Category Archives: Joe Firestone

The Value of the Right Ratio Is Zero

Posted on March 17, 2015 by Joe Firestone | 7 comments

The public debt-to-GDP ratio is, perhaps, the most important measure used in discussions of the relative fiscal sustainability of nations. Nations with high levels of debt-to-GDP are viewed as having more serious fiscal problems than nations with lower levels. Nations having increasing ratios over time are viewed as becoming less fiscally sustainable, while those with decreasing ratios are viewed as more fiscally sustainable.

But is the public debt-to-GDP ratio really a valid measure of fiscal sustainability, or is it a measure that incorporates a neoliberal theoretical bias in its fundamental assumptions? In the United States the total value of public debt subject to the limit at any point is the total principal value of all the outstanding debt instruments sold by the Treasury Department. The GDP is the aggregate value of the production of goods and services in the United States within a particular period of time, adjusted for price changes.

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Tagged debt-subject-to-the-limit, debt-to-GDP ratio, fiat sovereigns, financial incapability ratio, Fiscal Sustainability, MMT, Modern Monetary Theory

Maya MacGuineas: The Profound Fiscal Irresponsibility of Resistance to Facts

Posted on March 17, 2015 by Joe Firestone | 3 comments

Just as every Spring we can count on the Peter G. Peterson Foundation (PGPF) to do a supportive press release when the CBO issues one of its budget outlook 10 year projection reports, we can also count on being treated to public statements by Maya MacGuineas joining in the Peterson Army choir, warning about the coming debt crisis, and singing about the glories of deficit and debt reduction. And this while completely ignoring the real and sad consequences of deficit and debt reduction policies throughout the world since the crash of 2008, as well as previous applications to Latin American, Asian, and the nations of the disintegrated soviet empire, most notably Russia itself. Let’s look at Maya MacGuineas latest effort; her testimony to the Senate Budget Committee.

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Tagged austerity, balanced budget, Campaign to Fix the Debt, CBO, Committee for a Responsible Federal Budget (CRFB), Fiscal Policy, high platinum coin seigniorage, Maya MacGuineas, MMT, Modern Monetary Theory, Peter G. Peterson Foundation, REAL fiscal responsibility, Senate Budget Committee, washington consensus

Podcast: A conversation with Mike Norman

Posted on March 15, 2015 by Joe Firestone | Comments Off

Earlier today, I appeared on Mike Norman’s podcast for a long conversation about how I became interested in MMT, my recent blog series on Bruce Bartlett’s testimony to the Senate Budget Committee, and a discussion of how the history of the platinum coin’s rise to public consciousness. The conversation was a lot of fun, since Mike and I both tend not to mince words. The podcast is posted on his site and is also below.

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Tagged Bruce Bartlett's testimony, debt crisis, joe firestone, MIke Norman's podcast, MMT, modern money theory, platinum coin seigniorage, Senate Budget Committee

The Peterson Foundation Sings the Same Old Song

Posted on March 12, 2015 by Joe Firestone | 7 comments

The Peter G. Peterson Foundation (PGPF) always does a press release when the CBO issues one of its budget outlook 10 year projection reports. The PGPF did another in January quoting its President and COO, Michael A. Peterson. Let’s go through that press release and see how many troublesome or false statements we can find. Here’s a breakdown of the press release quotation from Michael Peterson.

Today’s CBO report reminds us once again that our nation has significant fiscal challenges that have yet to be solved.

It certainly does, but I doubt that Peterson and I would agree on what those challenges are. He thinks they have to do with bringing the national debt under control. I think they have to do with creating full employment with a federal job guarantee program, price stability, a robust economy, a great public and free educational system through graduate school, stopping and reversing climate change, providing everybody in, nobody out, no co-pays and no deductibles health care for all, a first class infrastructure, and a greatly expanded social safety net including a doubling of SS benefits.

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Tagged austerity, budget projections, CBO, enhanced Medicare for All, Fiscal Gap, Fiscal Policy, High Value Platinum Coin Seigniorage, HR 676, HVPCS, Michael A. Peterson, MMT, Modern Monetary Theory, Peter G. Peterson Foundation, REAL fiscal responsibility, The Body Economic, washington consensus

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

Posted on March 10, 2015 by Joe Firestone | 1 comment

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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Tagged Bruce Bartlett, Fiscal Gap, full employment, generational accounting, Inter-temporal Government Budget Constraints. fiscal policy, MMT, Modern Monetary Theory, neo-Keynesianism, paul krugman, Peter G. Peterson Foudation, platinum coin seigniorage, Senate Budget Committee

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

Posted on March 10, 2015 by Joe Firestone | 2 comments

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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Tagged austerity, Bruce Bartlett, debt crisis, debt to GDP 90% threshold hypothesis, MMT, Modern Monetary Theory, Reinhart and Rogoff, sectoral financial balances, Thomas Herndon

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

Posted on March 9, 2015 by Joe Firestone | 4 comments

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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Tagged Bruce Bartlett, crowding out, debt crisis, Household analogy, inflation, loanable funds market, MMT, Modern Monetary Theory, savings, Senate Budget Committee, Taxes

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

Posted on March 7, 2015 by Joe Firestone | 8 comments

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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Tagged Bruce Bartlett, capital investment, debt burden, debt crisis, debt limit, Fiat Sovereignty, seigniorage, Senate Budget Committee

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

Posted on March 6, 2015 by Joe Firestone | 16 comments

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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Tagged Bruce Bartlett, debt crisis, debt repayment, Fiat Sovereignty, MMT, Modern Monetary Theory, Senate Budget Committee

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

Posted on March 5, 2015 by Joe Firestone | 4 comments

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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