To deploy an army of MMT proponents to respond to deficit terrorism on the web.
Go to offending articles. Neutralize flaws. Report back to home base.
An MMT heart (♥) will be awarded for each successful strike.
In November, prizes will be awarded to those with the most MMT ♥, including an all inclusive trip to the Center of the Universe, St. Croix, USVI.
HOW TO PARTICIPATE:
1. Sign up
2. Track down the deficit terrorists
3. Counter attack with comments on their websites
4. At the end of your counter attack, leave your mark on their website
Your Name or Alias
Counter Insurgency, Deficit Terrorist Unit
5. Report back to headquarters for review
If you do not sign-up AND report back to headquarters for review, the MMT ♥ will not be awarded.
If you need assistance, let the group know.
We will put out a call for back-up.
All appropriate comments properly signed out will receive MMT ♥.
Leaders will be posted within the next few weeks.
Good luck to all that participate.
very good idea
Go Team indeed! Get those DTs (Deficit Terrorists)
International trip paid ?
Yes! And a boat ride. 🙂
Is second prize a set of steak knives? :o)
I’ve been doing this on my own for years. I’d love to go to the Center of The Universe – and I’d love to get a ride on that crazy catamaran of yours!
Warren is also a good businessman. It is a good idea – definitely will contribute to the cause.
Well the MMT opponents are much better formally organized with the support of all these rich people foundations, while the MMT-ers now are like the jedis fighting the Empire – no resources – only passion.
A good idea to be sure, but the analogy to Jedi overthowing an “evil empire” is eerily misplaced. These are innocent frauds that we are fighting remember.
“These are innocent frauds that we are fighting remember.”
Giving the perps the benefit of the doubt. However, we suspect on some good evidence that this is not always innocent, but disingenuous and self-serving.
Thank you for all of your years of support!
I’ll be rubbish at it, but it sounds fun. In the unlikely event of my victory, does the trip to St Croix include flights from England?
This is a target rich environment:
I think I signed up a year ago.
I’ve been doing just this on a discussion board I frequent. Probably 2 or 3 people have really got behind me but I’m meeting some resistance from a few others. It would be nice to set up an area where a relatively new proponent of MMT can get some questions answered in order to more effectively confront some entrenched views and opposition. For example, I asked a question in the comments section on one of your recent posts. The question was completely unrelated to the post but I didn’t know where else to pose this question in order to get a relatively quick and well-reasoned response. Thus far no one has answered my question thus I’ve been hesitant to engage the opposition on this particular topic as I’m not certain that my views are correct. Any suggestions would be appreciated as I want to get the word out…I just need to be able to get questions answered by more knowledgeable MMT’ers if necessary. Thanks.
Which discussion board? I can point it to Warren and others if you need back up.
Here is a link to the discussion board. It’s not an economics blog but rather a website originally designed for discussion of fantasy literature. Over the years the discussion board has grown to the point where a vast array of things are being discussed. MMT is a hot topic right now and I have several people reading Warren’s “Innocent Frauds” book and we are breaking it down section by section.
Any enlightenment would be appreciated.
The Banker (posting as Brinn on the linked website)
He is checking it out now.
He said you guys were good – no need for back-up! 🙂
Thank you for having Warren take a look. I appreciate the words of encouragement.
I do still have two general comments that I was hoping you would consider. The first, and IMHO, the more important is to consider establishing a place on your website where questions regarding MMT could be answered by Warren or even by some of the more experienced commentators at the site. If I have a question or need clarification on a certain point or concept I currently have no place to get an educated answer. The more informed your readers are the more confident they will be in spreading the word.
My second comment is that, if the comments here are any indication, the current focus is on spreading the word via economics blogs (particularly those that are typically hostile to MMT). I appluad these efforts but I would encourage those here to engage in the MMT on any blog they may visit, be it a fantasy literature website, a political debate site, or a discussion board for the New England Patriots. Most discussion sites these days have sections where visitors can discuss anything from politics to the weather, to current events, to economic theory. I would think these non-econ sites would be more open to new ideas as they do not have a built-in bias. For example, if I’m posting on Mankiw’s website (I know he doesn’tr allow comments but let’s just assume that he does) I’m going to meet fierce ideologically based resistance. The people perusing those sites are likely looking for reinforcement of pre-existing notions and thus, even if you can beat them with logic, they are going to fall back on economic dogma. Bottom line: What incentive would Mankiw, a Harvard econ professor who’s entire existence is built around his professional credentials, have to admit that he’s been wrong all these years?
That’s a fair point. You’re going to have a tough time convincing a group of chiropractors of the benefits of back surgery.
Always easier to persuade folks who haven’t already made up their minds, and not just on websites. James Carville wrote something that’s worth thinking about:
When… members of Congress get generic letters to their offices saying, “Why are you cutting education”, it just rolls off them like water off a duck’s back… What they’re not prepared for is the specific critique in their local news. So to really put a member of Congress on the spot, send a letter to the editor on of your local paper explaining how his or her vote actually hurts your town or state. That’ll get to them faster than an oil company lobbyist.
Interesting point Beowulf. I’ll have to give that a try. Thanks for the info.
It is definitely challenging.
I’m figuring out new ways to group efforts more efficiently.
When you need back-up, leave a comment and link on this page for now. Warren or other experienced MMT people will be able to provide support.
Feel free to email me if the comment gets buried.
Anyone want to chime in with a clear and simple analysis of Stagflation (particularly during the 70’s) from an MMT perspective. I’ve searched this and many other MMT sites and I’ve been unable to locate a clear and easy to understand explanation of how MMT would have addressed it. I’m assuming the explanation will involve a differentiation between cost-push and demand-pull inflation but I’m still trying to get a clear understanding of what MMT would recommend aside from waiting for prices to reach equilibrium. Any thoughts on how to address this issue in language and concepts that would be understandable to non-economists?
Bill Mitchell recently posted MMT and Inflation – Part 1, which deals with demand, and Bill has promised Part 2, which will deal with supply. This series should summarize inflation from the MMT perspective pretty comprehensively.
See also Stephen Spadijer, Fiscal Policy and the Great Stagflation: A Reappraisal, an article that draws on Mitchell’s work.
Thanks Tom. I was actually looking over Mitchell’s blog article this morning tyrying to glean some insights but it looks like I’ll have to wait for part two. I’ll definitely check out the the article you’ve linked. Thanks for the response.
Read Spadijer’s article at lunch today and it’s too technical and dense for mass consumption. If the truths of MMT are going to reach a wider audience we’re going to need to translate the jargon of economics into simple to understand analogies and comparisons, like the “simple business card economy”. I’m either going to have to go back through Spadijer’s article and try to compress the 28 pages into a concise, easy to understand explanation of stagflation and what should be done to remedy it, or simply hope that someone else here already has a much more concise explanation that wouldn’t mind sharing.
Thanks again for pointing me in the right direction.
Banker, that is the task. It is necessary to do the homework, i.e., do professional research and write up, but the trick is getting it out there. Bill Mitchell has taken a significant slice of his time to do this on his blog. Bill’s archive is premier source.
Warren’s site, too. Warren’t 7 Deadly Innocent Frauds is another great contribution to accessibility. Warren has also been out there on the stump talking MMT to regular folks, and some of this is on video.
Randy Wray’s primer on MMT, Understanding Modern Money, is also a giant leap for accessibility. Bill and Randy are working on a textbook and that should be a step between popularization and the professional articles that take some advanced background in economics to understand.
I have been suggesting for some time that we need a dedicated site for organizing all this for accessibility and usability, as well as creating greater popular accessibility by “translating” some of the professional-speak into ordinary language, citing references. Bill has offered space on his server for it, but he doesn’t have time to set it up and maintain it. We also need better representation on Wikipedia, too, which is where a lot of people go for info.
A very bold and welcomed move, Mr. Mosler.
I suggested this a couple times over at billy blog. Glad to see you taking the lead on this.
didn’t see it but will give you full credit if it works, thanks, because I should have seen it, sorry!!!
See my comments to Econbrowser blog titled “Fighting Deflation” at http://www.econbrowser.com/archives/2010/07/fighting_deflat.html
My strike was successful and I used their own favourite weapon: the “market is right” argument. Deficit terrorists are neutralised for now at Econbrowser.
In order to earn your ♥, make sure to fill out the form in #5 under participation. Also, you must sign out properly (#4).
Also, you must sign up (#1). Need some way to keep track of all successes. 🙂
Good luck in the competition!
In my last newsletter, I had a whole section “Bond Vigilantes wrong for longer than I’ve been alive”. It reaches a decent number of people. 😉
Do I get a heart every time (like, a million so far) I’ve countered this deficit crap on Fox?
As long as you have signed up AND sign out, it counts.
Hope to see you in St. Croix one day!
Seriously, this is a very cool initiative! I wish I had thought of it!!
I have been doing what I can to counter the debt/deficit fear mongers for months, online and off. I am not interested in hearts and flowers. 🙂 However, I mainly do so at sites like Mark Thoma’s and Brad DeLong’s, that I visit, anyway. What I could use is a list of less friendly sites to visit and write to. 🙂
Min, this is what Warren should do, let us all tally a list of sites to attack with our jedi forces instead of sending us off in a million directions. Brad Delong’s website gets a nod from me, I go there often. Also I have been fighting a personal battle against mish and the gold bugs on his blog and various other sites he posts at for over a decade now. So that would be another good place to send our forces. Ok so that is 2 blogs, delongs and mish’s – let’s grow the list. Jim Puplava over at financial sense, another gold bug that we need to turn into a renaissance man and bring him forward into the future of the power of the force (MMT). What other sites are the deficit terrorists using for defense? The Financial Armageddon site perhaps?
