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Tag Archives: public debt

Public vs private debt

I was teaching about deficits and debt this last week. If you know me and follow this blog, you'd know that I always emphasize the importance of the distinction between debt in domestic currency and debt in foreign currency. Functional finance authors (and MMT too) are correct in noting that a country cannot default on debt in its own currency (for a model of a currency crisis and default, in foreign currency go here; as afar as I know the only formalization of a PK alternative to the...

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To Loot or Not to Loot? How Public-Private Partnerships Harmed Turkey

This article first appeared in the Indian journal Economic and Political Weekly on 18 July 2022. A Murder in Konya Konya is a province in Turkey. On 6 July 2022, about an hour before I started writing this article, a murder news hit the Turkish pages of the internet: “In Konya City Hospital, a patient shot and killed a cardiologist and his secretary today.” Whether the assassin committed suicide or the private security killed him is unknown, although there are both rumours. City hospitals,...

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Those Italian subsidies for Germany

Sergio Cesaratto – Those Italian subsidies for Germany December 8, 2021 Economics, EU politics, EU-Institutions, Finance, Inequality, National Politics, Regulation Italy has paid for certain ill-advised policies of the ECB – influenced by Berlin, the dominant power in Europe – with dozens of points of additional debt/GDP and finding itself ever poorer, while Germany symmetrically gained. Sergio Cesaratto teaches European monetary and fiscal...

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Climate crisis, global debt, and the Fermi paradox – a proposal to the IMF

This article first appeared in the Indian journal Economic and Political Weekly on 13 November, 2021. Fermi Paradox In a recent article, Yıldızoğlu (2021) reminded us of the Fermi Paradox, which can be summarised as: Although the probability of the existence of other forms of life in the universe is sufficiently high, why have we not met any? Enrico Fermi, the Italian–American physicist and the creator of the world’s first nuclear reactor, was probably not the first person who asked: “but...

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Spend for recovery & green future, raising corporation tax is ok, & there are no bond vigilantes

A couple of weeks ago, my old shower broke down, needing replacement. Chatting to bathroom-kitchen store manager, I learnt that business was brisk for them, especially the demand for new bathrooms.  In fact, very brisk. Lots of people wanting new bathrooms for their holiday to-be-let homes, with higher rents in mind, as well as for actually lived-in homes. His order book is far stronger than in ‘normal’ times. For those who ‘have’, the times are not – financially speaking – bad at all. All...

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Spend for recovery & green future, raising corporation tax is ok, & there are no bond vigilantes

A couple of weeks ago, my old shower broke down, needing replacement. Chatting to bathroom-kitchen store manager, I learnt that business was brisk for them, especially the demand for new bathrooms.  In fact, very brisk. Lots of people wanting new bathrooms for their holiday to-be-let homes, with higher rents in mind, as well as for actually lived-in homes. His order book is far stronger than in ‘normal’ times. For those who ‘have’, the times are not – financially speaking – bad at all. All...

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Is Modern Monetary Theory suited for the EMU?

In 2020, governments all over Europe and beyond enacted unprecedented fiscal stimulus to keep their economies afloat amidst the pandemic. By the end of the year, a country like France will have engaged or guaranteed at least EUR 300 billion, the equivalent of four years of income tax receipts. Institutions of the European Union (EU) also rightly stepped up to the challenge. Of particular importance has been the response of the European Central Bank (ECB) which launched several...

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The GND and Europe’s next ten years: a plan for resolving the public debt crisis

The centrality of public debt to private capital markets In thinking about the next ten years, we must acknowledge that new times are coming, and they will lead to big changes in the capitalist system. The absolute novelty of the situation in which the COVID-19 crisis has placed the world, and even more markedly, Europe has made the financial and monetary options that have preoccupied economic debate so far, if not obsolete, at least questionable. It is a crisis that obliges us to rethink,...

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To save the climate – don’t listen to mainstream economists

Ann Pettifor’s The Coming First World Debt Crisis (Pettifor 2006) was the first book to warn of the approaching 2007 Global Financial Crisis. More than decade after that crisis, its cause—excessive private debt, created primarily to finance asset bubbles rather than productive investment—is still with us, while we are entrapped in a pandemic crisis, and on the cusp of a climatic one. Figure 1: Private debt levels over the history of capitalism Looking forward to the next ten years, and given...

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Austerity: a symptom of globalised rentier capitalism’s failure

Even while the economy is recast for today’s pandemic on the back of the dismal failures of the past decade, austerity is already rearing its ugly head. At one level there must be politics here. The public must not be allowed to think that socialising the economy to meet a pandemic means the economy might be socialised when the pandemic is over. Likewise, obsessing about excessive debt means the greatly more pressing and more dangerous reality of deficient expenditure is side-lined. But it’s...

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