3 Characteristics of MMT

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A 600-Page Textbook About Modern Monetary Theory Has Sold Out


Japan Is Having Its Own Heated Debate Over Modern Monetary Theory


The hottest economic doctrine around says governments should stop worrying and learn to love their public debt. Japan’s been more relaxed than most –- but a looming tax hike suggests it may be about to blink.

Modern Monetary Theory posits that countries which control their own currency can seek stronger economic growth via government spending, without risking default. The only limit on spending is inflation — a remote prospect in Tokyo, where steering clear of deflation is the priority and a 2% price target remains far out of reach.

It’s a controversial idea that has detractors and admirers worldwide, and may even surface in next year’s U.S. election campaign. Japan is often cited as evidence the theory is accurate. Now it’s having its own version of the MMT debate.

How Modern Monetary Theory Lets Politicians Think Big: QuickTake….


…..“There’s nothing wrong with the idea of MMT,’’ said Satoshi Fujii, who served as an economic adviser to Abe for six years. He’s called for a postponement of the tax increase and additional public spending of 15 trillion yen ($140 billion) a year over three years to jump-start inflation…..

…..”Aso can deny it for all he is worth,” said Mitchell, a professor at the University of Newcastle in Australia. In fact, Japan has been a “laboratory to establish the principles of MMT and the consequences of different fiscal and monetary policy initiatives,” he said.
A 600-Page Textbook About Modern Monetary Theory Has Sold Out
Hiroshi Ando, a lawmaker from Abe’s party, is less squeamish about MMT than his leader. He’s organized study sessions for colleagues who support bigger budget deficits to learn more about the doctrine. About 10 of them attended a discussion on May 15.
If you understand this theory,’’ said Ando, “you will come to the conclusion that it’s utterly untrue to say Japan’s finances are in a critical state.’’

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Hirm MMT ees

Hirm MMT ees on vasakult ja paremalt. Mõlemad kardavad MMT-d. Parempoolsed nagu Trump ei saa siis enam rääkida, kui edukad nad majanduses on tänu regulatsioonide kaotamisele ja vasakpoolsed ei saa klassiviha õhutada ettevõtjate ja kapitalistide vastu.


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Embrace on Wall Street

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Fiscal Money as a Solution to Italian Eurowoes


See on hea plaan ja erinevates vormides varem läbi jooksnud ka siit blogist.

Fiscal Money as a Solution to Italian Eurowoes

Biagio Bossone / Marco Cattaneo / Massimo Costa / Stefano Sylos Labini

The strong performance of Eurosceptical parties such as M5S and Lega at the recent Italian election has been ascribed to the country’s dismal economy.

This is indeed the case. Italian GDP at constant prices in 2017 was € 100 billion below its 2007 level – a 5.5% decrease ! Meanwhile, export grew 7.8% – not a stellar performance in ten years, but a clear sign that the main culprit is lack of domestic demand. Had Italy’s GDP grown at the same rate as exports, today it would be 14% (i.e., € 241 billion) higher.

This state of affairs has caused Italy’s U-6 unemployment rate (which takes into account discouraged and involuntarily part-time workers) to be approximately 30%. There is no question that a huge output gap exists.

To be sure, the Italian economy suffers from other problems, too. Productivity growth has been miserable for the last 20 years. But, then again, this also is at least partly a consequence of depressed demand. In 2017, capital expenditure in real terms was 18.5% lower than in 2007. Low private sector demand, public budget restraints, and low capacity utilization have all had long-lasting negative effects on investments and productivity.

As fiscal rules constrain Italy’s ability to reflate demand by issuing debt, and with monetary policy being as accommodative as it gets, an alternative instrument is required. Fiscal Money provides such instrument.

Our proposal is for government to issue transferable and negotiable bonds, which bearers may use for tax rebates two years after issuance. Such bonds would carry immediate value, since they would incorporate sure claims to future fiscal savings, and would be immediately exchangeable against euros or usable as payment instruments (in parallel to the euro) to purchase goods and services.

Fiscal Money would be allocated, free of charge, to supplement employees’ income, fund public investments and social spending programs, and reduce enterprises’ tax wedge on labour. These allocations would increase domestic demand and (by mimicking an exchange rate devaluation) improve enterprise competitiveness. As a result, the output gap would close without affecting the country’s external balance.

