Ep130[1/3,4/6] John Harvey on exchange rates and neoclassicism [guest host: Johnathan Wilson]

Activist #MMT - podcast

Welcome to episode 130 of Activist #MMT. Today's part four of a six-part series with Texas Christian University (TCU) economics professor and Cowboy Economist John Harvey. Parts four through six are also the first main interview of Activist #MMT hosted by someone other than me. Today's guest host is my own former guest, MMT researcher, Texas lawyer, and pmpecon.com author, Jonathan Wilson. (Jonathan and I spoke in episodes 106 and 107.)

(A list of the audio chapters in this episode can be found at the bottom of this post. Here's a link to part one in this six-part series with John, which contains a link to all other parts. For a link to every Activist #MMT interview with John – plus the full audio of every Cowboy Economist video – go here.)

This three-part interview with John and Jonathan is wide ranging and in-depth. They start by discussing the difficulties nations face managing their currencies, such as during major conflicts, natural or man-made disasters, and in the global south. They also discuss these things from the perspectives of holders of various currencies, both in and out of a country.

In part two, they continue this conversation. In the second half of part two, John gives his extended thoughts on a recent critique of MMT by Drumetz and Pfister.

Finally, in part three, they focus on some of the core assumptions and ideology of mainstream economists. They also discuss how some assume inflation to always caused by too much demand and too high wages, despite clear empirical evidence that it's caused by something else.

You'll find links to many resources, as mentioned by John and Jonathan throughout these three parts, in the show notes.

And now, onto Jonathan's conversation with John Harvey. Enjoy.

Resources

• 2004 book by Ilene Grabel and Ha-Joon Chang: Reclaiming Development: An alternative economic policy manual
• 2017 book by Ilene Grabel: When Things Don't Fall Apart
• John Harvey, intermediate macro, 30 lectures (discusses problems with general equilibrium models)
• Paul Romer "post-real" paper, The Trouble with Macroeconomics and Trouble with Macroeconomics, Update - Paul Romer
• George DeMartino (Ilene Graebel's husband) 2013 , Professional Economic Ethics: Why Heterodox Economists Should Care
• Megacorp. an oligopoly by Alfred Eichner (John: somewhat outdated but still important)
• Steve Keen 1995 paper in Journal of Post Keynesian Economics, Finance and economic breakdown: modeling Minsky's "financial instability hypothesis"
• 2011 post by Warren Mosler, Proposals for the Banking System

Audio chapters

• 3:30 - Video games
• 7:12 - We need an MMT game
• 10:58 - The plan
• 11:31 - What happened to the ruble and domestic inflation in Russia this year?
• 15:02 - How does Russia manage the price of the ruble through, Gasprom, which is a privately owned bank?
• 17:00 - What are foreigners who held rubles before the war now doing?
• 19:53 - Timeline of Russian management of the ruble through the conflict
• 21:38 - Russian versus non-Russian holders of the ruble
• 23:08 - Bank of International Settlements (BIS) tri-annual survey of international transactions
• 26:07 - What might happen after the war?
• 28:11 - Strong currency as a cause versus as an effect.
• 33:24 - Ilene Grabel
• 34:21 - Decrease in price drives demand up, but not enough to drive the price back up to the original level. (No perpetual motion machine)
• 38:36 - Holding foreign currencies as a form of portfolio diversification.
• 49:57 - Should countries force others to purchase things in their home currency?
• 53:55 - Hierarchy of currencies, 1-5
• 58:59 - What is a low-value exporting country to do?
• 1:04:35 - The deficit can be evidence of an external desire to save
• 1:08:16 - Currency markets are driven by financial capital flows, not trade flows.
• 1:12:00 - Duplicate of introduction, with no background music (for those with sensitive ears)