If the USA hadn't intervened, Japan would have a BoP-crisis due to policies praised by Robin: The fall in demand for export due to austerity in abroad, rate hikes by BoJ, cut in fiscal spending and suppressed wages stimulated bankruptcies: Foreigners sold assets, Yen depreciated

Mainstream theory: "Food prices rise when people eat more". But firms passed costs onto customers as demand is inelastic: PPI rose by 32% over the last 7 years Core inflation: 28%- lower than PPI How? Firms supplying durable goods absorbed rising costs by producing more medium.com/@monetarypol...

This fall in employment is the main factor behind the rise in mortgage delinquencies driving mortgage rates up as delinquencies and government bond yields are rising, investors asking for higher yields from MBS and banks pass this cost onto loan rates.

Powell in July 2023: We no longer foresee a recession. Me: If productivity and/or wages don't increase enough, rate hikes will drive the economy into recession. Now, delinquency rates are historically high. They can't foresee recessions they engineered but can control inflation?

Blanchard has served as the Chief Economist at the IMF, written textbooks, yet has no clue about how the economy works. Public debt is risk-free and reducing it may lead to asset bubbles and instability. Crises are driven by rising private debt/income ratio boosted by austerity policies. +

What I wrote 2 days ago for the Fed and USD explains China: People's Bank of China injected liquidity by buying bonds, triggered demand for bonds and as a result, the Yuan appreciated.

Labour share is counter-cyclical as output falls faster in recession and rises faster in expansion phases than employment/real wages. But the long-run decline does not imply that the economy has been in expansion phase since 70s. It is byproduct of the rising market concentration

How to explain this rise in profit margins? Has budget deficit exceeded trade deficit-which is the source of profits from production-by a wider margin? No. -Market concentration increased as austerity policies & rate hikes gave rise to bankruptcies -Profits from financial assets

This is because of the decline in employment in high-paying financial sector and the increase in part-time employment in low-paying service sector. The share of durables in consumption expenditures will fall and the share of basic needs (food, sheltering, utilities) will rise. x.com/i/status/208...

"US household debt fell -$13 billion in Q2"(Kobeissi Letter) I foresaw on November 9 that US households will reduce their debt. Paradox of debt at play: As payment of loans destroys money circulating in the economy, debt-to-income ratio will rise, firms facing a fall in revenue will cut inv spending

According to mainstream theory, bond yields reflect the expected inflation rate at maturity. How can bond traders know what will happen in France between December 2051 and August 2056 that will drive inflation from 0.7% up to 4.7%? No way..

Foreign debt only to finance the trade deficit? No.. www.elgaronline.com/edcollchap/b...

Will AI boost productivity? The attempt to suppress wages using AI to increase productivity and profits will result in lower sales and profits due to the fall in purchasing power: Paradox of cost (Kalecki). Productivity growth falls as it is demand-driven: Paradox of productivity.

Interest on government bonds is not paid out of tax income. One should have asked why tax rates have been not raised, even cut, in late 80s and early 90s when the ratio of debt to tax revenue was reaching its maximum, before repeating this nonsense argument..

I was asked on LinkedIn how Argentina has been running a current account deficit despite having run a trade surplus for 3 years. If financial outflows, interest and dividend payments to foreign investors, exceed the trade surplus, the country runs a current account deficit.

On January 18, 2025 I wrote: "A budget surplus is harmful: It takes money out of the economy and increases bankruptcies." Nonperforming loans in Argentina have been soaring since then, bankruptcies rose by 65% in 2026.

Utterly wrong analysis. Once you misunderstand money and debt, then you misinterpret all economic phenomena. Russian government does not need money to spend, to finance the deficit or the war and never runs out of Ruble. Russia sells gold down to buy other currencies. x.com/i/status/208...

Firms fire workers when real wages fall as demand for goods falls- do not hire when labour becomes cheaper since it is not a storable commodity, unlike supposed by mainstream theory. And the fall in wage income explains the rise in nonperforming loans and bankruptcies..

Although inflation has been around 5% (above the 3% target) in 2024 and resurging since September 2025, Mexico CB kept cutting rates since 2024. And yesterday held unchanged despite the rising inflation expectations. Why? Because CBs target bank profits: nonperforming loans are high.

Mortgage delinquencies are rising despite the Fed kept rates unchanged because real disposable income is stagnated, even fell, as the government didn't increase spending: Rising debt-to-income ratio. So, financial stability requires not only monetary policy but also fiscal policy

Who cares about communication of the Fed? The financial or the real sector? Did the real sector raise prices immediately? As you all discuss about the reaction of financial markets, your argument that messages of the Fed have an impact on inflation is a fiction. www.elgaronline.com/edcollchap/b...

Rate cuts without proper regulations induce speculative borrowing to inflate financial markets which results in M&A and takeovers. www.elgaronline.com/edcollchap/b...

US corporate profits rose 50% annually this quarter. Yes, production increased to absorb the rise in producer prices and wage growth is lower while prices rose. However, this alone does not fully account for the 50% increase in profits. I guess the increase in financial income is a more significant.

Japan confirms joint intervention with US to counter yen’s excessive volatility (FT) Another example supporting the argument that balance-of-payment crises are rather a matter of international relations. The recent example was Milei's Argentina. Good relations with the USA protect against the crisis

2- Did the depreciation lead to a trade surplus- as mainstream economics propose? No, because foreign demand remained weak, and Japan primarily exports high-tech products, whose demand is more sensitive to income levels than to prices.

The Yen has been depreciating over the past year. 1- Why didn't Japan impose tariffs on imports instead of hiking rates or selling FX reserves to appreciate the Yen? Because financial flows, rather than trade volume, determine the exchange rate- as post-Keynesians point out.

Rising bond rates: Rising liquidity preference and liquidity paradox: -Some investors sold bonds to buy other assets-like shares- from which they expect higher returns -Some sold bonds as they need liquidity to make their urgent payments, but this would result in lower liquidity as bond prices fall

I have been emphasizing for more than 2 years that CBs target profits of banks, not inflation. CBs cut or do not raise rates regardless the inflation level when nonperforming loans are high.. Thanks to Edwin Dickens. Let's check the argument: +

Mainstream economists would say, mortgage loan rates increased because the demand for mortgage loans rose. No, this is not the case. As delinquencies and government bond yields are rising, investors asking for higher yields from MBS and banks pass this cost onto loan rates.

1-The war on Iran poses risks for supply chain of semiconductors 2-Inflation triggered by the war will increase profits of other sectors more than tech companies 3-Rate hikes against inflation will deteriorate balance sheets of tech industry more severely as they are overindebted