Tag Archives: MMT

The Five Stages of Money (and why we’re stuck at stage 4)

By J.D. ALT

Like everything else, money has evolved. It began in a primitive form and morphed into something more sophisticated, more successful. Then, probing and testing for an even better form, it morphed again. A simplified history of money’s evolution can be outlined in five stages:

STAGE 1: Money is a tangible thing of value—e.g. a gold coin.

At some point in the pre-history of humankind, the “invention” of money solved a time-gap problem in cooperative trade: I’ll give you my baby goat in exchange for your flint-knife—but you have not yet made the knife, so the exchange is stymied. To solve the impasse, you give me a token of gold to temporarily stand in place of the flint-knife, so you can take my baby goat. The gold token is a promise that the knife will be delivered, and that promise is secured by the fact that the gold itself is deemed equally valuable as the knife. In the meantime, I may find someone else with a flint-knife already made who will exchange it for the gold, thus completing the trade. The invention of this place-holder transformed the cooperative trade interactions of human society.

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Cenk and Young Turks Team: Your Deficit Hawkery is Unrealistic and Stands in the Way of Progressive Change

By Michael Hoexter, Ph.D.

[The Young Turks (TYTNetwork) is an online news network that has a wide reach among mostly progressives and independents in the United States with viewership in the hundreds of thousands of unique visitors per day and over 2 million views per day.  Cenk Uygur is its founder, CEO, and leading on-camera commentator.]

Dear Cenk, John Iadarola, Ana Kasparian, and the Young Turks Team,

I’m a Young Turks subscriber, member, and a longtime fan of your coverage of politics.  I think you have provided a consistent and detailed perspective on the failures of our political system, consistent criticism of both US major political parties as well as the alarming emergence of Trump and Trumpist/GOP neo-authoritarianism.  I think your instincts for analyzing political personalities is grounded in keen and accurate observation of people and political forces.  You also rarely shy away from criticizing both the Democratic and Republican Establishments, which distinguishes you from the “liberal” mainstream media.  You have been also very good at analyzing some of the biases of mainstream media against progressives and against change that most Americans want.  You are a consistent, principled, and very much needed independent voice that I often wish was heard more widely.

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Framing a Job Guarantee

By J.D. ALT

Note: This essay was first posted on realprogressivesusa.com

Now that progressive leaders (Bernie Sanders, Kirsten Gillibrand and Corey Booker) have placed a proposed “Job Guarantee” program onto the mainstream political stage, it is essential they begin explaining the proposal’s underpinning macro-economic logic. Otherwise they lay themselves, and the proposal itself, wide open to scathing public ridicule—as exemplified by a recent Megan McArdle op-ed in the Washington Post (“A federal job for everyone?” April 25, 2018). But what should they be saying by way of explaining?

Perhaps a point-by-point response to Ms. McArdle’s arguments is a way to begin. First, her title itself is an intentionally misleading—and pejorative—portrayal of the proposal. The Job Guarantee (JG) program will use federal dollars to pay wages, but few (if any) of the wage earners would become part of a federal bureaucracy that most Americans believe is already over-bloated and inefficient. Think instead of all the private doctors and nurses paid federal dollars to provide health-care services to Medicaid and Medicare patients; think of all the private enterprise farmers, food-processors and distributors who are paid federal dollars to implement the SNAP (food-stamp) program; think of the millions of private defense contractor employees who build ships, planes, and missiles. Ms. McArdle is being disingenuous in planting the idea that everyone who is paid with federal dollars is a federal employee; it’s an idea that immediately discredits the JG program, and it should be proactively discredited itself.

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Framing the Progressive Platform

By J.D. ALT

This essay was first posted at www.realprogressivesusa.com

I keep reading the big challenge Democrats face in the 2018/2020 elections is that they have moved too far left, proposing a platform that includes “free” universal health care, “free” college tuition, “free” pre-school day-care—and a national infrastructure building and repair program paid for, not by the states, but by the federal government (i.e. “free infrastructure”). Progressives seem to genuinely wonder why mainstream Americans would object to these proposals. Why would American voters be put off by proposals they’d obviously gain so much real—and in many cases personal—benefit from?

