Monthly Archives: January 2013

Paul Goes Platinum!

By Joe Firestone

Another platinum coin surge in the Second Wave rippled through the mainstream media yesterday and this time hit the Congressional Progressive Caucus. Domenico Mantanaro of MSNBC kicked things off on one of the morning shows by mentioning the Trillion Dollar Coin (TDC) as a possible solution to the debt ceiling problem. Then, in the afternoon, on MSNBC’s the cycle, Krystal Ball, and Steve Kornacke, in discussing the coming debt ceiling conflict talked rather matter-of-factly, I thought, about minting some TDCs to get around the debt ceiling. Continue reading

Putting the Pains in their Place

By Dan Kervick

As part of his Tuesday night statement on the fiscal cliff deal he had just concluded with Congress, President Obama boldly affirmed that he would not negotiate over the debt ceiling, implicitly raising the dire specter of government default to defend his position:

Now, one last point I want to make — while I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed. Let me repeat: We can’t not pay bills that we’ve already incurred. If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic — far worse than the impact of a fiscal cliff. 

Now this is the kind of thing that tends to make star-struck Democrats weak in the knees.  Partisan Democrats are always extraordinarily impressed by ejaculations of tough talk from President Obama.  But they often have difficulty distinguishing the stagy theatrics of tough talk from the drab backstage reality of tough action.  And unfortunately, every time Obama succeeds in turning some policy debate into a theatrical tilt with Republican leaders, progressives lose.  They lose because Obama’s Democratic supporters will usually follow him almost anywhere – so long as he gives them an emotionally gratifying “win” in the end.  Of course, they will allow Obama himself to define the rules and objectives of the games he is playing, and thus to implicitly define what constitutes winning.

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Functional Finance and the Debt Ratio—Part V

By Scott Fullwiler

[Part 1] [Part 2] [Part 3] [Part 4] […]

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 fifth and final (!) part applies functional finance to CBO’s projections of the government’s long-term budget outlook and then offers concluding remarks for the entire series. Continue reading

Catch Randy Wray Discussing His Modern Money Theory Book on FDLSalon

Firedoglake is hosting a book salon with Randy Wray discussing his new book Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems.  NEP’s William K. Black will be the host for the salon.

When: Saturday, January 5, 2013 at 2:00 p.m. pacific /5:00 eastern

Where: fdlbooksalon.com

 

The Washington Post’s tries again to create a moral panic sufficient to push the Grand Betrayal

By William K. Black

The Washington Post’s mission has been to create a “moral panic” sufficient to cause the Obama administration to overcome the objections of Senate Democrats and adopt the “Grand Bargain” (sic).  The deal would actually constitute the Grand Betrayal.  The betrayal of Democratic Party principles and promises would inflict a recession through massive austerity via large cuts to the safety net and social programs and modest/moderate increases in revenues. Continue reading

The President’s Leverage: He Can Go Platinum

By Joe Firestone

Well, that’s over. The President had a chance to go “over the cliff,” bargain hard with the Republicans, get more of what he said he wanted at the price of perhaps some more days of crisis with extreme pressure building on the Republican caucus, and he blinked. I don’t much care that he blinked on tax rates for the top 2% and on inheritance taxes, because tax rate increases for purposes of deficit reduction simply aren’t needed for getting deficit spending needed to create jobs, as the rest of this post will show. Here’s what I care about: Continue reading

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

Brad DeLong Has Me Worried

By Stephanie Kelton

Brad DeLong is worried.  And now I’m worried.  He’s worried about “unfunded tax cuts,” which, he says, are “bad juju” in the long run.  I don’t mean to pooh-pooh his juju, but what the heck is an “unfunded tax cut”?

 

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The Strange Reality of Fiat Money

By J. D. Alt

It is time to come to terms with the fact that U.S. dollars are what economists call “fiat money”. Having acknowledged this—and it’s difficult not to accept it as true since the U.S. abandoned the gold-standard over forty years ago—it might be worthwhile to give some consideration to what “fiat money” actually is and the peculiarities of how it works. Continue reading

Austerity’s Irrationality: The Age of Economic Anorexia

By Michael Hoexter

Rational public debate about the economy and government’s role in the economy is currently in extremely short supply.  In a debt-deflation, a weak economy saved from Great Depression-level misery by half-way, inadequate government action, government spending is now blamed categorically for the ills of the economy by the aggressive austerity campaign that has captured the political discussion in major capitals.  Previous flaws in the economic theory of the state and theory of money, typically consigned to the realm of different economic “tastes” or moral persuasions, are now revealed to be catastrophic gaps in most economists’ and the public’s understanding of the basics of the capitalist economy.  The predatory austerity campaigners, many originating from within the financial industry, have turned what should have been an era of greater clarity about government’s critical role in the economy into a scapegoating of government for ills perpetrated for the most part by components of the financial sector or by the subservience of the public sector to the financial sector.  Austerity policies when implemented are the equivalent of ‘economicide’ as they strangle government’s ability to spur lagging demand for real goods and services as well as government’s role in steering the economy to deal with challenges that the private sector can’t or doesn’t want to face on its own.

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