To use money to serve people and nature rather than as an exploitive tool for the few is an amazing idea and has been around for thousands of years. Should be backbone of all economic and politics in our cities.😊🎉🎉
MMT is finally getting more acknowledgement. It shows how countries and behind them societies have a lot more power than orthodox economic theory acknowledges. Chinese governments were smart. They held on to their monetary and fiscal sovereignty unlike European countries.
Yes, that is true. All state money is an I.O.U. of the state: "We owe you redemption for payment of one unit of tax liabilities or fees or fines due." Even the local government debt has no serious economic consequence if the central bank issues the debt at a zero interest rate. So local governments do not really need tax for "revenues". They are just branches of the "family" of central government and can be permitted by central government to spend but use tax to create a fiscal vacuum to offset inflation risk. If there is no inflation risk then there is no case for higher tax. If there is unemployment the tax needs to be cut or spending increased. The "revenue" (return back to issuer) is then whatever it needs to be to guarantee full employment with price stability. No government can _accurately_ to the dollar compute what this is, so there is no "right" tax rate. They just need to let supply float and fix price until they are at full employment.
Indeed, this gives a fresh perspective to the dominant narrative we hear on the Internet. Can we assume that the Chinese Govt. is basically on top of things and there would not be a collapse as predicted by Western economists?
Great to listen to Prof. Liang on MMT. For several years I have been facinated by this theory and the importance of implementing this methodology. Thank you Pascal
I'm following the Chinese debt situation quite closely and am not at all worried. Yes, China once again needs to go through the tax allocation system, but don't forget: China's banks are all state owned (by 80% or more) and has zero inflation for many years. This means, local debt can simply be bought by the banks with new central bank money with almost no risk. MMT is definitely not a useful tool, compared to Marxist-Leninist industry focus. But luckily the Chinese government knows that.
Why do workers go to work in those marxist-lenninist factories? Because they need to get the currency to pay their tax. MMT applies to *_every_* monetary system of production, from anarchist to libertarian and marxism/socialism in between. Just try getting socialism without a unit of account. You cannot do it except in a small village where everyone knows each other and so has the record of account (aka. the money) in their head/memory.
@@Achrononmaster There are no more Marxist-Leninist factories, where workers go to do time and get coupons. That's old. There are factories from the Shimomuran-Wernerian school of economics, which has already been done in Japan and South Korea and is also followed by many other Asian countries (the four tiger economies), including China. Governments of that school spend big based on MMT principles to achieve certain economic goals.
The reason for making the local govt manage its own finances is to ensure accountability. It is not a problem, should the son runs out of money and the reason is justified for more money, the father will just give him some. Local government in China governs a very big area with millions of population. It is better to give money when it runs out so that the father knows where the money goes to rather than giving too much and money wasted through mismanagement. This also encourages the local government to be more prudent in spending.
That also creates a certain level of opacity for the central government, since local government revenues for expanding spending is the sale of land leases for private real estate projects.
I was told when younger money doesn't grow on trees. After watching my government find money for foreign entanglements I realized money does indeed grow on trees, I just don't have the tree.
What she said at the start is, I think, very important. Debt at the federal level is much less important than debt at the local level. It is why power in a country will naturally drift to the federal level and away from the local level.
It's a disgusting propaganda for totalitarian fraud! Void of any logic. Advocating inflation to rob the poor and enrich the richest. If the government doubles the amount of money every year, it halves your salary, pension or welfare every year. Dividing the money amount into smaller parts, instead of creating any value.
We really have three monetary sectors, a private citizen level sector, a state level economical sector, and a very private billionaire level financial sector. How on earth there would be a common all satisfying mutual cooperation and idea of quality in the world we are living in
No. Money is money because it is the universial standard of measure. There are no "dectors" with it. And it is the government force gainst its enslave subjects that concentrate all ownership to the few ultra rich. That is what turnes Sweden into the most unequal country in the world, with the highest Gini-coefficient and with the highest concentration of wealth to the (less than 40 persons) dollar billionaires. It was government dictated 0% interest rate NMT that did that!
Real estate in China is considered as generational wealth. The owners do not care what their current selling prices are because they never not intended to sell them off in the first place. The only people who are affected are people who want to buy but do not have enough savings to buy a property. They are just waiting for prices to go down enough to tempt them to buying.
But also is true that most of the local government debt is owed to state banks so it's not big issue. They can always forgive it. Much higher debt have SOE, but still most of it owned by state banks and they can always do at least partial privatization. Debt is for now not an issue in China. Maybe in thirties it will be some problem. But I think they will solve it.
*Part-2.* a more important point, even if the mainstream macro theory is half true (it is not, but suppose it is) --- why do they (non MMT'ers) all analyze most nations' monetary policy (interest rate effect) using fixed exchange rates (or IS-LM)? It is an inapplicable notion when a nation is on a floating exchange rate. It is completely nuts they do this. It is like using a cold air balloon to try to rise upwards.
I think trying to understand China’s economy is a good thing, but I don’t think it does justice to analyze it in simple terms like the MMT, and to say “China’s biggest debt problem is x, y, z….” is insulting to say the least. People forget that China is much more than the CPC. The CPC was founded in 1949, but its civilization is thousands of years old. The T’Ang Dynasty (618-907), for example, had a very sophisticated system of financial administration, such as land tenure, direct taxation, state monopolies and taxes on trade, currency and credit, etc. And during the early years of the communist party, the study and application of Marxist and market theories were methodical, scientific and, simply, mind blowing. Every time I learn something about China’s financial system, the more amazed I become and the more questions I have. I think it’s a mistake to analyze China’s economy separately from its Governance. There is so much that happens behind closed doors, and I just wonder how the great minds make decisions because outsiders can only witness the product of their success. I think as long as they maintain their sovereignty, they will continue to amaze the world.
