Category Archives: J. D. Alt

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.

Continue reading

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.”

Continue reading

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.

Continue reading

The Ideology of Money Scarcity

By J.D. ALT

I’ve been continuing to work on the book I first proposed here at NEP last spring—The Millennials’ Money—and am getting close now to having it ready for publication. The aspect of it that was least successful (and there were several NEP comments to that effect) was the framing of the “ideology of money scarcity” as having evolved from the particularities of the baby-boomer’s generational experience. That was always a shaky and not-very-insightful argument—and I recently came to realize it had to be replaced with a “framing” that focused the “target” of the book in a more useful way. This “target” became clear to me while reading a series of collected essays by Wendell Berry (The Art of the Commonplace) in which he very forcefully explains how and why local, self-sufficient economies are being exploited and destroyed by the multi-national corporate economy—and why it is essential for those local economies to somehow be re-established and regain some useful portion of their self-sufficiency. I realized this was, in fact, precisely what my book was suggesting ought to be the ultimate purpose of the “millennials’ money”—and that modern fiat currency, itself, makes achieving that goal uniquely possible. What follows here is part of my revised introduction, which is titled: “The Ideology of Money Scarcity—A Brief History”.

Continue reading

The Question I Wanted to Ask

By J.D. ALT

I recently attended a panel discussion called by Bernie Sanders—and moderated by Stephanie Kelton—to discuss the crisis in Greece. The panelists were Joseph Stiglitz, Jacob Kirkegaard (of the Peterson Institute) and James Galbraith (who, it had been disclosed just a few days earlier, was part of a secret committee in Greece which evaluated how, and at what cost, an actual Greek exit from the Euro could be managed.)

Jacob Kirkegaard was game in acknowledging that he’d been invited to lend “diversity” to the discussion—and then proceeded, without even wearing a uniform, to give a highly credible impersonation of a six foot nine inch SS storm-trooper. Joseph Stiglitz was a charming rambler who punctuated each point he made with a bright smile—the more painful the point, the brighter the smile. James Galbraith punctuated his points with the very first word of each sentence, which came out as a kind of uncontrolled squawk quickly followed by an incisive and original intelligence that I found truly mesmerizing. (I’d never before seen or heard any of these people.)

Continue reading

A Push-Pull Model for Cooperative Markets Financed by Sovereign Spending

By J.D. Alt

I recently outlined a sovereign spending structure for making “free” pre-school care and instruction available to every American child (Opportunities of a Millennium, Part 1). After further consideration, I realize the proposal glosses over a fundamental issue posed by sovereign spending itself: Should it “push” or should it “pull” at resources to achieve a given goal?

Here is what I mean: In the case of pre-school care and instruction, it would be possible to direct the sovereign spending in basically three ways. The first way is the classic “government program” model where the federal government establishes and staffs a public bureaucracy to provide the pre-school care. This model was ruled out in deference to the Boomer-GenX generation’s legitimate objections to “big government”—and especially big government programs which waste money and fail to accomplish their goals. This leaves two options for directing the sovereign spending.

Continue reading

Opportunities of a Millennium (Part 1)

By J.D. Alt

Viewed through the ideology of money-scarcity, the major challenges facing society appear to represent “costs” that people must be penalized to pay by taking dollars out of their personal pockets. At one level, politics is the endless and bitter argument of one party proposing to do X, Y, or Z in order to accomplish some collective benefit, and the other party saying: Yes, but how are you going to pay for it?—which is the “gotcha” question because everyone certainly “knows” that in order to actually do X, Y, or Z, the federal government will have to increase taxes or borrow dollars from the Private Sector pot. Understanding modern fiat money (and how to manage it as a collective tool) creates, as we now understand, a remarkably different and more useful perspective. With this new perspective, as we’re about to see, many of the biggest challenges we face as a collective society can be viewed not as a “cost”—a penalty to be paid—but instead as an enormous opportunity to make our lives, both collectively and individually, more effective and prosperous. Confronting these challenges, in other words, will not take dollars out of our personal pockets, it will—in addition to hopefully overcoming the challenge addressed—put dollars into our pockets. This, in essence, is the uniquely empowering perspective that modern fiat money makes possible.

Continue reading

The Millennials’ Money (part 3)

By J.D. Alt

Commentary on part 2, again, was extremely helpful and much appreciated. Especially useful were suggestions from readers who “didn’t recognize” my description of the Boomers ideological obsession. This got me to substantially rethink the framing, and I hope that is now fixed. What I realized—and looking back on my own experience, it seems obvious in retrospect—was that what the Boomers were focused on had little to do with the idea of “competition” and much to do with rebelling against (and distrusting) institutional power—especially the institutional power of the federal government. It became natural for them to want to starve that government to keep it from interfering with the individualism the Boomers championed. As I said in my comment to the post, “Do your own thing” seems to have morphed seamlessly into the “trickle-down” economics of federal austerity.

Draft of the next section is as follows:

Continue reading

The Millennials’ Money (Pt 2)

By J.D. Alt

The comments on Part 1 have given me pause and food for thought—and they are much appreciated. Obviously, the generational theme is a lot more complicated than simply BGXers versus Millennials, but I don’t want to get lost explaining or defending the generational theories of Strauss & Howe. I’m sensitive to the critique that making BGXers out the way I am is a dramatic oversimplification and might, in some degree, be counterproductive to my goals by alienating the BGXers themselves. I’m struggling with that because, on the other hand, I want the book to be a “simple” and highly focused message—and the message is (a) that understanding and effectively using modern fiat money could very usefully become the “political brand” of the Millennials, and (b) the BGXers, because of their ideological baggage, can be expected to resist the whole way down the road.

In the meantime, what comes next in the proposed book is the essay Diagrams & Dollars, which I won’t repeat here, since it is already posted. The beginning and end of the essay will be re-written to better flow with the Millennial narrative. The section after D&D is what follows below. This is a particularly difficult segment for me: I am trying to convey, accurately, the money operations described by L. Randall Wray—which is a bit like trying to describe the rotations of a rubric’s-cube puzzle—and to do it in a way that won’t wrangle the brain of a typical Millennial reader who isn’t aspiring to being a banker. Comments here will be especially helpful!

Continue reading