Recent Items

Randy Wray: The World’s Worst Central Banker

Posted on by

Yves here. I guarantee some readers will recoil at Wray’s refusal to depict inflation as Economic Enemy Number One. Even if you think his praise of the central banker in question is overdone, consider: would you rather be an ordinary worker in her country, or in, say, Ireland, Latvia, or Spain right now?

By Randy Wray, Professor of Economics at the University of Missouri-Kansas City and Senior Scholar at the Levy Economics Institute of Bard College, New York. Cross posted from Economonitor

OK, I know you think this is yet another critical column on Chairman Ben Bernanke.

Nay, I just returned from a conference held by the Central Bank of Argentina—“Central Banks, Financial Systems and Economic Development” held in Buenos Aires on October 1st and 2nd. Yours truly gave a talk on Modern Money—and the powerpoint will appear below (not magically—I’ll probably need professional help so your patience will be required).

In attendance were what appeared to be about 200 central bankers from across the globe, plus a smattering of reps from international financial institutions like the IMF and as well a few from academia.

An unusually large number of presentations were given by economists who can loosely be charged with heterodoxy: Jamie Galbraith, Anwar Shaikh, Stuart Holland, Jane Knodell, Jayati Ghosh, John Weeks, William Lazonick, Dirk Bezemer, Fernando Cardim de Carvalho and many others.

What the heck was this motley crew doing at a Central Bank conference? One cannot imagine them at Jackson Hole.

Well, here’s the deal. The head of the Argentine Central Bank—Mercedes Marco del Pont–has been awarded the distinction as “the world’s worst central banker”. By whom, you might ask? Well, by Wall Street’s sycophantic press. Wall Street hates Mercedes. The woman, not the car.

Why? Well, for one thing she’s a woman. Wall Street hates female heads of central banks (take a look at the list of the top ten worst—3 out of 10 are female; then take a look at the 10 best, of which all but one are males.)

But that’s not anywhere near the most important reason. Ms. Marco del Pont kicked off the conference with a rousing talk, defending her central bank’s recent move away from a single mandate (inflation target) to pursuit of multiple mandates: financial stability, employment creation, and economic development with social equity.

Boy does Wall Street hate that.

Stability? Where’s the profit in stability? Employment creation?—Wall Street is a job destroyer.

Economic development? Nay, Wall Street wants de-development, a return to a feudal economy as finance plays the role of wealth-extracting feudal lord.

Social Equity? You’ve got to be pulling my leg. Wall Street is overseeing the greatest concentration of wealth in the hands of the new oligarchy that the world has ever seen.

No wonder they hate Mercedes.

Moi? I’ve seen the perfect replacement for Ben Bernanke when his current term ends. I do not know whether a foreign national can be picked to head the Fed, but if not we ought to be working on removing the restriction. Governor Marco del Pont’s presentation was the most eloquent defense of the multiple mandate that I’ve seen. She laid out the need to rethink the role of central banks—to push them to directly provide finance for development and to ramp up their historic role of cooperating with the treasury to finance needed public spending.

When she mentioned her “award” given by the lapdog press, she clearly relished the battle. Later that evening I (unfortunately) was seated at dinner with a former IMF economist, now a central banker in India. He confidently predicted that Argentina will be “kicked out” of the IMF any day now because of the incompetence of its government and especially of its embarrassing central bank.

(Sure enough, the IMF’s Christine Lagarde has threatened a “red card”—soccer speech for expelling a player—to which Argentina’s feisty President Kirchner replied: “My country is not a soccer team. It is a sovereign country and, as such, is not going to accept a threat.” If there is anything Wall Street hates more than a country with a female Governor of its Central bank, it is a country that puts women in charge of both government and the central bank!)

My immediate thought as I listened to the Indian central banker’s smug assessment of Argentina’s fate: that’s like being kicked out of a motorcycle club or drug cartel for insufficiently enthusiastic raping and pillaging of innocents. There are some clubs you just don’t want to be a member of.

The twinkle in the Governor’s eye told me she appreciates the irony that her central bank’s concern with the 99% is what makes her incorrigible in the eyes of the IMF’s flunkies.