What a silly comment. The Great Leap Forward was a part of the learning process for the CPC. It wasn’t a plan to starve the people. In December 1964, Mao Tse Tung said, “We must smash conventions, do our utmost to adopt advanced techniques…build our country up into a powerful modern socialist state. When we talk of a Great Leap Forward we mean just this.” Of course, the way it unfolded didn’t go as planned, but the mistakes were corrected, changes were made and China moved on. From Deng Xiaoping to President Xi, all leadership specifically and consistently acknowledged that the Great Leap Forward was a huge mistake, and a mistake that had to be urgently corrected. And now, China has a form of government that President Xi calls “Socialism with Chinese Characteristics for the New Era,” and I would say that it has been pretty successful. If “you” look at the chronicles of the CPC, you can trace their progress: what they tried, what didn’t work, what the Soviets tried and didn’t work, what is the role of capital, how much state intervention is good or bad, etc. To me, that’s pretty amazing. What other country has been so self-critical and self-correcting? So, But my main point was that China is far more than the CPC. The first evidence of fiat currency was in the Sung Dynasty, and all the associated experiments and experiences don’t just disappear. It becomes all a part of their knowledge base. I don’t mean to sound condescending, but I would like to suggest that there are books still in print that provide objective information on China. “Internet research” is too often oversimplified and/or tainted by modern propaganda.
@@ABee-vd6rt Yes! How silly of me to worry about the deaths of millions if not tens of millions. People, are just resources like wood, steel, cement to be consumed. There are more than enough survivors to comment on the mass starvation because it was more important to make steel then to grow grain. That is the problem with centralized states. The old Soviet Union denied the mass starvation of the thirties. Just western propaganda. There is the reason why the Ukrainians resist Russia so vigorously. They remember Holodomor even if the likes of you dismiss as western propaganda.
@@StevePowell-p9f That's the problem with westerners. They like to talk about things they know nothing about and fool themselves into believing they make sense. Most westerners just parrot what their corporate-owned media tell them, conveniently forgetting how captured their corporate-owned media, and are just propaganda arms of the military-industrial complex.
Totally agreed. Discussions with Chinese scholars will inevitably reference to China's ancient history. People forget when they're talking about China, they're talking about a civilization. Without understanding this, it's difficult to truly understand China.
The balance sheet-approach adopted by MMT is the most rational one. Just as much as the principles of energy and matter conservation of physics and chemistry. Economics still has a long way to go to become a "hard science". Far beyond the plain adoption of Newtonian mechanics to "explain away" the ins and outs of political economy.
9:06 Money is always a means to steer people in political systems, via the allocation of resources. It's the resources which are limited, not the money.
@@bjorntorlarsson Except that money systems begin with the state. The state issues its unit of account and imposes taxes payable in the unit of account. Individuals (taxpayers as a whole) must obtain the state's money. Only then do they use it in private exchange (and to pay tax).
@@randyallred2382 No, money is older than the state. The state is nothing but a gang of robbers who stole everyone's money. Money is a tool for mutually voluntary cooperation individual-to-individual without any state or other looters as parasiting middlemen.
@33:30 MMT awareness would also fix their political problem. There is no reason to use debt as discipline on local authorities. The discipline is a budget. The local authority can then always make payments, and if they go into overdraft it is functionally a loan and they get a notice "See headmaster Xi in the morning!" - and bring your homework balance sheet. Different sort of anxiety, but at least the people promised economic relief and decent dignified jobs do not suffer.
That is provided there are proper checks and balances for improper use of funds at the local level. The one thing many people can't fathom is how distant local decision making is from the central government. Years of working to budget can contribute to corruption instead of improving efficiencies and generating returns back to the central government. Having a debt based mechanism brings accountability to the local level and helps to crimp excess money floating around at the local level becoming corruption money.
@@fisherfriendmanthe relationship between the central government and the local governments is rooted in Confucian principles - but of course, arrogant Western scholars think it’s quite preposterous to read a “philosopher” (really, in Chinese terms, a “sage”) to understand economics.
This was Alexander Hamilton’s tactic I believe. The federal government assumed the debt of the regional governments after the winning the war thus allowing the federal government the credit worthiness to borrow. The local governments became indebted to the federal government.
Question to ask is why local govt is borrowing so much. it is because they are making unproductive investments which are making no return. Unless they stop these infrastructure projects, there is no end in sight
Small is beautiful. Solve local economic problems by local governments, regional problems by regional government, national problems by national government. International problems by international institution. Some even argue that local government should have the power to issue their own currency for use only in their juridiction.
@@stuartwray6175 every cells of your body have their own biological economy. Every organs of your body have their own organic economy. Your global body has it's higher economy that delegates some of the management responsibilities to the organs. Those delegates some to the cells.
Best practices and regulations that hold local governance to best practices would do a great great toward minimizing lesser resourceful uses of the funding.
My academic journey started at 16 in a social workshop filing sharp edges from manufacturing of car shocks. The expensive kind. I said to the workshop boss i'd strut them under my car someday. He doubted it. I had them mounted two years ago under a 25 year old diesel van! I was able to do so because my older brother had carbon monoxide poisoning in a housefire whilst firemen where joking amongst themselves outside for 30 minutes straight. They found him a couple yards from the front door. I do not believe in government or the financial system. Government stole his retirement fund, but still he did manage to leave me some money. It's all rigged. Pascal... What's your view on the friendly civilized club that frequents Davos?
