"The biggest capital power in London is of course the Bank of England, but its position as a semi-state institution makes it impossible for it to assert its domination in so brutal a fashion. Nonetheless, it too is sufficiently capable of looking after itself... Inasmuch as the Bank issues notes that are not backed by the metal reserve in its vaults, it creates tokens of value that are not only means of circulation, but also forms additional - even if fictitious - capital for it, to the nominal value of these fiduciary notes, and this extra capital yields it an extra profit." Marx, Karl. Capital, volume 3. Penguin. pp. 674–675.

Someone who had the time and wherewithal will probably have a first-hand report on this past weekend’s recent 2nd annual Modern Monetary Theory (MMT) conference in NYC.

Until that happens it seemed important to remind ourselves how important MMT is to progressive politics and how a radical political economy approach requires the continuing research work in this area, albeit largely academic. For a MMT primer go to this link.

It is one of the few contemporary movements that from a double-coding or even a dual coding perspective has the advantage of implying socialist solutions without ever having to mention socialism or Marx.

This is not a trivial matter, considering the ignorance of the US populace.

MMT is not necessarily a socialist stalking horse, but its adoption by folks like Bernie Sanders, provides one of many tools for how the current idiocy can be brought under control.

Modern Monetary Theory (MMT or Modern Money Theory) is a macroeconomic theory that describes and analyzes modern economies in which the national currency is fiat money, established and created by a sovereign government. The key assertion of MMT is that sovereign governments that are the sole supplier of national currency can issue currency of any denomination, and in physical or non-physical forms. Consequently, these governments have an unlimited ability to pay for the things they wish to purchase and to fulfill promised future payments. MMT claims that these governments also have an unlimited ability to provide funds to other sectors, and that because of this, it is not possible for a government that issues its own currency to be bankrupt.^[1]

MMT is seen as an evolution of Chartalism, and is sometimes referred to as Neo-Chartalism.

[...]

Because the government can issue its own currency at will, MMT maintains that the level of taxation relative to government spending (the government's deficit spending or budget surplus) is in reality a policy tool that regulates inflation and unemployment, and not a means of funding the government's activities by itself.

[...]

Thomas Palley concludes that MMT provides no new insights about monetary theory, while making unsubstantiated claims about macroeconomic policy, and that MMT has only received attention recently due to it being a "policy polemic for depressed times".^[37]

Marc Lavoie argues that whilst the neochartalist argument is "essentially correct", many of its counter-intuitive claims depend on a "confusing" and "fictitious" consolidation of government and central banking operations.^[38]

Daniel Kuehn has voiced his agreement with Murphy, stating "it's bad economics to confuse accounting identities with behavioral laws [...] economics is not accounting."^[40]

Considering the nature of fictitious capital, imagining the consolidation of government and central banking operations is beyond the confusing of accounting identities and behavioral laws when as we’ve seen the policy chaos fomented by Lord Dampnut.

MMT is not some entryist plot, it is a rethinking of how the monetary system can be restructured from its deficit premises and its capitalist avarices. It is regulatory but more importantly it has structural implications for redefining capitalism.

Viewed from afar, Modern Monetary Theory (MMT) and Marxism appear opposed. Contemporary Marxists such as Anwar Shaikh reject MMT and, typically, MMT is disassociated from Marxism when presented to the public. In truth, however, MMT and Marxism share an entangled history that thwarts neat distinctions and oppositions.

For one, Karl Marx’s intervention stands at the origin of critical political economy. Insisting that the modern money systems that mainstream economics deem natural and self-correcting are in truth politically constructed and destabilizing, Marxism functions as a philosophical torchbearer for the heterodox post-Keynesian tradition from which MMT arises. What is more, post-Keynesianism itself comprises a kaleidoscopic conflagration of Keynesian and Marxist impulses, which cannot be sharply dis-articulated.

In terms of direct influence, MMT owes many specific insights to the history of Marxist thought. MMT relies heavily on post-Keynesian theories of effective demand and stock-flow consistency, both of which are traceable to the second and third volumes of Marx’s Capital. Moreover, MMTers such as Bill Mitchell, Mathew Forstater, and Peter Cooper regularly draw upon Marxist concepts and arguments in their writings, paying express heed to Marxism’s ongoing relevance for MMT.

Meanwhile, post-Keynesian circuitist theory has increasingly prioritized state credit money in their analyses of the monetary circuit (M-C-M’) outlined in the first volume of Capital. Especially interesting in this regard are European Marxist circuitists like Riccardo Bellofiore who overtly mobilize MMT’s insights. Forging novel connections between Marxism, post-Keynesianism, and MMT, Bellofiore and his followers continue to uncover important genealogical and theoretical linkages among these projects.

