Treasury Settlement

 

Much easier to understand by the monetarist morons figuratively as “they’re printin’ money!”…

U.S. government securities clearing & settlement visualized pic.twitter.com/ngYUXHWpBu

— Conks (@concodanomics) May 7, 2024

De-Dollarization Bombshell: The Coming of BRICS+ Decentralized Monetary Ecosystem — Pepe Escobar UPDATED

 Footsoldier posted this in the comments. I am promoting it to a post. 

So-called de-dollarization is envisioned to happen in two major steps stages each with many incremental iterations. 

The first stage stage is conducting bilateral trade in the currencies of the trading partners. This is already well advanced. 

However, this is not actual de-dollarization, which is the establishment of a competing monetary system with a goal of eventually replacing the USD as the primary global currency. 

No one thinks that this will happen quickly and without growing pains, or without Western opposition. But it is a stated goal rather than simply an aspiration. 

The Unit plan is now on the table.

Sputnik Globe

De-Dollarization Bombshell: The Coming of BRICS+ Decentralized Monetary Ecosystem
Pepe Escobar

See also

Pepe waxes philosophical here. 

For some reason there is increasing interest in Stoicism right now.  

The most prominent Stoics were Marcus Aurelius, emperor of Rome, and Epictetus who was born into slavery. That pretty well covers the spectrum.

Those wishing to up their mental game may profit from reflecting on the Stoics.

Strategic Culture Foundation (sanctioned by the US Treasury Department)

We should all be Stoics now

Pepe Escobar

UPDATE

A new order may be in the works already. (The Economist)

Moon of Alabama

A Pessimistic Economist Laments The End Of Order

b

 

If Government Can Print Money, Why Does It Borrow? — L. Randall Wray (2005)

Recently, the neglected question of why the US government borrows, given that it can print money, has arisen in the context of discussions surrounding a new documentary, Finding the Money. As L. Randall Wray observes in this one-pager, Modern Money Theory has been providing answers to this question for some time; and, he argues, it is a topic that mainstream economists are ill-equipped to address, since very few concern themselves with the monetary operations that underlie the question of why a currency-issuing government issues debt.

Underground Network ONE-PAGER No. 72 | May 2024

If Government Can Print Money, Why Does It Borrow?
L. Randall Wray, Levy Economics Institute, 2005

Also at Underground Network May 9, 2024

New documentary that explains how money works and how pretty much everyone today gets it all backwards.

Finding the Money – There’s another side to the national debt.

Cleveland Fed for May

CPI nowcast for May reporting low:

Corporate buybacks

No not so fast there buddy. ..  According to MMT the US government is “borrowing money!” from the tax exempt foreign divisions of these multinationals…

It’s not just transferring retained earnings into foreign UST accounts at the Fed as part of a scheme to reduce overall corporate tax liabilities… that’s not what is happening..

I wonder how many people know these “buybacks” are mostly unpaid taxes distributed to investors in US 🤔

In the case of $AAPL profits are kept offshore in 0% tax countries like Ireland, then $AAPL issues bonds in #US to finance these buybacks and when the bonds mature they use… https://t.co/HKwjqY8PYx

— JustDario 🏊‍♂️ (@DarioCpx) May 3, 2024

Month end settlements

 

Have to see if this large month end settlement pattern continues…. It may be that first of the month fiscal transfers are getting so large these days that they are destabilizing reserve assets at Depositories… so Treasury might be scheduling most of the settlements the day before to reduce reserve balances within the same regulatory period as the first of the month…

Treasury issuance is not “borrowing!” despite what MMT asserts…

Treasury issuance is skewed this month. There are net paydowns and one large settlement on month-end. If we exclude month-end, there's a net paydown of $108B. O/N rates should head lower throughout the month. Every net paydown will put additional downward pressure on O/N rates pic.twitter.com/3fTwWGMwmR

— Scott Skyrm (@ScottSkyrm) May 2, 2024

Jared Bernstein, total idiot. You have to see this to believe it.

You know that scene in The Big Short, when after the collapse there's a distinct vibe of "man that was so obvious, how were people so impossibly stupid?"

