Category Archives: J. D. Alt

CROWDSOURCING the COLLECTIVE “WE”

By J.D. ALT

Let’s jump ahead to the day (surely it will come, right?) when we realize a general consensus has actually been established that, yes, it IS possible to sustainably pay for collective goods and services by the direct issuing of sovereign fiat dollars―that our federal government doesn’t have to collect taxes in order to have dollars to spend, that it doesn’t have to issue Treasury bonds to get the dollars it needs but imagines it doesn’t have.

Now that we’re here in this future moment, it’s clear we have an even BIGGER problem than we had before!

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The Charade

By J.D. ALT

My last essay, “A Perfect Example,” elicited six thoughtful and compelling questions from a reader with the moniker “MadcapMongoose.” They deserve an equally thoughtful response, which I’ve been trying to formulate, off and on, these past many weeks. Each formulation I come up with, however, seems to be missing a larger and deeper issue that I keep getting glimpses of. So, with apologizes to Mongoose, instead of answering him (or her) directly, I’m going to try to mine the topic obliquely to see if I can get at that deeper vein.

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A Perfect Example

By J.D. Alt

Recent news reports lament the on-going collapse of America’s coal industry―specifically the spectacular loss of jobs which is devastating not only families but entire local economies and communities. On a PBS news report, a woman who’d worked for a local mining company for thirty years teared up and asked the reporter, “What in the world am I going to do?” At a recent event sponsored by Wyoming Public Radio, attendees were asked to fill out 5X7 cards with suggestions about how to answer that question—how to replace the lost coal industry jobs. Under the banner “How to Diversify Wyoming,” the cards were pinned on a bulletin board for everyone to see and discuss. The suggestions ranged from eco-tourism to pot-growing to space-flight support―all good, healthy, creative ideas, (with the possible exception, I think, of space-flight). What suddenly jumped out at me, however―like a jack-in-the-box on a spring―is that implicit in every suggestion written on those 5X7 cards lies a huge, overpowering, built-in assumption about the way the world has to work:

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Video

By J.D. Alt

I spent the last couple days reading and contemplating “Political Aspects of Full Employment”, the transcript of a lecture―given in 1942!!―to the Marshall Society by economist Michal Kalecki. This was recommended to me by Nat Uerlich in his May 2 comment to my post “False Choice or Real Possibilities.” Many thanks to Mr. Uerlich for taking the time to make the comment. I urgently recommend Professor Kalecki’s lecture to anyone who feels a little fuzzy (as I have lately been feeling myself) about what we are up against as a collective society as we now confront, once again, how collective society itself is structured to inexorably be its own worst enemy.

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Over-Arching Perspective

By J.D. ALT

I’m attracted to “big picture” vistas that put the day’s momentary developments into what at least feels like a meaningful perspective. It helps me to imagine things are more manageable than they otherwise seem to be. In reading my daily news (currently The Washington Post), I’m always on the lookout for at least two articles that fit together somehow to create a glimpse of this over-arching view. Today (Friday, 6 May) I got what feels like a pretty good peek.

First is an article about the EPA’s twenty-five year struggle to define and implement rules and regulations about lead in America’s water supply. Basically, the efforts have focused on requiring municipalities to test their water for lead on a regular basis―and then implement some kind of remediation if the lead-levels test too high. The problem lies in the complex relationship between the testing and the remediation: Testing must occur at the tap, not at the supply, because lead contamination occurs in the old, lead pipe-connections which the water, pure as it may be when it starts out, must pass through to get to the tap. The corrosiveness of the water, which is controlled by many factors and chemicals, determines how much lead is picked up along its journey through the lead-infested pipes. If the tap water tests too high, municipalities must implement a complex calculation of how to reduce the water’s corrosiveness.

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False Choice or Real Possibilities

By J.D. ALT

The essential ploy in politics is to give people a false choice. For dinner tonight, you can have fried potatoes—which are what I am serving—or you can have watered-down potato gruel, which is what my opponent is serving. Never mind that, if we take time to look, the larder is actually stocked with tomatoes, corn, zucchini, string-beans, hams and pork bellies.

The political false choice is usually quite subtle, and invariably involves whether you want to be taxed or not. The example I continuously stumble upon is Barak Obama’s 2015 State-of-the-Union proposal for universal child-care in America. However eloquently he may have framed it, the choice President Obama eventually gave was this: pre-school child-care for every American family paid for by the federal government—coupled with a new tax on cigarettes—OR hit-and-miss pre-school child-care paid for by private welfare, struggling individual families, and desperate single moms. Never mind looking in the larder to see if there are unemployed resources in America which—without raising additional taxes—could not only provide the child-care services, but could be employed to do so, thereby contributing not only to the gross domestic product and aggregate demand for Main Street businesses, but to the well-being and success of our nation’s school-children. But instead of looking in the larder to see what was possible, we were given Obama’s false choice.