Here is a recent post, Mish has to be one of the worst deficit terrorists out there that reaches a lot of J6P. He wants the ranks of the unemployed to swell to such levels that we will probably have another civil war in the USA from all the crime and poverty that mish’s policies would bring about. He is constantly calling for cuts, layoffs, downsizing, etc etc. We must turn him away from the darkside.
Good luck. The only way to reach Mish is through his pocket book as a trader. Maybe Warren could get to him as a successful trader and explain to Mish how he is shooting himself in the foot, but others have tried with no success. He is a dyed in the wool Libertarian politically and Austrian economically.
Tom he moves fast, already another deficit terrorism post advocating more unemployment!
I have asked Mish since 1997 over at http://www.siliconinvestor.com why lots of unemployed people running around is good for society and he never seriously addresses the issue. He brushes it off with if they want to work they will go back to school and get retrained in the private sector.
He is a dangerous individual because he is popular with a lot of J6P, I have seen him turn a fair number of J6P monetary fence sitters into goldbugs. Effectively getting them to buy his dogma and leaving little ability for MMT to enter thier heads. When Warren came on CNBC recently, Mish was one of the first on the web to criticize him if not the first.
Mish’s ideas have made it into several official congressional hearings citing his blog.
Another dangerous person for different reasons – http://siliconinvestor.advfn.com/profile.aspx?userid=7255592
Jay Chen – whose grandfather was temporary acting emporer of China (and he couldn’t even speak the language). Voted one of the 10 greatest people in chinese history and honored as such by the chinese government. He has tremendous influence with many chinese government officials and businessmen and is selling the goldbug meme to many. If you win over every person in the USA, but Jay Chen wins over 1 billion chinese and 1 billion indians, have you won the war – well we have to think globally don’t we?
Tom he moves fast, already another deficit terrorism post advocating more unemployment!
I have asked Mish since 1997 over at http://www.siliconinvestor.com why lots of unemployed people running around is good for society and he never seriously addresses the issue. He brushes it off with if they want to work they will go back to school and get retrained in the private sector.
He is a dangerous individual because he is popular with a lot of J6P, I have seen him turn a fair number of J6P monetary fence sitters into goldbugs. Effectively getting them to buy his dogma and leaving little ability for MMT to enter thier heads. When Warren came on CNBC recently, Mish was one of the first on the web to criticize him if not the first.
Mish’s ideas have made it into several official congressional hearings citing his blog.
Mish is essentially a liquidationist. He believes that creative destruction is required to fix the nanny state, destroy public employee unions, and purge the malinvestment resulting from government intervention, especially for social engineering. I doubt anything will change his mind on this. It is dyed in the wool.
Running a russian-language blog. Started this New Year and getting now 4k+ visitors a month 😉
One piece of advice: set up a google alert for words like “cut the deficit”, “MMT”, or the like.
At one blog I frequent (which mainly talks about paranormal stuff, another of my interests), the host went off about how the deficit was dooming us all, and I engaged him the comments to introduce him to the MMT view. To my surprise, he actually read some of the material and was slowly convinced. To my even greater surprise, our own Tom Hickey parachuted in to the discussion to provide backup – apparently he has an alert set up for discussions of this kind.
Another piece of advice: make use of the ideologically-neutral nature of the MMT message to tailor your appeal. One thing I have found in any discussion, whether IRL or online, is that you don’t make any headway by defining yourself upfront as an “enemy”. People generally won’t listen to any arguments from people “on the other side” – they only look for quick refutations. If you can make plain to someone that you are sympathetic to their views (limited government and “personal responsibility” on the right, social programs and wealth redistribution on the left), they will listen to what you say when you bring up MMT. It helps if you stick to the sites that are generally amenable to your own views.
Very good ideas!
At one blog I frequent (which mainly talks about paranormal stuff, another of my interests), the host went off about how the deficit was dooming us all, and I engaged him the comments to introduce him to the MMT view.
Funny you say that, two prominent conspiracy writers, Joseph P. Farrell and Jim Marrs have both published monetary reform books in the last few months, IRRC, both of them endorse Milton Friedman-style 100% reserve bank system. Farrell is a trip and seems like a nice guy but Marrs is the heavy hitter among Paranoid-Americans (well him and Jessie Ventura).
I’ve been cruising around different places for a while now, posting on MMT analysis and solutions. As far as I can determine, many sites are very Austrian, especially the financial ones, and these people are not ever coming around. It’s a waste of time trying to talk sense to them. They have made-up minds that are closed to reason and fact, even though it would help them in the market. Over at Zero Hedge many people lost their shirts looking at the monetary base expanding exponentially and betting on inflation last year. Listen? Nah.
Strangely, there is a lot of resistance on progressive blogs. Progressives seem to want to confront deficit hawks as deficit doves. They seem to regard MMT as wildly impractical — Zimbabwe, you know — or too out of paradigm to engage anyone seriously. Even some progressive that say they are open to MMT, turn out to be not so much.
Some of the pros like Scott Fulwiller, Winterspeak, and JKH have also jointly confronted different economists in comments at their blogs. They have pretty much given up on that a useless exercise. People who are deeply invested aren’t very open to anything new, especially anything that rocks their boat.
What it will take is long slow plodding and constant repetition to get the message out. So dig in, roll up your sleeves, and go to it. We are making gains slowly but surely on a broad front.
Tom Hickey: “Strangely, there is a lot of resistance on progressive blogs.”
Historically, they have been the “tax and spend” crowd. Fiscal discipline helps to justify social spending, to ward off charges of being out of control. And I think that there is a sincere belief in being responsible. Can we afford it? is a real question for them.
The bank bailouts opened the eyes of one long time liberal. He realized that, “We had the money all along.” I am afraid that most others thought, “Do we have any money left, now?”
Random question: Where has JKH been posting. I really enjoyed his posts but I haven’t seen a post from him in ages. (Actually he recently posted on one of the recent Krugman posts, but that’s all that comes to mind).
Barry Ritholtz’ Big Picture is one of the mostly widely read econ blogs there is. Currently there is Rodger Malcom Mitchell commenting using MMT, but he is a bit hostile/difficult. Everything is a ball-busting challenge type response from him. He gets no traction that I can see. I comment in MMT terms on some things but very rarely, as I don’t consider myself an expert or an economist by any stretch.
I think MMT may have begun to influence him a bit (see below). He is one of the most influential bloggers out there and gets a huge hit rate, often rated the #1 finance blog by various pollsters.
Although this debate – http://www.ritholtz.com/blog/2010/07/stimulus-battle-how-to-fix-the-economy/ – could be picked apart by MMTers, interestingly Ritholz calls for a tax holiday as a solution to current problems. So maybe someone more expert than I would like to watch and add to the comments section?
Tom Hickey, I don’t agree with you when you seem to advocate just giving up. Nothing in life is easy especially opening minds. Rome wasn’t built in a day, and education is not always a simple snap of the fingers followed by “aha!” But “aha” may come eventually. Persistence, my friend.
Bill, I am not advocating giving up, too soon at least. I am saying to pick your fights and expend your energy where it will do the most good. Arguing with ideologues is like arguing with religious fundamentalists about science. It’s basically a waste of time.
Tom, you make great points, I have discussed the goldbug meme with this zealot for over 10 years now.
Another dangerous person for different reasons – http://siliconinvestor.advfn.com/profile.aspx?userid=7255592
Jay Chen – whose grandfather was temporary acting emporer of China (and he couldn’t even speak the language). Voted one of the 10 greatest people in chinese history and honored as such by the chinese government. He has tremendous influence with many chinese government officials and businessmen and is selling the goldbug meme to many. If you win over every person in the USA, but Jay Chen wins over 1 billion chinese and 1 billion indians, have you won the war – well we have to think globally don’t we? For 10 years for every objection I can bring up on how the goldbug meme will not lead us to stargate atlantis societies, he just keeps falling back on the same old dogma – “for 5000 years gold is the only currency that has ever survived” yada yada. It is extremely frustrating because he is very educated, worldly, and very bright, except that he believes everyone running around trading shiny pieces of metal back and forth is the way to the future (sigh). A younger version of myself would not agree with you Tom, but after a decade of trying to reason with his dogma, I finally gave up. They have such emotional attachment to an idea, no amount of logic will prevail. It was with great anguish to surrender in that battle, I hate to lose good minds and souls to silly ideas that don’t help our world 🙁
Forget about trying to influence the Chinese and Indians not to buy gold. It is traditional with them. It would be like trying to persuade Americans not to eat their mom’s hot apple pie piled with ice cream.
Here’s one for everyone who’s interested. I’m tired of trying here myself, as the aversions are so sophomoric, knee-jerk, and seemingly never ending, but I’d love to see others give it a go.
Takes a big man to name call. Takes a bigger man to step up to the plate and provide sensical arguments…. Haven’t seen anything to clear yet. I’ll wait. This isn’t a game of I’m right you are wrong. Stop acting like children.
There’s 20 years of literature, or more, on MMT, in refereed journals. What have you written that’s the equivalent of “stepping up to the plate?” You call it as you see it. So do I.
Garth: “I don’t see how you or any MMT’er can espouse an ideology based on government spending, government guaranteed full employment, and control of inflation via tax policy without involving politicians. To say something contrarily is ridiculous. MMT is not a ‘monetary’ theory at all…it is a new-fiscal policy tool in disguise, and that is all. Again, I could be wrong, but I don’t see MMT as providing anything so much as a useful solution to our existing problems. Again, I say, try to convince me. If not me, you’ll never succeed.”
OK, let’s play nice. For starters, I don’t see this as an apt characterization of MMT. I would say that, following Keynes, the principal question of macroeconomics is “the problem of unemployment” in a modern society. This is a social, political, and economic question. Claiming that there is a purely economic answer is, I think, naive. Politicians are necessarily involved in “the problem of unemployment” because their jobs depend on getting it right, as the Democrats are finding out.
