1/9
Another interesting piece by Adam Tooze in which among other things he notes Russia's intensively conservative monetary policy: "Under Finance Minister Siluanov, Russia pursued a regime of severe austerity, coupled with...
@adam_tooze adamtooze.substack.com/p/chartbook-91…
Another interesting piece by Adam Tooze in which among other things he notes Russia's intensively conservative monetary policy: "Under Finance Minister Siluanov, Russia pursued a regime of severe austerity, coupled with...
@adam_tooze adamtooze.substack.com/p/chartbook-91…
2/9
a free floating exchange rate and an increasing shift to a domestic bond market - the classic trifecta of the Wall Street consensus (Daniela Gabor)."
a free floating exchange rate and an increasing shift to a domestic bond market - the classic trifecta of the Wall Street consensus (Daniela Gabor)."
3/9
He then asks, in the context of MMT, "why should Russia not use its monetary and fiscal sovereignty, reinforced by the new regime of exchange controls, to launch a stimulus program and, in so doing, negate a large part of the impact of sanctions?"
He then asks, in the context of MMT, "why should Russia not use its monetary and fiscal sovereignty, reinforced by the new regime of exchange controls, to launch a stimulus program and, in so doing, negate a large part of the impact of sanctions?"
4/9
I am not sure a large country like Russia can switch from a very conservative fiscal position to a very expansionary one easily and quickly, but I think Tooze makes an important point about the changing constraints within the Russian economy.
I am not sure a large country like Russia can switch from a very conservative fiscal position to a very expansionary one easily and quickly, but I think Tooze makes an important point about the changing constraints within the Russian economy.
5/9
In the longer term what matters isn't whether or not Russia can exploit its monetary sovereignty to expand demand and employment. Of course it can, at least temporarily, but to be sustainable the resulting expansion must be matched by an expansion in supply.
In the longer term what matters isn't whether or not Russia can exploit its monetary sovereignty to expand demand and employment. Of course it can, at least temporarily, but to be sustainable the resulting expansion must be matched by an expansion in supply.
6/9
Thats because without an equivalent expansion in supply, the economy will have to adjust in some potentially disruptive way to keep the two in balance. This adjustment might be in the form of inflation, as MMT proponents suggests, but that's not the only form of adjustment.
Thats because without an equivalent expansion in supply, the economy will have to adjust in some potentially disruptive way to keep the two in balance. This adjustment might be in the form of inflation, as MMT proponents suggests, but that's not the only form of adjustment.
7/9
As I explain in this recent Carnegie piece, there are many ways in which an economy can adjust to keep supply and demand in balance, including financial repression, wage suppression, shortages, trade deficits, etc.
carnegieendowment.org/chinafinancial…
As I explain in this recent Carnegie piece, there are many ways in which an economy can adjust to keep supply and demand in balance, including financial repression, wage suppression, shortages, trade deficits, etc.
carnegieendowment.org/chinafinancial…
8/9
The point is an increase in non-productive spending, e.g. military spending, won't be sustainable, but an increase in needed infrastructure will be, and an increase in welfare transfers might also be if these transfers, in turn, set off additional business investment.
The point is an increase in non-productive spending, e.g. military spending, won't be sustainable, but an increase in needed infrastructure will be, and an increase in welfare transfers might also be if these transfers, in turn, set off additional business investment.
9/9
Tooze's argument seems very persuasive to me: there no longer are many reasons for Putin not to respond to sanctions with a major experiment in MMT-based fiscal expansion. What matters is how that expansion will be directed.
Tooze's argument seems very persuasive to me: there no longer are many reasons for Putin not to respond to sanctions with a major experiment in MMT-based fiscal expansion. What matters is how that expansion will be directed.
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