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Frances Coppola

Frances Coppola

I’m Frances Coppola, writer, singer and twitterer extraordinaire. I am politically non-aligned and economically neutral (I do not regard myself as “belonging” to any particular school of economics). I do not give investment advice and I have no investments.Coppola Comment is my main blog. I am also the author of the Singing is Easy blog, where I write about singing, teaching and muscial expression, and Still Life With Paradox, which contains personal reflections on life, faith and morality.

Articles by Frances Coppola

Lessons from the Long Depression

11 days ago

A version of this post appeared on Pieria in December 2013. 

In my post “The desert of plenty”, I described a world in which goods and services are so cheap to
produce that less and less capital is required for investment , and so easy to
produce that less and less labour is required to produce them. Prices therefore
go into freefall and there is a glut of both capital and labour. This is

There are two kinds of deflation. There is the “bad” kind,
where asset prices go into a tailspin and banks and businesses fail in droves,
bankrupting households and governments and resulting in massive unemployment,
poverty and social collapse. America experienced this in the Great
Depression and narrowly avoided it in the Great Recession. More recently, at least one European

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The desert of plenty

11 days ago

This post first appeared on Pieria in November 2013. 

Throughout history, humans have dreamed of plenty. They have
longed for there to be abundant supplies not only of essentials, but of
luxuries. The promise made to the Israelites wandering in the desert was that
they would eventually come to a land “flowing
with milk and honey”. And the vision of the New Jerusalem in Revelation is
of riches
beyond imagination.

Recent forecasts of forthcoming abundance, too, have focused
on the benefits. Imagine a world in which everything was so plentiful that not
only the essentials of life but the luxuries, too, were free. There would be no
need for money, because nothing could be bought or sold; and there would be no
need to work, because there would be no need for income. And if

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Keynes and the death of capitalism

11 days ago

In a recent article for the New Statesman, the economics commentator Grace Blakeley makes an extraordinary claim. Writing about the origins of the IMF, she says:
Seventy-five years have passed since these international financial institutions were created in Bretton Woods, New Hampshire, in 1944. Back then, delegates sought to tame the power of international finance, the growth of which helped to cause the 1929 Wall Street Crash and the ensuing Great Depression. JM Keynes – who led the British delegation – arrived at Bretton Woods with the aim of “euthanising” a financial elite he viewed as parasitic on productive economic activity.
I thought that Bretton Woods was about free trade and economic cooperation, not "taming the power of international finance." But I can be wrong. So I

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Weird Is Normal

20 days ago

This post was originally published on Pieria in December 2013. Since then, the idea that the long-term real equilibrium interest rate must be equal to or lower than the long-term sustainable growth rate has become much more mainstream. I am just amazed that anyone ever thought it could be otherwise. A long-term real interest rate persistently above the sustainable growth rate cannot possibly be an "equilibrium" rate. As I show in this piece, it can only be maintained through rising inequality. It is by definition ponzi and therefore unsustainable. Periodic financial crashes are inevitable in any system in which growth does not cover the interest on debt. Three years ago, Nick Rowe produced this
post describing a “weird world” – a world in which the equilibrium interest
rate is at or

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Why Central Bankers Don’t Understand Inflation

27 days ago

My debut post at CapX develops a theme I have written about many times. Central bankers are tasked with controlling inflation, but they don’t understand it.
For the last decade, central banks in developed countries have been
pursuing policies designed to raise inflation. Quantitative easing, cheap
funding for banks, tinkering with yield curves, low and negative interest rates
– all aim to raise inflation to the ubiquitous 2% target.

Understandably, central banks’ inflation forecasts assume that their
policies will return inflation to target over the medium term. But as time goes
by, and inflation stays stubbornly low, their forecasts are becoming increasingly
difficult to believe. This does not bode well for central banks that depend
above all on credibility…..
Read on here.Related

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Inflation Is Always And Everywhere A Political Phenomenon

27 days ago

We don’t understand inflation. Those who lived through the high inflation of the 1970s are convinced that inflation is always and everywhere caused by wage-price spirals. Germans, economic Austrians and Bitcoiners are convinced that inflation is always and everywhere caused by central bank money printing. Small-state supporters are convinced that inflation is always and everywhere caused by profligate governments borrowing and spending excessively. Hard money enthusiasts are convinced that inflation is always and everywhere caused by currency devaluation. Every school of economics has its own theory of inflation.We don’t even know what we mean by inflation. As the Cleveland Fed entertainingly discusses, inflation originally meant expansion of (paper) currency in a manner that resulted

