The most common misunderstanding I hear from friends & family is even worse than this - that they have "already paid for" their Social Security and Medicare, as if they were drawing money out of a savings account they'd built up while working.
That is as big a problem as the political circus about "knowing how to pay for it." Every employer issuing a paycheck should be required to include a note to employees explaining that their SS/Medicare deduction is not a savings account but a trust fund contribution that goes toward financing the retirement of former contributors in retirement and guaranteeing the future retirement payment of the employee from whose paycheck contributions are made.
it's only doing that "on paper". what it's really doing is displacing current consumption. your explanation would actually ensure that this charade continues instead of being truthful about the money.
if employees and employers are not spending it in the present, then the retirees are. THAT is what "taking from the employed right now to put in an imaginary 'trust fund' for the future" does.
The government needs to spend money on facilitation of the growth of the productive part of the economy. The problem is that the federal government is facilitating the de-industrialization of the economy and the financialization of the economy. If we focus our attention on the wrong problem, we will never get to the part about solving the most pressing problem.
The current excess contributions to SS could be spent on facilitating the growth of the economy, but we don't have enough politicians and residents to understand this.
To clarify, it is not a matter of whether the government can pay the money obligations of Social Security. The question is if when the retirees use that money to buy things, will the economy be able to supply what they are trying to buy.
The non-productive part of the economy includes the part of the economy that collects debt interest payments from the people. Paying interest on debt makes banks richer, but it does not increase the economy's ability to produce what people want to buy.
My POV potential senior spending is the least of our probems & it should be beneficial as most seniors will be spending those $. Savings by the Top 20%, esp top 10, 1, .01 skyrocketed during Covid.
If the government makes a mess out of our economy in the future, providing a pension to a growing number of pensioneers in the face of a shrinking number of workers could be a problem. Keeping the economy growing as automation increases, is something the government can aid or it can hinder. That's what we should be concentrating on.
My opinion, there is more than enough resources to go around but there is excessive hoarding of wealth and income by a few. The laws being passed by the Politician Pawns are crafted by their Big Money Masters.
I am not talking about resources available now. I am talking about 20 or 50 years from now when the financialization and de-industrialization of the USA economy has had more time to louse things up. We do have to plan ahead for years or decades, not just days.
I'm 67 and thankful I'm probably not going to be around to the see the worst of it. I feel sorry for our youth. My opinion, most born after 1980 never had a serious chance.
Reformers/Progressives are working on thousands of worthy issues needing attention. Everything but what we need most, serious economic reform. Serious economic reform will solve most of these issues because everything on our big rock called Earth involves economics. Even hermits in a cave need some stuff.
'More than enough resources to go round' says every socialist moron. There is no limit to how many persons one working family can take care of.
Tell that to the citizens of the former Soviet Union, present day Venezuela, North Korea, Sri Lanka, Iran, Panama, the inflationary western nations, etc.
All governments are Kleptocracies with greedy, self-centered folks at the top, that subscribe to your nonsense. Gary don't respond to my stuff, I know your libertarian stuff and you know my stuff.
You don't understand Modern Money Theory if you think that they think that there is no limit to how many persons one working family can support. This limit is exactly what MMT focuses on, and what I have been trying to shift the discussion onto. The money that the federal government creates at will is not the issue. The issue is whether or not there will be enough productivity in the economy to supply the goods and services that the money will buy. If we think that de-industrializing the economy and turning it into rent and interest collection economy, then that is exactly how the supply capacity problem will bite us.
Steve, don't waste your time responding to Gary. I did previously and all he does is Trumpet neoliberal-like libertarian perspectives he probably listens to on Fox with little comprehension, or he's a dogmatic University of Chicago acolyte who drank the Kool-Aid.