(Oh, and as an aside, this IMF official/India Central Banker went on to claim there is no longer any poverty in India, that the caste system is actually a thinly disguised scheme for social advancement—sort of like Aristocratic Polo Clubs for everyone–and that India is the greatest land of opportunity the world has ever known, with all Indians “free to choose” whether to be rich—or poor—according to individual tastes, and thus the globe’s most perfect example of democracy to which all others ought to aspire. Such is the ecclesiastical orthodoxy we mortals encounter in central banking circles.)

So what is the basis of the international attack on Argentina, aside from the fact that its leaders are thumbing their noses at the IMF? Well, Argentina has “high” inflation. How high? Well, it depends on how you measure it. The government’s numbers come in around 10%; the right wing press claims 25% or so. To be sure some of this is just about measurement: inflation is measured as growth of some price index so it matters critically what you put into the index, how you measure inflation of the individual components, and what weighting you give to each. This always surprises students—who think that the CPI numbers are handed down by heaven. In truth, they are constructed, by fallible humans, and are always subject to controversy. (If you want to read up on construction of the USA CPI, you can take a look at this)

But here’s the more important point. Argentina has been growing very quickly since its financial crisis in the early 2000’s. It abandoned its currency board fix to the US dollar, it adopted a job guarantee program (Jefes), it defaulted on its dollar-denominated debt, and it told the IMF to take a long hike to hell. Rapid growth was thus inevitable. Unemployment and poverty plummeted and living standards rose. The currency stabilized and wages and prices started to inch up. More recently, the global commodities boom that resulted from Wall Street’s speculation drove up prices of Argentina’s main commodities outputs: soybeans and beef. These are both major exports and major components of the domestic consumer basket.

Believe me, an Argentinean without massive quantities of beef served at the table at least three times a day is not a happy Argentinean.

It is thus understandable that Argentina faces double digit inflation; indeed the result was entirely predictable. Imagine that your country is both a producer and a major consumer of a scarce commodity—say gold. In a speculative boom, gold prices rise quickly but that does little to quell domestic demand for gold. Indeed, as prices rise, domestic consumers bid prices ever higher as they try to get their share of output. Government policy will most likely turn against exporters due to the political necessity of conserving a share for local consumption. And then imagine that a natural disaster (earthquakes destroy some of the mines) reduce local supply. Inflation and some degree of social discomfort would be inevitable.

That’s more-or-less what happened in Argentina recently, as bad weather reduced soy and beef output. (And politics made the shortages worse by further restricting supply.)Rising global prices as well as falling domestic output (and thus employment) squeezed consumers who insist on keeping beef in the consumer basket. It is not at all surprising that Argentina is experiencing inflation—somewhere between 10% and 25% depending on how you measure it and who you believe. And that consumers are pissed.

But inflation will come down quickly. Prices are up mostly due to global speculation in commodities. I’ve written about that before—this is by far the biggest commodities speculative bubble in human history—so won’t go into it here except to say that what bubbles up to record highs will collapse into unfathomable lows. Presto-Change-O, Governor Marco del Pont’s main thorn in the side disappears.

(To be clear, I do not think the road ahead will be free of bumps. The coming next great recession in the developed world is going to hurt Argentina’s exports so it has got to find sufficient domestic demand to replace that.)

At the end of the conference, Argentina’s Vice President Amado Boudou joined the Governor to defend the maverick approach taken by Argentina’s government. He insisted that the Governor at the helm had brought a “breath of fresh air” to the central bank. He recounted his recent attendance at a G20 conference on “new ideas” at which he proclaimed there were no new ideas. He also ridiculed the currently fashionable view that central banks must focus only on preserving the “value of the currency” through inflation targets: a money anchored to the bottom of the sea will cause the boat to sink in the first serious storm. What really counts, he rightly insisted, is unemployment: with higher unemployment you get more debt, more poverty and less economic growth. That is why you need jobs, not single-minded devotion to stable prices.

We are, he said, at a crossroads in economics. Not only in terms of what goes on in the world, but also in terms of how we look at the world. In recent years we have put the financial system in center stage—to our detriment. We need, instead, to put employment and development first. And to do that we need to stop listening to the multi-lateral institutions (and, I’d add, to the central banker lapdogs) who offer the same tired recipes that have always failed.

If Argentina has got the world’s worst central banker, what we need is a race to the bottom.