If you are loaning money to the Federal Government (ie if you own government bonds), the *only* reason you should feel… https://t.co/KgutE7xeIv

— Erik Voorhees (@ErikVoorhees) May 3, 2024

Trump to set interest rates himself under secret presidential plan

Trump getting ready to go to war with the Democrat Monetarist morons who currently run the Fed... He probably wants rates back at zero like Obama had for 8 years… 

This would be a catastrophe if it ever happened.

It’s being reported by the WSJ so it’s legit.

If Trump lowered rates into an inflationary crisis it would create a lot of pain. Especially for the middle class. pic.twitter.com/FTLfEQ1Qmu

— QE Infinity (@StealthQE4) April 27, 2024

Japan

 

Shots fired:

Japan has always been a favorite talking point for the #MMT crowd, who claim Japan's huge debt load is totally fine. It isn't. Japan is in a currency crisis because its debt forces the BoJ to keep interest rates pinned. A huge warning sign for debt aficionados in the Euro zone... pic.twitter.com/mnO6RUQgnq

— Robin Brooks (@robin_j_brooks) April 28, 2024

Accounting 101

 

So what now we have Art Degree MMT Economics people teaching rudimentary Finance and Accounting Science 101 like this is some big revelation or something?  Big deal … 🤔

assets___________BANK________liabilities
+ reserves + bank deposits

What happened? 🧐

— Dirk Ehnts (@DEhnts) April 15, 2024

JPMorgan says high interest rates are driving inflation higher

 

But these JPM people are not winning the Art Degree argument though:

JUST IN: 🇺🇸 JPMorgan says high interest rates are driving inflation higher - Bloomberg pic.twitter.com/ui89mAh6RG

— Radar🚨 (@RadarHits) April 10, 2024

This guy is winning the argument:

.@lhsummers, former US Treasury Secretary and Wall Street Week contributor, says he's not surprised inflation rose again in March, but he says an interest rate cut in June by the Federal Reserve would be dangerous https://t.co/VVbO71W83N pic.twitter.com/enjnKsEm5Z

— Bloomberg TV (@BloombergTV) April 10, 2024

Latest European Union rules provide no serious reform or increased capacity to meet the actual challenges ahead — Bill Mitchell

It’s Wednesday and we have discussion on a few topics today. The first relates to the new agreement between the European Parliament and the European Council that was announced on February 10, 2024, which purports to reform the fiscal rules structure that has crippled the Member States of the EMU since inception. The reality is that the changes are minimal and actually will make matters worse. I keep reading progressives who claim the EU fiscal rules are no longer operative. Well, sorry, they are and the temporary respite during the pandemic is now over and the new agreement makes that very clear. I also express disappointment that high profile progressives continue to misrepresent Modern Monetary Theory (MMT) as they advance their own agenda, which effectively provides support to the sound finance narratives. Then some updated health data which continues to support my perspective on Covid. And then some anti-fascist music. What’s not to like.

William Mitchell — Modern Monetary Theory
Latest European Union rules provide no serious reform or increased capacity to meet the actual challenges ahead
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

What is responsible government spending? — Guest post by Scott Baum

Today, I am fully engaged in work commitments and so we have a guest blogger in the guise of Professor Scott Baum from Griffith University, who has been one of my regular research colleagues over a long period of time. He indicated that he would like to contribute occasionally and that provides some diversity of voice although the focus remains on advancing our understanding of Modern Monetary Theory (MMT) and its applications. Today he is going to talk about what responsible government spending should look like. Anyway, over to Scott …

William Mitchell — Modern Monetary Theory

What is responsible government spending?

Guest post by Scott Baum, Professor at Griffith University, Queensland

Death of empires: History tells us what will follow the collapse of US hegemony — Henry Johnston

The turn away from expansion, production and trade toward lending and speculation has precipitated decline for centuries

In the vein of Michael Hudson on the transition from industrial capitalism to financial capitalism, and the implications of this transition systemically. The article is a summary of the work of Giovanni Arrighi, one of a number of economists, economic sociologist and economic anthropologists that have explored the phenomenon of capitalism and its development in terms of the world system.

