Why not just say that the creation of bonds/debt is actually an example of monopolistic prestidigitation by Finance that makes the money created as the deficit into debt...when it should and could just be considered money without an indebtedness paradigm at all, and with a policy of a 50% Discount/Rebate policy implemented and executed by the FED at retail sale would forever end any possibility of inflation...and hence end any justification for fiscal austerity by not just conservatives and libertarians, but by democrats as well???
"The problem is that the private sector cannot be the source of its own net financial surplus." For me, this is the startling, slap-upside-the-head insight of MMT! When the next so-called econ expert appears on TV, I'm hoping for the following exchange:
"So it's your opinion as a member of the Council of Economic Advisers that the gov't should be paying down our national debt."
"The gov't has to balance its books just the way every American household must. So, yes."
"Tell me, do you have U.S. dollars in a checking or savings account--or stuffed in your mattress--that you own free and clear?"
"Yes, of course I do--I mean, not in my mattress...."
"So you don't have any outstanding bank loans?"
"Well, I have a mortgage, but the equity in my house would take care of any default."
"And you haven't robbed a bank lately?"
"I'm an economist, not a thief!"
"OK...so where did those dollars come from?"
"What do you mean? I earned them."
"Well, yeah, but if you didn't rob a bank and you don't have an outstanding bank loan, then those dollars can't be "bank money."
"No, it's my money!"
"You're not a counterfeiter, are you?"
"Certainly not!"
"Good. Here's my point. Banks create money when they issue loans. But banks have a nasty habit of wanting to get paid back in full--plus interest. So all of the "bank money" circulating throughout the economy is spoken for. Every loan is simultaneously an asset and a liability for both the bank and the borrower. The whole shooting match sums to zero. There's no way you can own "bank money" free and clear."
'Well, yes, I suppose that's true."
"And I assume you didn't go in your backyard and pick the fruit off your Benjamin Tree?"
"Look, we all know, hopefully, that U.S. dollars don't grow on trees."
"Exactly. So where did your U.S. dollars come from? I see you look a bit flustered, so let me continue. Unlike a bank, which must follow strict rules or lose its charter, the federal gov't not only issues our currency but doesn't actually care about being repaid in full. That's why the pre-pandemic "national debt" was about $28 trillion! And guess what? It was one of the greatest achievements in the annals of human history. The U.S. Treasury/Federal Reserve had been able to pump $28 trillion in deficit spending (most of it since WWII) into the world economy while keeping interest rates and inflation rates absurdly low. And that's where the U.S. dollars in your personal bank account came from--federal deficit spending. And look, the money itself is no big deal. But just as banks have a nasty habit of wanting to get repaid, workers have a nasty habit of wanting to be paid for their work. And injecting this much currency into the economy (the pre-pandemic inflation rate told us it wasn't TOO MUCH) allowed our economy to reap the benefits of incredible innovation and worker productivity. And it made millions of Americans more financially secure, including you."
"OK, OK, you make valid points. But look at inflation now! Haven't the national debt chickens come home to roost?"
"There you go, again. We'll talk about that next time. But for now, just remember where the U.S. dollars for those "Hamilton" tickets you bought last month came from."
Once again, the Fed wants to break the back of labor, just like Volcker did. Powell even said so.
Wall Street is getting scared by all the union organizing going on around the country, much of it successful. That will lead to higher wages and additional costs for providing a safe workplace. Our ruling elite simply can't abide such a thing.
Thank you for such a clear explanation of the SFB approach to analyzing the economy. It needs to be presented to people repeatedly until they understand the implications.
Kelton you so totally rock! I prefer prefer the Godly answer for tax understanding, “Give back to Caesar what belongs to Caesar....”. Thanks all you smart people. Keep the Faith and an open mind.
So if I'm understanding correctly, it's not so much that the deficit reduction is bad in and of itself (and would actually be somewhat expected given the unusually large deficits of the previous 2 years), but that the deficit has been reduced by *so* much that now the private sector is *also* in deficit? And that private sector deficit has the potential to start (or worsen) a recession if it were to continue for too long? Just trying to wrap my head around this so please correct me if I'm wrong.
