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The Press continues to be full of opinions reflecting deficit: “mongering,” “hawkism,” “terrorism,” and “errorism,” all based on erroneous neo-liberal ideas about economics. There are a number of sites however that provide very good analysis and refuting of these very dangerously silly ideas, which our President, who claimed he understood economics during his campaign, both espouses and seems ready to implement at both his political and our material peril. So, I thought it would be useful to identify some of those here, especially for those progressives who still think it’s a good idea to balance budgets at all costs.
Just today, one of these blogs, Simon Johnson’s Baseline Scenario, had a great piece on financial regulation, Paul Volcker, and the President, which is a must read. A host of writers on Modern Monetary Theory (MMT) write at: New Economic Perspectives including Randy Wray, Bill Black, Marshall Auerback, Michael Hudson, a recent significant addition named Yeva Nersisyan, and other very good economists.
Warren Mosler, economist and Presidential candidate, has a blog of great interest for progressives, and you should not miss his developing book for the economics-challenged, evolving in multiple drafts, on his site called Seven deadly Innocent Frauds. And Professor Bill Mitchell, perhaps the leading Australian writer on Modern Monetary Theory is here. Mitchell and Mosler, in particular, have a pedagogical aspect to their blogs, so you can get a lot of instruction these sites – not only about the basics, but advanced matters too, which frequently are part of the discussion.
Another great site for progressives with a lot of economics posts is New Deal 2.0. There are lots of progressive economists posting there, including some already cited above and Jamie Galbraith, as well.
Finally, one of the most well-known, and most-read sites is Yves Smith’s Naked Capitalism. In addition to her own always relevant and very sophisticated and clear posts, Yves gives a lot of space to guest posters, including some of the leading MMT writers. Later today, she will appear at Corrente, Sunday, March 28 from 2-4PM EST, and will discuss her new book, ECONned in an open forum setting.
(Also posted at firedoglake.com and Correntewire.com where there may be more comments)
67 Comments
Thanks for the list. I also like Calculated Risk, which tends to focus on real estate and which links to Naked Capitalism and Baseline Scenario.
Marshall Auerback is a great writer and thinker, he’s put some great ideas out there. I love his use of the phrase “deficit terrorism.”
Dean Baker’s Beat the Press is a good one. He elaborates a lot on his ideas about trade and budget deficits and the housing bubble.
http://us1.institutionalriskanalytics.com/pub/IRAMain.asp
http://www.debtdeflation.com/blogs/
http://market-ticker.org/
http://jessescrossroadscafe.blogspot.com/
I love the Saturday quiz on Billy Blog. Unfortunately for me, though, the more confident I feel about my answers, the worse I usually do.
Thanks letsgetitdone. It’s always useful to have a solid set of credible economic sites to check out.
In the past I’ve mostly depended on New Deal 2.0 and Naked Capitalism, with the occasional visit to Baseline Scenario. I’ll definently checkout the others you mention.
I particularly like James Galbraith’s articles. He tends to post on a variety of sites. So I just checkout his University of Texas bio for links to articles.
http://utip.gov.utexas.edu/JG/Comments%20and%20Interviews.html
Hehe, Beat the Press is very entertaining. Dean Baker really does the daily dirty work of beating our press over the head with a clue hammer.
One of my favorite comments which Dean Baker makes about the Washington Post is that they’ve depended on David Leraeh for analysis on housing economics.
Who is David Leraeh? Cheif Economist of the National Association of Realtors AND author of the 2006 book:
Why the Real Estate Boom Will Not Bust – And How You Can Profit from It
As an added kicker, senior FED and Fannie Mae officials give the book rave reviews on amazon.
You just can’t make this shit up. Dean is both informative and entertaining.
Grateful for this post, Lets. I want to learn as much as I can about “economics” which I think is still a bogus study.
Same here.
Also, Yves Smith came to FDL for a very good Book Salon chat two weeks ago to talk about Econned.
i strongly recommend randy wray’s understanding modern money: the key to full employment and price stability.
Thanks for the addition. It is a very good one.
