keen and kelton 2021/02/25
Keen podcast 2021
Keen 2020
スティーヴ・キーンはグッドウィンの使った雇用率(-失業率)と賃金率に民間負債率を加えた。
DSGEが使うのが7つの変数、49のパラメータに対し、
キーンが使うのは3つの変数、9のパラメータだ。
それでもDSGEより複雑な現象を説明できるという(邦訳『次なる金融危機』39~41頁)。
キーン作成MMT会計ソフトMinsky概要
https://www.patreon.com/posts/40545245
DSGEが使うのが7つの変数、49のパラメータに対し、
キーンが使うのは3つの変数、9のパラメータだ。
それでもDSGEより複雑な現象を説明できるという(邦訳『次なる金融危機』39~41頁)。
キーン作成MMT会計ソフトMinsky概要
https://www.patreon.com/posts/40545245
ちなみに『次なる金融危機』で言及されたキーン・モデルの3変数は、
雇用率、産出に占める賃金の割合、民間負債の対GDP比率。x,y,z軸として立体視される。
キーンはマルクス主義系としては唯一リーマンショックを予見した十二人の経済学者のひとり
雇用率、産出に占める賃金の割合、民間負債の対GDP比率。x,y,z軸として立体視される。
キーンはマルクス主義系としては唯一リーマンショックを予見した十二人の経済学者のひとり
ドーナツ経済学#4より
Keen 2020/11
次なる金融危機
キーンによると図の右上の国が危険らしい
〜2007年8月
〜2017年
邦訳『次なる金融危機』85,92頁より
ちなみにキーンは自作ソフト(変数3つの複雑系)にミンスキーの名を冠しているが
自他共に認めるマルキスト
Bezemerが2009年に挙げた12人のリストを自著(Debunking Economics –2011年版)冒頭で引用した
キーンが一般向けに2008年の金融危機を予見したとされるのは以下、
(学術的な予見は別にある)
"The Lily and the Pond.” 2006. Interview reported by the Evans Foundations.
https://evatt.org.au/news/445.htm
https://evatt.org.au/news/lily-pond.html
《Unfortunately, long before we manage to do so, the economy will be in a recession.
The reasons are simple: paying down excessive debt causes borrowers to stop spending -
whether that means households that cancel order for the latest LCD TV, or firms that
put off that planned expansion of capacity. Income plummets, but debt continues
to rise, simply because of the effect of compound interest. The debt to GDP ratio
starts to fall only when a substantial slab of income is devoted to paying debt, but that
in turn means a serious recession.》
（残念ながら、そうすることができるずっと前に、経済は不況に陥るでしょう。 理由は簡単です。過剰な借金を返済することで、借り手は支出をやめることになります。それは、最新の液晶テレビの注文をキャンセルした世帯、または計画された容量拡大を延期した企業を意味します。 所得は急落しますが、複利の影響のせいで負債は増え続けています。 GDP比に対する債務は、実質的な収入のスラブslab(床板)が債務の支払いに充てられている場合にのみ低下し始めますが、それはひいては深刻な後退を意味します。）
ちなみに
キーンが重視するのは雇用率、賃金率、(民間)負債率の３つ。
(負債率重視はミンスキー譲り。賃金率重視はマルクス譲り？)
キーンはMMTに好意的だが批判もしている。
https://www.macrovoices.com/podcast-transcripts/546-prof-steve-keen-dollar-reserve-currency-status-blessing-or-curse
《…They think that it’s actually – exports are a cost and imports are a benefit.
I just completely reject that perspective.》
とは言えバンコールに可能性を見るのは多くのMMTerと同じ。
Keen on Bancor 2013
Prof. Steve Keen: Dollar reserve currency status – blessing or curse? 2019 MMT批判
https://love-and-theft-2014.blogspot.com/2020/09/prof.html
Prof. Steve Keen: Dollar reserve currency status – blessing or curse?
2019/04/11
https://www.macrovoices.com/podcast-transcripts/546-prof-steve-keen-dollar-reserve-currency-status-blessing-or-curse…
私がMMTと違うところは、彼らは外国部門の重要性を過小評価しているということです。 彼らは、実際には-輸出はコストであり、輸入は利益である（exports are a cost and imports are a benefit）と考えています。
私はそのような考え方を完全に否定しています。 しかし、それが彼らに言いたいことは、実質的にはそうなのですが、実際には明確には言っていないのですが、貿易黒字を出すべきだということです。 なぜなら、紙切れを送っているだけで、商品やサービスが返ってくるからです。
これは、あなたが話していたことから来ていると思いますが、アメリカには基軸通貨としての地位があるので、それができるということです。 他の国が無期限にそれをやろうとすると、自国通貨の切り下げが始まるでしょう（which is America’s capacity to do that because they have the reserve currency status. Any other country that tried that indefinitely would start to see its currency devalue. ）。
キーンはモズラーの以下を念頭に置いている
嘘5：貿易赤字は、職業や産出を奪う
事実：
輸入とは実質的に利益で輸出は費用だ。…
ただし MMTerはポストケインジアンなので、当然ながら
バンコールを研究し、ドル覇権以降を模索している。
フリードマン 1978
モズラー「命取りに無邪気な嘘」「“名刺”経済」
494 名無しさん＠お腹いっぱい。[sage] 2020/08/14(金) 19:54:18.24 ID:qlKnnwaF
MMTはトランプあたりの反移民政策、
さらに輸入を絶対劣位として敵視するのを間違いとする
モズラーもケルトンもこの部分はフリードマンに追随する
Friedman 1978
ただしこれはあくまで頭の体操で
世界レベルの会計認識が必要というだけ
例えば最近フランスがマスクを自国産に切り替えつつあるが
善悪はインフレと同じく個別に考えるべき
純輸出はリソースを手放すから費用
そこまではいい
しかし輸入を便益とするフリードマン的発想は間違い
ガンジーは自給することで初めてイギリスの資本主義に打ち勝った
要はケースバイケース
ヒックスのように[輸入は借り入れ]
輸出は貸し付けと考えるのがしっくりくる。
《輸出国は輸入国に対して結果において貸し付けていることになる。》
(ヒックス『経済学の思考法――貨幣と成長についての再論』1985年、128頁)
借り入れて何が悪い？という疑問ならわかる。
この場合は相手による。
かつてのガンジーの戦略からもわかるように
輸出入の善悪はインフレ対策と同じく
ケースバイケースだ
基軸通貨ドルはアメリカが赤字になることで全世界に供給されるので
国際通貨でも日本円とは違う
ドルは石油というよりアメリカの軍事力で担保化されている
(だがそれは永遠ではない)
また欧米は農業を含む主要産業の供給能力を維持している
何を基幹産業とするか？
少なくともモノカルチャーを欧米は選ばない
(植民地にはモノカルチャーを強要したが)
最近の小さな実例のひとつとして
フランスがマスクを国産に切り替えた
トランプ流の絶対優位志向は論外だとしても輸出は結果的に貸付だとするヒックスの言葉がしっくりくる
(貨幣の交換価値を輸入国は相手国に保証し続ける)
借り入れは悪くない
ただ相手次第ではある
(突然石油が輸入出来なくなったら？)
同じ様にインバウンドに頼るのも愚かだ
ガンジーよりフリードマンが説得力を持つ状況というのは理解するが、
《かつて経済学者ロバート ・ソローは、
二国間の貿易収支が重要でないことを次のように説明したことがある。「私は理髪店に対して慢性的な赤字だ。彼は私から何も買おうとしないからね」。し
かし、そのことでソローが収入に応じた暮らしをやめることはないし、必要に
なればいつでも彼は理髪店に行くのである。》
マンキューマクロ経済学入門篇#6:200頁
ただしこれも相手次第と言いたい
貨幣ピラミッドの指摘もヒックス1977がはやい
(ただしヒックスは金属貨幣論を保持している)
経済学の思考法75頁
That just becomes more formal with the rise of banking. This builds upon the base of the metallic money a pyramid of
money substitutes;
Economic Perspectives: Further Essays on Money and Growth (English Edition) Kindle
John Hicks (著)
…私にはフリードマンの結論は逆に読まれねばならないことが、突然わかりはじめてきた。すなわち、
