How do you create all of a roaring economy, accomplish the goals of Andrew Yang/UBI, Stephanie Kelton and every other MMTer, Steve Keen, Michael Hudson, Ellen Brown, enable us to effectively confront climate change, integrate the best aspects of the economic and political agendas of the right (tax cuts) and the left (economic democracy) and completely slay inflation...all in one fell swoop?
Answer: Become a system's philosopher and change the current monetary and financial paradigm which has been in effect for the entire course of human civilization, and has be-deviled humanity on many levels as a result.
Every one of the above movements and areas of activism are reforms, EXCELLENT reforms, reforms that in fact point at and conceptually align with the new paradigm concept...but they haven't recognized the specific new paradigm concept or the most efficacious points in the economic process to apply the new concept and hence temporally implement and change the ENTIRE PATTERNS of economics and the money system.
Reforms are good...and always incomplete and temporary. Only genuine paradigm changes are permanently progressive. Let us begin to analyze on the operant concept/paradigmatic level and integratively solve the key problem, namely the current pattern, not just (ineffectively) hit at it with various reforms. Please.
Yes, that is the way all new paradigm concepts are initially perceived because they are always in complete conceptual opposition to the present paradigm and its problematic set of orthodoxies. Nomadic Hunting and Gathering was in complete conceptual and temporal opposition to Agriculture, Homesteading and Urbanization. Likewise, helio-centrism required us to conceptually and temporally think in terms of complete inversion of the positions of the earth and the sun. It's not easy to buck orthodoxies especially when they are coming from both sides of a duality, but when the new concept works to resolve the major problems
of the current paradigm and makes everything in the pattern under analysis function better all you have to do is keep looking at its actual effects...until it blows your mind.
The 50% Discount/Rebate policy at retail sale is such because it is the very expression of the new paradigm concept, Abundantly Direct and Reciprocal Monetary Gifting and its executed at the single point in the entire economic process (retail sale) that is universally participated in. Hence its mathematical effects are macro-economic. Those effects are an immediate doubling of everyone's purchasing power, the potential doubling of available demand for every enterprise's goods and services and not only the end of inflation, but the implementation of BENEFICIAL price and asset DEFLATION. Now that is an orthodoxy busting set of effects if I ever saw them.
You should read Michael Hudson on the financial paradigm which has been in effect for the entire course of human history. I'll bet that you will find that history is not what you assume. Why assume what that history has been when there are people who have actually studied that history and have written about what they have found? Did I mention Michael Hudson?
I included Michael Hudson in my original post. I don't know if Michael has actually expressed a specific new paradigm concept. I do know that he considers private finance to be a parasite which I totally agree with, and his research regarding the ancients doing periodic debt jubilees (which is what? Oh yes, a form of monetary gifting) is accurate and aligned with what I'm saying.
The only problem with debt jubilees was they were basically one-offs and hence palliatives, because ever rising private debt just went right back to being inevitable. We need to be smarter than the ancients, not stupider like now...and integrate debt jubilee directly and continuously into the economic process with my second most primary policy which is a 25-50% Discount/Debt Jubilee policy at the point of loan signing.
Put the retail sale and loan signing policies together and a $60k Tesla becomes $30k at retail and when you go to sign the note its reduced to $15k. If you buy a $40k internal combustion auto its $20k at retail and $15k at note signing (only a 25% debt jubilee). Likewise a $400k home is $200k at retail and $100k at note signing. As I said, the new paradigm and its policies resign inflation to the dust bin of history.
The debt jubilee written into the Hebrew bible was periodic. Did you miss this part of Michael Hudson's writings? Your ideas for writing in a jubilee into a loan may be novel. Let's see some experts opine on how likely your ideas will work in the real world. I see problems with them myself, but I am not going to argue with you here.
It WAS periodic. That was its problem. We need to integrate it continuously into the economic process. And that is what the 25-50% Discount/Debt Jubilee policy at the point of note signing does. Just do the simple yet macro-economically effecting math.
I'd welcome the opportunity to discuss and defend what I've posted here, particularly from Stephanie and from anyone else. Just remember two very important truths, new paradigms always explode orthodoxies and cynicism never solved a problem because it is about 5 microns above apathy and it's exactly what the ruling elites with their paradighmatic control are hoping is everyone's reaction to something actually new.
New paradigms tend to explode orthodoxies. However, every idea that explodes orthodoxies is not necessarily a good idea. Let me explode another old saw. If I don't have a better idea, that does not promote your idea to be a good idea.