Notice than under IFRS, Fiscal Money bonds would not constitute debt, since the issuer would be under no obligation to reimburse them in cash. Also, under Eurostat rules they would be treated as non-payable deferred tax assets and would not be recorded in the budget until used for tax rebates (that is two years after issuance, when output and fiscal revenue have recovered).

Based on very conservative assumptions (i.e., fiscal multiplier of 1 and a resumption in private investments to recover half of the drop since 2007), GDP recovery would generate additional tax revenues sufficient to offset the tax rebates. Projections show that these would peak at around € 100 billion, which compares to more than € 800 of Italy’s total fiscal revenue. Thus, the cover ratio (that is, the ratio between government gross receipt and tax rebates coming due each year) would be large enough to accomodate for possible shortfalls due to future recessions.

Have we found the “philosopher’s stone” ? Certainly not – in an economy with large resource slack, the multiplier works its effects largely on output and moderately on prices. And if external leakages are contained (which increased competitiveness would do), the multiplier effects are the highest. Fiscal Money is about mobilizing unutilized resources, accelerating investments and inducing banks to resume lending.

By activating a Fiscal Money program, Italy would solve its output gap problem without asking anything to anybody. No European treaty revisions would be required. No financial transfers would be needed. Public debt would stop growing and start declining relative to GDP, thus attaining the Fiscal Compact goal. Public finances would be sustainable as long as the ECB confirmed its “whatever it takes” commitment – which it would have no reason to disavow with Italy’s debt stabilized.

Even if Italy were to lessen its fiscal discipline and decide to over-issue Fiscal Money, only recipients would take the hit, as the value of the instrument would fall while over-issuance would neither affect the euro nor create default risk on a default-free instrument. In any case, the large cover ratio would make this scenario totally unlikely. Besides, it is only fair to remember that Italy’s inability to rein in net public spending is a false myth. Between 1998-2017, Italy has been the only Eurozone country to achieve a primary surplus in each single year (other than 2009). If anything, Italy has suffered from excessive public budget restraint, which has led to its dramatic output decline.

A strong recovery of the Italian economy (and possibly of other Southern Eurozone countries, which could replicate the Fiscal Money framework) is an indispensable precondition for Europe to cooperate effectively and harmoniously. Fiscal Money is the appropriate tool to make this objective achievable.

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Spending in the world as we know It

Spending in the world as we know it

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MMT hullus

USA ajakirjandus on nüüd MMT sõdasid täis ja ei võitle ainult gigantideks peetavad eksperdid, vaid ka lihtsalt poliitilised sümpateerijad ja vastased. See muidugi ei piirdu ainult ajakirjandusega, twitteris heideldakse edasi, vahest natuke teised nimed vms. Blogosfäär kubiseb arvamustest MMT kohta. Bloomberg, Reuters, WSJ, Forbes jne jne. Mitte, et kõigiga ei jõuaks vaielda, kui isegi tahaks, vaid kõiki pealkirjugi ei jõua lugeda. Krugman heitleb Stephanie Keltoniga juba päevi. Blogosfääris on selliseid mõtteid, et mis on MMT, kas keegi oskaks seletada ja need pole majandusfännid.  Twitteris mängivad inimesed, et esita MMT viie sõnaga jne: taxes don’t come before spending või deposits don’t come before lending   🙂

Asi on minu hinnangul kergelt mingi hulluse kuju võtnud Ameerikas.

On kuulda olnud, et MMT läheb senatisse rääkima.  🙂 Et big game on nüüd.

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Neoliberalism: Fantasy Economics

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MMT on nüüd mainstream

Mina ütleksin, et MMT on nüüd mainstream. Enne pidi MMT muretsema tuntuse pärast, nüüd on need maha jäänud, kes MMT-st midagi kuulnud pole.

