Bankugintzaz eta zergapetzeaz, zehaztasun batzuk

Bankugintza, gero eta argiago

Gutxienez, Britainia Handian, haren banku zentrala dela eta, batzuek badakite:

The truth is out: money is just an IOU, and the banks are rolling in it


The Bank of England’s dose of honesty throws the theoretical basis for austerity out the window

Back in the 1930s, Henry Ford is supposed to have remarked that it was a good thing that most Americans didn’t know how banking really works, because if they did, “there’d be a revolution before tomorrow morning”.

Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called “Money Creation in the Modern Economy1“, co-authored by three economists from the Bank’s Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window.

To get a sense of how radical the Bank’s new position is, consider the conventional view, which continues to be the basis of all respectable debate on public policy. People put their money in banks. Banks then lend that money out at interest – either to consumers, or to entrepreneurs willing to invest it in some profitable enterprise. True, the fractional reserve system does allow banks to lend out considerably more than they hold in reserve, and true, if savings don’t suffice, private banks can seek to borrow more from the central bank.

The central bank can print as much money as it wishes. But it is also careful not to print too much. In fact, we are often told this is why independent central banks exist in the first place. If governments could print money themselves, they would surely put out too much of it, and the resulting inflation would throw the economy into chaos. Institutions such as the Bank of England or US Federal Reserve were created to carefully regulate the money supply to prevent inflation. This is why they are forbidden to directly fund the government, say, by buying treasury bonds, but instead fund private economic activity that the government merely taxes.

It’s this understanding that allows us to continue to talk about money as if it were a limited resource like bauxite or petroleum, to say “there’s just not enough money” to fund social programmes, to speak of the immorality of government debt or of public spending “crowding out” the private sector. What the Bank of England admitted this week is that none of this is really true. To quote from its own initial summary: “Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits” … “In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money ‘multiplied up’ into more loans and deposits.”

In other words, everything we know is not just wrong – it’s backwards. When banks make loans, they create money. This is because money is really just an IOU. The role of the central bank is to preside over a legal order that effectively grants banks the exclusive right to create IOUs of a certain kind, ones that the government will recognise as legal tender by its willingness to accept them in payment of taxes. There’s really no limit on how much banks could create, provided they can find someone willing to borrow it. They will never get caught short, for the simple reason that borrowers do not, generally speaking, take the cash and put it under their mattresses; ultimately, any money a bank loans out will just end up back in some bank again. So for the banking system as a whole, every loan just becomes another deposit. What’s more, insofar as banks do need to acquire funds from the central bank, they can borrow as much as they like; all the latter really does is set the rate of interest, the cost of money, not its quantity. Since the beginning of the recession, the US and British central banks have reduced that cost to almost nothing. In fact, with “quantitative easing” they’ve been effectively pumping as much money as they can into the banks, without producing any inflationary effects.

What this means is that the real limit on the amount of money in circulation is not how much the central bank is willing to lend, but how much government, firms, and ordinary citizens, are willing to borrow. Government spending is the main driver in all this (and the paper does admit, if you read it carefully, that the central bank does fund the government after all). So there’s no question of public spending “crowding out” private investment. It’s exactly the opposite.

Why did the Bank of England suddenly admit all this? Well, one reason is because it’s obviously true. The Bank’s job is to actually run the system, and of late, the system has not been running especially well. It’s possible that it decided that maintaining the fantasy-land version of economics that has proved so convenient to the rich is simply a luxury it can no longer afford.

But politically, this is taking an enormous risk. Just consider what might happen if mortgage holders realised the money the bank lent them is not, really, the life savings of some thrifty pensioner, but something the bank just whisked into existence through its possession of a magic wand which we, the public, handed over to it.

Historically, the Bank of England has tended to be a bellwether, staking out seeming radical positions that ultimately become new orthodoxies. If that’s what’s happening here, we might soon be in a position to learn if Henry Ford was right.

Ikus The Millennials’ Money izeneko bideoaz, hiru iruzkin

What actually happens is all private bank lending creates money ex nihilo in a similar fashion (keystrokes producing entries in a spreadsheet) as the Bank of England creates money out of thin air to enable the government to spend. Don’t take my word for it though, try this from the Bank of England back in 2014:

As another commentator has mentioned earlier, the video leaves the detail of private bank money creation out to avoid undue confusion to newbies. However, it is really pretty simple since it follows similar principles to the process of government money creation by the Bank of England or the Fed in USA. The big difference is that instead of a government tax-redemption-IOU being created and then a changeable amount of tax being imposed at some later date where tax may be greater, equal-to or less-than the number of tax-redemption-IOUs created by the initial government spending private-IOUs are created alongside an exactly equal entry on the other side of the bank’s balance sheet at the moment the loan is created along with a contract stipulating the time period within which the loan must be repaid (and thus the IOU destroyed). In that sense money created privately has a built in self-destruct timer ticking from the moment the loan agreement is signed.

That is why MMTers say “only the government’s central bank can create net savings in the private sector” – because only money created by government spending is free of this self destruct mechanism and so can lead to aggregate savings once all private debts are taken into account. In reality private loans sometimes do go bad and never get repaid so some privately created money escapes its designed destruction date but most gets paid back and thus destroyed as scheduled. Taxes will get the rest in the end anyway.”

Zergapetzea, gero eta zehatzago

Gutxienez, zenbait kazetariren artean badago zehaztasun minimo bat

What are taxes actually for?


