Peterson Thinks We Need Austerity While He Lives It Up!

Posted on March 9, 2014 by | 23 comments

By Joe Firestone

The Peterson Foundation reacted to the President’s budget document with a report repeating its usual whining about the debt problem, and the need to cut entitlements. Here are quotations from the report and my explanations of why they are ridiculous deficit/debt terrorist nonsense.

While today’s deficits are much lower than those during the financial crisis and recession, over the next ten years debt will remain at historically high levels under the policies outlined in the President’s budget. Over the long term, our debt is on a rising and unsustainable path that harms our economy and threatens our future standard of living.

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No, Virginia, the Austerity Era Is Not Over

Posted on March 8, 2014 by | 19 comments

By Joe Firestone

If the President’s budget were enacted by Congress, and OMB’s projections over the next decade hold, it would almost certainly mean economic stagnation punctuated by recession over the next decade. Would it also mean austerity, however? Let’s see.

The Sector Financial Balances (SFB) model is an accounting identity, and these are always true by definition alone. The SFB model says:

Domestic Private Balance + Domestic Government Balance + Foreign Balance = 0.

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

Posted on March 7, 2014 by | 6 comments

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

Posted on March 6, 2014 by | Comments Off on 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.

 

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FORGET THE 1%

Posted on March 5, 2014 by | 53 comments

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

Posted on March 4, 2014 by | 10 comments

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

Posted on February 28, 2014 by | 10 comments

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

Posted on February 27, 2014 by | 4 comments

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

Posted on February 27, 2014 by | 5 comments

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.

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Revising Adam Smith

Posted on February 27, 2014 by | 6 comments

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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