Macro N Cheese

All digital currency is not created equal. Its technology can potentially be used as a force for good or a force of evil. Robert Hockett joins Steve to discuss both. Let’s start with the evil. The collapse of FTX, one of the world’s largest crypto exchanges, is still sending shock waves through the mainstream and financial media. It seems that only MMTers are unsurprised by it or the chain reaction, as other crypto schemes are tumbling apace. Bob describes how the collapse follows the same pattern as the junk bond bubble of the 80s and the sub prime mortgage crisis in the aughts. Prices are driven up as more people crowd the market, eager to hop aboard a new investment opportunity. You don’t need a Ponzi to have a Ponzi scheme. And apparently you don’t need to produce anything of value in order to generate huge profits... for a while. “The irony is that in every one of these cases, there is a clue in the name of the product in question that ought to warn you. If it's called a junk bond, there's a reason for that word "junk" being used. And if it's called a sub prime mortgage loan or sub prime mortgage-based product, there's a reason for that “sub prime” term. Similarly with cryptocurrency or crypto assets, one of the most ironical names ever conceived for this kind of product. If the word "crypto" comes into it, then that's a pretty good tip-off that there's something non-transparent about it, that there's something opaque and occluded and difficult to understand about it.” Bob and Steve talk about the development of Central Bank Digital Currency, or CBDC, which will be as safe as a nation’s fiat currency—Bob likens it to the introduction of the greenback dollar in the 1800s. None of this is to say that we at Macro N Cheese approve of the Federal Reserve’s ideology or actions; a neoliberal system will have a neoliberal central bank. No big surprise there. Robert C. Hockett is an American lawyer, law professor, and policy advocate. He holds two positions at Cornell University and is senior counsel at investment firm Westwood Capital, LLC. His latest book is The Citizens’ Ledger: Digitizing Our Money, Democratizing Our Future. @rch371 on Twitter

**After the episode, visit our “Extras” page where you’ll find links to Bill Mitchell’s blog, books, MMT education course, and more. Every episode of this podcast is also accompanied by a full transcript. realprogressives.org/macro-n-cheese-podcast/**Usually when Steve and his guests talk about culture, they’re referring to that of neoliberalism. As Scott Ferguson says, neoliberalism isn’t just enmeshed in our popular and esthetic culture; it is our culture. “There’s no enmeshing; it IS neoliberalism—what in the Marxist tradition we call etiology, the kind of background assumptions and values that structure our innermost thoughts and feelings and desires and, you know, what makes us laugh, what makes us cry, what makes us horny. What makes us, you know... everything.”In today’s episode, our dear friend, Bill Mitchell, talks to Steve about Japanese culture, which predates neoliberal culture by eons. Bill has recently taken a fellowship at Kyoto University, giving him and his wife the opportunity to experience the day-to-day life of Japanese society while pursuing his research into their economy.Bill’s interest in Japan coincides with the start of his academic career:“As I was entering my first tenured position, Japan had the biggest commercial property collapse in history. It went neoliberal in the late 1980s and had an extraordinary explosion of debt, typically concentrated on commercial property in Tokyo and Nagoya and the big cities. And that collapsed in 1991.”Despite the huge decline in property values, Japan had just one negative quarter of GDP. He had to ask, “How the hell have they been able to avoid a deep recession and get out of this huge property market collapse?” The answer was found in the government’s response—providing fiscal support to the economy.“The fiscal deficits went up to 10% or 11% of GDP. And in historical terms, that was huge; that was sort of like wartime shifts in fiscal positions. So that's what started me on my Japanese research agenda and my interest in following Japan. Then I met Warren (Mosler) and we started the MMT project in the mid-90s... And Japan was my laboratory—my real-world laboratory.”Some suggest that the government’s fiscal behavior could be explained by the difference in culture. But the way the monetary system works is identical to that of the US or Australia.Throughout the episode, Bill and Steve continue to compare Japanese culture and economic policies with those of their home countries.We at Macro N Cheese are always looking for answers, but often the learning experience is more valuable when we come away with new questions. Throughout this episode, Bill and Steve compare Japan’s culture and economic policies with those of their home countries, yet they make no definitive statements about cause and effect.Japan has managed to maintain a high standard of living for its citizens—first-class health care, first-class public education, first-class public transport. Unlike the US, Japan does not see unemployment as the cure for inflation. Bill describes the many service workers in jobs that would make neoliberal bean counters pull out their hair—greeters in stores, parking guides, maintenance workers in Japan’s beautiful public spaces. These jobs are not busy work; they improve a community’s quality of life. Bill sees Japan as an ideal candidate for a job guarantee.Japan faces vast challenges, yet its monetary and fiscal policies continue to defy the pressured expectations of hedge fund speculators, austerity evangelists and self-styled experts (hello, Paul Krugman!) This demonstrates that mainstream macroeconomics is not knowledge, it is fiction. Only MMT has it right.Bill Mitchell is a Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the University of Newcastle, NSW, Australia. He is also a professional musician and plays guitar with the Melbourne Reggae-Dub band – Pressure Drop.@billy_blog on Twitter