I wouldn't dispute that last statement. However, if you or anyone else can find an applied concept that temporally and mathematically accomplishes more than everything I listed in my original post here and with only four basic policies (there is much more to the entire policy program in my book) ...then I'm all ears.
Waiting for some constructive response from Stephanie or some other economic thinker here that affirms or tries to refute any of the claims I make for the policies of the new monetary and financial paradigm. I don't like being a troll, but I dislike apathy or some other motive regarding something as truly significant as a pattern change....especially when making that change could not only enable MMT's goal of increased fiscal deficits but enable deficits literally orders of magnitude larger than current thinking on the matter so that we could fund the mega-projects necessary to rationally confront climate change. Please, even
MMT is utopian. Leveraging our country’s balance sheet with the wobbly idea we have fiat currency or treasure to spend will end in tears or worse. This time is not different. As for climate change a lot has been done and more Is to come. Panicking is the worst thing we and others can do. Look at the EU. They are now hostages to Russian oil. Crazed.
First off what I'm suggesting is not MMT yet would hasten the goals and genuine benefits that the MMT perspective on our money system would enable.
MMT is not utopian. It is a very good reform movement that does important things, namely clarifies the process of money creation in our fiat system and shows that we are monetarily sovereign.
My new monetary paradigm goes way beyond that because it breaks up the monopolistic monetary paradigm that forces new money to be created only with the burden to repay it. This is done strategically by gifting 50% of the price to the individual at retail sale and reciprocally gifting every cent of that discount back to the merchant so they are made whole on their overheads and profit margins. That single policy is a conceptual and temporal universe change in the character of both the economy and the money system, and there are further policies in the new paradigm that stabilize and bring many more benefits to virtually every agent.
The 50% Discount/Rebate at retail sale mimicks the exact accounting process that the private banks utilize to create upwards of 97% of our money AND YET with the equal debits and credits formula of accounting summing to zero and the character of the new paradigm (Gifting) ....changes the entire pattern while resolving its deepest problems.
You understand accounting. DO YOU SEE THIS STEPHANIE?!
MMT gurus refuse to tell you the story in words that make sense here. Private banns do not create money. They create promises of money. If these private banks are ever forced to pay out all the money they have promised, it is the Federal Reserve that will have to create it, and give it to the private banks.
You mean gurus like Michael Hudson who you have touted here? Perhaps you had better re-read Hudson. Private banks DO create upwards of 97% of our money every year simply with accounting entries. The FED just provides them (the banks) with the reserves to cover their loans. The FED is the hand maiden of the private banks. I thought you were rellatively astute, but you're almost as uniformed and/or blinded by orthodoxy as Mr. Carroll
If private banks create money, how come you get Federal Reserve Notes out of the ATM of all private banks. You do not get private bank money. The Gurus like Warren Mosler, Randy Wray, and Stephanie Kelton give a qualified money name to what private banks create. For some purposes, that other set of words is an adequate explanation, but for some purposes those names are misleading. For explaining why private banks need Federal Reserve money, or why they do not give out private bank money from an ATM, or why privaet banks don't just create money when they need it, you have to use the appropriate words. If you call what private banks create with the name promises of money, it makes it clearer why sometime a promise of money is not good enough. Sometimes people want real government bank money in terms of Federal Reserve Notes , USA Treasury bills, or USA treasury bonds.
If you don't see the problem, then I don't think you are understanding money as deeply as you think you are.. I forget the exact words that Michael Hudson used to explain what private banks create when it comes to those situations where calling it a form of money is not an adequate explanation.
“Economic Democracy “ , by whom? The Elite? What a joke. Who decides? I believe you, and she, mistake the ideal of economic democracy with coercion. Permanently Progressive. C’mon. Cutting taxes, crazed redistribution and leveraging your balance sheet to crazy levels is tantamount to a teenager stealing his parents credit card, maxing it out and trying to pay it off with new credit thinking Dad is Fiat currency. Trust me when I say, none of these new age economists will be around when the wheels come off.
You're not doing the simple math at retail sale. Do it. Paradigm changes are always permanently progressive moments. Gutenberg Press wasn't a permanent technological advance? Copernican Cosmological paradigm change wasn't a permanent astronomical and cosmologically positional change? You're critiquing from the mindsets of at least several dis-proven orthodoxies. I'm sorry. Go back to school.
Folks. MMT is looking not so good. Funny, the UK has fiat currency. Their long guilt traded down in PX 50% in two days a month ago. It cost them a government. Their D/GDP approaching 100%. It can’t happen here. Our D/GDP is a manageable 125%. A record high. The teleprompter thinks he is FDR. Inflation is transitory and our creditors actually want to get paid back.
