Typical liberal b.s. only reason we get away with your opinion is US$ is the Worlds Reserve Currency (for current time anyway) ... that doesn’t stop money/resources be massively wasted by Federal Spending...of course most Economists are essentially Federal Government Workers anyway.... getting life time jobs at Universities , Big banks, or actual Feds. You have an extremely strong reason for favoring Big Federal Government
There seems to be no way around the fact that virtually all participants in the debt ceiling kerfuffle are idiots. Rather than attempting to reason with cretins, I suggest that, instead, we demand that each Congress-critter who opposes raising the debt ceiling submit a list of all of the items of federal spending for their state or district they will agree to forgo to avoid raising it. I predict that, were they required to do so, they'd cease whining about the ceiling immediately.
I like stopping the partisan finger pointing. But it wouldn't hurt to blame both Parties--i.e. Congress--for policies that have contributed to the supply-push inflation that we are experiencing, namely trade wars (e.g. with China) and economic sanctions (on Russia), as Stiglitz has pointed out. These policies have pushed the Fed into raising interest rates. Why not remind the American people of the elephant in the room--Congress itself?
If the trade and economic sanctions were accomplishing their objectives, that's one thing. But the trade deficit with China is actually increasing, and the Ruble is as strong as ever. We should be throwing in the towell but the hawks in Congress and the White House have other agendas than the health of the US/EU economies.
I wish Stephanie would help the American people understand the connection between the Trade Deficit, the wars of empire, and the government spending deficit. As Stephanie points out, the government must be in the "red" for the rest of us--including our trade partners--to be in the "black." The rest of the world strives to be "in the black" in dollar terms (the dollar being the global Reserve Currency) to keep the IMF off their backs. Who's the only player that can sustain "red" finance indefitely? Only the fiat creator of dollars via interest-bearing bonds. Where do those bonds come from? US federal spending deficits. This , in a nutshell, is "Triffin's Dilemma," first posited in the early '60's. It's the burden of the Reserve Currency sovereign for providing a growing money supply for the world at the expense of the domestic economy. In the current trade regime, the U.S. taxpayer is funding capital outflows via Treasury bonds in order for private wealth holders to invest abroad and privatize their profits from the sale of their goods back to U.S. consumers. In short, the US public debt is a "U.S. public money-->international private profit" scheme. It's a scheme that benefits international capital and the FIRE sector at the expense of U.S. workers, U.S. infrastructure, U.S. States and Cities, all of whom have experienced shrinking income and tax revenues for decades. We are financing the de-industrialization of America and turning the economy into a rentier economy.
We'd like to spend our public deficits in ways that help the U.S. economy. US public finance at the expense of workers, cities and States (e.g. via a strong dollar) would seem to be the height of stupidity and unfairness. Stupid because continuing on this path really does undermine the long term credit-worthiness of the U.S. by weakening its foundations. The unfairness is obvious, now, to all and is contributing mightily to political instability.
Ironically, there are indications we are headed into a recession. Excessive trade deficits hurt GDP, and is one reason why the US. economy is so anemic. So now we must increase deficits to help stabilize the economy. Cutting spending now would turn a normal recession into a deep recession.
Look up Triffin's dilemma to understand why we are in this awful position. There is a way to get out of it: let the dollar decline, endure the resultant moderate trade-induced inflation, and help the U.S. economy recover from its addiction to trade deficits. Let inflation provide a price signal to industry to raise domestic output. It really is Macro-Economics 101.
Growth in actual productive capacity and GDP is what we need to reduce the Debt/GDP ratio. That will then change the appetite (particularly by private business) to invest and incur debt for real growth. Then the Corporate sector will become net borrowers rather than net savers. They'll want to be "in the red". Only then (if I understand MMT correctly) can the public deficits start declining.
