Author Archives: Dan Kervick

Blinder Leading the Blind

Posted on February 17, 2013 | 43 comments

By Dan Kervick

The establishment’s debt and deficit hawks have taken flight once again, this time to launch a counterassault against Paul Krugman’s sensible and increasingly successful campaign to get people to stop clutching their pearls over the federal budget situation, and to focus attention on more pressing matters of high unemployment and economic stagnation.  Joe Scarborough, Ezra Klein and the Washington Post editorial board are among those springing into action on behalf of deficit worry, and against the dangerous movement of calmness and sobriety breaking out all over.  One thing that becomes more apparent as this debate unfolds is that the budget warriors frequently confuse broader public policy challenges that happen to have a budgetary component with narrower problems related to size of the budget deficit itself.  A recent Atlantic piece by Alan Blinder unfortunately contributes to that confusion.

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The State of the Economic Union

Posted on February 11, 2013 | 31 comments

By Dan Kervick

On Tuesday night, President Obama will give the first State of the Union message of his second term.  Preliminary indications from Washington are that the President will attempt to shift some attention back to jobs and economic growth.  But similar White House moves to address jobs and the economy over the past four years have been half-hearted and politically feeble.  It is likely that the jobs message delivered by Obama will be overshadowed and weighed down by the endless and destructive partisan battles over our long-term budget position and Washington’s misguided plans for budget austerity and fiscal contraction.  Obama came into office extolling “the fierce urgency of now” – but Washington’s mystifying obsessions with the federal debt and impossible projections of future budget deficits have moved the beltway agenda from the fierce urgencies of 2013 to the unknowable contingencies of 2035.  The unemployed are trapped despairing and jobless here in 2013, choking on the spreadsheets of dueling beltway actuaries.

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Dan Kervick Talks with Arnie Arnesen about Austerity, Jobs and Public Enterprise

Posted on February 7, 2013 | 5 comments

By Dan Kervick

I appeared today on The Attitude with Arnie Arnesen.  The main topic of discussion was my recent NEP post “The Dangerous Collapse of Public Enterprise.”  We talked about the loss of jobs in the government sector, the role of government enterprise and employment in our economy, the ongoing Washington obsession with austerity, and the strategy of disaster capitalism.  My segment comes at about halfway through the first hour, following the Bachman Turner Overdrive “Taking Care of Business” introduction .  Have a listen!

The Attitude

The Attitude is broadcast from WHNH 94.7 in Concord, New Hampshire

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The Dangerous Collapse of Public Enterprise

Posted on February 4, 2013 | 45 comments

By Dan Kervick

When economists talk about the role of government in economic recovery, they often focus on the question of whether or not we need more economic stimulus.  They ask whether the government should temporarily change its fiscal policies – its taxing and spending decisions – to add some additional publicly financed spending to the economy and help jolt the private sector back to life.  Continue reading →

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Only Public Enterprise Can Heal Our Sick Economy

Posted on January 30, 2013 | 51 comments

By Dan Kervick

For most Americans, the news that the US economy contracted by 0.1% in the fourth quarter of 2012, the first quarter of negative growth since the pit of the Great Recession 2009, has undoubtedly come as a disappointing shock.  For readers of this blog and the other MMT blogs, however, the emotion felt is probably closer to bitter frustration, since we have all been warning for a very long time about the danger of the utterly misguided austerity drive that has wrecked the European economy, and was officially imported last year to the United States.

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From Central Bank Independence to Democratic Public Finance

Posted on January 25, 2013 | 121 comments

By Dan Kervick

Effective governance in any country requires a well-designed system of public finance through which that government can achieve its various purposes and pursue the public interest.  If the system of public finance is poorly structured, the public interest will be poorly served.   So, badly designed systems of public finance must be altered or abolished. [1]

We have reached that point in the United States.  The present system of public finance in the US is inefficient and antiquated: its fusty architecture hampers the capacity of the national government to respond to economic fluctuations and crises in a timely and effective manner; its byzantine operational complexity thwarts democratic governance and generates pervasive public confusion about the full range of public policy options; and its over-reliance on government bonds means that wasteful and unearned profits flow to some of the most affluent members of US society, as they are paid service fees for intermediating what ought to be routine operations of the government.

