Tag Archives: Fiscal Sustainability

Fiscal Myths of Campaign 2016: A New Kindle e-Book

Most of the world, and most notably the United States, is in the grip of fiscal myths fostered by the ideology of neoliberalism. There is virtual unanimity across the major political parties in the United States in accepting the viewpoint of neoliberalism, and the fiscal myths associated with it.

This book is about these myths, the arguments showing that they are, indeed, myths, and the truths that can counter them. It is about Campaign 2016, and some of its issues, because the fiscal myths will certainly be used in the Campaign; since, for the first time in a very long time, there is a major party candidate running, who, because he advocates for a very broad agenda and for fighting inequality, will, sooner or later, find that some, and perhaps a large number, of fiscal myths are being directed at him by his opponents and their supporters, who want to persuade voters that his agenda is “fiscally irresponsible.”

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How Can Our Senators and Representatives Vote for Giving Away Our Monetary Sovereignty?

Right now the US fulfills the three essential conditions for monetary sovereignty: 1) it issues its own non-convertible currency, 2) which it allows to float on international currency markets; and 3) it owes no debts in any currency other than dollars. Because it is monetarily sovereign, and can always meet its obligations the US can never be forced into insolvency.

It can become insolvent due to Congressional decisions such as failing to raise or repeal the debt ceiling, or Executive decisions such as failing to use its platinum coin minting authority to fill the public purse and then pay its bills once it has reached the debt ceiling. But again, it cannot be forced into insolvency by external financial or economic factors that are beyond the control of the Federal Government (including the Congress).

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The Value of the Right Ratio Is Zero

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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Functional Finance and the Debt Ratio—Part IV

By Scott Fullwiler

[Part 1] [Part 2] [Part 3] […] [Part 5]

This five part series will explore at length (warning!) and in detail (another warning—wonk alert!) the MMT perspective on the debt ratio and fiscal sustainability.  While the approach suggests a macroeconomic policy mix and strategies for both fiscal and monetary policies that most neoclassical economists currently believe are unsustainable, ultimately the MMT preference for a significant role for fiscal policy in macroeconomic stabilization is shown to be consistent with traditional neoclassical views on fiscal sustainability.

This fourth part integrates the content of the first three parts with the functional finance strategy for fiscal policy.  Warning again—this part is the longest and most detailed of the four. Continue reading

Richard Eskow Asks: Which Side Are You On?

By Joe Firestone

Richard Eskow of the Center for the American Future, posted a very good one a couple of days ago. He used the old union meme “which side are you on” to beat up the President and Congress about Social Security being placed on the negotiating table. I thought his writing on it was striking. Here’s some of it:

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New MSM Trillion Dollar Coin Wave: Here’s The Big Story

By Joe Firestone

The one thing that jumps out at you when reading the mainstream posts of the past week-and-a-half bringing Platinum Coin Seigniorage (PCS) into the forefront of attention again, for the first time since last year’s debt ceiling crisis, is that every mainstream blogger or commentator is telling a story about minting a Trillion Dollar Coin (TDC), or a few trillion dollar coins as an option the President can either use or not to get around the debt ceiling. But no one is telling us the much bigger story of the enormously increased authority to cause the creation of fiat money, delegated to the Executive Branch by the Congress in the 1996 legislation enabling PCS. And no one is telling us what the possible implications of this change are for our political and economic systems. Continue reading

New MSM Trillion Dollar Coin Wave Misses the Big Story: Bradford and Plumer

By Joe Firestone

In my last three posts, I’ve critiqued the new wave of mainstream posts and commentary on Platinum Coin Seigniorage (PCS) on my way to making the case that the MSM are missing “the big story” about PCS. These  include posts by Pethokoukis, Wiesenthal, Carney, Drum, Yglesias,  Yglesias, and an MSNBC cable segment by Chris Hayes. All of these have looked at PCS in terms of the Trillion Dollar Coin (TDC) and its possible impact on the impending debt ceiling shakedown. None have viewed it from a broader point of view. Let’s now look at commentaries by Harry Bradford, and Brad Plumer. Continue reading

New MSM Trillion Dollar Coin Wave Misses the Big Story: Drum and Yglesias

By Joe Firestone

In my last two posts I’ve been reviewing the new wave of mainstream posts and commentary on Platinum Coin Seigniorage (PCS) by way of providing background for making the case that the MSM are missing “the big story” about PCS. Thus far I’ve reviewed recent posts by Pethokoukis, Wiesenthal, and Carney, and an MSNBC cable segment by Chris Hayes. All four have looked at PCS in terms of the Trillion Dollar Coin (TDC) and its possible impact on the impending debt ceiling shakedown. None have viewed it from a broader point of view. Let’s now look at the commentaries by Kevin Drum and two from Matthew Yglesias here and here. Continue reading

New MSM Trillion Dollar Coin Wave Misses the Big Story: Hayes and Carney

By Joe Firestone

Did the MSM’s new wave of commentaries on platinum coin seigniorage (PCS) miss the really big story about it? Of course, I think it did, and I’ll continue my review of the MSM commentaries with the efforts of Chris Hayes at MSNBC, substituting as host on the Rachel Maddow show (12/05 at 9:20 PM); and John Carney at CNBC (12/06 at 11:54 AM). This is my second review post on this subject. Continue reading

New MSM Trillion Dollar Coin Wave Misses the Big Story: Pethokoukis and Wiesenthal

By Joe Firestone

In this post I said I would blog about the likely expected relationship between the different PCS options and inflation using the framework laid out by Scott Fullwiler!  But, after reconsidering, I thought I’d hold off until later, and, instead, first provide a discussion of the “new wave” of MSM-based blog posts on the Trillion Dollar Coin (TDC) “solution” to the upcoming debt ceiling conflict. As it turns out that will take a number of posts in itself. Continue reading