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Bill Mitchell

Bill Mitchell

Bill Mitchell is a Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the University of Newcastle, NSW, Australia. He is also a professional musician and plays guitar with the Melbourne Reggae-Dub band – Pressure Drop. The band was popular around the live music scene in Melbourne in the late 1970s and early 1980s. The band reformed in late 2010.

Articles by Bill Mitchell

The Weekend Quiz – July 31-August 1, 2021

2 days ago

Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.

1. Larger fiscal deficits as a percentage of GDP mean that there are less real resources available for other productive uses.TrueFalse2. For a nation running an external deficit, income adjustments will ensure government will record a deficit if the domestic private sector seeks to increase its saving overall as a percentage of GDP.TrueFalse3. The payment of a positive return on overnight reserves held by the commercial banks equal to the current policy rate will tend increase the overall level of reserves held by the latter (ignore any reserve

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Booming growth in Britain (Brexit?) but child poverty rises (austerity)

3 days ago

It’s Day 14 today and later this afternoon I am to be released from my stint in quarantine as a result of shifting myself from Newcastle to Melbourne 2 weeks ago. NSW (where Newcastle is located) is now an area of extreme risk according to the Victorian government, given the growing COVID outbreak in Sydney, and any resident travelling back into Victoria was required to do the 14 days in strict Iso. So today is my ‘freedom day’ after being stuck inside my residence for 2 weeks. Woo! Given my extensive CPI report yesterday, I am not treating today as my normal Wednesday work pattern and so apart from some great music, I offer a few observations on things that have come to mind recently.

Booming growth in Britain (Brexit?) but child poverty rises (austerity)
I am investigating this issue

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Inflation rises in Australia – but transitory factors and natural disasters are the reason

5 days ago

Today, my on-going inflation watch turns to Australia, given the release today (July 28, 2021) of the latest – Consumer Price Index, Australia – for the June-quarter 2021. The data is consistent with what we are seeing across many nations as supply chains are disrupted by the pandemic. Energy prices are adjusting back upwards and because the base from which we are judging these quarterly rises was lower as a result of price suppression during the downturn, the recovery in the pre-pandemic price levels deliver larger than usual price increases (when the base is higher). In Australia’s case, a major recent flood and a long drought before that have also complicated matters by driving up food prices. All these impacts are transitory. The CPI rose by 0.8 per cent in the June-quarter 2021 and

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And the winner is Brisbane … well kind of … or maybe not

6 days ago

Just when we were meant to be waving our national flags, standing to attention at the medal ceremonies and enjoying the Olympic Games from our various states of lockdown or in my case (day 12) quarantine, Professor Scott Baum sends me his latest guest blog telling us how bad the Games are. What a spoilsport (sorry). So, today, Scott from Griffith University, who has been one of my regular research colleagues over a long period of time, brings the wet blanket to wreck our fun, and just as Victoria (where I am holed up in quarantine at present) comes out of lockdown. Over to Scott …

And the winner is Brisbane… well kind of… or maybe not
Amongst all the noise emanating from the Japanese capital about the long delayed 2020 Olympic Games, there was the announcement that Brisbane Australia (the

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Calling the British PAC, IFS – it is time we all moved on from the debt and deficit hysteria

6 days ago

The BBC in Britain carried a story yesterday (July 25, 2021) – UK will be paying for Covid for decades, say MPs – that began with the assertion that “Taxpayers will bear the costs of Covid ‘for decades’”. I guess there is some truth in that statement – families will remember their loved ones that died from the virus and those who are stricken with Long COVID will probably endure the negative effects for the rest of their lives. In that sense, if they are also ‘taxpayers’ they will be ‘paying’ the ‘costs’ of the pandemic. But, of course, that is not what the BBC article was wanting its readers to absorb. The intent was to lie to British citizens that somehow their tax burdens would have to rise to offset the deficits that the British government has run dealing with the collapsing economy. I

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The Weekend Quiz – July 24-25, 2021 – answers and discussion

8 days ago

Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern Monetary Theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

Question 1:

If the external sector is in deficit overall and GDP growth rate is faster than the real interest rate, then:
(a) Both the private domestic sector and the government sector overall can pay down their respective debt liabilities.
(b) Either the private domestic sector or the government sector overall can pay down their debt liabilities.
(c)

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The Weekend Quiz – July 24-25, 2021

9 days ago

Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.

