Yearly Archives: 2014

Essays in Monetary Theory and Policy: On the Nature of Money (12)

By Usha Pradhan*

Pre-MMT Knowledge

And there I was, a teenager, strolling on the Kingsway – a district with a long road that encompasses high-end shops, restaurants, and hotels on both sides of the road and as the name implies, it literally used to be the King’s way to his palace – when I saw a few street children walking around begging the privileged passersby for mercy-money. Sadly, I observed that the street children were invisible to almost everyone. The fortunes would look straight at them and see right pass through them. I wondered why those shoppers who could afford to spend on high-end designer handbags could not show mercy on those children and spend a few dollars on them. One of the conclusions I reached was that maybe because they were so used to encountering not only those underprivileged children, but also, a lot of other underprivileged people in their daily lives in that society that they were immune to them. This story is of a developing country and as with a lot of developing nations, the income gap between the “haves” and the “have-nots” was pretty high and consequently, inequality persisted in every aspect of life among the citizens there.

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NEP’s Bill Black appears on BBC’s Law In Action

Bill appears on an episode of BBC Radio 4’s series Law In Action originally broadcast on March 4, 2014. The topic of discussion is why no senior bankers have been prosecuted for their role in the financial crisis and whether companies should be able to avoid criminal prosecution by making a deal with a judge about how they work in future. Bill appears at about 13:30 on the timeline. You can listen here.

 

FORGET THE 1%

By J.D. Alt

All this talk about the 99% versus the 1%? I say the easiest—and likely the most useful—thing to do is just forget the 1%. Write them off. Let them have their gated communities, their mega-yachts, their island retreats and off-shore bank accounts. What do we need them for?

For one thing, we DON’T need their money. Even if we could get it—which we can’t because they steadfastly refuse to use it for anything other than casino gambling in their private and secretive financial networks. We wonder why we have a “jobless recovery”? Does it have anything to do with the fact that such a large percentage of our “capital” has, for all practical purposes, been removed from the economy?

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When Will They Ever Learn: Uncle Sam is not Robin Hood

By L. Randall Wray

Memo to Obama: Don’t tie progressive spending policy to progressive tax policy. Each can stand on its own.

Reported today in the Washington Post:

Obama proposes $600 billion in new spending to boost economy

President Obama on Tuesday unveiled an ambitious budget that promised more than $600 billion in fresh spending to boost economic growth over the next decade while also pledging to solve the nation’s borrowing problem by raising taxes on the wealthy, passing an overhaul of immigration laws and cutting health costs without compromising the quality of care. Obama seeks to raise more than $1 trillion – largely by limiting tax breaks that benefit the wealthy — to spend on building roads and bridges, early childhood education and tax credits for the poor.

Here’s the conceit: Uncle Sam is broke. He’s got a borrowing problem. He’s gone hat-in-hand to those who’s got, trying to borrow a few dimes off them. But they are ready to foreclose on his Whitehouse.

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Key House Republicans Almost Get Accounting Control Fraud

By William K. Black

To prepare myself for a guest lecture to a class at the University of Kansas I did some research about the House Financial Services Committee, now chaired by Jeb Hensarling (R. TX).  I was pleased to learn that the Committee’s home page emphasizes the key role that accounting control fraud played at Fannie and Freddie.  The home page has a “spotlight” section designed to draw the reader’s eye to a short series of documents designed to support passage of the Protecting American Taxpayers and Homeowners (PATH) Act, which focuses on eliminating Fannie and Freddie.  The documents largely stress that Fannie and Freddie were accounting control frauds.

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Public Debt, Public Assets and Public Capacity

By Dan Kervick

Everybody is very excited about Thomas Piketty’s new book Capital in the Twenty-First Century, whose English translation is due out on March 10th from Harvard University Press. The book studies long term trends in the accumulation and concentration of wealth, and in the evolution of inequality. The argument of the book is intensely data-driven, and has been billed as a game changer since it first appeared in French earlier this year.

Matt Yglesias reproduces a chart from the book, and calls it “the chart the debt alarmists don’t want you to see”. However, if I were a debt alarmist, I don’t think I would be very much moved by the chart, and wouldn’t worry so much about others seeing it. Let me explain. Here is Piketty’s original version of the chart, and here is Yglesias’s colorized reproduction :

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The Triumphant Return of NEP’s Podcast

By Stephanie Kelton

It’s been a long time, but I finally carved out enough time to record a new podcast. Although they’re my colleagues, Bill Black, Randy Wray and I see surprisingly little of one another these days. I did manage to catch up with Bill in Minneapolis last week, where I happened to be giving a talk (more on that in the coming days), but for the most part we’re all just trying to keep up with requests, which is a good problem to have when you think about it.

It was nice to slow down and talk with Randy this afternoon. We promised one another we’d do it more often. Anyway, here is today’s podcast.  We hope you enjoy it.

Revising Adam Smith

By J.D. Alt

The Ebook DIAGRAMS & DOLLARS (in top 10 best-sellers on Amazon/ category money & monetary policy!) paints an optimistic picture of what “Sovereign Spending” could achieve for our collective benefit. The video made from it (approaching 3,000 views on YouTube—thank you Haiku Charlatan!) ends with cheering calisthenics around the final diagram of our national prosperity. Unfortunately, the “real world” of our Congressional leaders and media spin-machine is painting a very different picture—a dire vision of out-of-control government spending and national insolvency. Understanding why that is, and what we can do about it, is the real challenge we have before us.

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Degrees of Responsibility for Climate Catastrophe

By Michael Hoexter

The climate crisis is an event with such profound personal and broadly social moral implications that many shy away from discussing the crisis itself let alone its ethical aspects.  Via our society’s use of fossil fuels we are, if our combustion of these fuels remains unchecked and in addition we further destroy the carbon fixing capacity of natural systems, destroying almost all wealth, the likelihood of their being future civilizations, and even the possibility for existence for future generations.  To continue ignoring climate change and effective climate action is definitely an après moi le deluge stance, an expression of callousness and self-absorption unsupportable by moral justification.  Morality and ethics is here not an exotic preoccupation of a select group but a basic reality-check:  does what we are doing make sense and promote the general ends to which these activities are devoted?  How do we assess our own agency and role and those of others, in events that are occurring around us and will with very high likelihood exacerbate in the future?

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Getting Big Money Out of Politics: A Solution

By Joe Firestone

A lot of Americans have the feeling that those who have and supply big money to candidates, office holders, lobby groups, think tanks, and media have bought politics. That it is they who are determining the agendas that office holders act upon and even the specific decisions they make in passing laws and rendering executive and even judicial decisions. This short post won’t debate the extent to which big money has perverted democratic processes in the United States. Instead it will offer a simple, perhaps an oversimple, solution to the problem that will really work. Here it is. Continue reading