The proposal out there now that is driving policy is NAIRU, in which the Fed uses interest rate setting to achieve “full employment and price stability.” This is achieved by redefining unemployment to allow for a permanent stock of idle labor, reducing the bargaining power of labor and resulting in foregone opportunity owing to under-utilizaton of productive capacity. What this amounts to targeting inflation using unemployment as a tool and calling it “full employment with price stability.”
MMT proposes a different solution that it contends will produce actual full employment (that is a job for anyone who seeks work) along with price stability. If that could be achieved it seems it would be an improvement. Why is there a political problem is voter dislike both unemployment and inflation/deflation. Surely, if there were a way to secure both permanently, it would be a winner politically and politicians would be careful not to upset the balance.
You are absolutely right about economics not being divorced from society. Economics deals with the real resources relative to society (production, distribution and consumption). As such it has application to policy-making, This is obvious. MMT proponents are not writing papers and books about employment in the abstract.
A major contention of MMT is that the current economic understanding is off-base for two reasons. The first is that key theoretical assumptions are aren’t supported by data. Second, the understanding of the operation of the monetary system, including banking and finance, does not accord with operational reality. This is not theory. It is a description of how things actually work day to day at the central bank and Treasury, in the interbank market, primary dealers, commercial banks, and those demanding credit.
If you will tell us what your questions or objections are, and may be we can shed some light on these issues. But to throw out generalities is naive. Do you really think that people who have been working assiduously on this and publishing articles and books in the field have not already consider such things and provided answers?
My field is not economics but philosophy. Where I come from if someone criticizes someone else without fully checking out their position and citing in detail, it is considered extremely unprofessional and not worthy of a serious answer. You are after all listed as a faculty member.
Thank you, Tom. That was perfect.
It was my e-mail to him he was re-posting (without permission). I am sorry for any mis-representing of MMT on my part, I had no idea it would be made public.
ah, it looks like he took out my writing and just his response to it. Be careful with this guy.
JKH wades in. 🙂
Warren, with all of the enthusiasm for your new promotion, I’m a little worried that you’re going to run out of MMT hearts. Are you planning to issue MMT heart bonds to fund the awards? 😛
“Warren, with all of the enthusiasm for your new promotion, I’m a little worried that you’re going to run out of MMT hearts. Are you planning to issue MMT heart bonds to fund the awards? :P”
Give ESM the trip for that comment alone……………………… priceless!
already applied to the IMF
just checking in after a long day, had a press conference announcing the Independent party has the required signatures to be on the ballot in November.
like what’s happening here!
After Warren talked that Finance Ministry into using his business cards as the national currency, nothing surprises me anymore.
This mises.org article which was linked: here, there’s also this , worth responding to?
He is actually refuting the basic accounting idea that a financial asset must have a matching liability. He also makes the claim that a person external to the entity when placing money into the entity would some how end up under the liability section of an entity’s balance sheet. When in reality it will always go capital in the equity section.
He also brings up the argument that government deficit spending leads to a transferring of real goods and services to the government, something which I’ve seen MMT proponents readily admit.
To his credit he seems unaware of MMT in general so perhaps he couldn’t pursue the idea he was critiquing any further, but regardless he is disputing accounting logic and presupposes a number of claims which MMT rejects – government’s must borrow to spend, actually on this point he seems unaware of possible offsetting actions of the central bank.
V. interesting discussion, which I’ve been following (from England) since my engagement with Tom H and other MMTers at my blog.
I tend to agree with Tom about the need to be realistic about who’s going to buy into MMT. The more rightwing nutjobs are never going to go there, and the more cost-effective challenge is to persuade the ‘deficit doves’/liberals/socialists-like-what-I-am that, even though they might not (yet? cf Krugman/Galbraith) buy fully into MMT as an operational reality (the inflation question), their best chance of creating a viable alternative in the public mind is to start to ‘sell’ the essential fiat currency and tax-not-as-revenue-but-as-driver concepts.
Otherwise, we should argue, being a deficit dove looks, to the general public, like you’re just a rubbish deficit hawk.
The campaign is, in many ways, not about reality (and I know that’s hard for operational reality-focused MMTers); it’s about the power of discourse, the creation of ‘political frontiers’ (for the post-Marxists amnogst you) and starting through discourse to portray the ‘flat earthers’ not as innocents (sorry Warren) but as part of a conspiracy waged by the finance industry to pull the wool over the public’s eyes about what money actually is, and how the peddling of a lie about what (fiat) money is leads to unemployment and deprivation.
I think Dennis Kelleher, judging on what he’s written at my place, is good on thi
Welcome, Paul. Thanks for sharing your insights, with which I am largely in agreement as a political activist. The debate is not really about economics and finance, or policy or politics (ideology).
It is a debate about effective strategy and tactics for shifting perception, since “perception is reality.” The GOP in the US understands this very well and use it to great advantage politically. In fact, they have the Obama administration tied up. The UK is in an even worse position presently.
And I agree that this is not innocent fraud. It is being perpetrated and cleverly orchestrated. That is not to say that many people that should know better aren’t being duped and are “innocently” going along. But even that is not totally innocent. As professionals with responsibility is their business to know better. And of the reasons that they don’t know better is that it is not to their advantage. It is difficult to persuade people that something is wrong when their job depends on it.
Without an effective counter to this strategy, there will be no signifiant change forthcoming. So-called reforms will just be co-opted.
To think that this fight is going to won by solely or chiefly reason and debate of issues is myopic. Perception needs to shift and that means shifting the universe of discourse because people “see” complex matters through the lens of concepts.
Hope you’ll be able to act on my last comment to you at my blog re: getting Bill M/Warren M to email me direct re: coming over to UK if we can sort it, and I’ll take it from there.
Uggh. I’m sorry but this kind of discourse is not what we need.
Libertarians and conservatives might not like fiat currency, but for better or worse (better I think) that’s exactly what we have. MMT tells us right now that either the government is too small, or that we are overtaxed. The goal should be to get people on both sides of the spectrum to believe this. Then we can have an informed debate about whether taxes should come down or government should grow (or perhaps both). In terms of vested interests, those cut both ways politically. I think that there are just as many on the left who want to use the tax system to impose “fairness” as there are people on the right who want to restrain the growth in entitlements.
I think that conservatives and the GOP would generally be onboard with a FICA tax holiday, by the way. I would have thought that this was the best area to find common ground. It would be a tax cut to be sure, but it is a very regressive tax that would be cut.
ESM, I don’t want to get in a kerfuffle over this but I have good reasons for thinking that “innocent” is not the correct word in many cases. But in the interest of co-operation, I’m willing to drop “deliberate” from the discussion if others are willing to drop “innocent.”
ESM, yes. The issue is about educating the public and policymakers about operation realities thus arguments should be made from a politically neutral perspective. OTOH, some people are far too dogmatic to reach.
BTW, I predict Tom H. will easily win.
“I think that conservatives and the GOP would generally be onboard with a FICA tax holiday, by the way. I would have thought that this was the best area to find common ground. It would be a tax cut to be sure, but it is a very regressive tax that would be cut.”
I think you’re wrong. They wouldnt be in favor of eliminating FICA taxes unless we eliminated Social Security. We here all know that there is no reason ANY money needs to be removed from our paychecks in order for the govt to pay us something down the road.
That would not fly with most conservatives. I’d even say the overwhelming majority.
Chartalists met attention economics 🙂 Attention commodity, to be extracted by means of comment activity (work) and hypertext link-building (investment).
Participants by no means motivated by neccessity to earn income to pay “MMT tax”, but clearly motivated by future expectations – perspective to earn the same commodity – attention.
It’s a challenge. Internet activism conforms to Metcalfe’s law -the value of a network is proportional to the square of the number of connected users of the system. Create “extraction” technology (writing/linking guidelines), define taxonomy, develop economy. In the case of success you will have overattention buble very soon.
But that’s will be another problem.
Important. Thanks for providing the links.
I’ve been reading your blog for close to a year now, and as a former deficit hawk/Austrian, I have to admit that you and some of your fellow MMTers have opened my eyes to a new reality!
And I also think this contest is a great idea to help spread the word.
I’ve never commented here before, but I feel an obligation to do so now. I want to let you know that I disagree STRONGLY with the use of the term “deficit terrorist”. Not only do I think this term is sophomoric and childish, and potentially offensive, but I would argue its use is actually counter productive!
While I have no doubt there are some deficit-phobes who understand the potential negative impacts of constant surpluses, I suspect the vast majority are just like me, who are, in a word, ignorant.
I can assure you that if the term was in common use here when I first found this blog, my mind would have closed instantly to anything further you had to say. Throwing me into the same class as a suicide bomber will not help you positively influence or educate me. And I find the use of such a term politically naïve coming from someone who is actually running for the US Senate!
I even think the term “innocent fraud” is a bit negative, though it may be accurate. I think something like “innocent” or “misinformed misunderstanding” might actually open more doors, and minds. Or maybe something along the lines of “hard currency carryovers” or “gold standard beliefs” make more sense. I think that’s where many deficit phobic beliefs originated.
So while I applaud you for your intentions and your efforts here, and on your creative approach to drive participation, I think it is important to let you know that I am not willing to participate alongside a person or group using the “deficit terrorist” label.
Your experience is important to say how someone changes their mind about all this. What made you reconsider your views?