1. If the external sector is in deficit overall and GDP growth rate is faster than the real interest rate, then:Both the private domestic sector and the government sector overall can pay down their respective debt liabilities.Either the private domestic sector or the government sector overall can pay down their debt liabilities.Neither the private domestic sector or the government sector overall can pay down their debt liabilities.2. The debt of a government which issues its own currency and floats it in international markets is not really a

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Debate about the National Disability Insurance Scheme driven by the usual ‘taxpayer’s money’ arguments

11 days ago

Today, we have a guest blogger in the guise of Professor Scott Baum from Griffith University who has been one of my regular research colleagues over a long period of time. Today, he is writing about the way the Federal Australian government is starving the National Disability Insurance Scheme of funding. The usual arguments are being used – ‘taxpayer’s funds’ are in short supply – which seriously undermine the future for thousands of people with disabilities. The NDIS is the national structure that supports people with disabilities to increase their capacity to participate in employment and provide opportunities for them to so. So, once again, to Scott …

Debate about the National Disability Insurance Scheme driven by the usual ‘taxpayer’s money’ arguments
Recently (July 13, 2021) the

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Mobility data tells an interesting story about cultural differences between Australian states

11 days ago

It’s Wednesday and I am catching up on other writing commitments. But I have been examining the latest – Google Mobility Reports – to assess the differences between NSW and Victoria during this latest COVID crisis that has befallen Australia. The results are not particularly robust in terms of statistical benchmarks, rather, being eyeballing exercises, but they do tell and interest story about life in Australia and the cultural differences that lie on either side of the border between our two largest states. And, as usual on a Wednesday, I get out of writing by offering music.

Google Mobility Data
The latest COVID outbreak in Australia centred, initially on Sydney (NSW) and then spreading to other states because the NSW conservative government refused to lockdown early enough, tells an

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British House of Lords having conniptions about QE – a sedative and a lie down is indicated

12 days ago

When I studied British politics (as one unit in a politics minor) at university, I was bemused by the role of the House of Lords. I know it is a curiously British institution that would be hardly tolerated anywhere else. But the fact that it serves as a part of the British democratic system continues to amaze me. Recently, the Economic Affairs Committee has been investigating (if that is what they get up to) Quantitative Easing because, apparently, some of the peers were worried about the “operational independence” of the Bank of England and the “economic effects” (read: inflation fears) among other concerns. They published their first report last week (July 16, 2021) – 1st Report – Quantitative easing: a dangerous addiction? – and it is littered with errors. The government has until

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Reading Beardsley Ruml carefully

13 days ago

Many social media commentators that have become interested in Modern Monetary Theory (MMT) regularly cite sections of the article written by businessman and former Chairman of the Federal Reserve Bank of New York Beardsley Ruml – Taxes for Revenue Are Obsolete – which appeared in the January 1946 edition of the American Affairs journal. The article was actually a speech that he made “before the American Bar Association during the last year of the war”. Some claim that the content provides an early underpinning for Chartalism, upon with MMT is, in part, derived. I disagree. If you read his work carefully, rather than selectively quoting convenient sentences, and, that work includes his more substantial book that was published in 1945 and from which the article cited above was derived, you

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The Weekend Quiz – July 17-18, 2021 – answers and discussion

15 days ago

Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern Monetary Theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

Question 1:

Over the last several decades, governments have introduced punitive measures against the unemployed and exploited the popular view, that the unemployed on income support benefits live off the hard work of those who pay taxes. The popular view has validity.

The answer is True.
Dispensing with the emotional trappings that this sort of claim might

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The Weekend Quiz – July 17-18, 2021

16 days ago

Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.

1. Over the last several decades, governments have introduced punitive measures against the unemployed and exploited the popular view, that the unemployed on income support benefits live off the hard work of those who pay taxes. The popular view has validity.TrueFalse2. Inflation fears are being hawked at the present by the financial media. But a potential problem with running continuous fiscal deficits is that the spending builds up over time which adds to inflationary pressures.TrueFalse3. If private domestic investment is less than private

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Australian labour market – slow employment growth but unemployment continues to fall as population growth remains weak

18 days ago

Today (July 15, 2021), the Australian Bureau of Statistics put out the latest – Labour Force, Australia – for June 2021. The data shows that the trend where even relatively weak employment growth is driving the unemployment rate down because the growth in labour supply, is continuing. Employment increased by 29,100 or 0.2 per cent (which is weak), monthly hours worked decreased by 1.8 per cent, the participation rate was stable, yet unemployment fell by 22,000 (which is excellent), and the unemployment rate fell 0.2 points to 4.9 per cent. But underemployment rose sharply (0.5 points) to 7.9 per cent. So it is a good outcome for unemployment to be falling but the quantity and quality of employment growth is not desirable. The drop in working hours is due to the two-week lockdown in

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British Labour remains unelectable – Part 104