I will say that the FitchRatings graph is interesting but I don't find it all that compelling when it comes to the relationship between the private sector's financial positions and recessions. Like if you had told me "recessions tend to be preceded by a deterioration in the private sector’s financial position" and then gave me that graph (without the gray bars) and asked me to predict where recessions happened, I don't think I would have come close to being correct. I'm sure that's because there are many more factors at play when it comes to recessions, and so I'm curious how much of it is actually due to the private sector's financial positions vs. those other factors.
I've been following MMT, Steve Keen, Michael Hudson, UBI and Public Banking since 2008 and their researches and policies all align with the concept of monetary gifting. What is UBI? Monetary Gifting. What are fiscal deficits? Monetary Gifting to government contractors. Keen and Hudson have proven that it's the money system that de-stabilizes the economy and Finance is basically a parasite on the actually productive economy. Ellen Brown wants to cut costs and direct money toward the individual instead of financialized greed that can also destabilize the economy as we saw in 2008. All they really need is to recognize the precise new paradigm concept of Direct and Reciprocal Monetary Gifting and how, where and when to most efficaciously implement that new concept in order to break up the private banks' monopoly paradigm of Debt Only which is the operant economic factor that keeps a host of seeming unresolvable problems in suspension. That where, when and how is a 50% Discount/Rebate policy at the point of retail sale. You can find the entire program of the new paradigm and its policies here: https://www.amazon.com/dp/B07PLNJLRN/ref=sr_1_1?keywords=wisdomics-Gracenomics&qid=1552358772&s=books&sr=1-1-catcorr
I do miss the role of the financial 'private sector' , which has become such a large part of the economy. Not a word about it.
Folllowing Moslers reasoning, one could argue it should be a separate sector. They profit both from private sector deficits as well as government sector deficits (talk about win-win!) *
Interest adds to the financial sector surplus at the expense of the other sectors. The 'missing' dollars can only be created through more debt or government deficit, either way money supply has to rise. That means that if inflation does go down after interest rate hikes, the financial sector must be running a surplus at the expense of the private sector, the government or both.
This also explains why the financial sector so badly wants fed hikes as soon as their other sources of income start declining (volume growth in credit, transaction fees etc)
----------
*normal private sector has to choose : use their productive capacity for either government or private sector (or a combination) The financial sector doesn't have that constraint, servicing government doesn't reduce their possibility to finance the private sector.
The truth is private for profit money creation is not a legitimate business model at all. Why? Because loans/money creation is always a very costly occurence pre-production (as in business start ups and business expansion) or post retail sale (as in mortgages, auto loans and other big ticket items). Thus it exposes private for profit money creation as a wholly exterior parasite on the actually productive process. Investment banks that only utilize already created money/savings and other such financial services are legitimate business models.
Money creation needs to become a public utility guided by the most beneficial and ethical concept humanity has ever self actualized, namely the natural philosophical concept of grace, not grace as in some religious, sectarian orthodoxy, but grace as in as in love in action/systemic policy.
The way to herd the political apparatus toward economic abundance and ecological sanity is to communicate the incredible benefits of the new monetary paradigm of Direct and Reciprocal Monetary Gifting most specifically a 50% Discount at retail sale all of which discount is Rebated back to the enterprise granting it to the consumer so that they can be made whole on their overheads and profit margins. This single policy has the following empirical/mathematical effects: 1) ends inflation forever for every individual agent by implementing BENEFICIAL price and asset DEFLATION into profit making economic systems. "Holy orthodoxy exploding and temporal universe reality inverting occurence. That's a paradigm change all by itself. 2) Thus it ends any argument for fiscal austerity enabling running the kind of fiscal deficits necessary to confront climate change. 3) It immediately doubles every individuals purchasing power so if you're making $20/hr. you can now purchase at a rate of $40/hr or maintain your present lifestyle and save/invest at a rate of $20/hr. 4) It potentially doubles demand for vitually every enterprise's goods and services integrating the self interests of enterprise with their consumers. 5) It consequently isolates Finance from every other legitimate business model making it a huge economic and politically powerful issue. Finally, and most importantly it breaks up private banks' monopolistic paradigm of Debt Only as the sole form and vehicle for the creation and distribution of money.