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The Coin Abides

Posted on January 13, 2013 | 46 comments

By Dan Kervick

Matt Yglesias has posted a sharp post-mortem on the platinum coin debate.  This weekend, the White House imperiously declared that debate over.  And perhaps it is – for now.  But Yglesias remarks on the salubrious effects of the debate:

All that said, I’m glad we had this conversation. Direct discussion of the platinum coin was a good reminder that many people, including influential media figures, appear to have no idea what money is or how the monetary system works. Apart from the shockingly widespread view that the value of coins is determined by their metallic content, there was a lot of insistence that creating money was somehow an act of “magic.” In fact, the way all legal currency is created is that a government agency creates the money.

I would go a bit further.  The coin debate triggered something.  The platinum coin is a big shiny, reminder that in some way, somehow, the monetary authority of the United States rests with the American people, even if the plutocratic architects of our financial system and the owners of our country have succeeded over time in burying that authority under many layers of convoluted technocracy and confusing delegations.

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The Quadrillion Dollar Thought Experiment

Posted on January 11, 2013 | 59 comments

By Dan Kervick

Imagine this:  In a burst of manic, public-spirited zeal and budgetary enthusiasm, the US Congress passes, and the President signs, the following law.  (Lawyers, forgive my poor mastery of legalese and feel free to translate the sense of what follows into the appropriate terminology):

L.1  The Secretary of the Treasury shall by a date no later than September 30, 2013 consolidate all United States Treasury accounts into a single account, to be called the “General Account”, and to be held at the Federal Reserve Bank of New York.

L.2  The General Account shall be used to settle and record all payments to and from the US Treasury.

L.3  The Federal Reserve Bank of New York shall on midnight, October 1, 2013 credit the General Account with an initial balance of $1,000,000,000,000,000.00

That’s one quadrillion dollars, about 263 times the current US annual budget, and about 63 times the current US Gross Domestic Product.

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Podcast of My Appearance Today on The Attitude

Posted on January 10, 2013 | 2 comments

I appeared today on The Attitude with Arnie Arnesen, broadcast by WNHN 94.7 in Concord, New Hampshire.   The topic of our discussion was austerity, disaster capitalism, the upcoming sequestration, Washington corruption and incompetence, and the exaggerations promulgated by Fix the Debt and other such organizations to scare people into undermining progressive government.  Arnie’s questions were great as always.  You can listen to the podcast of the show at the link below.  My segment appears about halfway through the first hour, after the musical break at the 28 minute mark:

“The Attitude” with Arnie Arnesen on WNHN 94.7 FM

Deborah “Arnie” Arnesen is a former member of the New Hampshire House of Representatives, a former fellow of the Harvard Institute of Politics, and was the Democratic nominee in the New Hampshire 1992 gubernatorial race.  She also ran for the U.S. Congress in 1996, and is a very well-known New Hampshire political figure and radio personality.  

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We Need to End The Debt Ceiling Distraction – Now

Posted on January 10, 2013 | 20 comments

By Dan Kervick

The debt ceiling standoff is a massive national distraction, as is the rampaging blogospheric discussion of the standoff and its various possible resolutions.   I am convinced that both the White House and Congress are eager to keep the debt ceiling debate and conflict alive to distract the country from a much more important reality: that they are currently negotiating the final shape of an economically punishing and magnificently stupid austerity package that will be substituted in for sequestration cuts due to take effect in March.   The austerity package is Washington’s obsequious response to the disaster capitalism cattle stampede that has been urged on by Pete Peterson, Fix the Debt and affiliated groups of debt hysterics.  Whatever combination of tax increases and spending cuts are finally accepted, the result will be to tie a fiscal cement block amounting to about 1.5% of GDP to the legs of an economy that is barely treading water.

But on the odd chance that the White House is actually serious about bringing a quick end to this standoff, the President should make a curt and frank public statement that plainly calls on Republicans to discipline the incompetents in their increasingly ridiculous party before they humiliate the party even further.   The statement should go something like this.

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