By Thornton (Tip) Parker
Most MMT advocates probably took months to get comfortable with it. But like a personal computer, one need not understand its innards to use its power. The great power of MMT is its lesson that the federal government can create new dollars by running deficits to do things that should be done. But the lesson is counterintuitive and will be rejected by voters unless it can be explained convincingly in a few minutes. This paper offers five nuggets for explaining it quickly. NEP readers are asked to suggest ways to make the explanation simpler and better.
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Most Americans believe the federal government is like a family or business that must live within its income. On the surface, that makes sense and the reasons why it is wrong are complex. Here are five nuggets, or simple ways to explain why it is wrong to voters who will never be economists. They show why federal deficits are necessary. They can be adapted and used as appropriate. Continue reading
This is how the mission of the President’s National Commission on Fiscal Responsibility and Reform was defined by the White House
on February 18, 2010:
The Commission is charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. Specifically, the Commission shall propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. This result is projected to stabilize the debt-to-GDP ratio at an acceptable level once the economy recovers. The magnitude and timing of the policy measures necessary to achieve this goal are subject to considerable uncertainty and will depend on the evolution of the economy. In addition, the Commission shall propose recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal Government.
William K. Black
February 3, 2016 Bloomington, MN
This is the second article in my series prompted by the Wall Street Journal report that “big money managers” want to bring back “liar’s loans.” Given that the best study of liar’s loans during the crisis found a fraud incidence of 90% — this is a startling proof of how openly addicted to fraud the “big money managers” remain. It demonstrates some of the terrible costs of the Department of Justice’s refusal to prosecute the fraudulent loan originators’ controlling officers.
In this installment I lay out briefly the lies that the banksters made, and continue to make, about liar’s loans and why those lies are so harmful. The WSJ chart on liar’s loans faithfully repeated those lies as if they were revealed truth. The chart is shown below. Let us count the lies.
We need big, big changes in the United States. Many of them will require the Federal Government to spend unprecedented amounts, including deficit spending to enable us to solve problems that have languished, creating needs, for many, many years.
How can we get these changes legislated through a political system that has been increasingly less responsive to most people over the past four decades. There’s only one way that will work without revolution.
We need a movement for change powerful enough to replace the present establishment of House and Senate legislators and presidents wanting to preserve their way of looking at how to do things, with another group that has concluded that change is desperately needed and must be accomplished come what may, whatever the cost in long established customs and traditions in both Houses of Congress and among the vested political and communications elites in the Washington, DC/New York “village.” But not just any changes will do. Continue reading
William K. Black
February 2, 2016 Bloomington, MN
It is time to break out one of our two family rules again – it is impossible to compete with unintentional self-parody. How fraudulent is finance even now? The Wall Street Journal reports that “big money managers” want to bring back “liar’s loans.” I am trying to write much shorter columns, so there will be many columns in this series because the WSJ article so beautifully exemplifies the lies that the industry and the media told about liar’s loans before and after 2008.
Spoiler alert: liar’s loans, as the name admits, are pervasively fraudulent. Only fraudulent lenders make liar’s loans as a regular business practice. These home loans make the officers wealthy through the “sure thing” of the “fraud recipe” for “accounting control fraud.” The WSJ, of course, ignores these facts and presents instead falsehoods provided by fraudulent officers.
[revised – Michael Winston’s bio added]
At this time (January 29, 2016), we consist of four founding members:
Our bios are listed at the end of this post. We share a number of common experiences. They explain why we came together to try to implement real reform. Continue reading
In order to restore the rule of law, we ask every candidate for the nomination of their party for the presidency to pledge that they will not take contributions from any financial firm (or contributions above $250 from their officers) that the United States or its agencies have, after investigation, charged with committing the legal elements of fraud. That list includes virtually all of the largest banks in the U.S. and Europe and Freddie and Fannie. Indeed, most of these financial giants have admitted that they conducted massive frauds.
- On Day One, the President directs each relevant federal financial agency to restore a superb criminal referral process, the criminal referral mandate, and criminal referral coordinators, at every federal financial agency. Local and state police forces rarely investigate sophisticated financial frauds. That work is done overwhelmingly by roughly 2,000 FBI agents in the white-collar section. That means that we have roughly two FBI agents per industry. Those numbers mean that FBI agents don’t “walk a beat” – they only come when they receive a criminal referral alerting them to a likely fraud. It also means that they cannot possibly have more than a few agents with expertise in the particular industry. There is one other key fact to keep in mind – corporations don’t make criminal referrals against their own CEOs for obvious reasons, even though frauds led by CEOs cause by far the greatest harm of any form of fraud.
William K. Black
January 30, 2016 Bloomington, Minneapolis
Well, this is slightly embarrassing. Gary Aguirre, Bill Black, Richard Bowen, and Michael Winston came together to form a pro bono effort by bank whistleblowers to restore the rule of law on Wall Street. As a placeholder in the drafting process, I called us the “Bank Whistleblowers’ Group” and that name survived the drafting process and was announced yesterday by me on New Economic Perspectives (NEP). Michael Winston deserves credit for suggesting that we call ourselves “Bank Whistleblowers United” – a name that everyone in our pro bono group prefers. We’ve changed the documents posted yesterday on NEP that make public our initiatives to reflect our new name. The “announcement” document I posted yesterday has been changed to reflect the new name and I used the opportunity to make a few edits as well.