@22:30 China policy is ruled by neoliberals educated in Chicago. Madness. They have the 3% GDP debt limit "rule" (no market forces involved) and think that controls inflation. But they fail to realize they have a base interest rate policy of around 1.5% to 2% (shibor) which essentially *_is_* the base inflation rate. Thanks to strong exports they import deflation and have a moderate inflation rate of less than a percent. It makes it look like their fiscal rule "works" but they've got the whole story backwards, just like all the other neoliberal policy wonks. Tragic. Given the capacity of China they are missing out every day on huge sustainable green development gains. Those loses can never be recovered.
Missed opportunities are just that. Opportunities. They are not losses. Any profits from perceived opportunities are just nebulous wishful thinking and have not basis in reality.
Informative information for knowledge seekers listening is an important asset. TAKE THIS CHALLENGE TO DARE MORE LISTENING FOR KNOWLEDGE AND EDUCATING ONESELF SERIOUSLY. GOOD LUCK.
Alternative world ha? Lets see.. BRICS supports “global governance” and “the central role of the United Nations in the international system,” BRICS supports the leading role of the IMF in global finance, BRICS supports the UN’s 2030 Agenda for Sustainable Development, BRICS supports public-private partnerships to help nations achieve their Sustainable Development Goals (SDGs), BRICS supports the reduction and removal of greenhouse gases to combat climate change, BRICS supports the creation of carbon markets, BRICS supports the World Health Organization (WHO) and its “central coordinating role” in strengthening “the international pandemic prevention, preparedness and response system,” BRICS supports the development of “safe & effective vaccines,” BRICS supports “digital transformation” using 5G and other “emerging technologies,” and BRICS supports the goal of “Strengthening Multilateralism for Just Global Development and Security” instead of the goal of “Building a Just World and a Sustainable Planet.”
Actually the closer analogy is the use of railroads. In Europe railroads are used to move people. In the United States railroads are used for to move freight(things). I would argue that the later is more efficient. In the United states American consumers borrow and spend. American companies save and invest. In China, consumers save and invest, the state borrows and spends.
Pascal, if you want to surprise Prof Yan when you next speak with her, pronounce her family name the same way English speakers pronounce the Japanese currency unit ...."Yen". That is a more accurate Mandarin pronunciation of her family name.
MMT = Scientific studies of the ecology of money. Is it me or does Professor Liang is a dead ringer for Zhang Ziyi? It's my first time seeing Pascal not familiar with the subject matter.
why does the private have to be in deficit for public to be in surplus? It just doesn't make sense. I try to imagine it simply: a society takes out 10kg of gold of the earth, gives 6kg to the workers and the company which does it, and give 4kg to a government. Both have a surplus. What do I get wrong?
Nothing makes sense here! It's just bizarre propaganda mubmojumbo. "Halve the definition of a meter, and everything become twice as long!" The most uneducated, illogical childlish emotional outburst of vomit.
The private sector and the government sector are accounting counterparties. Don't think of gold-which is not money. Money is an *accounting tool* created by the state.
MMT promoters have, in my view, made a mistake by aligning too closely with “left,” “green,” and “Democrat” agendas. MMT is supposed to describe how money works in reality, yet its advocates have positioned it as a left-leaning agenda, alienating Republicans. Massive wind turbines now disrupt our landscapes, and electricity prices have doubled in recent years, while basic needs like road repairs are left unmet. If MMT were promoted to MAGA Republicans by highlighting its potential for infrastructure projects-fixing roads, building bridges, expanding nuclear energy, and lowering energy costs-it would be more widely accepted. Trump won the popular vote, the electoral vote, and Republicans now hold power in the House and Senate. MMT could gain traction with this massive audience if they could see it delivering tangible improvements for everyone.
At least a portion of the left understands that is ridicolous to think that any of the two ruling parties in the United States will do something for the people if you ask them politely. Maybe that's why people who have a higher understanding of how society actually works and develops tend to be more left leaning.
The nature of power puts thought in the hands of the ruling elites the people around banking industry which in afinancialized economy and a politics that is ruled by money makes this unfotunately such a long shot - only a rebellion by small business people who coudl marry a complimentary progressive movement within the Republican Party as happened in the late 1800s early 1900s that still did not succeed until late in the 1930s and finally with the proof of the correctness of these ideas during world war 2 - a functional political system with powerful progressive forces in both parties would make this possible - a Berne Sanders that say supported gun control Christian values etc things anathema to the left but part of perpetual cutlurel wars but harnessing people who will support this but also get that the current system only in reality benefits the banks etc - and other parasitic financial but in league with fossil fuel interests and monopolists - this will be politically a pre requisite for a proper function aging economy and society.
The nature of power puts thought in the hands of the ruling elites the people around banking industry which in afinancialized economy and a politics that is ruled by money makes this unfotunately such a long shot - only a rebellion by small business people who coudl marry a complimentary progressive movement within the Republican Party as happened in the late 1800s early 1900s that still did not succeed until late in the 1930s and finally with the proof of the correctness of these ideas during world war 2 - a functional political system with powerful progressive forces in both parties would make this possible - a Berne Sanders that say supported gun control Christian values etc things anathema to the left but part of perpetual cutlurel wars but harnessing people who will support this but also get that the current system only in reality benefits the banks etc - and other parasitic financial but in league with fossil fuel interests and monopolists - this will be politically a pre requisite for a proper function aging economy and society.