All of what MMT says about deficits and the mechanics of money creation is wonderful, good and accurate. I applaud their research and their conclusions...but their analysis, as well as that of Keen, Hudson, Brown, Graeber, still needs to up their game to the level of paradigm concept. Why? Because a paradigm is an ENTIRE pattern CHANGE....not just a reform that while it may conceptually align with the new paradigm concept...doesn't change the ENTIRE pattern. Why does a new paradigm concept change an entire pattern/system, body of knowledge? Because it locates the operant problem and finds the specific way(s) to express the solution to it temporally. Thus all of the attending outnesses/anomalies that have plagued the old pattern go "poof". That's what occurred with the Copernican cosmological paradigm change. And paradoxically and amazingly to those addicted to reductionistic complexity ONLY (the onlyness is the problem not the method itself) it was a single concept that made the change that resolved all the problems. And it's important to point out that the final piece of the puzzle that made all of the anomalies of Ptolemaic cosmology go to the dust bin of history was the discovery of the elliptical nature of planetary orbits. In other words that temporal universe discovey/application was key. And that is why the 50% Discount/Rebate policy at the point of retail sale...is the analogous discovery...because the policy is both the expression of the new paradigm concept itself (Direct and Reciprocal Monetary Gifting) and the most efficaciously beneficial, most strategically powerful and universally participated in point in the entire economic/productive process.
And by the way I agree that productive capability does make a difference (even though inflation would not be a problem with a few regulations and reasonable rules for participation in the new paradigm program), but in the time between when the new paradigm was recognized and politically affirmed the help of government spending directed toward increasing domestic production (which is a wise economic and energy/ecological decision with or without the new paradigm) could easily be accomplished. And in the mean time if we had to continue importing from China etc. So what?
I didn't really think it happened then, but maybe you are correct. But for sure it happened with 2008 recession. And then more dramatically with the $5+ trillion of covid relief. Good point.
Yeah, you maybe right, but regarding their apparent lack of concern about national debt and budget deficits it seems they didn't care so they can protect their wealth back in 2000 then shortly thereafter 9/11. Remember Jr Bush advice for the economy... Keep shopping!?
If deficits/national debt don’t matter (except when it causes inflation) what happens when no one wants to buy the bonds that is used to “create” the money?
When China says we have no use for any more USA dollars, we aren't going to buy any more bonds, and you have to pay us in renminbi to buy from China, then you will see what Michael Hudson is talking about.
The government, i.e. the Fed, buys the bonds. I believe that's what happens now? Certainly there were not enough buyers for the $5 trillion of covid relief?
Then maybe we'll finally talk about how US natural resources are divied up and who primarily benefits from them along with the insane concentration of wealth.
We'll probably see what happens sooner, rather than later.
How do you conclude that bonds are used to create money? No bonds were created for the Fed to create trillions of dollars to bail out the banks. That trillions of dollars is not included in the recorded federal deficit either..
By the way, if you really wanted to know the answer to your partly misstated question, you would read what Michael Hudson has to say about that.
Take a bond to the grocery store and try to buy a loaf of bread with it. There are some aspects of bonds that are just like Federal Reserve Notes, and there are other aspects where they are different. Which aspects you focus on depends on what question you are trying to answer.
When you say cash-like, I'd like to see your list of how these bonds differ from cash. If they are only cash-like, that implies there are differences. Little people like me own these bonds, too. What do you think it does for us?
We could if we took all off the illegals, foreigners that the government brings in, people on welfare who have never held a job and stopped and Democrats from stealing from it as a slush fund. Then there would be plenty of money!
Stephanie, The government may pay for things, but it doesn't fund them. It has no money or rather resources. When government allows one to sit and do nothing, another must fund that leisure. When government pays one to do work of little value, another must supply the goods and services to render that waste possible. You erroneously continue to think in terms of easily printed and manufactured money like the socialists and communists do. It has nothing to do with money and everything to do with resources. Idled people don't consume money, but resources supplied by others. Wasteful government workers do not consume money, but again the resources of others.
Your entire work is based upon a childish fiction that is being exposed across the world.