その因果関係はY からMへと進まねばならないのであって、MからYへではない。それで、私はその
ことについて時間をかけて考えれば考えるほど、商品-貨幣経済(commodity-money economy) に基礎を
置く貨幣価値理論は、信用-貨幣経済(credit-money economy)に適用しえないといっそう確信するよう
になった。…（図は省略）…
さて、信用貨幣の場合には、貨幣「供給曲線」を垂直的にではなく、水平的に描くのが適切で
あろう。金融政策は所与の貨幣ストック量によってではなく、所与の利子率によって表わされる。
そして貨幣存在量は需要によって決定されるであろう。…
邦訳カルドア『マネタリズム〜その罪過』1984(1982),72,74頁より（111頁に需要インフレとコスト・インフレの記述）
（鍋島直樹『現代の政治経済学」2020,118頁参照）
https://twitter.com/ProfSteveKeen/status/1303296381675646978?s=20
They're quite predictable when you track what causes them, which is a credit bubble followed by collapse. They surprise Neoclassical economists like @krugman & Cochrane because they assume credit doesn't add to aggregate demand. https://t.co/xPs0RDes2g pic.twitter.com/aJrpXMaKDL— Steve Keen (@ProfSteveKeen) September 8, 2020
キーン作成MMT会計ソフトMinsky
https://minsky.sourceforge.io/changelog.htm
概要1
https://www.patreon.com/posts/40545245
https://c10.patreonusercontent.com/3/eyJhIjoxLCJwIjoxfQ%3D%3D/patreon-media/p/post/40545245/a466c2f29ee743ad8c1a19c8ab0477d9/1?token-time=1599270731&token-hash=T_SHxw49KjolMv_dG_L_pWb5_MrVoL0-E1qZzuST9sA%3D
2
The Mathematical Model of Modern Monetary Theory 2: Simulating #MMT | Prof Steve Keen on Patreon
https://www.patreon.com/posts/40866029
ソース
Minsky
System dynamics program with additional features for economics
Brought to you by: hpcoder,profstevekeen ★
ミンスキーは、システムダイナミクスと通貨モデリングを経済学にもたらします。モデルは、描画キャンバス上のフローチャートを使用して定義されます（MatlabのSimulink、Vensim、Stellaなどと同様）。ミンスキーのユニークな機能は「ゴドリーテーブル」です。これは、複式簿記を使用して、財務フローの在庫フローの一貫したモデルを生成します。
ミンスキーは、システムダイナミクスで最も「数学に似た」インターフェイスを備えているため、数学のデモにも適しています。
Minskyの開発は、Friends Provident Foundationから資金提供を受けています。この資金提供が継続している間、更新は定期的に投稿されます（https://www.patreon.com/posts/friends-provides-30880108を参照 ） 詳細については）。https://www.patreon.com/hpcoder/で
MinskyのPatreonページ（月額最低$ 1）にサインアップし ます。。これにより、SourceForgeが促進しないユーザーコミュニティが作成されます。
ここに示されている完全な変更：https : //minsky.sourceforge.io/changelog.htm
ミンスキーは、システムダイナミクスで最も「数学に似た」インターフェイスを備えているため、数学のデモにも適しています。
Minskyの開発は、Friends Provident Foundationから資金提供を受けています。この資金提供が継続している間、更新は定期的に投稿されます（https://www.patreon.com/posts/friends-provides-30880108を参照 ） 詳細については）。https://www.patreon.com/hpcoder/で
MinskyのPatreonページ（月額最低$ 1）にサインアップし ます。。これにより、SourceForgeが促進しないユーザーコミュニティが作成されます。
ここに示されている完全な変更：https : //minsky.sourceforge.io/changelog.htm
特徴
- VensimおよびSimulinkに類似したグラフィカルモデリング環境
- 財務フローをモデル化するためのGodleyテーブルの独自の機能
- キャンバスに埋め込まれた動的グラフ
- シミュレーションパラメータをその場で変更して、経済政策などの影響を調査します。
- システムODEソルバー
- システムをXML、LaTeX、SVGとしてエクスポート
プロジェクトサンプル
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 | スティーブ・キーン（@ProfSteveKeen） |
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gr @grhutchens 素晴らしい記事Gareth！#MinskySoftware patreon.com/posts/40866029 と patreon.com/posts/の
統合された通貨モデル（私的および公的バランスシートを考慮したもの）で、私が予算赤字/余剰の計算で 行っているシリーズをお楽しみ いただけます。 40545245。来週の第3弾。 | |
https://twitter.com/profstevekeen/status/1299890345132523521?s=21
現代通貨理論の数学モデル| PatreonのSteve Keen教授
https://www.patreon.com/posts/40545245現代通貨理論の数学モデル| PatreonのSteve Keen教授
現代の通貨操作の1つの数学モデル
このモデルはMMTの金銭面のみを考慮しているため、サブタイトルはタイトルよりも正確です。ジョブ保証とインフレ管理コンポーネントはまだ組み込まれていません。しかし、MMTの金銭的主張は、経済界と政治界で依然として争われているので、これらを数学モデルに入れて、真実性をテストすることは価値があります。
モデルを開発するための主な刺激は、Stephanie KeltonのThe Deficit Mythの 出版でした 。ステファニーは非技術的な読者のために本を書きました、そして彼女は非常に良い仕事をしました：それは政府支出に関する多くの従来の知恵が間違っている理由を説明する非常に簡単な読みです。しかし、MMTは政治および経済界で大きな抵抗に直面しており、私のお気に入りは、米国議会のケビン・ハーン議員が投稿した以下の決議に向け た動議でした。
衆議院（1）は、赤字は持続不可能であり、無責任であり、危険であることを認識している。（2）認識-（A）現代の通貨理論の実施は、より高い赤字とより高いインフレにつながることになる。（B）下院が現代通貨理論を非難する義務。
この一連の投稿の目的は、この動きの最初の部分、つまり「赤字は持続不可能で無責任で危険である」という主張の評価を可能にすることです。
この投稿のモデルは、オープンソースシステムダイナミクスプログラムMinskyで構築されています 。そのユニークな機能は、いわゆるGodley Tables（Wynne Godleyに敬意を表して、在庫フローの一貫性のパイオニアである）を使用して財務フローのモデルを構築する機能です。 モデリング）。これらの表は、「会計の法則」を実施しています（図1を参照）。
図1：空白のGodleyテーブル
あるエンティティの「資産」としてアカウントにフラグが付けられると、 ミンスキー は別のエンティティの「負債」としても表示する必要があることを認識します。これにより、金融システムを統合的に見ることが可能になり、政府の見方だけでなく、金融システム全体の観点からハーンの動きを評価することができます。
赤字、黒字、および資本の統合ビュー
この ミンスキー モデルは、国内通貨システムの単純ですが完全なモデルです。5つのコンポーネントに分割できる6つのセクターがあります。
- 政府部門を構成する財務省および中央銀行 。
- 銀行セクター。
- 「ノンバンク民間部門」を構成する企業部門、資本家および労働者。
- 「非政府部門」を構成する非銀行民間部門および銀行部門。そして
- 「非銀行部門」を構成する政府 と 非銀行民間部門の合計 。
簡単にするために、税金と政府支出は企業セクターのみに課され、 銀行は企業にのみ融資を行います（モデルがすべてのセクターに税金と支出と融資を持つように一般化された場合、総結果は同じになります）テーブルを読むのがずっと難しくなるだけです）。
わずか13の財務フローがあります。
- 財務省が企業に費やす（支出）。
- 財務省税務会社（税）;
- 財務省は、赤字を補うために債券を銀行セクターに売却します（BondB）。
- 財務省は、銀行部門が所有する財務省債（インタレストボンド）に利息を支払う。
- 中央銀行は、「公開市場操作」（BondCB）で国債を売買します。
- 銀行は企業に貸し出します（Lend）;
- 企業は銀行に利息を支払います（利息）;
- 企業は銀行にいくらかの借金を返済する（Repay）。
- 企業は労働者を雇う（賃金）。
- 企業は配当を支払います（配当）。
- 労働者は企業（ConsW）から商品を購入します。
- 資本家は企業から商品を購入します（ConsK）; そして
- 銀行家は企業（ConsB）から商品を購入します。
