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- A Fairy Story
- A Lesson in Economics from Stephanie Kelton !
- A looming demographic time bomb?
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- An Independent Scotland will need its National Debt!
- Are Government Bonds Just Another Form of Money?
- As an online economic discussion grows longer, the probability of a comparison involving the Weimar Republic or Zimbabwe approaches 1
- “All of the economic research that allegedly supported the austerity push has been discredited”
- Balancing the Budget !
- Big Scary Numbers #2: Everyone in the UK owes £34,281.54
- Big Scary Numbers: Like the UK National Debt is £2,228,300,000,000
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- Can Commercial Banks Create Money out of Thin Air? #3 The “creation of money” by private banks in the process of lending leads only to the removal of money from the economy
- Can commercial banks create money out of thin air? (2)
- Can government debt ever be termed good, bad or irrelevant?
- Classical economists don’t understand real people or real economies.
- Do we need to balance our books in Australia? Yes, maybe, except they already are!
- Doctor Who and the Dalek invasion of Planet Earth 2150. The MMT version.
- Economic Imperialism: Fact or Fiction?
- Ed Balls Promises to Wreck the UK Economy by 2020
- European lemmings!
- European lemmings!
- Eurozone electors have been sold a lemon!
- Follow me on Twitter?
- Future Funds and a Biblical story.
- German euros and Greek euros. Are they really the same?
- Germans don’t understand how currency unions need to function.
- Germany vs Greece. The end game?
- Germany vs Greece: The battle commences!
- Greece hasn’t got a debt problem. It has a lack of growth problem!
- Greek debts cannot be repaid in euros!
- Help! Australia is Running out of Money!
- High Unemployment in Britain is its own Government’s Fault. No-one else’s!
- How come that nearly everyone, gets it all wrong on money and the economy?
- How to Balance the Government Budget. The MMT way!
- How to Balance the Government Budget. The MMT way! (Part 2)
- How to win and lose elections
- How to win and lose elections. (2)
- I don’t promise to pay the bearer on demand… but we’ll give you two fives for a ten!
- If Dollars and Pounds are Really IOUs it Must Logically Follow that Government Debts Need Never be Repaid!
- Is there really a “skills shortage”?
- John Quiggin, MMT and Russia
- Keeping it Simple
- Loan repayments destroy credit money. Right? Wrong. They don’t.
- Loan repayments destroy credit money. Right? Wrong. They don’t. (Part2)
- Loan repayments destroy credit money. Right? Wrong. They don’t. (Part2)
- MMT – Economics for the Political Right?
- MMT Humour
- MMT Humour – Money and Babies
- MMT is gaining followers!
- MMT: The antidote to nonsensical economics.
- MMTers: Does Adair Turner have a point?
- Money, Government Bonds, and Quantitative Easing
- More on why fiat currencies have a value.
- Muddled Thinking Watch # 3 Hugh Pym of the BBC with his coloured sweets
- Muddled Thinking Watch #2: The Bank of England is wrong… in its claims QE creates no inflationary pressure writes Andrew Lilico
- Muddled Thinking Watch #4: “British economy too reliant on people spending money” Christine Lagarde IMF!
- Muddled Thinking Watch #5: “Increase taxes to balance the budget, the revenue well is not dry” Greg Jericho. The Guardian.
- Muddled Thinking Watch #6: Trade figures show long road ahead to rebalance Britain’s economy. Larry Elliot. The Guardian
- Muddled Thinking Watch #7: Chuka Umunna on Labour’s pre-GFC Deficit
- Muddled Thinking Watch: “We will need decades of austerity not years” writes Philip Booth in the Daily Telegraph
- Nationalisation Costs Nothing and Privatisation Raises Nothing!
- Neo-liberal thinking!
- Neo-Liberalism virus infects the UK Labour party! They want a government surplus without a trade surplus!
- Never mind the deficit just vote for the recovery!
- No government debts need ever be repaid !
- Note to the beancounters of this world: If you plant beans, you can grow more beans!
- On BBC tv NEWSNIGHT
- One (or maybe slightly more) Line Responses to Common Neo-liberal Arguments
- Positive Money : A Fallacy Built on a Little Known Truth. (Part 1)
- Positive Money : A Fallacy Built on a Little Known Truth. (Part 2)
- Positive Money : A Fallacy Built on a Little Known Truth. (Part 3)
- Revaluing the Swiss Franc
- Spending = Income! The Government needs to run a deficit to balance the books!
- Stand by for the next UK crash! ETA 2016
- Steve Keen Explains why Quantative Easing is not Inflationary and can’t simply be Considered Money Printing.
- Tesco announces plans to open 40 new skips across country
- The British left needs to discuss more than the UK’s membership of the EU.
- The Concept of Money Speed. Fast and Slow Money.
- The Earth is not flat!
- The economics of a budget surplus: Something to think about before making rash promises
- The EU: Progressive or Reactionary?
- The Euro Cannot Survive Without Greece!
- The Euro could work so why doesn’t it?
- The Government isn’t living beyond its means!
- The Half-Life of Money
- The Japanese own their own debt so they don’t have a problem. Right?
- The National debt: Is it a bad thing and is it too large?