The Powerpoint of my presentation should appear belo:

Introduction to Economic Perspectives

Print Friendly
Twitter26DiggReddit0StumbleUpon1Facebook26LinkedIn0Google+0bufferEmail

55 comments

  1. Chris Rogers

    Randal Sir,

    May I thank you for an excellent post and significant points of interest you have raised concerning central banking, inflation targets, national sovereignty and employment.

    Your post, whilst you have failed to mention it, highlights the fact that the Argentine government and its Central Bank Governor have abandoned any pretext of following the failed neoliberal economic orthodoxy that has been rammed down our throats since Nixon abandoned the Gold Standard in 1971.

    Obviously, a central banker not corrupted by neolibralism is a danger to the existing status quo – a status quo that presides over the greatest ever theft from the majority to a very small minority in the history of mankind.

    To put it bluntly, I’m surprised the Argentine Governor has not been accused of being a Communist for wishing to assist the majority in her nation, rather than its elite and multinational corporations.

    As for the Indian who once worked at the IMF and now who is employed by the Indian Central Bank, suffice to say they are an insult to humanity – particularly in their homage to Indian society, one of the most unequal societies ever and one I certainly would never laud.

    Again, many thanks for the post, its pleasing to know that sanity exists, regrettably it does not exist in the World Bank, IMF, WTO, European Union, European Central Bank and numerous governments the world over.

    1. jake chase

      It sounds like Argentina may be on the right track, but without more details who can say. Its history suggests the future may provoke shortages, strikes, whirlwind inflation, social catastrophe. The country is very rich but I believe the wealth is very concentrated, even worse than America’s. The writer doesn’t indicate whether Argentina has a private debt problem. To say that the central bank is targeting social welfare is not to say what is being done about it.

      We need more than just a rejection of neoliberal insanity.

      1. patricia

        “Hope is the last thing that dies in man; and though it be exceedingly deceitful, yet it is of this good use to us, that while we are traveling through life it conducts us in an easier and more pleasant way to our journey’s end.” La Rochefoucauld

      2. David Petraitis

        On the surmise that Argentina’s inequality is worse than the USA (which is a form of fallacious argumentation by purporting a fact of which one is ignorant but could Google it…) it looked it up for the commentariat:

        The USA is estimated by the CIA to be at 45.0 as of 2007 and Argentina at 45.8 as of 2009. The Whirled Bank estimates are of too disparate years to be compared sensibly for argumentation’s sake.

        Source:
        http://en.wikipedia.org/wiki/List_of_countries_by_income_equality

        1. Marco

          Yes, but economic inequality is going down in Argentina, and up in the United States. The same trend is, logically, observed in poverty and share of the gdp taken by the lower stratas.

          Anyway, the idea that such a highly developed nation has now a similar gini index to a latin american country (probably the most unequal region on the planet) is just stunning. Of course, from a latin american point of view, I can`t resist to connect my enthusiasm for our own advances with some schandenfreude.

    2. Stan Getz

      Randal,

      Great Post, the incredible growth Argentina has experienced since it walked away but tried to re-negotiate its debt has been under-reported. And when it has been reported the stories of rampant inflation follow quickly. A discussion of the causes and a more in depth report of the inflation components would be welcome. Argentina is an important example of a courageous government w/ the fortitude and morality to design policies aimed at helping argentinians and not just narrow well monied interests.

      I would like to hear more of a discussion on how Mercedes is implementing the varied philosophy of stability, growth and employment.

  2. Ruben

    Related to unorthodox approaches, the Argentinian gov’t passed an anti-trust law 3 yrs ago that limits the concentration of electronic media property, with the consequence that the largest media group, a honest entrepreneural conglomerate that voices the views of the Argentinian job creators, the 1%, will have to sell or lose at auction hundreds of cable licenses and a few radio and TV licenses as well, a law that the Clarin groups is courageously resisting.

    http://knightcenter.utexas.edu/blog/00-11527-argentinian-government-gives-media-group-deadline-break-under-antitrust-law

    1. YankeeFrank

      In what way can a group that is trying to hoard media licenses and promote concentration of media ownership be deemed “courageous”? What is courageous is taking on such powerful interests and knocking them out. We in the west could use some more of the courage that finds the leadership confronting and dismantling the levers of concentrated oligarchic power, or do you think that the problem in the west is that media ownership is too diverse? Please. “Courageously resisting”. What a laugh.

