Rethinking Russia's War Chest — NeilW

A recent BBC headline, “How the West is helping Russia to fund its war on Ukraine,” published on May 30, 2025, presents a familiar narrative: Russia, reportedly awash in foreign currency from its fossil fuel sales, is using these “Western billions” to bankroll its ongoing war. The article starkly points out that “Ukraine’s Western allies have paid Russia more for its hydrocarbons than they have given Ukraine in aid,” highlighting a staggering €883bn earned by Russia since February 2022, despite sanctions.

While the sheer scale of these export revenues is undeniably jarring, and the moral implications of such purchases are deeply unsettling, the BBC’s analysis of Russia’s war funding misses a crucial economic point. The narrative that Russia needs these euros and dollars to pay its soldiers, forge tanks, or churn out shells for military use oversimplifies the fundamental realities of sovereign currency.

New Wayland

Rethinking Russia's War Chest

NeilW

Bessent: could change SLR over summer

 Significant in helpful way:

See here entire US banking system added about $500B loans and lease Assets in over an entire year:

While Treasury added $550B of reserve assets in just a few weeks starting February 20th this year reducing TGA from $850B to $300B at the morons “debt ceiling!” … causing a corresponding precipitous drop in all other financial asset prices as Depositories don’t have the regulatory capital to comply with leverage regulations in these situations where the second rate Art degree monetarist morons think they literally “inject money!” like this:

Policy discussion around the SLR reform has previously addressed only these reserve assets at the Depositories but lately the discussions have expanded to also include USTs …. 🤔

This could be related to the advent of USD stablecoins and the threat these coins pose to traditional Depository businesses… we have to see how this part works out..

The important part is getting the reserve asset exemption … this will eliminate the effect of what has been the most destabilizing Art degree monetarist moron monetary policies in our lifetimes..

Trump stablecoin off and running

Trumps USD1 now up to $2.2B issued in just a couple of weeks on an exchange… at the Fed’s current screw Trump 4.40% risk free rate he’s already making $88M annual rate … if he can get issuance up to $100B then he’s grossing >$4B annual which would probably be his most valuable enterprise … iirc Tether is at >$160B…

With the Art degree “money pumping!” Fed morons obviously trying to screw him (and with him all US borrowers) with their current unprecedented high risk free rate he’s now able to take advantage of that via his stablecoin…

So with the higher rates he makes bazillions in his stablecoin while if they lower rates he’ll make bazillions in his CRE and DJT shares…

BULLISH: Trump-backed $USD1 has skyrocketed to a $2.2B market cap in just 2 months, now the 7th-largest stablecoin globally.

Politics meets stablecoin adoption, fast.#USD1 #Stablecoins #Trump pic.twitter.com/7RaXbEfwpX

— Bitcoin Magazine NL (@BitcoinMagNL) May 8, 2025

US National Accounts – growth contracts but likely to be temporary — Bill Mitchell

 People are closely watching the US data at present to see what the impacts of the recent tariff decisions by the new US President might have. I am no exception. Yesterday (April 30, 2025), the US Bureau of Economic Analysis published the latest US National Accounts figures – Gross Domestic Product, 1st Quarter 2025 (Advance Estimate) – which provides us with the first major data release since the new regime took office. The fact though is that this data cannot tell us much about the tariff decisions, given that Trump’s – Executive Order 14257 – only really became operational on April 4, 2025, although there had been some earlier tariff changes before then....

William Mitchell — Modern Monetary Theory
US National Accounts – growth contracts but likely to be temporary
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

A Wake for a Dying System—Spring Meetings, Sovereign Debt & ChangeNow Summit — Fadhel Kaboub (MMT economist)

This week's gathering in Washington DC for the annual meetings of the World Bank and the IMF should be a wake for a dying global economic architecture, but unfortunately, a New International Economic Order cannot be born without African leadership to reposition the continent and the rest of the Global South away from the bottom of the global value chain. This is what I told the BBC Newsday on Monday....