ミンスキー は、これらのフローがどのように相互作用するかについて統合されたビューを提供し、連動する複式簿記テーブルにおけるモデルの6つのセクターのそれぞれの財政状態を決定します。これらのフローから微分方程式を生成します。これは、株式（金融口座）が時間とともにどのように変化するかを示しています。
図2の最後の列である財務省のエクイティを見ると、ハーンが示唆する危険がすぐに明らかになります。 財務省の支出に加えて、未払いのトレジャリーボンドに対する利息の支払いが課税収入を超えると、そのエクイティは低下します。
図2：財務省の勘定
数学的には、トレジャリーエクイティの変化率は 、銀行部門が保有する 債券の税額 から 支出額 から利息額を差し引い た額の合計です 。
このポストで使用されている、トレジャリーエクイティがゼロから始まるという初期条件を考えると、赤字はすぐにトレジャリーをマイナスのエクイティに置きます。
これは中央銀行によって相殺されることはありません。中央銀行は株式のポジションにまったく影響を与えません（注：これは、私がこのモデルの構築を開始したときに期待したものではありません）。
図3：中央銀行の口座
したがって、政府の資本の変化率はその剰余に等しいか、または記録が保持されている限り政府は通常赤字であるので、赤字のマイナスになります。図4を参照してください。持続的に黒字になっているのは：
- 1920年代、1920年半ばから1931年半ばの11年間。
- 第二次世界大戦直後の1947年初頭から1949年半ばまでの2年間。そして
- 1990年代の終わりから2000年代の初めまで、1998年から2002年の初めまでの4年間。
図4：GDPで割った米国政府の余剰。平均値は GDPのマイナス 2.48％
この投稿のモデルに戻ると、政府の財政赤字が政府自体に与える影響は、すべて財務省が負っています。
政府の株式利回りのダイナミクスを示すために、財務省と中央銀行の株式の方程式を合計すると、方程式：
政府部門の視点だけから見ると、実行赤字は明らかに「持続不可能で無責任で危険」です。 政府がプラスの資本を持ちたいなら、それは黒字になるはずです。これはオープンとシャットダウンの訴訟です。政府の本だけを見ると、そうです。
しかし、このモデル（および実体経済自体）では、あるエンティティの資産は別のエンティティの負債です。それで、政府の黒字がシステム全体にとって良い考えであるかどうかを知るために、政府の黒字が残りの経済にどのような影響を与えるのかを尋ねる必要があります か？
経済の残りの部分はある 非政府 セクター、銀行セクターの合計、および「非銀行民間セクター 3つの非政府・非銀行部門、企業、資本家と労働者：」。このモデルは、資本家と労働者が政府の支出と課税、または債券の利払いに直接影響されないように設定されているため、銀行セクターの観点から経済を見るだけでこの質問に答えることができます（図5）。そして、企業セクターの視点（図6）。銀行セクターと企業セクターの公平性に影響を与える政府の行動は、各表の上部に示されています。
図5の最初の行は、政府部門の資本のマイナス要因、つまり国債の保有に対して銀行に利子を支払うことは、銀行部門にとってプラスであることを示しています。
図5：銀行部門の口座
同様に、図6の最初の2行は、政府部門の公平性にマイナスとなるものは企業セクターにとってプラスであり、政府にとってプラスとなるものは同様に企業セクターにとってマイナスであることを示しています。政府支出の増加企業セクターの公平性、そして課税はそれを減らします。
図6：企業セクターの勘定
したがって、非政府の正味財政状態は政府の鏡像です。
赤字は、年間ドルでフローを定義します。エクイティとは、時間の経過に伴うそのフローの蓄積（ドル単位）です。非 政府 部門の資本は、その赤字と同様に、政府部門の資本のマイナスです。
したがって、政府の財政に関する総合的な視点から、2つの紛れもない不快な真実が明らかになります。
- 政府が黒字を実行するには、非政府部門が赤字を実行する必要があります。そして
- 非政府部門がプラスの公平にあるためには、政府部門が同一のマイナスの株式になければなりません。
シーソーの2つの半分のように、両方を同時に立ち上げることはできません。政府が黒字を実行する場合（債券の利子支払いと支出の合計が課税より少ない場合）、非政府部門は その時点で同じ赤字を実行することを余儀なくされます 。場合 非政府 セクターがプラス株式であり、その後、 政府 部門は、同一の負の資本でなければなりません。
これらの結果は、あるエンティティの資産が別のエンティティの負債であるという事実のマクロ経済的帰結です。方程式の流れと、ある瞬間のエクイティの変化を示します。これらのフローはマグニチュードは同じですが、符号が反対なので、総計レベルで は、経済全体のエクイティはゼロであり、総エクイティの変化率もゼロです。
したがって、経済の1つのサブセットが正の資本を持っている場合、残りの経済は同じ 負の資本を持ち ます。同様に、1つのセクターの資本の変化率が正の場合、残りの経済の資本の変化率の大きさは同じで、負です。これは方程式で示され、フロー項の最初のインスタンスは黒で、2番目のインスタンスは赤で示されます。9つの項があり、それぞれ2回繰り返されます。1回は正として、1回は負として繰り返されます。合計はゼロです。
したがって問題は、赤字とマイナスの公平性が良いか悪いかではなく、赤字とマイナスの公平性が持続可能か持続不可能かです。
持続可能な経済システムにおいて永続的なネガティブエクイティにはなれないセクターが1つあります。それは銀行セクターです。銀行は、 必要があり 、正株式を持っている：それは資産だ しなければならない 、その負債の値を超えそうでない場合は破産です。したがって、持続可能な経済システムの場合、銀行セクター は 必ず正の資本になければなりません（銀行セクターが全体として負の資本にある期間は、2007年や1929年のような極端な金融危機の時期です）。
したがって、 ノンバンクセクター（政府とこのモデルでは、企業、資本家、労働者の合計）は 、マイナスの資本にならなければなりません。すべての資本の合計がゼロであることを考えると、これは避けられません。唯一の問題は、非銀行経済のどのサブセット（政府または非銀行 民間部門）が負の資本になるかです。ネガティブエクイティであることを処理するのにより適切なセクターはどこですか？
その質問と他の質問は、次の投稿で検討されます。
追記
図7は、このモデルを構成する完全な6つのGodley Tablesを示し、Equationは、このモデルによって生成された微分方程式を示しています。このモデルを自分で探索したい場合は（この投稿に添付されています）、https： //sourceforge.net/projects/minsky/files/beta%20builds/からMinskyの最新のベータリリースをダウンロードして ください。ベータ（現在バージョン2.19.0-beta.25）には、現在のリリースバージョン（バージョン2.18）にはない機能がここで使用されています。次の投稿では、シミュレーションを可能にするためにここで使用するフローを定義しますが、MMTの基本的なポイントは構造的です。この投稿で行ったように、それらは微分方程式自体から収集できます。
図7：完全なミンスキーMMTモデル
…
★
Minsky brings system dynamics and monetary modelling to economics. Models are defined using flowcharts on a drawing canvas (as are Matlab's Simulink, Vensim, Stella, etc). Minsky's unique feature is the "Godley Table", which uses double entry bookkeeping to generate stock-flow consistent models of financial flows.
Minsky is good for demonstrating mathematics too, with the most "math-like" interface in system dynamics.
Development of Minsky is being funded by Friends Provident Foundation. Updates will be posted regularly while this funding continues (see https://www.patreon.com/posts/friends-provides-30880108 for details).
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Full changes shown here: https://minsky.sourceforge.io/changelog.htm
Minsky is good for demonstrating mathematics too, with the most "math-like" interface in system dynamics.
Development of Minsky is being funded by Friends Provident Foundation. Updates will be posted regularly while this funding continues (see https://www.patreon.com/posts/friends-provides-30880108 for details).
Sign up to Minsky's Patreon page (for a minimum of $1 a month) at https://www.patreon.com/hpcoder/. This creates a user community, which SourceForge doesn't facilitate.
Full changes shown here: https://minsky.sourceforge.io/changelog.htm
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| Steve Keen (@ProfSteveKeen) |
|
@grhutchens Great article Gareth!
