It's Wednesday and I think the current yen situation is causing some hysteria in the financial media, although there isn't much to worry about. I'm also providing access to my latest podcast, which touches on class issues, the death of the left, Modern Monetary Theory (MMT), and degrowth, via the Bad Faith Podcast in Washington. Announcement of this book – now available for pre-order. Finally, there is the national anthem for International Labor Day.
Today is International Labor Day
Today, May 1st, we celebrate— International Labour Day – This is a “celebration of workers and the working class” that gives us hope and unity that together we can turn things around.
So please raise our glasses!
Which leads to the next project…
Japan is about to collapse! no!
There is a recurring trend in social media.
Twitter heroes who hate Modern Monetary Theory (MMT) try to find data changes that they believe invalidate our work.
The recent focus has been on Japan, given its currency's depreciation.
I have seen terms such as “collapse” and “death spiral” used more often to describe exchange rate movements.
All the signs of hysteria indeed.
Just last week it became clear that the yen was being forgotten about, and of course, Modern Monetary Theory was proven to be completely wrong.
Two things.
First, the characterization of MMT that often appears in these wild tweets, comments, and posts is so outrageous that one calls into question the demagogue’s grasp of reality.
For example, we read “The yen is depreciating and modern monetary theory is invalid because it says deficits don't matter” or something similar.
The core of modern monetary theory does not stipulate that currencies cannot depreciate under certain conditions.
When the Bank of Japan maintains its policy rate at zero and most other central banks around the world raise rates unnecessarily, currency speculation naturally moves funds to where higher returns are likely to be earned.
Modern Monetary Theory economists wouldn’t say anything different.
Secondly, the timing is usually pretty interesting too.
What happens, for example, the day after some Twitter heroes working for right-wing American think tanks conclude that the yen is collapsing?
There was a sudden appreciation on Monday.
The Twitter heroes are silent on this – a very inconvenient fact for them.
Then there was weakness after the U.S. Bureau of Labor Statistics released the latest data – Employment Cost Index Summary – March 2024, which revealed:
Civilian payroll costs increased 1.2% on a seasonally adjusted basis in the three-month period ending March 2024… Salaries and salaries increased 1.1% and benefit costs increased 1.1% from December 2023.
This rate may be enough to scare the frenzied members of the Fed and may even prompt them to raise interest rates further.
As a result, expected interest rate changes have not been revised downwards.
None of these fluctuations are related to fiscal deficits or government debt.
All financial commentators are doing gymnastics, trying to figure out whether the Bank of Japan has been conducting official foreign exchange market intervention – by selling dollars from its reserves and buying yen to provide support for the currency.
It looks like the finance minister may have instructed the central bank to withdraw some dollars from the so-called “Exchange Fund Special Account” within the finance ministry and buy some yen from commercial banks.
The Bank of Japan may also have been conducting transactions to support the yen through its relationship with the European Central Bank and the Federal Reserve.
Critics don't know one way or the other, and the lack of transparency is a thorn in the side of profit-seeking speculators.
Sometimes the Treasury comes clean soon after intervening (eg September 2022), but sometimes not (eg October 2022).
We will know when the ministry releases end-of-month FX intervention data, and when the ministry releases quarterly data we will know exactly which day the intervention occurred.
At the same time, I'm sure no one in the ministry is too upset.
Even with price pressures imported through exchange rates, inflation is falling rapidly.
And exports are booming, which provides a floor for the currency anyway.
We do know something about banks' behavior, though.
Just yesterday (April 30, 2024), the Bank of Japan released the latest money market data hinting at intervention.
I'll write more about this later when I have time and fully digested the data.
Latest Podcast – Bad Faith by Briahna Gray
The other day I was interviewed by Briahna Gray for her Bad Faith podcast.
This topic revolves around my work on the demise of the left and the role of class, all from a Modern Monetary Theory (MMT) perspective.
It was a very interesting and at times challenging interview, unlike many of the interviews I've done with the media.
The meeting was scheduled to last an hour, and shortly after, as we were exchanging post-interview pleasantries, the conversation continued and Briana asked me if she could include “off the record” material that I agreed to.
I felt like we could talk longer, which meant it was fun.
My new book is now available for pre-order
A new book I co-authored with Warren Mosler is in the final stages of completion.
The book is titled: Modern Monetary Theory: The Excellent Adventures of Bill and Warren.
The content description is:
In this book, William Mitchell and Warren Mosler, original proponents of Modern Monetary Theory (MMT), discuss their views on how MMT has evolved over the past 30 years.
In a delightful, entertaining, and informative way, Bill and Warren recall how they came together from very different backgrounds to develop Modern Monetary Theory. They consider the history and personality of the MMT community, including anecdotal discussions of various scholars engaged in MMT and those who have strayed from MMT's core logic.
This is a much needed book that provides readers with a basic understanding of the original logic behind the MMT Money Story, including the role of mandatory taxation, the origins of unemployment, the origins of the price level, and the need for job security As the essence of a progressive society—the essence of Bill and Warren’s brilliant adventure.
The introduction is written by British scholar Phil Armstrong.
You can find out more about this book from the publisher’s page – here.
The book will be published on 15 July 2024, but you can pre-order a copy by emailing: info@lolabooks.eu
The special pre-order price is €14.00 (incl. VAT).
And remember the lines from the movie:
Ted: Bill, I think they wanted us to say something.
Bill: What should I say?
Ted: [shrugs] Make something up.
Bill: Be good to each other.
So do we.
As for any similarities to the movie, we still haven’t figured out who that stupid waiter is!
Please also note that for the remainder of the month (May), I will be reverting to Monday and Thursday blog posting mode to give me extra time to complete the manuscript.
Regular transmissions will resume in June.
Smith Family Comics – Season 2 Coming Soon
The second season of “The Smiths” comics was originally scheduled to begin on May 24, 2024, and will resume on June 21, 2024.
The scripting is already well underway and the drawing is underway, but we still need a few weeks to finish the material.
Some video material about the series will be released in early June.
Music – a national anthem
Considering it's May 1st, I thought some rad chants might get the blood flowing and help us stay angry.
This is a fabulous British band— conflict —This is their ode to Marxist resistance— the great seven – taken from their fourth and best album released in 1980! – sandinista national liberation front.
“The title refers to the Sandinista National Liberation Front of Nicaragua, and its catalog number 'FSLN1' refers to the abbreviation of the party's Spanish name, the Sandinista National Liberation Front.”
This album shows how punk evolved from the early thrash genre.
A classic bass line and some classic lines:
ring! ring! It's 7:00 in the morning!
Move yourself to go again
Splash cold water on face
Take you back to this terrible place
So are the knuckle merchants and you bankers.
…
So get back to work and sweat some more
The sun will go down and we'll get out of the house
People don't work well in cages
Going into town, he drank his wages
You're upset, you're sweating
But have you ever noticed that you don't get it?
Didn't you stop long enough before you started?
Get your car out of that gear
Didn't you stop long enough before you started?
Get your car out of that gear
Carlo Marx and Friedrich Engels
Come to the 7-11 checkout counter
Marx was poor – but he had sense
Engels lent him the necessary pennies
That's enough for today!
(c) Copyright 2024 William Mitchell. all rights reserved.
