Macro N Cheese

It’s been almost two years since we’ve had German economist Dirk Ehnts on the podcast. This episode can be seen as part of Steve’s ongoing look at “dedollarization” and what it means to be the world’s reserve currency. They turn the MMT lens toward the Eurozone, comparing governments’ responses to the pandemic, inflation, and the treatment of labor.“So of course the labor laws are different in Germany compared to Italy, to France and so on. If the French workers go on strikes, they burn stuff. It's always amazing for us Germans to see it happening, but their productivity is even higher. So maybe German workers should burn stuff when they go on strike. So that increases productivity.No, I'm just joking. I never said that!"Dirk talks about changes in regulations on deficit spending and his belief that the ECB understands MMT, as evidenced by their support of national governments during economic crises. When monetary sovereignty was returned to Eurozone countries over a four-year period, “the results were pretty good.” They now have a lower rate of unemployment than ever before. It’s still high... but not as high as before. He thinks inequality is not quite so bad as in the US and explains why this is.Steve and Dirk discuss how Europe is affected by the US Fed’s raising of interest rates. “So it's just giving money to people who have money like Warren (Mosler) always says.” But ultimately, “the net effect is that we have roughly zero growth in the European economy.”Dr. Dirk H. Ehnts holds a PhD in Economics from the University of Oldenburg and a diploma in economics from the University of Göttingen. A heterodox economist, he is one of the leading proponents of Modern Monetary Theory (MMT).  He has taught classes on macroeconomics, money and currency, European and global economics, and the origins of political economy at a number of institutions. Every summer since 2016 Dirk has held a course on Modern Monetary Theory at the Summer School of Maastricht University and has published numerous articles in specialist journals and daily newspapers.https://www.dirk-ehnts.de/en-us/@DEhnts on Twitter

New Zealander Bijou Smith is a longtime friend of Steve and the podcast. His story, in brief: “I was a physicist. I love physics, theoretical physics, but when I learned a bit about economics—I was always interested in economics from a sort of dynamical systems analysis perspective. It's kind of interesting mathematics. Even the neoclassical stuff is interesting for a little while until you realize it's a joke. But then when I heard about MMT, a lot of the pieces clicked into placed and it's like, wow, this is really the struggle.” MMT is a bell that can’t be unrung.Steve and Bijou talk of popular concern about the petrodollar, and how economic illiteracy distorts its importance. The role of the US dollar in global political economy is poorly understood without the insights of MMT.Smith criticizes the false psychology that views currency as a finite resource and is locked into the image of fixed exchange rates. He argues that this creates mental models that are not true but are still played out as if they are. He distinguishes between false conceptions of dollar hegemony and the very real struggles that countries face when they are indebted to the IMF and believe the imposition of austerity is the only way out.The discussion looks at the way foreign exchange rates affect and do not affect national economies. Smith explains that this process does not have anything to do with confidence in a particular currency. It is a market-making activity.Those who follow us know that Steve has long been searching for a way to bring the understanding of MMT to the left. This episode is a continuation of that journey.Bijou Smith has lectured and taught general physics, magnetohydrodynamics, undergrad mathematics, statistics and IT. He now devotes most of his time to independent research in theoretical physics and studying implications of Modern Monetary Theory. Check out his blog, Ohanga Pai, at bijou.substack.com@MathWillSuffice on Twitter