I like Baker’s posts. They are simple and to the point. But I find the economics in his blog less compelling than in some of the others.
Well, the neoliberal economics taught in schools and university’s certainly is bogus. You might enjoy reading James Galbraith’s “Who Are These Economists, Anyway?”
Thanks you for the additions transparait. The more the merrier.
The quizzes and discussions are some of the best things about illy Mitchell’s site. The irreverence should also resonate with progressives.
I’m a big fan of Galbraith’s too. Both father and son, for that matter.
You can’t. I wonder if they’ve learned anything from Leraeh’s sterling record of prediction? One of the most disturbing thing’s about our elites these days, is that no one gets punished for poor performance, only for dissent. I’m not sure things have improved in this Administration.
Hi mm, It is and it isn’t classical and neo-classical economics are bogus; but there’s multi-disciplinary work that runs counter to these schools that’s very interesting. Also, MMT definitely has something I think.
Thanks. Somehow I missed that one.
And one more website:
http://www.moslerforsenate.com
all endorsements welcome- it’s a long, uphill battle!
Rob Johnson is at New Deal 2.0 and I have a lot of respect for him. I’m still trying to accept Simon Johnson. I agree with some of his criticisms but he comes from a more traditional, conservative place than me. I agree with Mosler in parts and disgree with him in parts. Wray I don’t read too much of but am in general agreement with him. Auerback does good work too. I think he blows off deficits a little too easily. They do matter just nowhere near as much what conservatives say they do or for the reasons they give. Bill Black is great. So is Jamie Galbraith and Dean Baker –although I am far more pessimistic about the economy than he is. Stiglitz is good but I often feel he stays too far above the fray. Ian Welsh still writes on economics:
http://www.ianwelsh.net/
There is also Karl Denninger:
http://market-ticker.denninger.net/
He can be pretty whacky on some subjects, like unions and the deficits. It’s obvious and you discount it but he often has great information (even when he is being whacky).
There’s also Mish but he he’s considerably whackier and I have stopped reading him. I notice no one mentions RBG monitor with Nouriel Roubini. His early work was good but he got some fame and his native conservatism seems to have come into play.
Transparait mentions IRA. They do good work too. It just isn’t always applicable to the macroeconomic picture.
Transparait also mentions Steve Keen’s blog. He also does good work from Down Under. I don’t follow his blog but read him in other venues.
Nomi Prins I have sort of lost track of. Is she writing articles anywhere?
Yves at Naked Capitalism which is a major hangout of mine has had Rob Parenteau posting several times recently. What is his name Satyajit Das? does good book reviews on economic subjects.
And of course I do a lot of my own independent analysis.
If you do win, you will be the first Senator who actually understands economics the place has seen in an age.
I’m concerned about the price of oil if your theories are put to use, Mr. Mosler. Won’t it rise quite a bit? Also, why would anyone save or borrow money under this regime, wouldn’t buying land or gold provide a much greater return?
Great background in that article.
Hi Warren, I’d heard you were running for the Senate in CT? Are you also still intending to run for the Presidency in 2012?
Thanks for the comment, Hugh. It certainly adds to the subject of this blog.
transparait, why do you think the prices of land and gold would rise if Warren’s policies were followed?
captjjyossarian, great addition. i thought that was one of james galbraith’s best (he also gave a talk based on that paper at the london royal society which was flaming. highly recommended to anyone who enjoys podcasts.
me too. really helps as a reality check to see if i’m getting his posts. i think mitchell is a very good teacher.
i also very much enjoyed his back and forth with steve keen. keen had persuaded me of re the endogenous nature of bank money, and mitchell has helped me take that idea further and start to put it into the context of vertical money. i’m really looking forward to reading moore’s horizontalists and verticalists, which i was just recently able to get a copy of after looking since october (no way was i going to spend $450 for a used copy at amazon!).
hey warren!
i’d support you just for writing your 7 Deadly Innocent Frauds, which i’ve been pushing people to read since i first read it. great work, very accessible for a paradigm change and i love the bits with al gore and larry summers.
