Yearly Archives: 2014

Christie’s Staff Reveals Why Christie will Never be President

Posted on January 8, 2014 by Devin Smith | 14 comments

No one can know the strengths and weaknesses of an elected official as well as his close aides. The official, unintentionally, reveals a great deal about himself when he chooses those aides. It is also the relatively smaller things that are most telling about character. How do the official and his aides react not to moments of crisis but to the routine disappointments inherent in life? How does he routinely use power? What level of empathy do the official and his aides demonstrate in day-to-day life? Does he and do his aides care about all the citizens or only their political supporters?

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Posted in William K. Black

Tagged Chris Christie

How Fiat Money Works

Posted on January 8, 2014 by Stephanie Kelton | 50 comments

By Chris Mayer*

Warren Mosler tells a good story that shows how our economy works at its most basic level.

Imagine parents create coupons they use to pay their kids for doing chores around the house. They “tax” the kids 10 coupons per week. If the kids don’t have 10 coupons, the parents punish them. “This closely replicates taxation in the real economy, where we have to pay our taxes or face penalties,” Mosler writes.

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Posted in Guest Blogger

Tagged fiat money, MMT, Modern Monetary Theory

DIAGRAMS & DOLLARS: modern money illustrated (Part 2)

Posted on January 8, 2014 by Devin Smith | 56 comments

By J.D. Alt

5. TREASURY BONDS—Are they really what we think they are?

Recall that in the old diagram we started out with—the one Congress seems to be using as a guide for its budgeting process—Treasury Bonds appear to be the mechanism by which the Federal Government “borrows” Dollars from the PS pot. Since we now understand that a Dollar is actually the Federal Government’s I.O.U. for tax credits, we can also see that it is illogical for the Federal Government to “borrow” these I.O.U.s. Why would it “borrow” its own I.O.U.—something it can instantly create any time it wants by simply saying, “I Owe You”? If that is the case, why does the FG “sell” Treasury Bonds?

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56 Comments

Posted in J. D. Alt

Tagged diagrams, MMT, Modern Monetary Theory

DIAGRAMS & DOLLARS: modern money illustrated (Part 1)

Posted on January 7, 2014 by Devin Smith | 39 comments

By J.D. Alt

1. The “unsolvable” riddle of our National Budget

Being an architect, I’m fascinated by diagrams visualizing things which otherwise are invisible. In designing a building we usually begin with diagrams to explore and understand the functional and spatial relationships—the flows and often unexpected interactions—the architecture needs to accommodate. Getting the diagrams right is important—if they’re wrong or incomplete, the building we design could turn out to be a dysfunctional disappointment for its owners and users.

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Posted in J. D. Alt

Tagged diagrams, MMT, Modern Monetary Theory

Essays in Monetary Theory and Policy: On the Nature of Money (10)

Posted on January 7, 2014 by Devin Smith | 3 comments

By Brian Hartley*

Modern banks are professional arbiters of financial IOUs secondary to that of the state or issuing authority. Central bank liabilities – reserves – form the most liquid and foundational instrument in the hierarchy of money, with intermediate obligations between banks ranking next, down finally to obligations issued by individuals. Banks facilitate the transfer of IOUs across and between various levels of the hierarchy, allowing transactions between individuals, extension of credit from the liquid to the illiquid, the transformation of maturities and transference of risk. Balance sheet expansion provides the liquidity necessary for increasing sophistication of the credit and payment system.

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Posted in Guest Blogger

Tagged Monetary Essay Series

The President and Republicans Are Both Wrong on Deficit Reduction

Posted on January 7, 2014 by Devin Smith | 5 comments

In early Summer 2013, Class Conscience interviewed Dr. Edward J. Nell, the Malcolm B. Smith Professor of Economics at the New School for Social Research in New York City. Both Drs. Stephanie Kelton and Mathew Forstater were students of Dr. Nell.

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Posted in Stephanie Kelton

Five Ways to Improve Your Odds of Succeeding in the Labor Market

Posted on January 6, 2014 by Stephanie Kelton | 12 comments

By Stephanie Kelton

It’s been five-and-a-half years since the US economy officially went into recession and three-and-a-half years since we entered the “recovery” phase of the business cycle. While technically in “recovery,” it’s no secret that when it comes to the labor market, workers are suffering the weakest turnaround in the post-WWII era.

And despite what you may have read, the truth is we’re still nowhere near full employment — at least not if you’re honest and you’re counting everyone who wants full-time work and can’t get it.

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