Home > Uncategorized > Who is to blame for Argentina’s economic crisis?

Who is to blame for Argentina’s economic crisis?

from Mark Weisbrot

Argentines remember the role the IMF played in the last depression. They also remember the improvement in their lives under Kirchnerism.

What are we to make of Argentina’s surprise election results on August 11, which jolted pollsters and analysts alike, and roiled the country’s financial markets? In the presidential primary for the country’s October election, the opposition ticket of Alberto Fernández trounced President Mauricio Macri by an unexpected margin of 15.6 percent.

The Fernández coalition attributes its victory to Mr. Macri’s failed economic policies, blaming him for the current economic crisis, recession and high inflation. Mr. Macri, by contrast, blames the fear of a future government of Kirchnerism — his label for the opposition — for the postelection financial turbulence as well as the problems of the economy since he took office more than three and a half years ago. He argues that both the markets and the people have everything to fear from such an outcome.

This disagreement is not just an academic argument, nor one specific to Argentina. It is a recurring, almost archetypical debate during economic crises that spill over into political contests. In recent years — in Britain, Spain, France, Greece and other countries where failed economic policies faced left-of-center challengers — Mr. Macri’s refrain was a frequent line of attack by incumbents.

Financial markets can move for many reasons, which can be unclear or even based on misperceptions of reality. In the case of last week’s news, we have electoral losses by a government whose economic policies have clearly failed and gains by challengers who hail from a period of strong and widely shared economic growth. This is not something that is inherently bad for the economy.

With Kirchnerism, Mr. Macri refers to the policies, followers and presidential administrations of the Kirchner family, which held office from 2003 to 2015 — first Néstor Kirchner, and then Cristina Fernández de Kirchner. Ms. Kirchner is running as the vice-presidential candidate on Alberto Fernández’s ticket and is a prominent leader of the opposition coalition — although this coalition is much larger and broader than the “Kirchnerista” base.

From an economist or social scientist’s perspective, it’s not clear why Kirchnerism should inspire fear. Looking at the most important economic and social indicators, the governments of the Kirchner presidencies were among the most successful in the Western Hemisphere.

Independent estimates show a decline of 71 percent in poverty and an 81 percent decline in extreme poverty. The government instituted one of the biggest conditional cash transfer programs for the poor in Latin America. According to the International Monetary Fund, gross domestic product per person grew by 42 percent, almost three times the rate of Mexico. Unemployment fell by more than half, and income inequality also fell considerably. The 12 years the Kirchners held office resulted in large increases in living standards for a vast majority of Argentines, by any reasonable comparison.

Economic growth waned in the last few years of Ms. Kirchner’s presidency. The government made some mistakes and was also dealt an external economic blow. A 2012 ruling by a federal appeals court in New York — a decision widely regarded as dubious and political — took more than 90 percent of Argentina’s creditors hostage to force payment to a small group of “vulture funds” that refused to join the debt restructuring of the early 2000s. The United States government blocked loans from international lenders such as the Inter-American Development Bank, at a time when the economy needed the foreign exchange.

By comparison, poverty has increased significantly, income per person has fallen, and unemployment has increased during Mr. Macri’s term, which began in December 2015. Short-term interest rates have shot up to 75 percent today from 32 percent; inflation has soared to 54 percent from 18 percent. The public debt has grown to more than 86 percent of G.D.P. from 53 percent.

How much of this economic crisis and poor performance is his predecessor’s fault?

In 2018 Mr. Macri signed an agreement for a $57 billion loan — the largest IMF bailout in history. The loan agreement, along with the reviews since, detail the government’s economic goals, strategy and execution. There is a lot of information publicly available that lays out what went wrong.

The main strategy of the program was to restore investor confidence through tighter fiscal and monetary policy. But, as has often happened, these measures slowed the economy and undermined investor confidence. By October, the results were vastly worse than the IMF had projected. The government and IMF increased both fiscal and monetary tightening, but it did not help.

The government also wasted more than $16 billion in unsuccessful attempts to keep the peso from falling and greatly increased the more problematic foreign component of the public debt. The result has been near-constant recession and high inflation, enormous interest rates, peso depreciation, financial instability and the huge run-up in public debt. The debt increase is particularly noteworthy because Mr. Macri inherited a low level of public debt.

