Yearly Archives: 2014

The Troika Continues to Harm the Eurozone and the WSJ continues to Miss the Story

Posted on June 3, 2014 by William Black | 4 comments

The European Central Bank’s (ECB) written policy is to maintain the eurozone inflation rate at just under two percent. The ECB has consistently failed to achieve that goal. Indeed, its failure has been growing steadily. The ECB’s failure tells us something enormously important about what is wrong with the eurozone’s economy and the troika’s bleeding of that economy through austerity. The ECB’s increasing inability to even come close to its inflation target demonstrates that demand remains woefully inadequate in the Eurozone – making austerity an insanely self-destructive policy. The Wall Street Journal (WSJ) reported on the ECB’s latest failure in an article entitled “German Inflation Rate Plummets as Manufacturing Slows.”

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Posted in William K. Black

Tagged austerity, ECB, troika

The Troika Attack Italy for Refusing to Bleed the Economy

Posted on June 2, 2014 by William Black | 12 comments

By William K. Black

The title to the latest Wall Street Journal article on Italy is “EU Tells Italy to Adopt More Austerity Measures.” It’s an old, stupid remedy. If you hit your carburetor with a hammer and it doesn’t fix it – hit it harder and more often. Italy is the troika’s carburetor and austerity is its hammer.

The Troika’s Response to Renzi’s Electoral Success: Crush Him

The general context of the troika’s latest act of depravity is particularly interesting. The troika consists of the European Commission, the IMF, and the ECB. The troika’s insistence that the periphery inflict austerity caused not simply a gratuitous second recession through much of the EU but a Second Great Depression in Italy, Spain, and Greece. One-third of the eurozone’s population – 100 million people – was kicked into a Great Depression due to the troika’s long-falsified economic dogmas.

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Posted in William K. Black

Tagged austerity, eu, Italy, Ollie Rehn, troika

The Tories’ Colonial Mindset and Independence for Scotland

Posted on June 2, 2014 by Devin Smith | 5 comments

By William K. Black

Family tradition says my relatives came from Ireland, Scotland, Germany, and Denmark – so I’m probably a typical American mutt. As an Irish-American I learned early about London’s disgraceful treatment of its first colony, Ireland. Indeed, but for London’s malign neglect my Irish relatives would likely never have emigrated and I would not exist. I cannot, therefore, claim objectivity when it comes to the subject of independence for Scotland. While I have no right to tell Scots how they should vote I would personally vote for independence.

My focus is on how the Tories are seeking to intimidate Scots to vote against independence. The point is made in the title of a recent New York Times article: “Scots Are Divided Over Independence, and Its Economic Costs.”

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5 Comments

Posted in William K. Black

Tagged David Cameron, independence, Scotland, UKIP

The 80th Anniversary of the Strike that Freed Minnesota from Tyranny

Posted on June 2, 2014 by William Black | 6 comments

By William K. Black

Teaching makes one feel very old, very quickly. You make a movie or literary allusion and your students stare at you blankly because A Man for All Seasons won all those Oscars decades before they were born. University students know only a world in which women are the majority and make up half the students in law schools and many other professional schools. The idea that women were treated as less than second class citizens is inconceivable to our students.

Tom Frank, the author of What’s the Matter with Kansas? How Conservatives Won the Heart of America, (who has a doctorate in history) writes about how most Democratic Party leaders turned their back decades ago on organized labor. Frank routinely asks progressives what they think about labor unions – and he tells me that the answers are overwhelmingly negative in terms of immediate responses. Eventually, the progressives mention the vital role that unions once played, but that is an intellectual response about a bygone era.

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6 Comments

Posted in William K. Black

Tagged Citizens Alliance, Minnesota, strike, unions

Spain’s “Stimulus” Plan: An Oxymoron Crafted by Regular Morons

Posted on June 1, 2014 by William Black | 1 comment

By William K. Black
(Cross posted from Benzinga.com)

Spain’s conservative government, eager to change the media’s emphasis on its repudiation in recent EU elections, has launched a media campaign stressing its adoption of an aggressive “stimulus” program. Spain’s conservatives – and their predecessors the so-called socialists – are infamous for embracing the troika’s demands for austerity. Why have the Spanish conservatives finally admitted that austerity is a disaster and stimulus is essential? They have not done so. Instead, they have rebranded “austerity” as “stimulus.”

“MADRID—Spanish Prime Minister Mariano Rajoy is planning to launch a €6.3 billion ($8.59 billion) economic stimulus package, a move to keep sky-high unemployment and the risk of deflation from derailing the country’s recovery.

Mr. Rajoy told 200 business leaders at a conference in Sitges, near Barcelona….”