19 days ago

It is Wednesday and I am now unable to get home to Melbourne as a result of the border closure between Victoria and NSW. That closure is the result of the incompetence of the conservative NSW government who thought they could beat the Delta variant of COVID and leave Sydney open for business. They have now learned that their claim to be the world’s best virus containing government were hubris and so regional NSW is also suffering, what will be a very long lockdown. Victoria has sensibly closed its border as have the other states to NSW, which now is an isolated, pariah state. Pity the NSW Labor opposition is so weak. Anyway, today is a few snippets about the British Labour party being so weak, some reflections on monetary sovereignty, and a note that the barbarians are trying to kill off

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European Commission processes still biased towards fiscal austerity

20 days ago

I keep reading that the European Commission has abandoned the Stability and Growth Pact (SGP) and that the euro is no longer a problem. I beg to differ. On June 6, 2021, the European Commission released a – Report prepared in accordance with Article 126(3) of the Treaty on the Functioning of the European Union – which updated their latest views on the state of fiscal balances in the EU. The Report confirms the Commission’s intention to return to the Excessive Deficit Mechanism process in 2023. The problem is that the whole assessment process is biased towards fiscal austerity. I show why in this blog post.

The content of – Article 126 – deals with the “excessive government deficits” rules and the surveillance mechanisms that the European Commission conducts via the Excessive Deficits

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Investors lose out following the advice of New Keynesian (mainstream) macroeconomics

21 days ago

I have been doing a lot of talks over the last few years discussing Modern Monetary Theory (MMT) with financial professionals. I stress that I am not acting as a consultant, to allow this community to make more money. I often joke I hope they all go broke. My motivation is education and one hopes that these communities will spread our ideas through their own influential networks. The aim is to put pressure on the public policy makers to restore full employment and reorient the public imagination away from the gloom that the neoliberal years has imposed on our policy aspirations. One of the things I confront these audiences with is the reality that an adherence to the precepts of mainstream macroeconomics and the predictions that flow from them have undermined their own objectives (which,

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The Weekend Quiz – July 10-11, 2021 – answers and discussion

22 days ago

Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern Monetary Theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

Question 1:

Over a given economic cycle (peak to peak), if a nation’s external sector is on average balanced and the government gap between its tax revenue and spending is, on average, equal to 1 per cent of GDP, then the private domestic sector’s spending-income balance will on average be in:
(a) Deficit of 1 per cent of GDP
(b) Surplus of 1 per cent of

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The Weekend Quiz – July 10-11, 2021

23 days ago

Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.

1. Over a given economic cycle (peak to peak), if a nation’s external sector is on average balanced and the government gap between its tax revenue and spending is, on average, equal to 1 per cent of GDP, then the private domestic sector’s spending-income balance will on average be in:Deficit of 1 per cent of GDPSurplus of 1 per cent of GDP2. Considering only the initial impact on national income (ignoring multiplier effects), fiscal austerity will have a greater negative effect on real GDP if it manifests as a spending cut of $x than if the

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Still a lot of slack remaining in the US labour market

24 days ago

The US Bureau of Labor Statistics published the latest JOLTs data yesterday (July 7, 2021) – Job Openings and Labor Turnover Summary – May 2021 – which provides some interesting insights into labour market dynamics that run against the mainstream narrative. It allows me to calculate broader measures of labour demand and supply to achieve a more accurate indication of how tight or otherwise the US labour market is. Currently there is still considerable slack in the US labour market, some of it, outside the official labour force, and some of it in underemployment, as well as the official unemployment number. My estimates of the gap between labour supply (employment plus unemployment plus part-time for economic reasons plus not in the labour force but want to work) and labour demand

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Intergenerational Report – the past is catching up with the government and the game is up

25 days ago

It’s Wednesday, and I have been filming most of the day some of the material that will appear in the next set of course material offered by – MMTed. We hope to offer some new courses later in September. But progress is slow (see below). Today, I provide some brief comments on my response to the Federal government’s latest – 2021 Intergenerational Report – which is one of the ridiculous, smokescreen-creating exercises that allow the government to avoid political responsibility for its fiscal surplus obsession. They come out every five years and are usually jam-packed with scaremongering about unsustainable fiscal deficits and the need for spending cuts. The only difference this time is that the damage caused by the years of following the austerity path – to health care, to aged care, to

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Staggered minimum wage increases in Australia further punish the most vulnerable workers

27 days ago

Last Thursday, guest blogger Scott Baum analysed the recent decision by the Fair work Commission – Annual Wage Review 2020-21 – on June 16, 2021, which raised the National minimum Wage in Australia to $772.60 per week or $20.33 per hour. See his blog post at – The working poor are still poor in Australia (July, 2021). Today, I also review that decision as part of my annual surveillance on minimum wage trends in Australia. The Fair Work Commission, is Australia’s wage setting tribunal, and as part of that task conducts an annual wage review which sets minimum wages across the nation. The minimum wage determination then flows on to other wage rates (these are the wage awards linked to the NMW). The decision is poor because it will further undermine the real living standards of tens of

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US labour market recovery leaves considerable slack and rising long-term unemployment

28 days ago

Last Friday (July 2, 2021), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – June 2021 – which showed that the recovery since the catastrophic labour market collapse in March and April 2020, continues with payroll employment rising by 850,000 in June 2021. The unemployment rate rose by 0.1 points to 5.9. However, the broader labour wastage captured by the BLS U6 measure fell by 0.4 points to 9.8 per cent. The US labour market is still 6,76 thousand jobs short from where it was at the end of February 2020, which helps to explain why there are no fundamental wage pressures emerging. The other notable point is that long-term unemployment now dominates among the duration categories published by the BLS.