i don’t live in CT, but i do live next door in MA and have a little bit of experience door to door canvassing in CT, if that would be of any use to your campaign (and my health permits).
i’m confused by a couple of things in your comment.
if you still disagree with marshall auerback and scott fullwiler about the nature of fed deficits, then i don’t see how you can agree with warren mosler (or for that matter, wray) about almost anything. would you elaborate on what you agree with warren and wray on and what you don’t (also an explanation of why would be most useful).
also, i’ve been reading steve keen for about a year – since yves smith hosted his roving cavaliers of credit post (which i still think is one of, if not the, most important of his posts), but you said that post was either wrong or uninteresting. have you come around to endogenous money (horizontal)? or is there something unrelated about his work you like? (i haven’t found anything unrelated, so i’m very curious).
i think i’m in the middle of being persuaded that land tax (based on the value of gov improvements and infrastructure) might be a useful thing to hold down housing asset bubbles (i disagree with those who blame interest rates as a primary cause of our recent bubbles). don’t have any clue about getting there from here though (seems like trying to get across the grand canyon – one step in the right direction and we end up smooshed at the bottom *g*).
i either missed or forgot that one. wow. thanks for posting it!
Hi all, and thanks for the kind words of support!
Yes, a strong economy in general can trigger higher crude prices by the Saudis who set price and let output adjust.
One way to deal with this is for the Govt (or a designated agent) to attempt to enter into long term contracts with the likes of Canada and Mexico for crude. I think Canada would be more than willing, as it’s price volatility and other associated risks that keeps them from investing and expanding output. Long term contracts are the ‘textbook’ way to go with this type of commodity, and not spot market pricing. A stable price for an extended period of time would go a long way towards price stability in general.
However, that doesn’t directly address the question of usage. I don’t think we want to go on burning crude for fuel for ground transportation, so I would recommend incentives to reduce consumption, switch to other fuels, etc. to coincide with term of the long term contracts.
I was running for president when asked to run for senate here in ct. and decided to make the switch hoping to get my message across now with unemployment where it is as a matter of urgency.
Again, thanks for all the support. New update of the 7dif should replace the old one some time today.
Warren
Thanks lets, I’ll be adding a few to my RSS today.
warren, what do you think of something like james hansen’s suggestion for a carbon tax and 100% dividend? his concern is the environmental issues with climate change, but his approach also seems worthwhile to me for encouraging conservation and eventually tech shift without taking $ from private sector. another question i have is regarding long term (r&d, etc) fed investment in alternative fuels and similar. galbraith has been talking about our lack of infrastructure investment (education, r&d, industrial policy, etc), what is your opinion on that type of fed spending?
thanks for your willingness to answer questions. i will be stopping by to get the latest 7dif today, thanks for the heads up — it’s the best thing i’ve found anywhere to help make the paradigm change (still working on mine, lots to wrap my head around, but best to start sooner rather than later).
hope you kick ass in CT. (but i really wish someone would put you in charge of the fed)
Warren’s theories lead to a devalued currency, at base he’s talking about increasing the money supply. As the total supply of money is increased each dollar is worth less than it was before, supply and demand. As this happens it will cost more of these dollars to buy real things, gold, land, food, energy. The real returns of these things will be larger because over time the currency will be devalued at a faster rate than any interest will compensate for. Not to mention the carry trade, borrowing in dollars to lend in another more stable currency, this also devalues the dollar.
Warren is not suggesting anything different than Greenspan or Bernanke (Bernanke’s Helicopter), he just wants to inflate directly from the Fed without depending on the banks desire or ability to lend (see selise’s link about the roving cavaliers at Steve Keen’s site).
This is why people don’t take him seriously, with a devalued currency input costs for production of anything in our economy (movies, wheat, snark) will skyrocket and nothing will be made or exported, an entirely paper economy that can produce nothing but more paper, movies and snark.
Underpants Gnomes.
1 ) Collect underpants
2 ) ????
3 ) Profit!
Can we prevent housing asset bubbles by banning high level trading instruments like CDOs and CDSs? Weren’t those mainly responsible for the bubbles?