I'm all for MMT, UBI, etc. etc. They're all very good reforms, but why not deal effectively and terminatedly with the truly operant factor in the economic system, namely the current monetary paradigm???
"You can argue—as President Biden and many democrats are doing—that cutting the deficit will help to bring down inflation."
The surprising thing (to me, at least) is that the Democrats are even attempting such a weak argument. In what I have read about the administration's plans I have not seen any *specific* arguments that the combination of spending cuts and tax increases they propose will relieve upward pressure on prices in politically sensitive areas such as energy and food prices. It's as if they believe that they will be rewarded by the public simply for proclaiming their worship of the principles of "sound finance."
It seems its the Republicans that have historically been the public crusaders to "eliminate the deficit" and pay down our debt, and they routinely criticize democrats for over-spending and increasing the deficits. This may not be a wise economic move if it propels us into recession, but even in that scenario the democrats can counter the republican criticism of "frivolous spending" and win more of the independent votes come election day. Sadly, its all about politics and not about sound and informed economic decisions. Why else would they make decisions "against the advice of some economists within the party"?
Right on Steve Hummel, the deficit is not the problem, its how we fund the deficit, with money or debt. Using credit debt for money has brought the world to the brink. We can change the money system or we can keep careening toward oblivion. The MMT lens has a blind spot called money, they don't want you to see it.
MMT aligns with the new monetary paradigm of Gifting in that it recognizes that a "deficit" is not a bad thing in the same sense that an individual monetary deficit is. Creating money ONLY AS DEBT, which is the current monetary paradigm, IS THE OPERANT economic problem we have, and monetary gifting with a 50% Discount/Rebate at the point of retail sale is the primary and paradigm changing policy in the new paradigm program. It's the discovery of the telescope, the observation of the moons of Jupiter and discovery of the ellipse of economic theory.
Yes, the PROBLEM is the current debt-based for-profit (usury) system. No human can resist such a powerful temptation to abuse power.
The monetary system of every nation should not be based on using privately issued debt for money, it concentrates wealth, drives predatory growth, drives the boom/bust cycle, and concentrates power to a few.
It is dangerously irresponsible not to change the monetary system asap and begin to repair the social and environmental damage it has wrought. MMT is a system operation to derail such efforts, not a theory. imo
Yes, although I would quibble with that by saying that it is actually the current (monopolistic) monetary and financial paradigm concept that is the specific and deepest problem. You can reform a system, you can't reform a paradigm...because a paradigm change is a change in the nature and the operant realities...of an entire pattern. The real problem with MMT, UBI, Keen, Hudson, Brown etc. is they represent mere reforms. We're way past the need for reform in the economic pattern because the monetary paradigm hasn't changed in the entire history of human civilization. Whether it was the Palace/government or the private banks money has always been created only as debt. Combine that fact with the existential problem of climate change/global warming...which the end of inflation 50% Discount/Rebate policy forever ends, and consequently ends any economic or rational argument for fiscal austerity therefore enabling the kind of fiscal deficits necessary to fund the mega-projects necessary to confront climate change...and you begin to see the possibility, the necessity and the potential benefits of an actual paradigm change.
Changing the monetary paradigm is actually what I refer to as a mega-paradigm change which I define as a paradigm change that is universally experienced, is immediate, continuous and has benefits in other bodies of knowledge, systems and/or areas of human endeavor not directly related to the primary pattern. There have only been 2-3 mega-paradigm changes in the entire history of the human species. (Of which the change from an unconscious ethic of mere survival to self awareness and hence the realization of morals and ethics, and the change from nomadic hunting & gathering to agriculture, homesteading and urbanization are 2).
Imagine for instance the social and psychological benefit of ridding ourselves of the apathy and hopelessness that the increasing awareness of climate change will be bringing and replacing it with abundance and hope?