You might enjoy the series I'm doing on the maths of budget deficits/surpluses, in an integrated monetary model--considering private & public balance sheets--in #MinskySoftware patreon.com/posts/40866029 & patreon.com/posts/40545245. 3rd installment next week. | |
https://twitter.com/profstevekeen/status/1299890345132523521?s=21
The Mathematical Model of Modern Monetary Theory | Prof Steve Keen on Patreon
https://www.patreon.com/posts/40545245The Mathematical Model of Modern Monetary Theory | Prof Steve Keen on Patreon
One Mathematical Model of Modern Monetary Operations
I confess immediately that I chose the title and subtitle for this post because their acronyms are palindromes.
The subtitle is more accurate than the title, because this model considers only the monetary aspects of MMT: the Job Guarantee and inflation management components are not yet incorporated. But the monetary assertions of MMT remain in dispute in economic and political circles, so it is worth putting these into a mathematical model where their veracity can be tested.
The primary stimulus for developing the model was the publication of Stephanie Kelton's The Deficit Myth. Stephanie has written the book for non-technical readers, and she's done a very good job: it's a very easy read that explains why many conventional wisdoms about government spending are wrong. But MMT is facing heavy resistance in political and economic circles, with my favourite to date being a motion before the US Congress, posted by Representative Kevin Hern, to resolve:
That the House of Representatives (1) realizes that deficits are unsustainable, irresponsible, and dangerous; and (2) recognizes— (A) that the implementation of Modern Monetary Theory would lead to higher deficits and higher inflation; and (B) the duty of the House of Representatives to condemn Modern Monetary Theory.
The objective of this series of posts is to allow the assessment of the first part of this motion—the assertion that "deficits are unsustainable, irresponsible, and dangerous".
The models in this post are built in the Open Source system dynamics program Minsky, whose unique feature is the capacity to build models of financial flows using what are called Godley Tables (in honour of Wynne Godley, the pioneer of stock-flow-consistent-modelling). These tables enforce the "law of accounting" that (see Figure 1).
Figure 1: A blank Godley Table
Once an account is flagged as an "Asset" for one entity, Minsky knows that it has to also be shown as a "Liability" for another entity. This makes it possible to take an integrated look at the financial system, which allows us to assess Hern's motion from the perspective of the entire monetary system, and not just the Government's view of it.
An Integrated View of Deficits, Surpluses, and Equity
This Minsky model is a simple but complete model of a domestic monetary system. It has six sectors which can be divided into five components:
- The Treasury, and the Central Bank, which together constitute the Government Sector;
- The Banking Sector;
- The Firm Sector, Capitalists and Workers, which constitute the "NonBank Private Sector";
- The NonBank Private Sector and the Banking Sector, which constitute the "NonGovernment Sector"; and
- The sum of the Government and the NonBank Private Sector, which constitute the "NonBank Sector".
For simplicity, taxes—and government spending—are levied only on the Firm Sector, and banks make loans only to firms (the aggregate outcome would be the same if the model were generalized to have taxes and spending and loans in all sectors—it would just be much harder to read the tables).
There are just thirteen financial flows:
- Treasury spends on firms (Spend);
- Treasury taxes firms (Tax);
- Treasury sells bonds to the Banking Sector to cover any deficit (BondB);
- Treasury pays interest on Treasury Bonds owned by the Banking Sector (InterestBonds);
- The Central Bank buys and sells Treasury Bonds in "Open Market Operations" (BondCB);
- Banks lend to firms (Lend);
- Firms pay interest to Banks (Interest);
- Firms repay some debt to banks (Repay);
- Firms hire workers (Wages);
- Firms pay dividends (Dividends);
- Workers buy goods from firms (ConsW);
- Capitalists buy goods from firms (ConsK); and
- Bankers buy goods from firms (ConsB).
Minsky provides an integrated view of how these flows interact to determine the financial position of each of the six sectors in the model in interlocking double-entry bookkeeping tables. It generates differential equations from these flows that show how the stocks—the financial accounts—change over time.
The danger to which Hern alludes is immediately apparent when we look at the Treasury's Equity—the final column in Figure 2: if Treasury spending plus interest payments on outstanding Treasury Bonds exceeds taxation revenue, then its Equity will fall.
Figure 2: The Treasury's accounts
Mathematically, the rate of change of Treasury Equity is the sum of the flows Tax minus Spending minus Interest payments on Bonds held by the Banking Sector:
Given the initial conditions used in this post, in which Treasury Equity starts as zero, a deficit will immediately put the Treasury into negative equity.
This is not offset by the Central Bank, which comes out with no impacts on its equity position at all (note, this is not what I expected when I started building this model).
Figure 3: The Central Bank's accounts
The rate of change of the Government's Equity is therefore equal to its surplus—or the negative of its deficit, since the government has normally been in deficit for as long as records have been kept—see Figure 4. The only periods in which the Government has been in surplus for a sustained period are:
- The 1920s, between mid-1920 and mid-1931, a period of 11 years;
- The immediate post-WWII period, between early 1947 and mid-1949, a period of 2 years; and
- The late 1990s till early 2000s, between 1998 and early 2002, a period of 4 years.
Figure 4: US Government Surplus Divided by GDP. The average value is minus 2.48% of GDP
Returning to the model in this post, the impact of the Government deficit on the Government itself is entirely borne by the Treasury:
Summing the Treasury and Central Bank Equity equations to show the dynamics of the Government's equity yields Equation :
Looked at just from the point of view of the Government sector then, running deficits is clearly "unsustainable, irresponsible, and dangerous". If the government wants to have positive equity, then it should run a surplus. It's an open and shut case—or so it appears, when looking just at the government's books.
But in this model (and the real economy itself), one entity's Asset is another's Liability. So, to know whether a government surplus is a good idea for the system as a whole, we have to ask what the impact is of a government surplus on the rest of the economy?
The rest of the economy is the NonGovernment Sector, the sum of the Banking Sector, and the "Non-Bank Private Sector": the three non-Government and non-Bank sectors, Firms, Capitalists, and Workers. This model has been set up so that Capitalists and Workers are not directly affected by government spending and taxation, or interest payments on bonds, so we can answer this question just by looking at the economy from the Banking Sector's point of view (Figure 5) and the Firm Sector's point of view (Figure 6). The government actions that affect the equity of the Banking Sector and the Firm sector are shown at the top of each table.
The first line in Figure 5 shows that what is a negative for the equity of the Government Sector—paying interest to banks for their holdings of Treasury Bonds—is a positive for the Banking Sector.
Figure 5: The Banking Sector's accounts
Similarly, first two lines of Figure 6 show that what is a negative for the equity of the Government sector is a positive for the Firm Sector, and that what is a positive for the Government is likewise a negative for the Firm Sector: Government spending increases the equity of the Firm Sector, and taxation reduces it.
Figure 6: The Firm Sector's accounts
The non-Government net financial position is therefore the mirror image of the Government's:
The deficit defines the flow, in dollars per year. Equity is the accumulation of that flow over time, in dollars. The NonGovernment sector's equity is, like its deficit, the negative of the Government Sector's Equity:
An integrated perspective on government finances thus reveals two undeniably uncomfortable truths:
- For the Government to run a surplus, the NonGovernment sector must run a deficit; and
- For the NonGovernment sector to be in positive equity, the Government Sector must be in identical negative equity.
Like two halves of a see-saw, both cannot be up at the same time. If the government runs a surplus—if the sum of interest payments on bonds plus spending is less than taxation—then the non-government sector is forced to run an identical deficit at that point in time. If the NonGovernment Sector is in positive equity, then the Government Sector must be in identical negative equity.
These outcomes are the macroeconomic consequences of the fact that one entity's Asset is another's Liability. The flows in Equations and show changes in Equity at one moment in time. Because these flows are identical in magnitude, but opposite in sign, at the aggregate level, the Equity of an entire economy is zero, and the rate of change of aggregate Equity is also zero.
Therefore, if one subset of the economy has positive equity, the remainder of the economy has identical negative equity. Equally, if the rate of change of one sector's equity is positive, then the rate of change of the equity of the remainder of the economy is identical in magnitude, and negative. This is shown by Equation , where the first instance of a flow term is shown in black and the second instance in red: there are nine terms, each repeated twice, once as a positive and once as a negative. The sum is zero.
The question therefore is not whether deficits—and negative equity—are good or bad, but whose deficits and negative equity are sustainable or non-sustainable.
