face a solvency issue, although there will be other important economic repercussions. Nonetheless, as a first step, it is critical to dismiss the notion that setting a fiscal deficit target arises from concerns over solvency per se. If deficit targets are emanating from the other economic repercussions – specifically inflation and/or balance of payments deficits – then there is no necessity of a blanket rule on deficits or debt like 3% or 10% of GDP respectively. The deficit is a policy variable that must be contextualised. While a deficit of 1% could trigger inflation in one situation, a deficit of 10% may have little impact on the price level (as in the case of Japan over the last 25 years and the US more recently).

There has also been a situation in history – prior to 1971 – when “modern money” was actually administered for a few years in the UK during the First World War. Although war is an extreme event, it does illustrate some fundamental misconceptions about fiscal deficits and modern money which neoliberal macroeconomists continue to cling to. Issued just one day after Britain declared war on Germany, the Currency and Bank Act of 1914 “permitted the [UK] Government to print notes as legal tender in place of gold sovereigns and half-sovereigns.” The gold standard was de facto suspended. The notes or treasury currency were made legal tender so that obligations to the state (payment of taxes, duties, fees and fines) could be settled with these notes. But since printing of the currency would take time, the Act even allowed postal orders to “temporarily be current and legal tender in the United Kingdom in the same manner and to the same extent and as fully as current coins.”…

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Roy Jenkins and Tony Benn debate : The European Communities membership referendum, 1975 – Panorama

Tony Benn 🙂

 

 

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Drain Le Swamp

Võib olla oled jälginud presidendivalimisi Prantsusmaal. Marine Le Pen võidab küsitluste järgi esimese vooru ja kaotab teise vooru Emmanuel Macronile. Praegu paistab, et valik tuleb nende kahe vahel. Macron on kirjade järgi vasakpoolne, minu hinnangul ei erine ta eriti Hollandest. Globalist ja euromeelne neoliberaal.  Situatsioon on mõneti sarnane USA presidendivalimistega. Kui Trumpil ei olnud poliitilist programmi ja ta lihtsalt mõmises, et tema on tark ja teeb head tehingud, siis Le Peni programm on minu meelest parim kõigist teiste kandidaatide plaanidest. Siin võid inglise keeles seda lugeda.

Le Pen tahab NATOst välja astuda, mis tõenäoliselt meile kui kõvadele NATO pooldajatele ei tohiks meeldida. Prantsusmaa on varem NATOst välja astunud ja ma leian, et ühtne NATO on tugevam ja tegutsemisvõimelisem. Aga see selleks, Le Pen on ainuke kandidaat, kes lubab eurost loobuda. See on väga vajalik samm.

Ma ei näe kuskilt otsast, et Le Pen oleks paremäärmuslane või rassist. See on ilmselt seotud partei minevikuga. Ta on natsionalist, ma ei toeta kõike tema immigratsiooni ja kodakondsuspoliitikas, kuid sellest hoolimata on ta minu meelest ainuke realistlik valik. Tema vastastele on euro ja EL-i lagunemine mõeldamatu, minu meelest möödapääsmatu. https://en.wikipedia.org/wiki/Marine_Le_Pen

Her social program and her support of SYRIZA in the 2015 Greek general elections have led Nicolas Sarkozy to declare her a far-left politician sharing some of Jean-Luc Mélenchon’s propositions. President François Hollande said she was talking “like a leaflet of the Communist Party”. Eric Zemmour, journalist for the conservative newspaper Le Figaro, wrote during the 2012 presidential election that the FN had become a left-wing party under the influence of Florian Philippot. She has also relaxed some political positions of the party, advocating for civil unions for same-sex couples instead of her party’s previous opposition to legal recognition of same-sex partnerships, accepting unconditional abortion and withdrawing the death penalty from her platform..

Le Pen on jah tugevalt vasakul. Fillon on tänu skandaalidele pildilt väljas, tema on paremkonservatiivne. Aga mis tõeliselt vasakpoolsetega on? Need unistavad ja räägivad ebarealistlikest asjadest nagu tavaliselt. Benoît Hamonil on geniaalne plaan roboteid maksustama hakata (miks mitte tolmuimejaid?). Mélenchon meenutab mulle kergelt Tsiprast, kes eurost loobuda ei taha, aga kasinuse lõpetada lubab. Erinevalt USAst, kus noored Trumpi ei toetanud, on Le Pen 18-24 aastaste seas kõige populaarsem kandidaat.

