New Economic Perspectives

Corporate CEOs Demand that they be Tipped Off When a Whistleblower Reports their Crimes

Posted on April 26, 2014 by William Black | 3 comments

I’m writing on the flight returning from the XII^th International CIFA Forum in Monaco. CIFA is an NGO. It is a confederation of independent financial advisor organizations that works with the UN in promoting the protection of investors. This means that their clients are often very wealthy and that many of the participants are speakers are very conservative or libertarians (or an admixture). One of the speakers, Dr. Hans Geiger, gave an impassioned denunciation of “bureaucrats” (which turned out to mean anyone who worked for the government) and the imposition of a duty on bankers to file criminal referrals when they had a “reasonable suspicion” that their clients had committed certain crimes. The official U.S. jargon for a criminal referral is “Suspicious Activity Reports” (SARS). Geiger was particularly distressed that the banker would not be allowed to inform his client that he was making the criminal referral (which FATF terms “Suspicious Transaction Reports” (STRs)) under the standard 21 proposed by the Financial Action Task Force in 2012.

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Posted in William K. Black

Tagged accounting control fraud, Control Fraud, dodd-frank, Financial Action Task Force, whistleblowers

Did Canada’s Middle Class Just Get More Affluent Than the US’s, or Did that Happen Long Ago?

Posted on April 25, 2014 by Joe Firestone | 3 comments

The New York Times and Dave Leonhardt’s Upshot section made a big splash a few days ago by reporting on a study showing that the Canadian middle class had caught the US middle class in median income and likely surpassed it since. The study is based on an effort to measure median income per capita after taxes, and its results are presented as something truly significant.

However, I think the study is biased in that in median income per capita after taxes, it selected the wrong measure. What is needed is a measure of income or affluence that takes account of the value of cross-national variations in Government benefits delivered to the middle classes. Since the United States has lower taxes than most comparable nations, but delivers much less in safety net and entitlement benefits, it’s pretty clear that the measure used in the study reported on by The Times overestimates the real median income of the US middle class in comparison with the middle classes of other comparable nations and provides a misleading impression of the relative affluence of the American middle class.

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3 Comments

Posted in Joe Firestone

Tagged 2011 Median Wealth per Adult, Credit Suisse 2011 Global Wealth Databook, Dave Leonhardt, Dylan Matthews, Ezra Klein Blog, Median Income Per Capita, new york times, romney, US Inequality, US Ranking on Median Wealth per Adult, wigwam

MMT Does Do Policy

Posted on April 23, 2014 by L. Randall Wray | 39 comments

By L. Randall Wray

I’ve seen some pretty bizarre claims about MMTers. They are “tea partiers”, “barely left of center”, who “are not interested in policy”, who “ignore inequality”, who “are only interested in reducing taxes”. “MMTers ignore the fraud of the banksters.” They are at best “one issue” advocates for a particular view on money, taxes, and employment. I have no idea where critics get this stuff. I’m convinced they make it up. Ignorance or dishonesty; probably both.

For anyone who wants to disabuse herself of such nonsense, please go to www.levy.org, click on scholars, click on my name, and find right in front of your face a few hundred pieces on policy that I wrote. Yes, inequality. Yes, the explosion of incarceration. Yes, the War on Poverty’s failure. And so on. Stephanie Kelton just reminded me of an interview I gave in December to Travis Strawn–who happens to be a former student. He was writing for the Seven Pillars Institute (full disclosure: I’m not sure what it is). Judge for yourself if this is garden-variety “liberal”, let alone “tea party”.
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39 Comments

Posted in L. Randall Wray

Tagged MMT, Modern Monetary Theroy, policy

Peterson/CBO Beat for Austerity Goes On!

Posted on April 22, 2014 by Joe Firestone | 13 comments

By Joe Firestone

Recently, I’ve been writing about oligarchs advocating for entitlement cuts and austerity. I’ve discussed attacks on entitlement benefits for the elderly from Abby Huntsman (of MSNBC’s The Cycle) and Catherine Rampell (a Washington Post columnist), both the children of well-off individuals. These posts have come in the context of the English language release of Thomas Piketty’s Capital in the Twenty-First Century, and the more recent pre-publication release of a study by Martin Gilens and Benjamin I. Page using quantitative methods and empirical data to explore the question of whether the US is an oligarchy or a majoritarian democracy. They conclude:

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Posted in Joe Firestone

Tagged #PCS, austerity, CBO projections, congress, consols, deficit spending, deficit terrorism, Gilens and Page, Michael A. Peterson, net interest, oligarchy, Peter G. Peterson Foundation, platinum coin seigniorage, Sector Financial Balances, the Fed, Treasury

CEO Pay is Perverse and Must be Fixed to Avoid Recurrent Crises

Posted on April 21, 2014 by William Black | 11 comments

By William K. Black

Slate has published a piece by Zachary Karabell entitled “Stop Obsessing Over exorbitant CEO Pay” in which the author appears unaware that he has reported, and then ignored, evidence that scholars he cites favorably are “resoundingly convinced” proves the opposite. Karabell’s author’s page shows that he has recently joined Slate and promotes theoclassical dogmas about economics. He is a Wall Streeter of the kind that thinks it is an honor to be a “regular” on CNBC. He also touts being a favorite of the Davos plutocrats. In roughly a month with Slate he has managed to be an apologist for high unemployment, inequality, and high frequency trading (HFT) scams.