We need to talk about taxation. I do not think it means what you think it means.

While some of us are pretty conscious of the importance of using the correct terminology when it comes to issues of social justice, race, gender and sexuality, when it comes to addressing inequality, we are still using language straight out of the neoliberal handbook.

We need to be honest about how the tax system works and what it is for. To do so isn’t radical, or even progressive. It is simply the economics of reality.

What are taxes for?

In countries whose governments issue their own currencies, taxes do not pay for federal services.

Governments like those of the US, UK, China, Australia, Canada, etc run spend & tax economies, not tax and spend. They do not need your taxes to pay for anything. You might be angered to know that, actually, your taxes are not used for anything after you pay it. Not at a federal level. Your taxes are essentially destroyed upon receipt. Taxation is the act of taking currency out of the economy. Using your taxes to pay for public services would keep that money in circulation, thus serving the very opposite of its purpose.

There are some exceptions here which are important to underline: Taxes pay for services at state and local levels, but that is only because they are themselves inadequately funded by federal governments and therefore raising taxes becomes necessary to make up the revenue shortfall. Taxes also nominally pay for spending in countries whose governments adopt foreign currencies (most EU member states, for example), or peg their gold to a foreign currency.

(Hobea izango litzateke EBZ-ri eskatzea defizit publiko handitu dezan, kasu austeritateari erabat lotuta dagoen %3tik %8ra, gutxienez!)

So why pay tax at all?

Taxes are important. Just not for the reasons that are often talked about.

Taxes exist for a number of reasons:

– To maintain the value of the currency.

– To stabilise aggregate demand.

– To manage growth and distribute wealth. and, depending on what you think government is for and who it exists to serve, ensure prosperity and equality of opportunity for their constituents.

– To discourage bad behaviours (taxation on cigarettes, for example, are designed to discourage smoking and reduce the burden on health systems) & encourage good behaviours, (like promoting sustainability through a tax on carbon and investment in renewable energy).

– It also exists to accurately cost public spending requirements: infrastructure, education, health, public safety: police, fire, ambulance, defence, intelligence etc.

As economist, Professor Randall Wray recently pointed out: Governments do not need a single dime from the wealthy to address inequality. That is not how taxes operate, or what they are for.

Taxes on the rich might take ‘resources’ from people who have too much — in that their demand deposit account is debited,” he writes for Naked Capitalism. “But taxation does not ‘give resources’ to people who have too little.”

Rather, government spending directed to those who ‘have too little’ is what gives the poor access to resources. (They can use their demand deposit credits to buy food, clothing and shelter, etc). They are functionally two separate entities.

Government can spend to help the poor without taxing the rich or anyone else.”

Buying into the myth

Nonetheless, the idea that taxes pay for government spending persists as an inaccurate bipartisan consensus, one of the greatest collective myths of modern capitalism.

When you hear politicians or pundits squawking about workers’ hard-earned tax dollars paying for this or that, you can almost certainly guarantee they have no idea about how taxes work either.

Our acceptance of this lie is, to quote anthropologist David Graeber, “collectively acquiescing to our own enslavement.”

The continuation of the statu-quo depends upon the public’s ignorance or blind consensus as to the true nature of banking, finance, government spending, job creation and the nature of work itself.

The very myth that the vast majority of us have settled on is the very thing preventing full and gainful employment, and guarantees a future (and a present) where the only way to buy our way out of public squalor is through rising private debt.

In his recent book, Bullshit Jobs, Graeber describes modern day capitalism as a system of ‘Managerial Feudalism’, a form of social and political control achieved through corporate bureaucracy: the proliferation of middle-managers, supervisors, administrators all employed to ‘appropriate labor through usury’, stealing wealth, resources, opportunity and power from the working and middle class and transferring ownership to the political and elite classes and the idle rich.

Marx appears to have been right when he argued that ‘a reserve army of unemployed’ has to exist in order for capitalism to work the way it’s supposed to,” he writes.

“…we are identifying with our rulers when, in fact, we’re the one’s being ruled.”

To truly address inequality and abolish austerity politics, we must start being honest about how taxation works and what it is for.

Language is important. You can be as woke as you like about gender and racial politics, but using the wrong terminology for taxation is kryptonite for social justice. We cannot subvert the neoliberal playbook while continuing to use the very same language invented to ensure a permanent economy of inequality and austerity.

Dirurik ez dagoela?

Dirurik ez dagoela?

Ez dagoela dirurik?

Dirua badagoela!

Badakigu. Euskal Herrian dena nahasten da: errenta banaketa, soldaten banaketa, lanpostu banaketa, pentsioen banaketa, oinarrizko errenta unibertsala (sic), zergak handitzea inbertsioak finantzatzeko, …

Eta horrela doa gure herria, amildegi baterantz eta abiada handi batez.

No Problem!

Politikan, Espainiak salbatuko gaitu (hego Euskal Herria, noski, ez Iparraldea) Espainiarekiko konfederazio baten bidez.

Mon dieu!

Ekonomian, alta, badauzkagu kazetariak (gehi progreak, ekonomialariak eta politikariak, noski) oso trebeak gu salbatzearren.


Ikasiko ote dugu inoiz?