  3. Bert_S

    Just because Wray doesn’t like central bankers doesn’t mean Wray isn’t the biggest nutcase in the world. I mean really, he thinks central bankers can fix these things.

    1. Ben Johannson

      “I mean really, he thinks central bankers can fix these things.”

      That you think Wray believes this means you don’t understand the point. What Wray is saying is central bankers should not be ramping up interest rates to throttle growth every time inflation ticks up a quarter point.

      1. BS

        “What Wray is saying is central bankers should not be ramping up interest rates to throttle growth every time inflation ticks up a quarter point.”

        How about every 5 points or maybe 10? What is the inflation rate there? Don’t get arrested telling us….

        1. YankeeFrank

          Did you even read the piece?

          And how high is inflation in the US? Or will they arrest you if you try to find out the real numbers? Nah, they’ll just relegate you to the backwater and viciously suppress any attempts you might make to promote your message.

          If Argentina fails in its mission to broaden its middle class and built a stable economy it will be because a) internal politics bring enemies of the current process into power or in some way allow them to hamstring and destroy the current efforts underway, or b) the international banking community, headed by the IMF and the other usual suspects, game the system to punish Argentina for not playing by their rules.

          One thing is certain, more than trying to obtain “WMD” or violating any number of international laws, what puts a nation in the crosshairs of the west is if it dare to go “off the reservation” of their economic hegemony. The only hope these South American nations have that are trying this grand experiment is that they have each other. I do sincerely hope that is enough to protect them from the ongoing and inevitably increasing attacks from the IMF and co.

          And please don’t try to point out how imperfect their systems are as some kind of proof of their failure. They have an uphill climb, as would any nation after decades of neoliberal destruction and control, and surely they will make mistakes, as well as be attacked relentlessly from outside, for their “hubris”. I wish them success and the wisdom and strength to succeed, and to help show the world that there is an alternative to the horrible inequality and misery the west has wrought.

          1. Nathanael

            South America is kind of ahead of the curve on this. Its break from its formal colonial empire happened early, and the “economic domination” strategy started being applied in the Monroe administration.

            They’ve had several hundred years to figure out how to respond. They are therefore well ahead of Asian or African countries which are trying to get out of the same trap.

  4. James

    Excellent stuff from Wray. We’re currently being lead by mad men, who are sacrificing many people’s lives at the altar of neo-liberalism.

  5. RT

    Quote: “Wall Street wants de-development, a return to a feudal economy as finance plays the role of wealth-extracting feudal lord.”

    That’s the sole purpose of this predatory ‘industry’. Making money out of money, not out of real stuff. And not for re-investing it in real enterprises but just to … make more of it. This unimaginative goofiness is a sign of mental retardation and the retardation stems from intellectual incest. That is what you get and where you end up if you marginalize each and every dissenting voice, if you surround yourself only with like-minded others, like, say, in Jackson Hole. It gets transformed into a Brainless Hole, no sound critics allowed.

  6. Brick

    While I would agree in theoretical terms that inflation and for that matter deflation (except where consumer debt is high) should not be harmful I perceive the practicalities to be different. I would be concerned that price and wage inflation do not react with the same speed and there are delays involved. I think there is also a risk that global perceptions (rightly or wrongly) about currency values and government and central bank policies elsewhere which can morph inflation into stagflation.

    In conclusion I would argue there is a tipping point where inflation does become harmful especially if it changes rapidly, it also has a tendency to morph into stagflation especially where a central banker is not responding to policies and changes outside the local economy. I would however agree that the fears about inflation are somewhat misguided and should help with a consumer balance sheet recessions.

    I think central bank policy should be about controlling the balance between wage inflation and price inflation to control growth. Blame it on speculation if you like but something seems to have gone very wrong with the balance between the wage and price inflation globally.

      1. Brick

        If anything I think the link you provided confirms the idea that if wage inflation keeps pace with or is above price inflation then damage to the economy is limited. I did note from the link that there is some concern about wage inflation in Argentina. Google translate provides this quote :

        He noted that the pattern of wage increases set by the national government in recent years, have always been overwhelmed by the collective bargaining agreements made effective: “In 2010 it was 24% the pattern was set, but the conventions were 29, and last year we set a standard of 25%, and agreements were 30%, “he said.

