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Wednesday, June 29, 2011

Modern Monetary Theory (MMT) in a Nutshell

A rampaging mutant macroeconomic theory called Modern Monetary Theory, or MMT for short, is kicking keisters and smacking down conventional wisdom in economic circles these days. This is because an energized group of MMT economists, bloggers, and their loyal foot soldiers, lead by economists Warren Mosler, Bill Michell, and L. Randall Wray are swarming on the internet. New MMT disciples are hatching out everywhere. They are like a school of fresh-faced paramedics surrounding a gasping heart attack victim. They seek to present their economic worldview as the definitive first aid for understanding and dealing with the critical issues of growth, unemployment, inflation, budget deficits, and national debt.

MMT is a reformulated blend of some older macroeconomic theories called Chartalism and Functional finance. But, it also adds a fresh dose of monetary accounting for intellectual muscle mass. Chartalism is a school of economic thought that was developed between 1901 and 1905 by German economist Georg F. Knapp with important contributions (1913-1914) from Alfred Mitchell-Innes. Functional finance is an extension of Chartalism, which was developed by economist Abba Lerner in the 1940's.

Warren Mosler biography
However, Chartalism and Functional finance did not directly spawn this new mutant monetary theory. Rather, Modern Monetary Theory had a hot, steamy, Rummy induced, immaculate conception as its creator, Warren Mosler, has stated:
The origin of MMT is 'Soft Currency Economics' [1993] at www.moslereconomics.com which I wrote after spending an hour in the steam room with Don Rumsfeld at the Racquet Club in Chicago, who sent me to Art Laffer, who assigned Mark McNary to work with me to write it. The story is in 'The 7 Deadly Innocent Frauds of Economic Policy' [pg 98].

I had never read or even heard of Lerner, Knapp, Inness, Chartalism, and only knew Keynes by reading his quotes published by others. I 'created' what became know as 'MMT' entirely independently of prior economic thought. It came from my direct experience in actual monetary operations, much of which is also described in the book.

The main takeaways are simply that with the $US and our current monetary arrangements, federal taxes function to regulate demand, and federal borrowing functions to support interest rates, with neither functioning to raise revenue per se. In other words, operationally, federal spending is not revenue constrained. All constraints are necessarily self imposed and political. And everyone in Fed operations knows it.
The name Modern Monetary Theory was reportedly coined (pun unintended) by Australian economist Bill Mitchell. Mitchell has an MMT blog that gives tough weekly tests in order to make sure that the faithful are paying attention and learning their MMT ABC's. MMT is not easy to fully comprehend unless you spend some time studying it.

MMT is a broad combination of fiscal, monetary and accounting principles that describe an economy with a floating rate fiat currency administered by a sovereign government. The foundation of MMT is its recognition of the importance of the government's power to tax, thereby creating a demand for its money, and its monopoly power to print money. MMT's full potential and its massive monetary fire power were not locked and loaded until President Nixon took the U.S. off the gold standard on August 15, 1971.

There is really not that much "theory" in Modern Monetary Theory. MMT is more concerned with explaining the operational realities of modern fiat money. It is the financial X's and O's, the ledger or playbook, of how a sovereign government's fiscal policies and financial relationships drive an economy. It clarifies the options and outcomes that policy makers face when they are running a tax-driven money monopoly. Proponents of MMT say that its greatest strength is that it is apolitical.

The lifeblood of MMT doctrine is a government's fiscal policy (taxing and spending). Taxes are only needed to regulate consumer demand and control inflation, not for revenue. A sovereign government that issues its own floating rate fiat currency is not revenue constrained. In other words, taxes are not needed to fund the government. This point is graphically described by Warren Mosler as follows:
what happens if you were to go to your local IRS office to pay [your taxes] with actual cash? First, you would hand over your pile of currency to the person on duty as payment. Next, he'd count it, give you a receipt and, hopefully, a thank you for helping to pay for social security, interest on the national debt, and the Iraq war. Then, after you, the tax payer, left the room he'd take that hard-earned cash you just forked over and throw it in a shredder.

Yes, it gets thrown it away [sic]. Destroyed!
The 7 Deadly Frauds of Economic Policy, page 14, Warren Mosler
 Gadzooks!

The delinking of tax revenue from the budget is a critical element that allows MMT to go off the "balanced budget" reservation. In a fiat money world, a sovereign government's budget should never be confused with a household budget, or a state budget. Households and U.S. states must live within their means and their budgets must ultimately be balanced. A sovereign government with its own fiat money can never go broke. There is no solvency risk and the United States, for example, will never run out of money. The monopoly power to print money makes all the difference, as long as it is used wisely.

MMT also asserts that the federal government should net spend, again usually in deficit, to the point where it meets the aggregate savings desire of its population. This is because government budget deficits add to savings. This is a straightforward accounting identity in MMT, not a theory. Warren Mosler put it this way:
So here's how it really works, and it could not be simpler: Any $U.S. government deficit exactly EQUALS the total net increase in the holdings ($U.S. financial assets) of the rest of us - businesses and households, residents and non-residents - what is called the "non-government" sector. In other words, government deficits equal increased "monetary savings" for the rest of us, to the penny. Simply put, government deficits ADD to our savings (to the penny).
The 7 Deadly Frauds of Economic Policy, page 42, Warren Mosler
Therefore, Treasury bonds, bills and notes are not needed to support fiscal policy (pay for government). The U.S. government bond market is just a relic of the pre-1971 gold standard days. Treasury securities are primarily used by the Fed to regulate interest rates. Mosler simply calls U.S. Treasury securities a "savings account" at the Federal Reserve.