Ironically, the IMF is well known in Argentina for promoting similarly unworkable policies during the deep depression of 1998 to 2002 — comparable to America’s Great Depression of the 1930s. Yes, history is repeating itself, although in this case the IMF has a stronger partnership with the government than it had 20 years ago.

The Fernández candidates will have to outline how they would get out of this mess. They can explain how Argentina exited from a much more severe economic crisis, with an unemployment rate more than twice as high and millions of previously middle-class people having fallen into poverty. They can assure creditors that there is no need for default on the public debt today, as there was then, because it was completely unpayable. But, as in 2003, the economy cannot recover under the conditions agreed upon with the IMF, and they will have to be renegotiated.

Millions of Argentines remember the last depression and the role the IMF played. Many also remember the rapid improvement in people’s lives over the ensuing decade. That collective memory and consciousness may now determine the outcome of this recurring debate over the economy, and with it, the October election, and possibly much of Argentina’s future.

See article on original site

  1. postkeynesian spain
    August 22, 2019 at 1:31 am

    Argentina is an example where MMT theory cannot helpless.

  2. August 22, 2019 at 2:27 am

    Nobody can help when nobody understands what actually works, or what suits the wealthiest cohort of the population. Macri is a neo-liberal and all neoliberalism incurs is exaggerated wealth discrepancy. The neo-liberals get support from the US, neo-liberal central, and it makes sure all loans are in US dollars. Argentina is a monetary sovereign nation, by right, but it has been shaved by borrowing in dollars, which no self respecting nation should accept. It has no control over loans in dollars, hence the hedge funds rampage, court supported, not at all to Argentina’s benefit. Similar depredations are under way in Brazil as well, for the same reasons. For the vast majority of the populations in Latin America US interference is bad news, except for the 1% [actually the 0.1%]

    • postkeynesian spain
      August 22, 2019 at 3:17 am

      This is so bad…

      Less MMT and more “Raul Prebisch”, the problem in Latin América is the current account, with external surplus a country can have debt in other currency without problems.

      With external deficit in your currency you have tecnology dependence, for example, but many problems more.

      https://en.wikipedia.org/wiki/Ra%C3%BAl_Prebisch

  3. postkeynesian spain
    August 22, 2019 at 3:18 am

    This is so bad…

    Less MMT and more “Raul Prebisch”, the problem in Latin América is the current account, with external surplus a country can have debt in other currency without problems.

    With external deficit in your currency you have tecnology dependence, for example, but many problems more.

    https://en.wikipedia.org/wiki/Ra%C3%BAl_Prebisch

    • August 22, 2019 at 6:38 am

      I cannot comment on what Prebisch’s thought. It’s not explained in the WIKI article. Much more secure is MMT, because it has a proper understanding of the economics we operate under today, going right back to the nations’ constitutions and the gift of monetary sovereignty contained therein. The EU nations have abandoned monetary sovereignty and will all become Argentinas. Even though Argentina still has M S, it has effectively abandoned it and linked up to external currencies, the US dollar in particular. A very grave error, made manifest by all the troubles seen today. All can be avoidable through better governance and less interference by the USA, the IMF, and the World Bank’ [partners in crime]

      • postkeynesian spain
        August 22, 2019 at 11:07 am

        “I cannot comment on what Prebisch’s thought. It’s not explained in the WIKI article. Much more secure is MMT”.

        You are pure ideology and repetition of dogmas, you can’t really comment on anything.

      • August 23, 2019 at 8:20 am

        Speak for yourself, You might avoid being called clueless that way.

      • postkeynesian spain
        August 23, 2019 at 3:25 pm

        First:

        “Even though Argentina still has M S, it has effectively abandoned it and linked up to external currencies, the US dollar in particular. A very serious error, made manifest by all the troubles seen today.”

        It´s ideology.

        Today the countries needs commerce, and the commerce needs a currency exchange stable. MMT can´t implanted NEVER NEVER NEVER, because always a countrie needs controls the currency exchange for his commerce with other countries, is so stupid …

        Controls of the imports and the financial assets it´s the solution and MMT is opposite. Free trade with free exchange rate, but this isn’t applicant because the trade needs exchange ratestable.

      • August 24, 2019 at 1:01 am

        Really?? Let’s see if you can even get to first base. Where does Argentina [in fact all MS states] get its currency?Does Argentina need surpluses or deficits in its budgets for getting ahead? I bet you cannot answer these correctly, considering the nonsense you just stated.