About appellations: I started to notice, early this year, strange rumblings in public discourse about future problems with the deficit. (At that time I knew nothing about MMT.) It all sounded reasonable, but was, IMO, inappropriate, given our current crisis. Later in the spring out and out absurd statements seemed to circulate without meeting much challenge, statements like, “The U. S. is in danger of going bankrupt”, “The national debt is a heavy burden,” “Social Security is broke,” etc. The media parroted these statements without question. At that point I became alarmed, and referred to the sources of these statements — who it was was not always clear –, as fear mongers. I still think that that is an accurate characterization, and I suspect that the earlier rhetoric was an initial salvo in an attack against additional stimulus spending and social programs.
When I have written about this, I hope that I have been clear that I do not regard everyone who has such fears or believes certain things as the fear mongers. At the same time, I think that they do exist, and that it is important to allude to them.
OC, you do not want to be considered a deficit terrorist, but do you think that we should say nothing about the rhetorical onslaught?
My eyes were opened when I began to do some research on the inflation versus deflation debate that’s been going on for several years now.
To me, it has always been intuitively obvious that the US, at least, could never run out of money, never go broke, so to speak. And that the only systematic risk we have from over printing money is in inflation. I mean, that’s just always seemed obvious to me.
Now I do see the potential for corrupt political manipulation of the money supply for private benefit, and I think we have witnessed some of that recently. But that’s a different issue altogether IMO. But many folks who argue for a gold or other commodity based standard point to that potential flaw of a fiat based system as an argument in favor of a gold standard.
But I have never been a fan of the gold standard, as I see it as a severe limit (or maybe a better word is “brake”) to economic growth. So that caused some friction with my Austrian friends from the get go. And it seems to me that other than some limited industrial value, gold’s worth is almost entirely psychological as well. It’s heavy and warm and shiny, and it stays shiny forever! And women like to wear it, so men like to provide it for them. But that’s it. I admit, I own some, and I love to play with it. So in that way, it’s there is nothing like it. But still, that a pretty shaky foundation upon which to build a global economy. And the potential for corruption, manipulation or markets, war, what have you, are still there even with gold. Not to mention the repeated cycles of deflation so well documented in the history books.
But yet, on some level, the notion of a balanced budget requirement always made sense to me. I’ve never been opposed to deficit spending in some situations, such as war or economic downturns. But I always felt that should be “made up for” after times returned to normal. But I have to admit, that was just a “feeling”, and when I thought it through, my experiences didn’t back up that belief.
Looking at the numbers in the US, I could see that most periods of high taxation were followed by economic contraction, and tax cuts have led to expansion. And of course, most periods of deficit spending were followed by economic growth. But until I discovered sites like Warren’s here, it never really donned on me that from a monetary system perspective, these two environments are basically two sides of the same equation. And that was when the light bulb went off in my head, and all the other ramifications of MMT immediately made sense to me.
I think Warren does a better job of explaining this stuff than anyone else I’ve found on the web. And I think a large part of that is because he is (mostly) apolitical and stays away from the scare tactic rhetoric. Well, except for the terrorist deficit thing…
And I would also point out that, to me at least, folks like Galbraith, Davison, etc resort to these very same scare tactics, and they suffer for it. And in fact, they’re doing it in the “deficit dove” letter Warren posted above. They imply that the real reason others are arguing against deficit spending is because those folks are trying to set the stage for some future imagined cuts to Medicare and Social Security.
It’s a shame that they must constantly cloud their perfectly valid technical arguments with political innuendo. And as I mentioned earlier, that kind of talk will turn off many truly opened minded individuals who would otherwise be interested in hearing the technical arguments that support MMT.
Many thanks, Jaymaster! 🙂 Interesting.
Jaymaster: “But yet, on some level, the notion of a balanced budget requirement always made sense to me. I’ve never been opposed to deficit spending in some situations, such as war or economic downturns. But I always felt that should be “made up for” after times returned to normal. But I have to admit, that was just a “feeling”, and when I thought it through, my experiences didn’t back up that belief.”
Well, that must be a common feeling in the U. S., since nearly every state has balanced budget legislation or constitutional provision. Some, I hear, have counter-cyclical balance, which has always sounded right to me. (Like the story of the 7 fat years and the 7 lean years.)
I also lean towards counter-cyclical policy for the Federal gov’t, with generally growing deficits, to keep the money supply growing. That may not be ideal, in terms of functional finance, but I think that it is a politically feasible framework. But first you have to dispel all those myths.
Jaymaster: “And I would also point out that, to me at least, folks like Galbraith, Davison, etc resort to these very same scare tactics, and they suffer for it. And in fact, they’re doing it in the “deficit dove” letter Warren posted above. They imply that the real reason others are arguing against deficit spending is because those folks are trying to set the stage for some future imagined cuts to Medicare and Social Security.”
Well, that is the stated objective of the “starve the beast” crowd. 🙁 It may be factually impossible to “starve the beast”, but, as long as a lot of Dems believe that the U. S. is running out of money, this is the opportune time for the “starve the beast” crew to strike, whatever they actually believe about deficits.
Jaymaster, I believe that the term was first used to refer to Pete Peterson and deficit hawk allies committed to spreading the idea that the US cannot meet its “unfunded obligations” and is insolvent. In my opinion this is the correct use. It is an orchestrated campaign that is not new. It has been going on for quite a while, and there is a lot of big money behind it. The GOP strategy of “strategic deficits” to drown government in red ink is link to this. Grover Norquist and his group have been at this for years.
My view is that some of these people are quite well aware that this is a self-serving fib, just like some supply-siders who preach that tax cuts pay for themselves.
However, many people have been taken in by it, and the Democratic Establishment, including the president (“The US is running out of money”). It’s working, and the middle class is getting shafted right along with the poor.
“Deficit terrorist” should be reserved for a very select group.
I do agree that there are some folks who propagate the myth for their own benefit. And they might well deserve such a label. Or at least something like “deficit hawk crooks”.
But I think the vast majority of anti-deficit folks are instead, mostly just ignorant, but well intentioned. And that includes many politicians on both sides of the aisle (and in the aisle…)
A sovereign, floating value fiat currency is a relatively rare and unique situation. And it’s not immediately obvious to many folks how such a case differs from a household or business or state or local government budget. But I think most folks with reasonable intelligence and an open mind can eventually come to understand the differences. But IMO, the political finger pointing gets in the way.
“But I think most folks with reasonable intelligence and an open mind can eventually come to understand the differences. But IMO, the political finger pointing gets in the way.”
I think that it was the president’s biggest error to make this mistake by bending over backwards being bipartisan instead of formulating a policy and pushing for it hard — as I give the GOP credit for doing when they are in power. Figure out what you really believe in and fight for it hard.
“They imply that the real reason others are arguing against deficit spending is because those folks are trying to set the stage for some future imagined cuts to Medicare and Social Security.”
I think that is naive to think that politics can be ignored when discussing policy. When asked his biggest failure in office, W answered, “Failure to privatize SS.” I don’t think that the left is jumping to conclusions or just pushing politics in this matter. This is a very high priority for the GOP, and it is a core Democratic program that they need to defend assiduously if it is to survive as at all effective instead of as a funnel to Wall Street.
I started out as a Republican in my youth, I am now a political independent. I vote for the person that I think will to the best job for the world, not just this country. I have not considered voting Republican since the Nixon travesty. The GOP never recovered. In fact many of the same old faces are around, like Dick Cheney. I have also voted third party at times in the past, either when I think that the third party candidate is clearly superior, or else when I can’t bring myself to vote for either of the major candidates.
I don’t regard myself as politically aligned. I call myself a libertarian of the left. To me the social, political and economic challenge is harmonizing liberty, equality, and solidarity, not just national but globally. No single party or ideology has the ocean in its bucket.
When the nominees were decided, I said, if McCain wins it will be a catastrophe. If Obama wins, it will just a disaster. I stand by that. If I am cheering on the Dems now, it is because I want the country to succeed. Moreover, I don’t see anyone on the GOP side that I would trust the country with at this point in time, let alone the world.
Humanity stands on the brink of unprecedented catastrophe if we don’t do better. This is deadly serious. The lives and welfare of billions hangs in the balance, and America is still the world leader. We aren’t playing games here.
Tom Hickey: “f McCain wins it will be a catastrophe. If Obama wins, it will just a disaster.”
Tom, do I detect a reference to Disraeli? “I suppose that if Mr. Gladstone fell into the Thames, that would be a disaseter, and if someone pulled him out, that would be a catastrophe.” 😉
Min, I was not aware of that quote. I obviously like it. Although I have to admit that Disraeli’s wit is a lot sharper than mine. 🙂
“I think that it was the president’s biggest error to make this mistake by bending over backwards being bipartisan …”
No offense meant Tom, but you have expressed this sentiment before, and I think it is simply ludicrous. Obama has been extremely partisan, perhaps not a surprise given his supermajorities in both houses of congress, but I think personally he has a problem with engaging in honest debate.
“If McCain wins it will be a catastrophe. If Obama wins, it will just a disaster.”
On a more humorous note, this reminds me of the “They told me if I voted for John McCain…” meme.
David Sloan Wilson is just out with his next post in the Economics and Evolution as Different Paradigms.
Behavioral Economics, or will the real Homo sapiens please stand up?
Good stuff. Check out the whole series if you haven’t followed it. It shows how economists who don’t look outside their narrow field of interest are numbskulls. You know who we’re talking about.
“Mish is essentially a liquidationist. He believes that creative destruction is required to fix the nanny state, destroy public employee unions, and purge the malinvestment resulting from government intervention, especially for social engineering. I doubt anything will change his mind on this. It is dyed in the wool.”
This is the classical communist revolutionary idea in a different bottle. Destruction precedes a new creation. Flectere si nequeo superos, acheronta movebo
“All the preceding classes that got the upper hand, sought to fortify their already acquired status by subjecting society at large to their conditions of appropriation. The proletarians cannot become masters of the productive forces of society, except by abolishing their own previous mode of appropriation, and thereby also every other previous mode of appropriation. They have nothing of their own to secure and to fortify; their mission is to destroy all previous securities for, and insurances of, individual property.”
