Norwich Bulletin Interview

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35 Responses

    1. Second that.

      Nice you had time to go into detail, and they let you say what you had to say without interrupting or confronting. That kind of forum is becoming scarce.

  1. Very educational interview.
    I don’t know how the law treats the political parties in US, but wouldn’t it be easier for the cause if a brand new party were registered. It would be more like a movement because people with different political views will participate – all of them united by the pragmatism of MMT. Just brainstorming 🙂

  2. Warren,
    I am proudly displaying my MOSLER lawn signs here in Cheshire. I turned many of my co-workers on to MMT and several have also put out signs. I know it is still a hard battle to break the establishment. You are doing a great job. Best of Luck.

  3. One of the things I think that needs to be communicated with MMT is getting rid of the myth that MMT = Large Government. It doesn’t have to be that way as L. Wray describes below. Wray states in #6 that he is in favor of abolishing the Fed, which would appeal more to the Libertarian crowd and ever growing anti-Fed movement. Anyway, the point being, MMT can be consistent with any size gov. and that is important to realize. My .02.

    “1. MMT is consistent with any size of gov’t. It can be a small libertarian govt if you like. But it issues a sovereign floating currency. It supports the currency by imposing a tax payable in that currency.
    2. Job Guarantee/Employer of Last… Resort is also consistent with any size of gov’t. If you want a big private sector and small govt sector, keep taxes and govt spending low.
    3. JG/ELR can be as decentralized as you want. I think there are massive incentive problems if you have federal govt pay wages of for-profit firms. So I would have fedgovt pay the wages in the program but have the jobs actually created and mngd by: not-for-profits, local govt, maybe state govt, maybe federal govt. Argentina experimented with cooperatives and it looked to me to be highly successful.
    4. The problem with a monetary economy (you can call it capitalism if you like) is that from inception imposition of taxes create unemployment (those looking for money to pay taxes). We scale this up to our modern almost fully monetized economy (you need money just to eat, watch TV, play on cell phones, etc) and we get everyone looking for money (and not just to pay taxes). It is sheer folly to then force the private sector to solve the unemp problem created by the govt’s tax. Private sector alone will never (never has) provide full employment. ELR/JG is a logical and empirical necessity to support the private sector. It is a complement not a substitute for private sector employment.
    5. How can the belief that all ought to work, contribute to society, rather than lay about and collect welfare be called socialism?
    6. Ed: I guess I’ve been called worse things than Libertarian! But as you know, I strongly disagree with much of what our govt does. The Fed is a case in point. I would abolish it. Move essential operations into the Treasury. And stop monkeying around with interest rates, inflation targets, money targets, etc. Set overnight (fed funds/discount rate) at 25 basis points and leave it there forever.
    LR Wray”

    1. Warren makes the point that the size of government depends on the relative balance of public and private and that this is a political decision to be made by voters. There are appropriate levels of spending and taxing for any size of government given economic conditions, but the size of government is independent of MMT as a macro theory based on operational reality and stock-flow consistency.

  4. The economy seems very understandable now that I’ve adopted your framework but only up to the next political action.

    Perhaps, given 20 years, you will be able to refine politics like you were able to refine economics.

  5. Felt the need to correct something especially when the matter was said on oath (Video 1) – taxes paid by cash are not put in the shredder.

    I do not know where it came from but its inaccurate.

  6. Warren,
    Have you had the opportunity to directly promote these ideas to deep pocket philanthropist like Bill Gates? If you can sell him on these ideas as a way to promote economic prosperity, you just might be able to give birth to a viable 3rd party movement that’s not based on flat earth economic theory.

    Btw.. Tax money is accounted for the same way Bank of America accounts for my mortgage payment; and I know you know that. You lose people when you tell half truths of what happens when we pay our taxes. People will look for the quickest and easiest path to dismiss your ideas; and I’m afraid you give them an easy out when you talk about the IRS shredding money without mentioning that the books are still updated properly. The nuance point you are preaching is lost on everyone but the choir.

    1. tried, but never have reached on of those

      ok on the accounting. yes, the federal govt accounts for tax payments. accounting is after the fact record keeping.
      my point of course is the feds doesn’t get anything that they operationally need for spending.

      operationally, bank america needs those accounting records to be able to make subsequent payment

      (boa doesn’t shred old bills, etc.)

      1. It’s just a friendly heads up. You have been so close to this for so long that you probably can’t relate to how the rest of us interpret it. It took me a while to get past this and figure out what you are trying to say. …have those lines tested on a few random voters, I bet they call BS and dismiss your ideas.

        I really loved the post though. The explanation of what happened to the Soviet Union versus the United States was a bit of an epiphany for me.

      2. Government does actually “get money” (reserves) when people pay their taxes. The person’s deposit account is debited, the bank’s reserve account is correspondingly debited that amount when the person’s check to the Treasury clears, and the Treasury’s reserve account is credited that amount. Those reserves in the Treasury’s account either go to reducing the deficit or generating a budgetary surplus. The surplus represents funds that the Treasury can use to draw down its balance.

        But this involves understanding the vertical-horizontal relationship, which most voters don’t have a clue about.

      3. but the govt is what does the debiting and crediting as a matter of record keeping, not actually ‘getting’ anything

        and crediting itself (the tsy) doesn’t give it anything it operationally needs to spend, as spending is simply the govt doing the crediting on its own books.

        but point understood.

