Monthly Archives: August 2013

Declaring the Grand Bargain Dead Is Premature

Posted on August 31, 2013 by Joe Firestone | 34 comments

Stories in The Washington Post and the New York Times have some in the blogosphere proclaiming that it’s time to celebrate the death of the Grand Bargain, and others at least raising a question about its death. I’ll go on record as saying that celebrating its death is definitely premature.

It is so because we’ve yet to go through the budget or continuing resolution-passing activities coming up in September, and also have yet to go through the debt ceiling conflict to come in October. Mainstream Washington commentators believe John Boehner is determined to avoid a government shutdown crisis of the budget/CR conflict and that one or the other will be passed before October 1. Assuming they’re right, that still leaves the matter of the debt ceiling “crisis,” which the same commentators are saying will happen because Boehner has to promise his tea party caucus a chance to coerce the Administration, if he’s going to get their acquiescence on the budget/government shutdown matter.

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34 Comments

Posted in Joe Firestone

Tagged #PCS, $60 Trillion Coin, austerity, debt ceiling, debt limit, debt-subject-to-the-limit, default, deficit spending, High Value Platinum Coin Seigniorage, Jack Lew, MMT, modern money theory, President Obama, public debt, Secretary of the Treasury

Hyper-Endogeneity

Posted on August 30, 2013 by Dan Kervick | 46 comments

By Dan Kervick

Some people believe in endogenous money. They believe we live in a monetary system is which money is generated and extinguished as part of the ordinary flow of everyday economic activity. The economy tends to generate the money it needs in order to satisfy the exchange desires and saving preferences of participants in the economy, and to extinguish the money it doesn’t need.

The endogenous money picture is in some considerable tension with the idea that the monetary system is controlled by the government. The alternative exogenous money picture holds that the issuance and destruction of money is a task reserved for government alone, and that the total amount of money present in the economy is therefore a government policy choice.

We can achieve a happy medium between the endogenous money and exogenous money pictures by viewing things this way: Due to a combination of deliberate policy choices and historical contingencies, societies have chosen to institute complex monetary and credit systems in which the generation of the most commonly used means of exchange is primarily a market-driven phenomenon, but one that is heavily regulated and supplemented by government agencies that also issue their own forms of money. We can also note that those latter forms of narrow government money usually play a foundational role in constraining and underpinning the broader forms of money, since they are needed to settle the obligations that are incurred by issuing those broader forms of money.

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46 Comments

Posted in Dan Kervick

Jared Bernstein Tries to Reimagine Larry Summers as a Foe of the Banksters

Posted on August 30, 2013 by Devin Smith | 9 comments

By William K. Black

Jared Bernstein was Vice President Joe Biden’s chief economist and was the strongest economic voice within the Obama administration opposing inflicting austerity on the Nation in response to the Great Recession. His August 28, 2013 column is entitled “Summers and the Banks.” He begins by acknowledging that Obama had dreadfully “misplayed” the choice of Ben Bernanke’s successor as Fed Chair.

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9 Comments

Posted in William K. Black

Tagged accounting control fraud, Jared Bernstein, Larry Summers

Jack Lew: Avoiding Default Is Your Responsibility Too

Posted on August 29, 2013 by Joe Firestone | 12 comments

By Joe Firestone

With the end of the Summer break, now comes the return of the debt limit dance. From Treasury Secretary Jacob Lew’s letter to John Boehner:

“Congress should act as soon as possible to protect America’s good credit by extending normal borrowing authority well before any risk of default becomes imminent.

“Based on our latest estimates extraordinary measures are projected to be exhausted in the middle of October. At that point, the United States will have reached the limit of its borrowing authority, and Treasury would be left to fund the government with only the cash we have on hand on any given day, The cash balance at that time is currently forecasted to be approximately $50 billion.

“. . . A cash balance of approximately $50 Billion would be insufficient to cover net expenditures for an extended period of time. And, on certain days, net expenditures could exceed such a cash balance.

“. . . Protecting the full faith and credit of the United States is the responsibility of Congress because only Congress can extend the nation’s borrowing authority . . .“

OK. So, only Congress can extend the nation’s borrowing authority. But it doesn’t follow from that fact that protecting the full faith and credit of the United States is solely the responsibility of Congress.