That’s great Warren I’ll look for it. And I agree with the long term contracts idea; but I also think a little rationing would be in order. We’ve done it at other times in our history and an appeal to a collective effort and to patriotism may not be out of place at this point.
Thanks you, Jason. That’ll be great.
Warren, I’d be for you for President, or at list second on a ticket with Elizabeth Warren, who’s impressed me with her candor and forthrightness. I suspect she’d be quite down with MMT also, but perhaps you know something about her views on that?
I’d like some empirical evidence for your claims, transparait, because I think they’re highly questionable. First, the immediate impact of deficit spending will be inflationary only if the productive capacity of a nation having a fiat money system is exceeded by the Government spending involved. If it is not, the impact will be to increase production, i.e. real wealth in goods and services, without materially increasing inflation. Second, insofar as real wealth is increased, the currency will not be de-valued, but will increase in value as other nations perceive that the the material basis of currency value, i.e. the real wealth of the United States has increased.
Third, from the consumer side, using all of our productive capacity will mean full employment and an increase in both tax revenues and consumer capacity, over time, and perhaps not a very long period of time either. That will decrease both the size of deficits and forecasts of deficits here, which will increase the value of our currency.
In other words, this is not a simple textbook situation of supply and demand, Government spending triggers multiple effects and feedback loops, and for fiat monetary systems in the modern period since the early ’70s there are no examples of extreme debasement of currency or runaway inflation due to Government stimulus.
In short, all the empirical evidence is against the proposition that Government spending in fiat currency systems inevitable lead to debasement of the currency. But if you think you have any evidence to the contrary, please cite it.
I don’t see any empirical evidence cited in what you wrote here, just a bunch of pretty iffy assertions.
“In short, all the empirical evidence is against the proposition that Government spending in fiat currency systems inevitable lead to debasement of the currency.”
http://www.google.com/finance?q=gld
Click on ‘Max’ in the chart. You are looking at currency debasement, Mosler’s theories are no different than Bernanke’s or Greenspan’s. Sorry. You may also want to google Bernanke helicopter.
transparait, if the currency were debased we would be able to buy less useful things with it. I understand that there’s been an appreciation of gold against the dollar in the past few years, but so what? We’re not on the gold standard, and as far as we know, the rate of inflation has been very low or negative during this period for most products you and I use.
But back to my proposition (and being more precise in its statement) that: “Government deficit spending in fiat currency systems where the Government has no debts in currencies other than its own doesn’t inevitably lead to debasement of the currency.” Do you have any empirical evidence that in the period since the early 1970s when the United States adopted a fiat currency system that Government deficit spending has led to a debasement of the currency? Have you even one case that can falsify my hypothesis? If not, I think you have to agree that your contention about Warren’s recommendations is itself falsified.
In replying please be careful, because the obvious cases: Zimbabwe, Argentina, and members of the European Union, all either used fiat currencies, but owed debts to external parties in foreign currencies, or, in the case of EU nations, gave up control of their fiat currency to an external authority, and so are not relevant to the hypothesis. So remember, the only cases that count are nations with 1) a fiat currency system, 2) no debt in anybody else’s currency, and 3) Government deficit spending.
I have already done so. A fiat currency is priced in commodities, it’s value is equal to the real things you can buy with it. The realest of real things value wise are land and gold. Did you notice the price of real estate rising the last few years? That means it takes more dollars to buy land, ie the dollars are worth less in relation to real things mister land and mister gold. Fiat currency -> devalued.
I realize Warren is promising you a pony, but try to look past that and examine what you read more rigorously. I believe I’ve done what I can for you.
Thanks transparait, I’m glad you’ve done what you can for me. And if you want to believe that the realest of the real things are land and gold, that’s your prerogative. But, as I said, we’re not on the gold standard anymore, and your belief in the surpassing value of land and gold won’t change that. Btw, you may be interested in this recent piece by Bill Mitchell on Bernanke’s dollars and the wisdom of gold investments.