In the U.S., MMTers see the contentious issue of a mounting national debt and continuing budget deficits as a pseudo-problem, or an "accounting mirage." The quaint notion of the need for a balanced budget is another ancient relic from the old gold standard days, when the supply of money was actually limited. In fact, under MMT, running a federal budget surplus is usually a bad thing and will often lead to a recession.

Under MMT the real problems for a government to address are ensuring growth, reducing unemployment, and controlling inflation. Bill Mitchell noted that, "Full employment and price stability is at the heart of MMT." A Job Guarantee (JG) model, which is central to MMT, is a key policy tool to help control both inflation and unemployment. Therefore, given the right level of government spending and taxes, combined with a Job Guarantee program; MMTers state emphatically that a nation can achieve full employment along with price stability.
 
As some background to understand Modern Monetary Theory it is helpful to know a little about its predecessors: Chartalism and Functional Finance.

Georg F. Knapp founded Chartalism the basis of Modern Monetary Theory
German economist and statistician Georg Friedrich Knapp published The State Theory of Money in 1905. It was translated into English in 1924. He proposed that we think of money as tokens of the state, and wrote:
Money is a creature of law. A theory of money must therefore deal with legal history... Perhaps the Latin word "Charta" can bear the sense of ticket or token, and we can form a new but intelligible adjective — "Chartal." Our means of payment have this token, or Chartal form. Among civilized peoples in our day, payments can only be made with pay-tickets or Chartal pieces.
Alfred Mitchell-Innes only published two articles in the The Banking Law Journal. However, MMT economist L. Randall Wray called them the "best pair of articles on the nature of money written in the twentieth century". The first, What is Money?, was published in May 1913, and the follow-up, Credit Theory of Money, in December 1914.  Mitchell-Innes was published eight years after Knapp's book, but there is no indication that he was familiar with the German's work. In the 1913 article Mitchell-Innes wrote:
One of the popular fallacies in connection with commerce is that in modern days a money-saving device has been introduced called credit and that, before this device was known, all, purchases were paid for in cash, in other words in coins. A careful investigation shows that the precise reverse is true...

Credit is the purchasing power so often mentioned in economic works as being one of the principal attributes of money, and, as I shall try to show, credit and credit alone is money. Credit and not gold or silver is the one property which all men seek, the acquisition of which is the aim and object of all commerce...

There is no question but that credit is far older than cash.
L. Randall Wray, in his 1998 book, Understanding Modern Money,was the first to link the state money approach of Knapp with the credit money approach of Mitchell-Innes. Modern money is a state token that represents a debt or IOU. The book is an introduction to MMT.

L. Randal Wray is a Professor of Economics at the University of Missouri-Kansas City, Research Director with the Center for Full Employment and Price Stability and Senior Research Scholar at The Levy Economics Institute. These institutions are hotbeds of MMT research. Wray also writes for the MMT website, New Economic Perspectives.

Finally, to finish the historical tour, here is how Abba Lerner's Functional finance is described by Professor Wray:
Functional Finance rejects completely the traditional doctrines of ‘sound finance’ and the principle of trying to balance the budget over a solar year or any other arbitrary period. In their place it prescribes: first, the adjustment of total spending (by everybody in the economy, including the government) in order to eliminate both unemployment and inflation, using government spending when total spending is too low and taxation when total spending is too high.
Given its mixed history it is not surprising that MMT has been given different labels. Some economists refer to MMT as a "post-Keynesian" economic theory. L. Randall Wray has used the term "neo-Chartalist". Warren Mosler stated, "MMT might be more accurately called pre Keynesian." Given that Georg Knapp's work was cited by John Maynard Keynes, the use of "pre-Keynesian" does seem more appropriate than "post-Keynesian".

But under any category, MMT has been considered fringe or heterodox economics by most mainstream economists. It therefore has been relegated to the equivalent of the economic minor leagues, somewhere below triple-A level. However, that perception is changing.

MMT is slowly seeping into the public policy debate. These days Warren Mosler and others with an MMT viewpoint are frequently being interviewed on business news channels.  MMT articles are being published. Recently, Steve Liesman, CNBC's senior economics reporter, used a Warren Mosler quote to make a point. Liesman said: "As Warren Mosler has said: ‘Because we think we may be the next Greece, we are turning ourselves into the next Japan’."

MMT is not easy to for many people, including trained economists, to understand. This is probably because of its heavy reliance on accounting principles (debts and credits). Some critics consider MMT nothing more than a twisted Ponzi scheme that is simply "printing prosperity." Calling MMT a "printing prosperity" scheme, by the way, is the quickest way to send MMTers into spasms of outrage. MMT does not "print prosperty" according to its proponents. The MMT counter argument is:
it [is] a perverse injustice that, in online discussions, MMT sympathizers are frequently reproached for imagining that “we can print prosperity” when in fact it is us who constantly stress as a fundamental point that the only true constraints are resource based, not financial or monetary in nature. We are the ones insisting that if we have the resources, we can put them to use. It is the neoclassical orthodoxy and others who try to make out that we can’t use resources, even if they are available, because of some magical, mysterious monetary or financial constraint. Just who is it that believes in magic here?
Emotions run hot in the current economic environment, especially on the internet. In some cases the energetic online promoting of MMT has turned into passive aggressive hectoring, hazing, name calling, badgering, and belittling. So be warned, if you write some economic analysis online that disagrees with MMT doctrine you might find yourself attacked and stung by a swarm of MMTers. If you are an economic "expert" and you do not understand monetary basics you may also get mounted on an MMT wall of shame.