FOR ME OF COURSE WHENEVER CHINA IS THE TOPIC WANT TO VERY MUCH WHY EUROPEAN COUNTRIES CAME THERE AND DID WHAT THEY DID?? A PEOPLE WHO COMPARABLY WERE CENTURIES BETTER DEVELOPED LONG BEFORE.AND I TOO HAVE NOT HEARD THE CONFUSIONISMIC PHYLOSOPHY, ETHICS AND MORALS. MODERN CHINA IS BASICALLY OF CONTEMPORARY HISTORY WITH KARL MARX LIKE "COMMUNISM" I THINK!!!?
Whatever these two are discussing, it's not T as I understand it to be. They talk of "printing money" which IMO is absolutely forbidden in all macroeconomic philosophies because it cause loss of trust in the system and the 20th Century examples of nations collapsing due to Latin Inflation. They also talk extensively about how government funds should be spent and although that is important is not really what MMT is. Any discussion about MMT or any other subject should start with defining the topic. MMT is simply the idea that economies can be managed by controlling the availability of money. If the economy is stagnant, then money can be injected into the system where it will exchange hands and support greater economic activity. The converse and s also true, if the economy is over active, then money supply can be shrunk to dampen excess activity. Those are the most basic concepts and only then you can extend the conversation to who might be favored and how to get best results when money is injected into the system. And crucially, at least how MMT is practiced by most Central Bankers, money is not created by printing money out of thin air which is recognized as reckless, irresponsible and leads to collapse. Nations today raise cash by mortgaging future sales income streams by selling sovereign debt. This puts guardrails in place against reckless, irresponsible behavior because potential lenders must believe in that country's ability to repay that debt for the interest offered or there would be no buyers or cash raised. For their part economic managers and government need to implement sound and good policy to keep potential buyers interested. That is what I understand MMT to be, not what the two in this video are discussing.
There are a lot of problems with this podcast. Yan Liang declares the crisis of 2008 in the United States a housing crisis. It was a banking crisis. Most of the damage was due to the refinancing of existing homes. In my opinion the housing crisis in China symptom of a greater problem which is demographic decline. China is a homogeneous insular society. It is not like the United States which can augment with immigration. When there are fewer new households, there is less demand for housing. That is simple supply and demand. There is no way around the issue that China's population will decline by a few hundred million or more in the next forty years. Since most of retail wealth is in real estate, this will be catastrophic to household wealth. Most of the MMT is beyond comprehension. I can't tell what is different from classic Keynesian deficit spending. Per Niall Ferguson, a sovereign currency is the reflection of the world's confidence in that countries culture. The United States can put out debt because there are world buyers including the government of China. However much that currency is, it is finite. The sovereign determines the unit. That is why not even the MMTs can spend their way out. If an economy continues to grow, then debt is okay. Back to China, the demographic timebomb will mean stagnant or perhaps even negative growth has hundreds of millions of workers retire in the next few decades. Monetary policy will not matter.
A lot depends on technology and the growth of the earned income of the people in the workforce. Say from previously 4 adults supporting 2 old aged retirees in the economy you get reduced to 2 working adults supporting 2 retirees then the 2 working adults disposable income must increase by at least a 100% or more for the growth of the economy. So it depends on haw fast technology can provide for efficiencies in the economy for those 2 working adults to be able to justify their growth in disposable income. Of course a lessening restriction of immigration would help.
I think before you continue deviating from “neutrality” and keep pushing for defending MMT. Maybe you should try to contact the economist Juan Ramon Rayo and get another point of view.
I'm really disappointed with this channel now. MMT isn't some serious economic theory and taking this up makes you look like a China puppet. Your Swiss and you know monetary economics better than most Europeans. I hope you'll host someone from Austrian school as a balance.
This is one of the most interesting insightful interviews I've ever heard on YT. Thank you.
To use money to serve people and nature rather than as an exploitive tool for the few is an amazing idea and has been around for thousands of years.
Should be backbone of all economic and politics in our cities.😊🎉🎉
I’m just ìò
MMT is finally getting more acknowledgement. It shows how countries and behind them societies have a lot more power than orthodox economic theory acknowledges. Chinese governments were smart. They held on to their monetary and fiscal sovereignty unlike European countries.
WWII devastated Europe. The US was in a position to take over Europe post WWII.
Thanks for having Prof. Yan Liang on! This is information everyone needs to understand.
Another fascinating discussion. Would welcome to hear more from this guest.
Agree.
China doesn't have a Wall Street. That's why its doing great.
My understanding is that China's debt is like a son owing his dad money. The other type of debt is dad owing bankers' money.
😂
Abusive fathers are a common thing...
Yes, that is true. All state money is an I.O.U. of the state: "We owe you redemption for payment of one unit of tax liabilities or fees or fines due." Even the local government debt has no serious economic consequence if the central bank issues the debt at a zero interest rate. So local governments do not really need tax for "revenues". They are just branches of the "family" of central government and can be permitted by central government to spend but use tax to create a fiscal vacuum to offset inflation risk. If there is no inflation risk then there is no case for higher tax. If there is unemployment the tax needs to be cut or spending increased. The "revenue" (return back to issuer) is then whatever it needs to be to guarantee full employment with price stability.
No government can _accurately_ to the dollar compute what this is, so there is no "right" tax rate. They just need to let supply float and fix price until they are at full employment.
@@kruys697 Domestic issue, though.
@@f1aziz There are no domestic issue's any longer in a global economy... Everything affects everything.
Indeed, this gives a fresh perspective to the dominant narrative we hear on the Internet. Can we assume that the Chinese Govt. is basically on top of things and there would not be a collapse as predicted by Western economists?
