Couldn't resist:

https://www.theshovel.com.au/2023/03/16/albo-extras-package-submarines/

Albo admits he got talked into buying extras package on new subs




...but should we be spending limited resources like this?

https://www.cnbc.com/2023/03/16/svb-signature-bank-failures-yellen-says-us-banki...__

Treasury Secretary Yellen says not all uninsured deposits will be protected in future bank failures

KEY POINTS
Treasury Secretary Janet Yellen told senators that government refunds of uninsured deposits will not be extended to every bank that fails, only those that pose systemic risk to the financial system.

Yellen has been at the center of an emergency program to refund billions of dollars in uninsured deposits held by clients of the failed Silicon Valley Bank and the shuttered Signature Bank.

But with markets recovering somewhat, lawmakers were concerned these backstops could become a new norm for big banks, giving “too big to fail” banks an unfair advantage over community lenders.

Torrens Uni MMT lecturer Dr Steven Hail's comments on inflation, reported by Crikey:

https://www.msn.com/en-au/news/other/inflation-is-too-tricky-and-too-sticky-to-b...

Inflation is too tricky and too sticky to be left to the RBA

https://www.msn.com/en-au/money/other/us-banks-want-socialism-for-themselves-and...

US banks want socialism for themselves - and capitalism for everyone else


Greg Becker, the former CEO of Silicon Valley Bank, sold $3.6m of SBV shares on 27 February, just days before the bank disclosed a large loss that triggered its stock slide and collapse. Over the previous two years, Becker sold nearly $30m of stock.

But Becker won’t rake in the most from this mess. Jamie Dimon, chair and CEO of JPMorgan Chase, the biggest Wall Street bank, will probably make much more.

That’s because depositors in small- and medium-sized banks are now fleeing to the safety of JPMorgan and other giant banks that have been deemed “too big to fail” because the government bailed them out in 2008.

...bankers, the mob with the sole privilege of creating money, while lending it at interest.....

https://profstevekeen.substack.com/p/the-fractured-fairy-tales-that-led?utm_sour...

The Fractured Fairy Tales That Led To Today’s Banking Crisis

"Kenneth D. Garbade, a Vice-President of the New York Fed, explained the origin of the practice of requiring The Fed to only purchase bonds in the secondary market in "Direct Purchases of U.S. Treasury Securities by Federal Reserve Banks" (Garbade 2014). It's hard to read his history and not conclude that the current system—which requires Treasury to sell bonds to private banks and "primary dealers", rather than to The Fed (US central bank)—was based on the rickety pillars of the self-interest of bond traders, and delusional ideas about money held by the mainstream economists who staff The Fed, and misinform our politicians."

An interesting critique of MMT from 2019, published in Quadrant, a conservative rag.

I will answer the criticisms one by one, over several posts.

This is the first instalment. 

https://quadrant.org.au/magazine/2019/07/unmasking-modern-monetary-theory/

Unmasking Modern Monetary Theory

Government loosed from financial constraints, full employment to the last man and woman willing to work, and all with no inflation to speak of. Welcome to the alluring world of Modern Monetary Theory (MMT). My purpose is to deconstruct and demystify MMT; to explain where it fits in macroeconomic theory; to assess its strengths and weaknesses; and to bring out the threat it poses to economic and political freedom. I can’t get close to being exhaustive. However, I believe I can provide a more complete and comprehensible account of MMT than generally appears in the popular press.

OK....so......full employment with no inflation "poses a threat to economic and political freedom", so straight away we know the author's free market ideology.

In brief, MMT is an economic theory which postulates that permanent full employment can be achieved through the application of (whatever-it-takes) expansionary fiscal policy, allied with accommodative monetary policy. Vitally, a third component of MMT is an employment buffer scheme to prevent inflation from getting out of hand. People are taken onto the public payroll during economic downturns and released into the private-sector during upturns. Finally, MMT requires that debt issued to support public spending is denominated in domestic currency; which, of course, governments can create at will, removing any risk of default.

The last sentence masks the fact currency-issuing governments don't need to issue debt to the market, other than as a means of recording the quantum of money creation and corresponding spending, because currency-issuing government can finance its own spending.  See #428.


Professor Stephanie Kelton of Stony Brook University in New York is one of the leading proponents of MMT. She provides a description of MMT in a short video on CNBC (March 4, 2019). It’s a little learning which would leave most watchers still in the dark. I mention it only because of a telling comment in the broadcast. She rejects the idea that MMT uses taxation to fight inflation but adds that people say this all the time. She is right that people mischaracterise MMT in this way. I have read numbers of commentaries which do that. For example, Hettie O’Brien, the New Statesman’s online editor, did it in a piece on February 20 (“The surprise cult of Modern Monetary Theory”) and she quotes Professor Jonathan Portes of King’s College London doing the same thing. The question is why people get something so fundamental so wrong.

Note: Stephanie Kelton has since then published her NYT best seller: "The Deficit Myth".

She would say inflation is caused by excessive demand which itself can be conceived as being caused by inadequate supply; so taxation is not required to control inflation, but price controls on the supply side might be required in some instances - which means nationalization of some essential services like energy may be required. 

Anathema to a free marketeer like Peter Smith (the author of the Quadrant article). 

(to be continued)

MMT Podcast:

https://pileusmmt.libsyn.com/163-l-randall-wray-breaking-banks-the-feds-magical-...

#163 L. Randall Wray: Breaking Banks - The Fed’s Magical Monetarist Thinking Strikes Again

Even in Australia; the consequences of forcing the government to tax and/or borrow in order to spend:

https://www.theguardian.com/australia-news/2023/mar/28/one-million-people-are-li...

One million people are living below the poverty line in NSW, census data has revealed