If you’re one of the lucky ones who attended our webinar, RP Live with Clara E. Mattei, then you’ve already heard this episode. Or you may have watched the video of that event. This podcast episode is the audio version, but we’re asking you to play it anyway. It never hurts to hear information a few times, and by playing it, you’re also helping us grow Macro N Cheese. Because algorithms.On Tuesday, May 2nd, Professor Mattei will be joining us for the first of two sessions of RP Book Club on The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism. There’s still time to register using the link at the bottom of this page.At the end of The Capital Order Mattei writes:"This book has detailed a set of influential economic patterns that are pervasive across the globe and that shape our daily lives. Contrary to what the proponents of austerity would have us think, however, the socioeconomic system we live in is not inevitable, nor is it to be grudgingly accepted as the only way forward. Austerity is a political project arising out of the need to preserve capitalist class relations of domination. It is the outcome of collective action to foreclose any alternatives to capitalism. It can thus be subverted through collective counteraction. The study of its logic and purpose is the first step in that direction."Join us for RP Book Club, May 2nd and 16th. To register, go to https://realprogressives.org/rp-book-club/Clara E. Mattei is an Assistant Professor in the Economics Department of The New School for Social Research and was a 2018-2019 member of the School of Social Sciences at the Institute for Advanced Studies. Her research contributes to the history of capitalism, exploring the critical relation between economic ideas and technocratic policy making.@claraemattei on Twitterhttps://realprogressives.org/podcast_episode/episode-198-the-trinity-of-austerity-with-clara-mattei/

Carl Zha brings us his knowledge of China, the US, and global political economic relations. He also brings his exquisite sense of the absurd.Exactly one year ago, Carl and Steve recorded their marathon discussion of Chinese history, resulting in three episodes about Mao. This time, they have Taiwan in their sights. Just like Joe Biden.Official US policy on Taiwan is just ambiguous enough to allow plenty of shenanigans, despite recognizing “one China” since the 1970s.“We know how the Cold War 1.0 played out. We isolated the Soviet Union and Soviet bloc. We cut off all the trade and then eventually the Soviet Union collapsed. This is how we won the Cold War 1.0. So we'll just play the same playbook to win Cold War 2.0 against China. But this is crazy talk because China is nothing like Soviet Union of the yester years; China is the world's largest trading economy. It has trade not just with United States and Europe but also has a huge trade with the global south. So, what the US is doing in its attempted decoupling from China, actually it's cutting US off from the rest of the world.”The United States has gone from being a major industrial power to being a service economy with a neglected, crumbling infrastructure. China is building economic relationships around the world “without tanks and nuclear arms and planes,” says Steve. “China has been working in a much more cooperative way and people are lining up to say, ‘sign me up. I don't want the US having its hands on me.’”The conversation covers the economic and political implications of this reversal of fortune. With their massive exports to the US, China has accumulated vast amounts of US dollars. The 2008 financial crisis supplied impetus for China to seek new uses for their dollars reserves. Carl explains the Belt and Road Initiative and its multifaceted benefits.Carl Zha hosts Silk and Steel, a weekly podcast discussing history, culture, and current events of China and the Silk Road. Support him at patreon.com/silknsteel. His YouTube channel is https://www.youtube.com/@CarlZha.@CarlZha on Twittert.me/CarlZha on Telegram

It’s been two years since Bill Black was last on with Steve. We’ve invited several guests to talk about the collapse of Silicon Valley Bank, so it only makes sense to ask our whistleblower friend to weigh in. Bill and Steve discuss what it means to be too big to fail. When an institution is too big to fail, the creditors get bailed out, but then, Bill says, “really really bad things have happened.” “...they hold the economy hostage. And nowadays they hold the global economy hostage. And if you hold the global economy hostage, you hold global politics hostage. So that needs to be fixed. And the way to fix that is not to allow such institutions, right? Duh,” The episode looks at the capture of government by the financial industry. Bill talks about his experience during the savings and loan crisis and the transition from somewhat effective regulatory apparatus to a fully cock-blocked system. (Our words, not his.) Bill Black is a professor of Economics and Law at the University of Missouri – Kansas City (UMKC) and the Distinguished Scholar in Residence for Financial Regulation at the University of Minnesota Law School. He is a serial whistleblower and authored The Best Way to Rob a Bank is to Own One.