Still, two Americans talking about China, one of them is half Chinese so she knows better, but none of them really do the job. So, layman's talking.
@@秋分-d8iPascal is not American - he is Swiss.
Great to listen to Prof. Liang on MMT. For several years I have been facinated by this theory and the importance of implementing this methodology. Thank you Pascal
I'm following the Chinese debt situation quite closely and am not at all worried. Yes, China once again needs to go through the tax allocation system, but don't forget: China's banks are all state owned (by 80% or more) and has zero inflation for many years. This means, local debt can simply be bought by the banks with new central bank money with almost no risk. MMT is definitely not a useful tool, compared to Marxist-Leninist industry focus. But luckily the Chinese government knows that.
And these are good debts - development ones which can be paid at lower interests
Why do workers go to work in those marxist-lenninist factories? Because they need to get the currency to pay their tax. MMT applies to *_every_* monetary system of production, from anarchist to libertarian and marxism/socialism in between. Just try getting socialism without a unit of account. You cannot do it except in a small village where everyone knows each other and so has the record of account (aka. the money) in their head/memory.
@@Achrononmaster There are no more Marxist-Leninist factories, where workers go to do time and get coupons. That's old. There are factories from the Shimomuran-Wernerian school of economics, which has already been done in Japan and South Korea and is also followed by many other Asian countries (the four tiger economies), including China. Governments of that school spend big based on MMT principles to achieve certain economic goals.
The reason for making the local govt manage its own finances is to ensure accountability. It is not a problem, should the son runs out of money and the reason is justified for more money, the father will just give him some. Local government in China governs a very big area with millions of population. It is better to give money when it runs out so that the father knows where the money goes to rather than giving too much and money wasted through mismanagement. This also encourages the local government to be more prudent in spending.
That also creates a certain level of opacity for the central government, since local government revenues for expanding spending is the sale of land leases for private real estate projects.
@fisherfriendman This problem no longer exist.
great content as usual Pascal , cheers mate greets australia
I was told when younger money doesn't grow on trees. After watching my government find money for foreign entanglements I realized money does indeed grow on trees, I just don't have the tree.
Wow! Great discussion. So much to learn about China.
Would love to watch you interview Prof. Michael Hudson too, he's one of mmt supporter and historian.
Absolutely. After this great interview, I almost think one with Michael Hudson should be a necessity!
What she said at the start is, I think, very important. Debt at the federal level is much less important than debt at the local level. It is why power in a country will naturally drift to the federal level and away from the local level.
Great discussion with Prof Yan Liang, thank you Pascal ❤.
It's a disgusting propaganda for totalitarian fraud! Void of any logic. Advocating inflation to rob the poor and enrich the richest. If the government doubles the amount of money every year, it halves your salary, pension or welfare every year. Dividing the money amount into smaller parts, instead of creating any value.
We really have three monetary sectors, a private citizen level sector, a state level economical sector, and a very private billionaire level financial sector.
How on earth there would be a common all satisfying mutual cooperation and idea of quality in the world we are living in
No. Money is money because it is the universial standard of measure. There are no "dectors" with it. And it is the government force gainst its enslave subjects that concentrate all ownership to the few ultra rich. That is what turnes Sweden into the most unequal country in the world, with the highest Gini-coefficient and with the highest concentration of wealth to the (less than 40 persons) dollar billionaires. It was government dictated 0% interest rate NMT that did that!
Great discussion on economics. Another guest that you can invite is Prof Richard Werner.
Agree. Dr Werner is the top of the mountain.
Real estate in China is considered as generational wealth. The owners do not care what their current selling prices are because they never not intended to sell them off in the first place. The only people who are affected are people who want to buy but do not have enough savings to buy a property. They are just waiting for prices to go down enough to tempt them to buying.
But also is true that most of the local government debt is owed to state banks so it's not big issue. They can always forgive it. Much higher debt have SOE, but still most of it owned by state banks and they can always do at least partial privatization. Debt is for now not an issue in China. Maybe in thirties it will be some problem. But I think they will solve it.
*Part-2.* a more important point, even if the mainstream macro theory is half true (it is not, but suppose it is) --- why do they (non MMT'ers) all analyze most nations' monetary policy (interest rate effect) using fixed exchange rates (or IS-LM)? It is an inapplicable notion when a nation is on a floating exchange rate. It is completely nuts they do this. It is like using a cold air balloon to try to rise upwards.
I think trying to understand China’s economy is a good thing, but I don’t think it does justice to analyze it in simple terms like the MMT, and to say “China’s biggest debt problem is x, y, z….” is insulting to say the least. People forget that China is much more than the CPC. The CPC was founded in 1949, but its civilization is thousands of years old. The T’Ang Dynasty (618-907), for example, had a very sophisticated system of financial administration, such as land tenure, direct taxation, state monopolies and taxes on trade, currency and credit, etc. And during the early years of the communist party, the study and application of Marxist and market theories were methodical, scientific and, simply, mind blowing. Every time I learn something about China’s financial system, the more amazed I become and the more questions I have. I think it’s a mistake to analyze China’s economy separately from its Governance. There is so much that happens behind closed doors, and I just wonder how the great minds make decisions because outsiders can only witness the product of their success. I think as long as they maintain their sovereignty, they will continue to amaze the world.
Yes, the Great Leap Forward was mind blowing. Never before had so many people died in absence of war or natural disaster.