I think that in standing Hegel on his hand, Marx and Engels got it backwards. The way to fix the problem is to transform self-interest, not treat its effects, like private property. That is wagging the dog’s tail.
This is chiefly a spiritual problem, not a material one. The independent variable here is consciousness, and the question is about transforming collective consciousness sufficiently to result in an enlightened society whose members are individuals of enlightened self-interest. (I did my master’s thesis on this back in the days of the counter-revolution.)
Saying that the material side of life is secondary is not say that the material side of life is unimportant. Spiritual and material are two sides of the same coin and work in tandem. But once humans transcended instinct as the primary driver of behavior, they acceded to a spiritual level that gave them control of the material to an unprecedented degree. That results in greater freedom (in the engineering sense) and also greater responsibility (in the moral sense). Humans are now active participants in evolution, capable of acting consciously and intentionally.
Thanks, Tom. Of course, I’m not saying Mish is a communist 🙂 It’s the rigid and potentially readily rutheless fanaticism that I had in mind.
Of course, I was just criticizing both Mish’s liberatarianism (individual liberty taken to its extreme is basically anarchism) and Marx and Engel’s socialism that in Lenin’s view meant statism. I do think that Marx was aiming at an enlightened society, but I think he got the means wrong.
In my view, we have to start with the goal of enlightened society, which is self-stabilizing, self-regulating, and continuously self-augmenting. This is an ancient concept which Abraham Maslow, for example, attempted to put in terms of modern psychology and social theory as “self-actualization.” He developed a motivational theory called Theory Z in management, where by acting in one’s self-interest one acts in the interest of the whole, and vice versa. Maslow’s ideas were further elaborated in transpersonal psychology.
This a reason that it is important to get the starting point of economics right. This is the philosophy of economics. The great contributors to economics were social and political philosophers as well as economists. Hayek and Keynes are obvious examples.
One could say that Hayek was interested primarily in a free society, and Keynes are chiefly concerned with a just society. Their approaches to determining the fundamental problem of economics reflects this difference. Hayek was chiefly concerned with liberalism, while Keynes focus was on good order in society. Hayek thought that the chief problem was how to protect the individual from the power of the state, while Keynes saw the problem as how to harness the power of the state to enhance the general welfare. Thus, Hayek emphasized free market solutions independent of government, essentially a micro approach, while Keynes emphasized the necessity for government as a social force and its unique role in regulating society by preserving balance, essentially a macro approach.
These are valid concerns and raise germane issues. The dialectic of their interaction continues to drive contemporary debate. This debate is over the proper balance of public and private in contemporary liberal democracies.
On the rare occasion I bother reading the befuddled thinking from Mish and other hopefully well-meaning folks like him, I am always reminded of the difference between libertarianism and anarchism. Under anarchism, the poor people get to shoot back.
Great writing, Tom! Thanks.
Tom I recently attended a talk by Neil Degrasse Tyson. It was at USF, where a lot of foreign muslim students attend. He said America was headed down a dangerous path, like that of the muslim world around the 12th century. He talked about how they were so far ahead in science, math, etc etc of the christian world at that time. Then a religious zealot ruler came in and decreed all kinds of new laws that sent them back into the dark ages of stupidity kinda like perhaps president bush and other western leaders were doing today (Tyson’s words). He said it was pitifully disgraceful that out of roughly one billion, there was practically no nobel prizes for the muslim world and that we should be careful not to let our society fall into decay like theirs started to do circa 12th century. The look on some of the muslims students faces who attended his talk – priceless.
oops–“rutheless” should be “ruthless.”
Yes, I agree. It is a spiritual problem. Nihilism is “diabolical.” Hence the quote from Virgil. Interestingly, Freud–a great destroyer–used it introducing his “Interpretation of Dreams.”
But there is a difference between the rough and tumble of electoral politics and the process of convincing the undecided. As I said upthread, the best way to ensure that people don’t listen to you is to define yourself as “the enemy”. The second best way is to peg yourself as a partisan to someone who doesn’t lean one way or the other. If you can get people to have an independent understanding of the monetary system, they can decide for themselves whether the democrats or the republicans are closer to the truth.
Jim, I agree with you on description. I present monetary economics operationally. It makes no different what your persuasion is. This is just how things work.
When we get to theory, however, things are different. Things get ideological fast and that means norms and values enter in importantly. One has to consider carefully and take stands in the world on the issues that are not entirely decidable on facts alone.
When I made an appearance at Miises.org in a post linked above in this thread. I made it clear that I came to set the record straight operationally, and I consistently refused to be drawn into a political discussion with Austrians, since we have irreconcilable differences about foundational matters. No sense it getting in an ideological kerfuffle with those folks on their own turf. So I just refused to go there.
This is the easiest decision the president gets to make all year. Recess appoint Elizabeth Warren… 1. Harvard gives its faculty up to two years off for government job before they lose their tenure, 2. The President can recess appoint someone for up to two years, to be precise, till the end of the next Congressional session so call it a year and a half till the end of the 2011 session.
Recess appointment means Warre can hit the ground running setting up the bureau… or is the White House working under the assumption that bank reform doesn’t have to start till 2014?
lol sorry Tom, I was pasting, I thought, something I figured would be up your alley and instead it was something I’d just typed at FDL (at least it was vaguely about economics and not say, my celebrity gossip blog I run on the side.
Anywho, here’s what I meant– an article about Truman’s CEA chairman Leon Keyserling, an economist whose mantra was “constant growth”.
To Keyserling, constant economic growth was a major necessity and goal for economic policy…. However, unlike many advocates of “counter-cyclical” economic policy, to Keyserling, growth meant constant growth. The economic policies should always be aimed at full employment–full employment demand and full employment supply.
Looks like a great find. I’ll read it in detail. Interesting that he sees inflation as primarily supply side, caused by oligopoly pricing. I have long felt that way about pricing of residential RE, automobiles and durable goods, the big ticket items that most effective demand goes to. The result of lack of real competition and more affordable prices is needlessly increasing debt, the culmination of which is a contraction exacerbated by debt deflation. If one travels the world, one sees that the lifestyle of the developed world is extravagant, and the result is not only wasted resources, but also people living beyond their means, which is financially unsustainable. This is made possible by financial institutions making credit available to amp effective demand beyond its natural boundary. This is not just banks, but also the finance arms of the large corporations that finance their stuff. It’s an insidious symbiosis that is parasitic.
Yeah and frankly Keyserling is right about the importance of growth, that should be the bipartisan goal. If the pie keeps getting bigger, there’s more to go around for everyone. And he’s right about 1951 Accord.
in 1951, the Treasury and the Federal Reserve reached an “Accord” in which the Federal Reserve would no longer be the federal bond buyer of last resort at the low, pegged interest rates… To Keyserling, this was the greatest economic mistake of the Truman era…In the long run, to Keyserling, it has led to higher interest rates, and less than full employment growth and a mismanagement of economic policy.
If you want my help i will do it, but to take anything for it would lower me to the level of the whores in DC……
and you can already visit any time you want (at your expense, of course…:)
Thats what i wanted to here! I am IN!! You will not see me anytime soon though, i am so broke i cannot pay attention LOL
Re: “Looks like a great find. I,,,It’s an insidious symbiosis that is parasitic.”
Very well put, Tom. Do you know anyone who explains the how and why of this with some detail, so I can learn? And preferably, who understands MMT, which I am also trying to learn.
Michael Hudson is probably more into explicating this phenomenon that anyone else I know of. Hudson calls this “financial capitalism leading to debt peonage.” The objective is a continuous source of rents. While Hudson is not an MMT’er per se, he is an ally.
Henry C. K. Liu, also an MMT ally, has a lot of good things to say, too, including advice to emerging China on how to avoid this trap. Liu’s Dollar Hegemony is a must-read. Dollar hegemony has placed an important role in getting America into this mess that is bad for the US and creating global imbalance, too. Liu observes that it is not only a demand problem, but also relates to the type of demand. The rich countries are over-consuming wastefully, while the rest of the world under-consumes as a result. It is a pernicious dynamic that favor a few at the expense of the many. Ironically, the wealthy would actually do better if there were balance, in that there would be a vibrant global marketplace and there would be the big trade imbalances that exist presently.
Thorstein Veblen laid the ground work in examining the culture leading to this. John Kenneth Galbraith followed up with, e.g., The Affluent Society and The New Industrial State, and his son James K. Galbraith, an MMT ally, continued this line of thinking, e.g, with The Predator State. This crisis is a syndrome of a late stage of the American malady that has been gestating for a long time and in which many factors are converging.
This involves a historical and sociological approach to the economics. While this phenomenon is peculiar to America, it is a disease that is catching. You hear this in the frequent calls for Asian savers and Germans to be like Americans and start spending more instead of following mercantilist policies. This is becoming a global problem due to trade imbalances, e.g., with the US importing “stuff” and exporting factories and jobs.
I think that Bill Mitchell’s recent post, Myths about pay and value speaks to this also. There is a broad pattern that this needs to be seen in terms of.
There is a lot contributing to this mess, and it is largely the result of perverse incentives. Some people at the top are making a lot of money from it and they have no intention of giving it up.
See, for example, William K Black, another MMT ally, Why the financial reform bill won’t prevent another crisis
Sorry. “there would be the big trade imbalances that exist presently” should read “there would NOT be the big trade imbalances that exist presently.
