I have now re-read Chapter 8 of Reclaiming the State and this is what I think they say on International Trade, I plan to simplify it further. I have tried not to insert the anti-arguments, but I am not sure that I agree that \u201cSudden Stops\u201d can only happen to poor countries. Also if the MMT people are right, then while the fiscal surplus\/deficit is not a constraint on macro-economic policy, I am still to be convinced that the balance of trade isn\u2019t! Also MMTers argue that the World Bank\/International Monetary Fund\/WTO will need to be refactored with new goals based on facilitating trade & development and ensuring that Trade can be financed. If collective\/political action is required to ensure that international trade works, why not the EU as the first port of call. Anyway, here’s my notes. …
\n<\/p>\n
Anyway, here\u2019s what I think they say.<\/p>\n
This is contrary to classic Keynesianism; here it is argued that imports are good, and exports bad whereas the alternative view that exports are an external augmentation of demand which creates growth, jobs and income.<\/p>\n
Globally, imports = exports, therefore, there must be both surplus and deficit countries\/currencies.<\/p>\n
The classic \u201cbalance of trade\u201d stabilisers don\u2019t work which since they are<\/strong> inflationary would be bad, but it means that depreciation does not<\/strong> increase exports which is also bad.<\/p>\n Currency sovereigns need only worry about the level of public debt held in FX and irrational\/speculative currency movements. i.e. this is the only monetary limit on international trade. In the UK, this FX debt is trivial and there are regulatory responses to \u201chot money\u201d flows.<\/p>\n Denial of trade finance, an issue between sovereigns is rare and should be ameliorated by a new world trade regime.<\/p>\n ooOOOoo<\/p>\n According to my researches, and sourced from the Bank of England, the UK Govt. Foreign Debt holdings is about $22 bn<\/acronym>. Source BoE pqqlaau.<\/p>\n ONS reports total foreign debt at \u00a36.6 trillion.<\/p>\n The UK GDP is \u00a32,320 bn, the public sector debt in foreign currency is under 1% of the GDP.<\/p>\n The UK Balance of Trade has been running a deficit for decades and the UK imports 48% of its food.<\/p>\n How much of the UK Gilt market is foreign owned? This site at the\u00a0Debt Management Office<\/a>\u00a0would seem to apply. Is it really 28%? What is the unit of measurement? The UK public debt is according to Wikipedia, as of Q1 (the first quarter of) 2018, UK debt amounted to \u00a31.78 trillion, or 86.58% of total\u00a0GDP<\/a>, at which time the annual cost of servicing (paying the interest) the public debt amounted to around \u00a348 billion (which is roughly 4% of GDP or 8% of UK government tax income)<\/p>\nTrade Finance<\/h4>\n
\n