Defizita: marmarka, etengabe

Hasierarako, Ikus Defizita, marmarka, desafioa eta erantzunak


(i) Mike Norman-ek segitzen du marmarka:

(a) Guest post: MMTers need to think about how to merge monetary and fiscal policy

(b) No more talk and lecturing. I’m using MMT to make money now. That’s the best revenge!

(c) And then Mosler shows up

(d) Going around telling people the deficit is too small is a non starter

(e) My friend calls and asks, “Mike, whaddya think now?” Here’s what I said…

(f) Time to ask ourselves, why hasn’t MMT caught on?

(g) Federal deficit is going up again. Up $40 billion versus last year.

(h) Who made this call? I did!

(i) The deficit is now $73 billion larger than last year and growing.

(j) Deficit is up 25% over last year, as I forecast. Will the “deficit is too small crowd” now change their position?

Tom Hickey said…
I’d assume they would say that it is still not big enough Mike….

If there is underemployment, the deficit is not big enough, as I understand it.

Marriner Eccles said that 90% stimulus doesn’t cut it in ending a crisis.

Charles Hayden said…

Mosler doesn’t predict the stock market; he’s about full employment and price stability.

And a note: in 2010 he was telling us all there would not be a second crash or double dip because the deficit was still over 10% of GDP.

Gary Hart said…
Somebody correct me but from what I understand from Bill Mitchell the deficit should not be compared to GDP, but should be large enough to quell unemployment.

MRW said…
Flows have been very, very, strong.

Then why is economic growth (according to the U.S. Bureau of Economic Analysis*) only 1.1%, when the average from 1947 to 2016 was 3.22%? Why are 94 million Americans underemployed or unemployed? Why are 45 million still on food stamps?

Who is benefiting from these flows? Just traders? Just Wall Street?

These are sincere, serious, questions. I am not asking them to be an asshole or smart-ass. I would really like to be enlightened, if possible. The deficit is just the difference between govt spending and taxes collected. An accounting measurement that recognizes the level of congressional spending and exercise of fiscal policy, the latter a phantom of times past. I really don’t see the contradiction that you claim makes Mosler wrong.

Steve D said…
@ MRW -“I really don’t see the contradiction that you claim makes Mosler wrong.”

Mosler consistently says borrowing to spend (to grow output) can come from any combination of the indebtedness of the public/private sectors. So yeah, the deficit remains too small.

Mr. Norman’s nit-picking (by assuming that Mosler strictly means the public “deficit is too small”) is Mike’s go-to recourse to assuage his own ego. Therefore, no dogma-free economics on MNE.

The financial economy always trumps the real economy.

Over 2 million have left SNAP roles since 2014, making the total today closer to 42m.

(ii) Eta marmarka gehiago

Deficit is the highest in 6 years. Where are all the MMT gods??


The deficit is now $766 bln, the highest in 6 years and the highest in 5 years as a %  of GDP. Where are all the MMT gods touting this as bullish? Mosler‘s still bearish. He’s been bearish for 4 years. Missed the entire rally.

Kelton? Still criticizing Trump.

Federal Deficit

Federal deficit

BTW…at Mike Norman Economics we look at FLOWS. It gave us the bullish signal a long time ago.

Ryan Harris said…

MMT is a useful economic model, seems like once Wray left and Mosler retired the remaining people became more interested in using the model as a means to promote political careers than the political economics itself.

Too bad in a way for the MMT analysis that gets bandied about like Mosler or Kelton clearly doesn’t go very deep any more — missing all the interesting things.

finaslegendarystories said…

well said RH…many questions re: MMT today (lack of good paying blue collar jobs, and resulting increased consumer debt) go unanswered, including my questions on Twitter responding to Aussie Prof. Bill Mitchell…is anybody paying attention, with exception of Mike Norman? But, WTF do I know, so I follow Ocasio-Cortez for entertainment purposes…

lastgreek said…

How much of this “deficit” was used in the public (Tom, Dick and Harriet…) interest?

lastgreek said…

Stephanie Kelton, Stony Brook University professor of public policy and economics, discusses the impact of U.S. tax cuts and infrastructure spending on employment and the economy with Bloomberg’s Joe Weisenthal on “What’d You Miss.”