That seems a little harsh. Logically the MMT economics she teaches makes sense to me. But blended into her economics is a liberal, progressive philosophy of taking care of people through a better distribution of wealth. I can understand that. I can also understand the Conservative principles of hard work, productivity and thrift. The idea of earning your way and carrying your weight.
We have to decide what kind of nation and society we are going to have. Yes, we want it to be productive and bountiful, but we also want people to be taken care of. The government can create money to pay for things it deems necessary. It is a political decision supposedly made by our representative government. I don’t think these goals are mutually exclusive.
The distribution of wealth was already achieved through markets, each according to their abilities. You don't like the result, so you demand the flawed government, adept at redistributing for the benefit of wealthy or influential special interests, rearrange the initial distribution.
Socialism doesn't work. And you can't accept the truth. None of you can.
- first, seems MMT is a misnomer, and it should be MMR (modern money reality), as once we became truly fiat money, there is no other reality
- second, MMR is ultimately about capital allocation; yes, markets determine pricing of goods and services, and capitalism rewards risk and investment, but how that is calibrated or allocated is a man-made (political or social) decision, not one ordained by a higher/market power - do we reduce personal income tax, or keep it at a current level and allocate capital to fundamental citizen needs that all agree upon
- socialism versus capitalism is a red herring; our great country is operating under capitalism and how we decide to allocate capital is the province and privilege of stewards and citizens of our country, not a vitriolic exercise in dogma
It gets very confusing whenever people hear that the Fed is buying its own treasuries. It sounds like a shell game . . . people ask, is the money really there? I believe in MMT mainly because it makes common sense once you grasp the issuer-of-currency vs user-of-currency bit. I don't pay much attention to the details of how the Fed makes it all work with the "yellow dollars" and "green dollars" Stephanie talks about. I know this is covered in The Deficit Myth but I'm stymied when trying to explain the Fed's role to friends who are suspicious of the Fed to begin with, thinking it is a tool of the plutocracy. (Well it is, but that's another subject.)
What we cannot afford is our ongoing support of the poor little billionaire class: Subsidies, tax breaks, loopholes, grants, and special financial considerations. They claim billions in corporate welfare.
And now the SCOTUS has opened the door to unfettered access of religious schools to our tax dollars. Religions are among the wealthiest corporations in the world.
It is so easy to blame those falling off the end of the conveyor belt
The shortcoming of MMT is that it focuses on the sector balances of the federal government sector and every other sector. That focus only takes you part way to understanding. The part that MMT does not address is how the money gets divvied up inside those other sectors. Right now, the Fed has probably created as much money as MMT would suggest. The problem is who in the other sectors is getting that money. MMT has no theory on that, and does not claim it does. The theory to explain the problem of who gets the money is pretty much only covered by Michael Hudson when he goes beyond MMT.
The trouble with "The Deficit Myth" is that it covers the area that almost doesn't matter anymore. It has nothing to say about the class distribution of the money.
The most common misunderstanding I hear from friends & family is even worse than this - that they have "already paid for" their Social Security and Medicare, as if they were drawing money out of a savings account they'd built up while working.
That is as big a problem as the political circus about "knowing how to pay for it." Every employer issuing a paycheck should be required to include a note to employees explaining that their SS/Medicare deduction is not a savings account but a trust fund contribution that goes toward financing the retirement of former contributors in retirement and guaranteeing the future retirement payment of the employee from whose paycheck contributions are made.
it's only doing that "on paper". what it's really doing is displacing current consumption. your explanation would actually ensure that this charade continues instead of being truthful about the money.
if employees and employers are not spending it in the present, then the retirees are. THAT is what "taking from the employed right now to put in an imaginary 'trust fund' for the future" does.
The government needs to spend money on facilitation of the growth of the productive part of the economy. The problem is that the federal government is facilitating the de-industrialization of the economy and the financialization of the economy. If we focus our attention on the wrong problem, we will never get to the part about solving the most pressing problem.