The fact remains that you’ve stated that Warren’s recommendations are wrong because the kind of Government spending he advocates with inevitable result in inflation and “debasement of the currency,” but you refuse to entertain the ample negative evidence in both the historical record in the United States and other nations that falsifies your hypothesis in that it shows a lack of correlation between deficits and inflation under the conditions I outlined previously. On this point for the United States you may find this post of L. Randall Wray’s informative.
It is not my belief, it is the fact. Fiat currency is priced by things, things are not priced by fiat currency. Think.
All I could identify as perhaps relevent from your links are these, which certainly don’t refute what I’m saying. Perhaps you’ve gotten confused and you think I’m arguing for a gold standard monetary system. I am not.
“Dr Jim closes by telling all his supporters to Buy Gold. So you gold bugs out there get all the cash you can assemble and buy some of the sweet ore and put it under your bed or hire a private militia to guard it for you – although you will have to persuade them to take gold coins because you won’t have any cash left – it will be worthless anyway before long. And for god sakes … feel good about yourselves – after all you are all for “freedom, liberty and sound money” … except you haven’t got any money left because you bought the gold.”
Is not relevent to what I said, and not particularly encouraging regarding this persons credibility. And.
“5. Some claim that if the government continues to run deficits, some day the dollar’s value will fall due to inflation; or its value will depreciate relative to foreign currencies. But only a moron would refuse to accept dollars today on the belief that at some unknown date in the hypothetical and distant future their value might be less than today’s value. If you have dollars you don’t want, please send them to me. Note that even if we accept that budget deficits can lead to currency devaluation, that is another obvious distinguishing characteristic: my household’s spending in excess of income won’t reduce the purchasing power of the dollar by any measurable amount.”
Is just stupid nonsense. Like I said, please do your homework a little more carefully.
transparait, warren is not talking about monetary policy (if that’s what you mean by money supply), he’s talking about fiscal policy. i’m not sure what you mean when you write “currency debasement” (different people seem to have different definitions for these terms and i want to understand what you specifically mean) — at first i thought you meant generalized inflation but you also referred to gold and land, both of which have been affected recently by massive bubbles (housing burst around the summer of 2006 and commodities the summer of 2008). so are you saying that fed deficit spending at this time would create bubbles or generalized inflation or something else? or maybe you think policies conducive to debt deflation are a good thing?
seriously, i’m having a great deal of trouble figuring out what the heck you are talking about, which makes me think we are using a different language or something. maybe it would help if, rather than starting with conclusions, we start with basic assumptions? maybe if you would tell me how you begin to answer these questions: what is money? how is it created and destroyed?, i’d have a better idea where you are coming from.
that is if you are willing to have this discussion with me (i hope so – but better yet, i wish you’d post a comment at warren’s site (this would be a good thread). there are people there who would be much better than me at understanding your points).
i don’t understand what you mean here by “priced in commodities.” the dollar is not commodity money — the value of a fiat money derives from it use as the only acceptable method of payment of taxes and also that it is the method of repayment of bank loans. it is a state money not commodity money.
I think it’s you who needs to think. The value of fiat currency is determined by two things. First, by the fact that fiat currency is needed to pay taxes because the State mandates this and the State has a near monopoly of legitimate physical coercion. Second, there is clearly a relationship of reciprocal causation between the value of fiat currency and the goods and services offered in the economy using that currency. The relationship is not a one way static one as you conjecture just above, but is a dynamic feedback relationship which develops over time.
Stimulation of the economy through Government deficit spending (fiscal policy), if done right, has the effect of getting people to produce more goods and services, i.e. more real wealth, and this effect, in turn, strengthens the fiat currency since ultimately its integrity is based on the confidence people have in the underlying economic system.
Further, while “things” produced do have an effect on the value of fiat currency, so does level economic activity, and usage of productive capacity. Innovation also has an effect on currency value. Gold on the other hand doesn’t have much effect on the value of one’s currency. Nor does land. You are living in the past and in a fantasy world. Wake up!
