Fiscal money: one for the wonks

Published by Anonymous (not verified) on Fri, 08/09/2017 - 4:53pm in



Social Europe had an article by Yanis Varoufakis yesterday on what he calls ‘fiscal money’. This, he argues, would be government rather than central bank created money. The idea is far from straightforward on first reading, but that’s true of most ideas about money.

The theme is, however, important. First he is saying a shortage of government debt is crippling existing money supply issues because, as he rightly argues, government debt is now effectively money.

Second, he is saying that this is destroying any real notion of central bank independence because what they are supposedly controlling – the money supply – is no longer within their effective control.

This, thirdly, means that he thinks (as I do) that the whole question of central bank independence is now de facto in doubt: if they are not independent of bond creation and debt policy then they are not as a matter of fact independent.

But (and here’s the twist) he argues that removing central bank independence may not be possible for political reasons. In that case his suggestion is that it is better to just let it wither and instead take back the whole issue of money creation for the government itself.

To this point I get his logic. Whether he is then right to argue that this new money should be issued for advance payment of tax is where, as yet, I am not convinced of his argument, not least because of the extraordinary discount rates he suggests should apply for reasons I cannot fathom as yet. I welcome his explicit linkage between money creation and tax payment. But thereafter I am going to have to muse on this. There seem to be so many simpler solutions than the one he is suggesting that I cannot see the merit in his proposal. But he’s a clever guy: maybe I have missed the point, of just need another coffee as yet.

Comments welcome.



Published by Anonymous (not verified) on Fri, 08/09/2017 - 8:21am in



August is the latest addition to the Syll-Meyer family. Four days today. And yes — Strindberg is one of our favourite writers …

Fed Watch: The Times They Are A-Changin'

Published by Anonymous (not verified) on Fri, 08/09/2017 - 2:00am in

Tim Duy:

The Times They Are A-Changin' , by Tim Duy: The Federal Reserve is now destined to get a dramatic makeover in the next few months. That is assuming that the Trump administration carves some time out of their busy schedule of managing chaos to nominate more governors. And the Senate finds the time to confirm those nominations.

Until the time the administration and Senate get their acts together, the balance of power at the Federal Reserve will shift to the regional presidents. And that could put monetary policy on a less certain course over the next year as doves on the FOMC are replaced with hawks and the Board lacks sufficient person-power to hold a steady line.

The Board of Governors of the Federal Reserve is supposed to have seven members. At the beginning of the Trump era, two spots were open. Then former Governor Daniel Tarullo resigned. That left four members and three openings.

Today we learned that Vice Chair Stanley Fischer will soon depart, on or around October 13 of this year. The stated explanation for his departure is "personal reasons." I fear this means a serious health issue. If so, my thoughts and prayers go out to him and his family.

That leaves three members and four openings. To give a sense of what this means operationally for the Fed, take a gander at the Board Committee assignments:


Federal Reserve Governor Lael Brainard is serving on SEVEN committees! Federal Reserve Governor Jerome Powell is on FIVE. You might think he is slacking, but he is the chair of those committees. Fischer currently has four assignments. Unless we get some new governors soon, Brainard and Powell will have to step it up a bit more to cover for him. I am thinking they are overworked. Just a bit.

Hats off to Brainard and Powell. Committee work is some of my least favorite work.

Who am I kidding? It is my least favorite work.

So now we are down to three governors and five regional presidents on the FOMC. At least in theory, this means the regional presidents can roll the governors on policy votes. Which means I have to start taking the presidents a little more seriously. Because in all honestly when the Board is fully staffed, that is where the power resides. And there is only so much time in the day to read speeches. The presidents talk a lot (but will the come speak at my events in Portland, a little hop from San Francisco - noooo), the governors too little.

Moreover, the Board generally offers a certain consistency of thought across years, whereas the regional presidents on the FOMC rotate. So next year, for example, the torch will pass from the dovish Minneapolis and Chicago Presidents Neal Kashkari and Charles Evans to the more hawkish San Francisco and Cleveland Presidents John Williams and Loretta Mester. Also added will be the still-to-be-announced Richmond Federal Reserve President, a hawkish spot in recent years.

The tide might turn on the hawks this year though, as it is easy to tell a story where Chair Yellen, Powell, Philadelphia President Patrick Harker, and New York President William Dudley all support a December rate hike while Brainard, Kashkari, Evans, and Dallas President Robert Kaplan oppose. What fun would that meeting be?

Of course, Randy Quarles is waiting in the wings for Senate confirmation, so perhaps he would tip the balance to the hawkish side. Marvin Goodfriend is rumored for another open position, but has yet to be nominated (I can see both hawk and dove in his record, but I am thinking he will lean hawkish). So it may be that by the beginning of the year the voting power will tip back to the Board, backed by a fairly hawkish rotation of presidents. So if the doves want to take a longer pause before hiking rates again, they need to ensure Yellen is on their side going into the end of the year.

