By J.D. ALT
In a recent essay (“A Strategic Thought”) I suggested that right now is an opportune moment for some brave progressive leader to step out and explain what modern fiat money is, why we’ve been using, in fact, it for the past half century, and how it changes the way we imagine our federal government pays for public goods. Whoever takes on this challenge, I suggested, would be treated as a harlequin by mainstream media and economic pundits—and would be marginalized and shunned by other political leaders on both sides of the aisle. No main-stream politician is ready to hear—let alone agree—that the federal government can issue and spend as many dollars as needed to accomplish whatever the nation has the real resources to undertake. No main-stream economic pundit is ready to hear that our federal “deficit” is a necessary aspect of a healthy fiat monetary system. No main-stream Republican or Democrat is ready to acquiesce to the reality that our national “debt” is not something we have to “repay” to anyone but is, in fact, the savings account of our private sector economy. No main-stream anybody who, by definition, depends on their position in the main-stream idea-flow for their livelihood and personal status, is ready or willing to hear, or even seriously listen to, any of those realities. Yet at some point all of it has to be formally presented and argued on the national stage—otherwise, modern fiat money, and the enormous possibilities it creates for human society, will continue to languish forever as a suppressed and poorly understood reality.
Putting modern fiat money on the stage now, I suggested, would have the merit (in the near term) of keeping the conservative deficit hawks activated—which will pose the same difficulty for President Trump as it did for President Obama: it will force him to put any spending proposals through a “budget deficit” and “national debt” logic. This will, in effect, make it virtually impossible for him to spend in any meaningful way—which is strategically important because, as I noted, one of the essential tools of every authoritarian populist is to send a stream of dollars, perks, or rebates to his, or her, voters.
In the meantime, the newly emerging progressives—who I believe will rise out of the ashes of the “old” Democratic Party—can stand just far enough to the side of the Harlequin to avoid being pummeled themselves. While the Harlequin makes a constant fool of herself, or himself, explaining the realities of modern fiat money and the possibilities it unfolds, the “new progressives” can propose serious federal spending programs that would, if implemented, have dramatic impacts on specific, real communities-in-need across America. As I suggested, the new progressives can safely call these proposals “deficit spending”—fitting themselves (at least temporarily) into the existing misunderstandings and power-structures of the monetary system. But the Harlequin’s message will be out there, and can be picked up and echoed in many different ways. Once it is on the stage of serious debate—even if its “role” is to be shamelessly and irrationally denigrated—its arguments and possibilities will begin to percolate into popular awareness.
The “new progressive strategy,” then, is to (a) keep Trump tied up with the fiscal hawks of his own party; (b) make serious federal spending proposals that would provide real assistance to communities-in-need across America (whether those proposals currently have any prospect of enactment or not); (c) do not directly contradict or delegitimize the message of the Harlequin, but allow, enable, and (to the extent possible) assist it to percolate into the popular awareness; (d) make a strong showing in the mid-term elections based upon the concrete spending proposals to assist specific local communities; (e) win the Presidency in 2020 with a “new progressive” platform that includes at least a “preliminary” acknowledgement of the possibilities of using modern fiat money more rationally to achieve national goals and address the real needs of America’s struggling citizens.
But who is willing to play the Harlequin? Who has the public face, credibility, knowledge, charisma—and courage—to pull it off? Any suggestions?
Is it kosher to nominate someone without their knowledge or permission? If it is, I think my recently re-elected congresswoman, Tulsi Gabbard, might play the part. She is from a very deep blue district and has been willing to stick her neck out on other issues such as not funding wars for regime change (Syria). The one issue I see is that she would need to be tutored in MMT. Perhaps Stephanie Kelton could be engaged as chief tutor.
…principled, truth to power, little d democracy, trusted, respected, recognizable
Dr Stephanie Kelton would be my nomination. Having taken two years Leave of Absence from mid January 2015 to advise Bernie Sanders in his bid for the POTUS position Dr Kelton is in the position to lead the attack on Trump aimed at depriving him of a second term. Part of that attack could be the promotion of increased private sector financial wealth though employing all available USA resources using sovereign government deficit spending.
I often promote the J D Alt document, Mobilization and Money. Over 6 or so years the USA went from depression to being the most productive and powerful economy ever known and, as Alt wrote, the Government never worried about where the money was coming from.
Stephanie could also break the POTUS glass ceiling.
I know Bernie’s not willing to do this, but he is willing to hire Stephanie Kelton…
Sanders would be a great one to handle this job. But he has had Dr Kelton available for two years, and it’s just not happening for whatever reason.
For ‘the reason’, please see Dr. Kelton’s presentation at the Minsky conference.
It’s ‘the debt’.
Dr. Kelton cannot change the reality of public debt.
Fiat money “should” , and “could” change the public debt requirement for balancing the budget, but it does not for one simple reason – we have ‘privatized’ the money system.