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Put your pussy hats on

Number üks ikoon punkmuusikas toetab Brexitit ja Trumpi.

Politico

Sex Pistols’ Johnny Rotten backs Brexit, Farage, Trump

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Brexit: the end of an error

Brexit: the end of an error

 

The EU60 hashtag on Twitter is a potent reminder of why I voted to leave. It is radiating hypocrisy. More than anything the EU is a deranged cult. The Europe the true believers live in is not one I recognise at all. I do not see this malign entity as a guarantor of peace and prosperity. Quite the opposite in fact.

The modus operandi of the EU has always been to capture political institutions in the belief that consent would eventually follow. Only when their agenda is complete do citizens get any kind of say in it. This is why Maastricht and Lisbon were never put to a popular vote. Our rulers knew that we would say no. And we got off lightly.Against all economic wisdom the EU pressed ahead with its vanity currency and now Greece is a broke and squalid internment camp. The rest of Europe has seen a decade of stagnation with no promise of recovery.In that we must ask when do the peoples of Europe get a say? When exactly do we see this exercise in consultation? When shall we have democracy? At what point is it turned over to the people? And what price must we pay until then?For this, the EU has no answers. A new Jerusalem is always just only one more treaty away. Paradise awaits but first you must surrender more power……

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Joan Muysken Lecture: “The Eurozone, Groupthink and denial on a grand scale”

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On ikka kuradi fašistid

Canada ”At Front Of Queue” For Brexit Trade Deals

As the United Kingdom prepares to begin its formal negotiations to leave the European Union, the British government is looking to the Commonwealth for new business opportunities, and reports indicate that Canada is at the front of the queue….

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How many poor?

Dave Rubin Retweeted Bernie Sanders

How many poor people live in your three houses? They’d probably like the new one on the lake…

Dave Rubin added,

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Ajastule sobivat muusikat

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Public Debt In The Eurozone: A Political Problem

by Thomas Fazi

Public Debt In The Eurozone: A Political Problem

…It is unparalleled anywhere else in the world. In “normal” countries – that is, advanced countries that control their currency – there is a strict operational (if not political) relationship between the central bank and the government, where the former tends to support the decisions made by the fiscal authorities. There, public debt is almost never a problem. We have the example of Japan: even though the country has the highest debt-to-GDP ratio in the world (close to 230 per cent), the central bank in recent years has effectively written off a huge chunk of the debt – more than 40 per cent of the country’s public debt has now been permanently buried in the Bank of Japan’s balance sheet – and has just announced that it will keep interest rates on government securities at zero for the foreseeable future, to reduce the government’s interest burden and help it pursue more expansionary fiscal policies. And guess what? The country is close to full employment. So much for the problem of excessive public debt.

This is the opposite of what happens in the Eurozone, where the central bank essentially tells governments: we will help you service the debt but only if you agree to implement austerity and forego any form of expansionary fiscal policy. This goes to the heart of the problem: public debt in the Eurozone is a political tool – a disciplining tool – used to get governments to implement socially harmful policies (and to get citizens to accept these policies by portraying them as inevitable). We saw this at play in Italy, in 2011, when the ECB effectively used its monopoly currency-issuing powers to pressure a democratically elected government into resigning. And, of course, we saw it in Greece during the infamous summer of 2015, when the ECB paralysed the country’s banking system by cutting off its banks’ access to central bank liquidity……

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Šoti vasakpoolsed natsionalistid tahavad Šotimaast kreekasarnast EL-i kolooniat teha

Scottish left nationalists want to turn Scotland into a EU colony like Greece

Scottish independence: Nicola Sturgeon to seek second referendum

Nicola Sturgeon has confirmed she will ask for permission to hold a second referendum on Scottish independence.

Ms Sturgeon said she wanted a vote to be held between the autumn of 2018 and the spring of the following year.