Imagine the personal benefit of having an economy where every time you purchased something it was an opportunity to feel gratitude for a gift of 50% of the price. How much good could a system continually enabling and encouraging the self actualization of grace as in gratitude and thankfulness actually do?
Yes, the current (monopolistic) monetary and financial paradigm - same thing and yes, I think we can reverse the negative psychological consequences of usury, debt-based, private profit money by shifting from the private for-profit paradigm to the public for-care paradigm. It would be an overnight transition per the 2011 NEED Act HR2990. All existing bank money would become US money and all new US money would be issued publicly for the general welfare as it first use. A system for public care or grace. Banks would not be put out of business but would operate with a more honest business model and would have to have the US money deposits on which to issue credit.
That was insightful, I had wondered what had happened to the money banks 'created' at the outset of a loan. Now it makes sense, the debt balances the loan. And the stock flow balance starkly shows that the government debt must equal private accumulated wealth and trade imbalance. Its Math.
I suppose that paying off the national debt could be considered a tool for slowing the economy and inflation by tightening the money supply. The Fed Reserve has been trying to do this with limited success. These measures may slow demand but don't help with some large supply side issues. Inflation is a political bug-a-boo. Get the leaches of debt reduction out to bleed the economy of its bad humors
Yes, the PROBLEM is the current debt-based for-profit (usury) system. No human can resist such a powerful temptation to abuse power.
The monetary system of every nation should not be based on using privately issued debt for money, it concentrates wealth, drives predatory growth, drives the boom/bust cycle, and concentrates power to a few.
It is dangerously irresponsible not to change the monetary system asap and begin to repair the social and environmental damage it has wrought. MMT is a system operation to derail such efforts, not a theory.
Imagine your $10/hr. wage being able to purchase at a rate of $20/hr. not only the end of inflation but the beginning of beneficial price and asset deflation, $2.00/gallon gas or lower, a $60k Tesla for $30k, a $400k house for $200k, and the beginning of the isolation of private finance from the all of the actually legitimate economic business models and hence the beginning of industrial capitalism guided, aligned and bulwarked by the natural philosophical concept of grace as in gifting.
And with the other policies and benefits of the new monetary paradigm these prices get even better.
A 50% discount at retail sale all of which is rebated back to the merchant granting it to consumers so they are made whole on their overheads and margins of profit: Too simple for the intellectual vanities of the erudite, too temporal universe reality inverting not to be a paradigm change in the economy and the money system.
I am not an economist, but it doesn't take an economist to see mutch of this article is a political attack of Biden and democrats not understanding while republicans are all knowing about the economy. That is "the big lie".
A couple of examples:
Biden wanted to pass the build back better bill, bur republicans wouldnt support it supposedly because it would increase the debt. They had no problem increasing the debt while wasting $7 trillion on 2 worthless invasions. The difference? Unlike military equipment & supply companies, Infrastructure companies don't have hundreds of powerful lobbyists who help skim billions off of appropriations to divert to congressional campaign funding and retirement accounts (investments).
Republicans had no problem giving welfare to farmers after Trump closed down their Chinese grain market they spent 20 years building. Instead of having foreign trade income, republicans increase the deficit by giving farmers billions they lost not being able to sell grain to China.
In order to take away republicans lame excuse of not funding "build back better" Biden talks about reducing the debt with his current bill. If the debt gets reduced, republicans have no legitimate reason for not passing "build back better".
Keep letting the Chinese laugh at us for wasting our capital on worthless wars that actually deplete our political capital.
Spare me the political argument the democrats don't understand economics!
Stephanie, Government, as you keep saying, has no budget. All public expenditures are, therefore, deficit financed. Government spending is funded by Taxation or Borrowing. When all government funding comes from S, does it matter what fraction is Taxation or Borrowing?
The equation should read Y = G + S + (X - M).
Because government wastes so much, the more government spends, the less real S there is.
This is a fact that MMT and many others have failed to acknowledge.
The economy is about resources and their distribution, not money.
What is the government giving us for the vast resources it confiscates? The answer is not much as about 80% go to waste, making for a much poorer nation.