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12 Comments

Posted in Joe Firestone

Tagged #PCS, $60 Trillion Coin, 14th Amendment, austerity, debt ceiling, debt limit, debt-subject-to-the-limit, default, deficit spending, High Value Platinum Coin Seigniorage, Jacob Lew, MMT, modern money theory, President Obama, public debt, Secretary of the Treasury

NEP’s William Black appears on HuffPost Live

Posted on August 29, 2013 by Devin Smith | 1 comment

William Black appeared on HuffPost Live with Mike Sacks on the Four Massive Economic Threats episode. Black discusses sovereign currencies vs. austerity.

1 Comment

Posted in William K. Black

Tagged austerity, sovereign currency

A Response to J.D. Alt: Mobilization and Money

Posted on August 29, 2013 by Devin Smith | 18 comments

By Glenn Stehle

Analyzing the nexus of war, economics, and society is a fascinating undertaking. War is the deployment of the state’s instruments of violence — the military and the police. So instead of the nexus of war, economics, and society, we could just as easily speak of the nexus of state violence, economics and society. And since Alt chose to make his article a morality tale, I would like to continue in that vein.

The two moral prerogatives which Alt articulates are 1) utilitarianism and 2) equality. We see this, for instance, when he notes that Continue reading →

18 Comments

Posted in Guest Blogger

Tagged morality, neoconservative, neoliberal, state violence, utopia

Zero Prosecutions of Elite Banksters is too many Prosecutions for the Wall Street Journal

Posted on August 29, 2013 by Devin Smith | 6 comments

By William K. Black

Unintentional self-parody was the result to a coordinated effort by the systemically dangerous institutions’ (SDIs) press flacks to gin up outrage that the Department of Justice (DOJ) would have the audacity to sue the SDIs’ for their manifold violations of the law. The Wall Street Journal recalled one of its former opinion page pundits to active duty as a shill for the Street. George Melloan’s August 25 column warned:

“If dubious prosecutions continue to mount, they could backfire on the regulatory agencies and further diminish sinking public confidence in government. Ask the folks at the IRS.”

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6 Comments

Posted in William K. Black

Tagged banksters

Honoring Dr. King’s Call for a Job Guarantee Program

Posted on August 28, 2013 by Devin Smith | 22 comments

By Fadhel Kaboub

Fifty years ago today, Dr. Martin Luther King, Jr. led the 1963 “March on Washington for Jobs and Freedom.” Yes, jobs!

For the civil rights leaders, the fight for justice was not limited to providing equal voting rights for all Americans and abstaining from discriminatory practices against African Americans. A federally funded Job Guarantee program was a central theme articulated by Martin Luther King and Bayard Rustin (the organizer of the 1963 March on Washington, and one of this year’s recipients (posthumously) of the Presidential Medal of Freedom).

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22 Comments

Posted in Guest Blogger

Tagged Bayard Rustin, job guarantee, Martin Luther King

Bank Lending and Bank Reserves

Posted on August 27, 2013 by Dan Kervick | 44 comments

By Dan Kervick

Provoked partly by some recent posts by Paul Krugman, which seem to imply that understanding the institutional structure of the banking system is irrelevant to gauging the effectiveness of the monetary policies implemented by the central bank, questions have arisen again about the relationship between bank lending and bank reserves. One of the issues raised can be framed by asking, “Do banks lend their reserves?” And as with so many questions in economics, the answer to this question depends on disambiguating the question, clearly distinguishing parts from wholes, and avoiding fallacies of composition and division.

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44 Comments

Posted in Uncategorized

The Five Worst Reasons Why the National Debt Should Matter To You: Part Four, Three REAL Reasons

Posted on August 27, 2013 by Joe Firestone | 10 comments

By Joe Firestone

This is the concluding post in a four part series on the “Top” reasons why the national debt should matter. In Part One, I considered “Fix the Debt’s” claim that high levels of debt cause high unemployment and argued that this is a false claim. In Part Two, I followed with a review of the historical record from 1930 to the present and showed that it refutes this claim throughout this period, and that there is not even one Administration where the evidence doesn’t contradict “Fix the Debt’s” theory. In Part Three I showed that the other four reasons advanced by “Fix the Debt” also had very little going for them. In this part, I’ll give reasons why the national debt does matter, and why we should fix it without breaking America, or causing people to suffer.

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