Finally, your replies to the two quotes from the references I provided are at the level of name-calling and labeling. They aren’t substantive at all. If you don’t want to discuss the issues, then that’s fine. But spare me the foolishness, please.
Thanks selise, I think transparait, is refusing to explain himself, but is just content to use one-liners, name-calling, and labeling in his replies. Nor do I think he’s debating in good faith, since if he were I think he’d explain his theory in more detail and also give us more evidence than a link to Google finance showing that the value of gold has increased over the few years. My reaction to that was so what? Who cares if the price of gold jewelry goes up? transparait seems to view gold with the reverence due to a sacred icon. But let’s see how he or she replies now.
Getting under your skin, huh, letsgetitdone? As you like.
“Further, while “things” produced do have an effect on the value of fiat currency, so does level economic activity, and usage of productive capacity. Innovation also has an effect on currency value. Gold on the other hand doesn’t have much effect on the value of one’s currency. Nor does land. You are living in the past and in a fantasy world. Wake up!”
It’s you who’s living in the past, what you say here is exactly Greenspan and Bernanke’s pov, and all it does is blow bubbles. Which bubbles would you like to see blown next? I don’t think there are any left that would be helpful. Tulips perhaps?
” so are you saying that fed deficit spending at this time would create bubbles or generalized inflation or something else? or maybe you think policies conducive to debt deflation are a good thing?”
A good thing is a bit loaded, but I belive both. We will not have a stable economy until the losses are taken.
“The evidence is still inconclusive as to whether today’s policies are likely to succeed. The Fed has expanded what economists call base money. But the so-called money multiplier, which is a function of bank lending, remains constrained. Monetary expansion in the US and elsewhere has given only a limited boost to lending into the economy, but has had a huge impact on financial markets and the profits of some banks, especially the major investment banks.
That gulf between slowly recovering economies and soaring markets has opened up a risk – that money printing will be the source of another painful correction in financial markets, although not, probably, anything on the scale of the 1929 crash.”
http://www.telegraph.co.uk/finance/breakingviewscom/6462168/Money-from-helicopters-is-Ben-Bernankes-modern-encapsulation-of-Milton-Friedmans-bold-revelation.html
This is a fairly kind assessment of the theory.
“don’t understand what you mean here by “priced in commodities.” the dollar is not commodity money — the value of a fiat money derives from it use as the only acceptable method of payment of taxes and also that it is the method of repayment of bank loans. it is a state money not commodity money.”
A convenient view, is that from Mosler? What do you do with money other than pay taxes selise? Shelter, Food, Transportation? What I mean is that you don’t buy other money with money, you buy things or services. If everyone in the country suddenly had ten times the ‘amount’ of money they did before, do you think things and services would cost more or less in dollars a month later? So, has the value of currency been determined by the value of things and services?
I think it has.
Let me make coffee..
Here is a clear primer. Mosler is saying nothing different than Bernanke, except as I said way up thread, he wants to bypass the banks and use Bernanke’s helicopter (Friedman’s I guess!). If you continue to blow bubbles with inflation like they both want to do, you will continue to have deflationary collapses, each worse than the last. There is no magic unicorn that craps skittles.
http://www.lesjones.com/2009/10/20/inflation-or-deflation-the-man-with-the-dollar-printing-press-says-inflation/
no, mostly from randy wray, although others have had a big influence as well. what in my comment pissed you off?
i’m thoroughly confused by your comments. @ 36 your refer to keen’s post positively and @52 you refer to the “money multiplier,” which keen’s posts argues is nonsense. i don’t think it can be both ways.
any reason you believe that or we are just arguing over religious faith here?
a few days ago i recommended the insights of mmt to you, saying, iirc, something like it’s a paradigm change so it seems crazy at first. maybe that’s what’s going on, but claiming that it is the same thing as what bernanke is doing just proves you have it all wrong. i’d love to have an argument against mmt, but not against a strawman that it’s not.