Why not just say that the creation of bonds/debt is actually an example of monopolistic prestidigitation by Finance that makes the money created as the deficit into debt...when it should and could just be considered money without an indebtedness paradigm at all, and with a policy of a 50% Discount/Rebate policy implemented and executed by the FED at retail sale would forever end any possibility of inflation...and hence end any justification for fiscal austerity by not just conservatives and libertarians, but by democrats as well???
"The problem is that the private sector cannot be the source of its own net financial surplus." For me, this is the startling, slap-upside-the-head insight of MMT! When the next so-called econ expert appears on TV, I'm hoping for the following exchange:
"So it's your opinion as a member of the Council of Economic Advisers that the gov't should be paying down our national debt."
"The gov't has to balance its books just the way every American household must. So, yes."
"Tell me, do you have U.S. dollars in a checking or savings account--or stuffed in your mattress--that you own free and clear?"
"Yes, of course I do--I mean, not in my mattress...."
"So you don't have any outstanding bank loans?"
"Well, I have a mortgage, but the equity in my house would take care of any default."
"And you haven't robbed a bank lately?"
"I'm an economist, not a thief!"
"OK...so where did those dollars come from?"
"What do you mean? I earned them."
"Well, yeah, but if you didn't rob a bank and you don't have an outstanding bank loan, then those dollars can't be "bank money."
"No, it's my money!"
"You're not a counterfeiter, are you?"
"Certainly not!"
"Good. Here's my point. Banks create money when they issue loans. But banks have a nasty habit of wanting to get paid back in full--plus interest. So all of the "bank money" circulating throughout the economy is spoken for. Every loan is simultaneously an asset and a liability for both the bank and the borrower. The whole shooting match sums to zero. There's no way you can own "bank money" free and clear."
'Well, yes, I suppose that's true."
"And I assume you didn't go in your backyard and pick the fruit off your Benjamin Tree?"
"Look, we all know, hopefully, that U.S. dollars don't grow on trees."
"Exactly. So where did your U.S. dollars come from? I see you look a bit flustered, so let me continue. Unlike a bank, which must follow strict rules or lose its charter, the federal gov't not only issues our currency but doesn't actually care about being repaid in full. That's why the pre-pandemic "national debt" was about $28 trillion! And guess what? It was one of the greatest achievements in the annals of human history. The U.S. Treasury/Federal Reserve had been able to pump $28 trillion in deficit spending (most of it since WWII) into the world economy while keeping interest rates and inflation rates absurdly low. And that's where the U.S. dollars in your personal bank account came from--federal deficit spending. And look, the money itself is no big deal. But just as banks have a nasty habit of wanting to get repaid, workers have a nasty habit of wanting to be paid for their work. And injecting this much currency into the economy (the pre-pandemic inflation rate told us it wasn't TOO MUCH) allowed our economy to reap the benefits of incredible innovation and worker productivity. And it made millions of Americans more financially secure, including you."
"OK, OK, you make valid points. But look at inflation now! Haven't the national debt chickens come home to roost?"
"There you go, again. We'll talk about that next time. But for now, just remember where the U.S. dollars for those "Hamilton" tickets you bought last month came from."
Once again, the Fed wants to break the back of labor, just like Volcker did. Powell even said so.
Wall Street is getting scared by all the union organizing going on around the country, much of it successful. That will lead to higher wages and additional costs for providing a safe workplace. Our ruling elite simply can't abide such a thing.
Thank you for such a clear explanation of the SFB approach to analyzing the economy. It needs to be presented to people repeatedly until they understand the implications.
Kelton you so totally rock! I prefer prefer the Godly answer for tax understanding, “Give back to Caesar what belongs to Caesar....”. Thanks all you smart people. Keep the Faith and an open mind.
So if I'm understanding correctly, it's not so much that the deficit reduction is bad in and of itself (and would actually be somewhat expected given the unusually large deficits of the previous 2 years), but that the deficit has been reduced by *so* much that now the private sector is *also* in deficit? And that private sector deficit has the potential to start (or worsen) a recession if it were to continue for too long? Just trying to wrap my head around this so please correct me if I'm wrong.