Iritzi sendo eta desberdinetako garaian bizi gara (4)

(4) Eskozia independenteak libera eskoziar berria behar du (the new Scotish pound)

Derek Henry-k: Eskozia independenteak moneta propioa behar du (the new Scotish pound)

(Despistatuentzako oharra: Eskoziako Banku Zentral berria-k libera eskoziar berriak teklatuaren bidez sortuko ditu, nahi izango den beste kopuru)

Eskozia independenteak moneta propioa behar du (the new Scotish pound)

Derek Henry‏ @DerekHenry1970


We read that :

2018 abu. 15

Derek Henry‏ @DerekHenry1970 abu. 15

None of which is true. A truly independent Scotland, issuing its own currency doesn’t need any one to “hold it” other than the residents and others who are forced to pay taxes in that currency.


Derek Henry‏ @DerekHenry1970


From a Modern Monetary Theory (MMT) perspective this is impeccable.

Derek Henry‏ @DerekHenry1970 abu. 15


2018 abu. 15

Derek Henry‏ @DerekHenry1970 abu. 15

Derek Henry‏ @DerekHenry1970 abu. 15


Derek Henry‏ @DerekHenry1970


2018 abu. 15


Derek Henry‏ @DerekHenry1970 abu. 15


Gogoratu ondokoak:

Bill Mitchell-ek Eskoziaz

Bill Mitchell-ek Eskoziaz, berriz (1)

Bill Mitchell-ek Eskoziaz, berriz (2)

Egingo ote du porrot Turkiak?


Derek Henry‏ @DerekHenry1970


Could Turkey Default? The Maths Say No

Alan Longbon is a MMT’r.

Could Turkey Default? The Maths Say No


2018 abu. 14

(ii) Alan Longbon



I have an MBA and over 25 years of experience in real estate development, stocks, bonds, finance and forex markets.

My investment approach is very simple. I find countries with the highest and strongest macro-fiscal flows and low levels of private debt and invest in them using country ETFs and contract for difference (CFDs)

I use functional finance and sectoral flow analysis of the national accounts of the nations I invest in. This is after the work of Professors Wynne Godley, Micheal Hudson, Steve Keen, and  William Mitchell. Roger Malcolm Mitchell, Warren Mosler, Robert P Balan, and many others.

One can analyze a country in seconds with four numbers as a % of GDP and these are G P X C where

[G] Federal spending.

[P] Non-Federal Spending.

[X] Net Exports

[C] Credit

One can then derive a set of accounting identities that are correct by definition.

GDP =  G + P + X

Aggregate Demand = G + P + X + C or GDP + Credit.


G and X are regularly reported in official national account statistics and one can work out P as follows:

P = G + X

Asset prices rise best where the macro-fiscal flows are strongest and where the private sector balance is highest.

The 20-year land/credit cycle identified by Fred Harrison and Phillip Anderson is also a key investment framework that I take into account.

Could Turkey Default? The Maths Say No

Prime Minister Erdogan makes a valid point with his criticism of the central bank driving inflation.

Turkey has a negative private sector balance, and the national government needs to spend more to stave off a recession.

Only private credit creation is driving aggregate demand at present and filling the spending gap.

Turkey has been in the news lately with the newly re-elected Prime Minister Erdogan quite rightly suggesting the central bank and its rate rises are fueling inflation and currency devaluation.

The purpose of this article is to look at the macro sectoral flows and assess whether Turkey is a good place for investment and to debunk the popular press view that Turkey is going to default on its debts and collapse.

Prime Minister Erdogan has made a connection between central bank rate policy and inflation.

It is the Prime Minister’s contention that the high central bank rates are the cause of the inflation. His view is correct, though not mainstream, and there is plenty of evidence to support his view. President Putin of Russia is on record with a similar view, and it is possible that the two exchanged notes at a recent meeting because President Erdogan’s comments began shortly after the Turkey-Russia summit.

We have seen globally that as soon as a central bank lowers or lifts rates, inflation moves in the same direction. This makes logical sense, as a rise in borrowing costs increases the price of products and services that have a finance or credit component in their cost structure.

If increasing interest rates were to strengthen a currency, then the Argentine peso would be the strongest currency in the world. But it is not.

The Canadian inflation rate was bumping along the bottom until they raised rates.

The US inflation rate was bumping along the bottom until rates were raised.


Russian inflation is moving with central bank rate movements.


What I am asserting is that the Fed and the mainstream have it backwards with regard to how interest rates interact with the economy. They have it backwards with regard to both the current health of the economy and inflation, and, therefore, their discussion of appropriate monetary policy is entirely confused and inapplicable. – Source: Warren Mosler1

Turning to Turkey’s lira, we have seen that higher rates have not led to a stronger currency, as the chart below shows.

The stock market is no worse than it was in January 2017 as the chart below shows, and has followed the trajectory of most emerging market countries over the same period.

Not all currencies are made the same. Corruption and business confidence play a big part in its value. Turkey has a corruption index rating of 40, which puts it in the same league as the countries shown in the table below. The higher the number the better.

(Source: Trading Economics dot com)

Not surprisingly the yield on the Turkish ten-year bond has moved up with the central bank rate.

This has an influence on GDP as measured in USD in the chart below:

Thanks to a volatile lira, Turkey’s GDP, expressed in USD, appears to be falling. However, in reality GDP has been growing strongly, as the above chart shows.

Turkey will be assessed using a balance of sectoral flows model after the work of British economist Professor Wynne Godley.