Speaking of Yellen, a decision on the Chair will soon need to be made. Yellen term expires in February of next year. Trump has toyed with the financial press by claiming she is in the running. I hope this is true, but Trump appears more interested in wiping the slate clean of Obama appointees than anything else. And she would be the pro-regulatory fly in the ointment, opposing Trump's preferred deregulatory agenda. So I can't get on board the Yellen train just yet.

White House economic advisor Gary Cohn had been thought to be in the front-running for the spot, but the latest word is that he tanked that opportunity with his frank (but belated) criticism of Trump's handling of the Charlotsville incident. What a way to go - catching it on one end for not speaking out soon enough and then, after already having lost that battle, grows a conscience and then catches it on the other end. Long story short, the White House is scrambling for a new name - and now need to get a replacement for Fischer (who could have stayed after his term as Vice Chair ended).

The Washington Post is reporting that Powell could be up for the job. That would be a good pick in my opinion. Former Governor Keven Warsh is also reportedly in the running. He has something few can match: Trump's childhood friend Ron Lauder is Warsh's father-in-law. It's not what you know, it's who you know. My feelings about Warsh are not warm.

Also, to add a bit more excitement into the mix, Yellen can stay on as Governor even if she is not the chair. Would she stay? Maybe not. Maybe. No chair has stayed since Mariner Eccles. Maybe it is a good time for one to stick around a few more years.

Bottom Line: Phew. I think that is the current state of play. Many potentially significant changes happening at the Fed over the next several months, and it is hard to predict how it will all end. All we know for now is a reported debt-ceiling deal removes the final potential obstacle to balance sheet reduction this month. That first step of unwinding the quantitative easing of the crisis years has wide support at the Fed; central bankers would like to get it underway before leadership changes begin in earnest.

Bostadsbubblan spricker!

Published by Anonymous (not verified) on Fri, 08/09/2017 - 1:24am in



Prisuppgången på bostäder i Stockholm de senaste 20 åren är unik i världen … Nu har fastighetsprofessorn Hans Lind och stockholmaren Fredrik B Nilsson skrivit boken “Att förstå bostadsmarknaden genom historien om den ofrivillige bostads-karriäristen” … I boken resonerar Hans Lind, som är professor i bygg- och fastighets-ekonomi, utifrån forskning och vetenskapliga teorier kring Stockholms […]

How the Energy Information Administration guestimates keep oil prices subdued

Published by Anonymous (not verified) on Fri, 08/09/2017 - 12:56am in



The weekly figures have been much higher than what the monthly data reveal only later. And remember, it is the monthly data that tends to be more accurate.

Milton Friedman’s permanent income hypothesis — so wrong, so wrong

Published by Anonymous (not verified) on Thu, 07/09/2017 - 10:52pm in



Milton Friedman’s Permanent Income Hypothesis (PIH) says that people’s consumption isn’t affected by short-term fluctuations in incomes since people only spend more money when they think that their life-time incomes change. Believing Friedman is right, mainstream economists have for decades argued that Keynesian fiscal policies therefore are ineffectual. As shown over and over again for the […]

Growth, but not as we’ve known it, is an issue we have to face

Published by Anonymous (not verified) on Thu, 07/09/2017 - 6:00pm in



The IPPR Commission on Economic Justice interim report includes much useful data that is well presented (which is crucial). I though this chart telling:

As IPPR say of this:

Economic growth has become ‘uncoupled’ from average earnings growth. We have an economy today that is growing in size but not translating this into higher earnings for a majority of the working population.

As they add:

[The following figure] shows a very striking pattern: a rising share of national income going to labour from the second world war to the mid-1970s, and then a falling one until the financial crisis. This is a trend observed in most developed countries: it suggests a major shift in how modern economies both generate growth and distribute its rewards.

Whatever growth out economy is now seeing is not of the type we have seen in the past. Returns to profit and rents are rising. Rewards for effort expended are falling. A number of consequences follow.

One, of course, is increasing inequality.

Another is the increasing despair faced by many, more especially in the younger parts of society, about ever having any financial security.

But most particularly it is now very obvious that GDP is simply not a measure of well being for most people. Whatever merit it once had for that purpose (and it was always open to question) it is now very obvious that a simple increase in GDP, which has for so long been the goal of Treasury politicians, is of no comfort to most people any more. Indeed, as the gap between divisions in society increases it is actually possible that increasing growth increases the perception of division, and so the social and consequent stresses in society, all of which more than  counteract any apparent material gains achieved.

What then to do about this?