        Martin Wolf is hedging his bets. MMT is right. Not “MMT is right ,but”

      • postkeynesian spain
      • postkeynesian spain
        August 24, 2019 at 8:22 am

        you don’t understood anything and want answer me…

        Argentina have problems with dollar´debts (not with dollar in his currency), and if you don´t want debt in other currency you need controls of capitals (Raul Presbich), not free exchange rates with free trade of products and financial assets.

        In the past Argentina have free trade of products and financial assets withouth controls of capitals and diviner!!! Take debts in dollars.

        And finally:

        MMT can´t implanted NEVER NEVER NEVER, because always a countrie needs controls the currency exchange for his commerce with other countries, is so stupid …

        All countries intervened in the history for an exchange rate stable. really existing history destroys the MMT. MMT and you only can say “we needs do this, do these”, but i explain the realite and the real polity if the states.

      • August 25, 2019 at 1:48 am

        Please stop advertising your ignorance about MMT.

      • postkeynesian spain
        August 24, 2019 at 8:24 am

        “not with debt in his currency”

        I answered for phone…

      • postkeynesian spain
        August 25, 2019 at 2:16 am

        good argument (excuse really) for go out with pride hajaha

      • August 25, 2019 at 6:31 am

        Conceding defeat doesn’t mean you understand any better.

  4. Greg Hannsgen
    August 22, 2019 at 5:04 pm

    I don’t see how Prebisch is irrelevant or, on the other hand, how his thought contradicts anything in Weisbrot’s article, including the wonderful reference to debt in foreign currency among other neoliberal policies. Here is a link to a working paper by Wray and Tcherneva on the Argentine employer of last resort experiment under what Weisbrot calls Kirchnerism in the article.
    http://www.cfeps.org/pubs/wp-pdf/WP41-Tcherneva-Wray-all.pdf
    The MMTers in some cases were advisers on an amazing and ambitious jobs program. They do not claim to have a unique theory of development of their own to rival Prebisch and subsequent people in that field.
    Here is a link to a post I did days ago on the recent events in the country, with a graph of the exchange rate:
    https://greghannsgen.org/2019/08/17/in-run-up-to-peso-collapse-argentina-did-not-have-sovereign-currency-policies/
    I will look at and read the wiki.

  5. Greg Hannsgen
    August 22, 2019 at 5:07 pm

    I mean Tcherneva and Wray, to get the authors in the right order in the above. Sorry.

  6. Ken Zimmerman
    August 24, 2019 at 3:03 am

    This sounds like 19th century European politics rather than economics. Looking to the fulfillment of the revolutionary promise to give all Europe political liberty—the vote for all men, a free press, a parliament, and a written constitution. Maintenance of the territorial arrangements of the treaties that closed the Napoleonic Wars at the Congress of Vienna in 1815. Mainly to keep this part of the post-Napoleonic world intact; that is, the boundaries that often linked (or separated) national groups in order to buttress dynastic interests. And in those parts of Europe who lost out from the Congress of Vienna the rise of romantic nationalism. Which lead to solidification of the “left” vs. “right” political division. Which lead to radical demands from the socialists, communists, and anarchists that the right would not accept. And with the unrest from industrialization and the push to restore former systems of monarchy, religion, or aristocracy, the great revolutionary furnace of 1848–52 ensued. The four years of war, exile, deportation, betrayals, coups d’état, and summary executions shattered not only lives and regimes but also the heart and will of the survivors. The hoped-for evolution of each nation and would-be nation, as well as the desire for a Europe at peace, was broken and, with all other hopes and imaginings, rendered ridiculous. The search began for new ways to achieve, on the one side, stability and, on the opposite, the final desperate revolution that would usher in the good society. All regimes failed to address the problems. All proposed solutions, dysfunctional as they were proved useless. There was peace, but war was imminent; as subversive groups continued to plot and frighten the bourgeois, to do what they could to kill royal heads of state, while machine industry and the resulting urbanization contributed their gains at the cost of the now familiar miseries and sordidness. Europe declined, technologically, artistically, and morally. Problems could no longer be solved. They only festered and got worse. The dominant feeling was that high hopes had perished in gunfire, and this realization bred the notion that hope itself was an error. Any new effort must therefore stay close to the possible, the “real.” Realism with a capital R and Realpolitik together grow from a distrust of humans’ imagination. This grim caution born of harsh experience coincided with a sense of fatigue that made Romanticist work seem like the foolishness of youth. Disillusionment was so deep that in order to run no risk of further disillusionment, what’s called real is limited to what could be readily seen and felt: the commonplace, the normal, the workaday, and often the sordid. Realpolitik rejected principles. The word did not mean “real” in the English sense; in German it connotes “things”—hence a politics of adaptation to existing facts, pursuing plain objects, admitting no obligation to ideals. It was in this environment that scientific materialism, Victorian morality, and the engineered “best” society were invented.