        It is important to seperate the inflation now in Argentina with that in 1989. Inflation at argentinian 1989 levels has to be bad. Once inflation reaches certain levels (I not suggesting Argentina currently is) it becomes difficult to forward plan or invest. Not everybody is entirely happy with the current level of inflation in Argentina either.The following quote is from the following link.

        http://www.bbc.co.uk/news/world-latin-america-12822426

        Monica Guglielmini runs a haberdashery near the centre of Buenos Aires and says. “Inflation is something that everyone who comes in here complains about,” she says. “It’s also difficult for me to plan anything. The price of stock goes up, so does the rent and if you’ve got employees, they expect their wages to go up to keep pace.”

        I still think stagflation is the real economy killer, but very high levels of inflation can be equally bad. What the level of inflation is before it impacts citzens rather than banks is in my view the essence of Randy Wrays article. Namely inflation can be a lot higher than some central bankers think before it really inpacts the 99%.

  7. Newsboy

    The scales have been lifted from my eyes.
    While all the talk of global “growth” continues unabated, and petroleum “production” remains in a plateau since 2005, Global Austerity Is The Plan.
    Global austerity is not a misguided means to an unreachable end. that’s the cover story. Austerity is the global financial elite answer to declining global resources, having confirmed peak oil, peak copper and apparently even peak gold. There will be political gridlock in Amerika after the election, and to get gridlock the House remains Republican, the Senate at least evenly divided and the Oval Office remains populated by team Obama.
    The sequesters and end of tax cuts, which were acrimoniously put in place last year will infuriatingly come to pass while all politicians bemoan their inability to protect their constituents from this unforeseeable event.
    It’s the plan; well, that and fracking and the police-state…

  8. BenE

    This is kind of dangerous and very unfair way of correcting the economy. I’m all for central banks focusing a bit more on the unemployment aspect of monetary policy but creating this much inflation is a poor way of doing it.

    I’m surprised that some people here think that inflation helps the majority when if fact it is equivalent to a transfer of wealth from workers and and retirees (wage earners and bond savers) to government, banks, corporations and people in debt (wage payers and bond issuers).

    Sure it will help create jobs since corporations will now have to pay everybody less relative to what they charge for their product and can thus afford to hire more people.

    But would you advocate for a large country wide wage reduction and retirement benefit reduction along with a new tax where a large part of the money is given to big banks, especially leveraged ones in order to create jobs? If you like inflation, that is what you want.

    In my opinion, a progressive tax along with government stimulus (maybe even in the form of a tax cut on some specific job creating sectors) would be a much fairer way of doing it. At least it wouldn’t be all on the back of the working and retiring class.

    1. YankeeFrank

      Did you read the piece? The inflation Argentina is experiencing isn’t planned, its largely the result of the massive continuing global commodities bubble. Perhaps this difficulty for nations like Argentina is just one of the side-benefits of the commodities bubble being generated by and for the benefit of the global rich.

  9. MR

    Time will tell whether the path Argentina’s monetary and fiscal authorities is effective long term. In the interim, if inflation isn’t a problem, why is the government suppressing independent (accurate) assessments of inflation? You contend that commodity demand is to blame for inflation, and that once it subsides so will inflation. Argentina is a large export beneficiary of said commodity boom. BTW, this “refreshing” “maverick” approach has resulted in oil output down 20% and gas output down over 10% in the last seven years despite much higher oil prices and large untapped resources.

  10. Jim Haygood

    Surely this is the BEST nude capitalism headline EVAH:

    Randy Wray: The World’s Worst Central Banker

    Ol’ Randy’s workin’ for Mercedes del Pont now, ain’t he?

  11. Susan the other

    Randall Wray’s story about the Indian neo-liberal is awful. India is in for the world’s worst ever rude awakening. I do hope we leave this guy and his ilk to fend for themselves when the time comes. India is a democracy of poverty and deprivation combined with an aristocracy of extreme and obscene wealth. But never mind. I have some quesitons: Has/can Argentina inoculate itself with sovereign banking so that sanctions against it, either under a military or a trade (or both) aegis, will have no effect? It is instructive to look now at Iran and the rial. The rial has lost 70+% of its value, sovereignty and all. And it will be painful because Iran imports food and medicine.