That would coincide with the expected conclusion of the UK’s Brexit negotiations.

The Scottish first minister said the move was needed to protect Scottish interests in the wake of the UK voting to leave the EU.

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Trump Saltmining Inc.

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Neoliberalism

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Poland warns of disunity across the EU after Donald Tusk re-elected European Council president

Poland warns of disunity across the EU after Donald Tusk re-elected European Council president

Donald Tusk has been reelected president of the European Council, angering the right-wing government of his native Poland and triggering a bitter dispute between Warsaw and Brussels.

The head of Poland’s ruling Eurosceptic Law and Justice party (PiS) seized on his re-election to attack the EU for being “dominated by Germany” and accused the bloc’s leaders of breaking rules to force through his appointment.

Jaroslaw Kaczynski denied the row would prompt Poland to consider leaving the EU, but said: “The rule that high-ranking officials should have the backing of their country was broken.”

Polish Foreign Minister Witold Waszczykowski told news site wPolityce.pl: “A very dangerous European relationship is being born — a toxic relationship that could harm many states.

“We know now that it is a union under Berlin’s diktat.”

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Trump on keeldunud Reagani majanduspoliitikast

18:30 See on  väga hea point Tucker Carlsonil: Trump has rejected Reaganism, he is not a free market guy. People behind Trump are very sceptical of market capitalism. The reason they are sceptical is, It hasn’t served the middle class.

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Head rahvusvahelist naistepäeva

Täna on rahvusvaheline naistepäev. Täna on sobiv mõelda väljapaistvatele ja vapratele naistele.

 

 

 

 

Terror and unemployment fears grip France as Marine Le Pen storms ahead in new poll

A new poll taken between March 2nd and 4th put Marine Le Pen out in front with 26.5 percent, Macron second with 25.5, Fillon at 18.5, and Hamon 14.

The survey of 1,822 registrants on the electoral roll over the age of 18 was taken this week and shows that Le Pen’s rhetoric is on the money.

The fight against unemployment is by far the biggest challenge for any presidential candidate with 55 per cent of those questioned saying it’s a major issue.

I’m with her

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Kohutav, Taani kannatab täistööhõive ja tõusvate palkade käes

Häda on selles, et Taani kannatab täistööhõive käes. Kui nii edasi läheb ja praegused rassistlikud ning immigratsioonivastased meeleolud jätkuvad, siis võib see juhtuda teisteski Euroopa riikides. Ja mõtle, kui rassistid USAs illegaalse immigratsiooni lõpetavad, siis võib sealgi täistööhõive saabuda?

Danish Companies Seek to Hire, but Everyone’s Already Working

…After a painful recession, unemployment is now at 4.3 percent, which is about as low as it can go without provoking inflation. During an economic boom a decade ago, joblessness fell as low as 2.4 percent, igniting an unsustainable spiral of higher wages and prices that the government desperately wants to avoid today.

Growth is still relatively modest — the economy expanded an annualized 1.2 percent last year despite the hiring frenzy. But in many sectors, the demand for workers has risen so fast that economists are warning that the recovery may hit a wall.

“It’s hard to see higher growth because we don’t have the labor needed for that,” said Steen Nielsen, the director of labor market policy at the Confederation of Danish Industry, the country’s main business lobby group. “We may have to be happy with low growth rates in the future unless we can stimulate labor supply.”…

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Euro saatus otsustatakse tõenäoliselt Itaalias

Why the election timetable favours the Five Star Movement in Italy

For people who want radical change in Europe, seeing both Wilders polling first and getting defeated and then Le Pen polling first and getting defeated is going to make you feel like the system is ‘rigged’. If you are an eligible voter in Italy who wants to overthrow the status quo and you see Wilders and Le Pen fail even after polling first, that’s going to give you a big incentive to make sure you vote for Five Star because — in Italy — Five Star will definitely wield power if it comes first. I haven’t seen any scenarios in which the Five Star Movement wins the popular vote and doesn’t at least have a powerful voice in shaping how Italy moves forward.