RT — Question More (Russian state-sponsored media)
Death of empires: History tells us what will follow the collapse of US hegemony

Henry Johnston, an RT editor who worked for over a decade in finance and is a FINRA Series 7 and Series 24 license holder

Millions of simulations show that media companies have too much time on their hands — Bill Mitchell

It’s Wednesday and I discuss a number of topics today. First, the ‘million simulations’ that Bloomberg apparently think show that there is an impending US bond market rout. Second, the way in which neoliberal-inspired legislation ensures the private energy providers can gouge prices and make huge profits in the face of a state-owned alternative. Third, my latest podcast with Real Progressives. Fourth, the crocodile tears from the Australian government concerning Gaza when they are effective supplying the means to kill our own citizens and tens of thousands of others. Finally, to calm down after all that some great jazz.…

Bloomberg published a ridiculous article yesterday (April 2) – A Million Simulations, One Verdict for US Economy: Debt Danger Ahead – which I thought might have been a delayed April Fool’s joke.…

William Mitchell — Modern Monetary Theory
Millions of simulations show that media companies have too much time on their hands
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

In Defence Of Discrete Time Models — Brian Romanchuk

Not MMT per se but it has to do with economic modeling that is pertinent to MMT's stock-flow modeling. 

When looking at Steve Keens's claim about continuous and discrete yesterday, it seemed to me to be a bit off given that economic data is discrete despite the fact that it is reported in terms of flows that are assumed continuous. Brian explains the details of the modeling math clearly and briefly without getting overly wonkish. 

Bond Economics
In Defence Of Discrete Time Models
Brian Romanchuk

Economic Democracy with Pavlina Tcherneva — Scott Ferguson and William Saas interview Pavlina Tcherneva

Podcast and transcript.

Money on the Left — MR Online
Economic Democracy with Pavlina Tcherneva
Scott Ferguson and William Saas  interview Pavlina Tcherneva

Giant Pictures & Kanopy Acquire ‘Finding The Money,’ Documentary That Explodes Myth Of Deficit Spending — Matthew Carey (with Trailer)

 "Finding the Money" Trailer.

Deadline
Giant Pictures & Kanopy Acquire ‘Finding The Money,’ Documentary That Explodes Myth Of Deficit Spending
Matthew Carey

The SDGs are not achievable—Unless we decolonize the global economic architecture — Fadhel Kaboub

I’m on my way back to Nairobi. I spent the last 3 days in Rome at a UN expert group meeting on SDG2 (Ending Hunger) at the FAO, in preparation for the 2024 High-Level Political Forum that will be help in July 2024. It was a bit ironic that the FAO building where we held the meeting used to be the Italian Ministry of the Colonies under the Mussolini regime, and my main message to the FAO was about decolonizing the global economic architecture is a prerequisite for achieving the SDGs, including SDG2 to end hunger. It is 2024, and the global food system reflects the legacy of colonial and post-colonial hierarchies. This blog is a brief summary of my main message to the FAO.…

Very clear presentation of the conditions of colonization in neocolonialism and of the requirements for decolonization by an MMT economist, although MMT is not involved in the post specifically. Rather, it addresses structural problems facing the Global South.

SDGs = Sustainable Development Goals. There are 17.

Global South Perspectives—Reflections & Analysis by Fadhel Kaboub
The SDGs are not achievable—Unless we decolonize the global economic architecture
Fadhel Kaboub, Associate Professor of economics at Denison University (on leave) and President of the Global Institute for Sustainable Prosperity. He currently serves as the Under-Secretary-General for Financing for Development at the Organisation of Educational Cooperation in Addis Ababa, Ethiopia.He also held a number of research affiliations with the Levy Economics Institute, the John F. Kennedy School of Government at Harvard University, the Economic Research Forum (Cairo), Power Shift Africa (Nairobi), and the Center for Strategic Studies on the Maghreb (Tunis). Fadhel is Tunisian-American MMT economist. Ph.D. in Economics & Social Science Consortium, 2006, University of Missouri - Kansas City. M.A. in Economics, May 2001, University of Missouri - Kansas City. B.S. in Economics, June 1999, with Distinction

