By Thornton (Tip) Parker
Most MMT advocates probably took months to get comfortable with it. But like a personal computer, one need not understand its innards to use its power. The great power of MMT is its lesson that the federal government can create new dollars by running deficits to do things that should be done. But the lesson is counterintuitive and will be rejected by voters unless it can be explained convincingly in a few minutes. This paper offers five nuggets for explaining it quickly. NEP readers are asked to suggest ways to make the explanation simpler and better.
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Most Americans believe the federal government is like a family or business that must live within its income. On the surface, that makes sense and the reasons why it is wrong are complex. Here are five nuggets, or simple ways to explain why it is wrong to voters who will never be economists. They show why federal deficits are necessary. They can be adapted and used as appropriate. Continue reading
This is how the mission of the President’s National Commission on Fiscal Responsibility and Reform was defined by the White House
on February 18, 2010:
The Commission is charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. Specifically, the Commission shall propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. This result is projected to stabilize the debt-to-GDP ratio at an acceptable level once the economy recovers. The magnitude and timing of the policy measures necessary to achieve this goal are subject to considerable uncertainty and will depend on the evolution of the economy. In addition, the Commission shall propose recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal Government.
William K. Black
February 3, 2016 Bloomington, MN
This is the second article in my series prompted by the Wall Street Journal report that “big money managers” want to bring back “liar’s loans.” Given that the best study of liar’s loans during the crisis found a fraud incidence of 90% — this is a startling proof of how openly addicted to fraud the “big money managers” remain. It demonstrates some of the terrible costs of the Department of Justice’s refusal to prosecute the fraudulent loan originators’ controlling officers.
In this installment I lay out briefly the lies that the banksters made, and continue to make, about liar’s loans and why those lies are so harmful. The WSJ chart on liar’s loans faithfully repeated those lies as if they were revealed truth. The chart is shown below. Let us count the lies.
We need big, big changes in the United States. Many of them will require the Federal Government to spend unprecedented amounts, including deficit spending to enable us to solve problems that have languished, creating needs, for many, many years.
How can we get these changes legislated through a political system that has been increasingly less responsive to most people over the past four decades. There’s only one way that will work without revolution.
We need a movement for change powerful enough to replace the present establishment of House and Senate legislators and presidents wanting to preserve their way of looking at how to do things, with another group that has concluded that change is desperately needed and must be accomplished come what may, whatever the cost in long established customs and traditions in both Houses of Congress and among the vested political and communications elites in the Washington, DC/New York “village.” But not just any changes will do. Continue reading
William K. Black
February 2, 2016 Bloomington, MN
It is time to break out one of our two family rules again – it is impossible to compete with unintentional self-parody. How fraudulent is finance even now? The Wall Street Journal reports that “big money managers” want to bring back “liar’s loans.” I am trying to write much shorter columns, so there will be many columns in this series because the WSJ article so beautifully exemplifies the lies that the industry and the media told about liar’s loans before and after 2008.
Spoiler alert: liar’s loans, as the name admits, are pervasively fraudulent. Only fraudulent lenders make liar’s loans as a regular business practice. These home loans make the officers wealthy through the “sure thing” of the “fraud recipe” for “accounting control fraud.” The WSJ, of course, ignores these facts and presents instead falsehoods provided by fraudulent officers.