There is one sector that cannot be in persistent negative equity in a sustainable economic system: the Banking Sector. A bank must have positive Equity: it's Assets must exceed the value of its Liabilities, otherwise it is bankrupt. Therefore, for a sustainable economic system, the Banking sector must necessarily be in positive Equity (periods when the Banking Sector as a whole is in negative equity are periods of extreme financial crisis, like 2007 and 1929).
It follows that the NonBank Sector—which is the sum of the Government plus, in this model, Firms, Capitalists and Workers—must be in negative equity. This is unavoidable, given that the sum of all Equity is zero. The only question is which subset of the non-Bank economy—the Government, or the NonBank Private Sector—will be in negative equity? Which sector is better placed to handle being in negative equity?
That question and others will be considered in a subsequent post.
Postscript
Figure 7 shows the full six Godley Tables that constitute this model, and Equation shows the differential equations generated by this model. If you'd like to explore this model yourself (it is attached to this post), download the latest beta release of Minsky from https://sourceforge.net/projects/minsky/files/beta%20builds/. The beta (currently version 2.19.0-beta.25) has features used here than are not in the current release version (Version 2.18). A subsequent post will define the flows used here to enable simulations, but the basic points of MMT are structural: they can be gleaned from the differential equations themselves, as I have done in this post.
Figure 7: Full Minsky MMT Model
The Mathematical Model of Modern Monetary Theory 2: Simulating #MMT | Prof Steve Keen on Patreon
https://www.patreon.com/posts/40866029
The Mathematical Model of Modern Monetary Theory 2: Simulating #MMT
The previous post finished with the observation that, since the sum of all Equity is zero, and the banking sector must be in positive equity, part of the remainder of the economy—the government, or the non-bank public—must be in negative equity. So which sector is better equipped to handle that: the non-bank public, or the government?
This will raise the age-old question that is perennially thrown at those who advocate government spending: "How are you going to pay for it?", or "Where's the money going to come from?". To answer both these questions, we first need to know how money is created in general.
Since money, exclusively in this model and primarily in the real world, is the sum of the Banking Sector's Liabilities and Equity, any action which increases Bank Liabilities and Equity creates money. Since every transaction is recorded twice, operations which increase the money supply must therefore occur on both the Assets and the Liabilities/Equity sides of the banking sector's ledger. Operations which occur exclusively on either the Assets side, or the Liabilities/Equity side, shift money between accounts and do not create money.
So the answer to the "where's the money going to come from?" question is "from any operation which increases the Assets and Liabilities/Equity of the banking sector". Equally, any operation that reduces Assets and Liabilities/Equity destroys money.
Only 5 of the 13 flows in this model affect both the Asset and Liabilities/Equity sides of the banking sector's ledger: Lending (and Repayment); Government spending (and Taxation); and interest payments on Treasury Bonds. These are shown in the top 5 rows of Figure 1. All other operations are either Liability/Equity swaps, or Asset swaps, and they don't create money.
Figure 1: The Banking Sector's Ledger
Operations that don't create money include the usual suspects—payment of interest on loans by firms (which transfers money from the Firm Sector to the Banking Sector), purchases of goods from the Firm Sector by workers, capitalists and bankers. But they also include two operations that figure large in conventional arguments about how to pay for government spending: sales of Treasury Bonds to the finance sector; and purchases of Treasury Bonds from the finance sector by the Central Bank in "Open Market Operations" (which are primarily used to control the rate of interest). Neither of these operations create money.
They are asset swaps: the sale of Treasury Bonds to the finance sector (the "Banking Sector" in this model) reduces Reserves and increases the Banking Sector's stock of Treasury Bonds. The purchase of Treasury Bonds from the Banking Sector by the Central Bank reduces the Banking Sector's stock of Treasury Bonds and increases the Banking Sector's Reserves. Neither operation affects the amount of money in the economy—the sum of the Liabilities plus Equity of the Banking Sector.
Since it's an asset swap for the Banking sector to buy Treasury Bonds using Reserves, the answer to "where's the money going to come from?" is "from operations that increase the sum of Reserves and Bonds". You can work this out by adding up the entries in the Reserves and Bonds columns of Figure 1: the Banking sector assets Reserves plus Bonds will grow if government spending plus interest payments on Treasury Bonds exceed taxation:
The Reserves that are used to buy the Bonds thus come from the deficit itself. The deficit—the extent to which government spending and interest payments exceeds taxation—creates money in private sector bank accounts (the Firm Sector and Bank Equity only in this model). This boosts the Liabilities and Equity of the Banking Sector. The corresponding Asset that is increased by the deficit is the Reserve accounts of the banking sector. If no interest is paid on Reserves—the "usual" situation, and sometimes made worse by charging negative interest on Reserves in the false belief that this will encourage Banks to lend more—then the Banks have a positive incentive to use these reserves to buy Treasury Bonds instead.
So the answer to the "Where's the money going to come from?" to pay for the deficit question is that it comes from the deficit itself: the deficit creates money that can be spent in the private sector; and it creates Reserves, which are (usually) non-interest earning Assets of the Banking Sector that are liabilities of the Central Bank—see Figure 2.
Figure 2: The Central Bank's Ledger
Reserves are Assets of the Banking Sector that earn it no income. But if the Treasury issues bonds to cover the deficit—if the total value of Treasury Bonds offered for sale is equal to the deficit itself—then the Banking Sector is offered a deal to swap a non-income-earning asset for an income-earning one.
What do you think the banks would do, when offered that deal? They take it, of course: this is why Treasury Bond Auctions have always been over-subscribed. Selling the bonds themselves is not a problem. It is, as Kelton emphasises in The Deficit Myth, a "no brainer" swap of a zero-income-asset for a positive-income-asset.
The money needed to buy the bonds has already been created, and is sitting in the Reserve account. Banks then transfer their funds from one Asset that earns no income (Reserves) to another Asset that does (Treasury Bonds). This Asset is a liability, not of the Central Bank, but of the Treasury itself—see Figure 3.
Figure 3: The Treasury's Ledger
This table also shows that the increase in Reserves is caused by the fall in the Government's equity: Reserves (and hence money) rise if the Government runs a deficit; Reserves and money fall if the Government runs a surplus:
How does the Treasury pay the interest on the bonds? The same way it pays for spending in excess of taxation: it runs up its own negative equity—see the final column in Figure 3.
This can be done in two ways, as indeed can overall deficit-financing itself: by the Treasury having a negative balance in its account at the Central Bank; or if the Treasury borrows from the Central Bank to pay Interest on the Bonds (the second last row of Figure 3). If it does so, the negative equity from paying interest on the bonds remains, but the Treasury Account at the Central Bank can be kept non-negative.
A third option is that the Central Bank buys the bonds off the Banking Sector in Open Market Operations (or QE). If it does so, the amount of interest the Treasury needs to pay falls. Also, since the Treasury is the effective owner of the Central Bank, it doesn't need to pay interest to the Central Bank on its holdings of Treasury Bonds—or if it does, the interest payments come back to the Treasury in Central Bank profits.
So the Government can run a deficit, and pay interest on the Treasury Bonds issued to cover it (not finance it: the deficit is self-financing in that it creates money), so long as it is willing to countenance being in negative equity. As noted in the previous post, because Banks must be in positive equity, the non-Banking sectors (and that includes the Government) must be in negative equity. For the Government to achieve positive equity therefore—which seems desirable, if you take the partial view of the economy epitomised by Representative Hern's motion that "deficits are unsustainable, irresponsible, and dangerous"—the non-Bank private sector must be pushed into even greater negative equity.
Does that sound like a good idea?
To show the consequences for the economy of the government running a deficit or a surplus, it's necessary to go beyond the purely structural equations used so far, and enable simulations. In what follows, I've built an extremely simple model of monetary dynamics in which all expenditures depend on the amounts of money in relevant bank accounts. There are many other ways these expenditures could be modelled, but this way ensures fairly easily that crazy outcomes—like workers have negative bank balances, but still spending their wages—don't happen in this very simple model.
For example, I relate consumption by workers to the level of workers deposit accounts at the private banks, using the engineering concept of a "time constant". This is a number that tells you how long an action would take to run an account down to zero, if it's removing money from the account, or to double it, if it's adding money to an account. A time constant of 0.02 for workers consumption says that if workers consumed at a constant rate, and there were no other inflows or outflows in their accounts, then they would run their accounts down to zero in 1/50th of a year—roughly a week. Higher values for capitalists and bankers—say 2 for capitalists and 5 for bankers—assert that it would take 2 years and 5 years respectively for them to run their accounts down to zero through consumption alone.
