Warren Mosler To Participate In 3 Senatorial Debates

38 Responses

1. Congratulations!

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2. Warren,
   Do you know who else is invited to the debates (other than the obvious two)? It will be a joy watching you against a clueless wrestler and a career dummy.

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   1. McMahon and Blumenthal

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3. Great news, both for you, Warren, and also for MMT. Go for it.

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4. Go get ’em! 🙂

   Declare war on unemployment! It’s a war we can win. 🙂

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5. Congratulation Warren! Next step… get Lieberman endorsement, you’re the only candidate left he hasn’t ruled out supporting. :o)

   Lieberman, who lost the 2006 Democratic Senate primary to Ned Lamont but still won the general election, said in a speech in the Constitution State that he won’t support Democratic Senate nominee Richard Blumenthal or Republican Linda McMahon.

   “I’ve decided it’s better for me to concentrate on being a senator, not get involved in any of the political campaigns in Connecticut this year,” Lieberman said, according to the Connecticut Mirror. “That’s my decision, and I’m enjoying it…”

   “I got elected as an Independent, but I’ve cast my lot with the Democratic caucus, and so obviously, I hope there is a Democratic majority in the Senate after this election, because this directly relates to my ability to do things for the state,” he said.
   http://thehill.com/blogs/blog-briefing-room/news/118579-lieberman-democrats-will-hold-senate-majority

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6. Warren,

   You have to do something to get some attention. Perhaps you could designate Oct. 7 as “Burn Title 26 of the United States Code” Day and stage a big bonfire.

   I’m philosophically opposed to burning books in general, but in the case of the tax code, an exception is warranted.

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7. thanks for the suggestions, considering all!

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8. Warren:

   As a former partner of yours, I beg you to focus on your understanding of monetary operations and the simple understanding that the government spends first and taxes second. Many of your policies, including your $8 make work proposal, is left of Mao. YOU WILL NOT BE TAKEN SERIOUSLY! Please focus on tax cuts instead of spending increases (even though you may believe the result is roughly the same) and why the deficit is nothing other than a savings account. If not for the law that the Treasury can’t run an overdraft at the Fed, we wouldn’t even need to issue debt. We could just pay a rate on deposits at the Fed. The problem with the economy and banks, as you’ve said, is that people can’t afford to pay their debt. A primary reason for this is they are being taxed too much. The tax is based on a flawed premise that we need the money. Mention that the IRS shreds real dollars when you pay your taxes at the window in cash. Stay away from the job creation program. The fact that you may think it will work (I don’t) doesn’t matter. It makes you come across as Marx and Trotsky all rolled up in one. CREDIBILITY GONE! Anyone who replies to your posts that McMahon and Blumenthal will look stupid and you’ll look smart is incredibly naive. KEEP YOUR MESSAGE SIMPLE AND RELATIVELY NON POLITICAL. And, for God’s sake, keep your answers short and firm and show some command of the stage. Being the nice, polite, professorial candidate means the other two get 90% of the air time! Finally, stop listening to the others on your blog who are as idealistic as you are. Please get in the real world with a real world message. How about buying some air time like Ross Perot and get out the message. Interviews alone won’t get it done. Too many of the people who interview you think you’re a kook and they have more credibility among viewers than a guy who comes on for 3 minutes 5 times per year!

   Ivan

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   1. I wholeheartedly second Ivan’s sentiments. You should focus on the fact that if there is too little aggregate demand (which everybody agrees there is), it is because there is not enough money. And then segue into the fact that Treasury bills, notes and bonds are just an interest-bearing form of money.

      Also, please make the point that monetary policy is ineffective. If somebody is not spending because he feels poor, offering to lend him lots of money at a low interest rate doesn’t actually change his behavior because the loan does not make him any richer.

      Anyway, focus on the payroll tax holiday and extending the Bush tax rates. You’ll at least find an ally in Linda McMahon, and you might even persuade her to stop being a deficit hawk (which I’m pretty sure comes from a lack of understanding rather than a desire to impoverish the proletariat).

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      1. been doing most of that

   2. Ivan, I think that what you are implying, is that Warren needs a political operative that also understand MMT as a campaign manager, and I would agree, although it’s a bit late at this stage in this round. Maybe next time. Campaigns are about winning elections, not governing. The winning pitch this time is the payroll tax cut along with a brief and clear explanation why it won’t break the bank (the government-finance-is-like-household-finance analogy is false).

