Chico Sajovic

@iealondon @EMaggiori_ Only reserves are money. -Cash can be exchanged for reserves -Deposits are promises to pay reserves -Treasuries are reserves to be paid in the future When the private sector pays taxes, there are less reserves.

🧾 @EMaggiori_ : "MMT was born out of an accounting mistake — they thought whenever the government collects taxes, the money disappears. They literally destroy the money." Emmanuel Maggiori exposes the error at the heart of Modern Monetary Theory. 👇

@EMaggiori_ Taxes don't fund the government in the classic accounting sense, they are a tool the government uses to redirect national output.

Today is launch day! Modern Monetary Theory #mmt is a seductive economic theory that's making the rounds around the world. It was popularized by Stephanie Kelton in her book The Deficit Myth, and it's been influencing politicians around the world. The theory was dismissed by traditional economists right away. But I didn’t want to do that. I wanted to learn as much as I could before drawing conclusions. So, I approached it with an open mind and read over 3,000 pages of work by modern monetary theorists themselves and their most thoughtful critics. The conclusion: MMT is not good. But I think we all need to understand what MMT says, as it’s a deeply seductive theory with the potential to cause a mess. Get a copy of my new book now :) amazon.co.uk/dp/1394375255/

@fiat_money @EMaggiori_ Redistribute consumption.

According to a post from U.S. President Donald J. Trump, due to the European Union (EU) not complying with the stipulations of a previously agreed upon trade deal, he is imposing 25% tariffs on cars and trucks coming from the EU. Per the statement, if cars and trucks are produced in the U.S., tariffs will not be imposed.

@ronrule If you feel your employer is making too much profit, that’s a signal to start your own business. If you don’t want to, your salary is fair.

When my son got one of his first jobs with a manufacturing company, he complained how he was “doing all the work” making parts that sold for hundreds of dollars a piece while only making $20 an hour. “It’s unfair to the workers!” he said. “You sound like a liberal.” I said. He made a classic mistake I see people make over and over. They only look at the hard cost of goods and final sale price. They don’t understand anything in between. I pointed out that the company he worked for only makes an 8% profit. Their total profit on that $400 part was really only about $32. “There’s no way.” he said. “The bar stock only costs about $8.” To him, his argument was logical. Every day his hands turned $8 worth of aluminum bars into thousands of dollars of product, but he only got about $160 of that. That seemed unfair. I asked him “What about all of the other people in the company? The ones who aren’t making the parts.” He hadn’t thought about that. I explained that every hand along that product’s journey from creation to the customer is another person who has to get paid. The engineers who designed and tested it, long before you made it. The person who packed it in a box. The person who made the manuals that go with it. The person who answers the phone when a customer has a problem later. The people who order the materials and maintain the machines and sweep the floors and clean the toilets after you leave. The accountants and lawyers and insurance companies who keep the business organized, compliant, and protected if the part you made fails. All of those people are paid for from those parts you made. And all of them get their paychecks whether the parts are sold right away or not. On top of that, there’s the cost of the facility itself. The building, heating and cooling it, and every piece of equipment inside it. All of those costs are paid before the owner makes one cent. “At the end of the day, you’re actually making more money from every unit you make than he is.“ He understood it after that. Running a business is the hardest way to make money. Roughly 90% of entrepreneurs will fail. Don’t get me wrong, the reward can be great if you’re one of the 10% that makes it, but that results in a confirmation bias. You only see the winners. You never heard about the 90% that failed before they made it. You see the guy in the big office who looks like he doesn’t work as hard as you, but you never saw what it took to get there. You never saw the times he went without a paycheck so he could make payroll. You never felt the stress of being denied necessary capital, or losing an important customer, or under-bidding on a contract and losing money on every unit. You’ve never felt the repercussions of making the wrong call. If you mess up, one customer is marginally inconvenienced, and you can fix it with another $8 part. If HE messes up, you and everyone else have no job. You can be the guy on top if you’re willing to take the risks they took and do the work they did to get there. Or you can do your part and collect your paycheck while someone else worries about that stuff. And that’s OK too, because the world needs both. The beauty of capitalism is that you get to choose which one you want to be.

@mattyglesias Amazed! We survived COVID disruptions and now Trump chaos. I know think the global economy is a lot more resilient than people give it credit for.

Voters are understandably angry that Trump is taking steps to push the cost of living up rather than down, but in his defense (?) the impact of the Strait closure has genuinely been much milder than most experts thought it would.

@BankUnlimited @Nebraskangooner My man!

@Nebraskangooner Paid off 😎

When you have $80,000 in the bank and a paid-off $10,000 truck, people may assume that you're broke However, if you have $10,000 in the bank and an $80,000 financed truck, people assume that you're rich Perception isn’t always reality Which situation would you rather be in?

@FreightAlley New strategy: Destroy or destabilize economic competitors!

The longer Hormuz stays blocked, the more competitive US industrials become relative to foreign providers.

The world is incredibly complex. It feels like a fine machine where slight disruptions should cascade and multiply throughout the system. After COVID and now the blockade of the strait of Hormuz it is becoming more and more apparent that we have built a highly resilient system.

based!

@fiat_money NYC is not a manufacturing hub.

Corrected:

Typical nonsense: imagining that money grows on rich people

@robin_j_brooks @RKelanic Holy fucking premise batman.

@RKelanic What's your alternative to a blockade if you want to bring Iran to the negotiating table in good faith?

With its ill-conceived Iran blockade, the Trump administration has forgotten a major lesson of the Cold War: spontaneous market adjustment beats central planning every time. There’s something very Soviet in Trump’s assumptions that economic activity is static and manageable. Trump’s plan: Blockade ➡️ Iran can’t export ➡️ Iran shuts in oil ➡️ cartoonish “explosion” ➡️Iran gives up. Every arrow is a place where the market can and will adapt to find creative solutions, albeit helped along by Iran’s policies, which could amplify — or dampen — adjustment depending how competent Iran’s bureaucrats are. But the number one rule of public policy is that people and markets always strategically adapt — always — to get around policy levers. In that sense, Trump’s model isn’t strategic in a game-theoretic sense because it doesn’t account for Iran’s likely attempts to compensate.

@litcapital Has he even passed a budget yet?

BREAKING: Socialist unsurprisingly runs out of other people’s money.

Data points: Hotel: winter down, April up bigly from last year. Residential: winter sucked, strong spring. Commercial: still no turnovers.

Most people don't understand that the Sun is the hardest place to get to in the Solar System.

I don’t think Iran can outlast the US. Until then the rest of the world will suffer the consequences.

@tonyannett Yeah, no, this is mob rule.

Yeah, it’s called democracy. Deal with it.

@suchnerve Right or wrong, I love the way you’re thinking about this.

@SpencerGuard That's what I would have thought too, but no one has been able to stop the Houthis from terrorizing the Red Sea. Who the fuck are the Houthis?

You have to admire the delusion...of course the U.S. military can open the Strait of Hormuz with military means and this promoted General would likely not be around to see it if the President directs that course of action.