Financial and commodity markets are largely an overly speculative inflationary tool of the banks and their monopolistic paradigm. MMT doesn't make much noise about them. I don't know if that is simply an attempt to avoid hitting the wasp nest of Finance or because it doesn't fully realize that it conceptually and theoretically still remains within the current monetary and financial paradigm. However, MMT is not any kind of primary or secondary cause of inflation.
Who's our creditor's? Who wants to be paid back? You seem to have not gotten past the basic understanding of the importance of differentiating between the "users" and the "issuer" of the currency. Federal government spending is nothing like your daddy's credit card. You seem to think there's only one side to the Federal government balance sheet. What is "debt" for a sovereign currency issuing government like the US government, that taxes, spends, and borrows only in its own currency. The US contributes nearly three time the amount of funds to the IMF for lending than the second highest contributor Japan. US is the largest creditor nation, not debtor nation. You seem to fail to understand the basic purpose of the currency. The purpose is to mobilize resource (labor and capital) to satisfy needs and what of the society (perform work). For the US federal Government, taxes and spending is an accounting measurement of two numbers that reflects the amount of dollars added by spending and dollars removed by taxes from the economy. How many fiat dollars can the US government add to the US economy?....You can think of it as a carpenter's tape measure used to measure out wood. How many inches here,...how many inches there,....the carpenter can run out of carpenter's wood, land, nails, ect......but he cannot run out of inches. On top of all this you have the external sector of trade that also supplies the world with US dollars. The US the last time I looked now has net trade imports
approaching 1 trillion dollars. That's a lot of dollars leaving the US economy but, it's a lot of production being imported. What's the purpose of the currency? Get people to perform work! Most of the people reading and making comments here are not interested in lowering the conversation down to dial 1 from 8 to debate with you because that's what Facebook is for. This conversation is way past orthodoxy nonsense that is just repackaged classical economics that was discarded to the trash bin during the great depression.
This conversation is way past orthodoxy nonsense that is just repackaged classical economics that was discarded to the trash bin during the great depression.
BS
This time is not different. Progressive fantasy economics, encouraged by new age economics, are leading our economy to a dark place.
20% of our debt it owned by the Treasury. MMT. 33% is owned by foreigners. The rest is owned domestically. The supposition that a direct transmission of credit from and to our government may at times work on the margin. However it does not happen in isolation. Inflation which can be transmitted by our currency weakening increasing the supply of money tipping the economy into an inflationary period as we are seeing now. Japan has seen its currency get destroyed by a third by essentially MMT. Essentially all salaried workers in Japan have seen their wages go down by a third while imported goods prices skyrocket. Japan with D?GDP at 250% is in a prisoners dilemma. They need to raise rates to defend their currency but the cost could send the country into a default.
Britain in the 70's had 90%+ marginal tax rates, Fiat currency. An MMT paradise. It had to borrow from the IMF. Inflation was over 20%, a technical default. Each time the Callaghan government went to finance expenditures the currency collapsed. They only escaped through tough measures and going for growth.
I'd love to hear from the professor why I might be wrong but MMT as an expression of Keynesian economics that fits a coercive political philosophy is sadly "au courant" but wrong. Debt matters.
Debt that is actually debt matters. "Debt" that is actually just plain old money but is immediately prestidigitized into "debt" by the FED or treasury so it becomes a guaranteed asset primarily for the banks...is "DEBT". That characterizes the national "debt".
So don't worry about it....just awaken to what has always de-stabilized domestic economies, namely PRIVATE PERSONAL AND COMMERCIAL DEBT, and on what will break up the monopoly paradigm of DEBT ONLY...which is to strategically integrate the new monetary and financial paradigm of Direct and Reciprocal Monetary Gifting into the debt based system.
The currency itself is a government IOU, regardless of if it's a green dollar or yellow dollar (treasury security). That US Federal Government IOU is excepted as means of payment in many areas of the world or can be exchanged for foreign currencies. You can exchange your yellow dollars for green dollars anytime you want. Just what do think the US Federal Government owes holders of Federal Government IOUs. You can pay Federal Taxes, fees and fines, but outside of that the only thing you're going to get for your 20 dollar IOU is two 5s and a 10. You can buy whatever is for sale in US dollars with those US government IOUs (fed debt) any place in the world. They will remain in circulation or savings till the US government redeems in federal taxes. The only thing the US federal government owes is US dollars. US dollars are tax credits which drive's the need for the currency (value) and assures acceptance at your local car dealer.