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A Fine Example of Crypto Ignorance

March 14, 2019

The video blogger Crypto Eri (@sentosumosaba) thinks she has evidence that the American Bankers’ Association (ABA) wants the Federal Reserve to adopt Ripple/XRP as its cross-border settlement system. She has found a letter from the ABA which makes three requests to facilitate faster interbank settlement:A liquidity management tool
Access for chartered financial institutions

Hey hey everybody, this looks just like Ripple’s bag, doesn’t it? "You are going to see how perfectly matched XRP is to meet their request," she says.I’ve tracked down the ABA’s letter to which she refers. It responds to a Federal Reserve request for comment on proposals for actions to support interbank settlement of Faster
Payments. Faster Payments are domestic online and automated payments, not

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A lack of compassion

February 23, 2019

It’s Saturday afternoon, and I have just returned from singing Evensong at Rochester Cathedral. The first reading was the dreadful story of Laban’s deceitful behaviour towards Jacob. Laban made Jacob work for seven years in return for a promise of his daughter Rachel’s hand in marriage. But at the end of the seven years, Laban palmed Jacob off with his other daughter instead, then made him work for another seven years to claim the hand of the woman he loved. This story is horrible not just because of Laban’s underhand behaviour, nor even because Laban treated his daughters as his property, but because of the damage it did to Jacob’s family. The rivalry between Rachel and her sister set up deep divisions that led to attempted murder and the disintegration of their family.Writing in

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An XRP Illusion

February 19, 2019

Here is a Public Service Announcement.Since @Galgitron, who I think is certifiably insane, has called for the XRP Army to deprive me of income by spamming the adverts on Forbes, I have decided to write future posts about XRP here on Coppola Comment. Moving to Coppola Comment negates accusations that I make money from posting what Ripplers call "FUD" on Forbes. Coppola Comment is widely read, but certainly doesn’t have the reach of Forbes. There are no adverts here and I don’t get paid for writing on my own blog. 
I can, however, write freely and say what I really think. And I will. I have taken so much abuse from XRP supporters now that I am distinctly uninterested in soothing their aggrieved egos with gentle words. If they behave like disgusting rabid hyenas, that is what I will call

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Why labour markets don’t clear

February 7, 2019

This post originally appeared on Pieria in July 2014. Roger
Farmer has
a blogpost in which he shows that labour markets don’t clear.
Specifically, employment varies with the business cycle, whereas the labour
force participation rate and hours worked only show long-term secular trends.
During cyclical downturns, therefore, we must conclude that there is more
labour available than there are jobs.
Keynesians say that the reason for this is sticky wages.
If only nominal wages could fall enough,the market would clear and there would
be no cyclical increase in unemployment. Therefore there should be labour
market deregulation so that wages can flex with the business cycle. Roger
Farmer questions this: he argues that the market simply does not clear at any
disagree. I think the

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The foolishness of the old

January 30, 2019

Most people want government to spend more money on them than
on anyone else. This applies regardless of their tax contributions (those who
don’t pay tax often demand more than those who do). And it is completely understandable.
After all, charity begins (and when times are hard, ends) at home.
So when voters in the US were asked what the government’s
spending priorities should be, it comes as no surprise to discover that their
preferences varied by age:

As we would expect, the priorities of the young are
education and jobs, the priorities of those of working age are jobs and
benefits, while the priorities of the middle-aged and old are pensions and
associated benefits (US pensions, pensioner benefits, Medicare, disability
benefits and family support are all bracketed together as

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ECB forecasting is a joke

January 21, 2019

Over at Bruegel, Zsolt Darvas takes the ECB to task for systematic forecasting errors in the last five years. He shows that the ECB has persistently overestimated inflation and unemployment, and on this basis he questions the ECB’s decision to end QE in December 2018. I share his concern that the ECB has tightened too soon, though as the ECB’s QE program is seriously flawed and very damaging, I am not sorry to see the back of it.But I think that in focusing on the last five years, he has underestimated the scale of the ECB’s failure. Here is his lovely chart showing Eurozone inflation since the creation of the Euro:

