Sir Grappler Truth Teller OAM wrote on Jul 25^th, 2022 at 5:57pm:


The exchange value of a nation's fiat currency is largely (but not exclusively) dependent on the nation's productive capacity, AND the desirability of the nation's  products on overseas markets.

Post WW2, the US dollar has had the privilege of global reserve currency, but Hudson sees the end of this $US status by mid-century, simply because China's real economy is more  productive than the post-industrial,  FIRE economy of the US. China is already the world's largest trading partner with nations in both the developing and developed world 

" In 2013, China became the largest trading nation in the world. The United States previously held that position."

The fascinating history of charging interest on loans.

https://en.wikipedia.org/wiki/Usury

and Thomas Aquina's thoughts:

St. Thomas Aquinas, the leading scholastic theologian of the Catholic Church, argued charging of interest is wrong because it amounts to "double charging", charging for both the thing and the use of the thing. Aquinas said this would be morally wrong in the same way as if one sold a bottle of wine, charged for the bottle of wine, and then charged for the person using the wine to actually drink it.[49] Similarly, one cannot charge for a piece of cake and for the eating of the piece of cake. Yet this, said Aquinas, is what usury does. Money is a medium of exchange, and is used up when it is spent. To charge for the money and for its use (by spending) is therefore to charge for the money twice. It is also to sell time since the usurer charges, in effect, for the time that the money is in the hands of the borrower. Time, however, is not a commodity for which anyone can charge. In condemning usury Aquinas was much influenced by the recently rediscovered philosophical writings of Aristotle and his desire to assimilate Greek philosophy with Christian theology. Aquinas argued that in the case of usury, as in other aspects of Christian revelation, Christian doctrine is reinforced by Aristotelian natural law rationalism. Aristotle's argument is that interest is unnatural, since money, as a sterile element, cannot naturally reproduce itself. Thus, usury conflicts with natural law just as it offends Christian revelation: see Thought of Thomas Aquinas. As such, Aquinas taught "that interest is inherently unjust and one who charges interest sins."

Well, an amazing philosophical examination of money; he certainly knew money is created out of thin air; and that Thatcher's dictum "there is no such thing as a magic money tree" is a simplistic misunderstanding of money. 

Twitter today from Gareth Hutchens, ABC reporter, economics and business:

"My Twitter feed feels like it’s just economists on one side who are defending the system and saying nothing needs to change and everyone is dumb for thinking change is necessary, and then normal people on the other side who are despairing for themselves, their kids, & the planet".

Brain-dead neoliberal economists , that is....

More on the disaster of privatization in employment services.

https://www.theguardian.com/business/2022/aug/06/mutual-obligations-the-money-go...

"In Australia’s welfare sector obligations are ‘mutual’, but profits flow only one way

As jobseekers face ‘humiliating’ tasks to maintain payments, vast network of job agencies rakes in hundreds of millions of taxpayer dollars".

Neoliberalism gone mad.

https://www.crikey.com.au/2022/08/09/labor-the-new-party-of-capital/?utm_campaig...

Labor is now the party of capital. Progressive, social, groovy, but capital’s party it is.
Labor may present itself as progressive and socially conscious, but it has a commitment to capital, and that will drive its actions.

Any reform Labor is associated with will tend to be socio-cultural and individual — gender stuff, assisted dying, etc — rather than socio-economic or political. The pathway opens for Labor to be a fully integrated authoritarian neoliberal party**, increasingly the discipliner of the people it once sought to represent.
  **beginning in the Hawke/Keating era.

Hence the disinterest in lifting the jobseeker rate, while insisting on stage 3 tax cuts benefiting high paid workers. 

As opposed to the ideals of 'Nugget' Coombs, Oz' first governor of the reserve bank, 1960-1968 during the high growth Menzies years):

Coombs's political and economic views were formed by the Great Depression, which hit Australia in 1929 and caused a complete economic collapse in a country totally dependent on commodity exports for its prosperity. As a student in Perth, he was a socialist, but while he was studying at the London School of Economics, he became converted to the economic views of John Maynard Keynes. He spent the rest of his career pursuing Keynesian solutions to Australia's economic problems.

Coombs deplored the breakdown of the postwar Keynesian economic consensus represented by Thatcherism, and in his 1990 book The Return of Scarcity he proposed a Common Wealth Estate to ensure a more equitable distribution of wealth.

Some random questions and answers (via google):

1. Do governments buy their own bonds?
When Fed policymakers decide they want to lower interest rates, the Fed buys government bonds. This purchase increases the price of bonds and lowers the interest rate on these bonds. (We can think of this as the Fed increasing the money supply, which makes money more plentiful and drives down the price of borrowing.)

MMT comment: prof Bill Mitchell supports a central bank zero interest rate policy.

2. Why does the government buy or sell bonds?
If the Fed buys bonds in the open market, it increases the money supply in the economy by swapping out bonds in exchange for cash to the general public. Conversely, if the Fed sells bonds, it decreases the money supply by removing cash from the economy in exchange for bonds.

MMT comment: smoke and mirrors, to hide the process of money creation from the public.

3.Where does Fed get money to buy bonds?
The Fed creates money by purchasing securities on the open market and adding the corresponding funds to the bank reserves of commercial banks. Banks then increase the money supply in circulation even more by making loans to consumers and businesses

MMT comment: The government (with its own treasury + central bank) should directly fund  government spending without borrowing (buying or selling bonds) , the limit of the funding being determined by the nation's productivity as manifested by whatever is available for sale to the government in the nation's currency. 

This what Ross Gittins means by "money printing":

Quote:


Funding the budget by printing money is closer than you think

Article examining the wrong responses of the BofE , to counter inflation:

https://www.taxresearch.org.uk/Blog/2022/08/18/inflation-is-a-passing-phase-what...

Inflation is a passing phase: what we need is help to get through it rather than pain to punish us for it
Posted on August 18 2022,

"The second stage of this is recovery. This could happen in late 2023, but is more likely in 2024. The chance of this relatively short-term recovery depends entirely on the actions taken by the government now. If the plan by the government is to support people with all the help that they need with the aim of keeping people and families well, fit, fed, together and in both their homes and jobs then the recovery stage will be relatively quick. All the foundations for a return to normal will be in place if this is the policy.

Unfortunately, this is not the policy. Tory leadership candidates are saying that they cannot help because there is no money (which we all know to be a lie, because they can create it) whilst the Bank of England is seeking to destroy the chance of people affording heat and food and the prospect of staying in their homes by increasing interest rates. Their intention is to crush spending power when it is already shattered. As a consequence, they want to force business closures and unemployment. They also want to create credit, rent and mortgage crises, all based on making debt unaffordable. In other words, their plan is to leave us in the worst possible place for recovery once prices stabilise, which they will despite, but most definitely not because of, the Bank of England's policies."