The current excess contributions to SS could be spent on facilitating the growth of the economy, but we don't have enough politicians and residents to understand this.
I hear that all the time in my senior community.
To clarify, it is not a matter of whether the government can pay the money obligations of Social Security. The question is if when the retirees use that money to buy things, will the economy be able to supply what they are trying to buy.
The non-productive part of the economy includes the part of the economy that collects debt interest payments from the people. Paying interest on debt makes banks richer, but it does not increase the economy's ability to produce what people want to buy.
My POV potential senior spending is the least of our probems & it should be beneficial as most seniors will be spending those $. Savings by the Top 20%, esp top 10, 1, .01 skyrocketed during Covid.
The problem, my pov, is the enormous wealth in the hands of top 20%, about 70% per https://usafacts.org/articles/us-wealth-distribution-and-inequality-recession-pandemic-2020/
They're spending lots on 'luxuries', not necessities.
If the government makes a mess out of our economy in the future, providing a pension to a growing number of pensioneers in the face of a shrinking number of workers could be a problem. Keeping the economy growing as automation increases, is something the government can aid or it can hinder. That's what we should be concentrating on.
My opinion, there is more than enough resources to go around but there is excessive hoarding of wealth and income by a few. The laws being passed by the Politician Pawns are crafted by their Big Money Masters.
I am not talking about resources available now. I am talking about 20 or 50 years from now when the financialization and de-industrialization of the USA economy has had more time to louse things up. We do have to plan ahead for years or decades, not just days.
Amen, Brother
I'm 67 and thankful I'm probably not going to be around to the see the worst of it. I feel sorry for our youth. My opinion, most born after 1980 never had a serious chance.
Reformers/Progressives are working on thousands of worthy issues needing attention. Everything but what we need most, serious economic reform. Serious economic reform will solve most of these issues because everything on our big rock called Earth involves economics. Even hermits in a cave need some stuff.
'More than enough resources to go round' says every socialist moron. There is no limit to how many persons one working family can take care of.
Tell that to the citizens of the former Soviet Union, present day Venezuela, North Korea, Sri Lanka, Iran, Panama, the inflationary western nations, etc.
All governments are Kleptocracies with greedy, self-centered folks at the top, that subscribe to your nonsense. Gary don't respond to my stuff, I know your libertarian stuff and you know my stuff.
You don't understand Modern Money Theory if you think that they think that there is no limit to how many persons one working family can support. This limit is exactly what MMT focuses on, and what I have been trying to shift the discussion onto. The money that the federal government creates at will is not the issue. The issue is whether or not there will be enough productivity in the economy to supply the goods and services that the money will buy. If we think that de-industrializing the economy and turning it into rent and interest collection economy, then that is exactly how the supply capacity problem will bite us.
Steve, don't waste your time responding to Gary. I did previously and all he does is Trumpet neoliberal-like libertarian perspectives he probably listens to on Fox with little comprehension, or he's a dogmatic University of Chicago acolyte who drank the Kool-Aid.
All of what MMT says about deficits and the mechanics of money creation is wonderful, good and accurate. I applaud their research and their conclusions...but their analysis, as well as that of Keen, Hudson, Brown, Graeber, still needs to up their game to the level of paradigm concept. Why? Because a paradigm is an ENTIRE pattern CHANGE....not just a reform that while it may conceptually align with the new paradigm concept...doesn't change the ENTIRE pattern. Why does a new paradigm concept change an entire pattern/system, body of knowledge? Because it locates the operant problem and finds the specific way(s) to express the solution to it temporally. Thus all of the attending outnesses/anomalies that have plagued the old pattern go "poof". That's what occurred with the Copernican cosmological paradigm change. And paradoxically and amazingly to those addicted to reductionistic complexity ONLY (the onlyness is the problem not the method itself) it was a single concept that made the change that resolved all the problems. And it's important to point out that the final piece of the puzzle that made all of the anomalies of Ptolemaic cosmology go to the dust bin of history was the discovery of the elliptical nature of planetary orbits. In other words that temporal universe discovey/application was key. And that is why the 50% Discount/Rebate policy at the point of retail sale...is the analogous discovery...because the policy is both the expression of the new paradigm concept itself (Direct and Reciprocal Monetary Gifting) and the most efficaciously beneficial, most strategically powerful and universally participated in point in the entire economic/productive process.