Author Dan Kovalik talks to Steve about his recent book, Nicaragua: A History of US Intervention and Resistance. His perspective includes his own experiences in Nicaragua and the personal connections he made there.From the 1910 occupation and eventual ouster of US Marines, through the dictatorships of several members of the Samosa family, the conditions for revolution were ripe. Dan describes the 1979 revolution as a David and Goliath story. The Sandinistas inherited a country steeped in poverty, with no infrastructure. The US-backed counterrevolution began almost immediately. Ronald Reagan and the Contras are just a small piece of it.Dan grew up believing the US was the beacon on the hill, committed to spreading democracy and freedom. His first trip to Nicaragua changed his politics and his life.Dan Kovalik is a labor and human rights lawyer and peace activist. He teaches International Human Rights at the University of Pittsburgh School of Law. He is the author of several books, including The Plot to Scapegoat Russia and Nicaragua: A History of US Intervention and Resistance.@danielmkovalik on Twitter

C. Derick Varn is a poet, teacher, and “arm-chair theorist” (his words, not ours), but Steve called on him for his deep knowledge of history, specifically the history of revolutions.Varn takes a realistic and nuanced look at some of the popular myths about the brutality of key figures, like Stalin and Mao. He suggests placing them in the context of historical geopolitical economic conditions.I'm also just going to remind people that both the Bolshevik Revolution and the Chinese Revolution, in particular, come out of the context of world wars. They happen when they happen during the world wars for a reason. You have highly traumatized societies where the power has been broken because of the consequences of world war, even when the powers at hand are actually allied with the winners.Steve asks whether one should excuse abandoning civil liberties in order to protect the gains of a revolution against very real internal and external threats. “What civil liberties?” asks Varn. Some revolutions never even got rid of their monarchies.The episode considers Bolshevism, Trotskyism, and fascism. Varn talks about why both socialists and capitalists were attracted to fascism, looking, again, to the conditions of the time.C. Derick Varn is a poet, teacher, editor, podcaster, and broadcaster. He is the host of VarnVlog and co-host of Gaming Materialists. According to his Patreon, Varn Vlog is a podcast and YouTube channel dedicated to delivering high-quality interviews and analyses on philosophy, art, political economy, culture, geopolitics, pop culture, and history. Support his work at patreon.com/varnvlog@skepoet on Twitter

When you learned of the run on Silicon Valley Bank, did the image of George Bailey come to mind, facing the mob demanding full withdrawals from Bailey Building & Loan?“You’re thinking of this place all wrong, as if I had the money back in the safe. The money’s not here. Why, your money’s in Joe’s house that’s right next to yours. And the Kennedy house and Mrs. Maitland’s house, and a hundred others. You’re lending them the money to build, and they pay it back to you as best they can. What are you gonna do, foreclose on them?” (It’s a Wonderful Life, 1946)Steve’s guest is Brian Romanchuk of Bond Economics, here to break down the conditions and events leading to the collapse of SVB. Spoiler alert: there’s no Jimmy Stewart, no uplifting message, no sentimental tears.Brian explains how the American banking system is unusual relative to other developed countries. In Canada, where he lives, the Big Five banks are an oligopoly, but they’re diversified. They deal with all the nation’s banking needs.SVB is a relatively small bank, specializing in venture capital. This focus affects expectation of profits and the decision to invest in long-term Treasurys. When the Federal Reserve, fighting inflation on the backs of the working class, raised interest rates, the ultimate result was the bank’s collapse.Brian and Steve discuss how the Fed’s policies have led to a decrease in savings and an increase in debt, leading to greater inequality. They touch on Credit Suisse as well as pension funds in the UK, and try to clarify our understanding of bankruptcy and “bail-outs.”Real life is more complicated than it’s presented in movies. Don’t expect any angels to get their wings.Brian Romanchuk is the author of several books, including Modern Monetary Theory and the Recovery. He is the writer and publisher of bondeconomics.com. His writings can be found in his substack, The BondEconomics Newsletter.@RomanchukBrian on Twitter