No one party is to blame. The proponents of modern monetary theory (The idea that governments can and should print as much money as they need to spend) are the ones to blame. The central figures in the FED and the people in positions of power able influence fiscal and monetary policy are to blame. Anyone who supported the unlimited printing of money and the dropping of rates to zero to stave off economic contractions is the blame.
The headline speaks for itself. There is no debt crisis whatsoever. Typical fearmongering nonsense by both Democrats and Republicans just to score political points with their base. As Stephanie Kelton mentioned, Trump was right about the debt and yet Republicans still lie about America going off some sort of fiscal cliff. Its beyond embarrassing at this point. Enough with the finger pointing and its time to start looking out for the economy and the American people and stop trying to score political points with the media. Once more, there is no debt crisis.
I would like to hear “The federal debt is a private sector asset. My colleagues and I are working to make it an asset of the people.”
Actually that was pointed out in the Canadian parliament in 1942 when the MPs were discussing with the governor of the Bank of Canada, Graham Ford Towers. the growing war debt. He, Towers, agreed with an MP who asked if the debt was a private sector asset. The finance minister of the day who led Canada’s delegation to Bretton Woods, J. L. Ilsley, then said we need to discuss how to make it an asset of the people.
I almost shared to my Facebook timeline but couldn’t. I speak to MMT often and always reference Dr Kelton. Yet, it seems to contain too much about what politicians and orthodox economists are saying not enough about the Why they’re not right. However, I’m ADHD and boar quickly. Or, I get anxious when positives are not weaved into a discussion as the negative bombs are being dropped. Nonetheless, Dr Kelton is my Go-To economics expert.
I believe it is empirically true that Republicans only care about the size of the federal deficit when Democrats hold the White House. They believe it is to their political advantage to behave in this fashion.
What I wonder is: Why do the Democrats allow this game to continue?
By now they know (a) that the Republicans will kick up a fuss every time the debt limit needs raising; and (b) if there's a government shutdown, the Republicans will get the lion's share of the blame. The Democrats could simply have abolished the debt limit once and for all when they held both houses of Congress. That would have deprived the Republicans of an issue and freed up Congressional time for more important issues. That the Democrats have not done so suggests that they want to keep the game going solely to provide the Republicans with opportunities to embarrass themselves. Fine for the Democrats -- but for the country?
MMT has the communication problems you mention all right. What it doesn't have is a set of policies that immediately and directly impact the pocket books of the individual. Think about it. Why didn't people bitch about the debt when they received their COVID stimulus checks? Because it was a direct gift of money and hence it benefited them. I'll bet the bankers really quacked in their boots and wanted to put their fingers to their mouths and go SHHHH! when the decision was made to implement that once or twice-off policy. A 50% Discount/Rebate policy at retail sale is the perfect direct and immediate beneficial policy MMT and every other monetary reform movement needs to break the spell of Finance's dominance. It simultaneously slays our three biggest economic problems:
1) continual erosive price and asset inflation
2) chronic scarcity of individual demand
3) the communication problem you mention, as an immediate and continuous doubling of everyone's purchasing power with a 50% Discount/Rebate policy at retail sale is the best thing "since sliced bread".
Messaging? How did Trump win in 2016 and get 40 million Twitter followers? He pressed the 50 year old ignored and oppressed button. Why not press the human civilization long dominated and enslaved button that Finance's monopolistic paradigm of New Money Creation Must Only Be Debt as in Burden to Repay and integrate Monetary Gifting DIRECTLY AND CONTINUOUSLY into the Debt Only system?
Here's a related post I just made on Steve Keen's substack podcast:
All of what you say regarding neo-liberal macro is spot on of course, but why do you treat private banking as a legitimate business model? Think about it. Finance is a shit load of additional costs that is always either post-retail sale or pre-production consequently clearly marking it as an exterior parasite on the the rest of the actually legitimate economic/productive process. And it matters not that calculus can justify its costs mathematically, its non/anti-economic in nature. You toss in the fact of its increasingly unethical dominance of every other business model and 95-99% of every individual agent and what's the argument FOR it???
