Selected Posts

Mosler: It's true for fixed fx regimes that don't care about real terms of trade or the real standard of living.


Comment: "Netherlands, Switzerland, Sweden, and Norway are all running surpluses that are larger as a proportion of GDP than Germany’s."

Mosler: I'd send them all a nice Christmas of thanks for supporting our real terms of trade!


Comment: Donald Trump says "China’s de facto tariff... has cost the U.S. billions of dollars and millions of jobs."

Mosler: Remind him exports= real costs, imports= real benefits, it's about real terms of trade, + jobs are about fiscal.


Mosler: Exports are real costs, imports real benefits. Sustain good paying jobs and real terms of trade via tax cuts or spending increases.


Comment: Using Fiscal Policy to Drive Trade Rebalancing Turns Out To Be Hard

Mosler: Use fiscal policy to sustain full employment and a Gov funded transition job- then optimize real terms of trade.


Comment: Warren, pundits speculating US losing its reserve status. In the event of a SDR type replacement, what happens to the public money monopoly?

Mosler: The currency monopoly remains. Worst case- real terms of trade diminish/real net exports increase.


Comment: This is characteristically sound in the classical Kaldor-Hicksian sense, especially over the short term. But the objection to vulgar Ricardianism isn't rooted in aggregative welfarism or global efficiency. It's rooted in distributive justice and national strategy.

Mosler: 'Distributive justice' is pretty much entirely a function of institutional structure including fiscal policy, which I suggest can be adjusted to desired 'distributive justice' without sacrificing real wealth via deliberate sub optimal real terms of trade.


Comment: E.g it now takes more Scotch to buy a Ferrari. Just thinking about countries where they are dependent on mainly one export e.g. oil, as the relative price of oil to other items change, this is reflected in the change in currency value. Idk, just a thought?

Mosler: What you are pointing to is called real terms of trade which is a separate issue from exchange rates.


Comment: As in there are greater and greater costs to having your liabilities accepted, especially if capital flows have created speculative bubbles and debt burdens that can't be serviced. What about Balance of Payments Constraints/Crises?

Mosler: Thanks. There is never a case where trade issues would force the abandonment of full employment policy/optimizing domestic output of real wealth.


Comment: But a nation can't have ever increasing current account deficits without at some point getting into balance of payments difficulties. Floating FX doesn't change that

Mosler: Please define 'balance of payments difficulties' with floating fx, thanks!


Comment: Depreciation is a not a painless process. Particularly as many CA imbalances are not driven by cost competitiveness, depreciation will mainly force lower consumption of imports, ie it will make people poorer.

Mosler: Not at the macro level. Only shifts in real terms of trade do that.


Comment: It is but shows no theory is a universal panacea for all nations. US resource rich & could probably get away without exporting or importing. NZ needs to export surplus to be able to import things of modern economy can't produce itself. NZ's problem is local food sold at export prices.

Mosler: Just saying optimizing real wealth is about sustaining full employment and optimizing real terms of trade.


Comment: You do know even Kelton herself said MMT was not a feasible option for South Africa due to lack of investor forward confidence and future non Rand denominated debt requirements. Right? Sovereignty and credibility are non-negotiable even for magic money.

Comment: Let’s have a discussion about whether #MMT can add any value to analysis of the South African economy.

Mosler: SA can immediately move to sustained full employment and optimized real terms of trade and thereby optimize real wealth.

Comment: SA should be able to implement Job Gty with little adverse effect. It can feed itself, power itself, little public foreign denominated debt to service. Private foreign debt may be an issue in terms of foreign exchange, but probably manageable.

Mosler: Nor will it materially negatively alter real terms of trade.


Comment: I would resist the urge to rush into signing free trade agreements with other nations. Relying on a combination of tariffs and subsidies instead to protect and nurture U.K. industry. We live in an age where the weaknesses of the Free Trade era are evident. It’s time for Security.

Mosler: Security comes from full employment levels of aggregate demand and a JG with decent compensation, etc. leaving you free to optimize real terms of trade, mindful of national security concerns, of course. ;)

All Posts

Mosler: It's true for fixed fx regimes that don't care about real terms of trade or the real standard of living.