      Governing comes later if you win. It is entirely different, and it requires different skills, hence different advisors. To focus on the governing instead of winning in a campaign is political suicide, unless the idea is only to get a particular message out, and that is a worthwhile objective, too. You have to convince likely voters to vote for you based on what they are interested in at the time they enter the ballot box. The big issue now is the fat cats got bailed out, now where’s mine? That’s a payroll tax holiday and reform, not spending on infrastructure.

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   3. Hi Ivan!

      As you know, I am what I am, and am just doing this as a matter of conscience.

      Would buy time if I had the extra cash. Lost all of my liquidity in 2008, and banks still calling my loans even with only 30% loan to value.

      (Still have a pretty high net worth but currently forced to sell assets for cash flow)

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9. Warren:

   As I see it, there is an incredibly important aspect to your message which is based on explaining reserve accounting. Budget deficits matter, but not for the reason 99% of Americans believe they do. They matter because they could become inflationary over time and decrease real wealth if they become excessive. As you used to say, government spending is only a problem when the government lifts the offer instead of having its bid hit. It isn’t that we have to worry about our ability to repay the debt. Once freed of that constraint, you can have reasonable economic arguments instead of the idiotic sound bites we hear from both parties. Unfortunately, until more people understand the core message, the secondary and tertiary messages make you sound too radical and thus you’re not taken seriously on your primary argument which has always been your strength. As you aren’t getting a great deal of time or exposure, I suggest using the little time you do get to focus on the deficit discussion in a way that mom and pop can understand. And, I personally believe the argument should be based on tax cuts as opposed to spending. They’re more immediate, more effective, and directly attack the problem that Americans simply don’t have enough cash to meet their needs and pay their debt…even when you only have a 30% LTV. Good luck!

   Ivan

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   1. Warren: I don’t know if private employers want to hire people who’ve been working in some sort of guaranteed government make work program. In general, yes, I’d rather hire someone who is used to working. However, I’d be very disinclined to hire someone working for the government today in a “real” government job. I can only imagine what you’d get from the $8 pool. Again, I still believe you have a very important point to make and you’ve put yourself in a position to make it. I think the focus on the jobs program sounds like something that Castro just conceded didn’t work. If you focus on tax cuts and the true nature of a “deficit”, you will undoubtedly be taken more seriously. If I recall correctly, this is something you’ve been passionate about for a long time. The jobs program just muddies the waters.

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      1. I think that Ivan is correct in his assessment of the political value of talking about the JG per se. It’s just not on the radar. However, it is absolutely necessary to talk about job creation.

         There are three ways they can occur. The first and preferred is through the private sector and that is a demand deficiency problem that can be corrected through fiscal policy, larger deficits that involve a balance of targeted tax cuts and expenditure, e.g., the payroll tax holiday. The second is staunching job leakage through state and muni cut backs. Here the per capita grant to the states figures in. The third is addressing structural unemployment. The way to fix this is to place workers laid off in jobs that aren’t coming back in developing industries, such as energy conservation, energy alternatives, green building, etc. as well as in infrastructure maintenance and improvement. Government R&D programs and grants can be expanded to absorb technical workers.

         It is important to explain the economic cost of an output gap and high unemployment. This cost dwarfs the fiscal needs to correct it early instead of letting costs build, the working force deteriorate, and the US competitive edge dull.

         All of these involve increasing the deficit. The chief difficulty in the way of this is overcoming the public’s erroneous belief in the government-finance-is-like-household-finance false analogy. There is no problem with either affordability or the government’s balance sheet, but the pubic is wrongly convinced there is. That is the thing to hammer at.

         Strategically I think that you have to prioritize objectives, and tactically, you have to spend on the top priority. That is explaining functional finance in a way that the public can understand. The public is conflicted. They want government finance to be “sound” and they want money to be “sound.” too. But they want tax cuts and they also want essential services. The GOP is promising all this without presenting the vaguest plan for achieving it. The Democrats can’t present a unified enough front to govern effectively in the face of unified opposition both from the GOP and the Blue Dogs, so they have lost credibility.