A true publically administered banking system has so many advantages over the private system its a testament to acculturated unconsciousness that no one is advocating for it. For instance, a public banking system would not need to make a profit thus it could both change the terminal ending point of the entire economic process from retail sale to the point of loan signing and thus incorporate finance into the legitimate economy. It would also much more easily enable us to integrate debt jubilee continually into that process with a 0-50% Discount/Debt Jubilee policy at point of loan signing. (the more rational and ecologically sane the financing the higher the debt jubilee percentage). Let's have some innovation for "the roving cavaliers of credit". Better yet, let us apply an aspect of the natural philosophical concept behind every historical paradigm change namely grace, in this instance monetary grace as in gifting.
That 6.2 trillion dollar CARES act bill Trump was talking about contained 2.2 trillion dollars of fiscal policy and 4.0 trillion dollars of monetary policy (lending). Loans are not recorded as "federal government deficits.'' Can anyone tell me if any of the 4.0 trillion (fed money) in the CARES act was in the form of ''forgivable loans?" At the very least they were low or no interest loans that corporations could receive and be used to do "Stock BuyBacks."
No one seems to be concern with the amount debt wall street has compiled (private sector wealth)! Hmmmmmmm, I guess we have the currency issuer to bail them out. Let also not forget the trillions of dollars the fed pump into the banking system and buying troubled assets in the years following the GFC.! No mention of private sector debt. It's only when certain people receive Federal deficit dollars (net spending) that "Federal Government deficits" become a problem.
The Federal debt needs a new name because it's more like an equity account than a debt. I suggest National Retained Earnings because it is a measure of private savings.
I'm with the Congressman, prioritize humans. Even the ones who disagree with me, frustrate, irritate and do not “like” me. We’re all in this situation together.
Kindly explain: "net savings desires of the non-government sector."
My engagement with MMT has not brought me into contact with this phrase.
Thank you.
Typical liberal b.s. only reason we get away with your opinion is US$ is the Worlds Reserve Currency (for current time anyway) ... that doesn’t stop money/resources be massively wasted by Federal Spending...of course most Economists are essentially Federal Government Workers anyway.... getting life time jobs at Universities , Big banks, or actual Feds. You have an extremely strong reason for favoring Big Federal Government
There seems to be no way around the fact that virtually all participants in the debt ceiling kerfuffle are idiots. Rather than attempting to reason with cretins, I suggest that, instead, we demand that each Congress-critter who opposes raising the debt ceiling submit a list of all of the items of federal spending for their state or district they will agree to forgo to avoid raising it. I predict that, were they required to do so, they'd cease whining about the ceiling immediately.
I like stopping the partisan finger pointing. But it wouldn't hurt to blame both Parties--i.e. Congress--for policies that have contributed to the supply-push inflation that we are experiencing, namely trade wars (e.g. with China) and economic sanctions (on Russia), as Stiglitz has pointed out. These policies have pushed the Fed into raising interest rates. Why not remind the American people of the elephant in the room--Congress itself?
If the trade and economic sanctions were accomplishing their objectives, that's one thing. But the trade deficit with China is actually increasing, and the Ruble is as strong as ever. We should be throwing in the towell but the hawks in Congress and the White House have other agendas than the health of the US/EU economies.
I wish Stephanie would help the American people understand the connection between the Trade Deficit, the wars of empire, and the government spending deficit. As Stephanie points out, the government must be in the "red" for the rest of us--including our trade partners--to be in the "black." The rest of the world strives to be "in the black" in dollar terms (the dollar being the global Reserve Currency) to keep the IMF off their backs. Who's the only player that can sustain "red" finance indefitely? Only the fiat creator of dollars via interest-bearing bonds. Where do those bonds come from? US federal spending deficits. This , in a nutshell, is "Triffin's Dilemma," first posited in the early '60's. It's the burden of the Reserve Currency sovereign for providing a growing money supply for the world at the expense of the domestic economy. In the current trade regime, the U.S. taxpayer is funding capital outflows via Treasury bonds in order for private wealth holders to invest abroad and privatize their profits from the sale of their goods back to U.S. consumers. In short, the US public debt is a "U.S. public money-->international private profit" scheme. It's a scheme that benefits international capital and the FIRE sector at the expense of U.S. workers, U.S. infrastructure, U.S. States and Cities, all of whom have experienced shrinking income and tax revenues for decades. We are financing the de-industrialization of America and turning the economy into a rentier economy.