One might say far more about the linkages and discordances that riddle heterodox economics. Here, I merely wish to demonstrate the folly of treating MMT and Marxism as unrelated or categorically opposed. To do so is to overlook post-Keynesianism’s paramount role within the history of heterodox economics and to repress the contested field of inquiry to which both MMT and Marxism belong.

www.nakedcapitalism.com/...

Scott Ferguson’s attention to the problem of social-ontological division between MMT and Marxism is compelling.

Nonetheless, I wish to risk articulating outright the underlying rift that cleaves MMT and Marxism. Marxism attributes the greatest degree of being to immediate material relations and imagines monetary abstraction as a necessary diminishment and volatilization of said relations. By contrast, MMT treats remote obligations to a centralized currency issuer as ontologically prior to any decentered association and sees monetary abstraction as a means to at once socialize and enlarge relations of production and distribution. Hence Marxism assumes that money is a private, alienating, and crisis-ridden exchange relationship that ought to be overcome. Yet MMT holds money to be a boundless public utility that, while by no means untroubled, is well-equipped to actualize radical collectivist ends.

www.nakedcapitalism.com/...

Ferguson goes on to distinguish between David Harvey’s “gravitropic” tendency and the possibility of MMT. This by no means delimits Harvey’s insights on the fictitious capital operating in capitalist space. It actually signals Ferguson’s lack of appreciation of critical geography and the limits of his own historical perspective.

In a sense Harvey is correct: contemporary neoliberalism is grim. Seen through the eyes of MMT, however, the future hardly looks foreclosed. Private debt can become a “bad infinity.” But public money is the best kind of infinity and it constitutes the center around which this forsaken system turns.

Marxism is a rich, heterogeneous project that continues to bear fruit. Yet unless critical political economy begins to relinquish its gravitropic attachments to a finite Liberal money form, Harvey’s bleak diagnosis will almost certainly turn into a self-fulfilling prophesy.

www.nakedcapitalism.com/...

Why is all this theorizing important. Note that while we have been fixated on trying to stop a resurgent misogyny and the fetal shibboleths of dominionists on SCOTUS, the money bin is being pillaged. And nobody had to drink jungle-juice.

While all that strife in important to remind us how little has been achieved as the RW elites have been rolling back all kinds of neoliberal social reforms and are managing to loot the Treasury in order to make a concurrent profit.

MMT, if made more ubiquitous, provides a means to institutionalizing a progressive discourse, even if changing the economics and business pedagogy may take yet another generation. The following events and issues below demonstrate how that need is more urgent and that while the theory of crisis is heuristic, it is not permanent without revolutionary struggle.

Fictitious capital encompasses a variety of financial instruments: bank credit, public debt, company bonds, and company stock shares. What all of these have in common is that they are not valuable in and of themselves.
Fictitious Capital moves beyond moralizing tales about greedy bankers, short-sighted experts and compromised regulators to look at the big picture. Using comparative data covering the last four decades, Durand examines the relationship between trends such as the rise in private and public debt and the proliferation of financial products; norms such as our habitual assumptions about the production of value and financial stability; and the relationship of all this to political power.

Hence the current free-for-all of looting the US economy...

With attention fixed on the Brett Kavanaugh confirmation hearings, the U.S. House of Representatives passed a new $3.1 trillion tax cut on Friday. The vote was 220 to 191, including three Democrats.

The down-to-the-wire 2017 tax act passed in late December contained a mix of permanent and temporary changes that had to result in a net increased cost that fell within a structural limit of $1.5 trillion that allowed the Senate to approve the bill with a simple majority.

The House’s new bill takes effect starting in 2025, and would add $600 billion to the national debt within the next decade, and then $3.2 trillion in the 10 years after that, according to Howard Gleckman of the Tax Policy Center.

Despite the House vote, it is unlikely the Senate will take up the legislation. The first round of tax cuts landed with a thud, with even a leaked Republican National Committee poll—reported on by Bloomberg News—showing American voters thought it benefited “large corporations and rich Americans” by an overall 2-to-1 margin and the same margin among independent voters.

fortune.com/...

More example of why the neoliberal orthodoxy needs heterodox approaches.

Central bankers have also more than doubled global debt as they have flooded national economies with cheap and easy money. In 2008, global debt sat at $177 trillion in comparison to $247 trillion today.

“We won’t be able to call it a recession, it’s going to be worse than the Great Depression,” economic commentator Peter Schiff told the Post. “The U.S. economy is in so much worse shape than it was a decade ago.”

A widespread drop in spending and income means that default rates will likely worsen in coming years. Schiff also blamed the U.S. Federal Reserve and other central banks in part for the impending crisis.