Global South Perspectives
A Wake for a Dying System—Spring Meetings, Sovereign Debt & ChangeNow Summit
Fadhel Kaboub, Associate Professor of economics at Denison University (on leave) and President of the Global Institute for Sustainable Prosperity. He currently serves as the Under-Secretary-General for Financing for Development at the Organisation of Educational Cooperation in Addis Ababa, Ethiopia.He also held a number of research affiliations with the Levy Economics Institute, the John F. Kennedy School of Government at Harvard University, the Economic Research Forum (Cairo), Power Shift Africa (Nairobi), and the Center for Strategic Studies on the Maghreb (Tunis). Fadhel is Tunisian-American MMT economist. Ph.D. in Economics & Social Science Consortium, 2006, University of Missouri - Kansas City. M.A. in Economics, May 2001, University of Missouri - Kansas City. B.S. in Economics, June 1999, with Distinction

Misreading the Signs: Why High UK Borrowing Doesn't Mean Financial Crash — NeilW

 Matthew Lynn’s recent article (“The UK is heading for a full-blown financial crash, and nothing can stop it now”) paints a dramatic picture of fiscal doom, arguing that rising government borrowing figures signal an inevitable economic collapse. While the borrowing numbers themselves are significant, the conclusion that they spell imminent disaster fundamentally misunderstands how government finance works in a country like the UK, which issues its own floating-rate currency. Lynn’s analysis, focused solely on the government’s deficit, misses the other side of the equation: the non-government sector’s surplus....

New Wayland

Misreading the Signs: Why High UK Borrowing Doesn't Mean Financial Crash
NeilW

Capital Flight: A Misconception — NeilW

Recent commentary has expressed concern that investors are “taking their money out of America”. Such claims invoke the idea of capital flight, a concept historically relevant under fixed exchange rate systems. However, applying this term to modern floating exchange rate systems is misleading. While significant shifts in investment preferences can have major economic impacts, no actual “flight” of capital, in the sense of a net reduction, can occur—only balanced exchanges....

New Wayland
Capital Flight: A Misconception
NeilW

DOGE Goons Physically Drag Social Security Worker From Desk

 DOGE "goons?" Seriously? A bunch of computer geeks? How tough can they be? This shit's getting ridiculous.

Dimon implying an upcoming Treasury auction failure

 

Dimon seeing another regulatory snafu coming up and Fed going to have to suspend SLR again… same thing as spring 2020 … they never learn... buckle up for more chaos… 

Jamie Dimon now saying he expects the Fed to have to step in and rescue the bond market.

Unprecedented times.

We had +3% real GDP a quarter ago. pic.twitter.com/KQosKC3UhY

— Spencer Hakimian (@SpencerHakimian) April 11, 2025

“Tariff” reprieve

 

Maybe Cook and the other US multinational CEOs had to finally break the news to the Art degree morons in Trump & Co that the “trade deficit!” was their overseas retained earnings ? 

🤔

BREAKING: Treasury Secretary Bessent was instrumental in getting President Trump to back down on Chinese phone and computer tariffs after multiple calls with Apple CEO Tim Cook and other CEOs. Navarro and Lutnick sidelined and Navarro likely to be fired as scapegoat - SOURCES

— Mike Alfred (@mikealfred) April 12, 2025

The Accursed Tariffs — NeilW

Many electrons have been inconvenienced over this topic, and most have been in vain. I’ve wondered all week whether I had anything meaningful to add. However, a few points that have emerged in discussions are worth highlighting....

New Wayland
The Accursed Tariffs
NeilW

IRS has agreed to share migrants’ tax information with ICE

 

So imminently employers of  millions of illegals are gonna be submitting their FICA tax reports containing those now DOGE deleted 9M SSNs and IRS is gonna immediately flip that information over to ICE for immigration raids probably to the largest offenders first…

Could be a mass firing event which probably won’t show up in UE claims because the current employees are illegal… maybe job openings will spike up … while UE rate appears constant…

So Art degree Fed morons will interpret that as “inflationary!” and will be EVEN LESS inclined to reduce the policy rate for Trump…

I’m more worried about this whole thing than the whole “tariff!” BS…

You may want to load up on some frozen chicken beef or pork products this week just in case..

IRS has agreed to share migrants’ tax information with ICE, to help find immigrants they are trying to deport, per NYT

— unusual_whales (@unusual_whales) April 8, 2025

Trump's "Liberation Day": Another PR Gag, or Global Reorientation Turning Point? — Simplicius

 I am a bit late with this. I have been jammed this week and just got to. It's an explanation of the Trump tariffs. 

