Yearly Archives: 2012

MMP Blog #47: The JG / ELR and Real World Experience

Posted on April 22, 2012 by Mitch Green | 37 comments

There have been many job creation programs implemented around the world, some of which were narrowly targeted while others were broad-based. The American New Deal included several moderately inclusive programs such as the Civilian Conservation Corp and the Works Progress Administration. Sweden developed broad based employment programs that virtually guaranteed access to jobs.

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37 Comments

Posted in L. Randall Wray, MMP, MMT

Tagged ELR, Employer of Last Resort, JG, job guarantee, Modern Monetary Theory

Simon Johnson and James Kwak’s White House Burning: Progressives in the Grip of “Hard Money” Ideology

Posted on April 21, 2012 by Mitch Green | 20 comments

By Michael Hoexter

Michael Hoexter is an energy efficiency and renewable energy policy analyst and marketing professional located in the San Francisco Bay Area. He is concerned that flaws in economic thinking are derailing effective policy action on climate and energy challenges.

Currently, on the world political stage, there is little discussion of an alternative progressive framework for economics that would significantly counteract the push towards fiscal austerity. One hears now and again protests about the damage already done and yet to be done by fiscal austerity, but the public in general has little knowledge of a comprehensive alternative framework. There are signs that the Modern Monetary Theory (MMT) view is reaching a wider audience, but it is probably the case that even most well informed political insiders remain in the dark. The public at large is exposed in both media and policy circles to two flavors of the same neoliberal economics that sees no positive leadership role or well-thought-out supporting role for government in the economy. In the upcoming US Presidential election, the American public must choose between two candidates, superficially different, but who offer in practice weaker and stronger versions of the same approach to governing. The lack of a perceived alternative engenders apathy and cynicism in many.

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20 Comments

Posted in Michael Hoexter

Tagged james kwak, Modern Monetary Theory, simon johnson, white house burning

Responses to MMP Blog #46: The Job Guarantee – Program Manageability

Posted on April 19, 2012 by Stephanie Kelton | 22 comments

By L. Randall Wray

Responses to MMP Blog #46: The Job Guarantee – Program Manageability

Sorry, late yet again. One more week of teaching and then things should be less hectic. Note I had planned for 52 MMP blogs and we are nearing the end…… But it looks like we’ll need a few more. I’m going to be a bit lazy this week, cutting and pasting the comments and providing brief responses.

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22 Comments

Posted in L. Randall Wray, MMP

Tagged job guarantee, MMT, Modern Monetary Theory

Romney’s Lead Economist Urges Policies that will Cause the Next Financial Crisis

Posted on April 16, 2012 by Mitch Green | 26 comments

By William K. Black
(Cross-posted from Benzinga.com)

Presidential nominees of either U.S. party can secure economic advice from any economist in the world. This makes it all the more amazing and sad that they choose economists with track records of disastrous policy advice. Bill Clinton chose Robert Rubin, George W. Bush chose Gregory Mankiw, Obama chose Lawrence Summers, and Mitt Romney chose Mankiw. Rubin and Summers led the Clinton administration’s efforts to gut financial regulation. Mankiw led the efforts under Bush. Collectively, these efforts created the criminogenic environment that produced endemic financial fraud (“green slime”).

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26 Comments

Posted in William K. Black

Tagged deregulation, mankiw

MMP Blog #46: The Job Guarantee – Program Manageability

Posted on April 15, 2012 by Mitch Green | 25 comments

By L. Randall Wray

As mentioned earlier, critics have argued that the program could become so large that it would be unmanageable. The central government would have difficulty keeping track of all the program participants, ensuring that they are kept busy working on useful projects. Worse, corruption could become a problem, with project managers embezzling funds. We will briefly look at some methods that can be used to enhance manageability.

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25 Comments

Posted in L. Randall Wray, MMP

Tagged Employer of Last Resort, job guarantee

The Wall Street Journal’s Weird Embrace of Pseudo Science and the War on Real Science

Posted on April 13, 2012 by Stephanie Kelton | 47 comments

By William K. Black

The Wall Street Journal published a self-revealing news article on Tennessee’s recently adopted law (modeled on a template created by the Discovery Institute – a Christian group whose ultimate goal is preventing the teaching of the core principles of biology) encouraging science teachers to teach their opposition to “controversial” scientific findings. The Discovery Institute opposes the scientific consensus on evolution – the central pillar of biology. One would never understand that fact, however, if one relied on the WSJ article.

