Loony Hoons

LoonyToon time again in Aotearoa New Zealand. Unlike Dr Bill Mitchell, I can afford to be short and sweet.

The New Zealand Tory government (National + ACT party) have macroeconomics completely backwards. Not just roughly. Completely. The “finance” Minister Nicola Willis went on official record the other day in proclaiming the NZ Government is like a household. Or, the Government Budget is “Like a Household Budget”.

Every MMT’er around knows this is utterly insane, and even a few post-Keynesian dimly know. I did my best on non-X social media to denounce Willis. But I’ll do it again. However, because post-Keynesians are contributing to the myths, still, we have to focus on them, because they should know better. So should heterodox folks like Brian Romanchuk (he’s a bit suss on these issues, I will try to explain in a minute’).

And it is not that the previous Labour government was much better, their leader Chris Hipkins was saying the same as Willis in different words. But class warfare is class warfare no matter whose mouth sounds the sweetest austerity.

The neoliberal narrative

The “household budget”. Completely moronic when you are the monopoly currency issuer."

How to counter the narrative

The hard honest answer is we have to educate others. Education is inoculation against ignorance. But I have some tips, you should write to me if you find they work:

0. The NZD currency is a score-keeping system. The score-keepers are the government plus central bank. It is a simple public monopoly. They tell you how much the currency exchanges for, and how you can get it. Politicians do not understand this, neither do many at the central bank, which is a cause of great needless suffering for our people.
1. Focus on the basics: there is no need for our government to tax in order to be able to spend. They impose tax liabilities to drive demand for the currency — willing takers — not to “get the money”.
2. Neither do Treasury bonds “finance the government”. No one can buy a bond until the government issues the tax credits (either by direct payments or via state licensed banks permitted to issue credit).
3. Nor do Treasury bonds “balance the budget”. The books are always in balance (unless some Treasury or RBNZ accountant made a mistake). The issuance of bonds is (on a floating exchange rate) nothing but basic income but only for people who already have money in proportion to how much money they already have.

So why are we even talking about bonds? Why are we talking about “balancing the budget”? It is all irrelevant talk.

(I mentioned Romanchuk. A bond trader. Why does his kind even exist?)

The purpose of public macroeconomic policy should be full meaningful employment of all sustainable resources. If the private sector is not employing existing resources (people, for the most part) the government always can hire them, without causing any price pressure — because by definition the private sector bid for unemployed labour is zero.

Remark 1: Can a full employment policy cause one-off upwards price adjustments?

Sure. But that is a policy choice. It does not follow by any economics law known to man or woman. Also, a one-off upwards adjustment in prices is not inflation. So stop talking as if it was!

Remark 2: can wasteful spending by a government cause a real rate of inflation (devaluation of wages relative to goods, or an increase in the real inflation rate (how much stuff your entire income can buy goes down))? Yes, sure it can. But that is again a policy choice. Unleashing MMT awareness upon feckless politicians is highly unlikely to cause such wastefulness. They are austerity hawks. It is hard enough to get government to spend already.

If you think MMT awareness infused into their brains will make them suddenly overnight want to spend wastefully then I think you need to go see a psychiatrist.

Yeah, they might be more prone to spending on junkets and cronyism, but that is hard in New Zealand, we are pretty open. You vote those bastards out of office pretty smart.

If you also worry about the balance of payments, that’s just another sickness akin to invoking the disgusting “household budget” dis-analogy. Any holdings of NZD that foreigners have, cannot purchase them things that are not for sale. If you worry our politicians are for sale, that’s not a problem because of foreign holdings of NZD, it is a problem due to any hoards of any currency, since anyone can swap USD, euro, Yen, or Ruble, for NZD at a Forex desk. Our corrupt politicians will also accept any currency, maybe even bitcoin under the table. (Seems like a really good case against crypto.)

The Proper Hammer

I loath Nietzsche. (Heck, he did have syphilis and was insane. In the real world a person’s character counts for something, not just their analytical concepts. If someone has a poor character you trust less their ideals. Sorry theorypleeb and you other Lacanians. That’s just reality.)

I also do not overly like Vladimir Lenin. You can cry to me as loud as you like about how masterful he was as an organizer, but without a mass of ordinary peasant people and bourgeoisie supporters, who believed in a decent vision for Russia, he was nothing. If you truly think Lenin was a great man, you are closer to being an Ayn Rand acolyte than a working class populist. That includes you China Mieville.