It's the brain child of Stephen Miran, chair of the Council of Economic Advisors. Miran lays it out in  A User’s Guide to Restructuring the Global Trading System. Simplicius summarizes it briefly.

Bill Mitchell deals with this from the MMT point of view in today's post, which I linked to earlier.

Simplicius the Thinker

Trump's "Liberation Day": Another PR Gag, or Global Reorientation Turning Point?
Simplicius

US government is pinning its tariff hopes on some unlikely to be realised assumptions— Bill Mitchell

 Last week, the US President honoured his election promise, indeed his long-held commitment, to increase tariffs on imported goods and services to the US. The formula they came up to differentiate between countries was bizarre but I don’t intend commenting on that here, except to say, the imposition of tariffs on the – Heard Island and McDonald Islands – which are an ‘Australian external territory’ that is a ‘a volcanic group of mostly barren Antarctic islands, about two-thirds of the way from Madagascar to Antarctica’ (where penguins live) ranked up there with their Signal chaos. These guys have access to the ‘red button’ after all. That’s the scary thing. Anyway I was sent a document that seemingly is the theoretical rationalisation for the tariff decision (thanks Mahaish, appreciated) and so I thought I would give it some time...

William Mitchell — Modern Monetary Theory
US government is pinning its tariff hopes on some unlikely to be realised assumptions
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

The Hidden Power of Sovereign Wealth Funds — NeilW

A recent UnHerd article warns of a “crypto time bomb,” suggesting that stablecoins could become a geopolitical tool to undermine the U.S. economy by redirecting foreign dollar reserves into U.S. Treasuries. The core assumption is that countries like Japan are sitting on idle piles of dollars, waiting for a stablecoin intermediary to put them to use.

This misreads how international finance operates. Like other major dollar holders, Japan doesn’t need help managing reserves. Dollars earned from trade surpluses are immediately reinvested, often into U.S. Treasuries. There are no dormant pools of dollars needing a middleman. The real action lies not in crypto or stablecoins but in how governments use their currency-issuing powers to actively manage currencies and reserves.
The Real Mechanism: Sovereign Wealth Funds

The real geopolitical financial weapon is the sovereign wealth fund (SWF), not digital tokens. Governments have long used SWFs and their variations to manage foreign exchange reserves, intervene in markets, and subtly manipulate currency values....

New Wayland

The Hidden Power of Sovereign Wealth Funds
NeilW

DOGE deletes 7M Federal ID numbers

If these numbers represent illegal alien people currently working using other dead peoples ID numbers, when the payroll taxes are paid this week and 7M fraud notices go out to the employers it could turn out Elon actually threw 7 million people out of their jobs this week … it could create a mass firing event of 7 million people who are currently working (albeit illegally but nevertheless) in the economy, …. causing a collapse in output and a collapse in tax receipts going forward…

Mike will immediately see the corresponding drop in YoY tax receipts in his reporting data if this is what is really happening… we have to wait and shortly see if this is the real effect is of this policy…

If so, the benefit to Trump politically might come when they rerun the SS actuarial numbers without the future accrued liabilities of the 7 million now marked as dead people… Then he may be able to give current recipients a boost because the SS  “trust fund!” might appear over funded…

For the past 3 weeks, @SocialSecurity has been executing a major cleanup of their records. Approximately 7 million numberholders, all listed age 120+, have now been marked as deceased.
Another ~5 million to go. https://5023w.roads-uae.com/wtfYvYMIeW pic.twitter.com/z2GUQnPkhd

— Department of Government Efficiency (@DOGE) March 25, 2025

The Effects of Modern Monetary Theory on the Structure of Production — Patrick Newman

 For the record. From an Austrian economist.

Abstract

This paper analyzes the debt monetization proposals of Modern Monetary Theory from an Austrian structure of production perspective. It shows that this policy raises societal time preferences and reduces the number of higher order stages in the economy, leading to a higher interest rate, lower economic growth, and increased prices of consumer goods. In order to demonstrate this, it goes back to the basics and investigates the nature of government spending and how it differs from investment. I argue that Murray Rothbard, a staunch critic of Keynesian economics who would have also fiercely opposed MMT had he lived to see its rise, was correct to classify government expenditures as unproductive consumption that detract from genuine marketplace economic output. I then defend Rothbard’s position by explaining the very serious concerns some economists had in the 1930s and 1940s regarding how to measure government’s contribution to aggregate production statistics. Armed with a proper understanding of government’s antithetical nature to investment, the chapter is then able to explain why MMT’s proposal to expand the money supply to finance government spending shortens the production structure.