Thank you, Tom. I found Hudson’s site and it does indeed look interesting. As you say, though, he not an MMTer–some of what he said about China and the US deficit seemed to contradict the idea of fiat money. He also seems to think that Chinese savings accounts in the form of T-bongs is inflationary–if I understood correctly–and that can’t be right. What was interesting was the idea of debt peonage, the way neo-classical economics favors rentier income, and the way the US has hollowed out its economy, leaving nothing but consumers who need endless credit. Not a healthy situation, and I wonder how the US could get out of it without rebuilding its already ancient infrastructure.
I am particularly interested in what Hudson has to say about debt peonage.
I don’t pay too much attention to what people say about China because the numbers cannot be verified. The Chinese system is pretty opaque and all we have is what the government reports. Other estimates are all over the place. The simple truth is that no one really knows what’s happening with China, or what their plan is.
We do know the numbers of the holdings of China in US, sort of.(It’s possible that China holds more that we don’t know about.) Anyway, China clearly desires at present to accumulate savings in dollars. China will eventually want to spend those dollars. That will add to demand in whatever China wants to buy and that could drive up prices. But right now, Chinese cheap exports are holding prices down in importing countries, like the US, as well as depressing the wages.
Just read Liu’s article you recommended. Frankly, I don’t understand all this. Am I right in thinking that the bottom line is that dollar hegemony is a function of the size and aggressiveness of our military? It all comes down to energy, which means oil, which means guns, since it isn’t ours, and since everyone wants it.
Also just read Ellen Brown’s article at Counterpunch. For her, even though we have a fiat currency, we are controlled by Wall St. and private banks, to whom, apparently, we owe money, and the situation is easily remedied.
Good grief! No wonder people are hopelessly confused by economics. Is there no one coherent and embracing explanation out there that a non-economist can understand? Because obviously economists don’t agree on the things they write. Whoever said economics was a science? 🙂
Lena, I’ll make a suggestion. Dig deeper instead of digging wider. That is, take one or two economists and read through their papers or books and follow the thread of their logic. The trouble with blog posts or even newspaper articles is that the writer will have to compresss or shorthand a point that, if its new to you, will sound very confusing. So, for me at least, the longer pieces are easier to follow.
Naturally, I’d suggest you read through Warren’s work. For starters, if you haven’t downloaded his new book, 7 Innocent Deadly Frauds, you should. Its a good read (he’s got some surprising cameos in it) and its easiest way to catch the thread of Warren’s thoughts. And you can download for the special introductory price— no on, it a free download
From there…the economists over at the Levy Institute are a sharp bunch and between them, have written a LOT! :o)
Looking at that list, I’ll note that James K. Galbraith and Randy Wray, are both excellent writers and are very good at explaining economic concepts that seem counterintuitive at first.
Liu’s point is that persistent trade imbalances are bad for the domestic economy of both deficit and surplus countries. (Someone’s deficit is someone else’s surplus as an accounting identity). China export real resources, depriving the Chinese of them. The US, in turn, exports factories and jobs to China, driving down wages and putting people out of work. So will the US gets cheap goods, and China gets capital and low paying jobs relative to the US, the workers of both countries don’t get much out of it. It’s only a few at the top of the food chain that make out. THe rest get eaten. This is particularly true of the Third world, whose resources are exploited and the people see no benefit at all. Moreover, their traditional way of life is destroy and nothing viable replaces it.
Ellen Brown says some interesting things but she has a particular agenda that favors state banking. I’m not convinced that this a solution, although it would have some advantages. Moreover, I don’t think that Ellen quite gets how central banking works operationally.
People are tightly confused by economics because economists are confused. There is no normal paradigm in economics, so it is “prescientific” in Kuhn’s sense. Rather than a normal paradigm based on empirical testing in a controlled fashion, economics as it is presently practiced is based on assumptions that are not empirically demonstrated in such as way as to be universally convincing to experts. In addition, the modeling is not sophisticated enough to capture the dynamics of complex events — complex in the mathematical sense. Add to that the fact that most economists neither look outside of their discipline nor examine foundations, there are significant problems.
Does a brief, clear and precise summary of economics exist? Not that I am aware of. There are explications of the various economic ideologies, but there is no overarching explanation (paradigm) that is generally accepted as essentially “correct.” So you have to make your own way in figuring out what’s going on. The reason I like MMT is a minimum of theoretical assumption and a lot of operational description.
Beowulf and Tom: Thank you very much! Your remarks and suggestions are very helpful and greatly appreciated. Lots of summer reading too!
I just read Liu’s piece as well, and either I don’t understand it or I don’t agree with it. I think it is not “in-paradigm” as we say here sometimes. I would stick with the “required readings” you find on this blog. Randall Wray’s book, “Understanding Modern Money” is also excellent.
As Tom has pointed out, economics is not a science. I would go further and claim that it is also not mathematics, but there are some economic principles that I think can be derived from axioms, just like theorems in mathematics. The various principles of MMT that are in the “required readings” and that everybody here agrees on (from Tom to Zanon) fall into the category of theorems that can be derived logically from the axioms which are operational reality in the US.
As an example, an axiom would be that the dollar represents a credit against the US government (an IOU owed by the government to the holder), which can be used to buy goods and services from the government (such as are offered) or to extinguish tax or fee liabilities owed to the government, but it can’t be used to demand anything else from the government (like gold).
Another axiom would be that the Fed can give dollars to a member bank merely by changing the number in a cell of an Excel spreadsheet which represents the reserves of that member bank.
A general principle that can be derived from those axioms is that the government (assuming the Congress and Treasury fundamentally control the Fed — another axiom perhaps) does not need revenue in order to spend. In fact, government revenue involves destroying government IOUs and government spending involves creating government IOUs (I have sneakily used the term IOUs here instead of dollars in order to include Treasury bonds and bills), and there is no functional limit to how many government IOUs can be created, but there obviously is a limit to how many can be destroyed (i.e. the cumulative number that have been created in the past).
I would leave the trade imbalance commentary to the side for now. There is a dispute on this site about whether we should worry about trade imbalances at all (I think we shouldn’t, and I also believe that that is the “pure” MMT position), but you’ll find that neither side can derive the truth from first principles without making some further assumptions (my assumption is that the government understands MMT and takes appropriate fiscal action to maintain aggregate demand at all times, but that’s a discussion for another post).
ESM: (I have sneakily used the term IOUs here instead of dollars in order to include Treasury bonds and bills),
Hmmm. Then what does “monetization of debt” mean? If reserves and bills/bonds are both government IOU’s, then it look to me like switching one for another is just making change.
I was on your side of that debate Tom. I can see Anon’s point about cleaning up the semantics, but I think it is a hopeless endeavor.
That was not directed at you, ESM. Your pointing out that both are government IOU’s is the point I was making. I don’t that that these financial instruments are all government IOU’s is debatable. Moreover, now few people actually hold physical cash or bills/bonds. This is all done electronically, and the current buzz is going complete to electronic money.
For example, the CFO of a large corp that has a lot of funds in its deposit account at the end of the day is not going to leave it there overnight at zero interest. So the CFO directs that the funds be switched to T-bills until the funds are needed to be disbursed. All this is done electronically by calling the corp’s bank. So this is just like a household switching a demand account to an intereest-bearing time account and back as needed through online banking, in order to earn some interest on idle funds. Is that “monetizing” a savings account?
Semantics matters. A lot of confusion results from semantics, and it can be cleared up easily by introducing precision of expression. That’s what operational definition is about.
Liu seems to get MMT. See Why China must buy US Treasuries with her Trade Surplus Dollars
Dollar hegemony is a well-known concept and Liu coined the term in his initial description of it. George Bush rather famously bragged about the world financing the US trade deficit through the US capital surplus. Al an Greenspan blamed the run up in asset prices on the Asian savings glut, i.e, represented by the US capital surplus.
I think that it is something that we have to reckon with. Since the Asian currency crisis, it has been obvious that something is out of balance. The Asians reacted to the crisis be building up large fx reserves denominated in US dollars. This drove of the US capital surplus, and if Greenspan can be believed, led to an imbalance in the US.
I have outlined previously on this blog my concerns with the notion that floating rates automatically stabilize fx and trade balances over time. I don’t see that happening, and if it is happening the run is too long, given the social, political and economic repercussions globally.
It seems to me that Liu has a pretty clear overview of it. Moreover, he is on board with MMT, as the article I cited at the top shows.
I think we need to pursue MMT and the trade balance/fx issue, and I also think that Liu’s contribution is something that needs to be considered in doing so. I am not well versed in fx.trade bakabces so I would be grateful if someone who is would jump in. This is an aspect of MMT that I have questions regarding.
Let me be clearer about the issues as I understand it. The gold standard was supposed to provide an anchor for both domestic and international monetary stability. When that went, then the bond market was supposed to ride herd on the politicians domestically to prevent them from issuing too much currency relative to goods. It was also assumed that countries that were improvident would be punished in the fx market, but this would make them more competitive, and the trade deficit would be corrected as exports became cheaper and imports more expensive.
As far as I can see, the former solution (the automatic correction supposedly provided by the bond vigilantes) has not worked well, and MMT has an answer for it. As far as I can see, too, the supposed automatic correction in fx hasn’t worked well either, and the world is suffering from chronic trade imbalances that are periodically disruptive, as well as highly disadvantageous for some nations, esp the Third World. MMT solution?