We'd like to spend our public deficits in ways that help the U.S. economy. US public finance at the expense of workers, cities and States (e.g. via a strong dollar) would seem to be the height of stupidity and unfairness. Stupid because continuing on this path really does undermine the long term credit-worthiness of the U.S. by weakening its foundations. The unfairness is obvious, now, to all and is contributing mightily to political instability.
Ironically, there are indications we are headed into a recession. Excessive trade deficits hurt GDP, and is one reason why the US. economy is so anemic. So now we must increase deficits to help stabilize the economy. Cutting spending now would turn a normal recession into a deep recession.
Look up Triffin's dilemma to understand why we are in this awful position. There is a way to get out of it: let the dollar decline, endure the resultant moderate trade-induced inflation, and help the U.S. economy recover from its addiction to trade deficits. Let inflation provide a price signal to industry to raise domestic output. It really is Macro-Economics 101.
Growth in actual productive capacity and GDP is what we need to reduce the Debt/GDP ratio. That will then change the appetite (particularly by private business) to invest and incur debt for real growth. Then the Corporate sector will become net borrowers rather than net savers. They'll want to be "in the red". Only then (if I understand MMT correctly) can the public deficits start declining.
No one party is to blame. The proponents of modern monetary theory (The idea that governments can and should print as much money as they need to spend) are the ones to blame. The central figures in the FED and the people in positions of power able influence fiscal and monetary policy are to blame. Anyone who supported the unlimited printing of money and the dropping of rates to zero to stave off economic contractions is the blame.
The headline speaks for itself. There is no debt crisis whatsoever. Typical fearmongering nonsense by both Democrats and Republicans just to score political points with their base. As Stephanie Kelton mentioned, Trump was right about the debt and yet Republicans still lie about America going off some sort of fiscal cliff. Its beyond embarrassing at this point. Enough with the finger pointing and its time to start looking out for the economy and the American people and stop trying to score political points with the media. Once more, there is no debt crisis.
I would like to hear “The federal debt is a private sector asset. My colleagues and I are working to make it an asset of the people.”
Actually that was pointed out in the Canadian parliament in 1942 when the MPs were discussing with the governor of the Bank of Canada, Graham Ford Towers. the growing war debt. He, Towers, agreed with an MP who asked if the debt was a private sector asset. The finance minister of the day who led Canada’s delegation to Bretton Woods, J. L. Ilsley, then said we need to discuss how to make it an asset of the people.
I almost shared to my Facebook timeline but couldn’t. I speak to MMT often and always reference Dr Kelton. Yet, it seems to contain too much about what politicians and orthodox economists are saying not enough about the Why they’re not right. However, I’m ADHD and boar quickly. Or, I get anxious when positives are not weaved into a discussion as the negative bombs are being dropped. Nonetheless, Dr Kelton is my Go-To economics expert.
Instead of imposing a financial budgetary limit on governmental spending, we should impose an inflationary budgetary limit.
Another talking point is The Federal deficit is the private sector's surplus.
I believe it is empirically true that Republicans only care about the size of the federal deficit when Democrats hold the White House. They believe it is to their political advantage to behave in this fashion.
What I wonder is: Why do the Democrats allow this game to continue?
