There’s a new monetary theory doing the rounds here which claims to be revolutionary: the Modern Monetary Theory (MMT. Not to be confused with the Market Monetary Theory). I agree with some of its points. But when some of its supporters say the state deficit and debt are not important – that they don’t have damaging consequences – the theory becomes a huge deliberate fallacy.
Lu Bingyang and Coco Feng via Caixin | China’s state-owned train maker has started work on a plant in Chicago, a year after clinching a $1.3 billion contract to supply rail cars to the Chicago Transit Authority.
Daniel Kapellmann | Whereas it took some 10 years to negotiate and enforce a mechanism to strengthen commercial bonds between Canada, the United States and Mexico, today, after 23 years in existence, the North American Free Trade Agreement (NAFTA) may be overrun in just a couple of months.
I believe central banks don’t control long-term rates – which are decisive for investment – and that they can influence them in what we would call normal circumstances, namely when GDP is expanding and inflation is at its optimum level. The central bank trys to control the private market’s expectations, but it doesn’t always succeed.
Benjamin Cole | The econosphere is again rumbling about Chinese debt and China banks, evidently forgetting the long serious faces made many times about Chinese debt and China banks in the recent past. But China keeps growing. Japan is another story that defies Western orthodox macroeconomics.
Peter Isackson | The fact that something that contradicts official accounts sounds like a possible conspiracy theory doesn’t mean it may not be true.
J. L. M. Campuzano (Spanish Banking Association) | The Fed raised rates yesterday, basically reducing the expansive nature of monetary policy. After listening to ECB board member Praet’s at a G20 meeting, it doesn’t look as if the ECB will raise rates quickly. But conditions could present themselves which favour a change in bias in monetary policy.
Is gold really the best hedge against risk and should we go back to the gold standard? Gold has been stable for a century, but in the last 50 years it has appreciated a lot, seeing a lot of volatility.
Yukon Huang via Caixin | China’s economic success over the past several decades coupled with America’s struggles to rebuild its economic base since the global financial crisis has spurred a debate about the relative roles for the state and market in guiding each country’s particular form of capitalism.
The Make in India campaign is an attempt to encourage foreign investment and manufacturing in the country in sectors such as aviation, automotive, steel and defense. Modi’s India finally seems to be walking toward a future where the traditional reliance on red-tape and high-level bureaucracy is fading in the minds of foreign investors.