The ECB’s persistently high forecasts in the last five years are painfully apparent. But what interests me is not the forecasts, but the outturns. The entire chart shows a

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The real victims of the “Rape of the National Insurance Fund”

January 10, 2019

Some things just make me furious. This post by David Hencke, for example. In it, he claims that politicians of all three main parties agreed to raise the state pension age for women to compensate for the ending of the Treasury’s contribution to the National Insurance fund. This isn’t true.Not only is it untrue, but it directly contradicts the research upon which the article relies, and dishonours the memory of a man who fought hard for pensioners’ rights.Hencke based his article on this piece by Tony Lynes, written in 2006 as a basis for a National Pensioners Convention factsheet on the National Insurance (NI) Fund. As readers of this blog will know, the NI Fund is not a pension fund. It is a clearing house for receipt of NI contributions and their disbursement to pensioners and

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The “Misérables” of the 21st Century

January 7, 2019

On Saturday, I watched Ken Loach’s 2016 film "I, Daniel Blake" for the first time. The following evening, I watched the second episode in the BBC’s adaptation of Victor Hugo’s 19th century novel "Les Misérables". And here is my unpopular opinion. I think that as a parable of the U.K. today, particularly the difficulties experienced by single parents, "Les Misérables" beats "I, Daniel Blake" hands down.
Why? Because Fantine’s story is closer to the experience of single mothers today. True, we don’t (yet) have a market for hair and teeth, and women today are much less likely to die of undiagnosed tuberculosis than they were in the 19th century. But the exorbitant cost of child care, and the fragility of employment, that were so disastrous for Fantine – these are all too often the reality

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Mental health and homelessness

December 22, 2018

I haven’t written a post for a while. I wanted everyone to read the post I wrote in November about my niece Annie’s suicide. Writing new posts drops older ones down the list, and I didn’t want her memorial post to disappear off the radar until after her funeral. Annie’s funeral was last Tuesday, 18th December, the day after her 29th birthday. Now, it is time to write again.But not yet to move on from the issues that Annie’s death highlights. This post is about the link between mental ill health and homelessness. Particularly, "street" homelessness, or in common parlance, "sleeping rough".Homelessness and rough sleeping have risen hugely in recent years. Government statistics show that between 2010-15, estimates of the number of those sleeping rough rose by 102%. This is partly due to

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A poignant Remembrance

November 22, 2018

On Remembrance Sunday, we remember those who died in war. Particularly the First World War, but also those who gave their lives fighting in subsequent wars. This year, I sang at two remembrance services in which all the music was written by people who either died in war themselves or had relatives who died. The poems of Wilfred Owen, who died one week before Armistice in November 1918, brought home poignantly to us the "pity of war".
Perhaps one day we will also honour those who did not fight but still lost their lives, and all those whose lives were ruined by war – the parents desperately trying to find out what happened to their children, the wives left to bring up children on their own, the soldiers whose mental and physical health was ruined, the villagers and townspeople whose

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Some governments really are like households

November 16, 2018

In my last post, I said that the fact that a government can buy anything that is for sale in its own currency is not sufficient to confer monetary sovereignty. A country which is dependent on essential imports, such as foodstuffs and oil, for which it must pay in dollars is not monetarily sovereign. Some people disputed this on the grounds that such a country could earn the dollars it needs through exports. So I thought I would write a post discussing how realistic this is in practice.Strictly speaking, the only country in the world that can always pay for everything it needs in its own currency is the United States. However, most developed  countries that issue their own currencies have deep and liquid FX markets that enable them to exchange their currencies freely for other

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Now state pension ages are equalised, let’s fix the real problems

November 6, 2018

Today is a day for celebration. After nearly 60 years of inequality and discrimination – originally against women, and more recently against men – the state pension age is at last the same for men and women. For one day only, both men and women will retire at 65. Tomorrow, the state pension age for both men and women will start rising again in lockstep, reaching 66 by 2020 and then to 67 and 68.I make no apology for celebrating the equalisation of pension ages. In my view this is long overdue. I have expected it all of my working life, having first discussed it when I was still at school. I never thought it was fair that my brother 14 months younger than me should receive his state pension 6 years and 4 months later than me. We both work for our livings and we have both brought up

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The myth of monetary sovereignty

November 2, 2018

How many countries can really claim to have full monetary sovereignty?

