Category Archives: Joe Firestone

The “Debt Crisis” According to Bruce Bartlett: Generational Accounting

This is the last post in my analysis and commentary on Bruce Bartlett’s testimony to the Senate Budget Committee. There’s one very significant issue left to discuss, and that is the issue of fiscal gap and generational accounting and whether it should be institutionalized in legislation. I’ll begin this post with that discussion and then end the series with my overall evaluation of his effort.

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The “Debt Crisis” According to Bruce Bartlett: Debt Thresholds, and Wars

This is the fourth in a series of commentaries on Bruce Bartlett’s recent testimony to the Senate Budget Committee. I appreciated his testimony and his critical evaluation of the idea that there is a public “debt crisis” in the United States. I also agree that there is no debt crisis. However, I was disappointed that his views, for the most part, did not show the across the board relevance to most aspects of the “debt crisis” of the fact that the United States is a fiat currency sovereign.

In the previous three posts, I’ve outlined the many contexts in which the fiat currency sovereignty of the United States is relevant to showing that the idea that the United States has or can have a debt crisis is just bunk. In this post, I’ll continue my discussion of Bruce Bartlett’s testimony in the same way.

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The “Debt Crisis” According to Bruce Bartlett: Household Analogy, Inflation, Savings, and Taxes

In the first two parts of this series of commentaries on Bruce Bartlett’s testimony to the Senate Budget Committee, I’ve reviewed the first 8 paragraphs in his statement. These points debunked various concerns of those who think the United States has a serious “debt crisis” it must handle before it takes on trivial problems such as its unprecedentedly high level of wealth inequality, lack of true full employment at a living wage, roughly 30 million people still lacking health insurance, one of the worst infrastructure systems in the developed world, transitioning from fossil fuels and ending climate change, creating a first class public educational system from pre-K through graduate school, ending the student loan crisis, creating a single standard of law for all, including the various categories of violators categorized as too big to prosecute by recent Administrations, and ending the student loan debt crisis, just to name a few.

However, what was noticeably missing from the variety of arguments given in his eight paragraphs was a recognition that the United States is a fiat sovereign nation and that this fact has serious implications for most of the subject matter Bruce Bartlett covers in his statement. In this post I’ll continue my analysis of his statement to explore the extent to which his views correspond to Modern Money Theory (MMT).

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The “Debt Crisis” According to Bruce Bartlett: Capital Investment, the “Debt Burden,” Fiat Currency, and the Debt Limit

This is the second in a blog series of commentaries on Bruce Bartlett’s recent statement to the Senate Budget Committee. The first post in the series discussed a number of his comments on aspects of the “debt crisis,” a crisis he and I both believe doesn’t exist. I discussed a number of his reasons for doubting the severity of any debt problem and related each of them to the capabilities of the United States as a fiat sovereign.

In this post, I’ll cover the issues related to capital investment, the debt burden, fiat currency, and the debt limit. I’ll begin with Bruce Bartlett’s statement on how capital investments ought to be treated in the budget.

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The “Debt Crisis” According to Bruce Bartlett: Fiat Sovereignty

Today, I’d like to offer the first of three commentary posts on Bruce Bartlett’s recent testimony before the Senate Budget Committee. Bruce Bartlett is a long-time veteran of the fiscal policy wars. He initially became known as a supply-side free market economist working for Ron Paul and then Jack Kemp in the 1970s. Later, he served as a senior policy analyst in the Reagan Administration, and then in the Bush 41 Administration as the deputy assistant secretary for economic policy at the Treasury Department. Since then he’s worked at conservative think tanks and as a well-known writer on economic policy and politics, becoming increasingly critical, first of the Bush 43 Administration and then of the increasingly rightward trend of the Republican Party. Today I think Bruce Bartlett is best characterized as a fiercely independent voice still respected in conservative circles, and also, among progressives such as Jamie Galbraith and Stephanie Kelton, but never afraid to call balls and strikes on any Administration or Congress as he sees them.

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Will We Ever Get Change if We Keep Electing People Who Represent Special Interests?

We can see the positioning and the messaging on the Democratic side beginning to take shape for the 2016 elections. Bernie Sanders and Elizabeth Warren with nods to Thomas Piketty and various economists have stepped forward to offer the themes of salvation for the middle class, moderating the extremes of inequality in American society, and doing something real about jobs and wages.

Clinton World seems to be responding, not yet with forthright statements from Hillary Clinton, but recently with articles by stalwarts of neoliberal Clintonism (and veterans of the Obama Administration) such as Larry Summers and Peter Orszag, expressing concerns about inequality and proposing measures to alleviate it, even including increased taxation on the wealthy.

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Return of the Coin?