      4. In order to understand that, of course, you need to accept the fact that whatever the institutional apparatus that surrounds it, the Fed is a branch of the government. A lot of Ron Paul types have problems with this…

      5. Warren, I think that the scoreboard analogy is a good one here. The budgetary balance is like scorekeeping because after a deficit entry the government doesn’t have less money, and after a surplus entry the government doesn’t have more money because the the numbers in these entries function like points, and the Fed’s spreadsheet is like a scoreboard. They don’t come from anywhere, and they don’t go anywhere. They are just numbers generated and erased by the process of keeping score. Of course, score itself does make a difference, but people are confused about what that difference is.

        The confusion arises from conflating these different levels, where the process is different operationally. The horizontal/endogenous level of currency users is dependent on the scorekeeping of the vertical/exogenous level of the currency issuer because only the currency issuer has the password to the spreadsheet.

        What people don’t get is that the vertical and horizontal levels are opposites, and the relationship of the vertical and horizontal is inverse. Government deficits entail nongovernment surpluses, and vice versa. They erroneously conflate the two and think that the government and nongovernment balances are directly proportional. Economic policy involves adjusting this relationship based on changing conditions in the economy, which is what functional finance does based on operational principles, rather than political posturing, ideology or “moral” arguments about “sound” finance.

        Somehow this has to be conveyed simply enough to grasp quickly.

      6. OK, so Russia went in to Estonia and the Estonian economy collapsed (lather, rinse, repeat for other countries Russia took over). They exported real goods and services to these countries to keep them afloat (and under control). What they should have done instead is employ anyone willing and able at R48/hr to begin mobilizing their economy and workforce, while encourging the rest of the private sector (the one way or the other) to gear up using Rubles. Sounds like these countries just enjoyed the imports from Russia, while they created their own economy that they hid from Ivan and did to Russia what Russia did to Germany. Basically, became a huge resource drag, then left them in the middle of economic nowhere, freezing to death with no taxes, goods or services. Nez Paw?

  7. Your sheer stamina is commendable. I agree the shredding money example is probably more confusing than helpful. I have some success telling people that if they have a dollar in their pocket or financial account it is ultimately because the Federal government deficit spent a dollar more into existence than it taxed. I have even resorted to piles of pinecones to show that the net effect of spending a dollar more or taxing a dollar less is the same before they got it. It gets harder trying to explain that the money banks create as loans disapears when paid back or defaulted on, until they understand that banks can make loans without deposits or reserves.

    Great quote I just found from David Eisenberg, co-founder and leader of Development Center for Appropriate Technology:
    “Having no money in the economy is like arriving at a construction site and finding the tools and materials are there, the workers are there, but we’ve run out of inches so we don’t build.” Perhaps he has read Soft Currency Economics.

  8. Nice job Warren.

    Have you approached Warren Buffet? George Soros? Time to put your hedge fund hat back on and get the meeting. III has enough clout with Goldman, Citi, BoA and other dealers. They should be able to help you get the meeting. What about your old friend Ross Perot?

    1. Ivan makes a good point about the need to win converts among economic and political leaders (not one and the same, besides CEOS types, there’s also to potential presidential candidates on the GOP or even independent lines (say Jesse Ventura or Ralph Nader). Just from his book, Warren had contacts with Tom Daschle, who was the one who set up the meeting with Larry Summers. Daschle’s longtime Senate chief of staff Pete Rouse, stepped in as Rahm’s replacement to be White House Chief of Staff (on an interim basis now but will probably get it permanently). In the book, Warren also had positive conversations with Al Gore and Donald Rumsfeld.

      In terms of institutions, I’m afraid there are few organizations other than labor unions that haven’t been infected with deficit hysteria. During the 1940’s and 1950’s, the CEO-heavy Committee for Economic Development under the leadership of Beardsley Ruml, who wrote “Taxes for Revenue are Obsolete”, were strong advocates of the “conservative Keynesian” (tax cuts instead of spending) approach to functional finance.

      The CED is still around, but its been captured by the Pete Peterson death star (that Peterson is a one man argument for stiff taxes on carried-interest). Compare and contrast,
      CED has strongly supported fiscal responsibility throughout 66 years of work on federal budget issues, and with the generous support of the Peter G. Peterson Foundation CED will continue to advocate for fiscal responsibility.

      The CED worked to implement its conservative Keynesianism in several important ways. It helped develop and publicize several key economic concepts (for example, the automatic stabilizer concept and the idea of the full employment budget) which shaped the parameters of the continuing debate over federal fiscal policy. The organization’s most fecund idea man, Beardsley Ruml… (p.11 of pdf)

      1. While sitting through a boring presentation this afternoon, I thought about who else is worth contacting. Google’s “chief economist” (Hal Varian) wouldn’t be a bad idea, (“Google is using its vast database of web shopping data to construct the ‘Google Price Index’ – a daily measure of inflation that could one day provide an alternative to official statistics.”).

        Members of Congress of both parties who ignored their leadership to vote No on the 2008 bank bailout probably already agree that our current monetary system is not the best of all possible worlds (especially those House members who hung tough and voted No on both votes). Those are the Members of Congress to contact or at least send courtesy book copies. Leaders of this ad hoc caucus in the House were Darrell Issa on the GOP side and his fellow Californian Brad Sherman on the Dem side of the aisle.
        House defeat of original bank bailout
        amended bank bailout passed House
        amended bank bailout passed House

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