    And to further this point and the danger it poses for Argentina or any country brave enough to take on the neoliberal international banksters: A month ago, during the previous incarnation of the Mittster, he said glibly that when he is president he is going to go into South America MILITARILY. I thought he must be referring to Venezuela, maybe Bolivia and possibly Colombia and the usual Central American mini-nations. But maybe he was looking directly at Argentina. Then at the Denver “debates” Mitt tried to launder that comment with another one that was less strident, but no less menacing, and he said he wanted to open up trade with South America. Virtually the same attack because trade implies a certain fidelity to the protocols of the IMF, et.al. Just monitoring the direction of the wind. What dangers for Argentina?

  12. steve from virginia

    Indeed … there are the ‘good guys’ (‘workers’ and ‘masses’ eating their helpings of beef out there somewhere in ‘little-people landia’), there are the evil monsters (the Wall Street cabal) and there are the Hollywood fools (orthodox financiers eating their own helpings of beef at conferences). How convenient.

    “But here’s the more important point. Argentina has been growing very quickly since its financial crisis in the early 2000’s. It abandoned its currency board fix to the US dollar, it adopted a job guarantee program (Jefes), it defaulted on its dollar-denominated debt, and it told the IMF to take a long hike to hell. Rapid growth was thus inevitable. Unemployment and poverty plummeted and living standards rose.

    Whoopie. Argentina is growing! Whoo f**king Wray! Besides beef, the workers and masses can run out and buy new cars, office towers, freeways, tract housing, auto insurance, military equipmen … no? Give them time. Economies don’t exist until they build a collection of ‘progress’ fetishes that are a) completely worthless, and b) costly enough to bankrupt said economies. Argentina’s growth represents the extinguishment of its non-renewable capital. Great job, Mercedes Marco del Ponzi.

    Please make note that Argentina is a petroleum exporter, its progress excrescences are supported by + $100/barrel price of its crude. As Argentina ‘grows’ its net exports fall, at the point where net exports are zero. The country then needs to import its +$100 fuel, it falls bankrupt like Spain or Greece for the same reason. Capital is exhausted … regardless of whether Mercedes Marco del Pont or Jeesuz Haich Christ is central banker. Tab down to ‘Argentina’ at the following site:

    http://mazamascience.com/OilExport/

    The country’s net exports are near zero now. A brief hurrah for Mercedes Marco del Pont before denoue-ment

    1. David Petraitis

      Did you even follow your own link? The exports from Argentina have fallen to near zero from the site you mention and net Oil imports are rising.

      Your argument is based on a ‘fact’ that you failed to even look at while giving others the link to do so. Good going.

      Sheesh.

  13. craazyman

    At first I thought the headline said that Professor Wray is, himself, the world’s worst central banker.

    Oh Boy, I thought, “this plays right into the hands of all the pundits out there” who think they know more about economics than the professors and the central bankers.

    I don’t know who that would be. haha.

    I look forward to reading the PowerPoint slides, which I will do because I appreciate and respect provocative thinking.

    I just wonder who will print what when inflation is 20% someplace and so is unemployment — because the group consciousness structures that underly social cooperation are inherently unstable and dysfunctional, and so are the madmen in charge. By that point, I’m not sure they’ll call it “money” anymore.

    1. Bert_S

      I get tired of reading, craazy, but if you come across any enlightment, let us know.

      One thing I wonder is why in the world do these counties keep borrowing from foreigners if it causes all these bad things to happen? I mean, like sheesh, this has been going on since the LatAm debt crisis way back in the 80s! And why do they need other people’s money when they can make their own pesos?

      I sure wouldn’t do that to them with any of my money!

      1. Calgacus

        They keep doing it because the psychotic mainstream economists brainwash their moron elite, like the Indian Central Banker above, that it is OK. Their masters at the banks & the IMF know perfectly well what they are doing – creating debt-peonage. These banksters make out like bandits on the interest on the usually, eventually unpayable loans, which are then just rolled over into another unpayable loan. Any loss by the TBTF crooks will be covered by their home central bank, ultimately the public. The main thing is keeping them in the debt-peonage system.

        And the ultimate weapon is military force and sanctions, again using the suckers of their “home”. Which would be used against a country which is less white European-descended than Argentina that tried to travel a sane MMT/ New Deal path to development. Overall, the bad guys have had very few failures.