So while everyone is focused on Le Pen and France, they really should be focused on Five Star and Italy, because Italy is where the future of the euro will be decided – economically and politically.

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Vasakpoolsed julgevad ainult Merkeli selja taga rääkida

Selles ei ole midagi progressiivset, et näiteks poolakad UK-sse tööle suunduvad ja kümnekesi ühes korteris elavad. Sellele vastu olemises pole mitte midagi rassistlikku ega ksenofoobset. Ükskõik millise progressiivse retoorika taha ennast regressiivne vasakpoolsus ei peida, on nende kavatsused läbinähtavad. EL on vasakpoolsete TINA.

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The European Union Trembles

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Any nation that cannot draw on its Reserve Bank for money but goes into market to compete with private sector is a colony: Prof Wynne Godley

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Varoufakis on tüüpiline vasakpoolne totu

YANIS VAROUFAKIS: Trump is risking a US debt crisis with ‘skyrocketing deficits’

“My great concern with Donald Trump is that his economic pronouncements don’t square up,” Varoufakis said in an interview with Bloomberg TV’s Guy Johnson.

Varoufakis said Trump’s proposed $1 trillion (£830 billion) government spending plan “is unfunded and will lead to skyrocketing deficits if he succeeds with all the tax cuts he wants to push through.”

At the same time, diplomatic tensions could lead China to sell its holdings of US Treasurys, pushing up bond yields and making it more expensive for Trump to fund the plan by borrowing on the international capital market.

It’s a sequence that echoes the European debt crisis, which started in 2010 when investors lost confidence in the ability of Greece and other southern European countries to fund government spending and pay back their national debt. That led to higher government borrowing costs, a series of banking crises, and sharp cuts in spending and economic growth.

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Real Progressives LIVE with L Randall Wray – MMT and Debunking AMI: Positive Money

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Ted Malloch: The US view of European integration

Ted Malloch: The US view of European integration

Exclusive: President Trump’s new administration has made it clear that the US is no longer interested in the EU’s integrationist ‘ever closer union’, writes Ted Malloch, the man tipped to be next US ambassador to the EU.

 

….US interests are further undermined by the EU’s many inherent internal contradictions – social, economic, and politically which undermine US beliefs and interests.

Chief among them are the Euro, a flawed common currency. The Euro offers little insulation from economic shocks and relies on fiscal transfers at the EU level to iron out economic imbalances. These are many. This equates to papering over cracks in the EU’s component economies.

It has also, as demonstrated by former World Bank, chief economist, Joseph Stieglitz, (see: The Euro and Its Threat to Europe) tilted the tables toward the benefit of Germany. Germany’s current account surplus is a huge eight per cent of GDP, which imposes a deflationary bias on the entire Eurozone.

The basic fallacy of the neo-functionalist philosophy underlying the EU is the assumption that political integration can be achieved through economic integration. This is a mistaken assumption further aggravated by the forced pace of such integration.

The cure to Europe’s calamity is genuine democracy – government by the people not by unelected bureaucrats parading as experts. Members of the European Commission are not elected and are unaccountable to any parliament. Such a globalist elite and its attendant super structure is detached from the people and therefore entirely anti-European…..

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EU In Disintegration Mode

by Armstrong Economics

EU In Disintegration Mode

The EU leadership is really trying to make Great Britain pay dearly for voting to exit the Community. Like the socialists in America, it’s our way or no way. The left may call the right the “deplorables” but the left are the “intolerables” who refuse to ever consider they might be wrong.

The EU thinks that if they can make it so bad for Britain, nobody else will leave. They refuse to examine why there is rising discontent within Europe. They refuse to let go of this dream of a federalized Europe to eradicate national identities along with sovereign rights…..

…..The EU leaders have nothing to say about the criticisms. They have no clear statement to challenge what is going on. The regulatory nightmare and outright rage that is rising among the people is simply ignored by Brussels. The legal uncertainty with the British exit on the banking system is something nobody even wants to speculate about. How do bail-ins work in Europe if abandoned in Britain? So while the EU thinks by punishing Britain they will discourage others from leaving, they are seriously mistaken. The dream of the EU is dead. It should have remained just a trade union – that was it…..

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