Thus, according to Chartalist theory, an economy can finance with sovereign credit its domestic developmental needs, to achieve full employment and maximize balanced growth with prosperity without any need for sovereign debt or foreign loans or investment, and without the penalty of hyperinflation. But Chartalist theory is operative only in predominantly closed domestic monetary regimes. Countries participating in neo-liberal international “free trade” under the aegis of unregulated global financial and currency markets cannot operate on Chartalist principles because of the foreign-exchange dilemma. Any government printing its own currency to finance legitimate domestic needs beyond the size of its foreign-exchange reserves will soon find its convertible currency under attack in the foreign-exchange markets, regardless of whether the currency is pegged at a fixed exchanged rate to another currency, or is free-floating. Thus all non-dollar economies are forced to attract foreign capital denominated in dollars even to meet domestic needs. But non-dollar economies must accumulate dollars reserves before they can attract foreign capital. Even with capital control, foreign capital will only invest in the export sector where dollar revenue can be earned. But the dollars that exporting economies accumulate from trade surpluses can only be invested in dollar assets, depriving the non-dollar economies of needed capital in domestic sectors. The only protection from such attacks on domestic currency is to suspend full convertibility, which then will keep foreign investment away. Thus dollar hegemony, the subjugation of all other fiat currencies to the dollar as the key reserve currency, starves non-dollar economies of needed capital by depriving their governments of the power to issue sovereign credit for domestic development.
Ignore the printing press part (because currency holding is a demand-led phenomenon), Liu seems to show some good understanding.
“fx.trade bakabces” — Where did that come from? I meant “fx/trade balances.” Sorry.
This is perhaps where the MMT Job Guaranty comes in but thinking globally.
Calibration: Oil imports are 20B/mo., trade deficit with China is 23B/mo., so there is your $42B/mo. US trade deficit for May 2010. So, half the US current account deficit is petroleum so lets put that aside for a moment (that’s another issue); that leaves Chinas exports of Industrial Components and finshed goods for the rest. That 23B/mo as % US gdp is just shy of 2% US gdp (276B/14,600B). The Chinese Cos. WANT this US business (or more), this puts some US workers in their crosshairs.
If you look at the business processes here in the US with wholeslers/retailers, etc.. These wholesalers go out and buy inventory (take the inventory risk) throughout the year, trying to maintain a balance between inventory and sales with their IT inventory mgmt systems; vertical integrated retailers (walmart) function the same way. When they need inventory they will go to manufacruters who: 1. Accept US dollars in payment, 2. can deliver a product of acceptable quality to schedule. China Cos. step up and compete for this business with US and other global manufacturers, they readily accept USD in payment and as they keep people working in China, the China govt changes out the currency for them, they are working together to support a full employemnt policy for China in this regard.
So I dont know if Im buying all of this hegemony type of talk with twirling moustaches, I think people are just trying to do business globally, and the Chinese govt doesnt have a problem with that and supports their Cos. with the currency issue. I see where they (Liu/Hudson) are going with it as it sucks to be you if you work in one of the US industries that the Chinese target, and it can create bad blood, wars perhaps, tensions, etc…so Im somewhat sympathetic there.
Here, if you had a JG as envisioned by MMT, the people who got thrown out of their jobs could just report over to the JG for their means of subsistence and continue with their lives. This would eliminate/lower any tensions that would otherwise develop. If it was implemented globally, it would reciprocate.
To me it keeps coming back down to our leaders (corrupt morons) dont know how to break this down and enact counter-cyclical policies like a JG. We need to keep pushing.
I agree with this Matt. I’m not totally sold on a JG per se, but it is clear that it is the job of the government to adjust fiscal policy to maintain domestic aggregate demand in the face of leakage via global trade (i.e. net imports).
I’ll also note that when you step back and contemplate the size of the US trade deficit (2% of GDP to China, <5% of GDP to the ROW), it really doesn't seem terribly large. If anybody were intested in looking at the various trade balances between US states (nobody is for some reason), I think you'd find much larger imbalances.
Matt, I think that the global problem is pretty much the same as the domestic problem, or at least very similar. The chief social, political, and economic problem is instability. At worst, it leads to wars. At best it leads to lack of satisfaction and foregone opportunity. Humanity seems to cycle through this best-worst case scenario, never getting to a stable equilibrium that is self-sustainable.
Neoliberalism holds that the optimal strategy is the free market approach. However, for this theoretical solution to work practically all of its assumptions must be met. The inherent reason that they cannot be met is that a free market requires regulation to obviate cheating, which induces biases. Regulation, of course, renders markets imperfect (Hayek). There are a lot of other Neoliberal assumptions that are unrealistic also. Therefore, it is not surprise that this solution has not worked in practice.
The result is that the world has not free market economies but managed economies. This being the case, the principles of management come into play. The question is what principles promote maximum stability with Pareto effectiveness, granting that Pareto ineffectiveness eventually leads to instability.
The rule for balancing employment with price stability is based on NAIRU, which Bill Mitchell has criticized extensively and it great detail. MMT proposes a solution, to which the anchor price of labor provided by a job guarantee or employer of last resort is integral. This part of the solution is in response to the problem that chronic unemployment and underemployment presents. It is one of the most inefficient, costly, and damaging aspects of modern society.
This must be recognized on a global level. for example, ,like MMT Henry C. K. Liu observes that the problem is ultimately one of real resources, including human resources, which constitute the most valuable resources. Global inefficiency is huge, costly, damaging, and ultimately threatening.
Presently, there is no effective management of the global economy that sufficiently addresses this problem. The World Bank and IMF are noble efforts, but they have essentially failed because they address the wrong problem and therefore use wrong-headed solutions that often compound the problem instead of improving the situation.
Liu points out, as does MMT, that the problem is a demand problem. The world is now burdened with overcapacity and insufficient demand, largely because so many workers or potential workers are either marginalized or left out altogether.
The world is run by the elite, for the elite. This is the fundamental problem and the great challenge — how to escape from oligopoly and plutocracy. While that is a political question, if it is not addressed economically with success, then it will be addressed politically, resulting from social unrest and leading to violence.
So I really don’t see that that floating rates are going to automatically correct imbalances sufficiently. Seems to me that MMT can and must do better in proposing a managed solution. We are entering the age of globalization and this problem and need for solutions is only going to increase. If all the available workers in the world were paid a living wage, that would go a long way by increasing demand, drawing productive investment, thereby increasing incomes and effective demand, etc.
Instead, wealth extraction is resulting in imbalances that show up as lack of demand, which, in turn, acts like a throwing a spanner in the works. Even the wealthy would do better if the system were more efficient, and with everyone better off, the risk of social, political, and economic instability would decline.
I like Lui’s phrase “sovereign credit” which is his term for no-bond govt financing. He’s an interesting writer, but sometimes what he writes is clearly pandering towards a Chinese audience. The example that stands out in my memory is his piece comparing those two great leaders, Abe Lincoln and Mao Zedong.
I think a distinction should be made between “pure MMT” and “achievable MMT”. For example, govt deficits should be funded with sovereign credit and not sovereign debt, but that is such a large break from how things function now that going to “no long bond” policy of selling no T-bills longer than 3 months is much more politically acceptable. I’d say the same thing as about a Job Guarantee, I think its a sound policy, but its going to have be to backed into, say as an alternative to renewing unemployment insurance for people who’ve been collecting for an extended period of time. Once that has a track record it can be expanded.
I’ve traded posts with Ramanan about inflation and import certificate markets. I don’t think either are necessary as an economic matter, but if one is going to ask politicians to ignore deficits and spend more (and tax less) to bring the economy closer to full employment, they’re going to have questions about inflation and the trade deficit. Having a “market-based” solution for both can only help. If that’s what it takes to get to jump out of an airplane, then it won’t hurt to give them a reserve parachute. :o)
Beowulf, I believe that Liu’s target is Chinese economists and the Chinese leadership. He is trying to show them the smart way to go for China and for the world, He is saying that in order to get a leg up and to avoid the traps set by the West, especially the US, China needs to adopt something like MMT suitable for China, as well as to break dollar hegemony by only accepting yuan for purchase of Chinese exports, using the proceeds to build demand to create a vibrant Chinese consumer base.
I also would hope that just fiscal (Tax cut) could get people back to work and a jg was not needed. But I dont think it would 100%.
heres an article from my state where 90 people just lost their jobs at this coated paper mill in Luke, MD because the Chinese are dumping coated paper into the US market.
The sectoral balances enforced in brutal fashion as usual.
Going forward here, if you had visibility, you would see the $ amount of Chinese imports going up a little while tonnage increases alot as they implement their full employment policy with global austerity. They will try to dump products into the US and our govt corrupt morons will do nothing.
Even if we do a nationwide FICA tax cut, there is no guaranty that these 90 people will not suffer to some extent due to Chinese desires to acquire US$ financial assets. If we had a JG funded by fiscal, these folks who were thrown out of their jobs could report directly to the JG right there in their community. This mill is in an old coal extraction/coal transport area (Cumberland, MD) with much environmental damage, the upper Potomac watershed is a mess, there is much that could be done in a JG program up there as far as the enviromment is concerned, probably other parts of the community too.
For my part of the quest I’ve been spreading the MMT idea through SE Asia and Australia. So far I’ve done a CFA Society meeting in Singapore, and doing CFA HK early September. Two presentations to actuaries in Sydney (repeated by request), with a presentation in Melbourne in October and HK in September. My Kindergarten Guide to MMT can be found by googling that title and my name.
Thanks for the heads up about your kindergarten guide, Frank. I hadn’t known about it.
Believe it or not but I saw it yesterday on the desk of my colleague and that is in Austria 🙂
Austria / Australia, whatever. Most people don’t notice the difference!
From my site stats I’d seen someone in Austria had looked, now I know who.
Re: “This is the fundamental problem and the great challenge — how to escape from oligopoly and plutocracy. While that is a political question, if it is not addressed economically with success, then it will be addressed politically, resulting from social unrest and leading to violence.”
No doubt. And there is no solution, for the simple reason that they have the money and the guns. The rest is just fantasy, so far as I can see. Democratic institutions were hijacked long ago. Bernays showed the way. The tv screen did the heavy lifting. Bread and circuses, divide and conquer. Works every time.
