first, it's somehow concluded that QE may be inflationary, while simultaneously calling @bankofengland to clarify how QE generates inflation
@bankofengland 'slaves to which defunct (monetary) economists?' via quick word count in 68 pages report:
* 'inflation' x ≈ 200 times
* 'money supply' x 1
* 'fiscal' x 60
* 'coordination' fiscal&monetary x 2
* 'market liquidity' x 4
Milton alive in spirit, if not theoretical essence
@bankofengland My testimony has sadly failed to convince Committee that you cannot worry about 'deficit financing ' without understanding why it's necessary structurally in sovereign-bond based macrofinancial regime
Coordination fiscal-monetary matters not just because financial system is so different from age of Friedmanite obsessions with inflation, but also because climate crisis
Report reduces complex questions of fiscal-monetary interactions to 'how do we manage peculiarities of institutional arrangement Treasury - BoE?'
hiding theoretical and structural issues in an operational Trojan Horse
one picture that exquisitely captures lack of any macrofinancial lens in this report.
through macrofinancial lens, state issues both reserves and gilts (sovereign bonds) to private finance
gilts do for market-based finance what reserves do for banks
if there is a substantive failure from Bank of England, it's the failure to communicate clearly the macrofinancial role that government bonds play *
we worry about inflation, we insinuate fiscal dominance, we condemn central banks' self-harming insistence on buying sovvies, we remain oblivious to the obvious explanation: they HAVE to
Spain's Social Democrats asking Cuba to push on with 'structural reform' as if: 1. we dont know how that went in Europe 2. it's not the very pro-market reforms that are fomenting inequality and social tensions against background of tighter US blockade
Under Diaz-Canel, Cuba has implemented gradual but substantive Washington Consensus:
weakened social safety net (la libreta, comedores en empresas), pushed price liberalisation, unified currencies, allowed more private sector activity, prioritised foreign currency shops
some of these measures make sense if you're living under the mother of all balance of payment constraints.
but we know from Eastern Europe that such measures exacerbate inequality dramatically.
pretending otherwise is silly, especially from 'progressive' politicians
Larry Fink complaining that IMF/WB havent embraced derisking as development/Wall Street Consensus sufficiently - and not anywhere, but at the G20 meeting.
cannot decide whether @ecb 2% tinkering is a distraction or a massive Trojan Horse for normalising targeting spreads and other innovative crisis policies
10 minutes into this press conference, and all we're debating is what happens around 2%
it's shocking that @ecb Strategy Review says nothing about fiscal-monetary interactions, when ECB has bought basically all sovvies issued by Euroarea countries since the pandemic
yes @Lagarde mentions macrofinancial linkages, but there is nothing in the text that points to the critical role that sovereign yields play in those linkages
so @ecb new climate strategy is out, and it's letting down those of us who expected an ambitious approach.
in my view, far less ambitious than Bank of England's.
1. ECB chose a 'risk framework' that emphasises risks that climate crisis poses to private finance, not the ways in which dirty lending accelerates climate crisis
ECB wastes chance to support Commission in its double materiality efforts.
private finance will be happy
2. ECB conceives transition risks - those risks to private finance from policies to address climate crisis - as entirely fiscal policy related (carbon prices)
but what about transition risks stemming from ECB decisions to decarbonise collateral & corporate bond purchases?