    Yet today many believe how could something as reality-focused as neoliberalism have any great consequences. So far, just world shattering and subverting consequences.

  7. Calgacus
    August 24, 2019 at 5:11 am

    Indeed. Postkeynesi spain holds an (unfortunately) common enough postKeynesian position. One modern trend of this misleading line of thought is attached to “Thirlwall’s Law”. But it is quite wrong. The tradition of practically all economic sects is to grossly, even wildly exaggerate, the importance of the international sector.

    The USA was very lucky to have an FDR who – following the mainstream of US practice – did not make such a “basic economic error.”

    Nobody has ever put it better than this: “The sound internal economic system of a Nation is a greater factor in its well-being than the price of its currency in changing terms of the currencies of other Nations.”

    Wireless to the London Conference

    Keynes called him “magnificently right” and Roosevelt later told Arthur Krock in 1938 that he was prouder of that than anything else he had done. He was right, imho.

    Tragically many nations, like Argentina, unlike the USA, have sacrificed the soundness of their internal system in obsessive pursuit of rigid exchange rates and the like. The critics reverse the cause and effect. It’s not that only rich or hegemonic countries can do MMT or Functional Finance. It’s that practicing MMT/FF/ genuine Keynesian economics makes your country rich and hegemonic.

    • postkeynesian spain
      August 24, 2019 at 8:39 am

      You are so bad … other people that don´t understood anything …

      “Today the countries needs commerce, and the commerce needs a currency exchange stable.”

      When the countrie have international commerce, this impact un his internal system, today don’t exist aislate countries. For this, a stable countrie with international commerce needs currency exchange stable (not necesary fixed).

      I only explain the realite and the history, the countries, alls, intervened in the history when they haved a currency crisis (USA today not is really MMT, the countries with reserve’s dolars keep his exchange currency rate) and in the future they will continue to intervene because this:

      MMT can´t implanted NEVER NEVER NEVER, because always a countrie needs controls the currency exchange for his commerce with other countries.

      you and MMTers can say “do this”, but this haven’t really importance, the states continue with polity if currency exchange

    • postkeynesian spain
      August 24, 2019 at 8:50 am

      “Tragically many nations, like Argentina, unlike the USA, have sacrificed the soundness of their internal system in obsessive pursuit of rigid exchange rates and the like. The critics reverse the cause and effect. It’s not that only rich or hegemonic countries can do MMT or Functional Finance. It’s that practicing MMT / FF / genuine Keynesian economics makes your country rich and hegemonic.”

      Really the rich countries practised controls of imports and capitals for his industrial production, not free trade with free exchange rate (yes, net imports are bad, not good), but this is so funny, because USA used the military base and the military force for his policy of exchange rate in dollars, that is today international reserve. And losed with Chine and today need controls of imports.

      How i said, today with countries that have international commerce and don´t are aislate, it´s necesary exchange rate stable for an good commerce and internal system with good found. The countries with currency crisis always intervin, in the past (Asian), today (Argentina/Turkey) and in the future.

    • postkeynesian spain
      August 24, 2019 at 8:53 am

      you and the TTMers can say “do this, do that” but the states will ignore you.

      • Calgacus
        August 27, 2019 at 3:42 pm

        you and the TTMers can say “do this, do that” but the states will ignore you.

        As I posted above, the country I live in, at a most crucial juncture, had a president who did not ignore his inner MMTer and floated the dollar rather than go for a “save the world” currency plan. A plan that meant as usual, save the world for “so-called international bankers”, nothing for anybody else.. And thank God for that.

        TTM is an interesting mispelling for MMT -it is the acronym of the first version of Geoffrey Gardiner’s book “Towards True Monetarism”, which is something like an earlier, British version of Wray’s 1998 book. Gardiner, who Wray calls “master of all trades” – and imho is the deepest MMT thinker – has been around long enough to rue just missing meeting Keynes.