But using thought and education as a hammer against the spiky sticking out loose iron nails of ignorance is based. I am a peaceful person, so I prefer to hammer bad ideas, not people. Class warfare is war against an entire class of people who are providing all goods to maintain the lifestyles of the rich. Although really the wealthy disgust me so much (why not give away all your excess? It is after-all… excess) that I just do not even want to know them to have to resist the urge of hammering them for real.

“Ahhh,” but you say, “the realpolitik means we cannot avoid mixing with the rich and powerful, because they hold reigns of power, so if we are to win the class war we need a few of them on our side.”

That is an argument.

But the reality is no number of rich people will win the class war. The class war is won when the majority rise up united against neoliberalism and neo-fascism. For the leftiepol nerds, let me define “neoliberalism” for you so you do not misunderstand: it is the entire liberal + oligarch elite who do little real work and yet claim the majority of currency scorepoints, all the while screaming at us we others need to be more unemployed to “fight inflation” (meaning maintaining their elite level purchasing power). You see, they cannot even get their own argument right! (Causing unemployment reduces purchasing power in real terms.)

You won’t find that definition elsewhere, it is parochial for here at Ōhanga Pai.

Note that a democratic majority power of the people cannot be exclusionary and ideological, it must embrace all people, even a few libertarian retards. (We could probably do with a quota on them.) I like the sound of a dictatorship of the proletariat, but it rings too strongly of violence and intolerance, even though “the proletariat” would be such a diverse crowd! It would have to include a few rich people too. Status as a proletarian does not imply one is not wealthy.

Ah, crap. I guess I’m going to go longer than Bill Mitchell today.

Maybe not… haven’t I written enough?

The Household Budget analogy Nicola Willis is officially proclaiming is domestic terrorism. It is needless austerity. Austerity kills poor people who might otherwise have lived a little longer and contributed meaningful to a decent society. The Tories are always paying lip service to a “decent society” but they have no clue how to promote one in their policy analysis.

I was going to blab on about the dickhead post-Keynesians who worry and fret, like the old grannies they are, about “balance of payments constraints” and inflation. But I am sick of their kind. Let them wallow in their own stupidity and die an ignoble death.

I can be such a nerd if I wanted and worry and fret like an old granny about inflation and “dollar devaluation” — but why? It serves no useful purpose. We will not win the psychological battle to overcome “fear of inflation” and “fear of the national debt” if we sink to such nerdery.

Although that’s an insult to real nerds. Anyone valuing their intelligence ought to know our grandchildren are not going to invent time machines so they can make payments to us to pay off our debts. Or maybe even the good nerds have completely lost their minds to neoliberalism by now? At the end of the universe in their Marvel CMU scenario when our “national debts” amount to infinity dollars (de Sitter spacetime ok), those grandkids are going to be really seriously stressed deleting those digits from the bank accounts to pay-off the debt. So we’d better not leave them too many scorepoints huh?

We just need to be bold and tell the true story about the monetary system. People are not so dumb, they just haven’t lifted the veil over their eyes drawn by neoliberalism.

Sock cucking around fretting about the purely psychological constraints is a mugs game. (Even Kelton and Kaboub are guilty of playing that game.) We can admit those psychological political barriers are real, but the way to overcome them is the Emperor’s New Clothes story. Just say they are needless self-imposed constraints. Best to overcome the false psychology by not crediting it in the first place.

A Global South nation faces real resource constraints limiting their prosperity and happiness, but are the Global North nation peoples any happier? The source of happiness is not in excess material possessions. But it is a darn good and happy thing to not deprive the poor of a decent standard of living. I truly believe every nation can afford, in real terms, a decent standard of living. They are not import constrained. Container ships can literally dock anywhere there is a harbour. They are constrained by the goodwill of other nations who do not see all people on the planet as their brothers and sisters.

Please do not heterodox-nerdball me that I am being naïve. I know what humanity is capable of, not in full totality, but the humble stuff. We are thoroughly capable of goodwill to each other. These are political will obstacles, not “sovereignty” obstacles.

If your brother is starving you do not say, “Awww, too bad, he could not grow enough bananas to feed his family and himself, he needed to be more self-sufficient.”

Or, I guess, you might say that if you are a sociopathic economist… I mean, if you are an economist.