The endgame is demand destruction and full spectrum dominance all in a very few hands.
“The endgame is demand destruction and full spectrum dominance all in a very few hands.”
And historically, that has always ended badly because it is inherently unstable over time.
“dumping coated paper into the US market. ”
Why is this a bad thing? I thought warren has constantly said that we americans should sit back and enjoy all this output that others work to produce, imports a benefit, exports a cost no? Tell those 90 workers to get on this blog and trade MMT ideas back and forth for free and start doing higher order stuff while on the government dole.
Tom I am deeply troubled by what you say about gold and the chinese and indians. That it is deeply ingrained in them and thier culture and something we cannot change. If we convince a lot of people in the USA about MMT, but we wish to import lots of stuff, technology, food, energy etc etc from chindia and they really only want shiny bits of golden metal in trade, we are gonna be hurting no?
Stefan Halper says china is going into all these developing regions and securing resources and supporting the local governments without trying to force moral changes like the west is trying (and failiing) to do.
“we wish to import lots of stuff, technology, food, energy etc etc from chindia and they really only want shiny bits of golden metal in trade, we are gonna be hurting no?’
It’s not a return to the gold standard. Ordinary Chinese and Indian traditionally put a good chunk of their savings into gold, which they buy on the market as a commodity. Indians especially like gold jewelry, and this counts for a significant portion of gold sales internationally. It will only increase as India becomes more affluent. It’s not only a matter or savings but a way of displaying social status. A woman’s adornment displays the social status and wealth of the family. Naturally, people achieving higher levels of wealth and status will want to manifest this in the traditional way unless the culture changes quite a bit. So, with India and Asia coming online, there will be increased demand for gold.
“A woman’s adornment displays the social status and wealth of the family.”
This is what concerns me, Halper made a strong case that we are losing the political and cultural influence war with the developing world. That they are going to adopt chinese ways and not our ways. This “Gold Meme” is not something we need to let 3 billion or more people get into thier head as chindian influence spreads – this can only hurt present and future MMT efforts no? So I am going to have to dress like Mr. T from the A-Team to be able to be considered as a mate in these cultures 🙁
Its only a bad thing if we continue to effectively tell the 90 people who just got thrown out of their jobs ‘too bad suckers!’. With a JG funded by fiscal, they could go right into doing something else within their community that is meaningful and productive, adds value to their communities.
Then we could tell the Chicomms: “thanks for the free paper in exchange for marking up some numbers on our compter system! good luck with your Job Guaranty program.” If they didnt like that smart-a__ comment, they could just stop selling us paper and then the 90 folks could leave the JG program and go back to their mill jobs making paper again.
Strawberry, you continuously over estimate the business value of what Asia sells into our markets. They only provide about 3% of our GDP and they are glad to get it. In this case paper has been around for 1000s of years, they have finally discovered it I guess. they also probably dont need it for over there, depending on what you print on it, you could end up in prison, probably they feel its not worth taking the risk to use it themselves so they send it over.
“With a JG funded by fiscal, they could go right into doing something else within their community that is meaningful and productive, adds value to their communities.”
I have had this debate with Mish for over a decade now. The retraining of detroit auto workers in their 40’s, 50’s or 60’s to do something else. Something higher order or more productive. That I don’t see it in the cities I frequent, and why I hate his “liquidationist” ideas. Mish argues to fire all these union/government workers and let them learn new skills/trades.
The reality is that many of these people are old dogs that I don’t see learning new tricks. Andy Grove of Intel talked recently about the inability of passing on skills from one generation to the next. I can see a JG working for young people or freshly out of college to keep thier “work ethic” alive until they can find useful gainful employment, but from what I have seen from detroit and other places, this policy is not going to work so well for our older displaced workers.
“90 folks could leave the JG program and go back to their mill jobs making paper again.”
I see the kindle and ipads all around me, perhaps in the future paperless society, they would be better served learning how to program android apps than holding onto “buggy whip” making skills in an automobile society eh?
“Strawberry, you continuously over estimate the business value of what Asia sells into our markets. They only provide about 3% of our GDP and they are glad to get it.”
Guilty as charged, from the clothes on my back to the parts for my truck I deliver strawberries in, all made in asia. USA the worlds largest debtor nation, China the worlds largest creditor nation, somethings gonna give.
“In this case paper has been around for 1000s of years, they have finally discovered it I guess.”
China is a good lesson in the rise and fall of empires, they have probably “re-discovered” paper what 4 or 5 times now? 🙂
I read alvin toffler’s futureshock a while back and concurred that change is going to happen so fast in the future very few will be able to keep up. A shame we have to keep re-discovering paper every few hundred to few thousand years in some places 🙁
the layoff at the coated-paper plant you mention may not be due entirely to Chinese imports, but also to the announcement yesterday that coated receipt-paper was the largest known remaining source of bpa contamination
ps: I’m also in Maryland; please contact me at rgerickson at gmail dot com
“And historically, that has always ended badly because it is inherently unstable over time.”
Historically, there has never been anything remotely like the modern world. And what does “ending badly” mean? Bad means what? And bad for whom?
The endgame means a technocratic dictatorship. This is exactly what the plutocracy has in mind. Brzezinski and others have explained it. Whether it succeeds is another issue. It has already succeeded in part. If it does fully succeed, its stability over time is another issue. At any rate, in this world, everything changes over time.
Stan, the patterns affecting civilizations and empires are similar across time. One can learn a lot from history, including economic history. Most contemporary economists are unfamiliar with economic history, and in their theorizing they just make stuff up about it.
The empires of old were the most technologically advanced in the world at the time, and they spread their technology widely. Eventually, all went into decline and were replaced by the next iteration, sometimes after a relatively extended period of civilizational collapse. Those whose institutions have more inbuilt instability unwind earlier.
While I agree that contemporary technocratic power structure is daunting, its plans made public, and its march seems inexorable, I’ve also studied the relationship of Vietnam with the West and witnessed some of it. I don’t think that General Giap ever had the slightest doubt that he would triumph over the French and then the US, even though the odds seem nigh impossible given the technological gap. There are other more powerful forces at work. BTW, did you know that the Viet Cong took over the north, Ho Chi Minh walked into the front door of the presidential palace and out the back door, and erected a traditional hut in the backyard, where he lived instead of in the palace? The US failed because they thought that the solution was technological, when it was moral.
While I am concerned over the technocratic direction things are taking in the process of globalization, I remain optimistic that an evil empire can be prevented, and if that is not possible, it will also fall eventually from its own weight. This is chiefly a move by the Western powers, and I suspect that they are not going to be able to pull it off successfully. There are already signs of opposition and alignment against it.
Another reason for hope is that now I do not think that people in power now are like powerful people in the past who were selfishly motivated solely by power and what it brings. I do think that most of these people are basically good people trying to do the best for the world, while paying themselves very well for their trouble, of course. They are more misguided than rapacious, I think, although there is also that element involved. It’s always there when power and wealth are in play, and it is a temptation that not many powerful people can completely resist.
So I don’t think that we are going to be dealing with conditions comparable with the past, where empire was driven intentionally by conquest and subjugation. The present order is going to change relatively quickly, with a possible collapse, because of shocks from environmental and ecological unsustainability, if vested interests prevent that from being addressed. You can’t continually foul the nest and expect not to get sick.
Here’s a reply by a reader to a my post on MMT–this is what you are up against in some “progressive” circles. The comment concerns Warren’s metaphor for fiat money as being akin to points on the scoreboard. You can see how far this person runs with the metaphor!
Let me try to break down what I am saying with regard to the “points in a football game” analogy. First, let me make sure we are clear about the labeling. I assume the following:
– points = dollars in fiat currency
– winning team = richer people
– losing team = poorer people
– referee = authority (government, but perhaps also banks, et al)
So, the referee can assign points virtually unconstrained by material reality. I say the referee assigns them because I think we would agree that the points no more jump onto the board spontaneously than dollars spring in and out of our wallets without some human agency. And herein lies the rub, I am saying: this human factor cannot be eliminated in material reality, so also must be considered in any descriptive model that hopes to have use-value. Also, it is ultimately this human factor which makes the use of money less than ideal at best, and likely just plain unsustainable. Let me be clear: I am *not* claiming monetary systems are unsustainable because there is some physical or mathematical limit on the amount of money that can be created in a fiat system.
So the referee is assigning points based on touchdowns, field goals, etc in the same way that merit is the supposed basis of wages and earnings. But let’s scale up that football game so that instead of a few dozen players and a handful of officials, it’s now layer upon layer of officiating bureaucracy and hundreds of millions of players on who knows how many teams. And let’s throw in a revolving door through which individuals go back and forth between the winning teams and the officiating bureaucracy. Then let’s iterate this scenario over a few hundred years. Doesn’t it only make sense that the officials are going to heavily favor the teams they know they are going to go back and play for? Even in football-as-played there are many instances when people feel an official has made a bad call or even been paid off. Now raise the stakes that much more and give the system time to normalize this behavior and what do you get? My hope is that it will be an audience who decides to leave the stadium and demand a refund 😉
26 July 2010, 6:53 am
This is about cheating. MMT’ers address this, too. See Warren’s reform proposals, for example.
More to the point, this is the system we live and work in now. The scoreboard is up and running, that’s not going to change. The only question is whether it should be operated by scorekeepers working for the bank’s interest or scorekeepers working for the public interest.
About the decline of the Muslim world in the 12th century: don’t forget the critical fact of the Mongol invasions. This was the key factor in the decline. The “fundamentalism” was a by-product.
I’ve sent letters to congressen, senators and the president. They probably know and want to keep up appearances. I harass every hypeventlator that i come across. keep on keepin’ on.