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Australian-based Demand Film has released a new virtual currency to reward users who promote and watch movie trailers. Demand Film is officially releasing the cryptocurrency, known as Screencreds, before the company launches in Germany next Tuesday. The new digital coin is the latest example of how digital currencies and blockchain technology are making waves in Continued
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Here are the answers with discussion for this Weekends
Quiz. The information provided should help you work out
why you missed a question or three! If you havent already done the
Quiz from yesterday then have a go at it before you read the
answers. I hope this helps you develop an understanding of Modern
Monetary Theory (MMT) and its application to macroeconomic
thinking. Comments as usual welcome, especially if I have made an
Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):
- A nation can run an external deficit and equal government surplus while the private domestic sector is saving overall.
- A nation can run an external deficit and equal government surplus while the private domestic sector is dissaving overall.
- A nation can run an external deficit and a larger government surplus while the private domestic sector is saving overall.
- None of the above are possible as they all defy the sectoral balances accounting identity.
The best answer is the second option A nation can run an external deficit and equal government surplus while the private domestic sector is dis-saving overall.
This is a question about the sectoral balances the government fiscal balance, the external balance and the private domestic balance that have to always add to zero because they are derived as an accounting identity from the national accounts.
To refresh your memory the balances are derived as follows. The basic income-expenditure model in macroeconomics can be viewed in (at least) two ways: (a) from the perspective of the sources of spending; and (b) from the perspective of the uses of the income produced. Bringing these two perspectives (of the same thing) together generates the sectoral balances.
From the sources perspective we write:
(1) GDP = C + I + G + (X M)
which says that total national income (GDP) is the sum of total final consumption spending (C), total private investment (I), total government spending (G) and net exports (X M).
Expression (1) tells us that total income in the economy per period will be exactly equal to total spending from all sources of expenditure.
We also have to acknowledge that financial balances of the sectors are impacted by net government taxes (T) which includes all tax revenue minus total transfer and interest payments (the latter are not counted independently in the expenditure Expression (1)).
Further, as noted above the trade account is only one aspect of the financial flows between the domestic economy and the external sector. we have to include net external income flows (FNI).
Adding in the net external income flows (FNI) to Expression (2) for GDP...
Amid the recent upsurge of leadership speculation, this time affecting the government, a crucial observation on the so-called National Energy Guarantee seems to have been missed.
This half-baked compromise, if it works at all, wont resolve anything. Theres no target for emissions reductions, which might help get legislation through Parliament, but leaves the most important single issue for later. The already messy pricing system is to be complicated further by unspecified policies to reduce prices directly. And the denialists are still pushing for a publicly funded coal-fired power station.
Supposing this chimera somehow struggles into existence, it will last as long as the political stars with which it is aligned. If Turnbull loses to the right of his own party, the whole thing will be dumped in favor of policies driven by culture war concerns rather than economics, let alone climate. If Labor wins, they will need to dump this mess and start again, effectively from scratch.
I have in my mind a picture of Turnbull, descending the steps of a plane and waving a peace of paper while he announces Peace for our Time. I guess that cant literally happen since the relevant meetings will all take place in Canberra and tarmac photo-ops are confined to state visits these days. But I doubt that Turnbulls deal will last as long as Chamberlains did.
In October last year, I decided to leave Australia for Europe. Australia may be the sunburnt country. But Europe is downright burning.
And over the next year, the reckoning will fall due.
I want to be there when it happens.
The question for Australians is whether we can safely ignore Europes woes once more. 2008 and 2012 didnt have a big impact on our economy. Just the stock market.
Our currency usually does most of the heavy lifting when a global financial crisis strikes. It protects us from a recession by tumbling. Just as the pound protected Britain after the Brexit referendum.
In fact, its the inability of countries inside the Eurozone to use the same safety valve thats making the euro so unpopular and destructive. They cant devalue when they get into trouble.
