http://www.ft.com/cms/s/0/f8b36ed2-d25d-11e0-9137-00144feab49a.html#axzz1WUBfhbp2

Headline: "Chinese tycoon seeks to buy tract of Iceland"

Bear in mind that I'm not a fully conversant academic proponent of MMT, but your assertion that MMT confers some inherent 'control' over a sovereign currency I think is way off the mark. I do hope I haven't given that impression in my posts here?

Let's be clear about this, I'm only suggesting China's recent monetary/fiscal policy illustrates but one element of MMT – nothing more.

An essentially fraudulent shadow banking system, capable of various kinds of off balance sheet transactions, requires proper banking regulation. MMT is a monetary system that also enables a 'functional finance' approach to fiscal policy. It needs responsible management just like any other system.

The point I made about China in an earlier post relate to the lack of significant inflation from China's own Central Bank policy & what I deemed its 'de facto' financing, thru' broadly state controlled 'commercial' banks, of various, typically infrastructure construction, schemes. In theory this financing is via loans, but it appeared to me that the central authorities are not too concerned if these 'loans' fail to perform. If they are doing this knowlingly, it is similar to government spending into the economy, debt free. And in this way similar to how fiscal policy might work under MMT in conditions of recession or high unemployment. It looks to me that China did this very directly to mitigate employment loss thru' fall in its exports following the '08 'crash'.

The key point is that, with substantial spending in this way, little general inflation occurred. For the simple reason, as MMT states, that there were real resources to be bought. With a large supply of available (unemployed) workers, wage inflation did not occur. There was adequate capacity in other resources too. China very rapidly returned to growth & retained or increased employment. Contrast this with our governments' insistence on pro cyclical austerity.

As regards a property bubble, or any other 'bubble' in an individual sector of an economy, this should be dealt with under fiscal/taxation policy to redress the balance & avoid knock on effects in other parts. This needs doing whether under an MMT framework or some other – no difference. However, MMT's 'functional finance' approach probably provides a more straightforward & capable ways of doing this than the contortions under the flawed thinking of (& often corrupt) neo liberalism.

That some want to restrain this is also normal, having allowed it to happen for long enough to get scared by the possibility that there will be a few salutary executions soon……

MAKING MONEY SEEMS TO BE EASY!!!!

Since reading Shaxon's book I have become fascinated with the 'secret' unseen off-shore world and its interaction with our very 'real' world. As Golem writes that 'our' banks are now trying to flog their crap in the East and the Chinese likewise want to move into offshore – are we not witnessing something other than a shift from West to East but a shift by global elites into pure unaccountability?

I await your corrections! : )

I thought this was interesting from auskalo's link: re chinese rebalancing "It depends in part on how resistant the elites are to the process of rebalancing, which almost by definition means eliminating the distortions that had benefitted them for so long. As Jeffrey Frieden pointsout in his brilliant Debt, Development and Democracy (1992), the elites that benefit from economic distortions are traditionally the ones most likely to prevent necessary adjustments, and if they actually run the whole show, adjustment can be incredibly painful and disruptive."

the elites that benefit from economic distortions are traditionally the ones most likely to prevent necessary adjustments… who does that remind me of?

http://mpettis.com/2011/08/some-predictions-for-the-rest-of-the-decade/

Some predictions for the rest of the decad

AUG 28TH, 2011 BY MICHAEL PETTIS

Hong Kong is both a problem for the Chinese Central authorities, but one they are willing to put up with because it also offers them the chance to play in the global financial market in ways they can't do from the mainlnad. That is what teh articles from May were all about.

Hong Kong is causing huge debt and lending problems but it is also their door to the securitization and off-shore world.