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Posted in William K. Black

Tagged austerity, Ollie Rehn, spain, stimulus, troika

The WSJ Suggests Hollande May Redefine Chutzpah by Complaining to Obama about BNP Paribas – on the 70th Anniversary of D-Day!

Posted on June 1, 2014 by William Black | 7 comments

By William K. Black

I am not a French hater – and there is no “but” to that clause. The Wall Street Journal, however, frequently engages in French bashing. The WSJ has also, unintentionally and unknowingly, suggested that the French may act in a manner that would provide a new humorous answer to the old joke that begins: “What is chutzpah?” The context is that the U.S. and New York state authorities are negotiating with BNP Paribas (a very large French bank) to settle a series of felonies involving primarily sanction-busting – and covering up those crimes.

A political movement has arisen in France opposing any U.S. criminal actions against Paribas. Americans will have no difficulty understanding this political dynamic, particularly because our Department of Justice (DOJ) continues to give a total pass to the U.S. officers who led the accounting control frauds that drove the crisis and prosecutes only foreign financial operations. What is remarkable is the WSJ’s suggestion of how the French Prime Minister Hollande might bring French objections personally to the attention of President Obama.

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Posted in William K. Black

Tagged accounting control fraud, Hollande, Paribas

Kenneth Rogoff is an Even Worse Criminologist than Economist

Posted on May 30, 2014 by William Black | 3 comments

By William K. Black

Kenneth Rogoff, the creator of the fictional 90% budget deficit cliff, is back spreading new myths. He has now ventured into white-collar criminology, without the benefit of any study of criminology. The results are yet another embarrassment for Rogoff. The title of his article is “Paper money is unfit for a world of high crime and low inflation.”

I’ll leave his claim about removing the “lower bound” on central bank monetary policy to others. I note only that he ignores the readily available (and superior) alternative of fiscal policy.

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Posted in William K. Black

Tagged ecuador, Kenneth Rogoff

Will the EU’s Austerity Prove as Radicalizing as the Washington Consensus?

Posted on May 30, 2014 by William Black | 5 comments

By William K. Black

President Rafael Correa of Ecuador owes a triple debt to John Williamson, the economist who coined the term “the Washington Consensus” in a paper he first presented in 1989. His paper is open about the focus of that consensus: Latin America. Latin America was to be transformed through policies on which the United States Government, the International Monetary Fund (IMF), the World Bank, and the Washington “think tanks” had reached a consensus. Those policies had four key components.

Require a sufficient stream of payments of interest by Latin American debtors to U.S. banks to ensure that the banks would not have to recognize large losses on their loans
Require Latin American nations to adopt austerity
Require substantial deregulation, and
Require substantial privatization

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5 Comments

Posted in William K. Black

Tagged accounting control fraud, austerity, washington consensus

Taxes and the Public Purpose

Posted on May 29, 2014 by L. Randall Wray | 17 comments

By L. Randall Wray

In previous instalments we have established that “taxes drive money”. What we mean by that is that sovereign government chooses a money of account (Dollar in the USA), imposes obligations in that unit (taxes, fees, fines, tithes, tolls, or tribute), and issues the currency that can be used to “redeem” oneself in payments to the government. Currency is like the “Get Out of Jail Free” card in the game of Monopoly.

Taxes create a demand for “that which is necessary to pay taxes” (and other obligations to the state), which allows the government to purchase resources to pursue the public purpose by spending the currency.

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17 Comments

Posted in L. Randall Wray

Tagged MMT, Modern Monetary Theory, predistribution, public purpose, redistribution, Taxes

Seeping into the Mainstream?

Posted on May 29, 2014 by Stephanie Kelton | 4 comments

By Stephanie Kelton

Scott Fullwiler spent part of the afternoon reading (and reacting to) a paper that John Cochrane just gave at a conference on central banking in Stanford, CA. I haven’t read the paper yet, but judging by Scott’s reaction on Twitter, there’s lots to like about it. (Mostly because it appears to draw heavily from a broad swath of at least a decade of published work from MMTers.)

We’ll have to wait for Scott’s forthcoming post to see just how close the parallels are (and how much Cochrane 2014 departs from Cochrane 2009). It will be interesting, particularly because several years ago Cochrane wasn’t interested in garnering insight from outside the mainstream. “Every now and then,” he confessed, “there’s an excluded subgroup that turns out to be right.” But he readily admitted — nay, disparaged — “I haven’t read their specific work. I’m busy, and I try to read what is considered interesting and valid.” Being right matters, and I think that’s why MMT has begun to seep into the mainstream. The risk (though this is not how Noah sees it) is that “all the interesting heterodox ideas [will] quickly get incorporated into the mainstream in some slightly bastardized form,” leaving the discipline as a whole only marginally better off, while those who did the heavy lifting remain at the margins.