In 1970, Professor Wynne Godley moved to Cambridge where, with Francis Cripps, he founded the Cambridge Economic Policy Group (CEPG). In early 1974, Godley first apprehended the strategic importance of the accounting identity – which says that measured at current prices, the government’s budget balance, less the current account balance, is by definition equal to the private sector balance.

GDP = Federal Spending + Non-federal Spending + Net Exports

As a percentage of GDP, all three sectors sum to zero.


These are accounting identities and correct by definition.

By definition, the stronger the private sector balance is, the stronger the private domestic economy and investment markets within it.

The following formula can express a nation’s balance of accounts:

Private Sector [P] = Government Sector [G] + External Sector [X]

The community, business, and the stock market are located in P. For P to expand, it needs the balance of inputs from G and X to be positive. A negative balance causes P to contract.

When one adds all three sectors together, it equals the GDP for that year. One sector’s loss is the other’s gain, and if they all go down, so does GDP.

When one does a sectoral analysis, one finds the following…

Sectoral Balance Analysis

The charts below show the key information required to calculate the sectoral balances:

One can calculate the private sector balance by adding the current account balance and the government budget and expressing it as a percentage of GDP. As an accounting identity, this must sum to zero overall as a percentage of GDP.

Recent, current and projected annual sector balances are shown in the table below:

Private Sector


External Sector


Government Sector




-3.8 %






2018 #




(Source: Trading Economics, FRED and author calculations based on the same)

# Forecast based on existing flow rates and plans.

The private sector balance is negative due to the drain from the current account and the meager input from the government sector. To fund what is in effect a private sector deficit, the private sector must be going into debt or running down its stock of existing wealth.

The private sector balance is also reinforced by private credit creation from private banks. One can say that aggregate demand in any period is GDP + Credit. The chart below shows the private credit trend:

Private credit creation added 3.6% of GDP in 2017 to the economy and money supply. This makes up the “gap” between the current account and government spending and enables the private sector to keep on spending. 2018 is already at 3.45% of GDP or $US29B. Credit is used in place of income to maintain purchasing power.

Borrowing in inflationary times is a good idea as the principal is inflated away much to the chagrin of the lender.

The flow of credit adds to the stock of private debt shown in the chart below:

(Source: Professor Steve Keen)

Private debt is about 80% of GDP, which is low by developed world standards. Most of this debt is held by the corporate sector and the household sector has hardly any debt at all.

Professor Steve Keen, an expert on private debt, says that 150% of private debt-to-GDP is the point at which most economies tend not to take on any more debt. It is a natural barrier.

Turkey could add a further 70% of GDP to its private debt before meeting this natural barrier.

The recent inflationary phase impact can be seen in the debt in that household debt is falling as it is inflated away in real terms. Corporate debt has kept growing because a lot of it is foreign debt denominated in USDs and Euros which keep pace with the exchange rate and rise when domestic inflation is high to keep pace with the principal and interest payments in real terms.

This is where the popular press believe that Turkey will default on its foreign debts and collapse.

Turkey is a currency sovereign which means that it has its sovereign currency that it is legally entitled to create to pay its bills and circulate in its nation-state. Turkey is sovereign in the Lira and can never become intentionally insolvent in the Lira anymore than a referee at a football game can run out of points to award in a game.

(Ikasiko ote dute inoiz Euskal Herriko ekonomialariek, politikariek, kazetariek eta progreek? Dudatan nago!)

The chart below shows Turkey stock of foreign exchange currency reserves.

The chart below shows Turkey stock of external debt not denominated in Lira and therefore at risk of default should Turkey not be able to obtain the currency for which the debt is denominated.

Comparing the two charts ones sees that there is $130B of Forex reserves and about $466B of external debt. If the debt were called in like a home loan, Turkey would have to find $336B in short order to meet the creditors. The interest on the $466B of debt would be in the order of $10B per year at five percent interest. At the current rate of twenty percent interest, it would be around $43B per annual. How much it is can only be speculated upon however it is more likely to be lower rather than higher.

One has seen with the Greek experience that terms are always renegotiated and extended to keep the debt alive. Debt “haircuts” are also possible.

When one looks at serviceability regarding foreign income with which to meet principal and interest payments on external debt one sees a healthy and positive income flow in the capital account shown in the chart below.

Turkey recorded a capital and financial account surplus of 2518 USD Million in June of 2018. Capital Flows in Turkey averaged 1736.75 USD Million from 1992 until 2018. That makes an average of some $24B capitaI flows per annum with which to meet an interest bill that lies somewhere in the same vicinity.

The big fear in the popular press is that Turkey will have a foreign currency shortfall. Turkey would then sell Lira on the foreign exchange market for dollars and euros and thus be at the mercy of short sellers who would devalue the currency and make it ever harder for Turkey to get its needed foreign exchange reserves.

It first has to sell Lira to get dollars, and the speculators and short sellers know this and bet against the Lira. This is what happened in Zimbabwe years ago.

This is not a likely scenario given the stock of foreign exchange reserves and also the steady foreign exchange income. Short sellers beware of a burn.

Another source of foreign debt settlement income is gold.

Turkey’s gold reserves have taken a hit this year. However, there are still upward of 200 tons worth about $7.6B.