I will say that the FitchRatings graph is interesting but I don't find it all that compelling when it comes to the relationship between the private sector's financial positions and recessions. Like if you had told me "recessions tend to be preceded by a deterioration in the private sector’s financial position" and then gave me that graph (without the gray bars) and asked me to predict where recessions happened, I don't think I would have come close to being correct. I'm sure that's because there are many more factors at play when it comes to recessions, and so I'm curious how much of it is actually due to the private sector's financial positions vs. those other factors.
I've been following MMT, Steve Keen, Michael Hudson, UBI and Public Banking since 2008 and their researches and policies all align with the concept of monetary gifting. What is UBI? Monetary Gifting. What are fiscal deficits? Monetary Gifting to government contractors. Keen and Hudson have proven that it's the money system that de-stabilizes the economy and Finance is basically a parasite on the actually productive economy. Ellen Brown wants to cut costs and direct money toward the individual instead of financialized greed that can also destabilize the economy as we saw in 2008. All they really need is to recognize the precise new paradigm concept of Direct and Reciprocal Monetary Gifting and how, where and when to most efficaciously implement that new concept in order to break up the private banks' monopoly paradigm of Debt Only which is the operant economic factor that keeps a host of seeming unresolvable problems in suspension. That where, when and how is a 50% Discount/Rebate policy at the point of retail sale. You can find the entire program of the new paradigm and its policies here: https://www.amazon.com/dp/B07PLNJLRN/ref=sr_1_1?keywords=wisdomics-Gracenomics&qid=1552358772&s=books&sr=1-1-catcorr
I do miss the role of the financial 'private sector' , which has become such a large part of the economy. Not a word about it.
Folllowing Moslers reasoning, one could argue it should be a separate sector. They profit both from private sector deficits as well as government sector deficits (talk about win-win!) *
Interest adds to the financial sector surplus at the expense of the other sectors. The 'missing' dollars can only be created through more debt or government deficit, either way money supply has to rise. That means that if inflation does go down after interest rate hikes, the financial sector must be running a surplus at the expense of the private sector, the government or both.
This also explains why the financial sector so badly wants fed hikes as soon as their other sources of income start declining (volume growth in credit, transaction fees etc)
----------
*normal private sector has to choose : use their productive capacity for either government or private sector (or a combination) The financial sector doesn't have that constraint, servicing government doesn't reduce their possibility to finance the private sector.
The truth is private for profit money creation is not a legitimate business model at all. Why? Because loans/money creation is always a very costly occurence pre-production (as in business start ups and business expansion) or post retail sale (as in mortgages, auto loans and other big ticket items). Thus it exposes private for profit money creation as a wholly exterior parasite on the actually productive process. Investment banks that only utilize already created money/savings and other such financial services are legitimate business models.
Money creation needs to become a public utility guided by the most beneficial and ethical concept humanity has ever self actualized, namely the natural philosophical concept of grace, not grace as in some religious, sectarian orthodoxy, but grace as in as in love in action/systemic policy.
The way to herd the political apparatus toward economic abundance and ecological sanity is to communicate the incredible benefits of the new monetary paradigm of Direct and Reciprocal Monetary Gifting most specifically a 50% Discount at retail sale all of which discount is Rebated back to the enterprise granting it to the consumer so that they can be made whole on their overheads and profit margins. This single policy has the following empirical/mathematical effects: 1) ends inflation forever for every individual agent by implementing BENEFICIAL price and asset DEFLATION into profit making economic systems. "Holy orthodoxy exploding and temporal universe reality inverting occurence. That's a paradigm change all by itself. 2) Thus it ends any argument for fiscal austerity enabling running the kind of fiscal deficits necessary to confront climate change. 3) It immediately doubles every individuals purchasing power so if you're making $20/hr. you can now purchase at a rate of $40/hr or maintain your present lifestyle and save/invest at a rate of $20/hr. 4) It potentially doubles demand for vitually every enterprise's goods and services integrating the self interests of enterprise with their consumers. 5) It consequently isolates Finance from every other legitimate business model making it a huge economic and politically powerful issue. Finally, and most importantly it breaks up private banks' monopolistic paradigm of Debt Only as the sole form and vehicle for the creation and distribution of money.
