[quetzalcoatl]

Monetary Sovereignty, Sanctions and Russian Economic Policy

This may be of interest to @Steve_American

...such sovereignty is implicitly treated as binary; it exists or it doesn’t. Thus there are two types of states, those to which MMT applies and all the rest.

But there’s a different way to look at the question. Sovereignty or its lack, rather than being a parameter, can be thought of as an object of policy, something to be achieved. And rather than being all or nothing, sovereignty can be a matter of degree, a policy space that can expand or shrink depending on the circumstances countries face and the measures they take to respond to them.

Dorman argues that having a sovereign currency is only part of the sufficient conditions for monetary sovereignty, ie necessary but not sufficient. Real world underlying strengths and weaknesses will either amplify or constrain such sovereignty.

Dorman deftly illustrates a post-MMT nuanced view of monetary sovereignty. I am hopeful PKs and MMT can converge in some fashion, as the neoliberal hardliners like Summers die off.

[wat0n]

So what determines this policy space?

[quetzalcoatl]

So what determines this policy space?

Resource self-sufficiciency, strength of consumer economy, strength of manufacturing sector, physical infrastructure, social infrastructure, political stability, and many other contributing factors.

Typical MMT doctrine subsumes all of these factors into the inflation limit. But the variables that influence this inflation limit are massively complex, and the effects of various policies are very difficult to predict.

At any rate, both Russia and the US are much weaker than China wrt to all the variables that influence monetary sovereignty. The US, for instance, is so weak internally it cannot fashion ANY coherent policy without invoking some kind of crisis.

[wat0n]

Then how come we aren't all using Yuans?

[Rancid]

Then how come we aren't all using Yuans?

Simple, who wants to use the money from an authoritarian country.

The relative social and economic freedom is why they dollar will always be used over the Yuan.

[Steve_American]

Monetary Sovereignty, Sanctions and Russian Economic Policy

This may be of interest to @Steve_American



Dorman argues that having a sovereign currency is only part of the sufficient conditions for monetary sovereignty, ie necessary but not sufficient. Real world underlying strengths and weaknesses will either amplify or constrain such sovereignty.

Dorman deftly illustrates a post-MMT nuanced view of monetary sovereignty. I am hopeful PKs and MMT can converge in some fashion, as the neoliberal hardliners like Summers die off.

If your summary of the article is any guide, then the author doesn't read MMT closely. And, you don't read my posts closely either.

MMT clearly states and I have said this at least 4 times over the years I've been posting here, that there are 3 important requirements for a nation to have a *full* sovereign currency.
. . 1] It must issue its own fiat currency.
. . 2] It must not peg it to anything, it must let it float.
. . 3] It must have no or only a small amount of debts in any other currency.

I might add, that it must not have a large trade deficit.

We MMTers are very used to critics not groking MMT, or maybe they do grok it, but lie about it to tear it down. I have never seen a critic who didn't fail to get an important point right. Prof. Mark Blyth now says that he is seeing more good in MMT, and recently he talked about MMT and got every point he made right. But, he didn't cover all the points.

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[quetzalcoatl]

Then how come we aren't all using Yuans?

Great power transitions aren't an instantaneous process. The dollar, like the pound, will remain around
a long time. The only difference is that the US won't possess financial hegemony.

If your summary of the article is any guide, then the author doesn't read MMT closely. And, you don't read my posts closely either.

MMT clearly states and I have said this at least 4 times over the years I've been posting here, that there are 3 important requirements for a nation to have a *full* sovereign currency.
. . 1] It must issue its own fiat currency.
. . 2] It must not peg it to anything, it must let it float.
. . 3] It must have no or only a small amount of debts in any other currency.

I might add, that it must not have a large trade deficit.

We MMTers are very used to critics not groking MMT, or maybe they do grok it, but lie about it to tear it down. I have never seen a critic who didn't fail to get an important point right. Prof. Mark Blyth now says that he is seeing more good in MMT, and recently he talked about MMT and got every point he made right. But, he didn't cover all the points.

.

My understanding of MMT is primarily Mosler Soft Currency Economics, a paperback edition I bought in 2013. I've ordered the Kelton book, and hopefully it will be arriving soon. I do follow developments as time allows, however I concede my grokking may not be as deep as one could wish!

I do believe I have a good grasp of MMT doctrine on monetary sovereignty, and know the import of the bullet points you list above. Nor do I want to dismiss MMT per se. A lot of its success (to date) is due to its willingness to absorb and synthesize many strands of political economy and to continuously evolve.

In that spirit, I propose that the original formulation of monetary sovereignty is inadequate. Yes, the conditions you cite are indeed necessary for monetary sovereignty (can we just say MS for short?). My question is are they sufficient?