         The public is looking for a logical solution that both parties would have to accept or come across as unreasonable. The MMT solution is the logical solution once one understands it. There are just some big barriers in the way in the form of preconceived ideas that have been long ingrained. So they need to hear this in a simple format over and over until it sinks in. I doubt that is going to happen in one election cycle, but it’s a start.

         Plenty of time to lay out the rest of MMT, including the JG later, when there is political will to implement it. I am not selling out on the JG, however, just recognizing that this not exactly a logical solution at this point, since the issue is not only job creation but also a labor price anchor that relates to achieving price stability. This not a simple concept to explain, let alone lead with. It gives the opposition easy ammo to attack you are unrealistic. Dealing with the eye rolling over the deficit is the first step, IMHO.

      2. first, i do focus on the payroll tax holiday

         second, my proposal was tried successfully in argentina in 2001 after it all collapsed and reopened with a floating peso. the gov offered a job to any head of household and got 2 million takers with a population of maybe 35 million. it paid half of min wage. these people had never held a private sector job and never expected to. within two years half had private sector jobs

      3. Warren:

         I think the payroll tax holiday isn’t enough. If I’m a democrat or a Republican, my reply is “Warren Mosler is trying to bankrupt the Social Security Trust Fund”. As to Argentina, I don’t believe American voters will care. Americans pride themselves, in general, on being fiercely independent and don’t want to be eating at the government trough….and we don’t like those who do. I feel that your goal for “fixing” the economy should be significant tax cuts to spur aggregate demand while simultaneously educating people that there is no such thing as being able to “afford” these cuts. Keep it simple! Over the past 15 years, I’ve had countless conversations with everyone from bright guys on Wall St. to my children explaining that a Federal Budget Deficit isn’t the same as a State Budget Deficit or a personal deficit. It is amazing that not one of them understands the math. And, when they do begin to understand, they’ll say “oh yea, you can always print money to pay off the debt but that isn’t good”. And those comments come from those working in the investment business. So, given that virtually nobody in this country understands the concept, the message needs to be much simpler without going too far afield into Argentina style government “make work” job programs.

         By the way, I was playing golf with a friend of mine from SAC Capital who trades fixed income relative value. He’s covered by AVM. I gave him a little of my background and his response was, and I paraphrase, “I know Warren…he’s a radical leftist”. When that becomes your reputation, your ability to deliver your message, not to mention raise money for your campaign, is severely compromised. The reason I like the budget deficit argument is because it is neither right nor left, neither democrat nor republican. It’s just a fact that too many others making important decisions in Washington don’t understand. Sorry to lecture but I assume you want honest feedback!

      4. the good news is it’s all over in 4 weeks when i go back to the center of the universe- sunshine, blue water, and coconuts.
         depressing cold rain here in CT today and too often. don’t know why anyone with enough money for bus fare doesn’t just leave…

         the left thinks i’m a radical conservative, and the right thinks i’m radical left.

         many tell me i’m promoting a big fed govt policy when all i have is tax cuts, revenue sharing to the states, and a transition job for unemployed to get them into the private sector when they are already in the public sector.

         my current proposals are lower taxes and competitive market solutions.

         and i’ve been accused of violating the biblical restriction on casting pearls before swine…

10. Ivan: Budget deficits matter, but not for the reason 99% of Americans believe they do. They matter because they could become inflationary over time and decrease real wealth if they become excessive.

    While this is true, it is confusing to many people who don’t understand how this works. Deficits only become an inflationary problematic when government injections generate demand that exceeds the productive capacity of the economy to supply it at full employment.

    Ivan: As you used to say, government spending is only a problem when the government lifts the offer instead of having its bid hit. It isn’t that we have to worry about our ability to repay the debt. Once freed of that constraint, you can have reasonable economic arguments instead of the idiotic sound bites we hear from both parties. Unfortunately, until more people understand the core message, the secondary and tertiary messages make you sound too radical and thus you’re not taken seriously on your primary argument which has always been your strength. As you aren’t getting a great deal of time or exposure, I suggest using the little time you do get to focus on the deficit discussion in a way that mom and pop can understand.

    Ivan, I would be interested in hearing how you suggest putting this in simple terms, if you have time to respond. It is crucial to translate this into everyday-speak so that the public can understand it — and hopefully the mainstream economists and pundits, too, but that is probably a lost cause.

