Monthly Archives: October 2013

Bernie Sanders: Self-shackled Champion of the People

Posted on October 31, 2013 by | 42 comments

I gotta love Bernie Sanders, because he seems so much like people I grew up with and like myself too, and he also seems to have that passion for equality and democracy that is so important for the future of America. Sometimes I think Bernie is one of the few champions of the people left in Congress. But I also think that along with other progressives he has constructed chains for himself that prevent him from being as effective a champion of the people as he otherwise might be. Continue reading →

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Posted in Joe Firestone

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Rotten Title, Great Summary of My Talks on MMT

Posted on October 31, 2013 by | 11 comments

By Stephanie Kelton

As much as I dislike the title of this article from Advisor Perspectives, the essay itself is a good overview of the talks I’ve been giving at national, regional and chapter meetings of the Financial Planning Association (FPA) over the past year-and-a-half. I wasn’t aware that Veras was working on a piece and didn’t see it until it was published (or I would have implored him to change the title!). I wanted to share the piece but only after this word of caution: I would not and did not say, “deficits don’t matter,” as you’ll discover if you read the entire piece. This is a touchy subject for MMTers, who’ve been (wrongly!) accused of taking the position that “deficits don’t matter.” Randy Wray made the MMT position crystal clear years ago, and I told Dan Jamieson the same thing when he interviewed me for a similar piece in Investment News:

InvestmentNews: Are MMT theorists saying deficits don’t matter?

Ms. Kelton: Deficits do matter, but not in the way people think.

So with that flashing neon disclaimer in place, here’s Veras’ article from Advisor Perspectives.

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Posted in Stephanie Kelton

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Former Dept. Secretary of the U.S. Treasury Says Critics of MMT are “Reaching”

Posted on October 30, 2013 by | 75 comments

By Stephanie Kelton

A few weeks ago, I had a lengthy e-mail exchange with Frank N. Newman, former Deputy Secretary of the U.S. Treasury. Frank’s books (here and here) are so closely aligned with MMT thinking about deficits, debt, monetary operations, etc. that I wanted to get his thoughts on one of the most common criticisms of MMT. MMT recognizes that the currency itself is a simple public monopoly and that the issuer of the currency must spend (or lend) it into existence, before it can be used to pay taxes or buy bonds. The implication? Governments that issue sovereign money are not revenue constrained. Critics have argued that MMT has this all wrong because the system requires the government to have numbers on its balance sheet before it can spend — i.e. the government is not allowed to run an overdraft and is, therefore, constrained by cash on hand. Here’s what Frank Newman thinks of that critique:

Continue reading →

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Posted in Stephanie Kelton

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The Oil Oligarchs Want Me to Know How Much They Hate President Correa

Posted on October 29, 2013 by | 4 comments

By William K. Black

Gustavo Coronel, a Venezuelan oil oligarch associated with Cato has written to let me know how much he despises Ecuador’s President Rafael Correa.  Coronel serves as his own “official scorer” so he has declared that one of my columns “made a failed attempt to whitewash the President of Ecuador, Rafael Correa, who is violating environmentally fragile areas of the Amazonia to drill for oil.”  This is a passing strange comment from a man whose professional life was spent growing wealthy by “violating environmentally fragile areas of the Amazonia [and elsewhere] to drill for oil.”  You may think that Coronel reached a late-life epiphany and is seeking to make up for a life violating environmentally fragile areas, but no such transformation occurred.  Coronel simply sees an opportunity to attack Correa, and Coronel has dedicated his remaining life to attacking any Latin American leader who opposes the oligarchs.

Continue reading →

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Posted in William K. Black

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Attention: Deficit Disorder and the Real Crisis Ahead

Posted on October 28, 2013 by | 16 comments

By Fadhel Kaboub*

The ongoing political deadlock over the U.S. government deficit and the national debt is slowly digressing into one of the most devastating economic pains that a financially sovereign government can inflict on itself and on its own people. With the exception of the readers of New Economic Perspectives and MMT-oriented blogs (here, here, here, here, here, and here among others), the vast majority of the public suffers from an acute form of deficit disorder, which can be diagnosed in a variety of ways, but most commonly you will notice that the subject is convinced that: 

  1. the government should balance its budget and pay off its debt in the same way that responsible individuals, households, and businesses do;
  2. government deficits crowd-out private sector investments;
  3. government deficits cause inflation;
  4. government deficits promote inefficient and wasteful government programs; and/or
  5. the national debt is a burden on future generations and a form of taxation without representation.

