All Life Is Problem Solving

This is the second in a series of posts based on youtubes from a speech in Milford CT by Warren Mosler. Warren is running for the Senate in CT in the Independent Party primary. Unlike both the Democratic and Republican candidates Warren really understands economics and his forté is explaining it to people. Here’s a youtube on his proposals for restoring our economy to normal functioning and to full employment. Warren has a three point program: 1) A FICA Tax Holiday for both employees and employers to restore purchasing power and encourage sales; 2) A one-time Federal subsidy to the States of $500.00 per person, to use as they please, but primarily intended to stop the impending collapse of State employment and the accompanying fall in purchasing power; and 3) A permanent Federal Jobs Guarantee Program (FJG), which will guarantee a Government job at $8.00 per hour, with full fringe benefits, to anyone who wants to work. [Read more →]

Warren Mosler is running for the Senate in Connecticut in the Independent Party primary. Unlike both the Democratic and Republican candidates Warren really understands economics and he’s really brilliant at explaining it to regular folks. Here’s a youtube on why we never have to worry about having enough money to repay the Chinese, or ant other nations that are holding US Dollars. The main point is that Government “borrowing” using debt instruments issued by the Government, is not like you and me borrowing money to fund something, because it carries no solvency risk for the Government. [Read more →]

Barack Obama hasn’t reached that point yet. But it wouldn’t take very much.

All he has to do is to go along with his National Commission on Fiscal Responsibility and Reform and the Peter G. Peterson Foundation, and he’ll drive us into a full-fledged depression with an increasingly shredded social safety net and a deeper hole to dig out of because the automatic stabilizers that both cause much of the “good deficits” we are now experiencing and contribute mightily to ending recessions will have gone the way of the safety net. [Read more →]

The progressive counter-attack against the President’s emerging “austerity” political strategy and program is beginning to emerge. In the last few days, we’ve seen posts by Nancy Altman and Eric Kingson of Social Security Works, Jane Hamsher, Robert Kuttner, and Dean Baker writing against the thrust by the Administration, the National Commission on Fiscal Responsibility and Reform, the Peter G. Peterson Foundation and its network of related organizations, and the deficit hawks in the Congress, seemingly aimed at Social Security. These posts make or imply a number of points sometimes in the form of questions. They are:

— The commission is unaccountable.

— It meets in secret. [Read more →]

Nancy Altman and Eric Kingson Co-Directors of Social Security Works have written an article called “Has Obama created a Social Security ‘death panel’? In the article they raise questions about the composition, process, and intentions of the President’s National Commission on Fiscal Responsibility and Reform and say:

”We write to raise questions and encourage press inquiry now, before the commission reports, at which point its recommendations could be on track and moving fast.”

And the questions they raise include:

”Q. Have the members of the Commission made up their minds, at least with respect to the broad outlines, making the whole exercise simply an effort by elected officials to escape political accountability?
Q. Why is the Commission apparently working so closely with billionaire Peter G. Peterson, who served in the Nixon administration and who has a clear ideological agenda?” [Read more →]

By

Warren Mosler and Joseph M. Firestone

Paul Krugman agrees that “We’re Not Greece.” But he only appears to have a glimmer of an understanding of the most important reason why this is so. We hope this commentary on his op-ed piece improves his understanding, and that of other deficit doves who appear to disagree with the deficit terrorists, but who in the end share their false basic assumptions about deficits, national debts, fiscal responsibility, and fiscal sustainability.

It’s an ill wind that blows nobody good, and the crisis in Greece is making some people — people who opposed health care reform and are itching for an excuse to dismantle Social Security — very, very happy. Everywhere you look there are editorials and commentaries, some posing as objective reporting, asserting that Greece today will be America tomorrow unless we abandon all that nonsense about taking care of those in need. [Read more →]

Progressives want a lot done. Some things, like accountability for torture and violations of constitutional rights, and for criminal activity undermining the financial system, won’t cost much to accomplish. But other things, like full employment job programs, Medicare for All, reconstruction of the educational system, modernization of infrastructure, transformation of the energy foundations of the economy, environmental sustainability, halting climate change, the creation of new industries, will all require Government spending. And in each area, deficit terrorists and many well-meaning people who believe in prudence and not living beyond one’s means will meet progressive legislative proposals with the statement, “that’s all very well but . . . , followed by the question “How Are We Going To Pay For It?”

If progressives expect to get done the things that they need to get done for America’s future they need to be able to answer this question. Currently the conventional answer to it has been either to tax or to borrow to “fund” or “finance” Government spending. But this doesn’t work very well because the taxing answer is now met with claims that taxes, even those on the very wealthy, should not be raised during a recession because of their deflationary impact. And borrowing is met with the claims of the deficit terrorists that progressive proposals are fiscally irresponsible and would place the nation on an unsustainable fiscal course and that interest payments would claim an increasingly and unsustainably high proportion of GDP. [Read more →]

James K. Galbraith’s short piece in The Washington Post Outlook section proposed that we ought to toss the Congressional Budget Office (CBO). I couldn’t agree more. This post is a commentary intended to amplify the argument.

Jamie begins with:

”The forecasts of the Congressional Budget Office are holy writ in Washington, and they fuel scary headlines about an impending federal debt disaster. This is a shame, because the CBO’s projections are indefensible, internally inconsistent and economically impossible.” [Read more →]

In the above video, Nick, otherwise known as The Modern Mystic, has raised an important question about applying Modern Money Theory (MMT) -based economics. He asks whether if all nations used MMT-based economics to achieve full employment, truly universal health care, and free public education for everyone, whether the world wouldn’t run up against resource limits, and whether these limits along with competition for resources from everyone wouldn’t cause resource price inflation?

Put another way, he is asking whether even if MMT-based, or as he calls it, “chartalist” economics, is rational at the “micro” level of the nation, it is also rational at the “sub-macro” level of a world system made up of interacting economies, national governments and interacting sovereign currencies, but no world fiscal authority? Or put still another way, is MMT-based economics, which may be fiscally sustainable in the short run in a single nation, both fiscally sustainable and socially sustainable in the longer-run in an international system of interacting, nations, currencies, and economies? [Read more →]

Professor Pavlina Tcherneva, one of the speakers at the recent Fiscal Sustainability Teach-In Counter-Conference, in a striking post entitled “Do Not Confuse Solvency with Sustainability,” says this about solvency and sustainability:

”Mad obsession with debt- and deficit-to-GDP ratios, divorced from any consideration to what is happening to the real economy, boggles the mind. Remember government deficits always create non-government surpluses–to the penny. When the government spends more than it collects, the private sector earns more than it pays in taxes to the government. That is, the private sector accumulates these government liabilities, again, in the form of electronic dollar reserves. The government does not run out of ‘electronic reserves’.These deficits go somewhere! They create income and profits for someone. The real question is “for whom?” and did those earners produce anything of value to society in exchange for getting this money? This is not a matter of financially bankrupting the nation. It’s a matter of bankrupting the economy in real terms. It’s about filling the coffers of a financial sector which has hired 7% of total U.S. employees in increasingly dubious services and who take almost 40% of total corporate profits (half of which are rents and serve no economic purpose). It’s about starving grandma, leaving our kids without world- class education, allowing the sick to get sicker, and the unemployed to become unemployable. And all because we refuse to build the real resources which we all need in order to maintain a decent standard of living. Now I would prefer not just a decent standard of living, but an excellent one—one to boast about, one that the richest country in the world can offer its citizens. Stop confusing solvency with sustainability. Start measuring sustainability in terms of the real goods, services, and jobs government spending creates for the public purpose.” [Read more →]