You divide the relevant stock (the level of bank accounts, in the case of consumption) by the time constant to get the annual flow—see Figure 4.
Figure 4: Equations for consumption
Similarly, a time constant of 9 for bank lending says that if this was the only inflow affecting the level of debt, and it went on at a constant rate, debt would double in 9 years. Repayment with the same time constant means that the level of (private) debt remains constant.
Figure 5: Modelling interest payments, lending and repayment
GDP is treated as the turnover of money in the firm sector (it can also be treated as the sums of consumption and investment—which investment is entirely debt-financed in this model—and net government spending, but that makes it possible to end up with negative sums in deposit accounts, unless a much more complicated model is constructed).
Figure 6: Modelling GDP and income distribution
Government spending and taxation are treated as simple percentages of GDP. For the moment, I have not considered how they are financed, so the flows BondsB, BondsCB and InterestBonds are not wired up. The equations that define the system's flows at this point are shown in Figure 7. At this stage, sales of Treasury Bonds to the Banking Sector, Central Bank purchases of Bonds from the Banks, and Treasury borrowing from the Central Bank, are not defined.
Figure 7: All the flow equations in the model (without bond sales or interest on bonds)
With no explicit financing of a government deficit, the negative equity that this causes for the government turns up as a negative balance in the Treasury's account at the Central Bank—see Figure 8, which shows the impact of a 2% of GDP deficit for 60 years on the Treasury. It runs accumulates negative equity of $160, and that is entirely due to its account at the Central Bank being negative to the tune of $160.
Figure 8: The Treasury's Ledger with no bond sales: negative Treasury Account and Treasury Equity
Figure 9 shows the impact of a 2% of GDP deficit for 60 years from the Central Bank's perspective, and the key point is that the negative equity of the Treasury is the same magnitude as the positive Reserves of the Banking Sector: the accumulated deficits of the Government are precisely equal to the accumulated Reserves of the Banking Sector.
Figure 9: The Central Bank's Ledger with no Bond sales: negative Treasury precisely equals positive Reserves
How does the picture change if we require that the Treasury's account at the Central Bank can't go into overdraft? Then the Treasury has to sell Bonds equal to its Deficit, and borrow from the Central Bank to pay interest on those bonds.
Figure 10: Bond sales are equal to the deficit, no Central Bank purchases of Bonds from the Banking Sector
Running this model to the same point as the previous one, where the Treasury Equity reaches minus $160, this negative equity consists of $115 in Bonds and $45.2 in Loans from the Central Bank (see Figure 11; the Treasury account at the Central Bank remains at zero). The Bond sales represent the accumulated government deficit over time, while the Loans from the Central Bank represent the accumulated interest on those bonds.
Figure 11: Treasury books with Bond sales covering the deficit
Can the Central Bank afford to lend the money to pay the interest on Treasury Bonds to the Treasury? Yes: as Figure 12 shows, the loans to the Treasury are an Asset of the Central Bank. It has the capacity to expand its balance sheet indefinitely, and none of the operations shown in this model affect its equity at all.
Figure 12: Central Bank books with Bond sales and interest payments on Bonds
I have to note that this was a surprise to me: I had guessed that the government's negative equity would be carried by the Central Bank, and the fact that a Central Bank—unlike a private one—can operate with negative equity {Bholat, 2016 #6037} would be what enabled the government as a whole to sustain negative equity. But it turned out that my guess was wrong: the Central Bank simply acts as an enabler of and conduit for the Treasury's negative equity.
Does the fact that the Treasury is borrowing from the Central Bank (in this model) cause any difficulty? No, because while private individuals can't pay interest on loans by borrowing from banks—without that interest ballooning with further interest and driving us bankrupt—the Treasury can pay interest on Bonds to the Banking Sector by borrowing from the Central Bank because, technically and legally, the Treasury owns the Central Bank. It therefore doesn't have to pay interest on any loans from the Central Bank If it did, it would get that money back in dividend payments from the Central Bank anyway.
What happens if the Central Bank buys all the Bonds from the Banks? Then the negative equity of the Treasury consists entirely of its debt to the Central Bank (see Figure 13).
Figure 13: Treasury's books with Central Bank Open Market Operations purchasing all Treasury Bonds
Since those Bonds have been purchased off the Banking Sector, the Banking Sector has Reserves of 160 (see Figure 14). This is not as desirable a situation for the Banks as when they own the bonds, because with no Treasury Bonds they receive no interest payments from the Government. Far from the finance sector in general having "Bond Vigilantes" ready to deny the government bond sales if they're worried about the state of government finances, the "Bond Vigilantes" are vigilantly on the lookout for sales of Treasury Bonds so that they can swap out of a non-income-earning asset and into an income-earning one.
Figure 14: Banking Sector's books with OMOs buying 100% of Bonds
In the next post, I'll consider what the impact is of different fiscal regimes: the government running a deficit (as the USA has for most of the last 120 years—roughly of 2.5% of GDP); the government running a surplus; the government running a surplus and the private sector borrowing from the Banking Sector; the government running a surplus and the private sector reducing its debt to the Banking Sector; and the government running a deficit while the private sector reduces its debt to the Banking Sector.
The Mathematical Model of Modern Monetary Theory 2: Simulating #MMT | Prof Steve Keen on Patreon
The previous post finished with the observation that, since the sum of all Equity is zero, and the banking sector must be in positive equity, part of the remainder of the economy—the government, or the non-bank public—must be in negative equity. So which sector is better equipped to handle that: the non-bank public, or the government?
This will raise the age-old question that is perennially thrown at those who advocate government spending: "How are you going to pay for it?", or "Where's the money going to come from?". To answer both these questions, we first need to know how money is created in general.
Since money, exclusively in this model and primarily in the real world, is the sum of the Banking Sector's Liabilities and Equity, any action which increases Bank Liabilities and Equity creates money. Since every transaction is recorded twice, operations which increase the money supply must therefore occur on both the Assets and the Liabilities/Equity sides of the banking sector's ledger. Operations which occur exclusively on either the Assets side, or the Liabilities/Equity side, shift money between accounts and do not create money.
So the answer to the "where's the money going to come from?" question is "from any operation which increases the Assets and Liabilities/Equity of the banking sector". Equally, any operation that reduces Assets and Liabilities/Equity destroys money.
Only 5 of the 13 flows in this model affect both the Asset and Liabilities/Equity sides of the banking sector's ledger: Lending (and Repayment); Government spending (and Taxation); and interest payments on Treasury Bonds. These are shown in the top 5 rows of Figure 1. All other operations are either Liability/Equity swaps, or Asset swaps, and they don't create money.
Figure 1: The Banking Sector's Ledger
Operations that don't create money include the usual suspects—payment of interest on loans by firms (which transfers money from the Firm Sector to the Banking Sector), purchases of goods from the Firm Sector by workers, capitalists and bankers. But they also include two operations that figure large in conventional arguments about how to pay for government spending: sales of Treasury Bonds to the finance sector; and purchases of Treasury Bonds from the finance sector by the Central Bank in "Open Market Operations" (which are primarily used to control the rate of interest). Neither of these operations create money.
They are asset swaps: the sale of Treasury Bonds to the finance sector (the "Banking Sector" in this model) reduces Reserves and increases the Banking Sector's stock of Treasury Bonds. The purchase of Treasury Bonds from the Banking Sector by the Central Bank reduces the Banking Sector's stock of Treasury Bonds and increases the Banking Sector's Reserves. Neither operation affects the amount of money in the economy—the sum of the Liabilities plus Equity of the Banking Sector.
Since it's an asset swap for the Banking sector to buy Treasury Bonds using Reserves, the answer to "where's the money going to come from?" is "from operations that increase the sum of Reserves and Bonds". You can work this out by adding up the entries in the Reserves and Bonds columns of Figure 1: the Banking sector assets Reserves plus Bonds will grow if government spending plus interest payments on Treasury Bonds exceed taxation:
The Reserves that are used to buy the Bonds thus come from the deficit itself. The deficit—the extent to which government spending and interest payments exceeds taxation—creates money in private sector bank accounts (the Firm Sector and Bank Equity only in this model). This boosts the Liabilities and Equity of the Banking Sector. The corresponding Asset that is increased by the deficit is the Reserve accounts of the banking sector. If no interest is paid on Reserves—the "usual" situation, and sometimes made worse by charging negative interest on Reserves in the false belief that this will encourage Banks to lend more—then the Banks have a positive incentive to use these reserves to buy Treasury Bonds instead.
