Category Archives: J. D. Alt

The Millennials’ Money (part 3)

Posted on March 18, 2015 by | 5 comments

By J.D. Alt

Commentary on part 2, again, was extremely helpful and much appreciated. Especially useful were suggestions from readers who “didn’t recognize” my description of the Boomers ideological obsession. This got me to substantially rethink the framing, and I hope that is now fixed. What I realized—and looking back on my own experience, it seems obvious in retrospect—was that what the Boomers were focused on had little to do with the idea of “competition” and much to do with rebelling against (and distrusting) institutional power—especially the institutional power of the federal government. It became natural for them to want to starve that government to keep it from interfering with the individualism the Boomers championed. As I said in my comment to the post, “Do your own thing” seems to have morphed seamlessly into the “trickle-down” economics of federal austerity.

Draft of the next section is as follows:

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The Millennials’ Money (Pt 2)

Posted on March 4, 2015 by | 14 comments

By J.D. Alt

The comments on Part 1 have given me pause and food for thought—and they are much appreciated. Obviously, the generational theme is a lot more complicated than simply BGXers versus Millennials, but I don’t want to get lost explaining or defending the generational theories of Strauss & Howe. I’m sensitive to the critique that making BGXers out the way I am is a dramatic oversimplification and might, in some degree, be counterproductive to my goals by alienating the BGXers themselves. I’m struggling with that because, on the other hand, I want the book to be a “simple” and highly focused message—and the message is (a) that understanding and effectively using modern fiat money could very usefully become the “political brand” of the Millennials, and (b) the BGXers, because of their ideological baggage, can be expected to resist the whole way down the road.

In the meantime, what comes next in the proposed book is the essay Diagrams & Dollars, which I won’t repeat here, since it is already posted. The beginning and end of the essay will be re-written to better flow with the Millennial narrative. The section after D&D is what follows below. This is a particularly difficult segment for me: I am trying to convey, accurately, the money operations described by L. Randall Wray—which is a bit like trying to describe the rotations of a rubric’s-cube puzzle—and to do it in a way that won’t wrangle the brain of a typical Millennial reader who isn’t aspiring to being a banker. Comments here will be especially helpful!

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The Millennials’ Money Pt. 1

Posted on February 26, 2015 by | 21 comments

By J.D. Alt

The ebook Diagrams & Dollars has been a top-seller on Amazon (in the category “macroeconomics”) for over a year now. There have been many requests for a paper-back version. In deciding to undertake that mission, I started to expand the original long essay into something that would be more book-like in length—and before I knew it, the effort morphed into something else: a different “frame” for the whole argument. The new “frame” evolved as I was reading Millennial Momentum by Morley Winograd and Michael D. Hais, which views U.S. history from the perspective of a repetitive cycle of four archetypal generations. Every eighty years or so, this cycle repeats, beginning with a “civic” generation—and each of these “fourth turnings” (as they are referred to in the book) is accompanied by dramatic, traumatic, social upheaval. When the upheaval is finally resolved, the “civic” generation is firmly in control, and things settle down, but with a dramatically changed social structure. The “civic” generation that is now leading us into the next “fourth turning” are the Millennials—the children of the baby-boomers—and they now, specifically, are the target audience for the book.

Before I complete—or even decide to publish—the book, I’d be grateful for feedback and responses to some key sections of it. With that in mind, this is the first of several posts presenting these key sections for comment by the NEP readers.

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Dynamic Scoring—a First Step?

Posted on January 12, 2015 by | 2 comments

By J.D. ALT

What? You mean we haven’t always been doing that?

A recent op-ed in the Washington Post (“Dynamic Scoring” by Congressman John K. Delaney) alerts us to an astonishing fact: Not only does our political leadership insist that the federal government manage its budget in the same way as a household—i.e. not spending more than it “earns”—but further insists that the federal government behave like a household devoid of any rational capacity to evaluate the net future benefits of its budgetary decisions. In other words, if the U.S. federal “household” wanted to buy seeds for the federal “household” garden, it is required to deduct from its budgetary calculation the cost of the seeds, but it is NOT allowed to add to its budgetary calculation the value of the tomatoes and cucumbers that will grow from the seeds it intends to plant—nor is it allowed to assign a value to the nutritional benefits that the “household” members will obtain by eating the tomatoes and cucumbers (or the health-care costs incurred if the veggies are not consumed.) This is called “static scoring”, and it is what the Congressional Budget Office, Delaney tells us, is required to do each time Congress proposes to spend money on any particular item or program.

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Enough Money

Posted on December 2, 2014 by | 4 comments

By J.D. Alt

Money causes labor to do useful things, and goods and services to be exchanged between people, thereby enabling people in general—both individually and collectively—to obtain what they need. In order for this process to occur in an optimal way—that is, in order for the maximum number of people to obtain what they need, individually and collectively, it seems clear that two basic conditions must be met: (1) there needs to be enough money to pay people to create all the goods and services they need, and (2) this adequate supply of money needs to be in the hands of people who are actually able and motivated to spend it for that purpose.