Clint Ballinger is an economic geographer, a path he followed in search of answers to what he calls fundamental questions of political economy. Why did the Industrial Revolution occur in England and western Europe? What is the reason for the radically uneven distribution—radically unequal material well-being—around the world? It exists not only between countries, but within countries. As listeners to this podcast know, economics departments aren’t teaching this stuff.Modern economists take money out of the equation. How absurd is that?“You have incredibly complex mathematical models being developed all through the forties, fifties, sixties... but they don't discuss all the things about money that matter. Because as we learned in 2008, they didn't even have money or a banking system in their equations, basically. So that's a huge problem.…Regardless of how you get it, once you have some kind of basic monetary unit, everything that comes after that in a monetary production economy is what got ignored.”Steve and Clint talk about the history of money and David Graeber’s book, Debt: The First 5000 Years. Debunking the “myth of barter” and understanding the history of money allows us to break through the misconceptions of money at the root of the misguided political stances that abound in our society. We can’t fix what’s broken without this clarity.Money is a token, not a commodity. Steve likens it to a concert ticket; the little square of cardboard has no intrinsic value. Yet not a single politician gets this right.Clint takes the discussion into property rights—not the rights of the rentier class, but the state’s role in protecting an individual’s resources.“We always have to get back to the real economy. That's always the fundamental thing. We make things—goods and services. People use those goods and services. Money per se, it's all accounts, accounts are always property rights. Every account in the world is a claim on real resources in some way. So that's why it gets back to the very basic ideas of property rights.”Much of this interview connects to topics covered in past episodes with Fadhel Kaboub and Rohan Grey, among others. Links can be found in the “Extras” section on our website, where you will also find a transcript of the episode. realprogressives.org/macro-n-cheese-podcast/Clint Ballinger got his MA in Political Science at the University of North Carolina at Chapel Hill, where he focused on modern uneven economic development and went on to specialize in the interpretation of global econometric data for his PhD in Geography at Cambridge University. His book, 1000 Castaways: Fundamentals of Economics, was published in 2019.@clintballinger on Twitter

** Check out the transcript for this and every episode of Macro N Cheese on the Real Progressives website. This week’s episode looks at using a recently developed economic model application developed by frequent Macro N Cheese guest, Steve Keen. The software is aptly named “Minsky” and Steve Grumbine’s guest, Tyrone Keynes, is an experienced user of the Minsky software modelling tool. Tyrone is a consultant whose specialties are economics, health, and ecological modelling systems. Steve and Tyrone walk through the steps to develop processes that they both similarly follow to build a model. Tyrone then talks about his latest work using Minsky to build an unnamed U.S. State a model that will describe how to manage the state’s retirement system to improve the disparities between low and high wage state workers. They discuss the prep work before running the model and validating results. Additionally, Tyrone describes examples of how Minsky has been used to validate MMT (Modern Monetary Theory) thinking and how the tool can be used in the future to help bring about consensus within the MMT community and acceptance in the economic community. Most Macro N Cheese episodes are unique, this one reveals how to focus the MMT lens with some tips on why other tools fail. Tyrone Keynes is a System Dynamicist, independent researcher, and professional consultant at BD Consulting, (https://www.bdconsulting.ca) showing how systems thinking can be applied to economics. He specializes in modeling economic, health, and ecological systems. He is also the main beta tester for the Minsky software and does most of the social media for it. @TyKeynes on Twitter

