Author Archives: Devin Smith

Inside Modern Money Theory: Our Route to Full Employment and No Debt

Posted on October 15, 2013 | 12 comments

By Rollo Martins
Cross Posted from PolicyMic.com

America has a tool that millennials can — and should — use to trump all the negatives that are piling up at their doorsteps (the high unemployment, international competition, and all that college debt). This tool is called the U. S. dollar, which aligned with a fiscal policy designed for growth and prosperity, would eliminate their debt and give them full employment for the remainder of their lives.

A sea-change is occurring in economics and the University of Missouri-Kansas City is leading the way. Combining a fiscal policy geared toward prosperity and growth with a new understanding of what fiat currency means for the country, the economists there are touting what is being called Modern Money Theory. MMT turns traditional neoclassical economics on its head: Instead of tax then spend, it’s spend then tax. In other words, we can spend whatever we want. (But I oversimplify: There is still inflation to worry about.) This is all great news for the country, and for the millennial generation in particular.

Continue reading →

12 Comments

Posted in Guest Blogger

Tagged full employment, MMT, Modern Monetary Theory

MINSKY DOES RIO: Notes from a Conference

Posted on October 14, 2013 | 4 comments

By L. Randall Wray

I recently returned from conference in Brazil jointly sponsored by the Levy Economics Institute, the Ford Foundation, and the Brazilian research group MINDS. It is part of a bigger project to take Hyman P. Minsky global. In my view, Minsky was hands-down the greatest economist of the second half of the twentieth century and he deserves the attention he’s getting. Watch for an upcoming film by Monty Python’s Terry Jones that will feature Minsky and his work. Minsky will even make an appearance—or, more accurately, a bigger-than-life Minsky puppet will be in the film. (Steve Keen and I were also interviewed.)

Continue reading →

4 Comments

Posted in L. Randall Wray

Tagged minsky, Rio

Arnold Kling’s Cunning Hairdresser Theory of the Financial Crisis

Posted on October 14, 2013 | 4 comments

By William K. Black

Arnold Kling is a libertarian economist who once worked for Freddie Mac. This article discusses a blog and an article he wrote about the causes of the crisis. Both (unintentionally) illustrate key theoclassical economic positions critical to understanding the origins of the crisis. Kling’s blog was in response to a January 29, 2013 post by Thomas J. Sugrue. Sugrue provided data demonstrating that blacks and Latino homeowners suffered far greater wealth losses in the crisis than did whites. This upset Kling, who responded:

Continue reading →

4 Comments

Posted in William K. Black

Tagged Arnold Kling, Financial crisis, liars loans, mortgage fraud

Stephanie Kelton’s Appearance on All In with Chris Hayes

Posted on October 9, 2013 | 16 comments

NEP’s Stephanie Kelton appeared on Chris Hayes’ All In on Monday evening, (10/8/13). The topic of discussion was “Why the debt ceiling isn’t your family budget” examining the fallacy of comparing the debt ceiling to a family budget.

See the full show here.

16 Comments

Posted in Stephanie Kelton

Tagged Chris Hayes, debt ceiling, deficit

UPI Treats Monetary Fiction as Fact: Sows the Seeds of the GOP’s Efforts to Cause a Recession

Posted on October 9, 2013 | 6 comments

By William K. Black

In the course of researching yesterday’s column that explains why Tyler Cowen’s faux “hyper-meritocracy” endangers our world I read a number of articles discussing the Northwestern University study on the public policy views of the wealthy. One of those columns was published by UPI on February 24, 2013.

One of the central points that the scholars who conducted the study made was that the wealthy use their political clout to try to cause the American public to adopt the belief of the wealthy that reducing the federal budget deficit, in response to the Great Recession, was the most important problem facing America. In my column yesterday I noted that the scholars pointed out the logical incoherence of that position given the wealthy’s strong support for the policy view that the federal government should run budget deficits as a counter-cyclical fiscal policy to a recession.

Continue reading →

6 Comments

Posted in William K. Black

Tagged debt, Deficit Hysteria, UPI

The Faux Hyper-Meritocracy that Threatens to Destroy Us

Posted on October 8, 2013 | 7 comments

By William K. Black

I have written two prior columns about Tyler Cowen’s praise of the faux “hyper-meritocracy.” Cowen assumes that productivity determines personal wealth and is measured by wealth. He celebrates financial managers as the exemplars of this hyper-meritocracy. In my first column I explained that it should have given Cowen pause that his meritocratic vanguard caused the greatest loss of wealth to society and that so many financial CEOs not only destroyed societal wealth, but also became wealthy through accounting control fraud. I explained how the bank CEOs that led the accounting control frauds also created the Gresham’s dynamics that suborned other professions (e.g., appraisers, loan brokers, and auditors) that cause bad ethics to drive good ethics out of the professions. Cowen could not have picked a less meritocratic group as his heroes than the financial CEOs running the systemically dangerous institutions (SDIs).