A heavyweight Keynesian economist, like Nobel Prize winner Paul Krugman, has felt the sting of MMT. But the quantity and quality of his criticism of MMT, so far, has been featherweight. He could not land a solid glove on the contender, Kid MMT. Krugman only proved that he does not understand MMT, so his criticism was weak (see MMT comments) and his follow-up even weaker. MMT economist James Galbraith did a succinct breakdown of Krugman's major errors.

Another school of economics feeling the heat from MMT are the Austrians. Austrian economist Robert Murphy recently wrote an article critical of MMT, calling it an "Upside-Down World". MMTers lined up to disassemble and refute Murphy's essay. Cullen Roach at the Pragmatic Capitalist blog shot back this broadside::
we now live in a purely fiat world and not the gold standard model in which Mises and many of the great Austrian economists generated their finest work. Therein lies the weakness of the Austrian model. It is based on a monetary system that is no longer applicable to modern fiat monetary systems such as the one that the USA exists in.
Does MMT really offer a path to prosperty? Or did the ancient Roman, Marcus Cicero (106 BC - 43 BC), have it right when he said: "Endless money forms the sinews of war."? The debate will only intensify. If you value those green, money-thing, government IOU tokens in your wallet then it pays to learn what all the commotion is about.

*********
Because of MMT's growing popularity it might be helpful to present a quick start guide so beginners can get up to speed and understand some of its fundamental elements. As a starting point here are some basics of Modern Monetary Theory (MMT) compared to some other principles of money and economics that might be considered conventional wisdom or old school wisdom.

1. What is money?

Modern Monetary Theory: Money is a debt or IOU of the state
[The] history of money makes several important points. First, the monetary system did not start with some commodities used as media of exchange, evolving progressively toward precious metals, coins, paper money, and finally credits on books and computers. Credit came first and coins, late comers in the list of monetary instruments, are never pure assets but are always debt instruments — IOUs that happen to be stamped on metal...

Monetary instruments are never commodities, rather they are always debts, IOUs, denominated in the socially recognized unit of account. Some of these monetary instruments circulate as "money things" among third parties, but even "money things" are always debts — whether they happen to take a physical form such as a gold coin or green paper note.
Money: An Alternate Story by Eric Tymoigne and L. Randall Wray

"money is a creature of law", and, because the state is "guardian of the law", money is a creature of the state. As Keynes stated:
"the Age of Chartalist or State Money was reached when the State claimed the right to declare what thing should answer as money to the current money-of-account... (Keynes 1930)...
Chartalism, Stage of Banking, and Liquidity Preference by Eric Tymoigne
John Maynard Keynes in his 1930, Treatise on Money, also stated: "Today all civilized money is, beyond the possibility of dispute, chartalist."
------
Old School Wisdom:
Money is essentially a device for carrying on business transactions, a mere satellite of commodities, a servant of the processes in the world of goods.
— Joseph Schumpeter, Schumpeter on money, banking and finance... by A. Festre and E. Nasica
Conventional Wisdom:
Money is any object or record, that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context.
Wikipedia
********* 
2. Why is money needed?

MMT: Money is needed in order to pay taxes
Money is created by government spending (or by bank loans, which create deposits) Taxes serve to make us want that money - we need it in order to pay taxes.
The 7 Deadly Frauds of Economic Policy, Warren Mosler
The inordinate focus of [other] economists on coins (and especially on government-issued coins), market exchange and precious metals, then appears to be misplaced. The key is debt, and specifically, the ability of the state to impose a tax debt on its subjects; once it has done this, it can choose the form in which subjects can 'pay' the tax. While governments could in theory require payment in the form of all the goods and services it requires, this would be quite cumbersome. Thus it becomes instead a debtor to obtain what it requires, and issues a token (hazelwood tally or coin) to indicated the amount of its indebtedness; it then accepts its own token in payment to retire tax liabilities. Certainly its tokens can also be used as a medium of exchange (and means of debt settlement among private individuals), but this derives from its ability to impose taxes and its willingness to accept its tokens, and indeed is necessitated by imposition of the tax (if on has a tax liability but is not a creditor of the Crown, one must offer things for sale to obtain the Crown's tokens).
Money: An Alternate Story by Eric Tymoigne and L. Randall Wray
Money, in [the Chartalist] view, derives from obligations (fines, fees, tribute, taxes) imposed by authority; this authority then "spends" by issuing physical representations of its own debts (tallies, notes) demanded by those who are obligated to pay "taxes" to the authority. Once one is indebted to the crown, one must obtain the means of payment accepted by the crown. One can go directly to the crown, offering goods or services to obtain the crown's tallies—or one can turn to others who have obtained the crown's tallies, by engaging in "market activity" or by becoming indebted to them. Indeed, "market activity" follows (and follows from) imposition of obligations to pay fees, fines, and taxes in money form.
A Chartalist Critique of John Locke's Theory of Property, Accumulation and Money... by Bell, Henry, and Wray
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Conventional Wisdom:
Money is needed as a medium of exchange, a unit of account, and a store of value.
Old School Wisdom:
Money is needed because it could "excite the industry of mankind."
— Thomas Hume, Hume, Money and Civilization... by C. George Caffettzis
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Old School Tony Montoya, aka Scarface, Wisdom: money is needed for doing business, settling debts, and emergency situations...
Hector the Toad: So, you got the money?
Tony Montana: Yep. You got the stuff?
Hector the Toad: Sure I have the stuff. I don't have it with me here right now. I have it close by.
Tony Montana: Oh... well I don't have the money either. I have it close by too.
Hector the Toad: Where? Down in your car?
Tony Montana: [lying] Uh... no. Not in the car.
Hector the Toad: No?
Tony Montana: What about you? Where do you keep your stuff?
Hector the Toad: Not far.
Tony Montana: I ain't getting the money unless I see the stuff first.
Hector the Toad: No, no. First the money, then the stuff.
Tony Montana: [after a long tense pause] Okay. You want me to come in, and we start over again?
Hector the Toad: [changing the subject] Where are you from, Tony?
Tony Montana: [getting angry and supicious] What the f**k difference does that make on where I'm from?
Hector the Toad: Cona, Tony. I'm just asking just so I know who I'm doing business with.
Tony Montana: Well, you can know about me when you stop f**king around and start doing business with me, Hector!