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Doing What the Market Can’t

By J.D. ALT

What decides whether something is undertaken in America is the “market.” The way the market decides what is to be done is by determining whether people are willing to pay to benefit from the undertaking, how many people are willing to pay, how much they are willing to pay, and all this is then compared with the cost of the undertaking. If nobody is willing to pay for the benefit (no customers), the undertaking will not happen. If the number of people willing to pay, multiplied by the amount they are willing to pay, equals a dollar value less than the cost of the undertaking, the undertaking will not happen. If, in fact, that calculated dollar value is not some specified percentage GREATER than the cost of the undertaking (profit), the undertaking will not happen either. If the calculated profit is determined to be adequate, the undertaking will move forward and the cost of doing so will be invested in anticipation of harvesting the profit. These are the basic rules and dynamics of a Market Economy which is—for many good reasons—the chosen, championed, and cherished American economic model.

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The Big Three

By J.D. ALT

This essay was first published at www.realprogressivesusa.com

There is a lot more riding on our understanding of modern fiat money than we typically consider or discuss. Human society is now confronted with three epoch-defining challenges and, in each case, the understanding and strategic use of modern fiat money holds out the ONLY real possibility for constructively engaging the them.

The challenges are:

  1. Climate change & ecological collapse
  2. Assault on Democracy
  3. Mass migration

In each case, the challenges are, first, aggravated, amplified, and intertwined by our ignorant, unimaginative clinging to the old rules and norms of “commodity” money. These old rules and norms tell us, basically, that money is (a) a finite resource that people must compete to have a share of; and (b) that a sovereign democracy must collect some portion of its citizens’ “finite” money-share (as taxes) for democracy to have money to spend for its collective goals and needs.

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A Comfortable Betrayal

By J.D. ALT

This essay was first posted at https://www.realprogressivesusa.com/

It would be a shocking scandal if it came to light that the professions of medical science had, for decades, known about an easy to treat, underlying cause of cancer—but conspired to obfuscate and suppress the information to protect their participation in a medical industry raking in hundreds of billions a year to treat the disease. Professional standings, tenures, licenses would be in tatters. Lawsuits would abound. Outrage would march on every city hospital and medical college in the nation—would it not?

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THE SHIFT: Understanding and Using America’s Fiat Money

By J.D. ALT

NOTE: This essay was originally posted at Real Progressives

Before it disappears forever from our experience—which the rapid adoption of smart-phone commerce suggests might happen within the next decade—we should examine, take stock of, and fully understand what this piece of paper is that we call a U.S. dollar. Or maybe a five-dollar bill, which is what I happen to have pulled from my wallet in preparation for writing this essay. It doesn’t matter which bill we choose: they all have the same basic informational clues indelibly printed onto their durably woven, cotton-linen fabric. The point is this: if, and when, we can no longer pull this particular piece of “paper” out of our pocket and actually examine it, we’ll have lost our chance to understand what a U.S. dollar actually is—which is something we very much need to understand if we hope to eventually create a successful, progressive, democratic economy. So, while it is still conveniently in our pockets, let’s take it out and consider what we’re really looking at—and what that means for our modern society going forward.

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Answers from the MMTers

By Stephanie Kelton and Randall Wray

A few days ago, Jared Bernstein posed some Questions for the MMTers in order to gain a “better understanding [of our] arguments.” We appreciate his interest in our ideas and, especially, his direct appeal for clarification of our views.  He raised four big questions, which our Australian counterpart, Bill Mitchell, has already answered in his own three-part series.  What follows is a response from two North American MMTers.

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We Pay versus You Pay

The New Regulatory Regime of Modern Fiat Money

By J.D. ALT

I was momentarily taken aback to read in the Washington Post that a primary reason Donald Trump was elected president of the United States was because of a little swampy area in the middle of an Iowa farmer’s cornfield. The cornfield in question belongs to an Angus beef farmer named Annette Sweeney who was both incredulous and outraged by the Obama administration’s new regulations on Clean Water. The regulations, known as WOTUS (Waters of the United States), established that the 1972 Clean Water Act applied not just to just major bodies of water, but also to their headwaters which, by circuitous routes, feed them. This headwater stipulation, by definition, included a ½ acre swampy place in the middle of the cornfield Annette Sweeney’s family had used to feed their beef cows for over two generations. This meant that the cornfield she thought belonged to her family was now essentially under management of the federal government—which stipulated requirements for new inspections and permitting regimes costing her thousands of dollars and untold hours of strife just to be allowed to plant feed-corn without garnering federal fines. Not only did Annette Sweeney vote for Donald Trump, she became a political activist advocating, successfully, against government regulations of virtually any kind whatsoever.

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