**Thank you to our listeners! Can you believe this is our 200th episode? Crazy, right? Well, it wouldn’t have been possible without the efforts of a dedicated team. Our sound editor and engineer, Andy Kennedy, has spent thousands of hours (literally) producing these weekly gems. Then there’s the diligent band of copy editors—Brad Sandler, Jonathan Kadmon, Jay Spencer, and yours truly, Virginia Cotts, (plus, in earlier days, Rose Ann Rabiola Miele and Rob Baxter)—who pore over every AI-generated transcript, correcting mistakes and fixing punctuation for clarity. Julie Alberding, the RP website’s reigning eminence, created the layout. Each week she meticulously formats and posts the transcript, show notes, and extras. And let’s not forget our inimitable host, Steve Grumbine, who invites us along on his personal quest for knowledge. The journey has resulted in some unforgettable interviews, invaluable content, and a few “aha!” moments.**It’s fitting that our 200th episode is also Fadhel Kaboub’s 10th. Fadhel is the non-economist's economist. You don’t need a new language to learn from him. In this episode he revisits some familiar themes, expands upon them and draws conclusions that... well, they just make so much sense.He looks at global changes, post-2008, post-Covid, and post-Russia/Ukraine. To avoid future disruptions to the supply chain, the three major power blocs—the US and North America, the EU and western Europe, and China, with Russia and central Asia in the hub—are looking to repatriate strategic industries. They are consolidating their sovereignty in terms of food, energy, high-tech manufacturing, strategic industries, and geopolitical, geostrategic sovereignty within each region. That leaves the global South as the place all three blocs perceive as the source of cheap raw materials, the dumping-ground for surplus output, and the site for low-cost assembly line manufacturing.“So that's the world that is emerging. The question for me and for the global South in general, and for Africa as a continent in particular, how do we position ourselves on this new map? And I think I said it before to you on the show, Steve. If you don't have a long-term strategic vision for yourself, you're going to be part of somebody else's strategic vision.”Fadhel proceeds to describe the structural deficiencies that neocolonial nations must overcome and then lays out his vision for the solution.“And that's been one of the most important things that I'm trying to convey to global South activists, academics, public intellectuals, and people who have influence in government policy on the African continent, is formulating that coherent pan-African vision for economic sovereignty, food sovereignty, energy sovereignty, technological sovereignty, and then leveraging that coherent vision—on African terms—to partner with anybody, including China.”He talks about the IMF and its debt traps. He talks about the built-in roadblocks on the path to energy independence. He talks of the need for truth and reconciliation commissions and looks at what post-colonial reparations must include. If you made a diagram of this discussion, there would be arrows connecting each piece to all the others. Sounds dialectical, doesn’t it?Dr. Fadhel Kaboub is an Associate Professor of Economics at Denison University and President of the Global Institute for Sustainable Prosperity.@FadhelKaboub on Twitter