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11. Warren used to use a simple business card analogy that made sense. He’d pay his son 10 business cards to wash his car and then charge him (tax) 5 cards to live in the house. The other 5 cards were held in his son’s bank account as debt. Was Warren really worried that he owed his son 5 business cards since he had “borrowed” them? No. The cards were all there and he could print as many as he wanted. He had a monopoly on printing these specific business cards. Now, take it to a higher level. China sells us real goods in exchange for deposits that the Chinese Central Bank holds at the Fed. Politicians tell us we should be worried about this because the Chinese convert their deposits (debt) for Treasuries (another form of debt). Who is at risk? Are we? We have all their products that they’ve worked to build and they have line items at the fed and the hope that at some point those dollars are still worth something to them. If we inflate, they lose. I know everyone on this website probably understands this better than me but I’m focused more on how the message is delivered. Politicians of both parties are telling us now that we need to cut the deficit, even though they don’t have the foggiest idea why. They tell us that if we have to balance our checkbooks, so should the government. Warren needs to deliver the simple message while at the same time pounding Blumenthal and McMahon that they are a danger to our future. As Rahm Emanuel said, don’t let a good crisis go to waste. Warren predicted this crisis from the moment the Clinton administration started generating a surplus. It is time that our politicians understand economics. That’s the message…if it were up to me!

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    1. As you used to say, government spending is only a problem when the government lifts the offer instead of having its bid hit.

       Ivan, thanks for your comments. I’m hoping you could unpack the above sentence (not being a trader, I’m not quite tracking it).

       You’re quite right that “conservative Keynesian” tax cuts are politically the best angle of attack and, to be fair, that’s the one thing above all else Warren’s been stressing. The “liberal Keynesian”job guarantee is part of the MMT monetary reform package that Warren, Bill Mitchell and others have advocated for years. I gather from Mitchell’s blog his firm belief the job guarantee is an essential element of the plan. However the politics in Mitchell’s Australia are much more liberal economically than the politics here (more social cohesion, the whole “mateship” thing, I guess).

       Tom Hickey has hit on the nub of the issue, how to explain it in “everyday-speak” to the ordinary voter (or more importantly, the ordinary newspaper editorial board). Especially with the current “deficit hysteria”, boiling it down so people “get it” is a challenge. Do the operational arrangements make a difference in selling to the public (e.g. add to publicly held debt, overdraft Fed account, direct Fed purchase, US Notes)? My own view is that the closer the Tsy can get to interest-free money (the current .25% FFR / interest on reserve rate is pretty damn close), the more of the $5 trillion over the next decade in net interest projected by the CBO (at a 5% average interest rate) can be recycled into tax cuts without “adding to the national debt”. Of course redirecting future public revenue from bondholders to taxpayers would not be universally acclaimed. :o)

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       1. In my mind, the bid-offer is a government spending concept. Again, I’d prefer a tax cut across the board because of its efficiency, but it too can become inflationary if it triggers aggregate demand in excess of potential GDP.

          That said, let’s assume the government understands that aggregate demand in the military sector isn’t sufficient. They then go to three contractors for submarines with their specs and a below market price. If someone hits their bid because they can make a profit at that price or they just want to breakeven to avoid layoffs, that isn’t really inflationary. You still have excess supply. Now, let’s assume we’re at war and we need three nuclear subs quickly and all the manufacturers are operating at close to full capacity In that case, they’ll have to lift the offering price to get the manufacturers to increase capacity and sell them the subs. That would be inflationary. Not the world’s greatest explanation but the best I could think of. It is essentially a decision by the government to lift the offer (buy scarce resources) or have its bid hit (show a price and wait for a seller for plentiful resources).

       2. Thanks for explaining that Ivan.

       3. By the way, I don’t like the job program either. First, I believe it undermines the very valuable argument that Warren is trying to make about deficits. Second, I believe it is inflationary. Even if the job program is below minimum wage, it creates a value for doing next to nothing (and that’s exactly what it would be) at $8 per hour. To leave the easy do nothing work of the government program to flip burgers at McDonalds, labor will demand a significant premium and that will drive up wages and prices. The size of the unemployed labor pool keeps wages down for those who have a job. Once you take away that pool of suffering unemployed, wages in the private sector have to go up. That said, I don’t like it. Once again, allow aggregate demand to increase through tax cuts and allow the capital to be allocated more efficiently than through government make work programs. Then you’ll get real job creation.