This quantity theory of money as the source of inflation has zero empirical evidence to support the theory in the real world (name one). The primary driver of inflation over that last 30 years has come from abusive market power coming primarily from energy, health care, housing and education sectors. Other than those primary area's it's always been something to do with a problem on the supply side. The high tax increases during WW2 in the UK and the US, was to control inflation due to the retooling of production to war supplies. As Keynes put it in his 1940 book "How To Pay For The War," "moving from the Age of Plenty to the Age of Scarcity."
The 70s and 80s oil price shock drove the inflation (cost push). US inflation around 20%, nothing to do with the money supply creating too much demand.
The US economy had been suffering from lack of aggregate demand for 50 years with high levels of unemployment and underemployment. This is not characteristic of the currency issuer issuing to much currency (Federal government "debt").
Since COVID, demand has out stripped supply due to changes in consumer demands (what people buy) and loss of production from COVID. Other factors driving inflation are energy prices and abusive market power. This "federal government debt" you're so worried about is responsible for the recovery of the 22 million jobs lost during the pandemic. IF you want to focus on debt you need to focus on private sector debt, that's where the problems come from yet not word from you on private sector debt.
The value of the US dollar on the foreign exchange market is up, not down! How do Orthodox models explain that? It doesn't sound like the capital market flows are to worried about the US dollar Armageddon. The backward fundamental starting of thinking that the taxpayers funds the federal government as opposed to the federal government funding the taxpayer is the starting point that leads to a bunch of nonsense that doesn't add up.
Excellent exegesis Rick. Especially your last point that the continual build up of PRIVATE debt is where the actual problem exists. That's why my twin policies of 1) a 50% Discount/Rebate at retail sale which goes a long way toward addressing the failure of American wage gains for the 99% over the last 50 years and 2) my 25-50% Discount/Debt jubilee at the point of loan signing which (finally) continuously integrates debt jubilee into the economic process...are so paradigm changing. Imagine buying a new $60k Tesla for $30k and when you go to the finance guy you only have to borrow $15k. If you buy a $40k internal combustion auto you pay $20k at retail and get a 25% debt jubilee at Finance so you only borrow $15k.
I love MMT's (correct) observations regarding the money system. I love Steve Keen's (correct) Minsky's Financial Instability Hypothesis. I love Michael Hudson's (correct) Financial Parasitism Hypothesis. I love Ellen Brown's (now somewhat watered down) Public Banking. Why? Because they are all valid observations regarding the paradigm of "money, debt and banks". Their only problem is they are palliative reforms instead of an Operant Concept/Paradigm Changing program...like what I advocate.
So should we maintain the lesser value of reform or go for the gusto with paradigm change where all of the valid research is acknowledged and integrated into a more ethical, efficacious and PERMANENT survival phenomenon???
Intellectual vanity only hurts for a moment, but the death by a thousand cuts where an excellent reform like Keynesianism gets morphed into neo-classical macro leaves the well intentioned full of frustration and regret.
If private banks create money, how come you get Federal Reserve Notes out of the ATM of all private banks. You do not get private bank money. The Gurus like Warren Mosler, Randy Wray, and Stephanie Kelton give a qualified money name to what private banks create. For some purposes, that other set of words is an adequate explanation, but for some purposes those names are misleading. For explaining why private banks need Federal Reserve money, or why they do not give out private bank money from an ATM, or why privaet banks don't just create money when they need it, you have to use the appropriate words. If you call what private banks create with the name promises of money, it makes it clearer why sometime a promise of money is not good enough. Sometimes people want real government bank money in terms of Federal Reserve Notes , USA Treasury bills, or USA treasury bonds.
If you don't see the problem, then I don't think you are understanding money as deeply as you think you are.. I forget the exact words that Michael Hudson used to explain what private banks create when it comes to those situations where calling it a form of money is not an adequate explanation.
If unemployment remains low and wages continue to grow, I wonder if it matters whether we are technically in a recession by some definition or not, as long as household balance sheets and income statements/cash flows hold up... that said, what economic measures are you watching most closely going forward Stephanie?
How do you create all of a roaring economy, accomplish the goals of Andrew Yang/UBI, Stephanie Kelton and every other MMTer, Steve Keen, Michael Hudson, Ellen Brown, enable us to effectively confront climate change, integrate the best aspects of the economic and political agendas of the right (tax cuts) and the left (economic democracy) and completely slay inflation...all in one fell swoop?