What I said in the passage you quoted may be in agreement with some things said by Bernanke and Greenspan. But if it is, 1) could you please supply cites, and 2) even if the passage you quoted agrees with them, that doesn’t imply that either Warren or I agree with their overall views on the economy. You’ve said a number of time snow that Warren’s point of view is essentially the same as Bernanke and Greenspan. But I’ve never seen either of them advocate the policy measures Warren does, or seen either of them express anything like “the 7 deadly innocent frauds,” so I’m really wondering why you believe his pov, theirs and mine are all the same, and I ask you to document how and in what way they are the same, rather than simply claiming that they are because you believe that this automatically discredits Warren’s views.
transparait, you said:
You and I may have a measure of agreement in that I believe that the banks should be made to recognize their toxic assets. I also think that if recognizing those assets shows them to be insolvent that they should taken into resolution and broken up by the Government after it restarts the flow of credit to small businesses. No more too big to fail.
But as far as deficit spending creating inflation bubbles or generalized inflation, I believe this view is mistaken and is not supported by any data occurring thus far.
Your example:
is not to the point, because MMT-inspired fiscal policy would do nothing like that Warren has proposed three measures: A payroll tax holiday for employers and employees; a Federal Government distribution of $500 per capita to the States to be spent as each State chooses; and a federally funded guaranteed job for anyone willing and able to work. Given the present state of the economy, and the relatively low ebb of consumer demand and the high levels of under-employment and unemployment, I don’t think these measures would be inflationary, or that would reduce the value of US currency over a period of a year. If you disagree, I’d like to see some very specific reasoning showing that these measures would create demand that outruns US productive capacity.
Of course, the argument you gave above about the supposed effect of giving everyone 10 times the money they had before is an example that guarantees inflation almost regardless of the level of demand existing before the fictional distribution.
There’s a vast difference between Bernanke’s actions and Mosler’s proposals. Mosler’s proposals are designed to restore demand and use of the USs full productive capacity. Bernanke’s were designed to bail out the financial system and to re-inflate the pre-recession debt bubble. They don’t guarantee full employment, or continued State-level human services, or renewed production of valued goods and services. So their impact will be entirely different than what we’ve seen from Bernanke. The point here is that if you use deficit spending to rev up activity that doesn’t produce real wealth, and new productive capacity, then you are indeed just inflating the currency, so the trick is not only Government spending, but Government spending that has a public purpose and produces value.
More on “The Myth of the Money multiplier” here.
You’re pissing me off, selise, because you run a really dishonest argument. I’m trying to speak directly in order to communicate clearly, but you ignore what I’m saying and go “Huuuhh? Whaaaaa? I don’t understand what your saying how about you answer some questions for me about ‘this-digression-that-is-also-subject-to-disagreement-and-draw-this-out-so-we-aren’t-talking-about-gold-and-the-helicopter-no-more’ ? Also, because my quote above mentions the money multiplier you insinuate that because I agree with Keen, there is something wrong with my conception, meanwhile not responding to what I wrote. Bernanke’s/Friedman’s/Mosler’s helicopter is how they get past the money multiplier bottleneck (banks won’t lend people won’t borrow), which is why they are no different, Mosler just claims that means it doesn’t exist. Convenient.
“There’s a vast difference between Bernanke’s actions and Mosler’s proposals. Mosler’s proposals are designed to restore demand and use of the USs full productive capacity. Bernanke’s were designed to bail out the financial system and to re-inflate the pre-recession debt bubble.”
Well, that’s what Mosler says. I don’t see much difference. Also, doesn’t Mosler want to eliminate reserve requirements for banks? I’m sure they’ll be very sad to hear that, lol. Everything Mosler proposes is intended to cause inflation, Bernanke also. There are two ways out of this inflation or deflation, three if you count Japan, which isn’t ‘out’ yet after 20 years.
“A payroll tax holiday for employers and employees; a Federal Government distribution of $500 per capita to the States to be spent as each State chooses; and a federally funded guaranteed job for anyone willing and able to work.”
How is that different than this, aside from the guaranteed jobs?