        Latin America and much of Europe has a long history of inflation, depreciation and unsound currencies – by using currency and interest rate manipulation as a temporary at best quick fix to achieve currency stability, that invariably wrecks it in the long run.

        See Greg Hannsgen’s comment above. Raul Prebisch etc ‘s economics is not opposed to or contradictory to MMT. A reality based development program that tries to stabilize the currency – realistically – and avoids foreign denominated international borrowing except as an utter last, survival resort – that has capital controls etc is fine.

        But you blithely write as if the enormous dangers (Venezuela, Argentina, Greece, Frnce 1980s, Britain pre and postwar & in the early 70s etc etc) of fixing currency rates (too high) and in effect subordinating the domestic economy to the international sector (and usually to the tastes of the local elites for wasting scarce fx on cheaper luxury imports) did not exist. Sure, fx stability is somewhat beneficial. But the benefits are wildly exaggerated, the destructive domestic effects of the tools to achieve it grossly minimized.

        But the deepest problem is even the way that people think about things and the vocabulary they use. Which leads people to reject MMT/FF/Keynesian natural common sense. Floating is natural. Fixing is unnatural. People speak as if the opposite were true. I’m all for Prebischian “import substitution” policies. But that name itself is like calling your spouse your “whore-substitute”.

      • postkeynesian spain
        August 27, 2019 at 4:29 pm

        This is so funny for my, yes!!!

        “had a president who did not ignore his inner MMTer and floated the dollar rather than go for a “save the world” currency plan”

        Remember Bro, remeber:

        The United States was the largest creditor and had the largest reserves in gold of the world thanks to first World War.

        And not only that!!!!

        The great depression initiated a war of tariffs that contained external restrictions for domestic demand.

        That was what allowed the United States to increase employment without problems with the foreign sector. Take away reserves, gold and credits to Europe, set free trade and the “New Deal” collapses.

        And now he use his military power how currency exchange polity, really United States have the biggest monetary policy aggressive with military forces at the world.

        Argentina don´t have gold/reserves, don´t have credits on other countries, don´t have military force or polity, don´t have a big industry, don´t have a big financial sector…

        I continue?

      • postkeynesian spain
        August 27, 2019 at 4:53 pm

        “But you blithely write as if the enormous dangers of fixing currency rates and in effect subordinating the domestic economy to the international sector did not exist. Sure, fx stability is somewhat beneficial. But the benefits are wildly exaggerated, the destructive domestic effects of the tools to achieve it grossly minimized”

        No, I say that for countries open to trade, external stability is necessary for their internal stability, and therefore they will not let the value of the currency fluctuate violently, carrying out a foreign exchange policy (historically it has always been like this), so what will never be practiced MMT: Free trade of product and assets with free floating and fiscal polity of full employment.

        Fixing exchange rates today needs of international actions too difficult. It´s best controls capital and imports, like China and many countries in Asian (but this is not free floating, it is to give flexibility to exchange rates in an acceptable margin, don´t is MMT).

      • Calgacus
        August 28, 2019 at 6:33 am

        You are quite wrong on the USA.

        That was what allowed the United States to increase employment without problems with the foreign sector. Take away reserves, gold and credits to Europe, set free trade and the “New Deal” collapses.

        Nonsense. They had no importance at all. Gold is a yellow metal. It has no real economic meaning. Roosevelt took the US off the gold standard as fast as he could. As Lerner noted at the time, especially during the war, everybody came to understand that “Dollars aren’t valuable because you can get gold for them. Gold is only valuable because you can get dollars for it”

        The US never had any significant foreign denominated debt. “Not being a debtor” that way was important, true. But that is pure MMT. That it was a creditor didn’t really mean anything, except indirectly, in that its policies had been deflating the rest of the world. The rest of the world couldn’t pay off what it owed, so how could these nonexistent payments be important to the US economy?

        FDR’s correct logic to float was that he didn’t want any international agreement interfering with his New Deal programs, which saw the quickest peacetime growth the US had ever seen. Basically the opposite of your view. A little inflation or depreciation would have been welcome at first for the deflating dollar. Alain Parguez aptly characterizes his attitude to this kind of international cooperation as “contempt”. Again, thank God for his contempt for the illogical worship of a meaningless external stability.