I'm all for MMT, UBI, etc. etc. They're all very good reforms, but why not deal effectively and terminatedly with the truly operant factor in the economic system, namely the current monetary paradigm???
"You can argue—as President Biden and many democrats are doing—that cutting the deficit will help to bring down inflation."
The surprising thing (to me, at least) is that the Democrats are even attempting such a weak argument. In what I have read about the administration's plans I have not seen any *specific* arguments that the combination of spending cuts and tax increases they propose will relieve upward pressure on prices in politically sensitive areas such as energy and food prices. It's as if they believe that they will be rewarded by the public simply for proclaiming their worship of the principles of "sound finance."
It seems its the Republicans that have historically been the public crusaders to "eliminate the deficit" and pay down our debt, and they routinely criticize democrats for over-spending and increasing the deficits. This may not be a wise economic move if it propels us into recession, but even in that scenario the democrats can counter the republican criticism of "frivolous spending" and win more of the independent votes come election day. Sadly, its all about politics and not about sound and informed economic decisions. Why else would they make decisions "against the advice of some economists within the party"?
Right on Steve Hummel, the deficit is not the problem, its how we fund the deficit, with money or debt. Using credit debt for money has brought the world to the brink. We can change the money system or we can keep careening toward oblivion. The MMT lens has a blind spot called money, they don't want you to see it.
MMT aligns with the new monetary paradigm of Gifting in that it recognizes that a "deficit" is not a bad thing in the same sense that an individual monetary deficit is. Creating money ONLY AS DEBT, which is the current monetary paradigm, IS THE OPERANT economic problem we have, and monetary gifting with a 50% Discount/Rebate at the point of retail sale is the primary and paradigm changing policy in the new paradigm program. It's the discovery of the telescope, the observation of the moons of Jupiter and discovery of the ellipse of economic theory.
Yes, the PROBLEM is the current debt-based for-profit (usury) system. No human can resist such a powerful temptation to abuse power.
The monetary system of every nation should not be based on using privately issued debt for money, it concentrates wealth, drives predatory growth, drives the boom/bust cycle, and concentrates power to a few.
It is dangerously irresponsible not to change the monetary system asap and begin to repair the social and environmental damage it has wrought. MMT is a system operation to derail such efforts, not a theory. imo
Yes, although I would quibble with that by saying that it is actually the current (monopolistic) monetary and financial paradigm concept that is the specific and deepest problem. You can reform a system, you can't reform a paradigm...because a paradigm change is a change in the nature and the operant realities...of an entire pattern. The real problem with MMT, UBI, Keen, Hudson, Brown etc. is they represent mere reforms. We're way past the need for reform in the economic pattern because the monetary paradigm hasn't changed in the entire history of human civilization. Whether it was the Palace/government or the private banks money has always been created only as debt. Combine that fact with the existential problem of climate change/global warming...which the end of inflation 50% Discount/Rebate policy forever ends, and consequently ends any economic or rational argument for fiscal austerity therefore enabling the kind of fiscal deficits necessary to fund the mega-projects necessary to confront climate change...and you begin to see the possibility, the necessity and the potential benefits of an actual paradigm change.
Changing the monetary paradigm is actually what I refer to as a mega-paradigm change which I define as a paradigm change that is universally experienced, is immediate, continuous and has benefits in other bodies of knowledge, systems and/or areas of human endeavor not directly related to the primary pattern. There have only been 2-3 mega-paradigm changes in the entire history of the human species. (Of which the change from an unconscious ethic of mere survival to self awareness and hence the realization of morals and ethics, and the change from nomadic hunting & gathering to agriculture, homesteading and urbanization are 2).
Imagine for instance the social and psychological benefit of ridding ourselves of the apathy and hopelessness that the increasing awareness of climate change will be bringing and replacing it with abundance and hope?
Imagine the personal benefit of having an economy where every time you purchased something it was an opportunity to feel gratitude for a gift of 50% of the price. How much good could a system continually enabling and encouraging the self actualization of grace as in gratitude and thankfulness actually do?