Why do I ask this question? It seems to me, a big part of the reasoning behind MS is that it imparts a certain autonomy to the nation states that possess it - "policy space" in the current lingo. Is MS (and the implied policy space) an absolute binary on-off, or is it part of a spectrum? My thinking is that it must be the latter, given the rather obvious difference in effective autonomy in many of the nations that would be considered monetarily sovereign by MMT.

What accounts for these differences in effective MS? Basically, the strength of the underlying economy and national political stability. This profoundly effects the ability of a nation to exercise its autonomy over its economic fate. The factors that influence this ability are far from easy to measure or calculate, which makes them hard to incorporate into a simple definitional schema, but they need to be taken into account.

In my quite humble opinion, the definition of MS currently accepted by most MMT advocates is too narrowly legalistic a formulation and doesn't really have a strong enough causality in creating policy space - at least not without incorporating more real world factors. The MMT inflation constraint is certainly a good start. My thinking is that the inflation constraint is simply a stand-in for the aggregate effects of the underlying economy, and needs to be more thoroughly sketched out. I'm hoping Kelton's book makes some kind of attempt at this.

[Steve_American]

Great power transitions aren't an instantaneous process. The dollar, like the pound, will remain around
a long time. The only difference is that the US won't possess financial hegemony.


My understanding of MMT is primarily Mosler Soft Currency Economics, a paperback edition I bought in 2013. I've ordered the Kelton book, and hopefully it will be arriving soon. I do follow developments as time allows, however I concede my grokking may not be as deep as one could wish!

I do believe I have a good grasp of MMT doctrine on monetary sovereignty, and know the import of the bullet points you list above. Nor do I want to dismiss MMT per se. A lot of its success (to date) is due to its willingness to absorb and synthesize many strands of political economy and to continuously evolve.

In that spirit, I propose that the original formulation of monetary sovereignty is inadequate. Yes, the conditions you cite are indeed necessary for monetary sovereignty (can we just say MS for short?). My question is are they sufficient?

Why do I ask this question? It seems to me, a big part of the reasoning behind MS is that it imparts a certain autonomy to the nation states that possess it - "policy space" in the current lingo. Is MS (and the implied policy space) an absolute binary on-off, or is it part of a spectrum? My thinking is that it must be the latter, given the rather obvious difference in effective autonomy in many of the nations that would be considered monetarily sovereign by MMT.

What accounts for these differences in effective MS? Basically, the strength of the underlying economy and national political stability. This profoundly effects the ability of a nation to exercise its autonomy over its economic fate. The factors that influence this ability are far from easy to measure or calculate, which makes them hard to incorporate into a simple definitional schema, but they need to be taken into account.

In my quite humble opinion, the definition of MS currently accepted by most MMT advocates is too narrowly legalistic a formulation and doesn't really have a strong enough causality in creating policy space - at least not without incorporating more real world factors. The MMT inflation constraint is certainly a good start. My thinking is that the inflation constraint is simply a stand-in for the aggregate effects of the underlying economy, and needs to be more thoroughly sketched out. I'm hoping Kelton's book makes some kind of attempt at this.

Sir, my understanding of MS (your abvr.) is that the nation must be able to pay all its debts with its own currency.
This is why it can't borrow in a different currency. This is why is can't peg it currency to anything.

However, it must not need foreign currency to buy oil or food, etc. This is why I added a trade balance or surplus.
Although, the US gets a pass for now because its dollar is the world's reserve currency.

Why does the dollar enjoy this advantage? Answer =>
. 1] It has a stable Gov. and has never defaulted on its debts.
. 2] It creates a lot of high quality bonds every year for foreigners to buy. The EU doesn't because of its neo-liberal rules. So, the EU & EZ fail on this point.
. 3] It has no currency controls and is against them in principal. It lets foreigners buy stacks and real estate without limits. China fails on this point.
. 4] It has a large economy and exports a lot of stuff. But, it imports more, so it fails the foreign trade balance or surplus test.

I'm not sure that the rather obvious difference in effective autonomy in many of the nations that would be considered monetarily sovereign by MMT matters.
. . Of course, only Japan has used MMT for a while, so the real world test has just one data point, and it has a trade surplus.
Well, the US also uses MMT when it comes to the defense Dept. and emergency spending on bank bailouts and covid economy economic support.
. . We can't be sure until some nation with insufficient MS tries to use MMT and gets punished by the debt police. So, Prof. MMTers say it is all or nothing.

IMO, the US should use the MMT lens to guide its deficit spending. We need massive spending to fight climate change. We don't do that because the billionaires own oil stock and don't want their stock to drop in value until it crashes. This is very short sighted, IMHO. IMHO, it may kill 99% of humans in the next 50 years. Worst case.
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