Modern Monetary Monopsony Theories (MMMTs): Draghi’s Fiscal Dominatricks Are Jay’s Repopiate Of The Masses
“Many profound changes have taken place, in the global economic order. One of which is that we’ll have to invest an enormous amount in a relatively short time in Europe.”(Mario Draghi)
Summary:
· The ECB’s intended expanded balance sheet mix, of Quantitative Easing (Sovereign Bonds), and Qualitative Easing (Bank Loans), is Modern Monetary Monopsony Theory (MMMT) by fiat.
· The ECB’s intended Modern Monetary Monopsony Theory (MMMT) implementation is pending inflation returning to target.
· Eurozone inflation’s return to target may require the financial instability that MMMT is designed to respond to.
· The ECB has an implicit financial stability policy mandate conditional upon compliance with its inflation target mandate.
· The official position of CBDC in ECB MMMT has, yet, to be revealed, but can be inferred from the official criminalized financial stability threat framed for Bitcoin.
· A Crypto crisis is an essential weapon in the EU’s Ukraine War.
· Mario Draghi is the intellectual Godfather, and Fiscal Dominatrix, of the ECB MMMT Cabaret.
· Mr. Market discounts the beginning of “Friend-Shored” Japan’s substitution for China’s Belt and Road under the T’s & C’s of the Indo-Pacific Economic Framework (IPEF) agreement of 2022.
· BOJ MMMT “First Mover Advantage” is also in the IPEF 2022 T’s &C’s.
· There is no stigma attached to the adoption of Brimmer’s Law, through the Fed’s Standing Repo Facility, by the US commercial banks.
· The adoption of Brimmer’s Law, through the Fed’s Standing Repo Facility, vitiates against a repeat of the US regional banking crisis and mitigates for a soft landing.
· The endogenous, market-based, price discovery of Brimmer’s Law, via the Fed’s Standing Repo Facility, is more sustainable than the exogenous, indiscriminate, blunt trauma of crisis-response-driven Quantitative Easing (QE).
· The Fed’s “Standing Repopiate” is the gateway drug to Modern Monetary Monopsony Theory (MMMT).
· MMMT is a “Special Topic” in the Fed’s new monetary policy framework.
· The Fed’s new monetary policy framework must resolve conflicting signals from “tight” housing, and labor, markets; and the lack of appropriate policymaking rules of thumb.
· The Fed intends to cure any banking sector addiction to MMMT with new capital adequacy and commercial risk pricing rules and regulations.
· The Fed’s emerging monetary policy framework is an Esther George master class.
· The Fed has slowly learned, as Esther George taught, that supply curve convexity and oligopoly-driven price inelasticity are a “constraining”, Stagflationary economic headwind.
· The Fed’s disingenuous “Disinflation without a rise in Unemployment” new mantra takes false credit for the accidental “soft landing” predicted by Esther George’s “constraints”.
· The Fed’s latest Monetary Policy Report, and recent balance sheet commentary, herald a new definition of full employment; that is consistent with the existing dual mandate, assuming the latter remains the same.
Extracts
· Central Bank insolvency is aligning with fiscal insolvency at a rapid pace in the global economy.
· The alignment of central bank and fiscal insolvency promotes the exclusive interest in financial stability policy.
· The interest in financial stability policy will enable the application of Modern Monetary Monopsony Theory (MMMT).
· The ECB has signalled that its inflation mandate is making it insolvent.
· Villeroy has confirmed that inflation (and monetary policy) is everywhere and always will be a financial stability phenomenon.
· Christine Lagarde has embraced the ECB’s real financial stability mandate whilst remaining consistent with its sole inflation mandate.
(Source: the Author)
· Financial stability risk, derived from Fragmentation risk, is a disinflationary headwind that will prompt the ECB to adopt Modern Monetary Monopsony Theory (MMMT).
(Source: the Author)
· The IMF believes that inflation is still too high to embrace MMMT.
(Source: the Author)
· CBDC is fertile ground for monetary artificial insemination.
· The ECB is piloting “Jefferson’s Airplane” with a dose of MMMT artificial insemination.
(Source: the Author)
· The IMF’s sponsored debate, about central bank monetary policy framework reform, has shifted back to the 1970s.
· Brutal application of “Volcker Doctrine” is being reviewed and revised for contemporary Polycrisis fundamentals.
· “Brimmer’s Law” is the rational explanation of the Fed’s current “absurd combination” of “Quantitative Tightening” and “Qualitative Easing”.
· Applying “Brimmer’s Law” may lead to the soft landing that the blind application of “Volcker’s Law” precludes.
· Contemporary “Brimmer’s Law” includes sectoral/national security parameters in addition to credit ratings.
· The “Guardians”, of “Brimmer’s Law”, feel confident enough, in their observance, to quantitatively tighten global US Dollar liquidity again.
· In compliance with “Brimmer’s Law” canon, and its “Guardians’” recent edict, the New York Fed has quantitatively tightened, US Dollar liquidity, for a qualitatively selected cohort of counterparties.
· The Fed is now applying Patriotic Monetary Policymaking, by Qualitatively Easing, via the FHLB, to sustain the US housing market, which is consistent with Political Monetary Policymaking on the Democrats’ Presidential Cycle timeline.
(Source: the Author)
· Esther George’s sound monetary policy compass will be sorely missed when she retires.
· Patriotic monetary policymaking may soon be framed as the creation of a stable disinflationary foundation on which the President can Slam Dunk.
(Source: the Author)
· The Quality and Quantity of Tightening are constrained by Esther George’s soliloquy.
(Source: the Author)