America has never worried about financing its priorities

Modern monetary theory is neither Marxist*, nor bullshit
Allow us to grossly simplify. Advocates for modern monetary theory argue that, for a sovereign country with its own currency, there is no inherently unacceptable level of government debt — that country does not automatically begin to collapse when debt reaches 90 per cent of GDP, or even 200 per cent of GDP. The country appropriates what it believes is necessary for domestic programs, regardless of revenue.
A traditionalist would see this as a prescription for inflation: increase the supply of money and, as with any commodity, you reduce its value. Modern monetary theorists argue that inflation happens only when the real economy — plants, machines, workers — can’t absorb what the government is spending. So: disconnect spending from taxation. Spend until the economy is at capacity, using all of its resources perfectly. Raise taxes only to cool down inflation, when the real economy exceeds that capacity.
Alphaville does not propose here to mount an extensive defense of modern monetary theory. There is not the space. (Will there ever be?) We are confident, however, that Howard Dean is correct. It is neither Marxist, nor is it bullshit.

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I love that Bronx Accent

MMT ruupor on nüüd USA Kongressis, sõbrad see on suur asi. Mitte mingi mõttetu Europarlament, vaid USA Kongress.  🙂

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Europe has made a political decision to go into recession

Europe has made a political decision to go into recession

Industrial production in Italy, Spain, and Germany went negative in November, according to data published last week. It looks like Europe is heading into a recession. Europe adopted “austerity” measures after the 2008 crisis, cutting government fiscal stimulus spending. Those cuts hurt GDP growth, leaving Europe’s economy permanently smaller, according to Oxford Economics and the IIF. Europe lost an economy the size of Spain because of it. “By lowering GDP permanently, fiscal consolidation increased the long-run debt burden rather than reducing it (as was the aim),” Oxford Economics analyst Rosie Colthorpe says.

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Sotsiaaldemokraatia USAs

AOC on sotsiaaldemokraat, enamus end Euroopas sotsiaaldemokraatideks nimetavad isikud ja partied ei ole sotsiaaldemokraadid. Sotsiaaldemokraadid Eestis ei ole sotsiaaldemokraadid. Stephanie Kelton on pundis ja töögarantii on laual AOC-l ja esialgu tundub, et AOC on UBI-st loobunud (varem ta sellest rääkis).Kas nüüd USA hakkab mingit progressiivset poliitikat ajama, seda ei tea, küll aga toob see MMT-le tohutult tuntust. Mulle meeldib praegune poliitiline tulemus USA-s, et igasugustest clintonitest ja pelosidest pilt vabaneks.

Alexandria Ocasio-Cortez’s Tax Proposal Isn’t As “Radical” As Some Say


In an interview with Anderson Cooper on Sunday’s 60 Minutes, Rep. Alexandria Ocasio-Cortez proposed a higher tax on the super-wealthy as part of a plan to finance the Green New Deal program.
Both the tax policy (what we know of it, at least) and the GND are ambitious. The GND is actually one of the boldest climate-change and economic policies to be discussed in Congress — ever. It aims to cut carbon emissions to keep climate change from plunging the world into a complete Doomsday scenario, while providing a federal jobs guarantee and large-scale public investments….

…However — and this may shock some — many of the GND’s proponents don’t want the program to be paid for by taxes at all. The U.S. prints its own money and has the right to make as much of it as it wants and pay for whatever it wants; the only thing that’s limited are the resources. As long as the country can balance both, we’re fine, Stony Brook University economics professor Stephanie Kelton told Vox.
What about the deficit? “If the deficit has to be 4.7% of GDP to create the economy we want, with full employment, low inflation, and poverty going down, who cares?” said Kelton. “If we can create the economy we want with a deficit of 2.1%, that’s fine, too. The budget outcome isn’t the thing that matters, it’s the real economic conditions.” This is, after all, how the U.S. “paid for” FDR’s famous New Deal, which effectively transformed the country….

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‘Everyone should know — I am very dangerous’

‘Everyone should know — I am very dangerous’An interview with Jean-Luc Mélenchon







‘Everyone should know — I am very dangerous’ An interview with
Jean-Luc Mélenchon

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Demokraadid USAs

Demokraadid USAs teenivad oma isandaid ja samal ajal kindlustavad endale vaeseid, kelle eest siesta ja hoolitseda.


