Bond Economics

Time 2020-06-26 22:03:36

Web Name: Bond Economics

WebSite: http://www.bondeconomics.com

ID:11831

Keywords:

Bond,Economics,

Description:

Work is proceeding on my MMT primer manuscript. One chapter I am working on (in parallel with the labour market analysis) are a discussion of what I view as serious objections to MMT as a theory. Although I want to finish off that chapter later, I am adding to it as I run into interesting criticisms. I discuss a couple of recent entries in this article. Although I do not want to derail my book with lengthy discussions of MMT critiques that are coming from every random direction, I also want to have at least some quotations of critics so that my comments are not viewed as attacks on straw men.[Update: here is a link to this Daniel de Voss article on Twitter wars. The complaints about MMT are weak, providing examples for my complaints about low quality criticism. I certainly will not want to crowd my book with low quality targets like that, but it is fun to read.]My view is that changes in structure in the labour markets that started in the 1980s but kicked into gear in the early 1990s explain the structural breaks in the behaviour of the developed economies that took place in the early 1990s. The advantage of these changes has been the decline in inflation. Although neoclassical economists attribute this change to the switch to inflation targeting (as will be discussed in Section 2.5), I do not think we can assume away the changes to the labour markets. The disadvantage of these changes has been the persistent sluggishness in developed economies.(Note: This is an unedited section of a manuscript that discusses MMT and the upcoming recovery. Although most people focus on fiscal policy stories when discussing MMT, labour market analysis offers a much greater contrast to neoclassical thinking. The section following this one delves into that aspect more deeply,)The politicisation of the pandemic has limited my desire to comment on it. The main risk seems to be a resurgence of infections in the United States, but reporting on this has split on partisan lines.On Twitter, I do updates on the local situation, on the theory that Montreal is a hot spot that did not get as much coverage as New York, and so might be of interest.From the perspective of the disease in Canada, the situation appears to be under control. In many provinces, infections have nearly disappeared, and so there is limited danger of loosening restrictions. The situation in Quebec is a bit rougher, but the problems appear to be concentrated to a few districts on the island of Montreal, as well as the health/senior care system.If we look at the post-1990 era in the developed world, we see a relatively similar pattern: long expansions with relatively low economic volatility, punctuated with short recessions. In fact, in the case of Australia, the expansion was only put to an end by the Pandemic of 2020. However, if we look past the low volatility, we also see that growth rates were relatively low, and employment conditions generally weak.NOTE: This is an unedited excerpt from a chapter within an upcoming manuscript on MMT and the upcoming recovery. The chapter describes the post-1990 expansions, which were characterised by disappointing growth. This sluggishness is explained from the perspective of MMT. This section is an introduction, and is my way of showing how slow growth surprised the consensus - repeatedly. Stephanie Kelton s the Deficit Myth: Modern Monetary Theory and the Birth of the People s Economy (affiliate link) has been a long-awaited book from a Modern Monetary Theory (MMT) proponent that was the Chief Economist for the Democratic Party on the Senate Budget Committee. The book provides a clean introduction to MMT, and how it fits in with fiscal policy and the political process.So far, the book has sold well, and generated discussion and reviews. This is welcome, as by putting MMT on the map, we might see something resembling a debate around it. There has been fairly intense criticism of MMT in traditional and social media as well as financial market commentary for over a year now, and my estimate that over 90% of those critiques were based on beliefs that were largely made up, and quite often the opposite of the MMT view. Other than the old MMT/post-Keynesian internecine conflicts, almost no citations are made of any texts written by academic MMTers.Stephanie Kelton's the Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy (affiliate link)has been published, and is selling like hotcakes.I am close to finishing it, and I have been impressed. I will do a longer article (more impressions than a formal review) in the coming days.Later on, I will be using it as the backup reference for a section on fiscal policy in my MMT primer.Also on the MMT book front, Pavlina Tcherneva has a book on the case for the Job Guarantee out (affiliate link). It has already been released in some European countries, but not available yet here in North America. I will certainly be looking at it when it is available.One recurrent line of discussion I have seen over the years are assertions or questions about currency values that follow this format: if some particular economic event happens, then the currency will rise (or fall). This seems to be the result of all else equal logic, but it is highly misleading. Foreign exchange markets are markets, and prices (exchange rates) should not be expected to follow simple rules. Otherwise, all foreign exchange traders would end up with above average profits, and we would have discovered a private sector magic money tree.As an Amazon Associate I earn from qualifying purchases.See my "Disclaimer" page for my privacy policy as well as advertising affiliate information. Please note that I use Google Analytics, which tracks user data; you will need to look at their documentation to see what they do about privacy. This website also incorporates links that are part of the Amazon affiliate program (which includes the images of book covers); you will need to consult their websites to see what tracking information they use. This blog contains general discussions of economic and financial market trends for a general audience. These are not investment recommendations tailored to the particular needs of an investor. The author may discuss strategies which are wildly inappropriate for retail investors. Any mention of corporate securities are for illustrative purposes only; the author does not make recommendations to buy or sell such securities (and frankly, has no expertise to do so). No warranties are made with regards to the correctness of data or analysis, and some data may be under copyright protection of the original data provider. Past performance is not a predicton of future performance (which should make some bond bulls fairly nervous).

TAGS:Bond Economics 

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