And by the way I agree that productive capability does make a difference (even though inflation would not be a problem with a few regulations and reasonable rules for participation in the new paradigm program), but in the time between when the new paradigm was recognized and politically affirmed the help of government spending directed toward increasing domestic production (which is a wise economic and energy/ecological decision with or without the new paradigm) could easily be accomplished. And in the mean time if we had to continue importing from China etc. So what?
Personally, I think the US has been practicing MMT since the dot.com crash.
I didn't really think it happened then, but maybe you are correct. But for sure it happened with 2008 recession. And then more dramatically with the $5+ trillion of covid relief. Good point.
Yeah, you maybe right, but regarding their apparent lack of concern about national debt and budget deficits it seems they didn't care so they can protect their wealth back in 2000 then shortly thereafter 9/11. Remember Jr Bush advice for the economy... Keep shopping!?
If deficits/national debt don’t matter (except when it causes inflation) what happens when no one wants to buy the bonds that is used to “create” the money?
Why There Will ALWAYS Be Demand For US Treasury Bonds
https://m.youtube.com/watch?v=EMEhE-WJFQA
Will there? Was there always demand for Zimbabwean bonds, Russian bonds, N. Korean bonds? Ignorance does not become any person!
Ditto, what Gary said.
When China says we have no use for any more USA dollars, we aren't going to buy any more bonds, and you have to pay us in renminbi to buy from China, then you will see what Michael Hudson is talking about.
The government, i.e. the Fed, buys the bonds. I believe that's what happens now? Certainly there were not enough buyers for the $5 trillion of covid relief?
Then maybe we'll finally talk about how US natural resources are divied up and who primarily benefits from them along with the insane concentration of wealth.
We'll probably see what happens sooner, rather than later.
How do you conclude that bonds are used to create money? No bonds were created for the Fed to create trillions of dollars to bail out the banks. That trillions of dollars is not included in the recorded federal deficit either..
By the way, if you really wanted to know the answer to your partly misstated question, you would read what Michael Hudson has to say about that.
Bail out banks and corporations. I didn't know they weren't included in the deficit, thanks for letting me know we're in worst shape than I thought.
But aren't these bonds money-like as they're a store of value and medium of exchange... for the time being?
Take a bond to the grocery store and try to buy a loaf of bread with it. There are some aspects of bonds that are just like Federal Reserve Notes, and there are other aspects where they are different. Which aspects you focus on depends on what question you are trying to answer.
The bonds are cash-like paying large clients or for foreign trade. Anyhow that's what the US does to other countries.
When you say cash-like, I'd like to see your list of how these bonds differ from cash. If they are only cash-like, that implies there are differences. Little people like me own these bonds, too. What do you think it does for us?
We could if we took all off the illegals, foreigners that the government brings in, people on welfare who have never held a job and stopped and Democrats from stealing from it as a slush fund. Then there would be plenty of money!
Did you go to University of Chicago?
Stephanie, The government may pay for things, but it doesn't fund them. It has no money or rather resources. When government allows one to sit and do nothing, another must fund that leisure. When government pays one to do work of little value, another must supply the goods and services to render that waste possible. You erroneously continue to think in terms of easily printed and manufactured money like the socialists and communists do. It has nothing to do with money and everything to do with resources. Idled people don't consume money, but resources supplied by others. Wasteful government workers do not consume money, but again the resources of others.