Lets look into some of whats going wrong in Europe. And then how it could reach you.
The EU predicts a Brexit bonanza (for Britain)
The latest news on Brexit might be the most important yet. The UK Telegraph claims to have seen a slide presentation given to EU officials. The EU claims it might have been stolen by British spies!
The presentation says that a soft Brexit would rob the EU of 89% of GDP over the next 15 years. Why? Because Britain would become an economic powerhouse that undercuts Europe and gains a competitive advantage!
In other words, the EU is terrified Brexit will be a roaring success. It even expects just that.
Meanwhile, Remain campaigners in Britain have been fighting for a second referendum on the basis that Brexit will be too destructive to the economy.
The EU just pulled that rug out from underneath them.
The slides expose the EUs true nature. It retards economic growth. It is anti-trade. And Brexit negotiations are motivated by holding Britain back, not by mutual gain.
The real threat to Europe is that others might realise this. And vote to leave.
Theyre not far off.
Euroscepticism goes mainstream
Widespread and coordinated riots in Sweden have pushed the Eurosceptic party there ahead in polls according to Bloomberg. The election is in early September.
In Spain, the new left-wing government is trying to buck the anti-immigration trend. Its accepting more refugees and migrants than before. But local governments are complaining about the burden this puts on them.
Within hours of the Genoa bridge collapse, Italian Deputy Prime Minister Matteo Salvini was already blaming Brussels. The way he sees it, the EU budget constraints are stopping Italy from spending what it needs to on infrastructure.
The EU argued that it provides plenty of funding for infrastructure. But conveniently ignored that the funding comes from Italian taxpayers. And ignored how that money has been spent.
In 2016, I travelled around Eastern E...
THE furore in the past fortnight over whether MyHealth should be opt-in or opt-out misses the point. Once the security concerns are fixed, there should be no opt at all. Everyone who uses Medicare or the PBS should be in MyHealth whether they like it or not.
Australia seems to be increasingly infected with the US contagion of an instinctive distrust of government so strong that people believe everything government does is bad and that no government would be better than any government.
It is a very destructive position.
Data, kept by government or in the private sector, is more often a friend than a foe.
Yes, it can be misused. But the answer is not to block its collection and distribution, but to make sure its collection and dissemination are secure.
The advantage of MyHealth most often cited is that it provides accurate details about individual patients to health providers thus preventing, for example, the administration of drugs to which the patient is allergic, or administering incompatible drugs or other treatment that might clash with the patients past treatment.
But the value of MyHealth could be much greater. With modern computing power the data could reveal astonishingly useful stuff things like cancer clusters, the effectiveness of drugs, and geographic prevalence of disease. Even drug incompatibilities or bad side effects could be detected well before case-by-case events bleep on the radar.
Stripped of individual identification the raw data of every interaction between people and the health system would reveal correlations, possible causations, trends, and lines of further inquiry that could lead to better treatments and avoidance of bad ones.
However, if people are allowed to opt out or fail to opt in, the database would become biased. In particular, socially disconnected and disadvantaged people are unlikely to opt in, and careful, fretful people would opt out. The remaining database would then not be reflective of the whole population.
If anything MyHealth is not comprehensive enough. A lot of the record relies on the patient manually inputting events and treatments.
It should be more automated. Virtually every health transaction goes into a computer somewhere, so it should not be too difficult to have them all automatically transmitted to each patients MyHealth account.
The Australian Taxation Office does it using the same MyGov portal as MyHealth.
The ATO automatically gathers wage and salary information, interest payments from financ...
Chinese ecommerce giant JD.com has launched a blockable maintenance platform alongside its first application one which digitally monitors corporate bills for among the biggest publicly traded insurers in China. Based on a release on Friday, JD.com said the application moves bill information for Pacific Insurance on a dispersed network at every step of the issuance cycle, automating the process and making it visible to all participants. Invoices, or even commonly referred to like Fapiao in China, play an essential part among businesses in the nation both as a benchmark for book keeping and for taxation purposes. The target of the application, as clarified by the ecommerce giant, would be to increase issuance efficiency and also to streamline the accounting process by maintaining the bill data updated on a dispersed ledger.