Plain, and simple.
I suggest promoting legislation to nationalize the Fed, concomitantly nixing the public debt now owed to the Fed. Nationalization would make more evident the degree to which the public debt is and is not an accounting artifice; as would merely promoting the statutory change.
In conjunction, I would propose expanding public banks, a la Bank of North Dakota.
We end up with public banks lending public money.
Hard to beat.
The message is “deficit spending is investment spending — invest in America”.
Oddly, I think we have the perfect harlequin: Trump. What is needed is to get to him and convince him not only of the soundness of the theory and practice, but that doing this will make his popularity soar. He may already understand this to a fair degree. Maybe a letter from a group of economists, enlightened business people, and a university or two will get his attention. Worth a try?
Interesting thought. I have wondered for some time now if he secretly knows much of this and will use it for spemding like his infrastructure plan. If so, the democrats have a much worse problem tha they thought.
–depends on their position in the main-stream idea-flow for their livelihood and personal status, is ready or willing to hear, or even seriously listen to, any of those realities.–
Elite capitalist’s and their enterprises have so completely captured , not merely a misrepresented (fake news) narrative but all of the agents and surrogates within government (judiciary, legislative, executive), whom stand willing to circumvent democracy (in a myriad of ways).
Movements need to move beyond identity (not that individual issues are not important). Mass solidarity for structural change is what capitalists, at the top of the economic pyramid, fear.
They’ve fraudulently blown up the world economy, begged for and gotten trillions in bailouts and tax cuts. Now, austerity and bad government is their siren.
The collective cures would include MMT, however, there is overwhelming justification (the swamp has induced a global violent bog of suffering) for a global mass push against a broken and worsening crisis of capitalism. For decades it hasn’t delivered the goods, as billed.
An alternative to a single Harlequin is for the entire MMT community to flood facebook, twitter, etc. with a response to every one who talks about the dangers of the debt, the threat that China will require repayment of the debt they hold, our inability to fund SS, medicare, etc. This could start today. For example, I watched Morning Joe this AM and was appalled to see the ignorance displayed not only by Joe but also by Daniel Drezner and Richard Haass. If the MMT community were to respond immediately to this display of ignorance we might force this these individuals to rethink their beliefs.
I just now tweeted the same. I couched it as “Fiat Currency Matters.”
Whether or not anyone steps forward to take on this role, the democrats have got to be bold. They need to fashion many bills to bring growth, including and perhaps critically, to rural areas.
I think there will be “an opportune moment for some brave progressive leader to step out and explain what modern fiat money is, why we’ve been using, in fact, it for the past half century, and how it changes the way we imagine our federal government pays for public goods. ” But it is not now.
The Right Wing has full control of our national political narrative right now. Witness how they have converted the term “fake news” to mean what is occurring when mainstream media tells the truth. They’re simply using the term “fake news” to further their own lies, by labeling truth tellers as liars, which they were already doing. But now they use the term “fake news” to do that.
Similarly, any attempts by MMT folks to explain fiat money will likely suffer a similar fate. I would love to be proven wrong about this. And I don’t see any harm in trying. So I hope this is attempted, just in case I will be proven wrong.
I think first priority needs to be to get rid of the electronic voting machines that keep “voting in” Right Wing candidates, such that the Right Wing now controls all branches of government. And second priority, well perhaps first, is to take back control of the national narrative from the creators of the Right Wing propaganda that we are immersed in. We need to start building a large strong financially sound progressive media empire right away, that will communicate progressive visions and policies, and will tell the truth about issues that the Right keeps lying about.
I can’t say I’ve noticed the MSM telling the truth. The only ones telling the truth, mostly, are some sort of conservative sites (such as Zero Hedge and Paul Craig Roberts), some leftish sites, and foreign media such as RT, Sputnik, Fort Russ, and a few others in other countries, such as NEO (new eastern outlook). I’m not sure who YOU mean by the right wing. The Dems are effectively right wing to a great extent, and primary war mongers now as well as imperialistic as the Republicans, and I expect nothing good from them: both parties have been taken over by the wealthy plutocracy and corrupted.
We have to go around the political parties and the establishment (both US and the international oligarchy), which will be quite difficult, and they are already working on tamping down the internet and alternative (real) news. I think one of the most important things we can do is to understand how to meet the effectively objections raised when talking about MMT, such as ‘government going bankrupt’, ‘runaway inflation’, the ‘wealthy are geniuses who earn all their money’, and so forth.
John Tillson has a good point: we need more then one harlequin, and many paleoconservatives are catching on and spreading the word too. The ‘right wing’ is too broad a category to be a useful term, and so is ‘liberal’: the language and words have been coopted and distorted, in this oversimplified ‘newspeak’ (and even doublethink). This latest nonsense report is absurdly trying to conflate an independent new station, RT, with Russians ‘hacking the election’, which itself has no basis in fact. Yet, there is a rather healthy national political (and even economic) narrative going on now, even if the MSM doesn’t acknowledge it, both with alternative news sources and the grassroots (which is a major factor in how Trump won). The people in the streets and stores I run into are often very receptive to these ideas about MMT, stopping the wars, and so forth, once a clear explanation is available to them. The trick is to have some knowledge, understand what you are talking about, and be willing and able to explain it: more and more this is a ‘reachable moment’.
You mean there was money available the whole time to keep people workin’ and in their houses but the other guys just don’t and didn’t get it? Somebody call the Pentagon, we need to declare war!
Explanations of MMT currency operations are far from enough to be convincing. Fiat regimes are subject to abuse. The Pentagon has no problem getting funded, there’s always enough money to bail out a bank (and not from “the taxpayers), but there’s not enough for social security, for infrastructure, and so on. There is also the great and overarching problem of the oligarchic control of the fiat system. International finance, the financialization of the economy, the offshoring of productive capacity, and so on, must also all be integrated into an MMT synthesis on pain of being unable to be assimilated. Fiat currencies give the “money masters” incredible power. They are not going to relinquish it and enlighten the public.
I think the US is finished. The corruption goes too far and too deep. Corruption, abuses of power, obstruction of justice in the Congress, the intelligence community, the banking world and the media. The Princeton study has already made clear that the US is an oligarchy (the realities of the 1%). More than a few experts have declared that the Congress is controlled by the large financial institutions [Top Senate Democrat: bankers “own” the U.S. Congress: http://www.salon.com/2009/04/30/ownership/ ]. Then there is the militarization of the police all across the nation, and finally, the monstrous “military-industrial-security complex.” Given this overall national reality, can any seriously imagine that some targeted deficit spending will accomplish anything real? What is lacking fundamentally is simply courage and political action, not mere commentary.
We may not be able to pull this out of the fire (and I see Trump as maybe going from the fire back into the frying pan), but the approach is to inform and educate the public as possible and hope that they will rise up and demand change — not just reform which will be inadequate, but a revolution of ideas and the system. A useful revolution, however, must be based on knowledge and an operational way forward to something better both politically and economically.
This is already in progress to an extent, but in the early stages, and with much resistance from the established rulers. It’s up to the people — if they can ‘wake up’ and organize enough. That’s where those with knowledge, not just about economics and MMT, but politics, propaganda, social science, etc., can help. Just giving a public talk for a hundred, or a thousand, or just 30, people can be a seed for them to spread the knowledge and organize. Have teach-ins, open air meetings, and neighborhood gatherings, and strike up informal conversations at the barber shops and waiting rooms.
See what Rick Wolff is doing. Remember what MLK Jr. did with talks easily accessible to the public. Word of mouth can be very powerful if the right time has come, and does not depend on the corporate state controlled media.
Seems Bernie is the best positioned to take that on now. I understand why he didn’t go there in the primaries. Trump understands MMT but job gaurantee, full employment and climate mobilization etc is likely contrary to agenda of privatization and fossil fuel extraction.
“” Yet at some point all of it has to be formally presented and argued on the national stage—otherwise, modern fiat money, and the enormous possibilities it creates for human society, will continue to languish forever as a suppressed and poorly understood reality. “”
Hmmmm. Funny that, when this potential reality was presented and argued on the national stage, and its repair to the forefront was clearly proposed – in the Kucinich fiat-money reform Bill …… HR 2990 of the 112th Congress …… that reality was blasted by MMT leaders, like Wray’s “Non-sequitur on search of policy”.
A sovereign fiat money system can be privatized.
It has, and once done, its usefulness for our public-purpose economics, lies in ruin.
At the Fed.
If you ignore this discussion, then the Guv cannot spend money into existence – because the banks create ALL the money (c.e.), and you are there, at the table, begging the Guv to borrow their ‘credits’ to fund full employment.
Blue Pilgrim– Russia Today, the state newspaper of an authoritarian government where journalists can get executed for reporting news that is embarrassing to Putin– you think RT tells the truth? And you think Zero Hedge tells the truth? You are certainly using different fact checkers than I am, if you are using any.
I guess everyone thinks fake news means the news organizations they don’t personally believe– regardless of what fact checking reveals.
You nailed it!
We had a chance several years ago during the sequester when the trillion dollar coin almost broke through the barrier of naysayers, scoffers and small thinkers. The left had the opportunity to come to an understanding of fiat money then but were too focused on the distraction of scoring political points rather than showing intellectual courage. With the ridiculous infighting and snobbery exhibited among money reformers, the right wing has the left just where it wants it.
We had a harlequin who had the courage and tireless diligence to actually author legislation that did put the concept of fiat money and its fiscal impact in the limelight. The modern monetary intelligentsia tore that “debt-free money crank” down. With this kind of cannibalism at work, the right has the progressives right where they want them.