Conclusion, Summary and Recommendation

One can see then that the private sector has a negative sectoral balance of over -3.5% of GDP. This is one of the weakest in the world, and but for credit creation fuelling aggregate demand, Turkey would be in recession now. This is not a good background for financial assets in the private sector such and stocks, bonds, and real estate.

More importantly, there is little risk of foreign currency default in Turkey given its stock of foreign exchange reserves and its steady inward capital inflows.

The Presidents understands that the central bank is in large part fuelling both the inflation and currency devaluation in his country with its excessive interest rate levels. The central bank is the monopoly supplier of the Lira and can set the price where it wants with its rate-setting policy and bond buying powers.

No doubt Turkey will soon be offered an emergency credit line from the World Bank or International Monetary Fund, similar to Argentina, on the usual neoliberal conditions:

1. Cut government spending on health care, education, and infrastructure.

2. Smash unions and deregulate the job market.

3. Privatize as much of public infrastructure as possible.

4. Open all its markets to foreign companies.

5. Buy Western made military items.

In essence become a low-cost export production platform for Western business interests. Turkey’s own central bank is preparing the grounds for this scenario at the moment and it will be interesting to see how it turns out. Will President Erdogan prevail over the central banks and Western business imperialism? He is certainly aware of what is going on.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Ikus There is no right time for the Fed to raise rates!:

Iritzi sendo eta desberdinetako garaian bizi gara (1) eta (2)

Iritzi sendo eta desberdinetako garaian bizi gara: basamortua (1)

(1) ETAren legatua: basamortua

Iritzi sendo eta desberdinetako garaian bizi gara: men egitea edo sumisioa (2)

(2) Submissió

Samir Amin (GB)

Samir Amin: “Europa es una ilusión emocional gigantesca” (2012.06.24an)

Nominalismoa nagusi:

Capitalismo de monopolios (sic): elkarrizketan 18 biderrez ‘monopolio’ hitza aipatu eta gero berdin edo txarragoa geratu gara.

Amin-ek (marxista) ez zuen ezagutzen Europar Batasuna (EB).

Utz dezagun bakean Amin bere nominalismoan!

Stuart Holland-ek (marxista) ezagutzen du EB: Stuart Holland – Wikipedia

Aspaldian ezagutu genuen Holland, 1980ko hasieran hain zuzen ere: Uncommon Market liburuaren bidez

In (orain dela 10 urte argitaratua):

Gaur egungo EB estatu desberdinen eraketa da, baita kapital handiaren eraketa ere: enpresa handiek eta banku erraldoiek beren nahitarako sortu eta antolatu dute EB. (Badago oso liburu on bat, orain dela 25 urte plazaratua: Stuart Holland (1980) Uncommon Market. Oraindik ere irakurtzeko merezi du. EBko merkatua ez da komuna, erabat desorekatua baizik.) EB horretan euskal errepublika independentea eratzeko daukagun oztopo bakarra, apartekoa noski, bi estaturi dagokiona da: espainiar eta frantses estatuei. Ez dago beste oztoporik, ez ekonomikorik, ez sozialik, ez kulturalik edo linguistikorik. Arazoa erabat politikoa da. Kontua subiranotasunari dagokio, autodeterminazioari, erabakitzeko subjektuari. Horretaz ez dut uste abertzalea denak dudarik izango duenik (orain dela 10 urte!!! Erabat okertu naiz, orain mandanga da nagusi!!!). Hortaz, ados bagaude horretan, ahalegin gaitezen horren inguruan batzen, bateratzen. Egia da EB hori martxan jartzerakoan, soilik kapitalari begiratu diotenez, europar banku zentralak izan duen politika monetario ia bakarra inflazioari aurre egitekoa izan dela. Ondorioa ezaguna da: langabezia nonahi eta gastu sozialen murriztea.”

Baina Euskal Herrian, sorry Granada honetan marxismoan murgiltzen zirenei (eta direnei!) so egin behar omen diegu. Ez dakit zeren esperoan. Ez dakit zeren zain…

Ala badakit?

Bai, askoz sakonagoa da (eta zen!) S. Holland S. Amir baino.

Alta, Holland ere labur samarra geratu zaigu.

Lekukoa Bill Mitchell, marxismoa ezagutzen duena, baina Granadan erabat ezezaguna dena.

Hona hemen Bill Mitchell-ek dioena Stuart Holland-i buruz:


(vi) Ezkerraren abdikazioa

Stuart Holland Not An Abdication By The Left

(a) The abdication of the Left – redux – Part 1

“… my response to the Social Europe article by Stuart Holland (July 11, 2018) – Not An Abdication By The Left – where he attempts to eviscerate various writers who have dared to suggest that the “social democratic Left in Europe … has run out of ideas” or that “there has been an intellectual abdication by the Left”. He uses his experience as an advisor to Harold Wilson in the 1960s and to Jacques Delors in the early 1990s as an ‘authority’ for his rejection of the claims that the Left has abandoned its social democratic remit. He holds the likes of Delors and António Guterres has shining Left lights. In Part 1, I showed that the view that Delors and Guterres are beacons of Left history and that the social democratic Left has not sold out to the neoliberal orthodoxy (particularly at the political level) is unsustainable. Holland distorts history to suit his argument and is in denial of the facts. (…)

(b) The abdication of the Left – redux – Part 2

“… In Part 2, I trace the argument further by examining the 1993 Delors White Paper, which was meant to be the European Commission’s response to the mass unemployment that was bedevilling the Continent at the time (and remains, by the way) and later propositions that Holland was associated with in relation to Greece during the GFC. They further demonstrate that Stuart Holland is attempting to maintain an indefensible position.