Steve talks with Thomas Fazi, journalist/writer/translator/socialist. Many of us know him as co-author, with Bill Mitchell, of Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World.A few weeks ago, we had an episode entitled Trussonomics. It was recorded a few weeks after Liz became Prime Minister, and mere days before she got the boot, making her the shortest-serving PM in UK history. Fazi has a different take on the events leading up to Truss’s removal, and spends much of the first half of this interview breaking it down. Truss is a libertarian free market conservative, so why was she such a threat? The mainstream narrative—left, center, and right—had it that her budgetary package spooked the markets so they forced her out.Truss’s real crime? She understood government finance. As listeners to this podcast know, deficit spending did not cause the current inflation. Fazi talks about the actual causes and makes the case that the markets didn’t oust Truss; the Bank of England did.“...In currency issuing countries, you don't usually see such overt tensions between central banks and government. Even though most central banks are formally independent, they tend to support whatever budgetary or fiscal policy the government decides to pursue. So, what transpired in the UK context was actually quite extraordinary because it was, I think, a rare instance of the central bank of a currency issuing country deliberately acting to sabotage a government.”Fazi lays out the ways in which austerity can now be justified in the UK, warding off the threat of a potentially strengthened working class. There are many layers to this story.The second half of the episode shifts the focus to global geopolitics and the US stance against China and Russia.“This isn't just US versus Russia and a few proxy countries. This new Cold War is a completely different one than the old one. It's one-way. The US is a declining power with declining influence over the rest of the world, where most of the world isn't following the US, for example, with regards to its policies against Russia and China. The US sphere of influence now is pretty much limited to Europe and Australia and New Zealand.”The US ruling class is the most powerful and dangerous in all of human history. The structural changes of the global economy have brought us into a multi-polar world. It's just a reality that the US elites don't seem ready to accept.Thomas Fazi is a “journalist/writer/translator/socialist.” who lives in Italy. He is the co-director of Standing Army (2010), an award-winning feature-length documentary on US military bases featuring Gore Vidal and Noam Chomsky; and the author of The Battle for Europe: How an Elite Hijacked a Continent – and How We Can Take It Back (2014) and Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (co-authored with Bill Mitchell, 2017). His articles have appeared in numerous online and printed publications. Find links to his articles on his Substack.@battleforeurope on Twitter

“Austerity is the best weapon they have to try to convince. And if they can't convince, they can't coerce. So in my book, I say austerity plays with a double strategy: coercion and consensus.”Clara Mattei is the author of The Capital Order: How Economists Invented Austerity & Paved the Way to Fascism, published this month. Steve Grumbine, who uses the Twitter display name “Austerity is murder,” was drawn to her position that austerity is not just bad economic theory prescribing bad economic policy. That is a simplistic framing that ultimately depoliticizes austerity.Many on the left tie the birth of austerity to the birth of neoliberalism – which some identify with Reagan/Thatcherism, while others say it goes back to Jimmy Carter and the 70s. Clara traces it back a full century, to the years immediately following the First World War, when capitalism was in crisis. It’s no coincidence that WW1, the Bolshevik revolution and the dawn of fascism all occurred during this period. The post-war period was full of socialist stirrings in Europe and the US. Squashing them required a brutal economic response.US and British capitalists openly celebrated the defeat of labor at home and expressed admiration for Mussolini. The head of the Bank of England wrote to Jack Morgan (son of Pierpont), "Fascism has surely brought order out of chaos over the last few years. Something of the kind was no doubt needed if the pendulum was not to swing too far in quite the other direction.” The alliance of liberalism and fascism in its diverse forms should not be a surprise; they are achieving the same ends. To understand austerity, don’t look to the form of government. Look to capitalism itself.We are reminded there are class antagonisms between countries as well as within. When the US exploits and plunders other nations, it is acting on behalf of the ruling class – the same ruling class that is exploiting American citizens and plundering our communities.Clara says, “If you look at austerity just as a tool to manage the economy, which is a typical stance that most Keynesians take, then you cannot really understand why austerity is so persistent and present and structural to our societies.” Austerity is required to enforce society's organization by class divisions, based on wage labor and exploitation. Destabilizing the economy in terms of economic growth is necessary to preserve the capital order.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 Twitter

