19 Comments

Much needed. JG is, of course, the favorite of MMTers.

An important point is that when policy interventions - non-automatic stabilizers - are needed, Congress is not nimble enough to do it in the proper amount at the proper time. The Fed is much more agile. I would give the Fed limited authority to manage two fiscal levers: a low, flat rate tax on all business gross receipts; and a monthy per capita stipend from the Fed to each State and Territory (suggested by Warren Mosler in response to the GFC, but I would make it a permanent feature, sharing a little bit of monetary sovereignty with lower levels of government).

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Feels like I’m reading Paul Krugman again when the article is about automatic stabilizers yet no mention of a job guarantee

You still support that, right?

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Dr.Kelton I just finished your colleague L. Randall Wary's latest book,'Making Money W

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Sorry last sent before ready ! my comment here below:

Dr.Kelton, average Joe citizen[ actually Ron] here ,who has been an advocate of a Government Guaranteed Job Program [GGJP] for sometime now and was initially attracted to MMT thru your book Deficit Myth.Your core group of economists have impressively moved MMT into the national political discussion and action, thank goodness. MMT just makes common sense to this Super Senior .AND -of all the federal policies and programs that would have major stabilizing economic, social, equalizing and economic effect on our sovereign nation ,I believe would be 1- Medicare For All  &  1A GGJP-and honestly 1A maybe the most important now of the 2.

I just  finished your colleague L. Randall Wray's recent book"Making Money Work For Us : How MMT Can Save America".I was surprised to learn and greatly encouraged that of MMT'S 3 major policy proposals, THE No# 1 POLICY IS GGJP !!

I hope that you and  your MMT TEAM will include more discussion and education of the Public and Politicians on GGJP PLEASE !! KEEP UP YOUR GREAT WORK !!

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I was hoping you would suggest some automatic stabilizers. The JG is the obvious one but beyond that.

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I'm a fairly unsophisticated student of economics in general, and MMT in particular, so forgive me if what I'm about to say sounds . . . unsophisticated:

"Deficits" arise when the federal government spends more in a fiscal year than it receives in "revenue" -- taxes and fees. From an MMT perspective, deficits are problematic economically only to the extent that they can lead to inflation. But, politically, they are problematic because, under our current system, they must be financed by "borrowing" from the private sector via the issuance of bonds. In the popular political imagination, "borrowing" means taking on "debt," and "debt" accrued by the federal government is, in the popular political imagination, the deadliest of economic sins: It's irresponsible, it's unsustainable, it puts a damper on private investment, it unfairly burdens our child and grandchildren, and so on.

This is all mostly BS, of course, but it is gospel writ across much of the political spectrum. Even left-leaning Democrats who should surely know better can't talk about federal spending without, in the same breath, swearing allegiance to "fiscal responsibility" and deficit reduction and the best interests of the children and grandchildren and great-grandchildren.

We can talk about the largely salutary nature of "deficits" -- whether arising from automatic stabilizers or fiscal policy. -- until we're blue in the face. But to make that idea politically palatable, we need to either (a) get a lot better at explaining why federal "debt" is not like household debt or, better yet, (b) simply abandon the requirement that deficits be "financed" by bond sales. If we need to drain money from an economy at risk of overheating, do it via taxation and by letting us little people maintain fully insured interest-bearing savings accounts (or term certificates) at the Fed. What looks like governmental "debt" -- the work of Satan --will instead look like private sector "savings," of which no one dares speak ill.

Amirite?? What say you sophicticates?

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$5 trillion. Crazed spending. Debt to GDP 125% and skyrocketing. Labor participation collapsing, inflation stoked, real earnings down and unemployment about to take off. The Government is not 100% of the solution and our balance sheet is in the danger zone. If GDP collapses again what gives?

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Perhaps time to start stating it in bald terms.

Rather than guaranteeing a price at which loans can be sold to the central bank, we should guarantee a price at which labour hours can be sold to the Treasury.

And rather than talking about fiscal and monetary policy, talk about *stabilisation* policy. We are looking to replace the current *discretionary* stabilisation policy with a fully automatic one that works in all economic weather.

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Dec 21, 2022·edited Dec 22, 2022

The automatic stabilizers AS were OK for the people, but as you say, not big enough.

Why aren't you lambasting the Fed for its balance sheet going from 1 Trillion in 2007, to 9 Trillion now? The Moneyed Interests have been using the Fed's balance sheet as an AS for the filthy rich protecting all their vital interests with little concern for we the people.

We need to let stuff CRASH next time AND let the Moneyed Interests BURN, converting the banks and companies that will undoubtedly fail, to publicly-owned enterprises.

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Central bankers, along with Keynesian & MMT ideologies, continue to wreak havoc on western economies. Edward Chancellor's excellent book 'The Price of Time' offers a sobering history of the world's prior major economic crises. All share the same basic traits - interest rates =< 2% and a gusher of easy money.

More than two years ago, I and others like me warned of the inflation gusher ahead. The Fed insisted it was 'transitory' but when basic commodity prices like copper & steel were up 40% to 70% over 2020, it was obvious that inflation would be anything but transitory. These are inputs to major capex spending and these higher costs became embedded. Wage pressures predictably followed.

Policy makers need to spend a lot less time & energy tweaking policy. Anyone with manufacturing experience understands the risks inherent with constant process tweaking. Economists need to learn the same lessons.

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