[...]

Hector the Toad: You want to give me the cash, or do I kill your brother first, before I kill you?
Tony Montana: Why don't you try sticking your head up your ass? See if it fits.

[...]

Frank Lopez: [pleading] Please Tony, don't kill me. Please, give me one more chance. I give you $10 million. $10 million! All of it, you can have the whole $10 million. I give you $10 million. I give you all $10 million just to let me go. Come on, Tony, $10 million. It's in a vault in Spain, we get on a plane and it's all yours. That's $10 million just to spare me.
— dialog from Scarface, the movie
Note: The comment about the $10 million stashed in a Spanish vault highlights a small chink in MMT's armor. If the taxing power of the sovereign state is sabotaged, or there is widespread tax evasion, then MMT falls apart.

*********
3. Where does money come from?

MMT: The government just credits accounts
Modern money comes from "nowhere."
Bill Mitchell
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Conventional Wisdom: Money comes from the government printing currency and making it legal tender.

 *********
4. Government Spending: any limits?

MMT:  government spending is not constrained.
a sovereign government can always spend what it wants. The Japanese government, with the highest debt ratio by far (190 per cent or so) has exactly the same capacity to spend as the Australian government which has a public debt ratio around 18 per cent (last time I looked). Both have an unlimited financial capacity to spend.

That is not the same thing as saying they should spend in an unlimited fashion. Clearly they should run deficits sufficient to close the non-government spending gap. That should be the only fiscal rule they obey.
Bill Mitchell
------
Conventional Wisdom: government spending should be constrained
One option to ensure that we begin to get our fiscal house in order is a balanced budget amendment to the Constitution. I have no doubt that my Republican colleagues will overwhelmingly support this common sense measure and I urge Democrats to as well in order to get our fiscal house in order.
— House Majority Leader Eric Cantor (R-VA), June 23th, 2010
*********
5. What is Quantitative Easing?

MMT: It is an asset swap. It is not "printing money" and it is not a very good anti-recession strategy.
Quantitative easing merely involves the central bank buying bonds (or other bank assets) in exchange for deposits made by the central bank in the commercial banking system – that is, crediting their reserve accounts... So quantitative easing is really just an accounting adjustment in the various accounts to reflect the asset exchange. The commercial banks get a new deposit (central bank funds) and they reduce their holdings of the asset they sell...

Invoking the “evil-sounding” printing money terminology to describe this practice is thus very misleading – and probably deliberately so. All transactions between the Government sector (Treasury and Central Bank) and the non-government sector involve the creation and destruction of net financial assets denominated in the currency of issue. Typically, when the Government buys something from the Non-government sector they just credit a bank account somewhere – that is, numbers denoting the size of the transaction appear electronically in the banking system.

It is inappropriate to call this process – “printing money”. Commentators who use this nomenclature do so because they know it sounds bad! The orthodox (neo-liberal) economics approach uses the “printing money” term as equivalent to “inflationary expansion”. If they understood how the modern monetary system actually worked they would never be so crass...

So I don’t think quantitative easing is a sensible anti-recession strategy. The fact that governments are using it now just reflects the neo-liberal bias towards monetary policy over fiscal policy...
Bill Mitchell
------
Conventional Wisdom:  Quantitative Easing is "money printing"
James Grant, editor of Grant’s Interest Rate Observer, says Quantitative Easing Is Just Money Printing
*********
6. What is the view on personal debt?

MMT: personal debt is not dangerous
Americans today have too much personal debt. False. Private debt adds money to our economy. Though bankruptcies have increased lately, that is due more to the liberalization of bankruptcy laws, rather than to economics. Despite rising debt and bankruptcies, our economy has continued to grow. The evidence is that high private debt has had no negative effect on our economy as a whole, though it can be a problem for any individual.
Free Money: Plan for Prosperity ©2005 (pg 154), by Rodger Malcolm Mitchell
Note: Rodger Mitchell is an MMT extremist. He calls his brand of MMT, "Monetary Sovereignty". Not all of his views may be in sync with mainstream MMT doctrine.
------
Conventional Wisdom: too much debt is dangerous
The core of our economic problem is, instead, the debt — mainly mortgage debt — that households ran up during the bubble years of the last decade. Now that the bubble has burst, that debt is acting as a persistent drag on the economy, preventing any real recovery in employment.
Paul Krugman, NY Times
Old School Wisdom: debt is always dangerous
"Neither a borrower, nor a lender be"
— Polonius speaking in Hamlet, by William Shakespeare
*********
7. What is the view on foreign trade?