        There’s a great passage in probably the first expose of the “international loan-sharking institutions” (his phrase) – Jonathan Kwitny’s Endless Enemies. He naively exclaims to an IMFer that what they are doing to African country X is debt-peonage, imposing debts which can never be paid, but which will bleed the country white forever. The bankster basically pats him on the head & says “Yes. That is our plan.”

        1. EconCCX

          Their masters at the banks & the IMF know perfectly well what they are doing – creating debt-peonage. @Calgacus

          Well, yeah. But how on earth do MMTers not see that pattern in the US? The privately owned central bank. The elected government’s need to go hat in hand to the financial digitizer for its funding, in exchange for bond-contracts that oblige USG to repay, and thus to re-borrow. Every other sector of the economy up to its eyeballs in debt.

          MMTers believe that government debt enriches the “non-government” through employment, incomes, support of aggregate demand. But that “non-government” formulation counts the financial sector, which immediately takes ownership of virtually all the new Reserves AND virtually all the new USG debt. Circulating our medium of exchange as interest and fee burdened private debt at a high multiple of those reserves. The multiple which everything we buy is priced in.

          Support for adjusting reserve requirements? Support for any change whatsoever in the engineering of money? Nah, just fiddle with interest rates, borrow or print to fund public works. Not the slightest sense of where the problem actually lives.

          Cal, I’ll follow up our previous threads here.

        2. EconCCX

          Their masters at the banks & the IMF know perfectly well what they are doing – creating debt-peonage. @Calgacus

          Well, yeah. But how on earth do MMTers not see that pattern in the US? The privately owned central bank. The elected government’s need to go hat in hand to the financial digitizer for its funding, in exchange for bond-contracts that oblige USG to repay, and thus to re-borrow. Every other sector of the economy up to its eyeballs in debt.

          MMTers believe that government debt enriches the “non-government” through employment, incomes, support of aggregate demand. But that “non-government” formulation counts the financial sector, which immediately takes ownership of virtually all the new Reserves AND virtually all the new USG debt. Circulating our medium of exchange as interest and fee burdened private debt at a high multiple of those reserves. The multiple which everything we buy is priced in.

          Support for adjusting reserve requirements? Support for any change whatsoever in the engineering of money? Nah, just fiddle with interest rates, borrow or print to fund public works. Not the slightest sense of where the problem actually lives.

          Cal, I’ll follow up our previous threads HERE. (Perhaps an admin will be kind enough to junk the misformatted one.)

  14. MyLessThanPrimeBeef

    The worst central banker?

    That’s like trying to pick the ugliest locust amongst swarms of locusts.

  15. The Dork of Cork

    But why do you even need Central banks when we have a declining resourse base…..what are they going to provide credit for exactly ?
    More of their Junk ?

    Exchequers should just produce fiat and tell both the Com & Central banks get the fuck out of the country.

    The “Irish” central bank today wanted the goverment to reduce wages & benefits even further so as to create a bigger current account surplus in Ireland and transfer that surplus to deficit London…..
    If they reduced domestic consumption for a rational capital programme such as a Tram system through Cork I might think it was worth doing……but to transfer a surplus to London and the various NAMA entropy enginneers which infest this country……Fuck off Central banks……they are a alien presence in all countries.

    The biggest selling car in Ireland this September was the BMW fucking 3…….says it all really.

    1. Nathanael

      Central banks should, as you suggest, simply be part of the Treasury/Exchequer department.

      “Central bank independence” is bullshit, an excuse to let the 0.1% steal money.

      1. SomethingSomethingComplete

        But isn’t everything an excuse for the 0.1% to steal money?

        Central Banks, fiat currency, hedge funds, political parties, the media, pharmaceutical companies, the IMF, Hollywood, the Illumaniti, the Freemasons, the Knights Templar.

        Who else? Goldman Sachs, surely. Also, the Bilderberg Society. The Council on Foreign Relations. The New World Order.

        They are all lurking in the shadows, siphoning money from you. So let’s fight them through these blogs! That’s cost efficient.

  16. The Dork of Cork

    PS …the normally conservative Philip Lane has posted 3 unusual articles on the Irish economy blog….

