Nino Galloni; Modern Monetary Theory

Nino Galloni: Italian Economist, Teacher and Writer

By Agrippino Castania

Professor Antonino Galloni, one of the most respected economists in Europe, speaks exclusively on Universal World. He talks to us about very important issues. Our newspaper will deal with the global economy, especially in these difficult months. Unfortunately Covid-19 has brought world economies to their knees.

During the interview, Professor Galloni made a very accurate analysis of the international economic situation. The Italian economist, writer and teacher in 1978 was a researcher at the University of Berkeley.

In Berkeley he carried out a research that was published in his book;

'Moments of North American Capitalism 1881-1885'
Giuffrè Edition.

He was also, from 1981 and 1987,  a collaborator of the post-Keynesian economist Federico Caffè  in the Faculty of Economics and Commerce of the University of Rome.

Economics is intriguing because it has different schools of thought so as to create constructive comparisons.

One of the most significant examples is represented by the difference between neoclassical and Keynesian economics.

The neoclassical one takes into consideration a long-term perspective in which inflation, unemployment, regulation, taxes and other possible effects are taken into account when creating economic policies. Keynesian economics, on the other hand, has a short-term perspective in bringing immediate results during times of economic difficulty.

Modern Monetary Theory

Professor Antonino Galloni what do you think of the European Stability Mechanism?

Before the health emergency, there were three ways to address the issue of public investment and of the lack of liquidity in the real economy:

  • the national sovereign currency, not impeded by the Lisbon Treaty which only regulates the issuance of banknotes - not state notes - having legal tender throughout the European Union, while the state notes (but also metallic and electronic money issued by the states) would circulate only within the territory of the issuer;
  • the coverage of the expenses of the various public administrations net of tax revenues through the purchase of securities by the ECB which could then be returned to the National Central Banks to be canceled or amortized on maturity;
  • insisting on mechanisms such as the ESM - or the Recovery Fund - in which there are heavy conditionalities for debtors - who, at maturity, will have to repay the loaned capital - and which is not trusted.

With the emergency, this tripartition has worsened; now, I understand that, unless there is a "Galloni government" or something like that, the first solution won't occur. But why would we possible insist on discussing only the harmful third solution when it is possible to enforce also the second? A serious government should discuss between the first and the second one.

In your opinion, was the UK right to leave Europe?

From this Europe certainly yes. We need to see what the Queen had in mind;

A North-Atlantic rapprochement?

Free hands in politics towards the East?

Better selection of the migratory flows?

And of course what really the population had in mind too? However, a storm in a teacup, because Britain had not only kept the pound sterling, but had not even considered the possibility of entrering into euro currency with 'special conditions', maintaining dual currency like other countries.

Do you like the current US economic policy?

Trump won the election because he promised workers and trade unions that he would reduce imports and increase wages and employment: which he has maintained (although, as I try to explain in the content of my books, the necessary change is much larger and must resize or even cancel the current financial capitalism, as Valerio Malvezzi says).

The health emergency - although faced in a less severe way than in Italy - has done more damage than expected: but USA, Germany and other countries have used the systems I mentioned earlier: provisional debt and the issuance of non-debt state money.

How can the various countries cope with the economic crisis caused by Covid-19?

Finance was less affected by this crisis, but it was better off than the real economy even before: as long as the central banks provide it with all the liquidity it needs, everyone will be able to sleep peacefully. With the emergency, however, the real economy - already suffering - will have to face two kinds of problems:

sectors where the deterioration is greatest;

the risk of a clash between the poor (if state resources are not sufficient to pay public pensions and salaries);

the scarcity of dedicated resources. And their cost, which is no longer the interest rate, but the conditionalities or guarantees or blackmail required by those who provide credit, if they provide it.

First of all, the truth about Covid should be told: 90 to 95% of tampons are negative, but positive does not mean neither sick nor contagious; the past cuts in healthcare spending and, above all, the displacement of the public one in favor of the private one which, precisely because of Covid, is not equipped, indicate what should be done in the first place;

no action was taken on urban public transport which, on the other hand, had to be done immediately;

support for sectors in difficulty, but, in particular, for all those submerged productive activities which, too, would contribute to the rebalancing of household income;

it would be necessary to investigate the responsibilities of the political and health authorities who by mistake - worse if they were not mere mistakes - have sentenced 35,000 wretches to death and aggravated the already precarious conditions of Italian economy.

Many countries, including those of European disunion, have done better than Italy  (Sweden, Germany and, outside the EU, Switzerland), both in terms of the necessary financial resources and in terms of support interventions for the most vulnerable situations of their respective communities.

The Universal World brings to light economists, such as Professor Galloni, who through their analyzes can make the economic world perfectly understood.

We suggest, for further study on similar topics, some economists of great educational value such as Ha Joon Chang.

The South Korean economist has written a fantastic book entitled "23 Things They Never Told You About Capitalism".

In the next economic editions we will analyze the economic thinking of Ha Joo Chang, considered in 2013 by the periodical Prospect, one of the 20 best thinkers in the world.

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