Month: August 2019

Brexit….. please!!!

Well, it’s really a good time for people like me who watch the news as entertainment. The Brexit fiasco is in full swing as of this writing: Boris has just (partially) sidelined Parliament to keep them from effectively blocking. (<< Yes, that’s a period. Normally a noun comes after an active verb. But Parliament has blocked everything coming their way, simultaneously offering no ideas of their (aggregate) own!)

So, is this a good thing that Boris is trying? Well, think of it this way: is the glass half-full or half-empty. For three (count them: 1 year, 2 years, 3 years!!!) Parliament has come up in total with 1 conundrum – rejected everything coming their way and offering no new ideas. They are mostly and adamantly in favor of “Brexit Only With a Deal”, but repeatedly reject the only deal the EU will give them! One can easily see that getting Parley-mess out of the way can clear the path to some resolution, some action. On the other hand, if you’re hung up on the machinations of democracy, an extended suspension of Parley-mess for political expediency reeks of demagoguery.

My point here is that time is running out for the EU itself!! It needs to deal with corrupt and undemocratic heads of state in Slovakia and Poland, and has formally recognized corruption running flagrant in several member countries – at all levels. Its agricultural policy machinery is infested with dirty money from chemical firms. The list goes on and as long as Britain sends so many overt, active anti-EU representatives to Brussels to strengthen the ranks of the existing anti-EU forces, no progress will ever be made. What doesn’t grow, stagnates. So, I favor what the majority of Brits voted for: an exit from the EU; for the sake of the EU! Whatever form that takes …. who cares on this side of the Channel (After 3 years, yes, a bit of indifference.)

One of the things that irks me are the standardized story-line that Brexit without a deal will leave gaps in Britain’s supply chains. And the news channels dramatically make it worse by erroneously stating that Britain will no longer find certain articles. Britain can buy anything in Europe, the same things they bought before, they simply need to follow WTO regulations. That is what they voted for: the ability to choose for themselves from whom they buy & to whom they sell. And who knows, maybe that pompous loudmouth in the White House #10 will be right: it will turn out better for Britain. But the longer it takes (my bet is Britain will still be in the EU in 2020) the worse – maybe even deadly – it will be for the future of a true European Union!

The Definitive Guide to MMT

MMT is currently a hotly discussed topic in financial circles and already has various monikers: Modern Money Theory; Magical Money Tree. We find the first too grandiose, too pompous and the second as more descriptive but simply shortsighted. We have our own moniker!

First, MMT is simply the idea that governments can print additional money (lots of it), then spend it to spur growth. In “normal” times such an idea would be recognized as a reckless, populist mistake. We are not in normal times, but rather we are all living in the shadow of monstrous world-wide debt mountain. And this mountain is holding us back from making progress. (Actually Japan has been doing this and the US is pretty much underway.)

Now – to lay the groundwork to explain the background dynamics – first think of a tsunami or an earthquake. These are outcomes because a mass of energy and then their release made them happen. A tsunami occurs perhaps because a side of an underground mountain slid off, or in the case of the earthquake one of two continental shelves shifted and released a mass of pressure energy to the surface. My apologies to the many, many victims of such disasters, the point here is simply to make the point that these phenomena start, release their new energy and … stop (mostly).

So, lets get to the point. This gargantuan mountain of debt is being widely recognized as the cause of blocking both present & future economic growth. The elephantine debt piles of governments is widely recognized as a danger to the actual functioning of governments themselves. We all need a solution.

And here comes our moniker to elucidate the evolution that will resolve this buildup of pressure: Make Money Trash!

When the printing of money comes at no or negligible cost to governments – or better, makes them money with negative interest rates on bonds – the responsible politicians will certainly do it. For MMT to be a substantive solution, they need to not only do it, but do it an a grandiose style. This will most certainly lead to inflation: the stated, but elusive goal of central banks. A little inflation, the fantasy number of 2% of the ECB or the Fed, will be reached – and passed like a regional train stopping shortly at the first of many, many stations. The end station will be a “hyper”station. This itinerary to the end station will have many calamities along the way where people will want to stop the train – and some will try. Won’t happen. But at the end station we will have surpassed the mountain of debt! Debt will be solved with cheap ‘trash’ money.

And just as the tsunami and the earthquake left behind many victims and much damage after their energy was spent, so will this force of a money avalanche after its force is spent. But society will survive. What this society looks like will be different from today, that is certain.