The simplistic answer is "any country which issues its own currency, has free movement of capital and a floating exchange rate." I have seen this trotted out MANY times, particularly by non-economists of the MMT persuasion. It is, unfortunately, wrong. 

This is a more complex definition from a prominent MMT economist:

1. Issues its own currency exclusively

2. Requires all taxes and related obligations to be extinguished in that currency

3. Can purchase anything that is for sale in that currency at any time it chooses, without financial constraints. That includes all idle labour

4. Its central bank sets the interest rate

5. The currency floats

6. The Government does not borrow in any currency other than

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A Budget Polemic

October 23, 2018

As Budget Day approaches, Economists for Free Trade have taken it upon themselves to give the Chancellor some advice. They have produced a "Budget for Brexit", subtitled "An Economic Report". One might expect from this that the report would contain a comprehensive set of Budget proposals with Britain’s forthcoming exit from the EU in mind, backed up by rigorous economic analysis.With this in mind, I started reading the report. There was the inevitable introduction from Patrick Minford, as usual criticising the U.K. government for disagreeing with his forecasts. Fortunately, his comments were only a little over a page in length. And remarkably, he concluded with an appeal for the Chancellor to raise public spending:
It is an extraordinary thing that economists like us feel the need

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Vítor unbound

October 8, 2018

I always find the views of former policymakers fascinating, not least because of their tendency to become much more outspoken once they are out of office. Some express much more radical views than they did while in office: Larry Summers springs to mind, and Adair Turner. Others become critical of the institutions that they ran: Mervyn King, for example.
The latest former policymaker to reveal what he really thinks is Vítor Constâncio, Vice President of the ECB from 2010 to 2018. In a fascinating lecture at the London School of Economics, he discussed the causes of the Euro crisis, the policy responses to it, and what should be done to prevent such a disaster happening again. The entire lecture is on an LSE podcast (audio only, sadly), but Vítor released four of the slides from his

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September 28, 2018

With only six months left to the moment when the UK leaves the EU, the Brexit end game is upon us. If there is to be a Withdrawal Agreement at all, the Northern Ireland border problem must be solved within the next couple of weeks. But at present, both sides are well dug in and showing no inclination to budge. No-deal Brexit is looking increasingly likely.Nonetheless, the game is still afoot. In Salzburg, the EU appeared to strike a mortal blow to Theresa May’s Chequers proposal. After this, surely she had to compromise on her red lines?Not a bit of it. Mrs. May is sticking to her Chequers proposal, apparently hoping that eventually the EU will blink. She remains, as ever, oblivious to the mortal damage that this would do to the EU as a political project.But agreeing a deal with the EU

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Cake and cherries

September 24, 2018

Sometimes I despair at the naivety of politicians.Theresa May’s humiliation in Salzburg was an inevitable consequence of her belief that the EU would be willing to compromise its "four freedoms" to keep her in power. To be fair, press reports since the Chequers plan have suggested that the last thing the EU wants is a change of leadership in the UK. But it was a mistake to interpret this as meaning the EU was willing to become Theresa’s poodle. Nothing could be further from the truth.
The EU has said many times that the four freedoms are not up for negotiation, and proposals that tried to keep some of them while rejecting others have all been flatly rejected. Theresa’s prized Chequers deal was weighed in the balance and found wanting the moment it hit Michel Barnier’s desk. All the

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Do you remember yesterday?