The Modest Proposal

Finally, Stuart Holland believes claims that the conduct of Syriza during the bailout crises and after is symptomatic of the abdication of the Left is unwarranted.

He argues that he and the then Finance Minister Yanis Varoufakis (later to be joined by James Galbraith) published several versions of what they called the “Modest Proposal” as a solution to Greece’s problems.


And then we come to the so-called “Modest Proposal”, put out by economists Yanis Varoufakis and Stuart Holland, which is just a variant of the BBP scheme.

As I wrote in my 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale – one recalls Jonathan Swift’s satire of the same name, published in 1729, where Irish parents were encouraged to ease their economic travails by selling their children as food to provide culinary pleasure to the rich.

The aim of the ‘Modest Proposal’ was to address four “interrelated” problems: a banking crisis, involving banks that are the responsibility of the national governments, who do not have the currency capacity to guarantee deposits; a debt crisis where nations cannot borrow from private bond markets; an investment crisis, where both the level of investment has fallen sharply and the imbalance between the trade surplus and deficit nations has widened; and a social crisis, with high unemployment, rising homelessness and poverty, and falling incomes.

Like all the ‘hybrid’ schemes, they are motivated by the assertion is that “a Eurozone breakup would destroy the European Union, except perhaps in name” which would pose a “global danger” (Varoufakis et. al., 2013: 2).

Dramatics aside, when assessing the proposal it was hard to see how a scheme that involves no fiscal transfers or changes to the Treaty can provide a lasting solution to the mess.

The proposal would never have solved the inherent problems within the Eurozone, which are defined by the very political constraints that the authors recognise force them to adopt these ‘modest’ proposals, in lieu of more effective and lasting solutions.

Their debt manipulation proposal was similar to the BBP, outlined above.

The obvious question is why bother? The ECB has through its QE programs demonstrated that they can deal the private bond investors out of the equation when it came to setting yields on government bonds.

The ECB can effectively set yields at any level it desires including zero, which means that a Member State can only run out of money if the ECB refuses to exercise its power to buy unlimited volumes of the government’s debt.

The SMP program kept the Eurozone together, but by imposing austerity as a pre-condition for participation, it failed to address the core problem that Southern Europe is in depression and the only way out is for fiscal deficits to expand.

The most direct way forward would have been for the ECB to invoke its OMT facility and facilitate increased government spending.

Varoufakis, Holland and Galbraith (2013: 5) acknowledged that the OMT program “has succeeded in taming interest rate spreads within the euro-zone” but conclude that the implicit threat against bond markets, described above, is “non-credible”.

Allegedly, bond dealers will eventually call the ECB’s bluff and expose the OMT program as a paper tiger. This criticism is without foundation.

How exactly can the private bond markets “test the ECB’s resolve”? (p.5).

The ECB has unlimited euro capacity to purchase all the secondary market bonds it desires.

To think otherwise is hardly progressive or Left. The belief that the bond markets have the power over the state is core neoliberal thinking.

It was also difficult to see the ‘Modest Proposal’ as being consistent with Article 104 of the Treaty if a Member State failed to make payments as agreed. In that case the ECB would have to fund the deficiency, which would be equivalent to offering the prohibited ‘overdraft facility’ to the state.

The ‘Modest Proposal’ would also probably promote perverse bond market behaviour and deliver massive corporate welfare to the investment banks.

The debt policy would see the ECB take bank reserves out of the system in return for ECB-bonds. It wouldn’t take long for the bond markets to work out that they could ask for a premium on the ECB-bonds and the ECB would be under pressure to concede. With interest rates low, the private banks could then borrow from the ECB to buy the bonds, which would pay a return higher than the short-term cash.


I felt the need to respond to the Stuart Holland article because it is a good example of how the progressive, social democratic Left has lost itself in the woods of denial, historical revisionism and plain stupidity.

I know the Europhile Left will be tweeting it and feeling good about it because it provides validation for their own cognitive dissonance.

But as a view of what has happened over the last 40 or so years within the political Left it definitive – completely losing track of reality.”

Bai, argi eta garbi: porrot egin duena Ezkerra da, erabateko porrota gainera: Ezkerraz, hitz batzuk

Nik neuk ez dut ezagutzen marxista bat ere ez Europari, Europar Batasunari hobe esanda, irtenbide sendoren bat proposatu dioenik… Bla-bla-bla eta hitzontzikeria asko bai, besterik ez!

Alta, Granada honetan profeta berri baten zain dago jende asko, bai gehiegi.

Noiz arte horrela?

Warren Mosler: aurrezkiak, zorra, maileguak, gordailuak, Fed eta Tsy

Warren B. Mosler‏ @wbmosler

Honi erantzuten: @EconEmotions

It’s a ‘one man’s savings is another’s debt’ world, and the causation is from loans to deposits, etc. 😉

Warren B. Mosler‏ @wbmosler

Honi erantzuten: @johnrlaughlin

Yes, ‘savings desires’ grow and compound and need to be continually ‘offset’ by deficit spending- public or private- to sustain demand. See attached bank credit growth chart as a rough proxy for private sector deficit spending:

Warren B. Mosler‏ @wbmosler

Hauei erantzuten: @RFrances2 @jessefelder

With my permanent 0% policy rate proposal risk adjusted returns on new investments go to 0.