Answer: Become a system's philosopher and change the current monetary and financial paradigm which has been in effect for the entire course of human civilization, and has be-deviled humanity on many levels as a result.
Every one of the above movements and areas of activism are reforms, EXCELLENT reforms, reforms that in fact point at and conceptually align with the new paradigm concept...but they haven't recognized the specific new paradigm concept or the most efficacious points in the economic process to apply the new concept and hence temporally implement and change the ENTIRE PATTERNS of economics and the money system.
Reforms are good...and always incomplete and temporary. Only genuine paradigm changes are permanently progressive. Let us begin to analyze on the operant concept/paradigmatic level and integratively solve the key problem, namely the current pattern, not just (ineffectively) hit at it with various reforms. Please.
This is insane crazy.
Yes, that is the way all new paradigm concepts are initially perceived because they are always in complete conceptual opposition to the present paradigm and its problematic set of orthodoxies. Nomadic Hunting and Gathering was in complete conceptual and temporal opposition to Agriculture, Homesteading and Urbanization. Likewise, helio-centrism required us to conceptually and temporally think in terms of complete inversion of the positions of the earth and the sun. It's not easy to buck orthodoxies especially when they are coming from both sides of a duality, but when the new concept works to resolve the major problems
of the current paradigm and makes everything in the pattern under analysis function better all you have to do is keep looking at its actual effects...until it blows your mind.
The 50% Discount/Rebate policy at retail sale is such because it is the very expression of the new paradigm concept, Abundantly Direct and Reciprocal Monetary Gifting and its executed at the single point in the entire economic process (retail sale) that is universally participated in. Hence its mathematical effects are macro-economic. Those effects are an immediate doubling of everyone's purchasing power, the potential doubling of available demand for every enterprise's goods and services and not only the end of inflation, but the implementation of BENEFICIAL price and asset DEFLATION. Now that is an orthodoxy busting set of effects if I ever saw them.
You should read Michael Hudson on the financial paradigm which has been in effect for the entire course of human history. I'll bet that you will find that history is not what you assume. Why assume what that history has been when there are people who have actually studied that history and have written about what they have found? Did I mention Michael Hudson?
I included Michael Hudson in my original post. I don't know if Michael has actually expressed a specific new paradigm concept. I do know that he considers private finance to be a parasite which I totally agree with, and his research regarding the ancients doing periodic debt jubilees (which is what? Oh yes, a form of monetary gifting) is accurate and aligned with what I'm saying.
The only problem with debt jubilees was they were basically one-offs and hence palliatives, because ever rising private debt just went right back to being inevitable. We need to be smarter than the ancients, not stupider like now...and integrate debt jubilee directly and continuously into the economic process with my second most primary policy which is a 25-50% Discount/Debt Jubilee policy at the point of loan signing.
Put the retail sale and loan signing policies together and a $60k Tesla becomes $30k at retail and when you go to sign the note its reduced to $15k. If you buy a $40k internal combustion auto its $20k at retail and $15k at note signing (only a 25% debt jubilee). Likewise a $400k home is $200k at retail and $100k at note signing. As I said, the new paradigm and its policies resign inflation to the dust bin of history.
The debt jubilee written into the Hebrew bible was periodic. Did you miss this part of Michael Hudson's writings? Your ideas for writing in a jubilee into a loan may be novel. Let's see some experts opine on how likely your ideas will work in the real world. I see problems with them myself, but I am not going to argue with you here.
It WAS periodic. That was its problem. We need to integrate it continuously into the economic process. And that is what the 25-50% Discount/Debt Jubilee policy at the point of note signing does. Just do the simple yet macro-economically effecting math.
I'd welcome the opportunity to discuss and defend what I've posted here, particularly from Stephanie and from anyone else. Just remember two very important truths, new paradigms always explode orthodoxies and cynicism never solved a problem because it is about 5 microns above apathy and it's exactly what the ruling elites with their paradighmatic control are hoping is everyone's reaction to something actually new.
New paradigms tend to explode orthodoxies. However, every idea that explodes orthodoxies is not necessarily a good idea. Let me explode another old saw. If I don't have a better idea, that does not promote your idea to be a good idea.
I wouldn't dispute that last statement. However, if you or anyone else can find an applied concept that temporally and mathematically accomplishes more than everything I listed in my original post here and with only four basic policies (there is much more to the entire policy program in my book) ...then I'm all ears.