What a silly comment. The Great Leap Forward was a part of the learning process for the CPC. It wasn’t a plan to starve the people. In December 1964, Mao Tse Tung said, “We must smash conventions, do our utmost to adopt advanced techniques…build our country up into a powerful modern socialist state. When we talk of a Great Leap Forward we mean just this.” Of course, the way it unfolded didn’t go as planned, but the mistakes were corrected, changes were made and China moved on. From Deng Xiaoping to President Xi, all leadership specifically and consistently acknowledged that the Great Leap Forward was a huge mistake, and a mistake that had to be urgently corrected. And now, China has a form of government that President Xi calls “Socialism with Chinese Characteristics for the New Era,” and I would say that it has been pretty successful. If “you” look at the chronicles of the CPC, you can trace their progress: what they tried, what didn’t work, what the Soviets tried and didn’t work, what is the role of capital, how much state intervention is good or bad, etc. To me, that’s pretty amazing. What other country has been so self-critical and self-correcting? So, But my main point was that China is far more than the CPC. The first evidence of fiat currency was in the Sung Dynasty, and all the associated experiments and experiences don’t just disappear. It becomes all a part of their knowledge base. I don’t mean to sound condescending, but I would like to suggest that there are books still in print that provide objective information on China. “Internet research” is too often oversimplified and/or tainted by modern propaganda.
@@ABee-vd6rt Yes! How silly of me to worry about the deaths of millions if not tens of millions. People, are just resources like wood, steel, cement to be consumed. There are more than enough survivors to comment on the mass starvation because it was more important to make steel then to grow grain. That is the problem with centralized states. The old Soviet Union denied the mass starvation of the thirties. Just western propaganda. There is the reason why the Ukrainians resist Russia so vigorously. They remember Holodomor even if the likes of you dismiss as western propaganda.
@@StevePowell-p9f That's the problem with westerners. They like to talk about things they know nothing about and fool themselves into believing they make sense. Most westerners just parrot what their corporate-owned media tell them, conveniently forgetting how captured their corporate-owned media, and are just propaganda arms of the military-industrial complex.
Totally agreed. Discussions with Chinese scholars will inevitably reference to China's ancient history. People forget when they're talking about China, they're talking about a civilization. Without understanding this, it's difficult to truly understand China.
Interesting conversation, thank you!
The balance sheet-approach adopted by MMT is the most rational one. Just as much as the principles of energy and matter conservation of physics and chemistry. Economics still has a long way to go to become a "hard science". Far beyond the plain adoption of Newtonian mechanics to "explain away" the ins and outs of political economy.
9:06
Money is always a means to steer people in political systems, via the allocation of resources.
It's the resources which are limited, not the money.
No, money is the most natural and obvious way that human individuals mutually voluntarily exchange favors for each other.
@@bjorntorlarsson Except that money systems begin with the state. The state issues its unit of account and imposes taxes payable in the unit of account. Individuals (taxpayers as a whole) must obtain the state's money. Only then do they use it in private exchange (and to pay tax).
@@randyallred2382 No, money is older than the state. The state is nothing but a gang of robbers who stole everyone's money. Money is a tool for mutually voluntary cooperation individual-to-individual without any state or other looters as parasiting middlemen.
@33:30 MMT awareness would also fix their political problem. There is no reason to use debt as discipline on local authorities. The discipline is a budget. The local authority can then always make payments, and if they go into overdraft it is functionally a loan and they get a notice "See headmaster Xi in the morning!" - and bring your homework balance sheet. Different sort of anxiety, but at least the people promised economic relief and decent dignified jobs do not suffer.
That is provided there are proper checks and balances for improper use of funds at the local level. The one thing many people can't fathom is how distant local decision making is from the central government. Years of working to budget can contribute to corruption instead of improving efficiencies and generating returns back to the central government. Having a debt based mechanism brings accountability to the local level and helps to crimp excess money floating around at the local level becoming corruption money.
@@fisherfriendmanthe relationship between the central government and the local governments is rooted in Confucian principles - but of course, arrogant Western scholars think it’s quite preposterous to read a “philosopher” (really, in Chinese terms, a “sage”) to understand economics.
This was Alexander Hamilton’s tactic I believe. The federal government assumed the debt of the regional governments after the winning the war thus allowing the federal government the credit worthiness to borrow. The local governments became indebted to the federal government.
Question to ask is why local govt is borrowing so much. it is because they are making unproductive investments which are making no return. Unless they stop these infrastructure projects, there is no end in sight
Small is beautiful. Solve local economic problems by local governments, regional problems by regional government, national problems by national government. International problems by international institution. Some even argue that local government should have the power to issue their own currency for use only in their juridiction.
Some, many, British local authorities have had their budgets cut in half. You suggest they can remedy that via issuing a local currency/raising taxes?
@@stuartwray6175 every cells of your body have their own biological economy. Every organs of your body have their own organic economy. Your global body has it's higher economy that delegates some of the management responsibilities to the organs. Those delegates some to the cells.
It is an added expense for local government to print their own currency as for small, localities, barter system will work very well.
@@JD-yz4kr barter don't work well for taxes. A currency was just a non perishable good that anyone can barter goods and services for.
Thank you.
Best practices and regulations that hold local governance to best practices would do a great great toward minimizing lesser resourceful uses of the funding.
My academic journey started at 16 in a social workshop filing sharp edges from manufacturing of car shocks. The expensive kind. I said to the workshop boss i'd strut them under my car someday. He doubted it. I had them mounted two years ago under a 25 year old diesel van! I was able to do so because my older brother had carbon monoxide poisoning in a housefire whilst firemen where joking amongst themselves outside for 30 minutes straight. They found him a couple yards from the front door. I do not believe in government or the financial system. Government stole his retirement fund, but still he did manage to leave me some money. It's all rigged. Pascal... What's your view on the friendly civilized club that frequents Davos?