“I think we are going to have a dollar crisis — you think the Turkish lira looks bad now, wait till you see when the dollar is imploding and we have a sovereign debt crisis in the US,” he told the Post. “The U.S. government is going to be given a choice between defaulting on the debt, or else massive runaway inflation.”

Financial experts predict a crash "worse than the Great Depression" under Trump https://t.co/WycXz92cRN pic.twitter.com/xKdLCQfe2I

— Newsweek (@Newsweek) September 24, 2018

Ten Years After the Crash, We’ve Learned Nothing https://t.co/Uchv6qVE2s via @RollingStone

— Serpentine202 (@Serpentine202) September 17, 2018

Fictitious does not mean epiphenomenal.

Profit can be made purely from trading in a variety of financial claims existing only on paper. This is an extreme form of the fetishism of commodities in which the underlying source of surplus-value in exploitation of labour power is disguised. Indeed, profit can be made by using only borrowed capital to engage in (speculative) trade, not backed up by any tangible asset.

The price of fictitious capital is governed by a series of complex determinants. In the first instance they are governed by the "present and anticipated future incomes to which ownership entitles the holder, capitalised at the going rate of interest".^[10] But fictitious capital is also the object of speculation. The market value of such assets can be driven up and artificially inflated, purely as a result of supply and demand factors which can themselves be manipulated for profit. The inflated value can just as rapidly be punctured if large amounts of capital are withdrawn.^[11]

en.wikipedia.org/...

So much speculation occurs in the shadows.

The invisible recession: A major economic event in 2016 escaped much public notice. But its impact was huge. https://t.co/HkKRiSBiOw

— The New York Times (@nytimes) September 29, 2018

The end of the mini-recession in the spring of 2016 created a capital spending rebound that began in mid-2016, and it has contributed to speedier growth since. Oil prices have reached four-year highs, a major factor in a surge in business investment this year.

It helps explain some of the economic discontent evident in manufacturing-heavy areas during the 2016 elections. It offers warnings for where the next downturn might come from, and shows how important it is for policymakers to remain watchful and flexible about unpredictable shifts in the global economy.

[...]

The impact of the global commodity-currency spiral of 2015-16 is evident from a glance at the economic statistics. It is less so in the economic debates of 2018.

First, while the Trump administration has claimed full credit for a surge in business investment, the bounce-back from the mini-recession is a major factor.

White House economists have presented charts showing a surge starting in the fourth quarter of 2016, when the election took place. But that turnaround began in mid-2016 by most measures, not late 2016 as suggested by the White House’s “six quarter compound annual growth rate” measure.

Second, the mini-recession might well have affected some political attitudes during the 2016 election. While the economy was in pretty good shape for people in large cities on the coasts, 2016 was rough for a lot of people in local economies heavily reliant on drilling, mining, farming or making the machines that support those industries.

A poll in October 2016 by an agriculture trade publication, Agri-Pulse, found that 86 percent of farmers were dissatisfied with the way things were going in the United States.

Third, economic policymakers need to display the flexibility to respond to incoming information, even when it doesn’t fit their own forecasts or preconceptions.

If Ms. Yellen had been more stubborn about sticking to the plan to keep raising rates through 2016 because of her training as a labor market economist, the result might well have been an actual recession. “She’s always learning,” said Julia Coronado, president of MacroPolicy Perspectives, “and not so egotistical that she’s wedded to one view of the world.”

Finally, it shows the global economy is so interconnected that events in Shanghai or São Paulo can cause unpredictable effects in faraway places.

In the last year, the Trump administration has been lobbing tariffs at China and other major economic partners to extract more advantageous terms for trade. But the mini-recession warns of the risk of ricochet.

Like it or not, the complexity of our global connections means that policy can’t just focus on the home front. In 2016, we learned that lesson the hard way, even if not everybody was paying attention.

And then there’s just basic weasel behavior.

x

Hm. No State readout (yet) of Pompeo/Saudi FM Jubeir meeting this morning. via @Joyce_Karam, followed up by a Trump call with Saudi King 1/

— Laura Rozen (@lrozen) September 29, 2018

Wonder if Pompeo and Trump are pressing the Saudis to open their oil pumps to try to lower gas prices before the US midterms. 2/

 

 

That is one reason I could see State not putting out a readout. 3/

 

 

If, and it’s speculative on my part, that was topic, not sure how much Pompeo is supposed to be involved in diplomacy to affect midterms 4/

 

 

(If topics discussed were the usual—Yemen, Iran, Iraq, Syria, etc.,—not sure why State would not issue a readout 5/)

 

 

 

Update: Looks like topic of at least Trump Saudi Kind call was indeed oil prices https://t.co/Nex5ppKpUZ pic.twitter.com/7ffEZw4sPt

— Laura Rozen (@lrozen) September 29, 2018