By now they know (a) that the Republicans will kick up a fuss every time the debt limit needs raising; and (b) if there's a government shutdown, the Republicans will get the lion's share of the blame. The Democrats could simply have abolished the debt limit once and for all when they held both houses of Congress. That would have deprived the Republicans of an issue and freed up Congressional time for more important issues. That the Democrats have not done so suggests that they want to keep the game going solely to provide the Republicans with opportunities to embarrass themselves. Fine for the Democrats -- but for the country?
MMT has the communication problems you mention all right. What it doesn't have is a set of policies that immediately and directly impact the pocket books of the individual. Think about it. Why didn't people bitch about the debt when they received their COVID stimulus checks? Because it was a direct gift of money and hence it benefited them. I'll bet the bankers really quacked in their boots and wanted to put their fingers to their mouths and go SHHHH! when the decision was made to implement that once or twice-off policy. A 50% Discount/Rebate policy at retail sale is the perfect direct and immediate beneficial policy MMT and every other monetary reform movement needs to break the spell of Finance's dominance. It simultaneously slays our three biggest economic problems:
1) continual erosive price and asset inflation
2) chronic scarcity of individual demand
3) the communication problem you mention, as an immediate and continuous doubling of everyone's purchasing power with a 50% Discount/Rebate policy at retail sale is the best thing "since sliced bread".
Messaging? How did Trump win in 2016 and get 40 million Twitter followers? He pressed the 50 year old ignored and oppressed button. Why not press the human civilization long dominated and enslaved button that Finance's monopolistic paradigm of New Money Creation Must Only Be Debt as in Burden to Repay and integrate Monetary Gifting DIRECTLY AND CONTINUOUSLY into the Debt Only system?
Here's a related post I just made on Steve Keen's substack podcast:
All of what you say regarding neo-liberal macro is spot on of course, but why do you treat private banking as a legitimate business model? Think about it. Finance is a shit load of additional costs that is always either post-retail sale or pre-production consequently clearly marking it as an exterior parasite on the the rest of the actually legitimate economic/productive process. And it matters not that calculus can justify its costs mathematically, its non/anti-economic in nature. You toss in the fact of its increasingly unethical dominance of every other business model and 95-99% of every individual agent and what's the argument FOR it???
A true publically administered banking system has so many advantages over the private system its a testament to acculturated unconsciousness that no one is advocating for it. For instance, a public banking system would not need to make a profit thus it could both change the terminal ending point of the entire economic process from retail sale to the point of loan signing and thus incorporate finance into the legitimate economy. It would also much more easily enable us to integrate debt jubilee continually into that process with a 0-50% Discount/Debt Jubilee policy at point of loan signing. (the more rational and ecologically sane the financing the higher the debt jubilee percentage). Let's have some innovation for "the roving cavaliers of credit". Better yet, let us apply an aspect of the natural philosophical concept behind every historical paradigm change namely grace, in this instance monetary grace as in gifting.
That 6.2 trillion dollar CARES act bill Trump was talking about contained 2.2 trillion dollars of fiscal policy and 4.0 trillion dollars of monetary policy (lending). Loans are not recorded as "federal government deficits.'' Can anyone tell me if any of the 4.0 trillion (fed money) in the CARES act was in the form of ''forgivable loans?" At the very least they were low or no interest loans that corporations could receive and be used to do "Stock BuyBacks."
No one seems to be concern with the amount debt wall street has compiled (private sector wealth)! Hmmmmmmm, I guess we have the currency issuer to bail them out. Let also not forget the trillions of dollars the fed pump into the banking system and buying troubled assets in the years following the GFC.! No mention of private sector debt. It's only when certain people receive Federal deficit dollars (net spending) that "Federal Government deficits" become a problem.
Thanks for the article, Dr Kelton.
Great timely article.
The Federal debt needs a new name because it's more like an equity account than a debt. I suggest National Retained Earnings because it is a measure of private savings.
I'm with the Congressman, prioritize humans. Even the ones who disagree with me, frustrate, irritate and do not “like” me. We’re all in this situation together.
The problem with MMT is that it solves the problems.