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11 Comments

Posted in William K. Black

Tagged accounting control fraud, Control Fraud, criminogenic environment, executive compensation, Karabell, white collar crime

Zachary Karabell and our Flawed “Society of Apologists for Plutocrats (SAPs)”

Posted on April 21, 2014 by William Black | 5 comments

By William K. Black

Slate has replaced one minor member of the Society of Apologists for Plutocrats (SAPs), Matt Yglesias, with another, Zachary Karabell. The transition has been seamless. As I noted in my prior column, Karabell’s initial columns served up apologias for extraordinary executive compensation and extreme inequality, high youth unemployment, and high frequency trading (HFT) scams. Karabell is the type of Wall Streeter who thinks it reflects well on him that he has been a “regular” on CNBC, rather than an admission of grave defects of character and intellect. Similarly, he thinks it is an honor that he was dubbed a bright young thing (a decade ago) by the denizens of Davos, the club for selfless plutocrats eager to “take up the white man’s burden.”

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5 Comments

Posted in William K. Black

Tagged accounting control fraud, Control Fraud, Great Financial Crisis, insider trading, Karabell, plutocracy, plutocrats, Slate

Stephanie Kelton talks with Fred Lee

Posted on April 20, 2014 by Stephanie Kelton | 1 comment

Stephanie’s latest podcast. She talks with UMKC Economist Dr. Fred Lee about the micro/maco distinction, Post-Keynesian price theory, the problems with neoclassical economics and his ideas about how to move the discipline in a more useful direction. (Note: There are some audio quality issues but only for the first 30 seconds).

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Posted in Stephanie Kelton

Tagged micro/macro distinction, neoclassical economics, post keynesian price theory

More Misdirection from Rampell in the Service of Generational War

Posted on April 19, 2014 by Joe Firestone | 6 comments

By Joe Firestone

In my last post, I took issue with a recent column by Catherine Rampell, who tries to make the case that seniors haven’t paid for their Social Security and Medicare because they “generally receive” more in benefits out of these programs than they pay into them. Rampell relies on an Urban Institute study to make her case. Since that post, she’s offered another that replies to some of the questions raised by commenters on her earlier effort. I’ll reply to that new post shortly, but first I want to present key points emerging from my analysis of Federal monetary operations in my reply to her earlier post. See that post for the full argument.

First, once Congress mandates spending, there is no way that the Treasury can be forced into insolvency or an inability to pay its obligations as long as it is willing to make use of all the ways it can cause the Fed to create reserve credits in Treasury spending accounts which can then be used for its reserve keystroking into private sector account activities that today represent most of the reality of Federal spending.

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Posted in Joe Firestone

Tagged #PCS, baby boomers, Catherine Rampell, coin seigniorage, congress, deficit spending, Economic Bill of Rights, entitlement benefits, entitlement solvency, entitlement spending, FDR, generational cohorts, generational warfare, medicare, millennial, neoliberalism, seniors, Social Security, SS, the Fed, the Treasury, Treasury

What Banks Should Expect in the Future

Posted on April 19, 2014 by William Black | Comments Off

By William K. Black

Bill talks with CCTV America about the future expectations for Banks.

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Posted in William K. Black

Tagged accounting control fraud, banking, banks, Control Fraud, Great Financial Crisis, regulation, white collar crime

The Reality of the Present and the Challenge of the Future: Fagg Foster for the 21st Century

Posted on April 18, 2014 by L. Randall Wray | 9 comments

By L. Randall Wray

Here is a presentation that I’ll give today at the University of Denver at the annual J. Fagg Foster honors ceremony. Most of you will not know of Foster, but you should. While he did not publish much, he was the professor of a number of prominent institutionalists who attended DU in the early postwar period. I was lucky to have studied with his student, Marc Tool, and was introduced to Foster’s work at the very beginning of my studies of economics. My presentation below is based on two of Foster’s articles: J. Fagg Foster (1981) “Understandings and Misunderstandings of Keynesian Economics”, JEI, vol XV, No 4, p. 949-957.; and (1981) “The Reality of the Present and the Challenge of the Future”, JEI vol XV, No 4, p. 963-968. Both are from 1966, republished in a special issue of the Journal of Economic Issues, 1981. You should read them.

Is this the age of Keynes? That’s the question raised by Fagg Foster in 1966.

In the 1960s the answer seemed obvious. Keynes dominated economics—or, at least, macroeconomics—and Keynesianism dominated policy. And it worked! Or, so most thought.

Foster wasn’t sure. While he agreed that “[t]here probably has been no instance in history in which a pattern of ideas has had so much effect on the everyday life of everyone in so short a time”, he thought most of Keynes’s followers misunderstood his theory.

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