Pascal, please fix typo in the video thumbnail title/text. Thanks for sharing this interview! 😃👍
Yes very smart guest. Does anyone have some links to her work or maybe substack profile? Would like to read more ?❤
Google her name and department of economics at Williamette University (Oregon).
@22:30 China policy is ruled by neoliberals educated in Chicago. Madness. They have the 3% GDP debt limit "rule" (no market forces involved) and think that controls inflation. But they fail to realize they have a base interest rate policy of around 1.5% to 2% (shibor) which essentially *_is_* the base inflation rate. Thanks to strong exports they import deflation and have a moderate inflation rate of less than a percent. It makes it look like their fiscal rule "works" but they've got the whole story backwards, just like all the other neoliberal policy wonks. Tragic. Given the capacity of China they are missing out every day on huge sustainable green development gains. Those loses can never be recovered.
Missed opportunities are just that. Opportunities. They are not losses. Any profits from perceived opportunities are just nebulous wishful thinking and have not basis in reality.
Informative information for knowledge seekers listening is an important asset.
TAKE THIS CHALLENGE TO DARE MORE LISTENING FOR KNOWLEDGE AND EDUCATING ONESELF SERIOUSLY. GOOD LUCK.
Alternative world ha? Lets see..
BRICS supports “global governance” and “the central role of the United Nations in the international system,”
BRICS supports the leading role of the IMF in global finance,
BRICS supports the UN’s 2030 Agenda for Sustainable Development,
BRICS supports public-private partnerships to help nations achieve their Sustainable Development Goals (SDGs),
BRICS supports the reduction and removal of greenhouse gases to combat climate change,
BRICS supports the creation of carbon markets,
BRICS supports the World Health Organization (WHO) and its “central coordinating role” in strengthening “the international pandemic prevention, preparedness and response system,”
BRICS supports the development of “safe & effective vaccines,”
BRICS supports “digital transformation” using 5G and other “emerging technologies,” and
BRICS supports the goal of “Strengthening Multilateralism for Just Global Development and Security” instead of the goal of “Building a Just World and a Sustainable Planet.”
Chinese save and invest while Americans borrow and spend.
Actually the closer analogy is the use of railroads. In Europe railroads are used to move people. In the United States railroads are used for to move freight(things). I would argue that the later is more efficient. In the United states American consumers borrow and spend. American companies save and invest. In China, consumers save and invest, the state borrows and spends.
Pls interview Radhika Desai or Jaishree Patnaik on this subject.
Pascal, if you want to surprise Prof Yan when you next speak with her, pronounce her family name the same way English speakers pronounce the Japanese currency unit ...."Yen". That is a more accurate Mandarin pronunciation of her family name.
The fix probably is simple, but people are very complicated.
MMT = Scientific studies of the ecology of money.
Is it me or does Professor Liang is a dead ringer for Zhang Ziyi?
It's my first time seeing Pascal not familiar with the subject matter.
Magic Money Tree!!!
93% of Chinese families own a house?!
Wow!
MMT legitimises financial arbitrage and it makes me sick honestly
why does the private have to be in deficit for public to be in surplus? It just doesn't make sense. I try to imagine it simply: a society takes out 10kg of gold of the earth, gives 6kg to the workers and the company which does it, and give 4kg to a government. Both have a surplus. What do I get wrong?
Nothing makes sense here! It's just bizarre propaganda mubmojumbo.
"Halve the definition of a meter, and everything become twice as long!"
The most uneducated, illogical childlish emotional outburst of vomit.
The Earth is in deficit due providing that 10kg of gold.
The private sector and the government sector are accounting counterparties. Don't think of gold-which is not money. Money is an *accounting tool* created by the state.
shes pretty
MMT promoters have, in my view, made a mistake by aligning too closely with “left,” “green,” and “Democrat” agendas. MMT is supposed to describe how money works in reality, yet its advocates have positioned it as a left-leaning agenda, alienating Republicans. Massive wind turbines now disrupt our landscapes, and electricity prices have doubled in recent years, while basic needs like road repairs are left unmet.
If MMT were promoted to MAGA Republicans by highlighting its potential for infrastructure projects-fixing roads, building bridges, expanding nuclear energy, and lowering energy costs-it would be more widely accepted. Trump won the popular vote, the electoral vote, and Republicans now hold power in the House and Senate. MMT could gain traction with this massive audience if they could see it delivering tangible improvements for everyone.
At least a portion of the left understands that is ridicolous to think that any of the two ruling parties in the United States will do something for the people if you ask them politely. Maybe that's why people who have a higher understanding of how society actually works and develops tend to be more left leaning.
Good luck with teaching this to the Republicans! They’re stuck in the austere Milton Freidman mindset like most people
Firstly the democrats are right wing neoliberals; secondly MMT is not anti capitalist and thus is not a leftist position anyway
The nature of power puts thought in the hands of the ruling elites the people around banking industry which in afinancialized economy and a politics that is ruled by money makes this unfotunately such a long shot - only a rebellion by small business people who coudl marry a complimentary progressive movement within the Republican Party as happened in the late 1800s early 1900s that still did not succeed until late in the 1930s and finally with the proof of the correctness of these ideas during world war 2 - a functional political system with powerful progressive forces in both parties would make this possible - a Berne Sanders that say supported gun control Christian values etc things anathema to the left but part of perpetual cutlurel wars but harnessing people who will support this but also get that the current system only in reality benefits the banks etc - and other parasitic financial but in league with fossil fuel interests and monopolists - this will be politically a pre requisite for a proper function aging economy and society.