Rinse and repeat–Truss chaos–the new benchmark — Bill Mitchell

For years, those who want selective access to government spending benefits (like the military-industrial complex and other parasitic sectors), while claiming the government cannot afford to provide adequate income support to the most disadvantaged citizens have used various ruses to give an air of authority or legitimacy to their claims. So in the UK, the lie in 1976 by the then Labour government that it was going to have to borrow from the IMF to stay solvent has been regularly wheeled out. In Europe, it was the ‘tournant de la rigueur’ (austerity turn) introduced by the French government of François Mitterrand in 1983 that effectively cancelled the commitment to the progressive – Programme commun – that is often cited as a demonstration of the limited capacity of governments to resist the global power of the financial markets. The fact that it was progressive governments that instigated these events made it more emphatic – the Left essentially swallowed the fictions introduced by the Right and the corporate elites that governments were now powerless against the power of the financial markets. The macroeconomic contest was essentially ceded to the conservatives and it has been that way since. There is now a new ruse that the elites are using that the progressives are also spreading – the Liz Truss Ruse. This apparently tells us that governments must appease the financial markets or face currency destruction and rising bond yields. Like its predecessors, there is no validity to the claims. But the Left is so bereft that it cannot see through the smoke and mirrors. And that is why the world is in the parlous state that it is – the contest of ideas is non-existent. It is a case of rinse and repeat – except all is happening is lies and posturing is being recycled....

William Mitchell — Modern Monetary Theory
Rinse and repeat – Truss chaos – the new benchmark
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Mark Blyth: Unionists 'taking my words on independence out of context' — Xander Elliards

 The sequel.

The National (Scotland)
Mark Blyth: Unionists 'taking my words on independence out of context'

Xander Elliards

Philip Pilkington turns the page on MMT?

 Philip Pilkington turns the page on MMT?

https://twitter.com/philippilk/status/1772538175564447823

The US, like the UK, can’t go broke in their own currency. But if foreign lenders don’t buy into net bond issuance, USD will have to adjust to shrink the trade deficit. This will put upward pressure on inflation and is what the UK faced under Truss. Will Trump get Trussed?… pic.twitter.com/fDuYrC3Gzx

— Philip Pilkington (@philippilk) March 26, 2024

Monetary Sovereignty and Mark Blyth’s critique of MMT — Peter May

And there is indeed a ‘current account constraint’ – if you are a small open economy you need things you can sell in order to get the stuff you don’t have.

MMT really applies, as many others suggest, uniquely to the US as it issues the world’s reserve currency.

If you are not the US and your Sovereign Currency is weak, it will drive import inflation so it really means that your currency is not properly sovereign.

MMT does recognize this constraint by treating it with more nuance.

MMT's basic framework includes the priority or primacy of real resources over government finances for all countries including those that issue their own currency and don't undertake obligations is other currencies.

MMT acknowledges that a country must either be able to produce is own real resources, which implies having the required natural resources and well as the industrial power, technology, etc. that go into production. This necessitates having ample factors that not all countries enjoy and probably every country including the US is exposed to in some way. 

If a country does not have the means of production for self-sufficiency or cannot acquire financial resources from exports, then it will have to either pay for imports by issuance, which may have an effect on the exchange rate, which in turn may affect the inflation rate.

This implies that any country, even through "monetarily sovereign," is constrained by real resources limitations that may the general prices level.

While a monetarily sovereign country can issue all the currency in wants to infinity, there are consequences based on availability of real resources that boil down to an inflation constraint. This includes the exchange rate, hence imported inflation.

There is also the issue of jobs. To the degree that imports are real benefits they also export jobs through labor embedded in imports. MMT addresses that through economic policy and specifically through an MMT JG as a universal job guarantee that also acts as a price anchor.

In other words, it's complicated (highly nuanced).

Progressive Pulse
Monetary Sovereignty and Mark Blyth’s critique of MMT

Peter May

There are other factors involved including geopolitical. From the time of Adam Smith, economics has focused on trade. The objective of economics in the colonial world was for the periphery (colonies) to send natural resources and agricultural produce to the core (colonialist countries) where technology was reserved and industry was developed for producing finished goods. Finished consumer goods were exported by to the colonies to be paid in specie, while capital goods exportation was restricted.

