More MMT. Memory Hole Post in Search of St Bill Of Mitchell and St Richard of Murphy. Steve Keens Guide for the Perplexed. #MMT #CircuitTheory #DoublePenetrationGateKeeping #NeilWilson @neilwilson

rogerglewis January 27, 2019 Leave a comment

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May 24, 2018 at 11:10am

Bill Mitchell has a new post “A surplus of trade discussions” responding to some of the criticisms of the MMT position on trade deficits (though he didn’t link to any of them, including my post “Some Preliminary Questions for MMT”). He opens with the proposition that “exports are a cost and imports are a benefit”, and reaches the following conclusion:

When it comes to trade, MMT focuses, initially on the real layer of the analysis.

Thus it is undeniable (and I am surprised to read all those who are torturing themselves trying to deny it) – exports are a cost and imports are a benefit.

Giving some real thing away is a cost. Getting some real thing is a benefit.

That doesn’t equate, as I have been reading the last few weeks, in a conclusion that MMT’s preference is for a nation to have a current account deficit.

It just states the obvious fact that exports, by definition, involve sacrificing real resources and depriving a nation of their use.

Imports on the other hand clearly involve receiving final goods and services where the real resource sacrifice has been made by the exporting nation.

In a world where we produce to consume – not for its own sake – then receiving goods and services is better (real terms) than sending them elsewhere.

Roger G Lewis, Poetry, Philosophy Creative writing and Music

http://henryckliu.com/public_html/page3.html worth a read Under principles of Chartalism, foreign capital serves no useful domestic purpose outside of an imperialistic agenda. Dollar hegemony essentially taxes away the ability of the trading partners of the US to finance their own domestic development in their own currencies, and forces them to seek foreign loans and investment denominated in dollars, which the US, and only the US, can print at will with relative immunity. The Mundell-Fleming thesis, for which Robert Mundell won the 1999 Nobel Prize, states that in international finance, a government has the choice among (1) stable exchange rates, (2) international capital mobility and (3) domestic policy autonomy (full employment, interest rate policies, counter-cyclical fiscal spending, etc). With unregulated global financial markets, a government can have only two of the three options. Through dollar hegemony, the United States is the only country that can defy the Mundell-Fleming thesis. For more than a decade since the end of the Cold War, the US has kept the fiat dollar significantly above its real economic value, attracted capital account surpluses and exercised unilateral policy autonomy within a globalized financial system dictated by dollar hegemony. The reasons for this are complex but the single most important reason is that all major commodities, most notably oil, are denominated in dollars, mostly as an extension of superpower geopolitics. This fact is the anchor for dollar hegemony which makes possible US finance hegemony, which makes possible US exceptionalism and unilateralism.

8mo

Stephen Laughton

The UK, attracting international capital flows to the CIty of London via its tax haven dependencies has also maintained a currency way above what its value would be and should be. Should be? Should be if you want an economy maximising production of real world products, running at full employment and one in which consumption of these real world products is shared according to work done rather than being claimed by rentier income.

https://web.archive.org/web/20171206132602/http://www.3spoken.co.uk/2011/12/double-entry-view-on-keen-circuit-model.html

A Double Entry View on the Keen Circuit Model

Over the last few months I’ve enjoyed Steve Keen’s lecture series on You Tube, which are definitely recommended for anybody wanting a solid understanding of why neo-classical macroeconomics is complete bunkum.

In there is an iteration of Steve’s horizontal money circuit and the tables and equations he uses to build that model. He’s rejigged those models in response to a challenge by Scott Fullwiler to fit the model into double entry bookkeeping tables.

Now Steve is a great speaker, a good writer and formidable mathematician. But I’m afraid he would get a fail in a bookkeeping exam. For something to be consistent with double entry there has to be at least two entries in the journal and the journal must sum to zero. To abuse Minsky’s words: a double entry model with a single entry in it isn’t a double entry model.

So its easy to see why the presentation of this particular model causes a few fireworks in schools of thought who are more fastidious in their bookkeeping.

My background is in Information System design and architecture, with a dose of accountancy thrown in for good measure, and I’ve worked in and around the Free Software movement for over twenty years. So my natural tendency is to look at ways of re-integrating ‘forks’. I believe all the issues commonly complained about in this model can be reconciled by making the tables double entry complaint and extending the model slightly. I hope this will show to all sides that they are talking about the same thing.

And by doing so I am almost certain to upset everybody. Such is life.

First the current tables. This is a copy of table 14.1 in Debunking Economics (similar to table 1 on this post at Steve’s site):