September 15, 2018

It’s ten years since the fall of Lehman Brothers. Ten
years…. but it seems much longer. I look back on the mid-2000s as if they were
a past century. Those days are gone forever, and the future is increasingly
dark and uncertain. How a single event can change the course of history…“Do you remember
yesterday, that was a hundred years ago?” cries Lucretia in Benjamin Britten’s The Rape of Lucretia, shortly before committing suicide. Lucretia’s death was the event that brought about the
fall of the Tarquin dynasty and the establishment of the Republic of Rome. A
fundamental re-ordering of Roman society was triggered by a single act of
betrayal. Tarquinius raped the wife of one of his senior generals. She committed
suicide. Appalled, the Roman army overthrew him. No doubt Tarquinius had

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Patrick Minford’s holidays

August 28, 2018

Skewering Patrick Minford has become something of an economists’ bloodsport. I admit, I have done my fair share of Minford-bashing, though I do try to stay away from trade economics. Others are much better at lampooning Minford’s antediluvian approach to trade economics than me.But when Minford starts pontificating on the effect of currency movements on the balance of trade, I can’t resist getting out the shotgun. Minford is appallingly bad on anything that involves foreign exchange. He just doesn’t seem to understand how floating exchange rates interact with trade dynamics and capital flows. So it is unsurprising that his latest venture into this complex subject is as disastrous as the last.Here is Minford, in the Express, talking about Brits and their holidays:
The mood of British

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Job guarantees for the disabled

August 28, 2018

It took me a while, but it has now dawned on me why job guarantees might be very popular in the U.S., even among the sick and disabled. The clue is in this response to a tweet from Nathan Tankus:

It’s not just a problem for the technically disabled. Health issues are the #1 reason why people miss work and lose jobs. Many are too weak or previously injured or old before their time. Until Medicare for all, JG with benefits would be a fantastic lift for many.
— Bob Spencer (@binhkhe) August 24, 2018
Here in the U.K., access to healthcare is not dependent on being gainfully employed. But in America, it is. If you aren’t working, your access to healthcare can be very limited. Thus, sick and disabled people who are unable to work can lose access to healthcare. The very people who need it

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Life after death

August 12, 2018

[embedded content]
Last Friday, I watched my father die.
It was the first time I had witnessed death in a human being, though I have seen it in animals. I will never forget what it looked like. The pallor of death is quite different from paleness due to shock or illness. Even before death arrives, the blood drains away from the face as if bleached, leaving behind something more like wax than human flesh.
Right up to the end, I knew he could hear. He tried to open his eyes when I spoke to him. He knew that my brother and I were there. I don’t know if he was in pain, but his breathing was distressed, so I asked the palliative care nurse to give him morphine. Perhaps the morphine stopped him fighting the process of death. He died shortly afterwards.
I have sung about death many times: in

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July 7, 2018

No doubt you are all wondering why Coppola Comment has been quiet for the last two months. There are two reasons: the first is personal – my father is seriously ill and needs a lot of my time. But the second will I hope be music to your ears. I am writing a book.
My forthcoming book will be called "The Case For People’s QE" and will be published by Polity, probably in Spring 2019. Yes, I know, the title makes it sound as if I have gone over to the dark side. But I assure you I have not become a Corbynista. My version of "People’s QE" has a long and hallowed pedigree, running all the way from Keynes through Friedman to Willem Buiter, John Muelbauer, Paul McCulley, Zoltan Poszar and numerous other sensible people. It’s really the outcome of much of my thinking and writing over the last

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A very British disease

June 17, 2018

The desire to judge people’s motives rather than addressing their needs is a “British disease”. We have been suffering from it for hundreds of years, cycling endlessly through repeated cycles of generosity and harshness. Each cycle ends in public outrage and an abrupt reversal: but the memory eventually fades, and the disease reappears in a new form. In this post, I outline the tragic history of Britain’s repeated attempts to "categorise the poor".
For centuries, successive British social systems have
recognised that there are people who cannot work, whether because they are too
young, too old, too ill or too infirm. These people need to be provided for by
others – in the first instance families, but where family support networks
break down, support must be provided by the wider

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Velocity Matters

May 10, 2018

An accounting
identity does not indicate the direction
of causation. Not ever.
I’ve been caught out on this a few times myself, usually
when I am trying to deduce something useful from national accounting equations.
But I’m merely a writer. People actually involved in the formulation of policy
should know better.
Here’s an attempt by people who should know better to
try to infer the direction of causation from an identity. On the St. Louis
Federal Reserve’s blog site is this
post by Yi Wen and Maria Arias. It purports to show that the reason why
three rounds of QE in the US have failed to raise inflation is because the
velocity of money has collapsed. And they then come up with some reasons why
velocity has collapsed, though sadly no ideas about what to do about it.
Their argument

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