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47 Comments

Posted in William K. Black

Tagged discovery institute, war on science

Green Slime Drives Our Financial Crises

Posted on April 12, 2012 by Stephanie Kelton | 16 comments

By William K. Black

“Pink slime” just had its fifteen minutes of fame. BPI, the producer of pink slime, calls it “Lean Finely Textured Beef.” BPI’s slogan is “expect a higher standard.” Pink slime starts with fatty tissues that are inherently more likely to be repositories of salmonella and e coli infections. The tissues are shredded and rendered and most of the fat drained off. The pink slime, however, is still more likely to be infected after this processing and that makes it dangerous and can make it smell spoiled. BPI’s “innovation” was to gas the pink slime in Mr. Clean (ammonia) to try to kill bacteria and reduce the stink. The resultant pink slime is then frozen into bricks and shipped in bulk.

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16 Comments

Posted in William K. Black

Tagged adam smith, finance, green slime, pink slim

Responses to Comments on MMP Blog 45: The JG and Developing Nations

Posted on April 11, 2012 by Stephanie Kelton | 11 comments

By L. Randall Wray

I am responding quickly because the Minsky-Levy-Ford conference in NYC starts today.

Q1: Philip: I’ve been thinking a lot about the problems with imports and the like because it directly affects, for example, Greece should they exit the euro. If they do so, their large dependence on imports will likely lead to a serious inflation. Another concrete example of heavy dependence on imports is (apparently) Argentina. A large amount of the inflation there — which, to my mind, could undermine the credibility of the Kirchner government if allowed run too long — is apparently due to the cost of imports. Is the most elegant solution to this not to work on the supply-side?

A: Agreed, especially for developing nations that do not produce much that is in demand outside their country. This is particularly true of nations that rely on subsistence agriculture. The JG can be used as a tool for development, including development of exports and/or tourism.

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11 Comments

Posted in L. Randall Wray, MMP

The Silver Anniversary of the “Keating Five” Meeting – Citizens United’s Precursor

Posted on April 9, 2012 by Mitch Green | 14 comments

By William K. Black

April 9, 2012 is the twenty-fifth anniversary of the most infamous savings and loan fraud, Charles Keating’s, successful use of five U.S. Senators to escape sanction for a massive violation of the law. The Senators were Alan Cranston (D. CA), Dennis DeConcini (D. AZ), John Glenn (D OH), John McCain (R. AZ), and Donald Riegle (D. MI). They became infamous as the “Keating Five.” I was one of four regulators who attended the April 9, 1987 meeting. I took the notes of the meeting, in transcript format, that were so detailed and accurate that the Senators testified that they were sure I had tape recorded the meeting. (The reality is that I owe my note taking abilities to Bill Valentine, my high school debate coach, and experience debating for the University of Michigan.)

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14 Comments

Posted in William K. Black

Tagged Keating Five

MMP Blog #45: The JG and Affordability Issues with Special Considerations for Developing Nations

Posted on April 8, 2012 by Mitch Green | 12 comments

By L. Randall Wray

Affordability Issues. As we have seen over the course of the previous 44 blogs, a sovereign nation operating with its own currency in a floating exchange rate regime can always financially afford an JG/ELR program. So long as there are workers who are ready and willing to work at the program wage, the government can “afford” to hire them. It pays wages by crediting bank accounts. If it credits more accounts than it debits through tax payments, a deficit results. This initially takes the form of net credits to the banking system, held as reserves. If the reserve holdings are excessive, banks bid the overnight rate down. The government can then either choose to let the overnight rate fall toward zero (or its support rate if it pays interest on reserves), or it can intervene to sell interest-paying bonds at the desired support rate; this will drain excess reserves. In no sense is the government spending on JG/ELR constrained either by tax revenues or the demand for its bonds.

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