        At “worst” a New Deal without the irrelevancies you wrongly believe were important, would have resulted in a slowly depreciating dollar. Whoop de doo. No collapse. Why would anybody care? Or even notice? Not Americans of that nearly autarkic era, who bought very little from abroad. Why would they? It’s a huge country.

        No, I say that for countries open to trade, external stability is necessary for their internal stability,
        No, it isn’t. It just isn’t. Again, wildly exaggerating the importance of the international sector, in general. It is amazing how people convince themselves that a tail wags a dog. That a usually relatively small sector is so vitally important, more than other bigger sectors. And to think that the external sector had such importance to the USA in the 30s and 40s – perhaps the most self-sufficient nation of all time, growing at a furious pace solely from internal resources – is breathtakingly wrong. I don’t know anybody who ever said such a thing.

        and therefore they will not let the value of the currency fluctuate violently,
        In the real world, they do. As MMTer Bill Mitchell has noted, his country, Australia has seen its currency go up and down in fx by a factor of two in fairly short periods. Most don’t even notice.
        Similar for the US vs Canada.

        Sure, I’m for a somewhat managed, dirty float, as all floats are in practice. But comparing the trivial problems of floating and “external instability” to the massive ones of high interest rates etc to “defend” a currency is comparing a common cold to pneumonia. I try to avoid colds too. But not by getting hospitalized for pneumonia.

        so what will never be practiced MMT: Free trade of product and assets with free floating and fiscal polity of full employment.

        The USA has been practicing “what will never be practiced” since 1933! The whole (developed) world too since 1971! That most such countries have been following comparatively austere policies since around then, the 70s has little to do with any genuine “international” cause – it’s just bad, internal policies, welfare for the rich and powerful. Norway, Switzerland, Japan and Austria kept their old postwar era full employment policies after the others abandoned them. The sky didn’t fall. In fact they were and mostly are conspicuously better off than their foolish brethren.

        I suggest you read Keynes’s National Self-Sufficiency essay. Or try to understand why he thought FDR was “magnificently right. Otherwise, your name here seems pretty odd – AntiKeynesi Spain fits better for your suggested policies and history.

      • Craig
        August 28, 2019 at 8:07 am

        MMT is a great reform. It’s just that it still resides within the present monetary paradigm of Debt Only for the sole form and vehicle for the distribution of money/credit. Hence it’s “fishbowl” instead of unitary, integrative, resolving and entire pattern changing.

      • postkeynesian spain
        August 28, 2019 at 11:20 am

        First: The Australian dollar has been fairly stable, as has the euro.

        Second: “The USA has been practicing “what will never be practiced” since 1933!”

        Funny, but the lies have very short legs:

        The New Deal and other polity of employment is United States only was when United States was creditor and don’t haved problems with the current account:

        When United States have problems with commercial defficit this said yours MMT (Wynne Godley and Randall Wray in “Goldilocks and the Three Bears”):

        “Growing government budget surpluses combined with growing trade deficits have generated record private sector deficits”.

        Surples!! are you understand?

        You cannot give examples of expansionary fiscal policy with trade deficit in expansion for the United States, you only can lie.

        But this is more funny:

        You say “Norway, Switzerland, Japan and Austria”, but this countries are creditors. Hahahahahaha.

        These countries and so many others support my argument that there isn´t expansive fiscal policy when there is a growing trade deficit.

        Finally:

        Can do you any example with a country with comercial deficit and fiscal polity of employment similar to “new deal”? I can give many in the opposite direction, just tell me the decade.

        If you cannot give an example, all that remains is to say that the MMT is impracticable.

        As i was saying:

        “MMT can´t implanted NEVER NEVER NEVER. You and the TTMers can say “do this, do that” but the states will ignore you.”

        You only can lie and lie and lie…

        And finally: “I suggest you read Keynes’s National Self-Sufficiency essay.”

        I have read all of Keynes’ work, and he advocated capital and import controls, as well as fixed rates for international trade.

        And I suggest you read his book “treatise on money”, not is easy and is longer than your recommendation, but critics the MMT, i can say you the chapter.

      • postkeynesian spain
        August 28, 2019 at 11:27 am

        And said Australi also, but I remember you that Australia is also a great example, because every trade deficit ended with a crisis because the government did not practice any fiscal policy during the growing deficit current account.

        Finally, how said Keynes, a country with comercial deficit need for full employment controls of capital and imports, not free trade of products and assets with free exchange rates.

        It was fun dragging him through the mud.