By Joe Firestone

The last few weeks have seen at least two posts calling attention to the potential use of the platinum coin in America’s political economy. The first to appear was Rob Urie’s piece in Counterpunch provocatively titled: “The Trillion Dollar Catshit Coin” And the second was Mike Sandler’s post in The Huffington Post called “Greece and the U.S. Senate: Economics for the 99%.

Let’s begin looking at these with Sandler’s effort. He reports on two challenges to austerity. The first is from Syriza’s victory in Greece and its promise to Greek voters that it will end austerity. The second:

The austerity mindset faces a new foe in the U.S. Senate as well. The re-shuffle of the last U.S. election that put austerity-minded Republicans in power has ironically resulted in a new anti-austerity economist being hired by Senator Bernie Sanders (I-VT) in the Senate Budget Committee — Professor Stephanie Kelton of the University of Missouri-Kansas City. Professor Kelton is a proponent of Modern Monetary Theory (MMT), a very pro-stimulus economic approach. Her hiring represents the biggest step forward for MMT, since the PR coup of the Trillion Dollar Platinum Coin in 2013. At that time, Kelton reportedly created the #mintthecoin hashtag that was featured in columns by Paul Krugman and others.

Sanders’ hiring of Kelton is a break from the more conciliatory “balanced budgeting” approach of some Democrats, such as former treasury secretaries with ties to Wall Street and fiscally-conservative “deficit hawks.” Kelton and her MMT colleagues go beyond the traditional Keynesian stimulus of short-term deficit spending. They seek to unleash the power of monetary policy to circumvent the scarcity mindset imposed on government action, perhaps even bringing the Trillion Dollar Coin back into the discussion.

Of course, Sandler means to say fiscal policy in the above, since MMT economics greatly favors reliance on fiscal, rather than monetary policy, in spite of the “monetary” in its name. But apart from that, he projects that we may see the platinum coin come back into prominence soon. Continue reading

Overcoming Systemic Voter Disempowerment with a System Changing Technology

By Nancy Bordier and Joseph M. Firestone

Most governments claim they are democracies because they hold popular elections. A large majority of their citizens who cast votes also think their governments are democracies.

But there are other criteria besides elections for determining whether or not a country has a functioning democracy — or a failing democracy.

A major criterion, possibly the most important one, is whether voters actually control elections and their legislative consequences.

– Can voters decide who runs for office and set the priorities for the legislation their elected representatives pass if they are elected?

– Can voters freely run their own candidates? Or must they vote for candidates run by intermediaries like political parties or special interests?

– Do institutions like the U.S. electoral college and election authorities place limitations on voters’ ability to run their own candidates by imposing requirements voters find it difficult or impossible to fulfill, such as collecting massive numbers of signatures, paying unaffordable fees, etc.?

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A Technological Fix for Failing Democracies

Dysfunctional democracies are provoking anger, confrontations, crises and conflicts for the following reasons:

  • In many cases, the citizens of dysfunctional democracies are unable to decide who runs for office, who gets elected and what laws are passed because of obstacles erected to prevent them from doing so.
  • Several of these obstacles, for example election laws in the U.S., result in the election of lawmakers, such as those who control the U.S. Congress, who represent only a minority of eligible voters and pass legislation that rarely represents the will of a majority of voters.
  • According to extensive research, special interests, wealthy individuals, corporations and financial institutions tend to exert greater influence than voters over lawmakers’ legislative actions because they finance lawmakers’ electoral campaigns.
  • Rogue lawmakers whose actions are not controlled by their constituents but by influential groups and wealthy campaign funders are contributing to the creation of increasing inequalities of wealth that enable a small percent of the population to acquire most of their nation’s wealth, while the rest of the population has little or no wealth and few if any opportunities to create wealth.
  • Undemocratic political parties that control electoral machinery and do not allow competitive parties to take root prevent voters from setting party agendas and nominating and electing candidates of their choice, increasing the legislative disconnect between voters’ and lawmakers’ priorities.

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The Technology Solution to the Democracy Crisis

By Joe Firestone

The spectacular intrusion of special interests into the passage of the $1.1 trillion government spending bill on December 13, 2014 was breathtaking as bankers and lobbyists whipped the vote by calling Congressional representatives directly to demand a host of special interest provisions, including the following:

  • Repealing the Dodd-Frank prohibition on locating derivatives trading activities in the same bank subsidiary company as their depositories containing checking, savings, and other accounts insured by the FDIC.
  • Raising individual campaign contribution limits by roughly 10 times the present limit.
  • Allowing businesses to default by as much as 1/3 of their private pension obligations.
  • Preventing the EPA from introducing new climate protections. 

So it is now abundantly clear that what we have is government by minority rule in which special interests reign supreme. Clearly, this cannot continue. It is for this reason that we are sharing the post below describing the only solution to the democracy crisis of which we are aware that can be implemented in the near future. It is long and we do not expect many readers to get through it in one sitting, or even at all. But if it piques your interest, you can re-locate it here at a more opportune time. 

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