By Michael Hoexter
The success of the austerity campaign in capturing the American and European political process is remarkable considering that it prescribes exactly the opposite of what factually grounded economic analyses would recommend. Leading politicians and their advisors are pushing governments to curtail spending at a time of economic weakness and doing so in the post gold-standard monetary era where currency-issuing governments have no affordability constraint on spending. The focus on public debt is leading the political process away from economic growth and full employment, despite the fact that all major actors in this process claim that their preferred policies are the way to lasting growth. In the current American “fiscal cliff” negotiations, the leadership of both sides of the negotiation are pushing for different forms of austerity, with no effective organized force in government working against this economic madness. Continue reading
Warren Buffet told CNBC reporter Becky Quick that he could fix our nation’s deficit problem real quick — in precisely five minutes. Problem is, the US doesn’t have a deficit problem. We do, however, have an aggregate demand problem, as MMTers have been arguing for more than two years. And we could fix that in five minutes too, if we could just circumvent Congress.
The Occupy Wall Street Protestors have announced that Nov. 5th is “Move Your Money Day.” A few folks started early and discovered an unusual new penalty for “early withdrawal.” You have to see it to believe it.
Prior to Sept. 17, 2011, no one would blink (or cringe) at a photo like this. But with the Occupy Wall Street movement drawing so much attention to the cosy relationship between Wall Street and the politicians who serve them, this photo of Mitt Romney and his colleagues at Bain Capital just doesn’t seem very funny.
In this private letter from Charles Koch to Fredrich Von Hayek, Koch urges the grand poobah of free-market economics to be sure to take advantage of the benefits he is entitled to under Social Security.
Until today, the bloggers at New Economic Perspectives had ever heard of Ben Strubel. But he’s definitely got our attention (and our respect) now. He posted a very nice summary of our macro approach — often dubbed MMT — and made a strong case for increased deficit spending. Maybe it’s just easier for people like this (practitioners/traders who haven’t had their heads fuddled with mainstream economic theory) to grasp how the modern monetary system actually works.
Here’s a terrific parable on de-leveraging from an anonymous author. We recommend using it the next time someone takes out a chart of outstanding debt (public, private, or both) and the money stock (monetary base, M1, M2, MZM) and tries to make the asinine point that we don’t have enough money to pay off all the debt.
CNBCs John Carney says that “very few people understand how the modern banking system really works.” He praises MMT for its more accurate depiction of finance and banking.
Here’s an incredible statistic on the FIRE economy: Interest on mortgages is now over 20% of personal consumption expenditure vs. 5% in 1980. And this is in spite of the fact that 60% of the housing stock is owned outright.