Yes, the current (monopolistic) monetary and financial paradigm - same thing and yes, I think we can reverse the negative psychological consequences of usury, debt-based, private profit money by shifting from the private for-profit paradigm to the public for-care paradigm. It would be an overnight transition per the 2011 NEED Act HR2990. All existing bank money would become US money and all new US money would be issued publicly for the general welfare as it first use. A system for public care or grace. Banks would not be put out of business but would operate with a more honest business model and would have to have the US money deposits on which to issue credit.
That was insightful, I had wondered what had happened to the money banks 'created' at the outset of a loan. Now it makes sense, the debt balances the loan. And the stock flow balance starkly shows that the government debt must equal private accumulated wealth and trade imbalance. Its Math.
I suppose that paying off the national debt could be considered a tool for slowing the economy and inflation by tightening the money supply. The Fed Reserve has been trying to do this with limited success. These measures may slow demand but don't help with some large supply side issues. Inflation is a political bug-a-boo. Get the leaches of debt reduction out to bleed the economy of its bad humors
Yes, the PROBLEM is the current debt-based for-profit (usury) system. No human can resist such a powerful temptation to abuse power.
The monetary system of every nation should not be based on using privately issued debt for money, it concentrates wealth, drives predatory growth, drives the boom/bust cycle, and concentrates power to a few.
It is dangerously irresponsible not to change the monetary system asap and begin to repair the social and environmental damage it has wrought. MMT is a system operation to derail such efforts, not a theory.
Imagine your $10/hr. wage being able to purchase at a rate of $20/hr. not only the end of inflation but the beginning of beneficial price and asset deflation, $2.00/gallon gas or lower, a $60k Tesla for $30k, a $400k house for $200k, and the beginning of the isolation of private finance from the all of the actually legitimate economic business models and hence the beginning of industrial capitalism guided, aligned and bulwarked by the natural philosophical concept of grace as in gifting.
And with the other policies and benefits of the new monetary paradigm these prices get even better.
A 50% discount at retail sale all of which is rebated back to the merchant granting it to consumers so they are made whole on their overheads and margins of profit: Too simple for the intellectual vanities of the erudite, too temporal universe reality inverting not to be a paradigm change in the economy and the money system.
I am not an economist, but it doesn't take an economist to see mutch of this article is a political attack of Biden and democrats not understanding while republicans are all knowing about the economy. That is "the big lie".
A couple of examples:
Biden wanted to pass the build back better bill, bur republicans wouldnt support it supposedly because it would increase the debt. They had no problem increasing the debt while wasting $7 trillion on 2 worthless invasions. The difference? Unlike military equipment & supply companies, Infrastructure companies don't have hundreds of powerful lobbyists who help skim billions off of appropriations to divert to congressional campaign funding and retirement accounts (investments).
Republicans had no problem giving welfare to farmers after Trump closed down their Chinese grain market they spent 20 years building. Instead of having foreign trade income, republicans increase the deficit by giving farmers billions they lost not being able to sell grain to China.
In order to take away republicans lame excuse of not funding "build back better" Biden talks about reducing the debt with his current bill. If the debt gets reduced, republicans have no legitimate reason for not passing "build back better".
Keep letting the Chinese laugh at us for wasting our capital on worthless wars that actually deplete our political capital.
Spare me the political argument the democrats don't understand economics!
Dr. Kelton,
I believe your arguments would be even easier to understand and more persuasive it all the charts were up to date through 2022.
Willis Kanaley
Stephanie, Government, as you keep saying, has no budget. All public expenditures are, therefore, deficit financed. Government spending is funded by Taxation or Borrowing. When all government funding comes from S, does it matter what fraction is Taxation or Borrowing?
The equation should read Y = G + S + (X - M).
Because government wastes so much, the more government spends, the less real S there is.
This is a fact that MMT and many others have failed to acknowledge.
The economy is about resources and their distribution, not money.
What is the government giving us for the vast resources it confiscates? The answer is not much as about 80% go to waste, making for a much poorer nation.