Thread by @gsignoret

Will be live-tweeting speech by @yanisvaroufakis
convention from the Mexican Institute of Financial Executives annual. Thread:

Estaré tuiteando en vivo un discurso de Yanis Varoufakis de la convención @IMEFOficial. Abro hilo:

"Capitalism is going through a spasm". Yet, markets are going extremely well. The disconnect, the chasm between the world of money and the world of enterprise tells us that
"we don't even have capitalism any more".

"We have too much money in the world". Too much saved. Almost 30% of global GDP. Yet in proportion to savings, the lowest level of investment. When savings exceed investment, central banks put interest rates at or below zero. Rates are the price of money. Consider potatoes ...

If we have an oversupply, the price will adjust to eventually balance supply and demand. This does not happen in the world of money. When companies today are given cheap money, they don't invest it, demand is too weak. They buy back shares. Capitalism is broken.

Before 2008, standard remedies for recession worked: whenever Greenspan or his counterpart in Japan, etc., lower rates spurred a virtuous cycle. USA had a huge deficit with everyone, financed through Wall Street. This was working quite well. But Wall Street "went beserk"...

...building "houses of cards". The recycling method broke down in 2008. Starting in 2008, the Fed started to print money that went into share buybacks. No more investment or true real economic recovery. We entered an era of "austerity for the many, socialism for the bankers".

Think of a punctured bicycle tire: the more air you pump in, the larger the tire but it never is mended.

Digression on the word "inclusion". It is used by those who perceive and worry about but benefit from inequality but are unwilling to do anything about shifting wealth ...

...to those excluded from it.

Returning to policy: "The main issue is the ridiculous distribution of power and wealth". Jeff Bezos's talent does not explain his 80 billion. "He made it in his sleep ... because the system is broken." This is sucking the life out of ...

... those excluded. "They are not left behind but rather held behind."

Solutions:

Cut out the middle man (commercial banks) between the real economy and central banks. Two ways:
Use (or create) public investment banks. They should issue bonds in large quantities. The task is to soak up excess savings. Put it into green investments that create good jobs.

The central bank should stand by and buy up bonds if yields get too high.
Second, print money and put it into people's bank acocunts. Helicopter money is not a left-wing idea, it came from Milton Friedman.

Should we give it to rich people as well? Sure, but tax theirs if their income exceeds a certain level.

Moving on now to policy on a global scale:

We have overly large external balances. Austerity in the EU is causing unemployment outside the EU. Similarly, U.S. deficits financed by a capital account surplus causes volatility.

So we need a new Bretton Woods. Revamp the IMF completely. Put it at the center of a new ...

... system. SDRs become a global currency that floats freely with all national currencies. (But let's change the name of SDR to cosmos.) We tax deficits and surpluses and put the funds into a global green equity fund. Fund green investments in the developing world. ...

... transferring prosperity from north to south.
"If we don't change our ways, we'll be amiss and answerable to the next generations."

"How do we do it politically?" It will not come from national politics. To get elected, politicians must make promises you know you can't keep to desperate populations. We know from climate change that global problems require global solutions.
Bankers look out for each other.

This is why we have created something like The Progressive International, an international green deal. Adherents include Bernie Sanders, Lula, and others.
I'm now open to questions.

END.