Sir James Goldsmith presciently warned of "labor arbitrage" in the 90's. However the huge policy error in my opinion was letting in China into the WTO with no strings attached. Possibly because the Secretary Albright was not alert enough and Clinton was being impeached. However the Wall Street story of "China" being an opportunity still continues.
Creditism is not capitalism. The “invisible hand” requires a signaling mechanism of preferences and costs. It was described by Hayek.
Hence, capitalism is voluntarism.
Creditism is central planning, the opposite of capitalism. How many times did you say “WE should”?
Every group of elites has its own “Silver Bullet” prescription for solving the coming climate/AI/Russia/China/depression disaster.
We are not anywhere close to general AI even if combining fancy regression algorithms makes it seem so.
People who don’t want the government to pick winners and losers have no illusions that it doesn’t. I just wished it stopped.
MMT is based on a strong assumption. I will need to write a monograph about what happens when you relax it (the magic dissipates).
We just had a long QE experiment. What structural problem did it solve?! (The Fed doesn't seem to believe that it did any good).
Did QE create structural problems? The Fed seems to believe so (inequality).
We had a short Helicopter Money experiment that created a bubble that the Fed is now trying to burst to no avail.
You seem to be thinking that creating more digits in the computer can generate innovation?! Isn’t necessity the mother of invention?! (preferences).
Petrodollar - The Good
The Petrodollar system ensured that the U.S. had the ability to purchase unlimited amounts of energy by simply printing dollars.
It allowed devastated countries from two world wars to economically recover and compete with the U.S. with the aid of depreciated currencies.
It allowed the U.S. to win the cold war by being able to print dollars for purchasing sophisticated weaponry and drive the USSR into bankruptcy.
Finally, it ensured world peace since the U.S. took upon itself to police international trade routes, oil producing regions and the world order.
Petrodollar - The Bad
Persistent trade deficits destroyed the U.S. industrial base and caused loss of low skilled well-paying manufacturing jobs. Together with consistent appreciation of assets, it created inequality.
U.S. government budget deficits accumulated into a massive debt burden. The debt cemented the deficit due to the need to pay the interest.
The U.S. lost both monetary policy and fiscal policy flexibility. This is due to the demand for treasuries that depressed interest rates but also “invited” deficits.
Other countries lost monetary and political independence due to their dependence on the dollar and U.S. dictates.
I have two questions about the talk, and one of the two has already been asked by Adem Tumerkan live:
What about all the Us partner surplus countries ex-China-and-Russia (Europe, Japan, Australia etc)?
I'm all into the idea that US partners need to recognize US as the superpower here, but either we Europeans become "colonies/vassal-states" with US law, currency, and taxes, or else we have to maintain our own european system, and we cannot wait for the US to "colonize" us ;)
So does this higher-government-spending into productive use for the population apply even to surplus countries?
I think the answer is yes, although I fear that some of these countries' currency power and credibility do not act in their favor (Japan and UK are the most recent example of government and central banks' incapability to run deficits "greatly" ).
I derived my second question from the latter statement and applied it to the financial sphere and forward guidance.
In a system where implied inflation expectations by the market drive real yields, and the "shadow banking system" (plus China) can act against FED and government forward guidance, how can you finance a "dare greatly" fiscal measure without being bullied by offshore institutions?
For example, in your interviews, you say that the FED injects volatility into the system by hiking rates, where instead, a fair policy would subsidize investment to lower the future inflation dynamics (not to mention that hiking interest rates force inflation higher too).
So how can you escape the "market inflation expectation trap" that hikes rates carelessly of the fair policy?
My English could be better at best, so I hope I have explained myself enough at least to be understood.
Anyway, thanks again for providing us with information not just for creating better investments, but above all to become better human and political beings.
Mike, I question the governments ability to allocate capital effectively. I think the current emphasis on wind and solar and renewables is an example of bad capital and resource allocation. A central bank I believe by continuing to finance the government's deficits furthers the economic distortions. From 1840 until 1914 before the founding of the fed, the private banking system did a very good job of developing the key technologies of its time - rail roads, canals, steel, shipping, etc... Having a federal reserve bank in many ways has only enlarged the government, financial, health care and higher education sectors at the expense of manufacturing (maybe not info tech). I think an approach that puts the entrepreneur at the center along with private sources of financing rather than a government/fed centered approach would work better. Maybe a Manhattan style project for AI. But in general an entrepreneurial/private financing centered approach I believe would be more effective.
Got to listen to half of this call. Really glad I got to hear the full thing here.