Waiting for some constructive response from Stephanie or some other economic thinker here that affirms or tries to refute any of the claims I make for the policies of the new monetary and financial paradigm. I don't like being a troll, but I dislike apathy or some other motive regarding something as truly significant as a pattern change....especially when making that change could not only enable MMT's goal of increased fiscal deficits but enable deficits literally orders of magnitude larger than current thinking on the matter so that we could fund the mega-projects necessary to rationally confront climate change. Please, even
MMT is utopian. Leveraging our country’s balance sheet with the wobbly idea we have fiat currency or treasure to spend will end in tears or worse. This time is not different. As for climate change a lot has been done and more Is to come. Panicking is the worst thing we and others can do. Look at the EU. They are now hostages to Russian oil. Crazed.
First off what I'm suggesting is not MMT yet would hasten the goals and genuine benefits that the MMT perspective on our money system would enable.
MMT is not utopian. It is a very good reform movement that does important things, namely clarifies the process of money creation in our fiat system and shows that we are monetarily sovereign.
My new monetary paradigm goes way beyond that because it breaks up the monopolistic monetary paradigm that forces new money to be created only with the burden to repay it. This is done strategically by gifting 50% of the price to the individual at retail sale and reciprocally gifting every cent of that discount back to the merchant so they are made whole on their overheads and profit margins. That single policy is a conceptual and temporal universe change in the character of both the economy and the money system, and there are further policies in the new paradigm that stabilize and bring many more benefits to virtually every agent.
The 50% Discount/Rebate at retail sale mimicks the exact accounting process that the private banks utilize to create upwards of 97% of our money AND YET with the equal debits and credits formula of accounting summing to zero and the character of the new paradigm (Gifting) ....changes the entire pattern while resolving its deepest problems.
You understand accounting. DO YOU SEE THIS STEPHANIE?!
MMT gurus refuse to tell you the story in words that make sense here. Private banns do not create money. They create promises of money. If these private banks are ever forced to pay out all the money they have promised, it is the Federal Reserve that will have to create it, and give it to the private banks.
You mean gurus like Michael Hudson who you have touted here? Perhaps you had better re-read Hudson. Private banks DO create upwards of 97% of our money every year simply with accounting entries. The FED just provides them (the banks) with the reserves to cover their loans. The FED is the hand maiden of the private banks. I thought you were rellatively astute, but you're almost as uniformed and/or blinded by orthodoxy as Mr. Carroll
Do you still believe in the myth of the loanable funds model for bank loans? Loans are not "covered" by reserves.
If private banks create money, how come you get Federal Reserve Notes out of the ATM of all private banks. You do not get private bank money. The Gurus like Warren Mosler, Randy Wray, and Stephanie Kelton give a qualified money name to what private banks create. For some purposes, that other set of words is an adequate explanation, but for some purposes those names are misleading. For explaining why private banks need Federal Reserve money, or why they do not give out private bank money from an ATM, or why privaet banks don't just create money when they need it, you have to use the appropriate words. If you call what private banks create with the name promises of money, it makes it clearer why sometime a promise of money is not good enough. Sometimes people want real government bank money in terms of Federal Reserve Notes , USA Treasury bills, or USA treasury bonds.
If you don't see the problem, then I don't think you are understanding money as deeply as you think you are.. I forget the exact words that Michael Hudson used to explain what private banks create when it comes to those situations where calling it a form of money is not an adequate explanation.
“Economic Democracy “ , by whom? The Elite? What a joke. Who decides? I believe you, and she, mistake the ideal of economic democracy with coercion. Permanently Progressive. C’mon. Cutting taxes, crazed redistribution and leveraging your balance sheet to crazy levels is tantamount to a teenager stealing his parents credit card, maxing it out and trying to pay it off with new credit thinking Dad is Fiat currency. Trust me when I say, none of these new age economists will be around when the wheels come off.
You're not doing the simple math at retail sale. Do it. Paradigm changes are always permanently progressive moments. Gutenberg Press wasn't a permanent technological advance? Copernican Cosmological paradigm change wasn't a permanent astronomical and cosmologically positional change? You're critiquing from the mindsets of at least several dis-proven orthodoxies. I'm sorry. Go back to school.
Cosmological paradigm. Sounds wild. Are you related to Crazy Eddie ;). Maybe I just don’t get it. :)
So...you couldn't find a single economist who thought we might be in a recession? Really?
She mentioned Liz Ann Sonders at Schwab - but you mean someone more of an academic?
Ooops! Missed that...How about Paul Krugman?
I’m very excited and happy to have you back writing new posts, I have missed it and look forward to them
Folks. MMT is looking not so good. Funny, the UK has fiat currency. Their long guilt traded down in PX 50% in two days a month ago. It cost them a government. Their D/GDP approaching 100%. It can’t happen here. Our D/GDP is a manageable 125%. A record high. The teleprompter thinks he is FDR. Inflation is transitory and our creditors actually want to get paid back.