Comment: "Netherlands, Switzerland, Sweden, and Norway are all running surpluses that are larger as a proportion of GDP than Germany’s."

Mosler: I'd send them all a nice Christmas of thanks for supporting our real terms of trade!


Mosler: Lew- subversive or doesn't know jack about real terms of trade?


Comment: Donald Trump says "China’s de facto tariff... has cost the U.S. billions of dollars and millions of jobs."

Mosler: Remind him exports= real costs, imports= real benefits, it's about real terms of trade, + jobs are about fiscal.


Mosler: Exports are real costs, imports real benefits. Sustain good paying jobs and real terms of trade via tax cuts or spending increases.


Comment: Using Fiscal Policy to Drive Trade Rebalancing Turns Out To Be Hard

Mosler: Use fiscal policy to sustain full employment and a Gov funded transition job- then optimize real terms of trade.


Comment: Warren, pundits speculating US losing its reserve status. In the event of a SDR type replacement, what happens to the public money monopoly?

Mosler: The currency monopoly remains. Worst case- real terms of trade diminish/real net exports increase.


Comment: Help! I'm genuinely confused. China now has slowing PMI, tightening MCI, falling(from a huge rate admittedly)credit.

Mosler: Exports are the real costs, imports the real benefits. It's about optimizing real terms of trade.


Comment: Exactly right Warren. But the way trade deficits are being demagogued, I don’t hold out much hope of people grasping that. Maybe we should just say when you pay $25,000 for an imported car, you get a car in return.

Mosler: If Trump wins, consequently our domestic prices rise more than our real earnings, negatively altering our standard of living. AKA reduced real terms of trade etc.


Comment: DJT's goal isn't to get US to pay more for stuff, it's 2get the other countries to remove tarrifs applied to USA products they import so USA products can compete "Fairly" in other countries,4business, like we allow here. This in turn circulates $ back to USA to buy more imports?

Mosler: Exports are real costs. It's about optimizing real terms of trade.


Mosler: Depends on how you define constrained but I do agree Turkey's fx debt reduces their real terms of trade potential vs. that of the UK. But both can quickly get to full employment and a 0 rate policy.


Comment: "In the case of Turkey, a 10% depreciation of the Turkish Lira relative to its trading partners results in its import prices in Lira rising by 9.3% one quarter after the shock and by 10.0% eight quarters after the shock, a horizon referred to as the ‘long-run’." Gita Gopinath, IMF.

Mosler: And how about export prices? At the macro level it's about real terms of trade. Internally it's a (very serious) distributional issue. Real wealth is domestic output + imports, - exports (all in real terms).


Comment: It would be truly great if someone in the Trump White House could learn a bit of economics. Trade deficits are the flip side of international borrowing; we run deficits because we are net borrowers; trade surplus countries are net lenders.

Mosler: A trade/current account deficit is a consequence of non residents desire to net save $US financial assets.


Comment: This is characteristically sound in the classical Kaldor-Hicksian sense, especially over the short term. But the objection to vulgar Ricardianism isn't rooted in aggregative welfarism or global efficiency. It's rooted in distributive justice and national strategy.

Mosler: 'Distributive justice' is pretty much entirely a function of institutional structure including fiscal policy, which I suggest can be adjusted to desired 'distributive justice' without sacrificing real wealth via deliberate sub optimal real terms of trade.


Mosler: Exporters are Marx's capitalist. They have no interest in the well being of the domestic economy. They just want cheap labor and other inputs to profit from foreign sales. When exporters are in control, the domestic macro economy pays the price.

Comment: What if the export is a natural resource like oil. Would your comment apply to Norway?

Mosler: It's about optimizing real terms of trade- getting the most back in exchange for your exports. Tariffs do the opposite.


Comment: Mosler: Tariffs are killing the global economy, with no pushback from the free trade Republicans or the opposing Democrats who also believe China is the 'bad guy'. Sadly, it reminds me of a child's game we called 'who can touch the softest.'

Mosler: In real terms, it benefits the importing nation at the expense of the exporting nations. Please read my 7dif book thanks!