       4. Are you saying that the Bush tax cuts should have been deeper? The Bush years were pretty dismal for job creation.

       5. Ivan,

          Bill Mitchell made a point back at the Teach In in April that a one time adjustment (imo also as perhaps could be caused by establishing a price floor for employment via a job guaranty, but Im not 100% convinced, probably depends on how its done) is technically not inflation.

          IOW just because the price of something goes up doesnt mean it is inflation. Could be supply shock, currency intervention, regulatory changes, etc… in this regard Freidman may have been right that inflation is a monetary phenom.

          Resp,

       6. in this regard Freidman may have been right that inflation is a monetary phenom

          Friedman was obviously right in the trivial sense that inflation being nominal is therefore “always and everywhere a monetary phenomenon.”

          The question is rather causality. It doesn’t seem to correlate with monetary or fiscal policy.

          There was a strong correlation between oil price and CPI in the ’70’s, undercutting the monetarist argument, but that relationship has weakened significantly since then.

       7. Oops, this doesn’t seem to accept HTML for images. Here’s the Fed chart for deficits, FFR and CPI.

          http://research.stlouisfed.org/fred2/graph/fredgraph.png?bgcolor=%23B3CDE7&chart_type=line&drp=0&graph_bgcolor=%23FFFFFF&height=300&mode=fred&preserve_ratio=checked&recession_bars=On&txtcolor=%23000000&width=500&id=FDHBPIN,FEDFUNDS,CPIAUCNS&transformation=pc1,lin,pc1&scale=Left,Right,Left&range=Max,Max,Max&cosd=1970-03-31,1970-03-31,1970-03-31&coed=2009-06-30,2009-06-30,2009-06-30&line_color=%23FF0000,%230033FF,%23FFCC00&vintage_date=2009-11-24,2009-11-24,2009-11-24&line_style=Solid,Solid,Solid&mark_type=NONE,NONE,NONE&mma=0,0,0

       8. the $8 job is needed to facilitate the transition from unemployment to private sector employment once my payroll tax holiday is in place and demand is growing rapidly.
          employers don’t like to hire the unemployed. they will much more readily hire someone who’s already working

12. Tom:

    Job creation under Bush was pretty anemic. However, if you consider that he took office when the equity bubble was deflating, 9/11, Enron, Worldcom etc and then the housing market debacle, the headwinds were pretty severe. If anything, the tax cuts weren’t significant enough under Bush. Yes…they should have been deeper.

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    1. Absolutely correct. It’s amazing how a liberal meme has developed that the Bush tax cuts were bad and actually helped cause the global financial crisis.

       The Bush tax cuts were the most exquisitely timed tax cuts in the history of the United States. They should have been deeper, of course, but the bigger mistake was allowing the budget deficit to shrink 1.5% of GDP in 2006-2007.

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       1. Yes, that is interesting. Bill Mitchell has observed that it was not the “usual susptects” like low rates or, here, tax cuts leading to deficits, but Ponzi finance that led to the GFC, and Bill is pretty far to the left.

13. Warren:

    I have to agree with you about Connecticut…although I wouldn’t say that if I were running for public office from the “nutmeg state”. Keep fighting the good fight. I know you’re not a republican but it strikes me that you’d have an easier time having influence with them going forward if 1) you can argue the benefits of an across the board tax cut and 2) can explain to them that it won’t leave our children with an enormous debt. They’re always looking for a good reason to cut taxes and you can provide them with cover but you need to first change the way they think about it. The sharpest guy in congress today might be Paul Ryan and he’s got a bright future. I think you need to find a way to get an audience with him. I don’t think it would be that difficult.

    Good luck!

    Ivan

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    1. be nice if there was a ‘them’ to explain it to.

       no one’s listening at all right now without ‘leadership’ from the media. and they don’t care

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       1. I hear you. Eventually, “they” realized the world wasn’t flat and doctors stop using leaches to cure disease so maybe…one day…

       2. I’m not too hopeful. Economics doesn’t seem to work like the other sciences where advances are made and built upon over time. 150 years after Frederic Bastiat gave us the Parable of the Broken Window, the top economic advisors in the most advanced country in the world gave us Cash for Clunkers and declared it a success because of all of the happy car dealers.

       3. economics is not a science