Overview for June 2021:

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The Weekend Quiz – July 3-4, 2021 – answers and discussion

29 days ago

Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

Question 1:

If the external sector overall is in deficit, it is still possible for the private domestic sector and government sector to run surpluses and each pay down its debt as long as GDP growth is fast enough (the technical condition is that the rate of GDP growth has to be faster than the real interest rate).

The answer is False.
Once again it is a

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The Weekend Quiz – July 3-4, 2021

July 2, 2021

Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.

1. If the external sector overall is in deficit, it is still possible for the private domestic sector and government sector to run surpluses and each pay down its debt as long as GDP growth is fast enough (the technical condition is that the rate of GDP growth has to be faster than the real interest rate).TrueFalse2. Federal government debt (where there is currency sovereignty) is not really a liability because the government can just roll it over continuously and thus they never have to pay it back. This is different to a household, which not only

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The working poor are still poor in Australia

June 30, 2021

Today, we have a guest blogger in the guise of Professor Scott Baum from Griffith University who has been one of my regular research colleagues over a long period of time. Today, he is writing about the impact the recent decision by the Fair work Commission – Annual Wage Review 2020-21 – on June 16, 2021, which raised the National minimum Wage in Australia to $772.60 per week or $20.33 per hour. I am travelling most of today and so it is over, once again, to Scott …

The working poor are still poor
The recent announcement by the Fair Work Commission (June 16, 2021) of an increase to the national minimum wage (NMW) while welcome, is still woefully inadequate.
In their – Decision – the so-called Expert Panel for Annual Wage Reviews stated:

The factors the Panel are required to take into

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The central banks don’t seem to be worrying about inflation

June 30, 2021

It’s Wednesday and I have been tied up most of the day with commitments. So we will have to be content today with a couple of snippets. The first about the on-going inflation mania and the way in which the ECB seems oblivious to it. The second about the gross incompetence of the Australia government, who has put the health of the nation at risk and forced state governments to invoke rolling lockdowns as only a small number of us are vaccinated and cases keep seeping out of a flawed quarantine system (the latter being the federal responsibility). And once the anger subsides from that little discussion, we have the usual Wednesday music offering to restore peace.

Inflation mania continues
The Bank of International Settlements is now whipping up the inflation narrative.
On June 29, 2021, the

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Australia’s Covid recession has increased inequality – winners and losers

June 29, 2021

Today is just a number-crunching exercise, which I conducted to allow me to understand where the employment losses and gains in the Australian labour market since the onset of the pandemic. The latest Australian Bureau of Statistics Labour Force data, which I analysed in this blog post – Australian labour market – stronger as working age population flattens out (June 17, 2021) – revealed that total employment in Australia is now above the February 2020 level by 130.2 thousand (1.0 per cent). I noted that some sectors are still languishing while others are rebounding strongly. I had to wait a week before the detailed industrial level employment data was released and today’s blog post is a brief view of that data to ascertain which sectors (and sub-sectors) are in the ‘languishing’ category

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New Australian inflation measures help us dig deeper into distributional consequences

June 28, 2021

On November 11, 2020, the Australian Bureau of Statistics published a very interesting new experimental dataset – Non-Discretionary and Discretionary Inflation – which was derived from the standard Consumer Price Index data. It provided us with new insights and a richer knowledge of the impacts of inflation, particularly in distributional terms. Last month (May 25, 2021), the ABS published a followup article – Measuring Non-discretionary and Discretionary Inflation – which summarised some of the key findings. After receiving feedback, the ABS has refined the data series and will publish them on an on-going basis from the September-quarter 2021 as part of the “regular quarterly CPI release”. This new approach to measuring inflation will help us considerably assess the implication of wage

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The Weekend Quiz – June 26-27, 2021 – answers and discussion

June 26, 2021

Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

Question 1:

The debate about creating a European-wide bond has been motivated by the desire to prevent sovereign defaults among member countries who are having trouble covering their net spending positions with market-sourced finance. The solvency risk is however sourced in the restrictions imposed on deficit and debt ratios by the Stability and Growth Pact

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