Author Archives: admin

Senator Bernie Sanders presents Tcherneva’s research to Show How Reagan Helped Destroy the Middle Class

By Michael McAuliff
(cross posted from Huff Post)

WASHINGTON — President Ronald Reagan remains a venerated figure in American politics, even as folks on the left have been taking a more critical look at his economic legacy in recent years.

So perhaps it’s not a surprise that Vermont independent Sen. Bernie Sanders would not think well of the Gipper. But when Sanders took to the Senate floor Thursday evening to offer a broad vision for how to do something to help the declining middle class, he offered a stunning chart that showed just how poorly most Americans have fared during economic recoveries since the advent of Reaganomics.

The chart starts by showing that in the decades after World War II, the bottom 90 percent of the country captured most of the growth in income during rebounds from tough times. But then came the Reagan era, and what George H. W. Bush once dubbed “voodoo economics.” After Reagan implemented his policies, the top 10 percent grabbed nearly 80 percent of the growth in incomes coming out of the oil crises of the late ‘70s.

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Getting Out of Our Lanes: Understanding Discrimination in the Digital Economy

By Raúl Carrillo

In the fall of 2013, on the 50th anniversary of the March on Washington for Jobs and Freedom, Ohio State University Law Professor Michelle Alexander penned a brilliant essay in The Nation, entitled “Breaking My Silence¨. In the piece, Alexander, author of the groundbreaking book, The New Jim Crow, urged social justice advocates to get out of our “lanes” and “do what Dr. King demanded we should: connect the dots between poverty, racism, militarism and materialism.”

In this spirit, I am writing to encourage readers to take up yet another task, one I’ve unfortunately only recently shouldered myself: to understand how digital surveillance reinforces socioeconomic hierarchies.

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Bill Black appearing on The Real News Network

NEP’s Bill Black appeared on The Real News Network (TRNN) discussing the bill that the House of Representatives passed that further weakens financial regulation. The video is below. If you wish to view the transcript at TRNN, click here.

The Politics of MMT (Strange Bedfellows)

By Jonathan Denn

There are the cut-and-dried facts, about how money actually works, which MMT succinctly explains—that those who were unaware—seem to readily grasp.

  1. The US is the issuer of currency not just currency users like households, towns, businesses and US States.
  2. If a country has a marvelous productive capacity, a free floating sovereign currency, and little to no debt denominated in foreign funds—then there is no external reason it cannot spend regardless of taxing or borrowing.
  3. The last seven US depressions were preceded by seven rare public surpluses.
  4. A public deficit is a non public surplus, which means a private surplus after taking into account what leaked overseas.
  5. A private surplus is the point of a prosperous nation, as long as it doesn’t cause hyperinflation.
  6. Banks create money, too. But since it usually has to paid back someday, those dollars are temporary.

The conclusion is that the US is the monopoly issuer of net financial assets. So, given a stable foreign trade balance the only way the private sector can grow is with increased government spending, asset appreciation (inflation), people spending out of savings, or people/businesses borrowing (temporarily) from banks.

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Absentee Governance by the “Captains of Solvency”

By John Nicolarsen

Recent events surrounding the bill passed for the funding of the United States Government for most of 2015, especially viewed in light of the bailouts throughout the financial crisis, prompt this piece, a brief reminder of the prescience with which the contributions of Thorstein Veblen stand up to vividly contouring the “credit system” of his day and, I argue, of our times presently. In addition to Veblen we benefit in seeing the past and future rescue measures from the work of János Kornai, in re-affirming and slightly filling out the “social process” of the extents taken as a result of the “soft budget constraint” syndrome. [1]

For Veblen, the “effectual control of the economic situation, in business, industry, and civic life, rests on the control of credit.” [2] The extension and control of the “fabric of credit” in determining production and output and “what the market will bear” is undertaken by a “conscientious withdrawal of efficiency, as dictated by the law of balanced return,”[3] and “Balanced Return involves Balanced Unemployment.” [4]

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Did Ms. Rousseff’s epiphany come too late?

By Felipe Rezende

If you’ve been tracking the news on Brazil’s presidential election, you already knew that incumbent Rousseff will face Neves in a runoff election for Brazil’s presidency on October 26th. The tight election reflects the perception of a downward trend of the nation’s economic outlook augmented by news that Brazil’s economy has fallen into recession in the first and second quarters of 2014. This really isn’t looking like the election the Workers’ Party expected. Brazil’s unemployment rate has hit record lows, real incomes have increased, bank credit has roughly doubled since 2002, it has accumulated US$ 376 billion of reserves as of October 2014 and it has lifted the external constraint. The poverty rate and income inequality have sharply declined due to government policy and social inclusion programs, it has lifted 36 million out of extreme poverty since 2002. Moreover, the resilience and stability of Brazil’s economic and financial systems have received attention as they navigated relatively smoothly through the 2007-2008 global financial crisis. Brazil’s response to the largest failure of capitalism since the Great Depression included a series of measures to boost domestic demand.

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Microcredit Accounting Control Fraud Deepens Bosnia’s Nightmare

By William K. Black

I write to recommend reading David Roodman’s recent column in the Washington Post (“Microcredit doesn’t end poverty, despite all the hype”).

Microcredit has been the fair-haired child in economic development despite very weak evidence that it was successful in reducing (much less “end[ing]”) poverty.  It has been praised by liberals, conservatives, and feminists – an odd but strong coalition.  Roodman explains that providing credit to poor people does not necessarily increase growth and reduce poverty.  Roodman notes that providing large amounts of microcredit can produce bubbles.  He notes that Bosnia is one of the nations that have experienced this problem, but does not note the critical article on the Bosnian microfinance crisis and he fails to mention the five-letter “f” word – fraud.  Doing so would greatly strengthen his argument and demonstrate that badly designed microcredit can spur control fraud, bubbles, financial crises, recessions, and increased poverty.  Roodman was writing a brief, general article about microfinance.  A longer article about Bosnia’s microcredit nightmare is a good complement to his piece and I urge reading both articles in full.

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New Look and Big Things to Come

Thanks to the efforts of Mitch Green, New Economic Perspectives has a fresh new look with features and extras that we hope will make this an even more exciting place to visit.  It isn’t easy. We don’t allow advertising on the NEP site, and we have no operating budget. We do what we do because we find it rewarding.  How else could we have “conversations”- in real time – with strangers sitting at computers all over the globe?  And while we’ve made great strides since the blog was launched in the summer of 2009 — NEP is ranked among the top twenty economics blogs in the world — we want to do more.

Our readers have asked for more multimedia content (YouTube lectures, animated videos, whiteboard presentations, etc.). We think these are great ideas!  With your help, we plan to create a library of essential resources for you to view and share as you wish.  If you agree that these are worthwhile goals, please make a financial contribution using the “Donate” button today.

Is Greece’s Rescue at Hand?

Marshall Auerback’s latest assessment of the ongoing Greek crisis.  Watch here.

BLOG #39 DISAGREEMENTS AMONG REASONABLE PEOPLE: RESPONSE TO MMT FOR AUSTRIANS #3


This week we continued our (unplanned) extension of commentary on Austrian economics. The post was featured on the home page of NEP as well as on the MMP. A large number of comments were provided, although few questions or comments that really needed response. There is no doubt that Austrian economics always provokes response—by lovers and haters. There is almost no in-between.