This condition still exists to a degree as the following post shows. China has the needed USD reserves to purchase goods and services from the US but is restricted from doing so in some important cases where the US desires to continue the previous system by protecting the core through keeping the periphery weak. But China can play that game too since it is no longer a colony even though it is not yet considered to be a developed economy. Trade suffers as a consequence, affecting the global economy.

• China introduced new guidelines to replace Intel, AMD chips and Microsoft Windows in government computers with domestic alternatives.
• The move is part of China's "xinchuang" strategy to achieve technological independence and reduce reliance on foreign technology.
• Analysts predict faster adoption of domestic server processors compared to PCs due to a less complex software ecosystem.

Oilprice

Chip War Escalates as China Bans Intel, AMD Chips in Government Computers

ZeroHedge

Climate Reparations, not "finance" — Fadhel Kaboub

A brief note on the EU, Egypt, Palestine, and Copenhagen

MMT's man on the ground in the Global South. 

Global South Perspectives—Reflections & Analysis by Fadhel Kaboub
Climate Reparations, not "finance"

Fadhel Kaboub, Associate Professor of economics at Denison University (on leave) and President of the Global Institute for Sustainable Prosperity. He currently serves as the Under-Secretary-General for Financing for Development at the Organisation of Educational Cooperation in Addis Ababa, Ethiopia. He also held a number of research affiliations with the Levy Economics Institute, the John F. Kennedy School of Government at Harvard University, the Economic Research Forum (Cairo), Power Shift Africa (Nairobi), and the Center for Strategic Studies on the Maghreb (Tunis). Fadhel is a Tunisian-American MMT economist. Ph.D. in Economics & Social Science Consortium, 2006, University of Missouri - Kansas City. M.A. in Economics, May 2001, University of Missouri - Kansas City. B.S. in Economics, June 1999, with Distinction

Untangling the "socialism" vs. "capitalism" dichotomy — Alex Krainer

 Interesting post that deal with some of the same concepts as MMT but is not MMT. It's an interesting take. He has seen both sides, having grown up in a communist country (Yugoslavia). He is former hedge fund manager, commodities trader and author based in Monaco. He now blogs on geoeconomics and geopolitics at TrendCompass on Substack.

Alex Krainer's TrendCompass
Untangling the "socialism" vs. "capitalism" dichotomy

Alex Krainer, The Naked Hedgie

"For full disclosure, I do have a university degree, but I’ve worked hard ever since to recover from it."

Entropy, the Theory of Value and the Future of Humanity — James K. Galbraith

In a keynote address to a conference on “Geopolitical Changes” at Kozminski University, Warsaw, on January 29, 2024, Professor James Galbraith called for economics to break with equilibrium dogma and re-found itself on the life principles that govern physics, biology and every existing mechanical and social system. Noting the distinguished presence of Professors Francis Fukuyama and E.S. Phelps, Galbraith called attention to the spectacular fallacies of “an end to history” and a “natural rate of unemployment,” arguing that these doctrines have helped blind our generation to the damage inflicted by rising resource costs and neoliberal policies of austerity and precarity, with dire consequences for households in wealthy societies, for their reproduction rates, and for the long-term viability of the species.

Transcript.

James K. Galbraith is an MMT-friendly economist.

Post-Neoliberalism—Pathways for Transformative Economics and Politics
Entropy, the Theory of Value and the Future of Humanity
James K. Galbraith | Lloyd M. Bentsen Jr. Chair in Government/Business Relations and Professor of Government at the Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin

See also at Post-Neoliberlsm

Whatever it Takes: How Neoliberalism Hijacked the Public Purse

Pavlina Tcherneva | Founding Director of OSUN-EDI, Professor of Economics at Bard College, Research Scholar at The Levy Economics Institute, and Senior Research Associate at the Center for Full Employment and Price Stability

Top 25 Heterodox Economics Books — Lars P. Syll

Chronological order. Randy Wray and Stephanie Kelton each make the list.