Comment: How about we put a border adjusted tax which is am import tax that hits all countries equally and you can't cheat it with currency devaluation. Then let's talk if protectionism doesn't work. Half measures like tariffs on some Chinese products was doomed to failure from the start.

Mosler: That too would reduce our real terms of trade and reduce our potential standard of living. Have you read my short, free, online book?


Comment: If you are not gaining a silicon valley, you are losing one, to put it simply. And there is value, both socially & from POV of innovation, in a highly varied economy also (not to mention resilience). The "exports are real costs and imports real benefits" misses all these factors.

Mosler: I see that as a matter of time horizon- long term real terms of trade vs short term real terms of trade- vs 'missing factors'???


Mosler: Think real terms of trade. China has been the world's slave.


Comment: Wouldn't a change in real terms of trade effect the exchange rate? E.g. AUS, large component of exports is commodity based, commodity prices vs the value of their exchange rate. One influences the other?

Mosler: Yes, in this case it's more about from the resulting change in the trade balance and foreigners needing more of your currency to buy your exports, etc.


Comment: E.g it now takes more Scotch to buy a Ferrari. Just thinking about countries where they are dependent on mainly one export e.g. oil, as the relative price of oil to other items change, this is reflected in the change in currency value. Idk, just a thought?

Mosler: What you are pointing to is called real terms of trade which is a separate issue from exchange rates.


Comment: As in there are greater and greater costs to having your liabilities accepted, especially if capital flows have created speculative bubbles and debt burdens that can't be serviced. What about Balance of Payments Constraints/Crises?

Mosler: Thanks. There is never a case where trade issues would force the abandonment of full employment policy/optimizing domestic output of real wealth.


Comment: But a nation can't have ever increasing current account deficits without at some point getting into balance of payments difficulties. Floating FX doesn't change that

Mosler: Please define 'balance of payments difficulties' with floating fx, thanks!


Comment: Depreciation is a not a painless process. Particularly as many CA imbalances are not driven by cost competitiveness, depreciation will mainly force lower consumption of imports, ie it will make people poorer.

Mosler: Not at the macro level. Only shifts in real terms of trade do that.


Comment: So we should be advocating activist industrial development policy and trade policy.

Mosler: The point would be to optimize real terms of trade, real productivity gains, etc.


Comment: But the issue with Free trade is, is if nothing is done about competitiveness, then because of things like increasing returns to scale, cumulative causation etc, imbalances will not only persist, they will indefinitely expand.

Mosler: It always comes down to optimizing domestic output and real terms of trade= full employment and enhancing productivity.


Comment: It is but shows no theory is a universal panacea for all nations. US resource rich & could probably get away without exporting or importing. NZ needs to export surplus to be able to import things of modern economy can't produce itself. NZ's problem is local food sold at export prices.

Mosler: Just saying optimizing real wealth is about sustaining full employment and optimizing real terms of trade.


Comment: You do know even Kelton herself said MMT was not a feasible option for South Africa due to lack of investor forward confidence and future non Rand denominated debt requirements. Right? Sovereignty and credibility are non-negotiable even for magic money.

Comment: Let’s have a discussion about whether #MMT can add any value to analysis of the South African economy.

Mosler: SA can immediately move to sustained full employment and optimized real terms of trade and thereby optimize real wealth.

Comment: SA should be able to implement Job Gty with little adverse effect. It can feed itself, power itself, little public foreign denominated debt to service. Private foreign debt may be an issue in terms of foreign exchange, but probably manageable.

Mosler: Nor will it materially negatively alter real terms of trade.


Comment: The Global North is extracting $2 Trillion per year from the Global South (everyone is implicated. It's systemic). And that's just cash, not to mention brain drain, and actual resource extraction. That's why I argue for climate, colonial, and neocolonial reparations.

Mosler: And they are running trade deficits!


Comment: I would resist the urge to rush into signing free trade agreements with other nations. Relying on a combination of tariffs and subsidies instead to protect and nurture U.K. industry. We live in an age where the weaknesses of the Free Trade era are evident. It’s time for Security.

Mosler: Security comes from full employment levels of aggregate demand and a JG with decent compensation, etc. leaving you free to optimize real terms of trade, mindful of national security concerns, of course. ;)