First, abandon GDP as a measure. As Charles Adams of Durham University suggested on this blog yesterday a much more useful goal for measuring economic well-being would be median wage income. It must be median and not mean wage because the mean is skewed by high pay and inequality; the median is not. And it must be wages because most do not own significant capital in this country and to exclude capital returns is, then, vital.

Second, inequality must be tackled, by progressive income taxes, wealth taxes, the benefits system, an enforced minimum wage (which we do not have at present for all practical purposes), better skills training and from investment in sustainable work (call it a Green New Deal if you like) anywhere but the south-east.

Third, the focus on the abstract – that is both money and the statistics derived from its flows – has to be replaced by a concern for the human story behind it.

That is what economic justice is about. These two charts show why it is needed.

Hurricane Irma and the UK’s Caribbean tax havens

Published by Anonymous (not verified) on Thu, 07/09/2017 - 4:19pm in

Hurricane Irma is continuing to batter the Caribbean. At a human level there can only be concern for tall those affected, and a desire that all that can be done to restore normal life in the places impacted will happen.

But the Caribbean is not a politics free zone, and nor is Hurricane Irma. I will leave aside the obvious global warming issues and the politics of that. I will mention instead that many of the places affected are tax havens. And many of them are British.

I sincerely hope that the UK government does supply all the assistance required to these places, as they will also do to those other places without such support. But I make the point that if we are to honour our responsibilities, then so should they. The British Caribbean tax havens can only exist because of the guarantee that the UK supplies, the legal system that the UK supplies and the regulation that we support. There is a cost to that. We will bear ours, but it’s not unreasonable to expect that those places who need us to do so respond in kind. That means they deliver accounts on public record, registers of beneficial ownership of companies and trusts for all to inspect and new regimes of transparency in all that they do.

And for those who think this isn’t the time to ask I would point out that even neoliberals think that the role of government is to act as a back stop. When the governments of the UK’s Caribbean tax havens rely on us to take that role then now is precisely the time to remind them of their reciprocal responsibilities, whilst continuing to supply all the support that is needed.

Note: This blog has been referenced, and largely reproduced, in The Guardian this morning.

Media Lies Exposed Again: Most Misogynist Abuse Comes from the Tories

Mike today put up a piece blowing away another lie that the Tories and their servants in the media have hawking: that the Left is full of misogynists, who harass and abuse women MPs. In fact Amnesty International have published a report showing that the opposite is true: most abuse comes from the right. And the female politico, who most often suffers it is Diane Abbott.

Who in the Left is honestly surprised by this? There are Conservative varieties of feminism, as you’d expect, but feminism, or women’s lib as it was known in the 1970s, is most often associated with the Left. And as the Austrian democratic socialist Marxist, Karl Kautsky argued, socialism is all about equality. This is why they champion the working class, and why left-wing governments, particularly Communist, have encouraged women to enter politics and the workplace, even if their countries’ traditional culture is very sexist, as it is in Russia and some of the countries of the former eastern bloc.

Conservatives, on the other hand, stress the importance of tradition, and despite having given Britain two female prime ministers, Maggie Thatcher and now Theresa May, this usually also means stressing and promoting traditional gender roles. Thus, while the right-wing broadsheets may earnestly discuss the issue of getting more women into the boardroom, and equal pay, the Daily Heil has been telling its female readers that stable families, and indeed western civilization as a whole, needs women to concentrate on staying at home to raise children, rather than both pursuing independent careers. The image the right projects of feminism is of angry misandrists, which has been a factor in why so many young women a few years ago rejected the term ‘feminism’, even when they had strong feelings about winning equality and rejecting sexism.

There’s also more than a little racism on the Tories’ side as well. The Tory right has always had links to Fascist right, including inviting members of central American death squads over to their annual dinners. A few days ago I put up a piece about Owen Jones’ video on YouTube, in which he commented on an odious conversation by the Tory youth movement, Activate, about gassing chavs and shooting peasants. This wasn’t the first time they had made Nazi comments and bullied the poor and underprivileged by a very long chalk. Jones discussed some prize examples of their foul behavior. This included the members of Oxford University Conservative society goose-stepping around like the real Nazis, singing songs about ‘Dashing through the Reich … killing lots of ****’, the last a very unpleasant terms for Jews. Their comrades north of the border ain’t no better either. This crew thought it would be jolly fun for one of them to dress up as a slave master, while another cringed before him as a slave. It wasn’t that long ago that the Tories in Scotland were known as the Unionist party, and their antics and Thatcher’s complete dismissal of the country was a large factor in the decision of so many Scots to vote for the SNP.