MMT: Exporters please just take some more fiat money and everyone will be fat and happy!
Think of all those cars Japan sold to us for under $2,000 years ago. They’ve been holding those dollars in their savings accounts at the Fed (they own U.S. Treasury securities), and if they now would want to spend those dollars, they would probably have to pay in excess of $20,000 per car to buy cars from us. What can they do about the higher prices? Call the manager and complain? They’ve traded millions of perfectly good cars to us in exchange for credit balances on the Fed’s books that can buy only what we allow them to buy...
We are not dependent on China to buy our securities or in any way fund our spending. Here’s what’s really going on: Domestic credit creation is funding foreign savings...

Assume you live in the U.S. and decide to buy a car made in China. You go to a U.S. bank, get accepted for a loan and spend the funds on the car. You exchanged the borrowed funds for the car, the Chinese car company has a deposit in the bank and the bank has a loan to you and a deposit belonging to the Chinese car company on their books. First, all parties are “happy.” You would rather have the car than the funds, or you would not have bought it, so you are happy. The Chinese car company would rather have the funds than the car, or they would not have sold it, so they are happy. The bank wants loans and deposits, or it wouldn’t have made the loan, so it’s happy.

There is no “imbalance.” Everyone is sitting fat and happy...
Warren Mosler, The 7 Deadly Frauds of Economic Policy
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Old School Wisdom: Trade arrangements will break down if a currency is debased
"Sorry paleface, Chief say your wampum is no good. We want steel knives and fire-water for our beaver pelts." — American Indian reaction after Dutch colonists debase wampum in the 1600's
*********
For a further comparison of MMT and Keynesian doctrine checkout:

Daily Kos:
Keynesian Deficit Doves vs. MMT Deficit Owls
*********
MMT References:

Warren Mosler blog: The Center of the Universe
Bill Mitchell: billy blog
L. Randall Wray et al.: New Economic Perspectives
MMT Wiki
Modern Money Mechanics

update:
More discussion of MMT and this post at Warren Mosler's blog:
MMT history and overview

Friday, June 24, 2011

Injustice in America or Clever Hoax?

This story about the homeless man who was sent to prison for 15 years after stealing $100 has been passed around thousands of times on the internet. Roy Brown, the homeless man, even has his own Facebook page. However, there is one little problem. If you try to find out the name of the sick judge, who sentenced Mr. Brown to 15 years for stealing the $100, or other details about the case you come up empty. So is the story true or is it a clever hoax?

Moral: Never forget, you can't believe everything you read on the internet!


Sample of blogs passing along the "injustice" against Roy Brown story:
we saw that... blog:
shreveport man gets 15 years for stealing $100.00 --
apparently, still smarting from that whole "cut 'em loose carmouche" nonsense that was used against him in his recent unsuccessful bid for the fourth congressional district seat, caddo parish, la. district attorney, paul carmouche asked for and received an astounding fifteen year prison sentence for roy brown...
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Please note that DA Paul Carmouche's Wikipedia page does not mention this case. So was this story originally fabricated to discredit Mr. Carmouche? Additionally, none of the online stories seems able to report the year and month the sentence was given to Mr. Brown. So there is no judge, no date, no relatives of Roy Brown speaking out about the injustice, no real "free Roy Brown" movement. Believe it or not, and apparently many people have believed this story without question.
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Update: more discussion
 
Theology Forum:
"Justice" in America -- [discussion of the Roy Brown story]

Slowtwitch Forums
can you guess which one could afford a lawyer? -- [discussion of the Roy Brown story]
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2d Update: This story seems to have had a couple of surges of interest. One in 2009 and one recently in June 2011. Exactly the same verbatim write-up caused both surges. It's amazing that people will continue to discuss the issue of  injustice regarding the case when it's pointed out to them that the case is probably bogus. Killing an internet myth is not easy.

If this story was 100% accurate don't you think 60 Minutes, or Dateline, or some other news show would have shown an interest in reporting on it? If you were a producer for one of these shows wouldn't you want to get Roy Brown on camera ASAP to tell his story to America. How do you spell Emmy?

Better yet, why hasn't Jesse Jackson or Al Sharpton taken up the Roy Brown cause?

Thursday, June 23, 2011

Grecian Burn via John Stewart

Jon Stewart and the Daily Show rip into the "retiring a few years after puberty" Greeks.







via ZeroHedge

Friday, June 17, 2011

Break the Kneecaps of those Delinquent Deadbeat Greeks

Here is a novel suggestion by David Goldman on how to deal with the Greek debt crisis. Simply, don’t allow the Greeks to default. Instead treat them like the delinquent tax dodging deadbeats they are. First, kick them out of the European Union for being liars and thieves and then have the ECB (European Central Bank) "turn up at Greece’s door like the loanshark who says, 'I bought your paper from the guys you owe, and now you owe me — and I want a piece of your business, or else.'"

This is the definitive bad cop approach. Of course, the Euro-wimps will never do it. But, it's the type of strong medicine the European Union/Euro will need if it wants to survive. Following the wimpy "extend and pretend" road with the debt of the PIIGS will end badly.

David Goldman / Asia Times - Inner Workings:
Europe Needs One Horrible Example --
The trouble with European debt negotiations is that they have not yet persuaded the citizens of highly indebted countries that they must consume less, work harder, retire later, and generally lead unhappier lives. That is what happens after years of living beyond one’s means. The Greeks in particular take the view that the Europeans need them (not to default) more than they need the Europeans, for their debt is so large that it would impair Europeans banks were they to default.

