Today is Wednesday and I just finished a “conversation” with the Australian Economics Association, where I talked about Modern Monetary Theory (MMT) and its application to current policy issues. Some questions are really good and hard to answer, and this is the best way to do it. You can check out the edited version discussed below, then enjoy The Meters.
Economic Society Lecture – May 25, 2022
This is an edited version of the discussion, including the Q&A section. The entire session lasted 52 minutes, including the introduction.
The production quality – resolution, sound, etc – isn’t the best because it was recorded with Zoom at low resolution. The video was produced by the organiser, the Australian Economic Society.
I did everything I could to improve the quality of this edited version – sometimes you don’t edit, which sometimes corresponds to downgraded audio.
Thanks to Belinda and Diane for their work in organizing this event.
Inflation may peak in Europe
There was also concern that annual wage growth in the euro zone, negotiated in the first quarter, rose to 2.8%.
The usual reaction by mainstream economists Pavlov is that this shows the need for the ECB to intervene quickly and cancel its asset purchase program and start raising interest rates.
They should have read the latest- Bundesbank monthly report – May 2022 (German).
In the opening chapter – Economic Situation in Germany Spring 2022 – we read:
1. “The German labor market developed very well in the first quarter of 2022” (the German labor market developed well in the first quarter of 2022).
2. “But the pre-crisis labor shortage is back” – why? Due to Omicron (worker sick) and Russian invasion.
3. “The increase in negotiated wages in winter 2022 was significantly higher than in autumn 2021. A 4.4% increase compared to the previous year was mainly due to high special payments and corona premiums. In contrast, for such special Pay-adjusted base compensation rose just 1.6%. Actual earnings likely rose faster than negotiated wages in the first quarter, largely due to significantly fewer short-term jobs compared to last year.
Here’s the big part – to wrap it up – negotiated wages in winter 2022 will increase more than in fall 2021 – an annual increase of 4.4%.
Why?
“Mainly due to high lump sum payouts and coronavirus bonuses”
“By contrast, after adjusting for this one-off payment, base pay rose by just 1.6 per cent.”
So once we have this one-off boost in Germany, the negotiated wage outcome in the euro area in a year is likely to be around 2% – I don’t need to remind anyone, that’s very low and doesn’t push inflation up Rate.
In addition, the latest – Flash Euro PMI – Published yesterday (24 May 2022), it provides an indication of what is currently happening.
The title section reads “Cost Pressure Relief for Second Month”.
Among other quotes:
1. “Factory output continues to be constrained by widespread supply shortages, with the war in Ukraine and China’s blockade adding to existing pandemic-related supply chain pressures.”
2. “Inflation rates for both goods and services moderated slightly, largely reflecting the slowdown in cost growth recorded this month.”
3. “There are signs that inflationary pressures may be peaking, with input cost inflation falling for the second month in a row and supply constraints starting to be less widely reported”.
takeout?
temporary.
Once all these supply disruptions dissipate, inflation will drop rapidly.
The most tragic farce in history
US Republican politicians send their “thoughts and prayers” to victims of gun violence, including the massacre of children.
Just ban f**k**g guns!
There would be no mass shootings without guns.
Levy Summer Symposium 2022
I will be speaking at the following conferences – Levy Academy Summer Symposium 2022 – Operates from 11 to 18 June 2022.
If you are interested in attending (I am not sure if there is still room), you can find details on the website.
This will be my first international flight since February 2020 and I have a lot of masks on hand.
It was a pleasure to reconnect with some of my MMT buddies in the US and discuss MMT with those seeking to learn more.
Music – The Meters
Here’s what I’ve been listening to this morning at work.
One of the best funk bands of the 1970s was- meter – They’re still one of my regular playlist favorites.
This track- Useless – On their fifth studio album – revival – Released in 1973, a classic of its kind.
I remember the day I bought this album sometime in 1975.
Because that’s the influence of this band, you see their lines on so many records.
Guitarist– Leo Northentelli – It’s confirmed.
All these syncopations make one ecstatic.
Enough for today!
(c) Copyright 2022 William Mitchell. all rights reserved.