As for the Tory press, they’ve been consistently against coloured immigration since Windrush. And long before then, in the late 19th and early 20th centuries they were busy campaigning against allowing ‘aliens’ – that is, eastern European Jews, to enter this country as asylum seekers fleeing the pogroms in eastern Europe. This anti-immigration stance has frequently been blatantly racist. Private Eye, when covering the prosecution of the Scum yet again for racism by the Press Complaints Commission, as it then was, noted that the wretched paper had had 19 judgements against it previously for its racist content. I can remember how the Torygraph, Mail and Express back in the 1980s railed against ‘unassimilable’ immigrants and the way they were forming little ghettoes.

Racism became a major issue in that decade following the 1981/2 riots, and the publication of government reports that revealed a massive culture of institutional racism and Black deprivation in Britain. To the Tory press, however, the riots were all the fault of racist Blacks. While there have been Black and Asian politicians before, Diane Abbott was one of the group of very visible Black politicians and activists to achieve public office during the decade, along with Paul Boateng and Bernie Grant, the leader of Brent Council. They were all very vocal in their opposition to racism. Grant died the other year, and I think Boateng more or less vanished into the depths of Whitehall. There are a number of other Black politicos, like David Lammy, Chuka Umunna and Oona King, but Abbott is one of the longest-serving and most reviled. The Scum tried running a Communism scare against the Labour party in the 1987 election, by putting up a two-page spread with the photographs of Labour MPs and candidates, below which was a few brief quotes or comments showing how they were a threat to British society. Red Ken is supposed to have said that he wasn’t in favour of the British army, but wanted the workers to be armed so they could guard the factories. Under Abbott’s was a quote, ‘All Whites are racist.’

That was very much the image she had at the time. She’s supposed to be very keen on tackling racism, because she felt that her mother’s career was blocked because of her colour. This is actually quite likely. But it’s highly questionable that she’s anti-White. Many of the stories the press published about the supposed hard-left extremists in the Labour party at the time were either exaggerations or completely made up. Ken Livingstone, whom the Eye has frequently mocked under the nickname, Ken Leninspart, really did believe in worker’s control. But he was never a Marxist, and in fact worker’s control used to form only a small part of the subjects he discussed with the, um, ‘gentlemen’ of the press. Most of the time it was rather more mundane. But they played up the worker’s control, and attacked it, because it frightened their proprietors and editors, quite apart from the rest of the middle class. The veteran gay rights activist, Peter Tatchell, who was also beginning his career as a Labour politico, was another who was made to appear much more extreme than he was. At one point the papers published a story about him going on holiday to one of the great gay centres on the American west coast. Except that he hadn’t, and didn’t even know the place existed. They also did the same thing to Marc Almond. In his case, they didn’t think he looked sufficiently effeminate, and so retouched his photograph.

Given this long record of telling porky pies about radical politicians, you can’t be sure that Abbot made the above comment, or that it represents her views now. But as Sid James remarked to Tony Hancock in ‘The Scandal Magazine’, mud always sticks, boy. They’ve carried on portraying her as a threat to White history and culture. A few years ago, the Daily Mail ran a story about how the London borough she represents in parliament decided to replace the paintings in their civic offices. Down came the traditional portraits of the White guys, who had previously served on the council, and up came paintings of Black children.

The story was part of a larger article about her, and didn’t offer any details about this, nor the reasons for the decision. Without putting it in so many words, it was presented merely as Abbott’s coterie of angry Blacks removing Whites from the history of the borough. How this supposed racist anger compares with her appearing regularly alongside Michael Portillo on Andrew Neil’s The Daily Politics, where she appears perfectly calm and genial with her White presenters, as befits a grande dame of British politics, I really don’t know.

Nevertheless, she remains a Tory bete noir, and given the fact that there have always been members of the party, who can’t understand why a Black person could ever object to golliwogs, the Black and White Minstrels or why you can make derogatory comments about Black people’s supposed character defects as a race, or use the unpleasant terms previous generations used to insult them, and it becomes quite easy to see why she should be the target for so much abuse.

As for the supposed sexism in the Labour ranks, there was never much substance to that anyway. It was never more than an attempt by wealthy, entitled right-wing Labour female politicians to smear their male rivals. These women had nothing to offer ordinary working Brits, including women. While ordinary women are finding it difficult to pay the bills and feed their families, thanks to the ravages of neoliberalism, these female politicians simply offered more of the same. More cuts, more privatization, more precarity. But like Hillary Clinton, from whom they got the tactic, they wanted to present themselves as representing women in general, even if in fact they only represented rich, entitled women like themselves. And so just Clinton was outraged by the popularity of Bernie Sanders, these women were infuriated by Jeremy Corbyn. Clinton claimed that she had been vilified by the ‘Bernie Bros’, who didn’t actually exist. And so her counterparts in the Labour party over here decided to follow her, and lie about how they were the victims of savage misogyny from Corbyn and the Old Left.

The reality is the opposite. I don’t doubt that there is racism and sexism on the Left. But there’s far less of it than on the right. But the press are still liars for claiming otherwise.