Monthly Archives: July 2013

My Unpublished Letter to the Editor of the NYT

By Stephanie Kelton

I submitted the following Letter to the Editor in response to Annie Lowrey’s July 4 article on Warren Mosler and MMT.  The Times chose not to run it.  So I will.

Thank you for alerting your readers to the growing impact of the anti-austerity branch of economics known as MMT. More than a decade ago, Warren Mosler challenged the economics profession, insisting that the U.S. would be a far more prosperous nation if we stopped basing our fiscal and monetary policies on macroeconomic theories that were designed for a country whose currency was still tied to gold. I was among the first wave of academic economists to reach agreement on this point. Now hundreds of articles, book chapters and conference presentations later, the ideas have spread well beyond the ivory towers. Tens of thousands of professionals in finance, business, government, etc., many of them formerly self-proclaimed deficit hawks, now champion Warren’s insight that our fears about debt and deficits are based on a failure to understand how modern money works–and that it’s holding all of us back.

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NEP’s Bill Black Appears on CNBC Tonight

Bill Griffeth (filling in for Larry Kudlow) discusses high frequency trading and whether it creates unfair markets. Bill Black weighs in on the lack of merits for High Frequency Trading and impact of collocating servers to get milli-second trading advantages.

NEP’s Bill Black Appears On CCTV’s Biz Asia America

CCTV America’s Phillip Yin speaks with Bill Black about new US bank regulations. Bill warns against ‘too big to fail institutions’ and the attempts to create a ‘tame tiger’ through policy, which he believes is a reckless path to the next financial crisis

Heeding the Appraisers’ Fraud Warnings Would have Prevented the Crisis

By William K. Black

On July 9, 2013 I participated in a radio interview with a lobbyist for the 100 largest financial firms.  The San Francisco radio program host asked me what question I would ask the lobbyist and I said that any discussion should begin with allowing him to state his view of what caused the crisis.  In the course of his explanation, he bemoaned the fact that there was no warning about the crisis.

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Former Deputy Secretary of the U.S. Treasury Department Endorses Modern Monetary Theory (MMT)

By Stephanie Kelton

Three months ago, Frank Newman sent me a book entitled Freedom From National Debt.  I finally got around to reading it — all 89 pages.  It’s a little book, packed with evidence that America is being held back by incorrect assumptions and misguided fears about the national debt and government finance in general. Here’s the takeaway:

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Politically Fashionable Carbon Gradualism vs. Reality

By Michael Hoexter

The recent re-entry of the Obama Administration into public discussions and advocacy for climate change action has been a mixed blessing for the climate action movement.  On the one hand, President Obama possesses the (U.S.) bully pulpit as President and thus can broadcast messages, which can be heard around the country and the world.  Furthermore he leads the executive branch of the US federal government, where his Administration can enforce existing regulations, negotiate international business and political relationships, and set climate and energy targets for the functioning of the federal government’s internal operations.  Indications that the US President personally is concerned about climate and assigns it a medium or high priority would, one would assume, make more likely real policy and executive actions, not just speeches.  Against the background of relative US government inaction on climate change over the past two and a half decades, the decision to bring the climate issue out of the shadows in the beginning of his last term in office and his June 25th speech would under most circumstances be viewed as a net “win” for climate action and the climate movement, no matter what the exact content of his policy prescriptions.

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Some Academic Literature on MMT

By Stephanie Kelton

I presume Alex Little put this together after reading the NY Times piece on Warren Mosler and MMT in which I was (mis)quoted as saying that MMT has no footprint in the academic press.  It’s not an exhaustive list, but you’ll be exhausted by the time you reach the end.

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Two Sentences that Explain the Crisis and How Easy it Was to Avoid

By William K. Black

Everyone should read and understand the implications of these two sentences from the 2011 report of the Financial Crisis Inquiry Commission (FCIC).

“From 2000 to 2007, [appraisers] ultimately delivered to Washington officials a petition; signed by 11,000 appraisers…it charged that lenders were pressuring appraisers to place artificially high prices on properties. According to the petition, lenders were ‘blacklisting honest appraisers’ and instead assigning business only to appraisers who would hit the desired price targets” (FCIC 2011: 18).

Those two sentences tell us more about the crisis’ cause, and how easy it was to prevent, than all the books published about the crisis – combined.  Here are ten key implications.

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Discrediting Regulation: from George Stigler to Tyson’s Fraud-Free Carbon Tax Fantasy

By William K. Black
(Cross posted at Benzinga.com)

Laura D’Andrea Tyson (President Clinton’s principal economist) has written an ode to a “carbon tax” that does not acknowledge a single disadvantage or substantive (as opposed to political) concern with such a tax.  A carbon tax can have advantages, but her article oversells the idea and ignores the severe concerns about such a tax.  Her article demonstrates why the Clinton administration’s anti-regulatory and fiscal policies helped sow the seeds of ongoing financial disaster.  (The Bush administration watered and fertilized those seeds and we all reaped the whirlwind.)

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Revealed Biases: Why MMT Critics Continue to Rely on Strawman Arguments

By William K. Black

Economists of nearly every flavor believe in the concept of “revealed preferences.”  What matters is not what people say they will do in a hypothetical situation, but what they actually do.  Their actions speak more credibly than their words.  In this column I announce a related concept: “revealed biases.”

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