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
By Michael Hoexter
The austerity campaign, a favorite for the last four years of politicians and financial tycoons, remains a seemingly self-contradictory and baffling phenomenon for those who know that it goes against at least 80 years of economic wisdom regarding management of the economy. The campaign draws on irrational strains and inconsistencies in our economic self-understanding to turn politicians against the welfare of society and the economy as a whole as well as against their own interests as political leaders. Austerity appears to serve the perceived short-term interests of some sectors of the wealthy and the financial industry but the long-term interests of no one.
How many times have you heard that the Government can only spend money after it raises revenue by either taxing or borrowing? Nearly every time someone talks or writes about the US’s public deficit/debt problem? How come nobody asks why, since Congress has the unlimited authority to create coins and currency, it doesn’t just create money when it deficit spends? The short answer is that Congress in 1913, constrained the Executive Branch from creating currency or bank reserves, delegated its power to do that to the Federal Reserve System, and never looked back when we went off the gold standard in 1971, even though this removed the danger of money-creation outrunning gold reserves, and also created a new monetary system based on fiat currency.
A preliminary note:
Greetings from Davos! I’m actually writing this over the mid-Atlantic as I return from being a keynote speaker at the annual “Public Eye” “shame prize” awarded to Goldman Sachs for its abuses. The shame prize award was made in Davos during the World Economic Forum as a counter-WEF event. Shell also “won” a shame prize, but I spoke on Goldman Sachs, the role of epidemics of accounting control fraud, and the WEF’s anti-regulatory and pro-executive compensation policies. I explained that the anti-regulatory policies were intended to fuel the destructive regulatory “race to the bottom” and why the executive and professional compensation policies maximized the incentives to defraud. I also explained that WEF was a fraud denier. Collectively, these three WEF policies contributed to creating the intensely criminogenic environments that produce the epidemics of accounting control fraud driving our worst financial crises. Detailed written developments of these arguments can be found here on our UMKC economics blog: New Economic Perspectives. Continue reading
Posted in William K. Black
Tagged austerity, banksters, Handmaiden of Capitalism, Heidi Moore
As part of a wonderful discussion thread on the legal basis for using Platinum Coin Seigniorage (PCS), following a post by beowulf (Carlos Mucha), the first to propose the Trillion Dollar Coin (TDC). Michael Sankowski, one of the founders of the Monetary Realism approach to economics offered a very long reply directed at High Value Platinum Coin Seignorage (HVPCS), and the TDC itself. Mike’s reply is a good example of the many misgivings people have about using PCS with face values in the trillions. Since Mike is a supporter, rather than opponent of PCS and believes that PCS is legal, I thought it would be worthwhile to deconstruct his long comment and show that his downsides are pretty speculative and don’t provide good grounds for supporting incrementalism is using PCS.
A wonderful discussion thread has been going on at Monetary Realism (MR) after a very good new post by beowulf (Carlos Mucha), who first brought forward the proposal for the Executive Branch to use the authority provided in the 1996 Platinum Coin Seigniorage (PCS) legislation to fill the public purse, on whether the Fed had a legal basis for turning down PCS in the form of the Trillion Dollar Coin (TDC). I’ll leave the legal discussion for another blog post, since I agree with beo on these, and also need to review some legal arguments against the TDC by some George Washington University Professors. Here I want to write about some of the MR discussion relating to PCS options.
Some have responded to the recent boomlet for using Platinum Coin Seigniorage (PCS) as a solution to the debt ceiling problem, by reacting to the ridicule visited upon PCS advocates by know-nothings like Heidi Moore of the Guardian and Matt O’Brien of the Atlantic, by proposing “smaller ball” PCS than the clearly inadequate Trillion Dollar Coin (TDC) itself. This post will focus on J. D. Alt’s interesting post which makes five points about the TDC debate as it was addressed on a recent Chris Hayes show.
Our Congresspeople, corporate CEOs, tea partiers, most economists, Pete Peterson’s minions, and even our President, tell us that we’re running out of money; and that if we can’t keep running huge deficits, and increasing our national debt forever, because eventually, our creditors will just cease lending us our dollars back.
John Williamson, a Peterson Institute “senior fellow” coined the term “the Washington Consensus” at a conference in 1989.
Williamson joined the Institute in 1981 when it was founded. Pete Peterson is the Republican billionaire from Wall Street who has dedicated his life to proselytizing for lower taxes on the wealthy, stringent spending cuts in social programs, and privatizing Social Security – the unholy grail of Wall Street that would provide our largest banks with hundreds of billions of dollars in additional investment fees. Peterson has funded many groups to evangelize for these neo-liberal dogmas.
Posted in William K. Black
Tagged austerity, neo-liberal doctrine, peterson, washington consensus
It is good to be Angela Merkel. Growth in Germany goes sharply negative in the last quarter of 2012 and press reports emphasize how sound the German economy is because it is a net exporter. This article analyses how the Wall Street Journal and the New York Times presented the news about Germany’s economy. I show that the presentation reveals more about the pathologies of our major media than about the pathologies of Germany and the Eurozone.
Posted in William K. Black
Tagged austerity, beggar thy neighbor, Eurozone, germany, mainstream media, merkel
Click images to view details