      • postkeynesian spain
        August 28, 2019 at 11:56 am

        I end up here, I answer this even though it’s so bad that I’m ashamed:

        “Nonsense. They had no importance at all. Gold is a yellow metal. It has no real economic meaning. Roosevelt took the US off the gold standard as fast as he could. As Lerner noted at the time, especially during the war, everybody came to understand that “Dollars aren’t valuable because you can get gold for them. Gold is only valuable because you can get dollars for it””

        The reality is that during World War I the United States lent money and stored gold, the same during World War II, thus, at the end of the war backed its dollar with gold (read Michael Hudson, as he has faith in MMT, TMMers explaining this). It’s funny to say that gold didn’t matter because in the greatest economic heyday the world (and the United States) has known, the golden age of capitalism, the dollar was backed by gold and the United States was the creditor of Europe and Japan.

        Are you an idiot or just a poor ignoramus?

        And guess what happened when America became a debtor and without dollars backed with gold reserve!

        Problems with the foreign sector came and unemployment was continuous except for short unsustainable periods and, over time. And as we can see today, technological dependence on China (an exporting country with the biggest reserves) and the need for protectionism.

        You can only lie, I show you the really existing reality and not alternative stories invented by you.

        Finally, as MMT saint Wynne Godley said:

        “In the long period it will be the success or failure of corporations, with or without active help from governments, to compete in world markets which will govern the rise and fall of nations” .

      • Calgacus
        August 29, 2019 at 3:24 am

        Thinking that gold has any economic importance is remarkable for a Keynesian – his words for it were “barbarous relic” “the golden calf” etc, etc. Of course it had nothing to do with the prosperity of the USA under Roosevelt. By the end of the war the US had 50% or more of the economic production on Earth. The idea that foreign trade and foreign plans or possession or not of gold had anything to do with this, could economically constrain or aid the most wealthy and powerful and dominant nation in history, the 1940s USA is preposterous. Which is what everyone, even economists, understood at the time.Gold doesn’t and can’t back anything. Dollars backed gold.

        And guess what happened when America became a debtor and without dollars backed with gold reserve!

        Problems with the foreign sector came and unemployment was continuous except for short unsustainable periods and, over time.

        The reverse of the truth. Under Bretton Woods, the US had the highest unemployment, the least Keynesian policy compared to the developed nations of Europe. After, it had the lowest unemployment and most Keynesian policy. (It maintained the worst sort of Keynesian policy throughout, military Keynesianism; it’s still a lot better than mindless European austerity worship)

        I gave two examples of fiscal expansions with trade deficits. USA now, basically since the 1970s and earlier; Australia before it went for mindless austerity generally had trade deficits, very full employment and a basically stable currency. As Australian Bill MItchell notes. The problem is belief in very bad theories limits the number of sane countries and sane policies. On Austria, its chancellor, Bruno Kreisky outdid the famous wit John Kenneth Galbraith by yes, attributing his country’s economic success to its exports.Galbraith asked huh, what export?. Kreisky answered “economists!”

      • postkeynesian spain
        August 29, 2019 at 4:14 am

        “Under Bretton Woods, the US had the highest unemployment, the least Keynesian policy compared to the developed nations of Europe. After, it had the lowest unemployment and most Keynesian policy.”

        I asked myself: Are you an idiot or just a poor ignoramus?

        Okay, it was stupid…

        During BW unemployment barely exceeded 5%, then barely dropped from 5%

        “I gave two examples of fiscal expansions with trade deficits. USA now, basically since the 1970s and earlier; Australia before it went for mindless austerity generally had trade deficits,”

        No, US haved problems with the commercial deficits and do not maked a expansive fiscal polity:

        “Growing government budget surpluses combined with growing trade deficits have generated record private sector deficits”, It’s called a big recession.

        And Australy haved crisis always similar, with deficit of current account (While they didn’t end up in exchange rate crises).

        Bigs in 1981, 1989 and smalls in 1985, 1995, 1999 and 2007, alls when the current account exceeded the 4% deficit.

        https://d3fy651gv2fhd3.cloudfront.net/charts/australia-unemployment-rate.png?s=aulfunem&v=201908151006V20190821&d1=19190101&d2=20191231&type=column

        where do you see full sustainable employment over time?

        It would have been preferable if you didn’t respond, at least that way you keep up appearances and don’t end up showing that you only have to lie because of your inability to reply to me.