House Passes PAYGO to Steer Budget Back on Track

WASHINGTON – Congressman Cuellar, a member of the Blue Dog Coalition, helped pass House Resolution 6. A resolution providing for the House Rules of the 116th Congress, which establishes Congressional House rules. The resolution included a measure restoring the bipartisan Pay-As-You-Go (PAYGO) rules. PAYGO, a Blue Dog initiative, requires that both mandatory spending and tax cuts must be offset to prevent increasing the national debt.
The last time PAYGO was in place was 2010, when the Blue Dog Coalition worked with Democratic Leadership to restore the rules to ensure the government does not spend beyond its means. However, when Republicans took the majority in 2011, they excluded tax cuts and other policies decreasing revenue from PAYGO rules.
During that time, Congressman Cuellar and his colleagues in the fiscally conservative coalition have worked to pass legislation that would restore PAYGO rules that require offsets for both spending increases and revenue decreases, reining-in federal spending and drawing down the nation’s debt.

“Reinstating PAYGO is the swiftest action we can take to restore fiscal responsibility,” said Congressman Cuellar. “This legislation was built on bipartisan ideas to better our economy— under these rules, Congress can’t spend a penny without cutting a penny from elsewhere.

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Mosler lays down tablets on the economy, stupid

Mosler lays down tablets on the economy, stupid


…Most persuasive, however, is the man himself. If only three people actually understand global finance, Mosler might well be the only one to also understand international bond markets. He has, after all, traded in them for more than 40 years, managing billions in funds and making millions in profit. It was during his most profitable trades – on Italian government bonds in the 1990s – Mosler says, that he had his epiphany.
”We made a lot of money by betting the Italian government wouldn’t default even though their debt-to GDP ratio had exceeded 110 per cent,” Mosler recalls. ”I knew no country that issued its own currency ever had defaulted, nor had they ever had to ‘print money’ to pay, but I didn’t know why. Eventually it hit me: buying securities from a country’s central bank or its treasury are both functionally the same.”
They’re supposed to be different, Mosler points out: central banks sell securities in order to drain reserves, while treasuries supposedly do it to raise expenditure. ”But the end result is exactly the same – a pile of money sitting in securities accounts at the country’s central bank,” he says. ”The inescapable conclusion is that treasury sales of government debt don’t actually raise funds: they too simply drain reserves. That means that it is government spending and taxing that actually impacts the economy, not managing the debt…

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Euroala suured majandused SKP per capita PPP

Eurokraadid räägivad, et euro on 20 aasta jooksul tohutult rikkust toonud sellega liitunud riikidele. Siin on illustreeriv graafik SKP per capita PPP

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CRASHED: Long version of my Observer review of Adam Tooze’s new book on the Crash of 2008

Yanis Varoufakis

CRASHED: Long version of my Observer review of Adam Tooze’s new book on the Crash of 2008

Tooze also reminds us that the Eurozone’s austerity, which condemned tens of millions of Europeans to cruel, unnecessary hardship, was originally championed not by conservatives but by Germany’s social democrats; and modelled on the brutality with which Eastern European elites (raised on a diet of authoritarian communism) had imposed austerity on their own people (to preserve their private benefits via continued membership of the international financial elite).

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Vasakpoolsed Euroopas on üles ärkamas

Jean-Luc Mélenchon

Verified account

Follow @JLMelenchon

Il faut sortir des traités européens, c’est ma conclusion. #DirectAN
Translated from French by
We have to get out of the European Treaties, that is my conclusion. #DirectAN
9:55 AM – 22 Oct 2018


Siiani on jutt olnud ikka selline, et me lepime kokku ja räägime läbi, aga mitte mingil juhul ei lõhu seda utoopilist unistust.  Raske öelda kas tegemist on ainult poliitilise retoorikaga ehk, sest parempopulistlikud jõud on populaarsust kasvatanud.  Presidendivalimise kampaania ajal oli Melenchoni jutt pehmelt öeldes populistlik: mitte mingil juhul eurost loobumine, kodanikupalk jne.


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Economists Who Want You to Rethink the Deficit Gather in Downtown NYC


Economists Who Want You to Rethink the Deficit Gather in Downtown NYC

Proponents of modern monetary theory — the idea that for countries like the U.S., the government’s ability to borrow in its own currency isn’t constrained, even if its real resources are — will gather this weekend, starting Friday, at the New School in New York’s Greenwich Village.