Sir James Goldsmith presciently warned of "labor arbitrage" in the 90's. However the huge policy error in my opinion was letting in China into the WTO with no strings attached. Possibly because the Secretary Albright was not alert enough and Clinton was being impeached. However the Wall Street story of "China" being an opportunity still continues.
Thanks Mike.
Creditism is not capitalism. The “invisible hand” requires a signaling mechanism of preferences and costs. It was described by Hayek.
Hence, capitalism is voluntarism.
Creditism is central planning, the opposite of capitalism. How many times did you say “WE should”?
Every group of elites has its own “Silver Bullet” prescription for solving the coming climate/AI/Russia/China/depression disaster.
We are not anywhere close to general AI even if combining fancy regression algorithms makes it seem so.
People who don’t want the government to pick winners and losers have no illusions that it doesn’t. I just wished it stopped.
MMT is based on a strong assumption. I will need to write a monograph about what happens when you relax it (the magic dissipates).
We just had a long QE experiment. What structural problem did it solve?! (The Fed doesn't seem to believe that it did any good).
Did QE create structural problems? The Fed seems to believe so (inequality).
We had a short Helicopter Money experiment that created a bubble that the Fed is now trying to burst to no avail.
You seem to be thinking that creating more digits in the computer can generate innovation?! Isn’t necessity the mother of invention?! (preferences).
Petrodollar - The Good
The Petrodollar system ensured that the U.S. had the ability to purchase unlimited amounts of energy by simply printing dollars.
It allowed devastated countries from two world wars to economically recover and compete with the U.S. with the aid of depreciated currencies.
It allowed the U.S. to win the cold war by being able to print dollars for purchasing sophisticated weaponry and drive the USSR into bankruptcy.
Finally, it ensured world peace since the U.S. took upon itself to police international trade routes, oil producing regions and the world order.
Petrodollar - The Bad
Persistent trade deficits destroyed the U.S. industrial base and caused loss of low skilled well-paying manufacturing jobs. Together with consistent appreciation of assets, it created inequality.
U.S. government budget deficits accumulated into a massive debt burden. The debt cemented the deficit due to the need to pay the interest.
The U.S. lost both monetary policy and fiscal policy flexibility. This is due to the demand for treasuries that depressed interest rates but also “invited” deficits.
Other countries lost monetary and political independence due to their dependence on the dollar and U.S. dictates.
Hi Mike.
Thank you very much for this discussion.
I have two questions about the talk, and one of the two has already been asked by Adem Tumerkan live:
What about all the Us partner surplus countries ex-China-and-Russia (Europe, Japan, Australia etc)?
I'm all into the idea that US partners need to recognize US as the superpower here, but either we Europeans become "colonies/vassal-states" with US law, currency, and taxes, or else we have to maintain our own european system, and we cannot wait for the US to "colonize" us ;)
So does this higher-government-spending into productive use for the population apply even to surplus countries?
I think the answer is yes, although I fear that some of these countries' currency power and credibility do not act in their favor (Japan and UK are the most recent example of government and central banks' incapability to run deficits "greatly" ).
I derived my second question from the latter statement and applied it to the financial sphere and forward guidance.
In a system where implied inflation expectations by the market drive real yields, and the "shadow banking system" (plus China) can act against FED and government forward guidance, how can you finance a "dare greatly" fiscal measure without being bullied by offshore institutions?
For example, in your interviews, you say that the FED injects volatility into the system by hiking rates, where instead, a fair policy would subsidize investment to lower the future inflation dynamics (not to mention that hiking interest rates force inflation higher too).
So how can you escape the "market inflation expectation trap" that hikes rates carelessly of the fair policy?
My English could be better at best, so I hope I have explained myself enough at least to be understood.
Anyway, thanks again for providing us with information not just for creating better investments, but above all to become better human and political beings.
BBG pod Zero discussing it this week https://podcasts.apple.com/gb/podcast/zero/id1621556928?i=1000596668546
Mike, I question the governments ability to allocate capital effectively. I think the current emphasis on wind and solar and renewables is an example of bad capital and resource allocation. A central bank I believe by continuing to finance the government's deficits furthers the economic distortions. From 1840 until 1914 before the founding of the fed, the private banking system did a very good job of developing the key technologies of its time - rail roads, canals, steel, shipping, etc... Having a federal reserve bank in many ways has only enlarged the government, financial, health care and higher education sectors at the expense of manufacturing (maybe not info tech). I think an approach that puts the entrepreneur at the center along with private sources of financing rather than a government/fed centered approach would work better. Maybe a Manhattan style project for AI. But in general an entrepreneurial/private financing centered approach I believe would be more effective.