By Stephanie Kelton
This year’s must-have stocking stuffer. My new MMT Coloring book.
Stated as above, the deficit hysteria-driven austerity campaign would have never gotten off the ground; no one outside the financial industry or its paid minions would choose to design society to facilitate the financial sector’s enrichment at the expense of the rest of the economy. However, the engineers of this campaign, including Peterson and Rubin, have couched the deficit hysteria campaign as if Social Security and other social spending are simply financial transactions between members of the private sector, generalizing as it were from their experience on Wall Street. In transactions between members of the private sector, credits and liabilities are assumed to balance. Debts must be paid in full or the debtor is assigned a social or financial penalty and/or stigma. This simple morality is supposed to apply to private sector to private sector business transactions (though often for Wall Street and the well-connected this morality is rarely compulsory) and is in most day-to-day interactions a workable rule of thumb for anonymous or largely anonymous business dealings between people.
By Frederic S. Lee
Whether it be inflexible prices, wage rates that are too high and sticky, or interest rates that cannot become negative, they all have the common property of disrupting the smooth workings of the price mechanism, thereby causing recessions, preventing economic recovery, and creating unemployment. But what if there is no price mechanism that allocated scarce resources among competing ends? Then the ‘price problem’ would disappear and the causes of recessions and persistent unemployment would be quite different. Ignoring the issue whether scarce resources as defined in mainstream economics exist or not, I am going to interrogate the supposed existence of the price mechanism that lies at the theoretical core of all mainstream explanations of recessions and unemployment.
The austerity push by politicians, political operatives, and pundits of the last 5 years is the height of economic, political, and social perversity and stupidity. Yet, as it still resonates in the halls of power, in the White House and Congress, and in many parts of the media, it still requires explanation and clarification. Besides inspiring the reduced level of government funding we are now seeing in the US and elsewhere, the deficit hysteria campaign is threatening to undermine what remains of the American social safety net that helped form and support the American middle class over the past 70 years. In addition, now and in the future, we will need a government able to use the full range of fiscal (i.e. financial) tools to combat climate change, tools which the austerity campaign seeks to lame or sequester for the benefit of a small financial elite. In the latest turn, deficit hysterics are trying to incite intergenerational warfare between the young and the old, accusing the latter of taking more than their share of public financial resources which the young will need later in life.
By William K. Black
(Crossposted at Benzinga.com)
No one expects Andrew Ross Sorkin’s slavish “Deal Book” lackeys to demand that the elite Wall Street bankers whose frauds drove the financial crisis be imprisoned, but the slavishness to the banks revealed when major news stories emerge continues to irritate if not surprise. A recent embarrassment can be found here.
The “Deal Book” Spinmeisters
The context of the NYT article was the expected settlement between DOJ, various states, and JPMorgan. The spin comes fast and hard, which would be great in cricket (or quarks) but, sadly, exemplifies the national paper of record’s “Deal Book” devotional pages. The “Deal Book” shows that cricket masters can impart very different spins. The first substantive paragraph’s spin is to minimize JPMorgan’s fraud.
Lately, I’ve had the feeling that “progressive” journalists and commentators too often pull their punches in calling attention to social problems, by underestimating the magnitude of problem-related statistics such as the unemployment rate and the number of fatalities due to lack of health insurance in the United States. My theory about this is that “progressives” are being defensive in their approach and bending over backwards to give the right wing the benefit of the doubt by understating numbers out of an abundance of caution.
By Dan Kervick
Paul Krugman has yet another pair of pieces up about real interest rates, inflation rates, monetary policy “tightness” or “looseness”, and the purported theoretical connection between these phenomena and US stagnation: stagnation in US growth, employment and wages. Read them and yawn.
These discussions are a waste of time. The fundamental source of stagnation in the United States is a conservative, corrupt and intellectually deficient US government – infesting both Congress and the White House – that refuses to do its job and is incapable of thinking big. We need an industrial policy, a detailed and aggressive program of mission-driven public investment for the 21st century, a national commitment to full employment and human development, and a very substantial increase in the federal government role in our economy. And we need our democracy and its citizens to get active in charting and implementing an agenda for our future, and to seize control of that agenda from the corporate profit-seekers and the complacent affluent who are stakeholders in the existing stagnation.
By Dan Kervick
I recently joined Tom O’Brien as a guest on his terrific podcast From Alpha to Omega, and the interview is now available online. We discuss many of my favorite topics: the central banking system and the role of reserves, fiscal vs. monetary policy, capital requirements, differences between the US and European systems, and the need for healthy deficits and engaged government action to promote full employment and drive transformative change. Here is the link to the podcast:
Cross-posted from Rugged Egalitarianism
By Mathew Forstater
On this, the 50th anniversary of the assassination of President John F. Kennedy, we would do well to remind ourselves that another loss resulting from that fateful day was that of a progressive trend in leadership regarding federal budgetary policy. The points are expressed so clearly they require no interpretation or commentary.
By Dan Kervick
When Larry Summers said:
Even a great bubble [first in high-tech and then in housing] wasn’t enough to produce any excess of aggregate demand…. Even with artificial stimulus to demand, coming from all this financial imprudence, you wouldn’t see any excess…
He wasn’t calling for more bubbles. He was pointing out that an economy that can only attain anything like full employment with stable inflation in a bubble is an economy with something deeply and structurally wrong with it–something that needs to be fixed.
DeLong then proceeds to lambaste Crook for his intellectual dishonesty. But Crook does not actually say Summers advocates bubbles. This is the relevant passage from Crook’s piece.