    1.Tall Ships and Sovereign Default
    2.Currency Depreciation
    3.Nominal GDP

    Is Ireland finally thinking of giving it a Punt ?

    It will be back to buying cheap 1 litre petrol cars like in the mid 80s and not……..
    The truely Absurd Nissan Qashqai
    http://en.wikipedia.org/wiki/Nissan_Qashqai

    It is the number 2 top selling “car” model in Ireland so far this year with 3,256 units sold (2,611 Jan -Sep Y2011)
    Who the hell is buying these capital & fuel intensive cars ?

  17. reason

    Surely,
    Jean-Claude Trichet is unassailable. Head of the ECB (in charge of ensuring the stability of the Euro) who triggered an existential crisis in the region with an insane interest rate increase. Come on, who can compete with that?

  18. The Dork of Cork

    The Euro is in the business of transfering capital to BMW & oil merchants of Germany & Arabia….
    Its a Gigantic capital export machine.

    But to be fair – its not just Germany , the corporations have no real home now….they just are…
    The Nissan Quashqai is made in the UK for example…

    The basic 1.5 litre diesel sells for 25,945 Euros in Ireland…..
    The most basic 1.0 litre petrol Volks “Up” sells for 11,745…
    3,256 of the Quashqai were sold in Ireland this year so far
    248 UPS were sold
    So 7160 ~ UPS could be bought rather then 3,256 Quashqais……
    You must understand the Irish car fleet is ageing at a rapid pace…….
    A small section of the population have very large deposits in a strong currency…..which means they can afford to waste whatever surplus is in the system…
    The remaining must buy second hand cars with higher long term running costs……
    The Irish capital account is run down…….
    We are held withen the vice of a seriously non optimum currency.

  19. Mike

    An article praising Argentina’s economic management… Whatever negative thoughts I have about our leaders melt when I realize that people like this author could be doing the job.

    1. SomethingSomethingComplete

      My thoughts exactly.

      Americans have weirdly romantic visions of other countries.

      It’s almost pathological. The USA is flawed, but people here really struggle to wrap their heads around the fact that there are few countries out there that don’t have even larger flaws (Argentina certainly is not one of the few).

      I think it stems from the fact that everyone wants to believe that there is a paradise.

      Some place, some country where the righteous and virtuous are in charge and these good, kind people will fight the Dark Side and win and dispel from this world all that is wrong.

      Just recently I encountered a very intelligent guy who thought China was some kind of worker’s heaven where everyone was provided for and that the “Chinese model” would soon come rescue America from the clutches of the oppressors.

  20. SomethingSomethingComplete

    Wow, that’s nice that everyone loves a fun, rousing martyr of a country that can “thumb its nose” at that pesky IMF and turn its central bank into some kind.

    Because of course things are just dandy in Argentina.

    There’s no cronyism there, no corruption, everyone is equal, and equally rich. The wealthy are firewalled from the government and everyone gets an equal say.

    The Central Bank sees the future with its all-seeing eye and moves cash around with prescient benevolence towards those most worthy and most deserving.

    And Kirchner and del Pont are fighting for the 99%, no doubt. They are good and virtuous and they guilty shall weep at their righteous feet one day.

    I am just so inspired…

    1. SomethingSomethingComplete

      First sentence should end with “some kind of enlightened despot”.

      I was writing the post through tears of joy and inspiration, so please pardon my error there.

  21. kjr63

    {i]Cheap housing loans form part of Argentina stimulus plan

    Thursday, June 14, 2012 – 08:51 AM

    Argentina is rolling out a major economic stimulus plan, using pension and treasury funds to provide nearly cost-free housing loans of up to 77,000 each to 400,000 people who have been closed out of private-sector borrowing.

    Buenos Aires governor Daniel Scioli ordered all “non-productive” government-owned land to be made available to the programme President Cristina Fernandez de Kirchner announced hours earlier.[/i]

    Obviously argentinians believe that way to “stimulate” economy is to create housing bubble and increase household debt. What a surprise.

    1. Yaun

      I love the fact that they again use whatever is left in the pension fund. How many times can Argentina devalue its pension system? Apparently the answer is that the number of times is infinite. The country must truly be the heaven that the well informed Randy Wray saw while sipping his drink in the Convention Center.

Comments are closed.