“In 2002, when the word “deflation” began appearing in the business news, Bernanke gave a speech about deflation. In that speech, he mentioned that the government in a fiat money system owns the physical means of creating money. Control of the means of production for money implies that the government can always avoid deflation by simply issuing more money. He said “The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost.” (He referred to a statement made by Milton Friedman about using a “helicopter drop” of money into the economy to fight deflation.) Bernanke’s critics have since referred to him as “Helicopter Ben” or to his “helicopter printing press.” In a footnote to his speech, Bernanke noted that “people know that inflation erodes the real value of the government’s debt and, therefore, that it is in the interest of the government to create some inflation.”
http://en.wikipedia.org/wiki/Helicopter_Ben#Economic_views
“If you disagree, I’d like to see some very specific reasoning showing that these measures would create demand that outruns US productive capacity.”
Much too iffy to say for sure, both for me and for Mosler.
stupid i may be, i wasn’t dishonest about not understanding your comments.
you can keep repeating this, but i think it’s flat out wrong and i was trying to figure out the source of our disagreement. keen’s post provides evidence that there is no money mulitplier — that’s it’s a MYTH — so when you used the money multiplier later in support of your pov, i thought that might be a clue as to where our disagreement was.
anyway, i’m not interested today in discussions with anyone who accuses me of dishonesty where there is only disagreement (if i’d said anything factually untrue after you provided compelling evidence to the contrary, i’d think i deserved it and my response would be quite different). any time you’d like to have a real discussion without the bs accusations, let me know. until then, adios.
You said:
That’s not just what Mosler says. There’s nothing in his proposals that would re-inflate a debt bubble. Rather, what his proposals would do is to restore demand based people working and earning salaries, not on borrowing money. he also wants to stop banks from speculative trading and to engage only in banking. This, too, would lead to deflating the debt bubble.
You continue:
First, even with all the debt the Japanese have had and the near zero interest rates they’ve had no appreciable currency inflation for ten years. Everything proposed by Mosler is not “inflationary.” There is no evidence that anything he proposes would cause “inflation.” And just to make sure we’re talking about the same thing I’ll define “inflation” as accelerating price increases over time.
Second, who cares if the Bankers are happy or sad about removing reserve requirements, what kind of argument against doing that is that observation?
And third, when you say there are only two ways out of this: inflation or deflation, are you intending to say that we can get out of our present poor economy by having either accelerating price increases or decelerating price decreases? Somehow I doubt that’s what you’re saying. But I think you’re just using the words “inflation” and “deflation” in a different way than we are. It’s clear that we can “get out of this” either by letting the economy collapse entirely and then recover in due course, or by doing things to increase economic activity, such as the kinds of things Mosler proposes. If that’s what you mean by “inflation” or “deflation,” I agree with your claim, but wonder about it’s importance or significance. certainly given that choice most people would choose what you’re apparently calling inflation.”
You say:
And then you quote from Wikipedia on Bernanke.
Well, first, I don’t see anything in that quote that specifically suggests Mosler’s three proposals. Second, the guaranteed jobs program is an automatic stabilizer in the specific sense that it is only stimulative during times of reduced economic activity, and decreases Government spending during times of increased activity in the private sector. It is also a measure that guarantees full employment for those who want to work, a change in our society that many of us have been seeking since the Roosevelt Administration, and that is wholly opposed to any thinking we have ever seen from Friedman, Greenspan, and Bernanke.
And third,on “printing money,” the Government doesn’t do that in any meaningful sense of the term, except when it prints the relatively small percentage of the total money supply accounted for by paper money. Here is Bill Mitchell on “printing money” considered as “monetization.”
Thanks. I think it’s iffy for you, but not for Mosler. The reason why is that if prices start to rise alarmingly then MMT and Mosler have recourse to tax increases to cool down the economy.
FWIW, transparait, selise is an exemplary commenter and occasional blogger here. She is known for her tough and precise criticisms and also for her honesty. She is also known for her generosity towards those she exchanges with, and her attempts to bend over backwards to be fair.
Finally, I’ll call attention once again to Bill Mitchell’s ‘Money Multiplier and Other Myths.” It pretty much killed the “money multiplier” for me.