Here’s a simple idea: Don’t allow them to default.

1) Kick them out of EMU and send them back to their miserable drachma...

In effect, the ECB would turn up at Greece’s door like the loanshark who says, “I bought your paper from the guys you owe, and now you owe me — and I want a piece of your business, or else.”

3) The European governments will then go to the Greeks to collect the debt. If the Greeks don’t want to sell their national patrimony, take legal action to seize Greek assets everywhere in Europe, starting with foreign-currency bank accounts, Greek ships in international ports, and so forth.

4) Demand that the Greek government seize the property of Greek citizens who have not paid taxes and auction it to foreigners. That would bring in plenty of foreign exchange. Sell the Parthenon, too. Sell it all. Of course, none of this actually will happen; pushed to the wall, the Greeks will find ways to find the money...
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related:

Diane Francis /
Greece Is Not a Country, It's a Party --
Finally, someone at the European Central Bank has hinted that a baseball bat may be what's needed to fix the never ending Greek debt mess.

The hint was couched in polite Euro-speak, mentioning a "second stage of bailouts," where the Eurozone would take some control over a country's [read Greek's] economic policies if it could not do so itself. Hours later, the Bank's economist was more blunt and stated that if Athens doesn't take the necessary measures then other parties would "interfere."

Translated into plain and simple English, it looks like the Euros are finally realizing what has to happen. Greece needs to undergo a severe "workout," which is banking jargon for lenders commandeering a profligate's management. Put another way, on the streets of Calabria or New York City, it is time to bring in the "muscle" because the loan "sharks" want their "juice."

More genteel lingo and methods have been applied to no avail. This is because Greece is not a country, it's a party...
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The opposite view: the Greeks are not at fault, they are being screwed by the bankers.

Sturdy blog:
Democracy vs Mythology: The Battle in Syntagma Square --
What is going on in Athens at the moment is resistance against an invasion; an invasion as brutal as that against Poland in 1939. The invading army wears suits instead of uniforms and holds laptops instead of guns, but make no mistake – the attack on our sovereignty is as violent and thorough. Private wealth interests are dictating policy to a sovereign nation, which is expressly and directly against its national interest. Ignore it at your peril. Say to yourselves, if you wish, that perhaps it will stop there. That perhaps the bailiffs will not go after the Portugal and Ireland next. And then Spain and the UK. But it is already beginning to happen. This is why you cannot afford to ignore these events...
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Other Reference points on Greeks behavior:
Michael Lewis / Vanity Fair:
Beware of Greeks Bearing Bonds --
what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piƱata stuffed with fantastic sums and give as many citizens as possible a whack at it. In just the past decade the wage bill of the Greek public sector has doubled, in real terms—and that number doesn’t take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job...

The Greek people never learned to pay their taxes .... because no one is ever punished. It’s like a gentleman not opening a door for a lady...
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 The Greeks are serial defaulters.

Johnsville News:
Greek Sneaks: 45 Gardeners, but no Garden --
There were forty-five gardeners from Greece.
They said, "The weeds in the garden would decrease!"
They made quite an array,
And were very well paid.
But, it all turned out to be a big fleece.
...Greece has been a serial defaulter throughout history (91 aggregate years in the last 182 – or approximately half the time).
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related:
TJN:
Break the Kneecaps of those Delinquent Deadbeat Greeks

Thursday, June 16, 2011

Freak'n Fukushima Ain't Going Away

Fukushima radiation is a certainly a baby killer. The long term health damage to the populations of Japan and the Pacific rim will be an issue for years.

Aljazeera.net:
Fukushima: It's much worse than you think
-- Scientific experts believe Japan's nuclear disaster to be far worse than governments are revealing to the public.

"Fukushima is the biggest industrial catastrophe in the history of mankind," Arnold Gundersen, a former nuclear industry senior vice president, told Al Jazeera...

Gundersen, a licensed reactor operator with 39 years of nuclear power engineering experience, managing and coordinating projects at 70 nuclear power plants around the US, says the Fukushima nuclear plant likely has more exposed reactor cores than commonly believed.

"Fukushima has three nuclear reactors exposed and four fuel cores exposed," he said, "You probably have the equivalent of 20 nuclear reactor cores because of the fuel cores, and they are all in desperate need of being cooled, and there is no means to cool them effectively."...

In the US, physician Janette Sherman MD and epidemiologist Joseph Mangano published an essay shedding light on a 35 per cent spike in infant mortality in northwest cities that occurred after the Fukushima meltdown, and may well be the result of fallout from the stricken nuclear plant...

Gundersen points out that far more radiation has been released than has been reported.

"They recalculated the amount of radiation released, but the news is really not talking about this," he said. "The new calculations show that within the first week of the accident, they released 2.3 times as much radiation as they thought they released in the first 80 days...
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Arnie Gunderson / Fairewinds Associates:
Hot Particles From Japan to Seattle Virtually Undetectable when Inhaled or Swallowed --


Original estimates of xenon and krypton releases remain the same, but a TEPCO recalculation shows dramatic increases in the release of hot particles. This confirms the results of air filter monitoring by independent scientists. Fairewinds' Arnie Gundersen explains how hot particles may react in mammals while escaping traditional detection. Reports of a metallic taste in the mouth, such as those now being reported in Japan and on the west coast, are a telltale sign of radiation exposure.