Continue reading →

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Economics could be a Science if More Economists were Scientists

Posted on October 28, 2013 by | 34 comments

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

Raj Chetty has written an op ed in the New York Times designed to counter the abuse the Sveriges Riksbank (Sweden’s central bank) rightly received for its latest embarrassment.  Economics does not have a true Nobel Prize, so a central bank decided to create a near-beer variant.  The central bankers have frequently made a hash of it, often awarding economists who got it disastrously wrong and inflicted policies that caused immense suffering.  This year, not for the first time, the central bankers decided to hedge their bets – awarding their prize to economists who contradict each other (Eugene Fama and Robert Shiller).  The hedge strategy might be thought to ensure that the central bank’s prize winners were right at least half the time (which would be an improvement over the central bankers’ batting average in their awards), but that is a logical error.  It is perfectly possible for both of the prize winners to be wrong.  I’ll explain why I think that is the case in a future article.

Continue reading →

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Posted in William K. Black

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Solidarity and organized national purpose

Posted on October 28, 2013 by | 10 comments

By Glenn Stehle

What drove that growth? Solidarity and organized national purpose. Americans worked together as a team during the war, and that solidarity continued into the postwar decades, behind an engaged and economically pro-active government.

–DAN KERVICK, “Market Myths and the Real Drivers of American Progress”

There’s nothing like an existential threat, such as the prospect of complete annihilation of one’s own group, to motivate behavior and focus one’s mind.  Kervick’s quote reminded me of this:

Continue reading →

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Posted in Guest Blogger

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The New York Times Authors the Most Ironic Sentence of the Crisis

Posted on October 24, 2013 by | 12 comments

By William K. Black

The author of the most brilliantly comedic statement ever written about the crisis is Landon Thomas, Jr.  He does not bury the lead.  Everything worth reading is in the first sentence, and it should trigger belly laughs nationwide.

“Bank of America, one of the nation’s largest banks, was found liable on Wednesday of having sold defective mortgages, a jury decision that will be seen as a victory for the government in its aggressive effort to hold banks accountable for their role in the housing crisis.”

“The government,” as a statement of fact so indisputable that it requires neither citation nor reasoning, has been engaged in an “aggressive effort to hold banks accountable for their role in the housing crisis.”  Yes, we have not seen such an aggressive effort since Captain Renault told Rick in the movie Casablanca that he was “shocked” to discover that there was gambling going on (just before being handed his gambling “winnings” which were really a bribe).

Continue reading →

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Posted in William K. Black

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Money For Nothing: A Panel Discussion by Black, Kelton and Wray

Posted on October 23, 2013 by | 23 comments
Cross posted from EconoMonitor: Great Leap Forward
On the evening of October 21, 2013, there was a preview screening of the film “Money for Nothing” at the University of Missouri-Kansas City (UMKC). After the film, there was a panel discussion about the film with the filmmaker, Jim Bruce, and UMKC professors Dr. Stephanie Kelton, chair of the UMKC department of economics, economics professor Dr L. Randall Wray, and Dr. William Black, former financial regulator and associate professor of law and economics.

There is a little noise from handling the recorder in the first couple minutes of the recording, but then it settles down to decent audio. Here is the link for the panel discussion:

https://soundcloud.com/tellsomebodyradio/money-for-nothing-panel

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Posted in L. Randall Wray

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JPMorgan: Fish Rot from the Head

Posted on October 23, 2013 by | 4 comments

By William K. Black

The New York Times’ spin of the tentative settlement of JPMorgan’s latest myriad felonies begins early and runs throughout the article.  JPMorgan and Attorney General Eric Holder have reached a common meme on their settlement:  the Department of Justice (DOJ) and Holder are stalwarts who have demonstrated their toughness and JPMorgan is a model corporate citizen.  The inconvenient facts that the senior officers of JPMorgan, Bear Stearns (Bear), and Washington Mutual’s (WaMu) grew wealthy through the frauds that drove the financial crisis and that JPMorgan’s senior officers will not be prosecuted and will not even have to repay the proceeds of their crimes never appear in the article.

A word of caution is in order: I am discussing an article that is the product of leaks from DOJ and JPMorgan’s press flacks about a tentative deal, so reality is certain to differ from the spin.  This article is a longer discussion of the settlement than my October 22, 2013 CNN op ed.

Continue reading →

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Posted in William K. Black

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