The application comes as the primary use case for JD.coms Blockchain Open Platform that was also declared today. The blockchain-as-a service merchandise rolled out months after the company announced its plan for the project in Apr was designed to help companies wishing to develop their very own blockchain applications, including those for monitoring supply chain info, charity donations, certification authentication and property assessment. JD.com has announced several blockchain trial applications within its own company divisions. In Mar, the company partnered with an Australian beef producer to track the distribution chain info import beef on its platform utilizing blockchain technology.
CoinDesk reported in June the JDs financial services arm planned to issue its asset backed securities on a blockchain in partnership with a local bank and a brokerage firm. JD.com image via Shutterstock. The leader in blockchain news, CoinDesk is a media outlet that strives for the greatest journalistic standards and adheres to a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.
Welcome to The Weekend Quiz. The quiz tests
whether you have been paying attention or not to the blog posts
that I post. See how you go with the following questions. Your
results are only known to you and no records are retained.
US stocks had a big session overnight. The Dow Jones had its best day since April.
All in all, the market looks bullish going into the second half of the year. And no wonder.
The earnings coming out are good. Management teams in the US are upbeat about the short-term outlook.
Retail sales especially have come in a lot stronger than expected as US consumers go shopping. Walmart says it saw the best quarterly sales growth in a decade.
US stocks can certainly rise from here, lifting the ASX with it.
Goodbye long-term bonds
Heres one reason why US stocks could be in for a lot more fun.
I came across an interesting market video this week. It pointed out that long-term bond prices are weakening relative to the US stock market.
You have to put this into a very long-term timeframe to get the point.
Imagine for a moment the typical US investor in the year 2000. Its highly likely their financial adviser gave them a portfolio that was half long-term bonds and half US stocks.
Over the last 20 years or so, it wasnt a bad way to go about investing. Both asset classes have done well.
But the main point is that when the US stock market dived, bond prices went up. This dragged down the overall risk and volatility of the portfolio.
But something notable happened with long-term bonds when the US stock market tanked in February. They went down too!
Something about the old relationship broke from the norm.
This is a relationship we need to carefully watch going forward. A lot of money could shift out or away from the bond market and head into US equites instead.
Big money in the market that needs fast returns
Its also interesting to note that the Wall Street Journal reported recently that US pension funds have a major problem: Their assets arent enough to cover future liabilities. They need growth of 78% to keep meeting their commitments.
One consequence of this is that theyve raised their percentage allocation to stocks. This is also pumping more money into the share market.
The pension funds are also allocating money to private equity and hedge funds. Bonds are losing appeal because yields are lacklustre.
This might be part of the dynamic that takes the share market to a top. Investors may be tempted to overreach.
Consider: Two of the biggest pension funds in the US are for Californian teachers and civil servants.
One of them is knowns as CalPERS. Theyre paying out huge sums and the demand on their financial resources is going to worsen.
This quote, via the Wall Street Journal, comes from Dane Hutchings, a member of the investment committee in June:
Its crunch time, and quite frankly, we simply cannot stand another market slowdown or substa...
WHAT HAPPENED IN AUSTRALIA? WITH LAUREN SOUTHERN Video Britt Pettibone / Lauren Southern Video Source
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The hashrate of the Bitcoin network, which represents the amount of computing power securing the blockchain, has continued to increase despite the 70 percent decline of BTC since January of this year. David Sapper, chief operating officer at Australia-based cryptocurrency exchange Blockbid, said in an interview with Bloomberg that the continuous rise in the hashrate
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|IndyWatch Australian Economic News Feed Archiver|
IndyWatch Australian Economic News Feed was generated at Australian News IndyWatch.
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