Monday, June 13, 2011

American Jewish Man Beaten and Arrested by Israeli Police

Sad to see that Israel does not have freedom of speech or freedom of assembly. Lucas Koerner an American-Jewish student, who attends Tufts University in Boston, was in Jerusalem on Jerusalem Day, June 1st, 2011, when he was grabbed, beaten, and arrested by Israeli police because he was "wearing a kippah and a keffiyeh [and] standing with the Palestinians."

This YouTube video and his blog tell the story of Israeli brutality.



Lucas Koerner / Stronger Than Slavery:
The Arrest --
As we walked up and down the sidewalk, waving our peace signs, many Palestinians of all ages approached to join us. With twenty or thirty people now gathered on the sidewalk facing the parade, we turned over leadership of what had become a demonstration to Palestinian activists, and we happily clapped and danced to their songs and chants. Standing on two feet high pylons, we tried to maintain our visibility as internationals in order to confer as much protection as possible to the Palestinians. The demonstration remained totally peaceful - just singing, whistling, and clapping. In fact, much to the chagrin of the paraders, we often danced to their music. Many Palestinians, fascinated with my kippah, approached me and exclaimed, “I love you”. For a moment, a space was opened for Palestinians to freely gather in their own streets and protest, peacefully demanding their basic rights. We were soon to learn just how brief that moment would be.

Suddenly, the police moved in without warning of any kind. Officers on horseback came so close to the sidewalk, nearly hitting some of the demonstrators. I stepped down from the pylon. In that instant, my impulse to flee was counteracted by the firm realization that, standing on a sidewalk waving a peace sign, I had every right to be there, and if I fled, who would stand with the Palestinians? I stepped back up on the pylon. Moments later, an Israeli police officer ran up, seized me, and dragged me to the other side of the street. He then punched me in the face, put me in a choke hold, and with four other officers, slammed me to the ground. I was eventually handcuffed and carried to the car; I allowed my body to go limp and refused to walk on my own in a gesture of nonviolent defiance. Throughout the whole affair, the only thing audible coming from the policemen was a constant stream of curses words, “motherfucker”, “piece of shit”, etc., which was to me a ringing confirmation of how infuriated and threatened they were by a 19-year old wearing a kippah and a keffiyeh standing with the Palestinians...
related:

Live From Occupied Palestine
American Jewish activist, Lucas Koerner says "Not in my Name" --
This annual [Jerusalem Day] march is little different to the Orangemen marches that took place in Northern Ireland. The pro-British Protestant Orangemen would deliberately march through the Catholic Republican neighbourhoods, The Orangemen march, like this march by Israeli Jewish Zionists, was all about the Occupier exerting their presence on an occupied people...
OpEdNews:
Jewish American Teenage Hero Lucas Koerner takes on two World Powers --
One would expect a massive outcry of indignation against Israel but it won't happen...
Covering Delta:
American Jewish Man Beaten and Arrested by Israeli Police --
I get really sick to my stomach when I see this type of police brutality, whether it is in Israel, the US or anywhere else.
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Lucas Koerner / Stronger Than Slavery:
Jerusalem Day march --
Jerusalem Day march through the Arab quarter at 4 am. Their celebrations are so excessive, so over the top that they approach the hysterical. Beneath this triumphant veneer, lurks a deeper fragility and vulnerability: normal, sane people in a regular country do not typically feel the need to scream “this country is ours forever”, as if for fear of losing the country if their voices are not loud enough...

Saturday, June 11, 2011

Ctrl+Alt+Bernanke

Empire State Rebellion has launched A99 OpESR Communication #2: Ctrl+Alt+Bernanke.
The Fed's screwing of most of the people most of the time will someday have repercussions. This looks like first steps.

FaceBook:
#OpESR - Operation Empire State Rebellion Amped

Twitter:
OpESR

AmpedStatus.org:

In this new video release, “as a first step,” Anonymous has called for public protests beginning on June 14th, continuing “until Federal Reserve Chairman Ben Bernanke steps down.” To make their case, they have presented a list of recent scandalous Federal Reserve actions.


90 days ago, we requested Ben Bernanke's resignation as Federal Reserve chairman. Mr. Bernanke has not complied with our request.
  • The Federal Reserve's policies are systematically looting the country to enrich one-tenth of one percent of the population.
  • The Federal Reserve has deliberately driven tens of millions of people into poverty.
  • The Federal Reserve is responsible for Crimes Against Humanity!
  • The Federal Reserve gave trillions of American taxpayer dollars, in secrecy, to the people who were most responsible for causing our economic crisis.
  • Our tax dollars were handed out as all-time record-breaking bonuses to top executives at the “Too Big to Fail” global banks.
  • The Federal Reserve gave American taxpayer dollars to foreign banks and corporations.
  • The Federal Reserve directly subsidized tax evasion by funneling taxpayer dollars into to the Cayman Islands.
  • The Federal Reserve gave American tax dollars to their primary dealer banks, so the banks could then lend that same money back to the US government at higher interest rates, leading to significant profits for the banks, at the further expense of the American public.
  • Through bailout programs the Federal Reserve socialized financial losses onto American taxpayers and privatized profits into the hands of global banks.
  • The Federal Reserve aids and abets trillions of dollars in accounting fraud.
  • The Federal Reserve routinely manipulates the stock market.
  • The Federal Reserve deliberately caused inflation in the price of food, gas and basic necessities, while devaluing the dollar!
  • The Federal Reserve represents the central planning force behind a global banking cartel that has deliberately impoverished people throughout the world.
US Politicians have not taken action to break up the Federal Reserve and the “Too Big To Fail” Banks.
US Politicians have not taken action to prosecute the people who caused our economic crisis.
US Politicians have not taken action to end the system of political bribery, the campaign finance and lobbying racket, which allows global bankers to control our political process.
Democrats have failed us.
Republicans have failed us.
No one is defending our interests.
We cannot remain passive while our future is going up in flames.
It is time for us to stand up for ourselves.
It is time for you to stand up for yourself.
We must restore the rule of law and fight back against the organized criminal class.
We must now launch Operation Empire State Rebellion.
The operation will commence on June 14th.
As a first step, we are calling upon you to occupy a public space until Federal Reserve Chairman Ben Bernanke steps down.