"I argue that Murray Rothbard, a staunch critic of Keynesian economics who would have also fiercely opposed MMT had he lived to see its rise, was correct to classify government expenditures as unproductive consumption that detract from genuine marketplace economic output."

This is a huge assumption that Keynesians of all types, many if not most institutionalists and Marxists and neo-Marxists would reject. Some neoclassical economists would agree with this assumption although perhaps in a weaker form. 

This assumption is pertinent at present since it lies at the foundation of DOGE and seems to reflect Elon Musk's monetarist thinking about economics and finance. 

Libertarians would of course agree with the assumption that government expenditure is unproductive and that they should be cut in favor of lower taxes. This is assumption correlates with the assumption that there are no public goods, only private goods.

The market-based state is also foundational for neoliberalism.

SSRN

The Effects of Modern Monetary Theory on the Structure of Production
Patrick Newman, Assistant Teaching Professor of Economics, University of Tampa

An Explanation Of Why Taxes Don’t Fund Spending—And Why Elon Musk Is Wrong About The US Government Deficit — Jim Byrne

Pass it on.

MMT101.ORG - Learn Modern Monetary Theory (MMT)
An Explanation Of Why Taxes Don’t Fund Spending—And Why Elon Musk Is Wrong About The US Government Deficit
Jim Byrne - MMT101.ORG

Reserve flows under debt ceiling

 

TGA down at 450b area now … 

So let’s assume they keep screwing around and eventually bottom it out at 50b leaving the current threat at 400b reserves in TGA that could be forced upon the banking system … 

To cover that 400b, banks would need at least 1/10th of that in capital for SLR of 0.1 … (might be a bit less) but we’ll be conservative …

 1/10th is 40b… so eg if banks were given 40b of additional free capital right now,  then they could cover those additional 400b reserve assets without effecting any other asset levels/prices at the banks…

IOR is providing additional free capital to the banks every month…

H.4.1 this week has reserves now up at >3.4T and IOR is 4.40% so that is approx 12b per month of capital flowing to banks every month … 40b/12b per month = 3.333 months so in a bit over 3 months the banks will have been given the additional capital to potentially support a TGA drawdown to 50b … 

We are about to head into a period of at least fiscal balance as taxes are paid (maybe even surplus) … so if we can stabilize TGA here for 3 months then banks might have near the additional 40b of additional capital by then that they will need to cover an additional 400b of reserve flow from TGA  .. 

So we could stabilize here at the current 10% drop in equities level for a while here if TGA stabilizes…

Then quickly recover this 10% drop when ceiling raised (allowing restart of reserve asset “drains!”) and Fed starts to cut rates in May or June (increasing all bank asset NPVs and capital) … 

The problem has been TGA has dropped from 800b to 450b in just the short period since ceiling hit on Fed 20th forcing non risk reserve assets to flow towards the banks and  negatively effecting the values/quatity of risk assets to maintain a required constant regulatory ratio…

Not out of the woods yet but maybe some relief from the constant liquidation on the way due to the typical fiscal calendar seasonality…. 

🤞

The Loan Lock Paradox — NeilW

It’s been over ten years since the Bank of England published Money creation in the modern economy, yet despite that, I run into people daily parroting untruths about how banking works. As part of the update to the UK Accounting Model, we will enhance the banking chapter to cover how lending institutions work and highlight some of the intriguing artefacts that a proper understanding reveals....

New Wayland

The Loan Lock Paradox

NeilW

Grok: “cash injection pumping liquidity!”

 

Musk’s “AI” can’t apply regulatory math (maybe THIS is where he gets it?):

The graph shows the Treasury General Account (TGA) balance dropping sharply recently, hitting its lowest since COVID. This $170B cash injection over 3 days signals the U.S. Treasury exhausting debt ceiling measures, pumping liquidity into the economy. Risk assets like stocks may…

— Grok (@grok) March 8, 2025

This is funny from it: “Risk assets like stocks may get a short-term boost…” 

LOL stocks are in a free fall!  Grok: “down is the new up!”…

How does a constant proportional (simply numerator divided by denominator) financial leverage system get a risk price increase when non-risk is being added?  It’s 8th grade Algebra… grok can’t apply it…

I think grok is based on language so it’s apparently susceptible to the same reification errors that typical liberal Art (discussion) method Econ is susceptible to… we see it all the time… it just picks up the popular language … is this really valuable?