**Full transcripts of all our episodes are available on the website, where you will also find an “Extras” page with additional resources. realprogressives.org/macro-n-cheese-podcast/Steve’s guest, Davarian Baldwin, calls himself an urbanist. This affects his prescriptions for reparations in the US, which extend beyond ADOS and beyond individual payments. His bio says he is a historian, cultural critic, and social theorist of urban America – and this episode touches on all those strands. The legacy of slavery and history of racism reverberates through any analysis of, or approach to resolving, this country’s social and economic problems. The New Deal itself helped increase disparity between the races.The interview includes a discussion of “wokeness”—a term which continues to stir up trouble among leftists and pseudo-progressives.“I'm glad you brought up the term identity politics, because what's happened now is that in any discussion of race or racism, identity politics is seen as black and brown, or women, or queer, or LGBTQ, as if straight or white or elite aren't identities. As if those aren't the identities that have guided and driven our society since its founding. So, identity politics is not discriminatory. Everyone has an identity politics.”In the second half of the episode, Davarian explains the concept of racial capitalism, then goes on to tie it to gentrification. He gives a detailed description of the effects on the white working class as well as communities of color. He makes the case that any solution must be both race and class based and must be systemic.Davarian L. Baldwin is the Paul E. Raether Distinguished Professor of American Studies at Trinity College, and is a historian, cultural critic, and social theorist of urban America. His work largely examines the landscape of global cities through the lens of the African Diasporic experience. He is author of “In the Shadow of the Ivory Tower: How Universities are Plundering Our Cities,” “Chicago’s New Negroes: Modernity, the Great Migration, and Black Urban Life,” as well as numerous essays and scholarly articles. He wrote the historical text for The World of the Harlem Renaissance: A Jigsaw Puzzle.@DavarianBaldwin on Twitter

“We have to understand neoliberalism as a particular phase of capitalism dominated by US imperialism. So let's start with the last point I mentioned: regime change operation. Any country around the world, any government that tries to have state oversight over the economy opposing neoliberalism was overthrown through regime change.”Ben Norton’s journalism, according to his bio, focuses primarily on US foreign policy and geopolitics, but that description doesn’t do him justice. If any of our listeners are under the illusion the US government serves a purpose other than making the world safe for neoliberal monopoly capitalism, this episode is for you. If you believe neoliberalism is driven by bad ideas, this episode is for you.Ben and Steve discuss Lenin’s prescience in ‘Imperialism, the Highest Stage of Capitalism,’ writing about the predatory nature of finance capital a full century ago. But finance capital in 1916 was a far cry from that of today:“No one in 1916 could have imagined the level of financialization of the economy, especially the US economy – and also deindustrialization. Let's not forget that deindustrialization is something quite new in the history of capitalism. This is something that really emerges with the rise of neoliberalism, especially starting in the '70s, going into the '80s forward and this neoliberal phase of globalization.”As the mainstream media is getting our minds prepped for war, we would do well to revisit some of the other ‘enemies’ in our recent past. They all had one thing in common. It had nothing to do with some crazy evil dictator threatening US national security.Ben Norton is a journalist, writer, and filmmaker. His journalism focuses primarily on US foreign policy and geopolitics. He is based in Latin America and speaks English and Spanish.@BenjaminNorton and @Multipolarista on Twitter

** Check out the transcript for this and every episode of Macro N Cheese at the Real Progressives website.Grumbine: I follow a lot of Brits on Twitter, and not just regular rank and file activists, but a lot of the actual economists. And the folks that are considered left, very strongly remind me of neoliberals.Wilson: Because they are. [laughter] What we have, you see, is this wonderful thing called the Oxford degree in philosophy, politics and economics [PPE]. And what happens is, when they graduate from that, there's a Sorting Hat, and it just puts them in either the Labor Party or the Tory Party, depending upon what the Sorting Hat thinks. They're all exactly the same. They're all the same graduates, they're all the same set of people. The economists are like that, too. They just get a Sorting Hat when they get the degree, I swear to God.Here in the US, we’ve been watching the administration scramble to deal with inflation. That chaos is nothing compared to what’s going on in the UK. They are soon to be on their fifth prime minister in six years. (As a point of reference, Maggie Thatcher was PM for 13 years; they don’t have term limits.)When Steve asked Neil Wilson to come on the podcast to talk about Liz Truss, he must have assumed she would last longer than six weeks! Oh well. It’s still an informative episode. As we well know, the MMT lens is useful regardless of economic conditions.Neil talks to Steve about the political lessons he has learned from the Tory’s attempt at handling of the economy. He and Steve talk about the EU and Brexit, and how the war in Ukraine is affecting the energy situation in the UK and Europe.Neil Wilson is an associate member of the Gower Initiative for Modern Money Studies in London, a co-author of "An accounting model of the UK Exchequer" and a co-editor and contributor to the forthcoming book "Modern Monetary Theory: Key Insights, Leading Thinkers"