Lars P. Syll’s Blog
Top 25 Heterodox Economics Books
Lars P. Syll | Professor, Malmo University

Claims that mainstream economics is changing radically are far-fetched — Bill Mitchell

I have received several E-mails over the last few weeks that suggest that the economics discipline is finally changing course to redress the major flaws in the curricula that is taught around the world and that perhaps Modern Monetary Theory (MMT) can take some credit for some of that. There has been a tendency for some time for those who are attracted to MMT to become somewhat celebratory, even to the point of declaring ‘victory’. This tendency is not limited to the MMT public who comment on social media and the like. My response is that we are probably further away from seeing fundamental change in the economics profession than perhaps where we were some years ago – after the GFC and in the early years of the pandemic (which continues). My answer reflects the incontestable fact that the make up of faculties within our higher education systems has not changed much, if at all, and the dominant publishing and grant awarding bodies still reflect that mainstream dominance. There is still a lot of work to be done and a lot of ‘funerals’ to attend (à la Max Planck)....

Summary: Nothing is going to change while the same clique remains in power and controls the educational and publishing process. Same in politics, although it is much more difficult to control the narrative that serves as an instrument of control than the narrative in terms of which the public understands economics. Heterodox economics has a long way to go in disrupting and eventually replacing this "Econ 101" narrative that firmly rules the collective mindset.

There is much more in this post than the title and lede paragraph would suggest.

Here is an example.

[Angus] Deaton then admits that “I have recently found myself changing my mind, a discomfiting process for someone who has been a practicing economist for more than half a century.”

How so?

Well,

1. He now says that the dominance of the “virtues of free, competitive markets” has meant that mainstream economics has ignored corporate power.

He wrote: “Without an analysis of power, it is hard to understand inequality or much else in modern capitalism.”

That is, without beginning with class conflict, an analyst has zero chance of gaining an understanding of the dynamics of capitalism, where capital seeks to influence outcomes in any way that advances their cause to retain their hegemony.

But if we introduced that into economic analysis there would be no mainstream elements worth retaining.

The dominance unit of analysis in mainstream economics is the individual.

Society is not considered.

Collectives are not considered.

Conflict is played down.

And when power does come up in mainstream economics the focus has been of trade unions as perverting the free workings of the labour contracting process. 

It continues.

This inquiry requires distinguishing two kinds of approach to economics.

1. One based on a "for-profit model" which assumes that a "free market" maximizes efficiency so that everyone gets more of a growing pie, which increasing inequality belies.

2.  The other based on a "fo- purpose model" that is designed and operated as the life-support system of a society. 

The former is a purely economic model while the latter is a socio-economic model that incorporates everything relevant, considering not only economics but also economic sociology and anthropology, economic geography, and comprehensive history, as well as psychology and evolutionary theory. Moreover, the scope of economics in a for-purpose model needs to include so-called heterodox approaches to economics in addition to the now dominant conventional model on which neoliberalism is based and which delivers ongoing control to the wealthy and powerful, creating plutocratic oligarchy in the place of actual democracy and government of the people for the people and by the people.

William Mitchell — Modern Monetary Theory
Claims that mainstream economics is changing radically are far-fetched
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Will BRICS launch a new world in 2024? — Pepe Escobar

BRICS doubled its membership at the start of 2024, and faces huge tasks ahead: integrating its newest members, developing future admission criteria, deepening the institution's groundings, and most importantly, launching the mechanisms for bypassing the US dollar in international finance.

The financial plans are toward the end of the post. No details yet, but a plan is supposed to be presented at the BRICs meaning in the fall of this year. An alternative BRICs currency is not being planned at this stage when BRICs is just getting off the ground and has yet to be adequately institutionalized yet itself. It still just "a club" at this point. Lots of work to be done, especially with many more countries already lining up for membership.

The Cradle

Will BRICS launch a new world in 2024?
Pepe Escobar

Joe Stiglitz really should not talk about modern monetary theory when he so obviously has no clue about what it actually says — Richard Murphy

Joseph Stiglitz makes freshman mistakes about MMT in addressing the House of Lords Economic Affairs Committee on the sustainability of the UK’s national debt. Richard Murphy calls him out on it.

Funding the Future (formerly Tax Research UK)
Joe Stiglitz really should not talk about modern monetary theory when he so obviously has no clue about what it actually says
Richard Murphy | Professor of Practice in International Political Economy at City University, London; Director of Tax Research UK; non-executive director of Cambridge Econometrics, and a member of the Progressive Economy Forum