Continue reading →

7 Comments

Posted in William K. Black

Tagged accounting control fraud, hyper-metitrocracy

Behind the Crisis in American Governance: Delusions about the Economy Treated As a Matter of Differing Economic “Taste” – Pt. 2/2

Posted on October 8, 2013 | 5 comments

By Michael Hoexter

[Part 1] [Part 2]

Why It’s Delusional: The Critical Dependencies of Capitalism

The mythical market and view of an autonomous, self-managing capitalism is contradicted by the multiple real critical dependencies of our economy. These critical dependencies, i.e. necessary relationships with other non-capitalist systems/entities, are integral to capitalism rather than optional features. Dependencies between these social and natural systems are the object of any meaningful economic policy or, for that matter, any government policy with economic effects. They are “critical” because they are non-optional and therefore not a matter of individuals deciding that for ideological reasons they “don’t like” one or the other of them and we can therefore jettison them, while maintaining something that is recognizably capitalism. If people in society were to seek to change the economic system to some other system, either by conscious effort or by historical accident, it then may be the case that one or the other of the dependencies listed below may no longer be “critical”. However no mainstream political actors in this drama are claiming that they are making a break with capitalism; in fact, to the contrary, right-wing Republicans claim to be its sole political defenders.

Continue reading →

5 Comments

Posted in Michael Hoexter

Tagged crisis in governance, democratic party, game theory, republican party

Money is not true wealth (Part IV: The United States)

Posted on October 7, 2013 | 4 comments

By Glenn Stehle

[Part 1] [Part 2] [Part 3] [Part 4]

Even a small-time gang of hoodlums has its own melodramatic ideology and pathological romanticism. Human nature demands that vile matters be haloed by an over-compensatory mystique in order to silence one’s conscience and to deceive consciousness and critical faculties, whether one’s own or those of others.

If such a ponerogenic union could be stripped of its ideology, nothing would remain except psychological and moral pathology, naked and unattractive.

–ANDREW M. LOBACZEWSKI, Political Ponerology

Capitalism is “the astonishing belief that the nastiest motives of the nastiest men somehow or other work for the best results in the best of all possible worlds.”

JOHN MAYNARD KEYNES, Attributed by Sir George Schuster, Christianity and human relations in industry

Continue reading →

4 Comments

Posted in Guest Blogger

Tagged austerity, money, wealth

Behind the Crisis in American Governance: Delusions about the Economy Treated As a Matter of Differing Economic “Taste” – Pt. 1/2

Posted on October 7, 2013 | 7 comments

By Michael Hoexter

[Part 1] [Part 2]

While the US political system (federal, state and local) has been assumed to be one of the more stable political institutions in the world, over the last two decades a series of confrontations between the Republicans and the Democrats has started to expose serious faults in American governance. The current government shutdown is just the latest and in all probability not the last in a long line of aggressive efforts originating almost always from the right-wing of the Republican Party intent on destabilizing and delegitimizing its opposition with no seeming regard for the integrity of the institutions of government as a whole. There is a sense of “entitlement to win” on the Right that is not mirrored on the supposed “Left” represented by the Democratic Party. From that sense of entitlement, the Right feels justified in using extreme measures to get its way, including shutting down government to extract political concessions from the party that currently controls both the Presidency and the Senate.

Continue reading →

7 Comments

Posted in Michael Hoexter

Tagged crisis in governance, democratic party, game theory, republican party

Bank Failures are “Inconceivable” under the Latest Neoclassical Fantasy

Posted on October 6, 2013 | 8 comments

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

Only theoclassical economics constantly recycles variants of its worst ideas that have proven disastrous when they have influenced policy. Other fields advance because they embrace the scientific method. Theoclassical economists repeat their worst errors because they embrace anti-governmental dogmas that blind them to the inherent weaknesses of the corporate form and limited liability. This represents a dramatic regression in understanding from over 200 years ago when classical scholars like Adam Smith were warning that corporations were inherently criminogenic and likely to produce what we now label “control frauds.”

Continue reading →