The nature of power puts thought in the hands of the ruling elites the people around banking industry which in afinancialized economy and a politics that is ruled by money makes this unfotunately such a long shot - only a rebellion by small business people who coudl marry a complimentary progressive movement within the Republican Party as happened in the late 1800s early 1900s that still did not succeed until late in the 1930s and finally with the proof of the correctness of these ideas during world war 2 - a functional political system with powerful progressive forces in both parties would make this possible - a Berne Sanders that say supported gun control Christian values etc things anathema to the left but part of perpetual cutlurel wars but harnessing people who will support this but also get that the current system only in reality benefits the banks etc - and other parasitic financial but in league with fossil fuel interests and monopolists - this will be politically a pre requisite for a proper function aging economy and society.
🌞
FOR ME OF COURSE WHENEVER CHINA IS THE TOPIC WANT TO VERY MUCH WHY EUROPEAN COUNTRIES CAME THERE AND DID WHAT THEY DID?? A PEOPLE WHO COMPARABLY WERE CENTURIES BETTER DEVELOPED LONG BEFORE.AND I TOO HAVE NOT HEARD THE CONFUSIONISMIC PHYLOSOPHY, ETHICS AND MORALS.
MODERN CHINA IS BASICALLY OF CONTEMPORARY HISTORY WITH KARL MARX LIKE "COMMUNISM" I THINK!!!?
Sweden's prime minister is in the fetal position and longs for mother in his fear that Russia will come and take Sweden after Trump's victory .
You have no thing with China exept parents or grandparents...
Chaos is needed in human lives...obviously.
This asinine economic presentation is unworthy of exposure on Pascal’s usual high quality broadcast
Whatever these two are discussing, it's not T as I understand it to be. They talk of "printing money" which IMO is absolutely forbidden in all macroeconomic philosophies because it cause loss of trust in the system and the 20th Century examples of nations collapsing due to Latin Inflation. They also talk extensively about how government funds should be spent and although that is important is not really what MMT is.
Any discussion about MMT or any other subject should start with defining the topic.
MMT is simply the idea that economies can be managed by controlling the availability of money. If the economy is stagnant, then money can be injected into the system where it will exchange hands and support greater economic activity. The converse and s also true, if the economy is over active, then money supply can be shrunk to dampen excess activity.
Those are the most basic concepts and only then you can extend the conversation to who might be favored and how to get best results when money is injected into the system.
And crucially, at least how MMT is practiced by most Central Bankers, money is not created by printing money out of thin air which is recognized as reckless, irresponsible and leads to collapse. Nations today raise cash by mortgaging future sales income streams by selling sovereign debt. This puts guardrails in place against reckless, irresponsible behavior because potential lenders must believe in that country's ability to repay that debt for the interest offered or there would be no buyers or cash raised.
For their part economic managers and government need to implement sound and good policy to keep potential buyers interested.
That is what I understand MMT to be, not what the two in this video are discussing.
OK why doesn't China try mmt first, I will get popcorns
There are a lot of problems with this podcast. Yan Liang declares the crisis of 2008 in the United States a housing crisis. It was a banking crisis. Most of the damage was due to the refinancing of existing homes. In my opinion the housing crisis in China symptom of a greater problem which is demographic decline. China is a homogeneous insular society. It is not like the United States which can augment with immigration. When there are fewer new households, there is less demand for housing. That is simple supply and demand. There is no way around the issue that China's population will decline by a few hundred million or more in the next forty years. Since most of retail wealth is in real estate, this will be catastrophic to household wealth.
Most of the MMT is beyond comprehension. I can't tell what is different from classic Keynesian deficit spending. Per Niall Ferguson, a sovereign currency is the reflection of the world's confidence in that countries culture. The United States can put out debt because there are world buyers including the government of China. However much that currency is, it is finite. The sovereign determines the unit. That is why not even the MMTs can spend their way out. If an economy continues to grow, then debt is okay. Back to China, the demographic timebomb will mean stagnant or perhaps even negative growth has hundreds of millions of workers retire in the next few decades. Monetary policy will not matter.
A lot depends on technology and the growth of the earned income of the people in the workforce. Say from previously 4 adults supporting 2 old aged retirees in the economy you get reduced to 2 working adults supporting 2 retirees then the 2 working adults disposable income must increase by at least a 100% or more for the growth of the economy. So it depends on haw fast technology can provide for efficiencies in the economy for those 2 working adults to be able to justify their growth in disposable income. Of course a lessening restriction of immigration would help.
I think before you continue deviating from “neutrality” and keep pushing for defending MMT. Maybe you should try to contact the economist Juan Ramon Rayo and get another point of view.
My understand is THAT she lives and works in USA??If so,she is NOT competent to speak ABOUT CHINA!!!
She was born in China and earned her undergraduate degree in China.
I'm really disappointed with this channel now. MMT isn't some serious economic theory and taking this up makes you look like a China puppet. Your Swiss and you know monetary economics better than most Europeans. I hope you'll host someone from Austrian school as a balance.
Said by Indian who love their country but wish to leave for better life😂😂
Austrian economics is the laughing stock of the economics field. MMT is an accurate description of how money systems work.
Oh no, another westoid finding an argument he disagrees with and labelling it as misinformation. What must we do to appease him?
@@randyallred2382 Austrian isn't even 'economics', it's a 'moral philosophy' spanking fetish.