Yearly Archives: 2013

DID SCOTT SUMNER FIND MMT’S ACHILLES’ HEEL?*

Posted on November 4, 2013 by | 63 comments

By L. Randall Wray

*The title of this post was inspired from a post by Mike Sax.

First an admission. I’m not really a blogger. I occasionally write pieces that somehow find their way onto blogs, but I rarely read or respond to blogs. I have no idea who is who in the blogosphere. For example, I do not know someone named Scott Sumner, who is apparently a Very Important Person in blogoland.

I note that he’s associated with the proposal that the Fed target nominal GDP. When I first heard about this, I thought it was a joke. Yeah, right, might as well have the Fed target the Earth’s Wobble. Gee, I’d really like the Fed to stabilize the tilt, to achieve San Diego’s invariantly moderate climate in upstate NY where I spend much of my time!

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The U.S. Attorney Who Prosecutes JPMorgan Will Be Its First Witness

Posted on November 4, 2013 by | 3 comments

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

The U.S. Attorney for the Eastern District of California is Benjamin Wagner.

“Once the U.S. government built a case against J.P. Morgan and settlement talks began, the Justice Department made several threats that it would file its civil lawsuit, and each time J.P. Morgan responded by offering to talk more or increase the amount of money it might pay, the people familiar with the discussions said.

One critical moment came as the department set an internal deadline, Sept. 24, to file a suit against the bank.

The day before the deadline, the bank offered to pay $3 billion to settle a case tied to mortgage-backed securities—an offer the attorney general rejected. That same day, Ben Wagner, the U.S. attorney from Sacramento, Calif., flew to Washington with two large charts he meant to display at a news conference describing the bank’s alleged misconduct. A criminal and civil investigation into J.P. Morgan’s past sale of mortgages bonds had been handled by Mr. Wagner’s office.”

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Texas is the New Jerusalem of Free Market Fundamentalism, but how’s that working out for the Lone Star State’s great unwashed?

Posted on November 4, 2013 by | 4 comments

By Glenn Stehle

Texas is the De Civitate Dei, the new holy city of free market fundamentalism, and Ted Cruz, the upstart Tea Party senator from Texas, has been quick to canonize himself as its patron saint.  In case you haven’t heard it yet, Texas is now “the light and the way,” and if you don’t believe it, just ask Ted Cruz or Rick Perry, or better yet ALEC:

The Texas growth narrative is well-known by now. Texas’ population grew by 11 million people (79 percent) between 1980 and 2011, more than double the rate of growth of the nation as a whole.   With that population growth came job growth. Since the 1990s, the rate of Texas job growth has been a full percentage point or more above the national average most years.

The American Legislative Exchange Council, among others, has suggested that other states should adopt policies that will make them more like Texas in order to grow their economies. One example from the introduction to ALEC’s recent Rich States, Poor States report: “[M]any governors are looking at Texas, which has led the nation in job growth over the past three years, as the state with the best policy to emulate.”   In particular, ALEC notes the state’s tax policy as a plus.

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House Passes Deregulation Bill Written by Citigroup

Posted on November 1, 2013 by | 5 comments

The Latest edition of the Black Finance and Fraud Report on TRNN. The House of Representatives has passed a deregulation bill written by Citigroup – supported by both parties.

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What Was Inside that Red Pickup Truck?

Posted on November 1, 2013 by | 38 comments

By Dan Kervick

Driving home from work last night here in New Hampshire, I ended up behind a man in a tidy red pickup truck. The man had written a very elaborate message on the back of the truck, carefully arranged with block letter decals of the kind you use to put a name on a mailbox. I couldn’t read the entire message without tailgating, and some of the letters toward the end of the message were smaller, but here was the part I could read:

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The Taylor Rule: Ignore Fraud Epidemics and Worship Markets

Posted on November 1, 2013 by | 5 comments

By William K. Black

I recently posted a detailed article in response to Raj Chetty’s lament that scientists make fun of economics’ pretense to science.

The thrust of my article was that the problem was not that economics was inherently incapable of becoming more scientific.  The problem was that so many economists wear ideological blinders that recurrently cause them to perform a parody of the scientific method.

Chetty claimed that economists who are “testing precise hypotheses” in quantitative studies that exploit natural experiments are (finally, in 2013) “transforming economics into a field firmly grounded in fact.”  Chetty’s metaphor is that economics is like epidemiology.  (One assumes that his column is posted in the CDC’s common areas for the general amusement of epidemiologists.)

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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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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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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:

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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.

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