We in big trouble with these people and their “AI” so-called…

It’s finally March 2025, and I can hardly believe that a date I’ve had in the diary for such a long time has finally arrived. It means, at long last, I can call time on a 30-year contracting career and retire from full-time work….

Congratulations on your retirement. Looking forward to your new focus on MMT research.

New Wayland
Time for a Change
NeilW

Treasury “injects cash!”

 

LOL … yo risk prices went DOWN you fcking idiots… it caused a sell off… forcibly adding non-risk to same system balance sheet causes risk prices to REDUCE… 

Here comes the flood: Treasury injects avalanche of cash into the economy ($170BN in 3 days, the most since covid) as debt ceilling extraordinary measures are exhausted; Should prop up risk pic.twitter.com/N3sDuQG70w

— zerohedge (@zerohedge) March 2, 2025

Zero Interest Rate Policy (ZIRP) Primer — NeilW

This primer outlines why the Zero Interest Rate Policy (ZIRP) is the most effective and equitable approach for the UK economy. It explains why interest rates should be permanently set to zero, how banking reform can create a more stable and fair financial system, and why clear, enforceable, and accountable loan regulation is essential for long-term prosperity.

New Wayland

Zero Interest Rate Policy (ZIRP) Primer
NeilW

The Introduction of the Euro–A Catalyst for Eurozone Economic Decline? The Effects of the Euro: An Analysis from a Modern Monetary Theory (MMT) Perspective — Jim Byrne

“…whenever I am studying European data I think how stupid the European Monetary Union (EMU) is from a modern monetary theory (MMT) perspective.“ MMT Economist Bill Mitchell

MMT101.ORG - Learn Modern Monetary Theory (MMT)

The Introduction of the Euro – A Catalyst for Eurozone Economic Decline?
The Effects of the Euro: An Analysis from a Modern Monetary Theory (MMT) Perspective.
Jim Byrne - MMT101.ORG

You Know Nothing About Economics—But there is no shame in that — Thomas Swan

Good short explanation of MMT by an educator. (10 min. read)

Pass it on.

Education
You Know Nothing About Economics—But there is no shame in that
Thomas Swan

The Rise of the Modern Monetary System: An Integration of the Credit and State Money Approaches— L. Randall Wray

 This working paper integrates the credit money approach (associated with Post Keynesian endogenous money theory) with the state money approach (associated with Modern Money Theory) by drawing on Wray’s 1990 book (Money and Credit in Capitalist Economies: The Endogenous Money Approach, Edward Elgar), his 1998 book (Understanding Modern Money: the Key to Full Employment and Price Stability, Edward Elgar), and his 2004 edited book (Credit and State Theories of Money: The Contributions of A. Mitchell Innes, Edward Elgar). New sources and interpretation of the history of money make it clear that there is no contradiction between state money and private credit money—each played a role in the creation of the modern monetary system. Indeed, today’s system was created by bringing state money into the private money giro, thereby strengthening both.

Levy Economics Institute of Bard College
The Rise of the Modern Monetary System: An Integration of the Credit and State Money Approaches
L. Randall Wray | Professor of Economics, Bard College

Episode 11 (S2) of the Smith Family Manga is now available–intergenerational tensions arise within the Smith household — Bill Mitchell

Today (February 13, 2025), MMTed releases Episode 11 in the Second Season of our Manga series – The Smith Family and their Adventures with Money. Have a bit of fun with it while learning Modern Monetary Theory (MMT) and circulate it to those who you think will benefit....

William Mitchell — Modern Monetary Theory

Episode 11 (S2) of the Smith Family Manga is now available – intergenerational tensions arise within the Smith household
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

DOGE rant

Mike with epic rant against the DOGE propaganda .. instant classic!

Trump's Executive Order to Rename Debt and Deficits — Stephanie Kelton

Rename "debt" and "deficit" to reflect reality.

The Lens
Trump's Executive Order to Rename Debt and Deficits
Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders