Monthly Archives: October 2017

Solving the Political Problem

By J.D. ALT

There was recently a breakthrough of sorts in media coverage for MMT. The Huffington Post published a piece covering the “People’s Convergence Conference” in Washington, D.C. on September 8-9. The conference brought together leaders and activists from all corners of the progressive political spectrum—including the “Draft Bernie for a People’s Party” movement. The conference apparently succeeded in creating the roots of a coordinated alliance between the leading progressive parties—including the Green Party, the Progressive Independent Party, and the Justice Party—which agreed, among other things, to the possibility of holding progressive primaries that would then field a single progressive candidate in the general elections. Most notable, however, the Huffington piece concluded with the header:  Progressive Economics: “How do we pay for it?”

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Money and Banking Post 21: The Interest Rate

By Eric Tymoigne

In Post 20, a lot is said about the role that the rate of return on financial instruments—the interest rate—plays on the pricing on securities, but little was said about what determines that rate of return. Two competing theoretical frameworks explain what influences the interest rate, one of them emphasizes the role of real factors and the other emphasizes monetary factors.

Real Theory of Interest Rate: Natural Interest Rate and Expected Inflation

Gross Substitution and Indifference Condition: Determinant of the Nominal Interest Rate

The real exchange framework (Post 12) emphasizes the role played by real variables in the decision-making process of any rational economic unit. People are not fooled by mere improvement in monetary income because they only care about improvement in purchasing power given that only consumption provides utility. Monetary instruments have no other purpose than to smooth market transactions, and preoccupation about the liquidity of balance sheets and monetary outcomes are irrelevant. Capitalism is equivalent to a barter economy that uses monetary instruments.

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Senator Warren: Equifax Profits from Data Hack While Consumers Pay the Price

NEP’S Bill Black appears on The Real News Network and says he’s skeptical that either Equifax or its former CEO Richard Smith will be held accountable for the breach that affected an estimated 145.5 million people. You can view here with transcript.

The Great Italian Experiment (part 2)

By J.D. ALT

As I said, Italy, is now experimenting with paying for public services with tax credits. Presumably, this is happening because Italy doesn’t possess enough Euros to pay its citizens to provide all the goods and services needed to maintain and run the public sector of its social economy. And Italy can’t “create” the additional Euros it needs because that prerogative is the exclusive right of the EU Central Bank which Italy, even as a sovereign member of the EU, has no control over. But, as the news article explains, Italy still needs to have the grass mowed and the weeds pulled in its public gardens. So it has decided (out of desperation, the article implies) to pay the gardeners with tax-credits. The gardeners are willing to do the work in exchange for the government’s tax-credits, because it means the Euros they earn (in other ways) can then be used to purchase goods and services rather than for paying their taxes. So, in practical terms, it is “just like” getting paid in Euros.

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Cheap Sexism and Intellectual Dishonesty about Marriage

By William K. Black
October 2, 2017     Kansas City, MO

This is the second column in my series about win-win strategies to strengthen the family and countering the conservative culture warriors who use the family as a means to oppose win-win solutions that bring people together.  Mark Regnerus is one of the most notorious of these hard right culture warriors.  He is the disgraced pseudo-scholar who right-wing groups funded to try to gin up evidence that same sex marriage harmed children.  His efforts collapsed in an embarrassing spectacle that made clear that his dogmas rule his work.

Regnerus is back in the Wall Street Journal flogging his new book in an op ed entitled “Cheap Sex and the Decline of Marriage.”  He introduces his thesis with the claim that because unmarried heterosexual women are willing to have sex, tens of millions of men are no longer willing to marry.  If unmarried heterosexual women wish to improve their chances of getting married, they need to be virgins – and convince their sisters to remain virgins until marriage (at an average age of around 28 for college-educated women).

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The Poorest Tax Payers to Pay the Most Under Trump Plan

NEP’s Bill Black appears on The Real News Network and says that both Republicans and Democrats are financially illiterate when they speak about the deficit, and Trump’s economic experts are ‘completely disconnected from the real world.’ You can view here with a transcript.

The Job Guarantee Should Unite Anyone Interested in Strengthening Families

By William K. Black
Kansas City, MO     September 25, 2017

The University of Missouri – Kansas City recently hosted the first conference on Modern Monetary Theory (MMT) and a closely associated idea, a federally-backed job guarantee for everyone willing and able to work.  On September 25, 2017, the New York Times published an article exemplifying one of the applications of the job guarantee that would provide a win-win that should unite anyone interested in strengthening the family.  The title is “How Did Marriage Become a Mark of Privilege?”  Claire Cain Miller authored the column, and her key takeaway are in these two passages.

Fewer Americans are marrying over all, and whether they do so is more tied to socioeconomic status than ever before. In recent years, marriage has sharply declined among people without college degrees, while staying steady among college graduates with higher incomes.

Americans across the income spectrum still highly value marriage, sociologists have found. But while it used to be a marker of adulthood, now it is something more wait to do until the other pieces of adulthood are in place — especially financial stability. For people with less education and lower earnings, that might never happen.

These facts establish an obvious policy that could unite the public.  The combination of MMT full employment policies and the job guarantee is the best way to strengthen family financial stability.  The United States, which has a sovereign currency, can do that.  The European Union nations that lack a sovereign currency will frequently be unable to do so.  Jobs, not simply income, are essential to many humans’ happiness and sense of self-worth.  Unemployed American men, for example, do less housework than do employed American men.  Businesses are deeply reluctant to hire the unemployed, particularly if they have been unemployed for any significant time.  The cliché of males responding to unemployment through depression has considerable truth.

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