- The world owes $57 trillion. Who the F*** to? Mars? Jupiter?
- The world owes $57 trillion. Who the F*** to? Mars? Jupiter? #2
- Thoughts on the Euro
- Three Sector Balances Haven’t Gone Unnoticed by the Economic Mainstream
- Tony Benn (1925 -2014) An honourary MMTer?
- Tony Benn: Every time I see a person in a cardboard box in London I think that person is a victim of market forces!
- UK Debt is a Myth!
- Unemployment, Currency, Taxation and the Job Guarantee ! The MMT view.
- Unfunded Promises? No such thing!
- Want a Budget Surplus? Easy. Devalue the Pound!
- Want to make your business card worth something? Easy. Start a protection racket!
- Warren Mosler’s Department Store Analogy – An Extension
- Warren Moslers 7 Seven Deadly Frauds of Economic Policy #1
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- Warren Moslers 7 Seven Deadly Frauds of Economic Policy #3
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- Warren Moslers 7 Seven Deadly Frauds of Economic Policy #6
- Warren Moslers 7 Seven Deadly Frauds of Economic Policy #7
- Wasting Resources and Wasting Money. Which is worse?
- What Is A Government Bond?
- What is the National Debt? A Ultra Short and Simple Explanation.
- What the Government don’t want you to know about taxes! But it’s easy enough to work out anyway.
- When Joe says he wants a surplus, he means for government but a deficit for everyone else!
- When Joe says he wants a surplus, he means for government but a deficit for everyone else!
- Who controls the economy?
- Who’s running the smarter economy: the UK or Germany?
- Who’s running the smarter economy: the UK or Germany? #2
- Why do they lie to you?
- Why Governments Can’t Choose to Run Balanced Budgets #2
- Why Governments Can’t Choose to Run Balanced Budgets.
- Why not give control of the fiscal deficit to the Bank of England?
- Why, sometimes I’ve believed as many as six impossible things before breakfast. (or what’s so hard about MMT)
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There is at last some evidence that the political mainstream is coming around to the idea that “places {in the same currency zone -PM} in deficit have to be easily financed by places in surplus”. At least there is, if we can consider John Redwood, a British Conservative MP, to be representative of the mainstream. He, himself, may well question that assertion, but nevertheless this recent quote shows that it isn’t just Greece’s Syriza and the political left who are making the argument.
John Redwood is, of course, meaning Germany although the same argument would apply to Holland who run an even bigger surplus, as a percentage of GDP than Germany. The Germans were always happy to finance their customers when they used the DM. They’d buy up the treasury bonds of the deficit countries, like the UK and US, and that way their surpluses were recycled to their customers by the process of government deficit spending. So why the problem now? From their POV now, they should be even keener to do that. It would keep “their” trade zone healthy. They could impose conditions , of course, but there would be no reason to impose such stringent conditions as they do.
They seem wedded to the idea that internal devaluations are now needed in the peripheral countries of the Eurozone. General devaluations are no longer possible within the common currency zone. But can internal devaluations work? We know external, or general, devaluations can work. Recently the Canadian dollar has fallen by about 20% against the US dollar. This isn’t particularly noticeable to Canadians until they cross the border into the US. Then they realise that their wages and salaries are now worth 20% less, in terms of US$, than before. Canadian prices, at least the ones unaffected by import costs, such as rents, in are now 20% less too. Imports from the USA are now 100*(0.2)/(1-0.2) =25% more expensive.
This shift is necessary for the Canadian economy to adjust to changing world conditions. But what would have happened if Canadians used the US$? Theoretically, if Canadians had reduced all prices and all wages by the same amount, and IF spending patterns were left unchanged, the outcome would be the same. I’ve used the big IF because IF prices were falling fast then the real level of interest rates would be very high, even if they were nominally zero, and which would make it irrational for any individual to spend more than they had to.
But would that have really happened? If Canadian companies had faced falling demands for their products, they would do what all companies do. They’d cut back. But there wouldn’t be pay cuts and price cuts. Maybe just no pay rises and no price rises. They’d lay off some of their staff and stop recruiting others. They would adjust to being 20% (or close to it) smaller in this way. That would be repeated right through the Canadian economy which would end up 20% smaller too. Unemployment would skyrocket and the US media would no doubt be making negative comments about the Canadians, especially if they’d dared say it was even partially the USA’s fault.
That’s exactly what’s happened in Greece, Spain and elsewhere. Except of course it is the Euro not the US dollar which is causing the problem. Economists, of the classical variety, will argue that this should not have happened. Some will be in complete denial and will argue that it can’t have happened, or if it has, it must be due to some other factor. Lazy Greeks maybe? They can , of course, show nice mathematical models of how an ideal economy would be able to restore its competitiveness if only people would just behave rationally – according to their definition of rationality. But real people behave rationally as they themselves see it, not how anyone else might see it. That needs to be understood by real economists too. Including real German ordo-liberal economists!
So instead of imposing austerity on countries like Greece and Spain, to force internal devaluations, the Germans need to find some new economic advisers who can come up with some other way to equalise the money flows. Otherwise, their dream of a united Europe will become ever more nightmarish as time passes.