(Source: Bloomberg)

Ralph Musgrave said…

The basic MMT position is that the size of the deficit doesn’t matter as long as the economy has spare capacity, i.e. as long as the deficit does not exacerbate inflation too much. In contrast, when the economy IS NEAR or at capacity, a country needs to be careful on the size of the deficit. In particular if it has an independent central bank, the CB will simply negate what it sees as an excessive deficit with interest rate rises. To judge by Kelton’s pronouncements, it’s not entirely clear to me that she gets that point, though I could be wrong there.

Matt Franko said…

Oh no now more bad news:

“Gross domestic product, the value of every good and service produced domestically, rose at an annual rate of 4.2%, the Commerce Department said, revised up from 4.1% in the advance estimate. It remained the fastest pace of growth in nearly four years.”

This really sucks…

Nahikoa eta sobera, behin eta berriz, sasi-eztabaida berbera!

Berriz: Why are 94 million Americans underemployed or unemployed?

Iruzkinak (6)

  • joseba

    Defizita: marmarka, berriz
    Deficit balloons to $980 bln. Where are all the MMT gods cheering this??
    A giant end-of-month spending spree in August has ballooned the Federal defiicit to $980 bln and 4.8% of GDP.

    This is the largest nominal deficit since 2009 and the largest as a percentage of GDP since 2012.

    The MMT gods should be cheering this. They’re not. Weird.

    myxzptlk said…

    If my understanding is correct, MMT doesn’t argue that every deficit is good. It argues that deficits that promote growth and don’t undermine economic confidence are good. So I would expect Stephanie Kelton et al to cheer current deficit spending only to the extent that it bolsters economic confidence. Clearly, market reactions to Trump’s tariffs (even if their impacts are small) are undermining economic confidence. It’s the psychological impact, not the economic impact, that matters.
    September 9, 2018

    Detroit Dan said…
    Right. Plus MMTers are clear that deficits which increase income inequality (as from the recent tax cuts) may not provide much of a boost to the economy as most additional income is simple reinvested in existing financial assets, driving their prices up but not increasing consumption or real investment.Eventually asset prices realign with underlying consumption and that will be negative. So not a good deficit on balance.
    September 9, 2018


    Ralph Musgrave said…
    MMTers aren’t celebrating the current large deficit because large deficits are not needed when the economy is at or near capacity, which is where it is now. In fact when THERE ARE large deficits in that scenario, the Fed has to counteract the resultant excess demand with interest rate rises, which all told is a fatuous exercise. I.e. what’s the point in creating and spending so much new base money into the economy that the state (i.e. government and central bank) then has to borrow some of it back to curb demand? The only net effect is an entirely artificial rise in interest rates.

    That all supports the point made by Warren Mosler, Bill Mitchell and others that enough base money should be created to keep the economy at capacity, but not so much that government then has to borrow some of it back. I.e. the state should pay no interest to anyone (unless there are particularly good reasons for government borrowing, and I don’t know what they are). I.e. Mosler’s “permanent zero interest rate” policy looks to me like being correct.
    September 10, 2018

    Michael Norman said…

    I compile this from data from the Daily Treasury Statement, which I analyze DAILY. The Treasury will post these figures later this month. My work is ahead of theirs.

    You can use my charts. They are correct.
    September 10

    Chewitup said…
    I don’t think we’re near capacity at all. Labor participation and job security are too low. We are still in supply side mode. Trickle down takes a long time to create warmth. Especially when so much of the deficit is spent on defense.
    As to why the mainstream MMTers are not citing the deficit- they are all Democrats. (Mike and Matt do not count). The best you can get is Stephanie Kelton admonishing Nancy Pelosi for her paygo policy.
    September 10

  • joseba

    Ná de ná:
    Mike Norman on Warren Mosler
    Why has Warren Mosler been bearish for so long?

    On Warren Mosler’s website his economic views have been bearish for something like the last four years. I cannot understand this.