Warren B. Mosler‏ @wbmosler

Hauei erantzuten: @barua_ashish @katiecannon2 @organicfanatic5

Their policy options differ.

Warren B. Mosler‏ @wbmosler

erabiltzaileri erantzuten @katiecannon2 @cullenroche erabiltzaileari eta

erabiltzaileri erantzuten

Yes, the tsy could mint the coin and sell it to the Fed. But either the Fed or Tsy has to pay interest on net spending if it wants a policy rate higher than 0%, so for all practical purposes nothing has changed?

Warren B. Mosler‏ @wbmosler

erabiltzaileri erantzuten @netbacker @cullenroche erabiltzaileari eta

erabiltzaileri erantzuten

CB member banks are agents of the CB which is an agent of the state that legislates that said bank deposits will be accepted for payment of taxes.

Warren B. Mosler‏ @wbmosler

erabiltzaileri erantzuten @netbacker @cullenroche erabiltzaileari eta

erabiltzaileri erantzuten

Tax liabilities are expressed in units of the state currency, so those units are best understood as tax credits. The state accepts its tax credits as the means of extinguishing its tax liabilities.

Warren B. Mosler‏ @wbmosler

Hauei erantzuten: @MasaccioEW @runtodaylight

When the President was informed that there were 11 Brazilian children in detention he asked ‘how many zeros in a brazillion?‘ 😉

Warren B. Mosler‏ @wbmosler uzt. 7

erabiltzaileri erantzuten @PDWriter @cullenroche erabiltzaileari eta

erabiltzaileri erantzuten

Banks debit and credit accounts on their own books. Banks don’t alter accounts on other bank’s books.

Warren B. Mosler‏ @wbmosler uzt. 7

erabiltzaileri erantzuten @MineThis1 @PDWriter erabiltzaileari eta

erabiltzaileri erantzuten

“Deficit” and “surplus” are residual accounting information.

Warren B. Mosler‏ @wbmosler uzt. 7

erabiltzaileri erantzuten @PDWriter @cullenroche erabiltzaileari eta

erabiltzaileri erantzuten

And the tsy then shifts those funds to its fed account as it doesn’t make payments from that commercial bank account?

Warren B. Mosler‏ @wbmosler uzt. 7

Hauei erantzuten: @barua_ashish @netbacker

People confuse productivity stories (automation) with unspent income stories (unemployment).

Warren B. Mosler(e)k Bertxiotua

SerbanVCEnache‏ @SerbanVCEnache uzt. 7

erabiltzaileri erantzuten @SerbanVCEnache @cullenroche erabiltzaileari eta

erabiltzaileri erantzuten

I guess the Chairman of the NY Fed back in ’46 was just drunk and writing fiction with this article? Right? …

Twitter batzuk: Fed, zorra, dirua eta QE

Stephanie Kelton‏ @StephanieKelton


When the govt “borrows,” it turns green paper ($ in fed accounts it already spent) into yellow paper ($ in different fed accounts aka ‘treasury bonds’). At maturity, the yellow paper is transformed back into green paper by shifting those $ back to the fed accounts they came from.

2018 uzt. 12

Stephanie Kelton‏@StephanieKelton uzt. 13

And all those $ together are just our net money supply. Nothing scary about the mechanics.

Deficit Owls‏ @DeficitOwls uzt. 13

Honi erantzuten: @StephanieKelton

Not enough people understand that “money” and “debt” are NOT two categorically different things. “Money” is debt, and debts can have more or less “money-ness.” Government debts, both currency and Treasury securities, have a lot of “money-ness.”

Ángel García Banchs‏ @garciabanchs uzt. 13

One cannot buy things (goods and services – G&S) with T-Bills, but only cash, deposits (debit), or creditcards (credit). The only thing one can buy with T-Bills is money, but not G&S. Therefore, although given the rate of interest, T-Bills are very liquid, they lack moneyness

 Warren B. Mosler‏ @wbmosler uzt. 13

True, but the Fed’s quantitative easing policy has demonstrated that the mix between reserves and securities is of no detectable macro economic consequence. 😉

NoisyScot‏ @JohnLeck22 uzt. 13

Hauei erantzuten: @StephanieKelton @consbyname

What is the point of doing this??

Warren B. Mosler‏ @wbmosler uzt. 13

It was applicable to our prior gold standard fixed exchange rate policy, but not to our current floating exchange rate policy.

Sara Holland #MMT‏ @sarahollando552 uzt. 13

Hauei erantzuten: @StephanieKelton @MammothWhale

Corporate Welfare for the few. Privatise the profits, socialise the losses.

Lake Louise World Cup‏ @LLSPEED

Honi erantzuten: @StephanieKelton

And when nobody wants the yellow paper but you continue to print the green paper? That’s called “Venezuela”.

Deficit Owls‏ @DeficitOwls

It’s the other way around. Creating the green paper creates the demand for the yellow paper: why would you want your savings not to earn interest?

Katalunia: strong opinions, iritzi sendoak

Zer gertatzen ari da Katalunian?

Ez dakit!