Financial and commodity markets are largely an overly speculative inflationary tool of the banks and their monopolistic paradigm. MMT doesn't make much noise about them. I don't know if that is simply an attempt to avoid hitting the wasp nest of Finance or because it doesn't fully realize that it conceptually and theoretically still remains within the current monetary and financial paradigm. However, MMT is not any kind of primary or secondary cause of inflation.
Who's our creditor's? Who wants to be paid back? You seem to have not gotten past the basic understanding of the importance of differentiating between the "users" and the "issuer" of the currency. Federal government spending is nothing like your daddy's credit card. You seem to think there's only one side to the Federal government balance sheet. What is "debt" for a sovereign currency issuing government like the US government, that taxes, spends, and borrows only in its own currency. The US contributes nearly three time the amount of funds to the IMF for lending than the second highest contributor Japan. US is the largest creditor nation, not debtor nation. You seem to fail to understand the basic purpose of the currency. The purpose is to mobilize resource (labor and capital) to satisfy needs and what of the society (perform work). For the US federal Government, taxes and spending is an accounting measurement of two numbers that reflects the amount of dollars added by spending and dollars removed by taxes from the economy. How many fiat dollars can the US government add to the US economy?....You can think of it as a carpenter's tape measure used to measure out wood. How many inches here,...how many inches there,....the carpenter can run out of carpenter's wood, land, nails, ect......but he cannot run out of inches. On top of all this you have the external sector of trade that also supplies the world with US dollars. The US the last time I looked now has net trade imports
approaching 1 trillion dollars. That's a lot of dollars leaving the US economy but, it's a lot of production being imported. What's the purpose of the currency? Get people to perform work! Most of the people reading and making comments here are not interested in lowering the conversation down to dial 1 from 8 to debate with you because that's what Facebook is for. This conversation is way past orthodoxy nonsense that is just repackaged classical economics that was discarded to the trash bin during the great depression.
This conversation is way past orthodoxy nonsense that is just repackaged classical economics that was discarded to the trash bin during the great depression.
BS
This time is not different. Progressive fantasy economics, encouraged by new age economics, are leading our economy to a dark place.
20% of our debt it owned by the Treasury. MMT. 33% is owned by foreigners. The rest is owned domestically. The supposition that a direct transmission of credit from and to our government may at times work on the margin. However it does not happen in isolation. Inflation which can be transmitted by our currency weakening increasing the supply of money tipping the economy into an inflationary period as we are seeing now. Japan has seen its currency get destroyed by a third by essentially MMT. Essentially all salaried workers in Japan have seen their wages go down by a third while imported goods prices skyrocket. Japan with D?GDP at 250% is in a prisoners dilemma. They need to raise rates to defend their currency but the cost could send the country into a default.
Britain in the 70's had 90%+ marginal tax rates, Fiat currency. An MMT paradise. It had to borrow from the IMF. Inflation was over 20%, a technical default. Each time the Callaghan government went to finance expenditures the currency collapsed. They only escaped through tough measures and going for growth.
I'd love to hear from the professor why I might be wrong but MMT as an expression of Keynesian economics that fits a coercive political philosophy is sadly "au courant" but wrong. Debt matters.
Orthodoxies. Errant orthodoxies. Sorry.
Debt that is actually debt matters. "Debt" that is actually just plain old money but is immediately prestidigitized into "debt" by the FED or treasury so it becomes a guaranteed asset primarily for the banks...is "DEBT". That characterizes the national "debt".
So don't worry about it....just awaken to what has always de-stabilized domestic economies, namely PRIVATE PERSONAL AND COMMERCIAL DEBT, and on what will break up the monopoly paradigm of DEBT ONLY...which is to strategically integrate the new monetary and financial paradigm of Direct and Reciprocal Monetary Gifting into the debt based system.
The currency itself is a government IOU, regardless of if it's a green dollar or yellow dollar (treasury security). That US Federal Government IOU is excepted as means of payment in many areas of the world or can be exchanged for foreign currencies. You can exchange your yellow dollars for green dollars anytime you want. Just what do think the US Federal Government owes holders of Federal Government IOUs. You can pay Federal Taxes, fees and fines, but outside of that the only thing you're going to get for your 20 dollar IOU is two 5s and a 10. You can buy whatever is for sale in US dollars with those US government IOUs (fed debt) any place in the world. They will remain in circulation or savings till the US government redeems in federal taxes. The only thing the US federal government owes is US dollars. US dollars are tax credits which drive's the need for the currency (value) and assures acceptance at your local car dealer.