    Not only was the deficit (something he talks about all the time) last year the highest in 6 years (both nominally and as a percent of GDP), but this year it will be even higher. In fact, it’s already three-fourth’s of last year’s total and we’re not even halfway through the fiscal year. Shouldn’t he be bullish?

    Moreover, government spending is going to break another record. Government spending is the “flow” in the “stock/flow” discussion (whereas the deficit is the stock) and it’s what drives income, profits and overall economic activity. You don’t even know what the deficit is going to be until the government spends first. (He even says, “gov’t spends first then taxes later.” So why not look at flows?)

    Finally, when he talks about Fed rate hikes he says they “add to income via the interest channel,” which is true. Meanwhile the Fed has been raising rates for the past 3+ years and he’s still bearish?

    Frankly I don’t understand his constant bearishness. It’s very odd. It’s like he ignores his very own MMT concepts when looking at the economy. Every post on his website is about how this or that metric is slowing and those posts have been going on for years, yet gov’t spending continues to rise, the economy continues to expand and the stock market continues to make new highs.

    Really, I find it very strange.

    Posted by Michael Norman at 7:13 AM

    Labels: bearish on economy, bearish on stocks, MMT, Warren Mosler

    David said…
    My perspective, Warren is ‘unknown’ risk adverse. He understands the complexities of the economic system and has used them to his advantage probably before anyone else did.

    His framework is more widely understood, even by central bankers and the levers are being made use of. Conflict with how Warren’s framework says the system operates and how it actually does has morphed. CB’s should not be buying stock (as in Switzerland, Japan and probably the US, China ) or other financial assets outside of Tsy securities either directly or indirectly. These nontraditional moves have allowed the current system to continue. MMR and one of the Scott’s would be proud

    I remember back in 2003? when Warren and I discussed the possibility of US choosing an alternative path to Japanese style deflation. I argued our electoral system would allow for an inflationary blowoff which would lead the world to unwind from its debt bondage in a nonviolent form of WWII. Warren thought I was nuts and he was right on target with the financial crisis that followed.

    My hope for an inflationary jubilee rather than a violent overthrow of the current system continues with the future bringing more deflation. Warren is a pessimist and mostly right.
    March 5, 2019 at 12:39 PM

    Michael Norman said…
    I don’t know about “mostly right.” His views have been mostly wrong. In addition they appear to be altogether dismissive of his own MMT rationale.

    Maybe he made his money like Jim Rogers made his money, i.e. being hooked up with a savvy trader and going along for the ride. (e.g. Rogers/Soros.)

    If he’s been short the market for the last 4 years based on is posts, then he lost a lot. And that was contrary to what his own MMT understandings should have been telling him.

    March 5, 2019 at 1:52 PM

    David said…
    If I recall correctly there was a little more to it…

    “Warren Mosler developed a lot of this cohesion himself while running his own hedge fund and made $100 million in the early 90s betting that Italy wouldn’t default on its own debt, because they could print as much Lira as they wanted.’

    My guess is he’s been making money lately like Bill Gross made his money for 40 years. He’s been borrowing short and lending long on Treasuries as Treasuries have no haircut on capital requirement, if you are a financial institution.

    I agree he’s been negative for a long time. He does follow my favorite recession indicator, Commercial and Industrial Loans and I find it useful when he posts charts of it since I’m not near as disciplined as he is. I don’t recall him doing or saying anything ‘wrong’, worst crime I would accuse him of is highlighting bad news.

    You and Warren had an interview thing going that I would listen to back in the beginning. Sorry you guys had a falling out, always figured Warren might be a bit autistic (as I possibly am) given his drive to gather information, though I’ve never met him.
    March 5, 2019 at 4:40 PM

    Kain said…
    I noticed this too. In general, is it fair to say that Warren Mosler has been out of the public eye for the most part in about 3 years?
    March 5, 2019 at 7:43 PM

    Mike Norman said…

    C&I loans are at record levels and rising at the fastest pace in over 3 years so, again, he doesn’t follow MMT or the “evidence” he posts.

    And he made $100 million because of his trader partners. He was the “analyst.”
    March 6, 2019 at 6:31 AM

    Mike Norman said…

    Here is the link to C&I loans.