Baina hona hemen zantzu batzuk:

(I) Zer gertatzen ari da Katalunian? Bi ahots kritiko

(ii) Zer gertatzen ari da Katalunian? Bi ahots kritiko (2)

(iii) La majoria social i la implementació de la república: carta a ERC i el PdeCAT

Gaurko gehigarria:

Joan Tardà i el referèndum acordat (

Ventríloc d’Oriol Junqueras, l’inefable Joan Tardà és l’encarregat oficial d’anar-nos explicant, via piulades, la canònica d’aquest nou art processista conegut popularment com a eixamplar la base. El cònsul d’Esquerra a Madrid (un diplomàtic de rang curiós, car representa la República cobrant encara sis mil euricus mensuals del Regne d’Espanya) diu que “la força de l’independentisme ha de contribuir a fer possible la construcció d’un procés popular i institucional de decisió que integri les diferents opcions presents a la societat catalana.” Per la seva prosa els coneixereu, estimats lectors! Jo que em pensava, hiperventilat de mi, que la força de l’independentisme consistia a proclamar efectivament la independència, fent honor al mandat del Parlament i al resultat de l’1-O, així com a protegir les institucions de la Generalitat que representen la ciutadania i tal i qual…

Doncs no, senyora, toqui’s la fava i balli! Segons la bona nova de can Lledoners, l’independentisme ha de construir la gran masia de quisvulla que vulgui determinar el futur de Catalunya a les urnes. A saber, i en cristià, convèncer d’acordar un referèndum no només als supporters d’allò que en dèiem dret a decidir, sinó fins i tot als contraris de la independència, una gent que –a dia d’avui– no vol veure el referèndum ni en pintura. Tardà ens ho aclareix: cal ser “més forts per guanyar la batalla del diàleg i la negociació d’un referèndum que ofereixi una resposta a les demandes de tothom, les dels catalans que aspiren a la independència, la dels que volen un estat federal o de qui defensa l’autonomia.” Per anar resumint, que de ser un moviment propositiu (implementar la República), l’independentisme ha passat a ser un col·lectiu de persuasió referendària. 

La idea podria ser bona, estimat Joan, si no fos pel petit detall que fa quatre anys ja es va proposar a un Congreso que la va tombar entre badalls. De fet, la pensada seria encara millor si l’electorat favorable a un referèndum on hom pugui votar No (bàsicament, el dels comuns) estigués per la feina de pressionar el govern de Sánchez amb l’exigència de la votació per mantenir-lo. Però si ni ho heu fet vosaltres mateixos, fills meus, que sou independentistes, què no deixarà de fer un espanyol d’esquerres? De fet, ja que hi som, Joan: em podries dir a canvi de què vàreu fer Sánchez president? Quin va ser, per seguir la teva prosa de manual de rentadora, l’espai de construcció que vàreu acordar amb ell? De fet, Joan, la idea que proposes seria d’autèntic Premi Nobel si no fos, oh my god, perquè us vàreu comprometre a aplicar el resultat d’un referèndum convocat pel Parlament.

Ara per ara, el govern espanyol no té ni un sol incentiu que el dugui a pactar un referèndum. Feu-vos una pregunta ben senzilla: Per què Sánchez hauria de pactar un referèndum, quan els convocants mateixos de l’1-O no van tenir la força d’aplicar la votació que ells mateixos van organitzar i prometre d’implementar? Encara unes altres, si teniu temps i no preferiu escudar-vos en el processisme. Per què Sánchez hauria de convocar un referèndum, si són els partits independentistes mateixos els qui li han regalat la investidura amb un xec en blanc? Per què, si ja en té prou amb ser espantall de PP i Ciutadans perquè Podemos, ERC i Convergència li paguin totes les fantes? I per acabar: com pot el Govern negociar un referèndum si la mateixa administració catalana va acatar el 155 i mentí amb la restitució dels exiliats i empresonats, desproveint-se de tota la seva força institucional?

Sé que les preguntes couen, perquè plantegen quelcom més que anar-se llepant la ferida amb el llacet groc. Feu-vos-les, us ho prego. Tu també, Joan. Perquè fer-te-les potser serà el primer pas per deixar de tractar la gent com si fos imbècil.”

Hortaz, zer gertatzen ari da Katalunian?

Ez dakit, baina badirudi gauza asko, gehiegi aldatu behar direla, katalanek independentziaren bidetik abiatu nahi izango balute (irrealtasun gramatikala) edo nahi izan balezate (posibletasun gramatikala).

Afera nagusia autonomismoa versus independentismoa bide da…

Baina afera ez da politika mailan bukatzen.

Izan ere, badakigu, ongi jakin, ERC, eta Oriol Junqueras bereziki, oso urrun daudela jarrera ezkertiar batetik.

Dudatan egotekotan, ikus ondokoak (in Eskozia, Katalunia, Euskal Herria… independentziarako bidean? Diru politikaren garrantziaz):

(a) Ezkerra neoliberalismoan murgiltzen denean…1

(b) Katalunia: gobernuaren finantza estrategiaz, independentziari begira2

(c) Eguberriko zipriztinak3

Gauza bertsua, ala okerragoa, gertatzen da Euskal Herrian, non EHBildu erabat galduta dagoen (PNV-ren atzetik, gainera) hala ekonomian (errenten banaketa, alokairuen banaketa, oinarrizko errenta unibertsala, zergak handitzea inbertsioak finantzatzeko, eta abar oso luzea…) nola politikan (Espainiarekiko konfederazioan!!).

Mon dieu!