Steve always says the beauty of MMT is “it takes the most convoluted spaghetti diagram and turns it into a straight line.” When it comes to banking, the financial industry, financial technology, and privacy, has the MMT community developed that straight line yet? Today’s guest, Raúl Carrillo, thinks we can get there:“I don't think we quite have, but I think the straight line flows right through everything else we've done. Just as we don't want banks to be heavily involved in the public provisioning process... We have to pay just as much attention to Silicon Valley, and then start thinking about what it looks like to actually build a democratic public money system that operates on MMT principles.”It’s been two years since we’ve had Raúl on the podcast, but the conversation is continuous, and it includes our episodes with Rohan Grey and Brett Scott.Steve and Raúl discuss Raúl’s recently published white paper, "Seeing Through Money: Democracy, Data Governance, and the Digital Dollar." It is essentially an intervention in the discussion about the future of money. It includes analysis of the way government agencies use financial technology today and how it is linked to a broader public money story and an MMT story. Currently, banks are intermediaries between the public and the state. In other words, banks are part of the plumbing. But what’s to stop the government from using financial technology for the public purpose and cutting the middlemen?Today, however, it’s more than just the banks.“The inclusion of new technological partners in the plumbing changes many, many things. If a Silicon Valley firm – whether it's a big stablecoin firm like Circle or PayPal – gets a master account at the Fed, we're living in a different terrain for MMT analysis ... I think it's just very important that we keep an eye on Silicon Valley in this sense and take the time for self-assessment when we talk about what kind of public money systems we're building.”The conversation goes into privacy issues where, again, the lines are blurred between the private sector and the government. Or maybe “blurred” is the wrong word. Their lines of communication are not necessarily visible to the public. What has been blurred is, in some cases, the distinction between left and right.Some take-aways from the episode. Financial surveillance can have extreme consequences. Think of a state with draconian anti-abortion laws. If the government can’t get a hold of your medical records, they can simply track your payments. After the Dobbs ruling, some suggested using cryptocurrency to pay for abortion, but guess what? It turns out blockchain is not private in the way most people think it is. That’s another take-away from the episode.Whatever the idealized intentions of the early developers of digital currency (remember how it would address the racial wealth gap?) it has mutated into a world of grifters and fraud. As Raúl says, “It’s not a cool party anymore, if it ever was. When you’ve got the cops and the bankers there, it’s time to leave.”Raúl Carrillo is the Deputy Director of the LPE Project (Law and Political Economy) and an Associate Research Scholar at Yale Law School. He is on the board of Modern Money Network and the chair of Public Money Action.@RaulACarrillo on Twitter

Austerity is a potent weapon of class warfare. Political economist David Fields talks with Steve about the ways austerity serves to discipline labor, as it has been doing since the Bolshevik revolution. They touch on the reasons capitalism cannot risk full employment, as explained by both Karl Marx and Michal Kalecki.David wants people to read Adam Smith’s The Wealth of Nations or The Theory of Moral Sentiments. Even Smith, the father of the “invisible hand,” said government is instituted for the security of property — for the rich against the poor.The discussion touches on the current inflation, comparing the true causes to the mainstream narrative.“There's been a very coordinated, calculated campaign with well-known economists. Call it neoliberalism. Call it what you want, financialization... The concepts, terms, economic principles that we take for granted are not value-neutral.”We are embedded in a system of winners and losers and we’re meant to believe there’s no other way. Workers must be prevented from understanding the trifecta of austerity – fiscal, monetary, and industrial.Bio: David M. Fields, Political Economist, Utah. From a critical realist & genetic structuralist ontology & epistemology, David's scholarly work centers on the intricacies concerning the interactions of foreign exchange & capital flows with economic growth, fiscal & monetary policy, and distribution, whereby attention is paid to the nature of money and international political economy. He has published in the following journals: Review of International Political Economy, Review of Political Economy, American Review of Political Economy, the Review of Keynesian Economics, and the Review of Radical Political Economics. Additionally, he has provided book chapter contributions to The Encyclopedia of Post-Keynesian Economics, The Encyclopedia of Central Banking, and the Wiley-Blackwell Encyclopedia of Globalization. David received his graduate degree from the University of Utah; his bachelor's from the University of Massachusetts, Amherst.@ProfDavidFields on Twitter