So the answer to the "Where's the money going to come from?" to pay for the deficit question is that it comes from the deficit itself: the deficit creates money that can be spent in the private sector; and it creates Reserves, which are (usually) non-interest earning Assets of the Banking Sector that are liabilities of the Central Bank—see Figure 2.
Figure 2: The Central Bank's Ledger
Reserves are Assets of the Banking Sector that earn it no income. But if the Treasury issues bonds to cover the deficit—if the total value of Treasury Bonds offered for sale is equal to the deficit itself—then the Banking Sector is offered a deal to swap a non-income-earning asset for an income-earning one.
What do you think the banks would do, when offered that deal? They take it, of course: this is why Treasury Bond Auctions have always been over-subscribed. Selling the bonds themselves is not a problem. It is, as Kelton emphasises in The Deficit Myth, a "no brainer" swap of a zero-income-asset for a positive-income-asset.
The money needed to buy the bonds has already been created, and is sitting in the Reserve account. Banks then transfer their funds from one Asset that earns no income (Reserves) to another Asset that does (Treasury Bonds). This Asset is a liability, not of the Central Bank, but of the Treasury itself—see Figure 3.
Figure 3: The Treasury's Ledger
This table also shows that the increase in Reserves is caused by the fall in the Government's equity: Reserves (and hence money) rise if the Government runs a deficit; Reserves and money fall if the Government runs a surplus:
How does the Treasury pay the interest on the bonds? The same way it pays for spending in excess of taxation: it runs up its own negative equity—see the final column in Figure 3.
This can be done in two ways, as indeed can overall deficit-financing itself: by the Treasury having a negative balance in its account at the Central Bank; or if the Treasury borrows from the Central Bank to pay Interest on the Bonds (the second last row of Figure 3). If it does so, the negative equity from paying interest on the bonds remains, but the Treasury Account at the Central Bank can be kept non-negative.
A third option is that the Central Bank buys the bonds off the Banking Sector in Open Market Operations (or QE). If it does so, the amount of interest the Treasury needs to pay falls. Also, since the Treasury is the effective owner of the Central Bank, it doesn't need to pay interest to the Central Bank on its holdings of Treasury Bonds—or if it does, the interest payments come back to the Treasury in Central Bank profits.
So the Government can run a deficit, and pay interest on the Treasury Bonds issued to cover it (not finance it: the deficit is self-financing in that it creates money), so long as it is willing to countenance being in negative equity. As noted in the previous post, because Banks must be in positive equity, the non-Banking sectors (and that includes the Government) must be in negative equity. For the Government to achieve positive equity therefore—which seems desirable, if you take the partial view of the economy epitomised by Representative Hern's motion that "deficits are unsustainable, irresponsible, and dangerous"—the non-Bank private sector must be pushed into even greater negative equity.
Does that sound like a good idea?
To show the consequences for the economy of the government running a deficit or a surplus, it's necessary to go beyond the purely structural equations used so far, and enable simulations. In what follows, I've built an extremely simple model of monetary dynamics in which all expenditures depend on the amounts of money in relevant bank accounts. There are many other ways these expenditures could be modelled, but this way ensures fairly easily that crazy outcomes—like workers have negative bank balances, but still spending their wages—don't happen in this very simple model.
For example, I relate consumption by workers to the level of workers deposit accounts at the private banks, using the engineering concept of a "time constant". This is a number that tells you how long an action would take to run an account down to zero, if it's removing money from the account, or to double it, if it's adding money to an account. A time constant of 0.02 for workers consumption says that if workers consumed at a constant rate, and there were no other inflows or outflows in their accounts, then they would run their accounts down to zero in 1/50th of a year—roughly a week. Higher values for capitalists and bankers—say 2 for capitalists and 5 for bankers—assert that it would take 2 years and 5 years respectively for them to run their accounts down to zero through consumption alone.
You divide the relevant stock (the level of bank accounts, in the case of consumption) by the time constant to get the annual flow—see Figure 4.
Figure 4: Equations for consumption
Similarly, a time constant of 9 for bank lending says that if this was the only inflow affecting the level of debt, and it went on at a constant rate, debt would double in 9 years. Repayment with the same time constant means that the level of (private) debt remains constant.
Figure 5: Modelling interest payments, lending and repayment
GDP is treated as the turnover of money in the firm sector (it can also be treated as the sums of consumption and investment—which investment is entirely debt-financed in this model—and net government spending, but that makes it possible to end up with negative sums in deposit accounts, unless a much more complicated model is constructed).
Figure 6: Modelling GDP and income distribution
Government spending and taxation are treated as simple percentages of GDP. For the moment, I have not considered how they are financed, so the flows BondsB, BondsCB and InterestBonds are not wired up. The equations that define the system's flows at this point are shown in Figure 7. At this stage, sales of Treasury Bonds to the Banking Sector, Central Bank purchases of Bonds from the Banks, and Treasury borrowing from the Central Bank, are not defined.
Figure 7: All the flow equations in the model (without bond sales or interest on bonds)
With no explicit financing of a government deficit, the negative equity that this causes for the government turns up as a negative balance in the Treasury's account at the Central Bank—see Figure 8, which shows the impact of a 2% of GDP deficit for 60 years on the Treasury. It runs accumulates negative equity of $160, and that is entirely due to its account at the Central Bank being negative to the tune of $160.
Figure 8: The Treasury's Ledger with no bond sales: negative Treasury Account and Treasury Equity
Figure 9 shows the impact of a 2% of GDP deficit for 60 years from the Central Bank's perspective, and the key point is that the negative equity of the Treasury is the same magnitude as the positive Reserves of the Banking Sector: the accumulated deficits of the Government are precisely equal to the accumulated Reserves of the Banking Sector.
Figure 9: The Central Bank's Ledger with no Bond sales: negative Treasury precisely equals positive Reserves
How does the picture change if we require that the Treasury's account at the Central Bank can't go into overdraft? Then the Treasury has to sell Bonds equal to its Deficit, and borrow from the Central Bank to pay interest on those bonds.
Figure 10: Bond sales are equal to the deficit, no Central Bank purchases of Bonds from the Banking Sector
Running this model to the same point as the previous one, where the Treasury Equity reaches minus $160, this negative equity consists of $115 in Bonds and $45.2 in Loans from the Central Bank (see Figure 11; the Treasury account at the Central Bank remains at zero). The Bond sales represent the accumulated government deficit over time, while the Loans from the Central Bank represent the accumulated interest on those bonds.
Figure 11: Treasury books with Bond sales covering the deficit
Can the Central Bank afford to lend the money to pay the interest on Treasury Bonds to the Treasury? Yes: as Figure 12 shows, the loans to the Treasury are an Asset of the Central Bank. It has the capacity to expand its balance sheet indefinitely, and none of the operations shown in this model affect its equity at all.
Figure 12: Central Bank books with Bond sales and interest payments on Bonds
I have to note that this was a surprise to me: I had guessed that the government's negative equity would be carried by the Central Bank, and the fact that a Central Bank—unlike a private one—can operate with negative equity {Bholat, 2016 #6037} would be what enabled the government as a whole to sustain negative equity. But it turned out that my guess was wrong: the Central Bank simply acts as an enabler of and conduit for the Treasury's negative equity.
Does the fact that the Treasury is borrowing from the Central Bank (in this model) cause any difficulty? No, because while private individuals can't pay interest on loans by borrowing from banks—without that interest ballooning with further interest and driving us bankrupt—the Treasury can pay interest on Bonds to the Banking Sector by borrowing from the Central Bank because, technically and legally, the Treasury owns the Central Bank. It therefore doesn't have to pay interest on any loans from the Central Bank If it did, it would get that money back in dividend payments from the Central Bank anyway.
What happens if the Central Bank buys all the Bonds from the Banks? Then the negative equity of the Treasury consists entirely of its debt to the Central Bank (see Figure 13).