Bloomberg saadab 3 reporterit MMT konverentsile New York City’s sel nädalavahetusel. Luke Kawa, Joe Weisenthal ja Katia Dmitrieva.

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Trillion-Dollar Deficit? Whatever, Says New Washington Consensus


Nancy Pelosi ja Hillary Clinton on eksinud hinged, kel pole mitte mingeid kokkupuuteid olnud mitte kunagi peavoolu majandusteadlastega. Kahjuks on need kaks Washingtoni poliitikut niivõrd isoleeritud elu elanud, sest peavoolu majandusteadus oli alati teadlik sellest, mida MMT väidab ja on nõus sellega. Kui Obama väitis, et raha on otsas ja valitsus peab ka kärpima, kui erasektor kärbib, siis peavoolu majandusteadlased lihtsalt viisakusest ei võtnud sõna. Nad ei tahtnud niimoodi majanduspoliitikasse sekkuda, kuigi teadsid, et Obama jutt on umbjama ja oleksid suuremaid defitsiite toetanud. Peavoolu majandusteadlaste käitumise vooruslikkus on kahtllemata mõistetav meile kõigile.

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Oleks ometi demokraadid võitnud?

Ok, on hea, et Trump defitsiitselt kulutab, aga ta kulutab valesti ja annab raha rikastele?

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Mis juhtub siis, kui rahvas saab eliidist targemaks

ja valib eliidi arvates idioodi

per Woodward book, Cohn was talking to Trump about the increasing U.S. deficit. “What do you mean? Trump asked. Just run the presses — print money.”

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Trumpile edu

Get Ready for a Massive Government Spending Spree

A government spending spree of potentially historic proportions will play out over the final seven weeks of fiscal 2018, as federal agencies look to spend $140 billion more than they thought they’d get before Congress passed and President Trump signed the omnibus spending bill.
Without a budget agreement in place, agencies spent cautiously through the first two quarters of fiscal 2018 before the omnibus—signed six months late in March—obligated an additional $80 billion for defense and $63 billion for civilian agencies.
Federal agencies, now flush with cash, must obligate that money before the fiscal year ends on Sept. 30 or lose it to the Treasury Department. Analysts believe the federal market will see a monumental effort among procurement officials to spend as much on contracts as possible….

Sa tõenäoliselt kuuled sadat erinevat versiooni majandusekspertidelt, et miks Trumpi majandus edukas on. Kes iganes taganeb prevaleerivast makromajanduslikust narratiivist, on majanduse juhtimises edukas. Paistab, et Trump saab hakkama. Need inimesed, kes end progressiividena esitlevad ja sotsiaalõiguslikud sõdalased on, jätavad rahva nälga ja tööta.

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Ütle mulle, kes on sinu sõbrad ja…


Mul on enne sel teemal juttu olnud sarnaste inimestega. Tavaliselt hakatakse küsima, et kes nii väitis ja kes sellist anarhiat toetab, aga mitte alati. Tundub, et Trumpi valimisvõiduks on väga tugevad põhjused.

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Ohtlikud fanaatikud

Ma vahest kohtan inimesi, kes suhtuvad praegu toimuvasse optimismiga, et küll EL sellest üle saab vms. Ma jään peaaegu alati sõnatuks.

Eurogroup statement on Greece of 22 June 2018

The Eurogroup returned to the sustainability of Greek debt on the basis of an updated debt sustainability analysis provided by the European institutions. The implementation of an ambitious growth strategy and of prudent fiscal policies will be the key ingredients for debt sustainability. In this context the Eurogroup welcomes the commitment of Greece to maintain a primary surplus of 3.5% of GDP until 2022 and, thereafter to continue to ensure that its fiscal commitments are in line with the EU fiscal framework. Analysis of the European Commission suggests that this will imply a primary surplus of 2.2% of GDP on average in the period from 2023 to 2060.

Kas need inimesed on kuidagi realistid? Kui sa ei tea, mida “primary surplus” tähendab, siis see on riigieelarve ülejääk arvestatuna ilma intressimakseteta riigivõlalt. Ja nad räägivad tõsise näoga sellisest ülejäägist kuni aastani 2060. Need inimesed on ju ohtlikud fanaatikud. Kas sa arvad, et selliste fanaatikute juhitud liidul on tulevikku?

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