32/ Lol, looking at all these graphs together… it doesn’t seem to matter either. So maybe the problem is rather that there is no market for NOK right now. Only what we force into existence by making oil companies pay us in NOK for taxes.
35/ it’s funny how Norwegian newspapers and even the central bank are not even pretending this has anything to do with us. You want to know what numbers the Norwegian central bank is looking at to figure out if they can lower the Norwegian interest rate?
34/ But then I don’t think there is any good reason for increasing interest rates. It is clearly not having any effect outside of making folks that were already struggling with increased food prices even more financially insecure.
39/ However, here we meet another weird dynamic: in Norwegian union “culture” they negotiate first with the export industry. Because the thinking goes that they are more sensitive because they are exposed to currency fluctuations. But remember they are raking it in on the currency exchange. So now that deal is pretty great for workers. But… the rest of the Norwegian economy is not great and they get hit with yet another blow: first imports got way more expensive, then the interest rates shot up (absolutely doing its job of cooling our not-hot economy) and now salaries shoot up.
46/ Or in kubernetes analogy (because of Cybercyn and the book The Unaccountability Machine): some stuff in our system (the Norwegian housing market) are auto-scaling in some cloud, some are manually scaled (by buying and adding new servers in our on prem data center) and once the peak in consumption is over, some things might scale down quickly, but some are stuck now with a lot of expensive hardware taking up space in our server racks.
Mortgages are in AWS and rents are on-prem in my very confusing analogy.
49/ is it possible that they are so afraid of “inflation” they are actually creating “inflation”? (Where each “inflation” is a different flavor of inflation)
48/ And maybe the bottom dropped out from under the NOK, but the whole oil tax thing will keep it from dying. Because there will always be buyers, because they have no other choice.
47/ I don’t know what the answer is, my earlier idea of constraining the supply of NOK… it looks like they did that, and it had apparently about as much effect as the interest rate (not much if any).
Maybe without these two things it would’ve spiraled out of control… but I don’t think so, because this wasn’t caused by our economy.
So maybe the best thing would’ve been to just accept it? Yeah, the NOK is weak, because the world is rough, increase salaries some and just sit tight? Maybe even stimulate internal growth to compensate?
52/ Ok, I think I get it. MMT says that a deficit isn’t a sign of government overspending, inflation is. (And here they are clearly talking about the overheated economy inflation) So as long as the spending doesn’t cause inflation, it doesn’t matter if you run with a deficit even over a longer period (she mentioned decades).
So basically she is sort of saying that deficits aren’t real because taxes aren’t real.
This is more like the water in a radiator system (my analogy). You can add in water or remove water, but the system isn’t the water. And adding water (money) only becomes a problem when the pressure in the system gets too high and water starts spilling out somewhere.
Basically, money isn’t “real”. It’s… just water in a radiator system in a building. The building and the radiators and the people living there are the real things.
53/ Ok, fine. Y’all have told me over and over to read Steve Keen, and I would’ve if he had a freaking audiobook, but he does have a podcast, so let’s do a crossover, because he has an episode on MMT. (h/t @joelving and the 5 other people who have brought it up) https://mastodon.joelving.dk/@joelving/112720891429481986
55/ Short recap: he basically agrees with MMT on most things. One thing came up though which is relevant to my discussion here about Norway, and that is that the USD is not a normal currency, and it can get away with a lot the rest of us can’t. The term he used was “reserve currency”. https://en.wikipedia.org/wiki/Reserve_currency
62/ I feel so smart when I read news articles that agree with me 🤓 🤣 “And an interest rate increase will not help, he believes. - The higher the interest rate goes, the more landlords have to raise the rent, and then the interest rate increase is inflationary. It does not have the same effect as in the housing market, where prices fall if interest rates rise. The interest rate is not a good weapon to deal with this kind of inflation. It makes matters worse, he says.” https://e24.no/norsk-oekonomi/i/93zl4d/uenige-om-leieprisene-det-gjoer-vondt-verre
61/ Based on this is it possible that Norway is actually doing MMT? Sort of? But instead of “printing money” they are covering a planned deficit with the earnings from its petroleum export?
64/ Real estate prices are up 8% this year, that’s bananas. But I guess it’s like the gold, people are investing in their homes, and maybe also the fact that it is a closed loop system. So until people start defaulting on their loans, the real estate market won’t feel it.
63/ What is absolutely hilarious is that the effect he describes on the housing market is actually not happening. But this is yet another time the terrain is wrong for not fitting their map.
67/ To be fair, I think that issue is pervasive in the whole field. They are not able to separate ideology from models of the economy. And then they infuse in morality and destiny and Right and Wrong in these models until it’s more mythology than science.
And I don’t mind ideology. I have a great helping myself. But when you’re already in a non rigorous field, mixing opinions into “models” makes the whole thing even less serious.
A complex system is what it is. You find out the shape of it empirically. You can form hypotheses, design experiments and test. You don’t sit in a corner and Devine It. You might have a famous “shower thought” but then you test.
And seriously, these people (economists) don’t test ANYTHING.
7/ I was starved for actual critical analysis of what is included and what is not, that I am now a bit too enthusiastic that someone is actually doing that.