By “enough money” I mean this: Is there enough money to pay people to build all the things and provide all the services they need both individually and collectively—without there being too MUCH money (which could cause prices to escalate)? If there isn’t enough money, it is likely there will be things we need but which we cannot have—not for the lack of available and willing labor to provide those things, but for lack of money with which to pay that labor. In this case that labor not only remains wastefully unemployed, but we, collectively and individually, go without something which we otherwise could have, and might possibly—even desperately—need. (It is also possible, of course, that we cannot have the things we need because the required natural resources—energy, materials, chemicals and minerals etc.—are not available. This, however, is not a “money problem” but a resource problem.)

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The Problem with Code Words

Posted on November 13, 2014 by | 12 comments

By J.D. Alt

Christine Lagarde, managing director of the International Monetary Fund, was recently quoted in the Washing Post as having said something quite remarkable given the IMF’s historical position on monetary policy: “…we have to repeat over and over that monetary policy cannot be the only game in town, and that there has to be a combination of sound fiscal policies, use of fiscal space for those countries that have fiscal space in order to support growth and rejuvenate that growth.” The problem is, what do these words and phrases mean to most people who read them—including most U.S. politicians and economic pundits? What do they really mean, for that matter, in Lagarde’s own mind? Our collective thinking—and hence our actions—seem entrapped by “code” words which we assume everyone understands to mean some specific thing even though we’re not entirely clear what they mean ourselves. The result is massive confusion, hesitation, and inaction at a time when bold and effective steps are desperately needed.

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Halfway There

Posted on October 27, 2014 by | 7 comments

By J.D. Alt

alt1The squiggle illustrated here may look like the Ebola virus, but it isn’t. The resemblance is just an eerie coincidence. It’s actually a graphical snapshot of the classic “Predator-Prey Model.” This mathematical exercise, first developed in the 1920s, serves as the introductory basis for a more recent NASA funded effort which produced—amidst a brief flurry of news and commentary last spring—the startling conclusion that a complete collapse of modern civilization may now be “irreversible.”

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BANK of the COMMONS

Posted on September 18, 2014 by | 11 comments

By J.D. Alt

We usually think of a Commons as a “territory” of resources which we, as individuals, share with other members of our local, regional, or national society. The tragedy of the Commons, famously, is a failure of that sharing in which, even though the resources are visibly being depleted at an unsustainable rate, individuals are not motivated to preserve the resources but, instead, are motivated to continue to deplete them. This perverse motivation occurs because each individual makes two rational assumptions: (1) most other individuals will continue to deplete and (2) if he or she personally refrains from depleting, the beneficial impact on the Commons itself will be negligible, negating the personal effort or sacrifice. These rational decisions effectively neutralize the actions of the cooperative gene within the society, leaving the selfish gene in a position of active dominance. The larger the Commons, and the greater the number of individuals who share it, the more powerful are the tragic forces.

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Bank Dollars & Sovereign Spending

Posted on September 3, 2014 by | 28 comments

By J.D. Alt

Why do so many people—including the authors of most economics textbooks—believe the U.S. banking system creates the U.S. dollars we earn and spend and pay our taxes with? It’s because the U.S. banking system does, in fact, “issue” the great majority of the dollars we use—by making loans to businesses and citizens which are not backed by “real” dollars the banks have on deposit. What everyone overlooks, however (for reasons not entirely clear) is the fact that these new loan dollars are “made real” by the U.S. government’s solemn promise to convert them at any time, on demand, into actual, “real”, sovereign U.S. dollars. The U.S. government is able to make this promise because, by law, it can issue the necessary actual dollars by fiat (by simply “declaring” the dollars into existence.) A lot of people (again for reasons not entirely clear) don’t like to hear that last part. But it’s simply a fact of life: the cash dollar bills you get from an ATM machine are not printed up (created) by the banks—they are printed (or created electronically as needed) ONLY by the U.S. sovereign government.

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WORLD without BANKS

Posted on August 12, 2014 by | 37 comments

By J.D. Alt

Sometimes it helps, if you want to see and understand something more clearly, to imagine the world without it. I just finished a book (“Rethinking Money” by Benard Lietaer and Jacqui Dunne) that was so thoroughly confused—and confusing—about how the U.S. private banking system “creates our money” (but perversely refuses to create enough of it) that I felt an overwhelming need to try to clarify, in my own mind, what the private banking system actually is. That’s when I got the idea of imagining a world without private banks at all—and trying to see at what point, and for what purpose, they become useful or, perhaps, even necessary.

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