      • postkeynesian spain
        August 29, 2019 at 4:35 am

        We continue in the same, show a country with trade deficit and fiscal expansion with full employment sustainable over time.

        He still couldn’t!

      • Calgacus
        August 30, 2019 at 7:03 pm

        Postkeynesi –
        On Bretton Woods etc you aren’t making the same comparison that I did. During the postwar era, the US had higher unemployment than Europe. After the 70s-80s change to neoliberalism, it had lower unemployment than Europe AND started running large trade deficits and budget deficits. That correct observation is not contradicted by your correct observation that unemployment was lower in the postwar BW era than it was in the subsequent neoliberal era, basically everywhere. On Australia, all of your years are in the neoliberal era. Of course I was talking about before then, when more than 2% unemployment would unseat an Australian government.

        In any case, the foreign sector is just not that important to most normal, fiat currency issuing government. Pretending that it is – thinking that the tail wags the dog – leads to destructive “cures” that are far worse than the mild “disease” of slowly depreciating currency maybe with a passthrough to slow inflation. These “cures” high interest & rigidly fixed fx rates are what cause the problems of welfare for local elites, oppression of the poor, destruction of domestic industry, depression, inflation and finally balance of payments and currency crises.

        Normal MMT fiat issuing currencies just don’t have these problems. How could they? The print the currency they “borrow” in. As you say for Australia even in the neoliberal era- “While they didn’t end up in exchange rate crises”

      • postkeynesian spain
        August 30, 2019 at 8:15 pm

        LIES AND MORE LIES:

        First:

        “During the postwar era, the US had higher unemployment than Europe. After the 70s-80s change to neoliberalism, it had lower unemployment than Europe AND started running large trade deficits and budget deficits.”

        Europe don´t is a country (just by knowing the American history you should know, because there the Eurodescendants are from several countries), are many countries, countries with commercial surples haved lower unemployment than US and and the opposite for countries with deficits/debts:

        Second:

        “On Australia, all of your years are in the neoliberal era. Of course I was talking about before then, when more than 2% unemployment would unseat an Australian government.”

        HAHAHAHAHAHAHA VERY NICE:

        You talk about Australia’s fixed exchange rates, gold-backed dollar and balanced current account. That is, in the era of fixed exchange rates and capital controls: low unemployment. In the era of MMT with flexible exchange rates and free trade: High unemployment .

        Finally:

        “As you say for Australia even in the neoliberal era- “While they didn’t end up in exchange rate crises”

        HAHAHAHA, yes, correct, because the polity fiscal was contractive, when in Australy the commercial deficit growth, the polity fiscal was contractive always, similar to US. If the fiscal polity is expansive with commercial deficit growth, a exchange rate crisis in the future.

        Your examples, all of them, prove me right, but i repeat:

        No doubt you are an idiot, your examples were Australia with fixed exchange rates and capital controls before the end of Bretton Woods and the United States post Bretton Woods when it had the highest unemployment rates.

        We continue in the same, show me a country with trade deficit and fiscal expansion with full employment sustainable over time.

        you still couldn’t!

  8. Craig
    August 24, 2019 at 7:08 am

    You can’t have security and justice without general abundance and you can’t have self actualization and full consciousness without satisfying those lower needs either. That’s economics and Maslow in a nut shell.

    When you no longer have to worry about the small fry issues like recession, inflation or unemployment due to the universal dividend, 50% Discount/Rebate monetary policy at retail sale and you also have a truly national publicly administered banking, financial and monetary system that serves all economic agents individual and commercial in the most cost effective way….then you could have a government that truly had no unnecessary barriers to taking on the mega projects for ecological sustainability, energy conservation and insuring the affordability of the consumer products that would assist in that process from the bottom up.

    Mega paradigm change is our only hope.

    • postkeynesian spain
      August 24, 2019 at 8:33 am

      You are so bad … other people that don´t understood anything …

      “Today the countries needs commerce, and the commerce needs a currency exchange stable.”

      I only explain the realite and the history, the countries, alls, intervened in the history when they haved a currency crisis (USA today not is really MMT, the countries with reserve’s dolars keep his exchange currency rate) and in the future they will continue to intervene because this:

      MMT can´t implanted NEVER NEVER NEVER, because always a countrie needs controls the currency exchange for his commerce with other countries.

      you and MMTers can say “do this”, but this haven’t really importance, the states continue with polity if currency exchange

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