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The Millennials’ Money is Published

By J.D. Alt

jd1I’m pleased to announce the book The Millennials’ Money is now available. Many of its parts were first vetted here at NEP, and readers’ comments and suggestions were extremely helpful in finalizing the text. There is a nice endorsement on the back cover by Stephanie Kelton. A deeply felt thank you to NEP and all of its readers! The book is structured in three sections:

The introduction, “The Ideology of Money Scarcity—a Brief History,” is an overview of how, after 1971, the U.S. found itself using a modern fiat money system but continued thinking and behaving as if U.S. dollars, like gold, were a scarce commodity.

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The Ogre & the Cog

By J.D. ALT

Classically, we imagine money being aggregated by an entrepreneur who uses it to build a factory, purchase raw materials, hire labor, and begin manufacturing widgets which are then sold in the marketplace. This same result could be had by the process of an ogre appropriating a factory by intimidation, acquiring raw materials by force, and using slave labor to produce the widgets. The difference is that, in the first case, the process produces customers (the laborers) who can purchase the widgets with their wages, whereas—in the second case—the ogre’s widgets have no paying customers. One model produces an economy, the other model doesn’t.

If we look at the modern global corporation, we see something of the ogre. Yes, they pay to build their factories—but prefer to coerce local communities into footing much of the cost through preferential land and tax deals (as well as, in many cases, the appropriation of local water supplies) in exchange for the “local jobs” the factory promises to create. They also do not outright “steal” their raw materials, but do manage to argue that the minerals existing in the ground of public lands are somehow theirs by right in exchange for a nominal rent. True, as well, they do not employ slave labor, but instead employ strategies that have, in the end, the same result: they minimize the use of local labor (all those jobs they promised to create) by using robotic technologies—and by outsourcing much of the “make-work” of the widget components to a country with cheap (some may even characterize it as “semi-slave”) labor. It is for this reason, of course, the same global corporation is so desperate for global trade agreements which will allow it to favorably access the markets to which it has outsourced its human labor—because that’s where the theoretical paying customers (the wage earners) are that its business model is creating.

In a similar vein, economists puzzle over the lack of inflationary pressure—indeed, the tendency towards deflation—in the modern western economies, even though the financial industries seem to be “creating money” at a historical pace. It might be that there’s something of the Ogre in that financial industry as well: the money it creates is not used to build factories, acquire raw materials, hire labor, and build widgets—it is used, instead, to make bets in the casino of the financial markets themselves. Poker chips are bought and played, but the chips never get redeemed, and they never leave the casino—except when they are used to buy political power and favor to perpetuate the game. (A few chips do get redeemed as spending money for the high-rolling players—and this does, in fact, put inflationary pressure on the prices for mega-yachts and London penthouses, but who really worries about that?) What matters is that the “money” generated by the casino never shows up is in the pockets of wage-earning customers on Main Street. Their pockets, if anything, contain fewer dollars than they did a generation ago—while the store fronts they gaze into contain more and more widgets assembled by robots with make-work parts fabricated by workers in other countries.

There is, in other words, a profound disconnect in the way things are functioning. The American economy has dropped a crucial cog out of its gear-box and, as a consequence, the gears on top are spinning wildly but futilely, while the disconnected gears on the bottom are grinding slowly and ineffectually. What we need to do, somehow, at all costs, is to put that missing cog back in the gear-box. Or—perhaps that is not exactly correct—we need to connect the drive-train directly to the lower gears themselves, and insert a cog let them drive the upper gears as, I believe, the machine was supposed to operate in the first place.

Tax Credits and Dollars—Playing Charades with Low-Income Housing

By J.D. Alt

Here is what the HUD.GOV website says about the status of low-income housing in America: “Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care. An estimated 12 million renter and homeowner households now pay more than 50 percent of their annual incomes for housing. A family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States.”

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Sovereign Spending in a Market Economy

By J.D. ALT

Even if we assume the principles of modern fiat money will be generally accepted at some point in the future, we must yet confront the problem that sovereign spending is a difficult issue for market economies. It could easily unfold that even with the new “modern” money perspective in place, a serious recession could still find federal stimulus spending unnecessarily constrained. This difficulty was on full display in the last recession when Obama’s stimulus package was finally passed by Congress—appropriating $800 billion for the federal government to spend—only to then confront the almost burlesque-show entertainment of watching Congress and the Obama administration trying to figure out how to actually do the spending.

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