Figure 13: Treasury's books with Central Bank Open Market Operations purchasing all Treasury Bonds
Since those Bonds have been purchased off the Banking Sector, the Banking Sector has Reserves of 160 (see Figure 14). This is not as desirable a situation for the Banks as when they own the bonds, because with no Treasury Bonds they receive no interest payments from the Government. Far from the finance sector in general having "Bond Vigilantes" ready to deny the government bond sales if they're worried about the state of government finances, the "Bond Vigilantes" are vigilantly on the lookout for sales of Treasury Bonds so that they can swap out of a non-income-earning asset and into an income-earning one.
Figure 14: Banking Sector's books with OMOs buying 100% of Bonds
In the next post, I'll consider what the impact is of different fiscal regimes: the government running a deficit (as the USA has for most of the last 120 years—roughly of 2.5% of GDP); the government running a surplus; the government running a surplus and the private sector borrowing from the Banking Sector; the government running a surplus and the private sector reducing its debt to the Banking Sector; and the government running a deficit while the private sector reduces its debt to the Banking Sector.
MMT Modern Monetary Theory Part.49
- 0710 金持ち名無しさん、貧乏名無しさん (ﾜｯﾁｮｲ 8f10-Kk5w) 2020/10/04 11:15:15 >>707
「輸出が損、輸入が得」と触れ回ってる奴が上の話を理解してるとは思えんが。
CADが積み上げれる状況って限定的だし、
日本は輸入超過は危険としてるのはMMTでも変わらん。
1 ID:tpB7eGXi0(3/4)
- 0711 金持ち名無しさん、貧乏名無しさん (ﾜｯﾁｮｲ cfd4-VYpw) 2020/10/04 11:20:07 こういうＭＭＴに基づいた政策をしたら 需要以上に輸入を拡大して 需要がないのに損をするほど輸入して 需要がないのにドル建て国債を発行して対外支出を増やしていくって思考 これどうにかならないの？ こういうトンデモ言ってる奴に対する反論って何かある？ ID:bX3SO1/F0
- 0712 金持ち名無しさん、貧乏名無しさん (ｱｳｱｳｸｰ MM47-ufNG) 2020/10/04 11:21:23 バカは相手にしなくていい ID:Mp+I/P7AM
- 0713 金持ち名無しさん、貧乏名無しさん (ﾜｯﾁｮｲ 4357-KLv+) 2020/10/04 11:32:24 >>710
輸入超過は危険でも何でも無い
輸出超過こそ危険
君は金本位固定相場制の世界で生きてる典型的なジャパニーズMMTer
1 ID:GjyG+79i0(1/8)
- 0714 金持ち名無しさん、貧乏名無しさん (ﾜｯﾁｮｲ 4357-KLv+) 2020/10/04 11:37:31 変動相場制を採用する国がペッグしていないドル建て国債が増える道理が全くない
幾らでも貨幣は発行でき、サプライサイドが極めて強力な国家は外貨に景気安定を頼る政策が全く意味無いことを示す
国際通貨の概念があるPM派やミンスキー系のMMT派はそれを理解してる
アベノミクスの金融緩和もスガノミクスのインバウンドも基本的には無意味 ID:GjyG+79i0(2/8)
- 0715 金持ち名無しさん、貧乏名無しさん (ﾜｯﾁｮｲ c3f8-D4sQ) 2020/10/04 11:39:15 なるほど 「最終的に海外収支の累計はプラスマイナスゼロになる」 というのを前提に考えてしまうとそんな勘違いが発生するのか 時点１での貿易赤字は 時点２での貿易黒字を産むから最終的にはプラスマイナスゼロになると 現時点ではbenefit であったとしても将来的には余計なcost になるから問題だと 無意識だから気にしてなかったけどおかしな考え方もあったもんだな ID:Iyc4erqS0
- 0716 金持ち名無しさん、貧乏名無しさん (ﾜｯﾁｮｲ 4357-KLv+) 2020/10/04 11:39:45 あともう一つ 安全保障上の制約が無く外形的に資産価値が保障されている国は負債の創出による資産形成がされやすいので、通貨資本が成熟する背景がある ID:GjyG+79i0(3/8)
- 0717 金持ち名無しさん、貧乏名無しさん (ﾜｯﾁｮｲ 4357-KLv+) 2020/10/04 11:43:50 財政赤字を支出し続ければ必ず購買力つまりディマンドサイドが強化されるので、輸入というサプライサイドに対し消費行動を強め続けることになる
結果として、貿易赤字かつ財政赤字になる
例としては、レーガノミクス
あれは無意識的にしろ軍事ケインズなのであって「緊縮」では無い
あれを「緊縮」と言ってしまうあたりがジャパニーズMMTerの無理解が表れる ID:GjyG+79i0(4/8)
- 0718 金持ち名無しさん、貧乏名無しさん (ﾜｯﾁｮｲ 8f10-Kk5w) 2020/10/04 11:45:33 >>713
ビルミッチェルにそう言ったら？ https://econ101.jp/%...E5%B9%B49%E6%9C%882/
>上述したように、食料的自給自足や貿易なしの自前の資源による電力システムの運営ができない国にとっては、
>輸出ができることが特に重要であることは明らかである。
1 ID:tpB7eGXi0(4/4)
- 0719 金持ち名無しさん、貧乏名無しさん (ﾜｯﾁｮｲ 4357-KLv+) 2020/10/04 11:46:31 異時点間の最適貿易仮説はパレートモデルを採用してるからね
しかし貨幣の無限創出が可能なアメリカ、日本、イギリス、EUには全く理論的に適合しない
ゼロサムゲームでは無い ID:GjyG+79i0(5/8)
- 0720 金持ち名無しさん、貧乏名無しさん (ﾜｯﾁｮｲ 4357-KLv+) 2020/10/04 11:48:12 >>718
輸出が無意味とは言ってない
レイがミンスキー以来のI-Sバランスを用いて言ってるように貿易黒字が無意味なだけ
貿易についてはレイとミッチェルが実際に論争していたとお ID:GjyG+79i0(6/8)
- 0721 金持ち名無しさん、貧乏名無しさん (ﾜｯﾁｮｲ 4357-KLv+) 2020/10/04 11:48:25 もう ID:GjyG+79i0(7/8)
- 0722 金持ち名無しさん、貧乏名無しさん (ﾜｯﾁｮｲ 4357-KLv+) 2020/10/04 11:50:57 ADASつまりマクロ恒等式を前提としてるケインジアンとしてのMMTとそうでないMMTは実は月とスッポンより違う ID:GjyG+79i0(8/8)
二国間の貿易収支は重要ではない
…
たとえば,世界がアメリカ,中国,オーストラリアの3つの国からなるとし
よう, アメリカは1000億ドルの機械部品をオーストラリアに販売し, オースト
ラリアは1000億ドルの小麦を中国に販売し, そして中国は1000億ドルの玩具を
アメリカに販売している. この場合,アメリカの中国に対する二国間貿易収支
は赤字であり,中国のオーストラリアに対する二国間貿易収支も赤字,オース
トラリアのアメリカに対する二国間貿易収支も赤字である.しかし, 3つの国
はどの国も1000億ドルの財貨を輸出し,同額を輸入しているので、全体として
の貿易収支は均衡している.
二国間貿易収支は政治の分野では過大に注目されている。これは1つには国
際関係が国対国で結ばれており、政治家や外交官は国対国の経済取引を測定す
る統計に自然と眼が行くからである。しかし、ほとんどの経済学者は二国間の
貿易収支にそれほど大きな意味があるとは考えていない。マクロ経済の観点か
らは,ある国とそれ以外の諸外国全体を合計した貿易収支が問題なのである。
国と同じことは,個人についても当てはまる。あなたの個人としての貿易収
支は、あなたの所得とあなたの支出の差額であり, この2つが見合っているか
どうかは気になることだろう。しかし、特定の個人や特定の企業との所得と支
出の差額はあまり気にすべきではない。かつて経済学者ロバート ・ソローは、
二国間の貿易収支が重要でないことを次のように説明したことがある。「私は
理髪店に対して慢性的な赤字だ。彼は私から何も買おうとしないからね」。し
かし、そのことでソローが収入に応じた暮らしをやめることはないし、必要に
なればいつでも彼は理髪店に行くのである。
マンキューマクロ経済学入門篇#6:200頁