Your entire work is based upon a childish fiction that is being exposed across the world.
That seems a little harsh. Logically the MMT economics she teaches makes sense to me. But blended into her economics is a liberal, progressive philosophy of taking care of people through a better distribution of wealth. I can understand that. I can also understand the Conservative principles of hard work, productivity and thrift. The idea of earning your way and carrying your weight.
We have to decide what kind of nation and society we are going to have. Yes, we want it to be productive and bountiful, but we also want people to be taken care of. The government can create money to pay for things it deems necessary. It is a political decision supposedly made by our representative government. I don’t think these goals are mutually exclusive.
People can take care of themselves. Those that can't have families, friends and neighbors to assist.
Most of what government is doing now is helping wealthy, special interests enrich themselves at the expense of the poor and working poor.
Is your concern then a more equal distribution of wealth?
The distribution of wealth was already achieved through markets, each according to their abilities. You don't like the result, so you demand the flawed government, adept at redistributing for the benefit of wealthy or influential special interests, rearrange the initial distribution.
Socialism doesn't work. And you can't accept the truth. None of you can.
Gents, a few thoughts/
- first, seems MMT is a misnomer, and it should be MMR (modern money reality), as once we became truly fiat money, there is no other reality
- second, MMR is ultimately about capital allocation; yes, markets determine pricing of goods and services, and capitalism rewards risk and investment, but how that is calibrated or allocated is a man-made (political or social) decision, not one ordained by a higher/market power - do we reduce personal income tax, or keep it at a current level and allocate capital to fundamental citizen needs that all agree upon
- socialism versus capitalism is a red herring; our great country is operating under capitalism and how we decide to allocate capital is the province and privilege of stewards and citizens of our country, not a vitriolic exercise in dogma
Respectfully - Steve
No. The right to allocate capital belongs to those who own it, not some distant government body composed of social engineering morons.
It gets very confusing whenever people hear that the Fed is buying its own treasuries. It sounds like a shell game . . . people ask, is the money really there? I believe in MMT mainly because it makes common sense once you grasp the issuer-of-currency vs user-of-currency bit. I don't pay much attention to the details of how the Fed makes it all work with the "yellow dollars" and "green dollars" Stephanie talks about. I know this is covered in The Deficit Myth but I'm stymied when trying to explain the Fed's role to friends who are suspicious of the Fed to begin with, thinking it is a tool of the plutocracy. (Well it is, but that's another subject.)
America can afford SS&MC to protect workers and to care for the least of us.
Fact: Total federal spending on a safety net for the poor costs the average taxpayer about
$400 a year
while spending on corporate welfare programs costs the same taxpayer about
$1400 a year.
(source: CBO figures) Corporate welfare programs are protected at the expense of the poor and powerless.
Facts on Corporate Welfare | Center for Effective Government www.foreffectivegov.org/node/341
What we cannot afford is our ongoing support of the poor little billionaire class: Subsidies, tax breaks, loopholes, grants, and special financial considerations. They claim billions in corporate welfare.
And now the SCOTUS has opened the door to unfettered access of religious schools to our tax dollars. Religions are among the wealthiest corporations in the world.
It is so easy to blame those falling off the end of the conveyor belt
For the excessive wealth & greed of the 1%
The shortcoming of MMT is that it focuses on the sector balances of the federal government sector and every other sector. That focus only takes you part way to understanding. The part that MMT does not address is how the money gets divvied up inside those other sectors. Right now, the Fed has probably created as much money as MMT would suggest. The problem is who in the other sectors is getting that money. MMT has no theory on that, and does not claim it does. The theory to explain the problem of who gets the money is pretty much only covered by Michael Hudson when he goes beyond MMT.
The trouble with "The Deficit Myth" is that it covers the area that almost doesn't matter anymore. It has nothing to say about the class distribution of the money.
That sounds reasonable but one thread with him was tediously repetitive.