    Click here.
    March 6, 2019 at 6:33 AM

    David said…

    Just wanted to say the C&I loan did the same before last recession was declared in Dec 2008. C&I loans turned down after they quit accelerating. The geniuses at the NBER declared recession and backdated its start to Dec 2007.

    I recall discussing with Warren at the time. He mentioned that often economic sectors will boost borrowing to compensate for fall in profits/income until banks wise up and quit lending. If you see a sudden acceleration in lending it isn’t necessarily a good sign.
    March 7, 2019 at 4:26 PM
    David said…
    I’m not sure where the optimism regarding the government deficit is coming from.

    I’m seeing a rapid deceleration in federal government deficit spending leading up to the end of 2018. See page 6 of Z1 report
    March 8, 2019 at 12:55 PM

  • joseba

    Mike Norman:
    I’m looking for recession and not finding it
    These are stats from my latest MMT Trader report. Are these recessionary signs? Warren Mosler is bearish as hell.

    Auto loans rising at the fastest pace in 8 months.
    Residential real estate loans rising at fastest pace in 3 weeks.
    Bank “residual” (capital) at record highs and up 3 weeks straight and up 6 of the last 7 weeks. (Implies growing bank earnings.)
    Bank assets at record levels.
    Gasoline demand at 6-month high.
    Distillate demand at 3-month high.
    Federal tax deposits have been rising since January and are on track to completely erase the y-o-y negative gap. Going positive.
    Corporation taxes rising, too. They bottomed vs last year in early February.
    Social Security (largest spending item) growing at fastest pace so far this fiscal year.
    “Other Withdrawals” (military and defense) growing at fastest pace since early February and has accelerated 63% since then.
    Unemployment benefits down and falling  y-o-y.
    Food Stamps down y-o-y. 

    These are all coincident or leading statistics. Most of these CREATE the forward conditions of the economy rather than reflect what the economy is already doing like much of the data cited by other economists.

    I don’t know…I just don’t see it.

    1 comment:

    Tom Hickey said…
    Paul McCulley on No Recession Ahead & Fed’s Tightening Done

    Prescient Economist & Fed Expert Paul McCulley on No Recession Ahead & Fed’s Tightening Done

  • joseba

    Eta oraindik marmarka gehiago…

    Deficit is $930 bln. Why are all the prominent MMTers silent on this? They should be cheering, no?
    The deficit as of August 15, was $931 bln. That’s the highest in 7 years. And as a percentage of GDP it’s now at 4.4%, the highest in 6 years.


    So why are all the prominent MMTers silent about this?

    Nothing from Kelton. Mosler continues to put out bearish forecasts. (Going on 5 years now!)

    They only talk about deficits when it’s convenient for them?

    They say they’re not political, but it seems to me that not mentioning the deficit is a way of not giving credit to Trump, even obliquely.

    Their information and analysis is discredited in my opinion. If you want to play objective you have to be objective.

    Bill Mitchell:

    The July 2019 BLS labour market data release for the US tells me that the US labour market has been relatively steady over the last few months despite some month-to-month volatility.
    It is weaker than where it was at the end of 2018.
    It is clear that there is still a substantial jobs deficit remaining and considerable scope for increased participation.
    There is also a rising proportion of below-average wage jobs (at the sectoral level) being produced since this recovery began.”

  • joseba

    Marmarka, berriz:

    Mike Norman
    Friday, October 4, 2019
    In the U.S. fiscal support is at record levels. FY 2019 ended with a record of $5 trillion of Federal Gov’t spending and the deficit at $1 trillion1, the biggest in 7 years. So it’s not just Japan. Why wasn’t this mentioned?

    Mike Norman said…
    I left a comment on Mitchell’s site. He sounds the alarm about slowing U.S. exports, yet mentions nothing about the fact that U.S. Federal Gov’t spending hit a record $5 trillion in the fiscal year just concluded, up over $300 bln2 from the previous year. And the deficit hit $1 trillion, the highest in 7 years. No prominent MMTer has mentioned anything about this. It’s been only me.
    October 4, 2019

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