This quantity theory of money as the source of inflation has zero empirical evidence to support the theory in the real world (name one). The primary driver of inflation over that last 30 years has come from abusive market power coming primarily from energy, health care, housing and education sectors. Other than those primary area's it's always been something to do with a problem on the supply side. The high tax increases during WW2 in the UK and the US, was to control inflation due to the retooling of production to war supplies. As Keynes put it in his 1940 book "How To Pay For The War," "moving from the Age of Plenty to the Age of Scarcity."
The 70s and 80s oil price shock drove the inflation (cost push). US inflation around 20%, nothing to do with the money supply creating too much demand.
The US economy had been suffering from lack of aggregate demand for 50 years with high levels of unemployment and underemployment. This is not characteristic of the currency issuer issuing to much currency (Federal government "debt").
Since COVID, demand has out stripped supply due to changes in consumer demands (what people buy) and loss of production from COVID. Other factors driving inflation are energy prices and abusive market power. This "federal government debt" you're so worried about is responsible for the recovery of the 22 million jobs lost during the pandemic. IF you want to focus on debt you need to focus on private sector debt, that's where the problems come from yet not word from you on private sector debt.
The value of the US dollar on the foreign exchange market is up, not down! How do Orthodox models explain that? It doesn't sound like the capital market flows are to worried about the US dollar Armageddon. The backward fundamental starting of thinking that the taxpayers funds the federal government as opposed to the federal government funding the taxpayer is the starting point that leads to a bunch of nonsense that doesn't add up.
Excellent exegesis Rick. Especially your last point that the continual build up of PRIVATE debt is where the actual problem exists. That's why my twin policies of 1) a 50% Discount/Rebate at retail sale which goes a long way toward addressing the failure of American wage gains for the 99% over the last 50 years and 2) my 25-50% Discount/Debt jubilee at the point of loan signing which (finally) continuously integrates debt jubilee into the economic process...are so paradigm changing. Imagine buying a new $60k Tesla for $30k and when you go to the finance guy you only have to borrow $15k. If you buy a $40k internal combustion auto you pay $20k at retail and get a 25% debt jubilee at Finance so you only borrow $15k.
I love MMT's (correct) observations regarding the money system. I love Steve Keen's (correct) Minsky's Financial Instability Hypothesis. I love Michael Hudson's (correct) Financial Parasitism Hypothesis. I love Ellen Brown's (now somewhat watered down) Public Banking. Why? Because they are all valid observations regarding the paradigm of "money, debt and banks". Their only problem is they are palliative reforms instead of an Operant Concept/Paradigm Changing program...like what I advocate.
So should we maintain the lesser value of reform or go for the gusto with paradigm change where all of the valid research is acknowledged and integrated into a more ethical, efficacious and PERMANENT survival phenomenon???
Intellectual vanity only hurts for a moment, but the death by a thousand cuts where an excellent reform like Keynesianism gets morphed into neo-classical macro leaves the well intentioned full of frustration and regret.
Ho, everyone joining my chat today. If anyone here could introduce yourself that would be great.
Hi Claudia!! Big fan here :)
Hi Claudia, thanks for your chat!
If private banks create money, how come you get Federal Reserve Notes out of the ATM of all private banks. You do not get private bank money. The Gurus like Warren Mosler, Randy Wray, and Stephanie Kelton give a qualified money name to what private banks create. For some purposes, that other set of words is an adequate explanation, but for some purposes those names are misleading. For explaining why private banks need Federal Reserve money, or why they do not give out private bank money from an ATM, or why privaet banks don't just create money when they need it, you have to use the appropriate words. If you call what private banks create with the name promises of money, it makes it clearer why sometime a promise of money is not good enough. Sometimes people want real government bank money in terms of Federal Reserve Notes , USA Treasury bills, or USA treasury bonds.
If you don't see the problem, then I don't think you are understanding money as deeply as you think you are.. I forget the exact words that Michael Hudson used to explain what private banks create when it comes to those situations where calling it a form of money is not an adequate explanation.
If unemployment remains low and wages continue to grow, I wonder if it matters whether we are technically in a recession by some definition or not, as long as household balance sheets and income statements/cash flows hold up... that said, what economic measures are you watching most closely going forward Stephanie?
Of course reserves cannot be loaned out. If they were loaned out, they wouldn't be reserves anymore, would they?