Operation Empire State Rebellion, Engaged.
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related:

Charles Hugh Smith / of two minds:
The Necessity of Resisting Financial Tyranny --
It's time we defended liberty and democracy against financial tyranny: take your money out of Wall Street and the "too big to fail" banks, and stop funding their fraud, churn and subversion of democracy...

Thursday, June 9, 2011

Bernanke and the Banksters

One website retitled the following Robert Scheer article: "Bernanke Puts Bankers First & The Public Last." That's the problem with Bernanke and the Fed: boosting the banks at the expense of the American middle class is the overall raw reality of their policies. Unfortunately Bernanke is unelected and untouchable until 2014, since Obama reappointed him to a second term in 2009.

It would be interesting if a Republic candidate for President dared to make Bernanke's performance an issue in the next election. How strongly would Obama rise to Bernanke's defense? How much traction would an anti-Bernanke/anti-Fed campaign get with the voting public? Probably nothing to worry about on that front since both parties kowtow to Banana Ben and the Federales.

Robert Scheer / The Nation:
The Bernanke Scandal: Full-Frontal Cluelessness --

the Fed chairman’s much anticipated remarks on Tuesday take one back to the contemptuous indifference of a Herbert Hoover to the public’s suffering: Bernanke dismissed the wobbly economy with its anemic 1.8 percent first-quarter growth as merely “somewhat slower than expected.” The rise in unemployment to 9.1 percent was “some loss of momentum.”

The problem with Bernanke is that he is utterly clueless as to the stark pain and fear endured by the 50 million Americans who have experienced, or face the prospect of, losing their homes. His remarks reflected the insularity of a ruling-power elite that is magnificently impervious to the damage that Bernanke’s policies in the current and past administration helped inflict on what used to be called the American way of life...
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Wednesday, June 8, 2011

Slashing Wall Street

It looks like the "Too Big To Fail" banks are going to become like public utilities and will be heavily regulated. So it should be no surprise that after having their wings clipped they might be a little upset. Lower profits and layoffs are the end result of more government intervention. "Too Big To Fail" has now become "Too Big To Prosper."

The NY Post reports today that Wall Street firms might soon be laying off thousands of workers in a fresh round of job cuts.

NY Post:
Slasher street: The closing bell tolls for thousands of jobs --
On Wall Street the hatchet man cometh.

Deep-pocketed bankers and traders are bracing for what could be a fresh round of job cuts on the Street, concentrated in equities trading and investment banking, where firms are considering eliminating thousands of jobs in the coming weeks, The Post has learned.

Barclays Capital, Goldman Sachs, Bank of America, JPMorgan Chase and Morgan Stanley currently are among those financial institutions either weighing staff cuts or actually paring payroll as they struggle to rein in costs and eke out profits in a choppy market, sources told The Post.

The exact size of the layoffs across the industry could not be learned, but it's possible total jobs cuts could run into the thousands as firms assess the impact on their bottom lines of sweeping regulatory reform and a balky economic recovery...
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related:
Wall Street Journal:
Morgan Stanley: The Canary in Wall Street’s Coal Mine --
in a people-intensive business like Wall Street, the only way to make up for less money coming in the door is to cut people (or year-end bonuses). The second quarter earnings reports are just weeks away. Brace yourselves...
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Jim Carney / CNBC:
Here's What Jamie Dimon Is Really Worried About -- Jamie Dimon’s confrontation with Ben Bernanke was notable because we rarely see corporate chiefs so publicly confront their primary regulators...

it seems that what provoked Dimon were recent signals from a Fed governor that the largest banks might face an additional capital surcharge, above and beyond the new capital and liquidity requirements agreed to last year in Basel.

At Basel, regulators agreed to more than double the minimum common equity requirement for banks to 4.5 percent from 2 percent, with an added liquidity buffer of 2.5 percent. That means banks will have to have total risk reserves of 7% of weighted assets. Regulators did not reach a consensus on proposals for an additional buffer—or "surcharge"— for "systemically important financial institutions"—which is regulator speak for Too Big To Fail...
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USA Today:
Senate lets the Fed slash debit card fees paid to banks -- 
The Senate has voted to let the Federal Reserve limit fees that stores pay banks each time a shopper swipes a debit card.

It's a victory for merchants in a long-running lobbying fight with banks.
At issue is a Fed proposal that's set to take effect next month and would cap the fees at 12 cents per transaction, compared with the current average of 44 cents per swipe...
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More on the employment situation. Not good.

Economics Policies for the 21st Century:
Revisiting Unemployment Predictions  —  Back in January 2009, Christina Romer and Jared Bernstein produced a report estimating future unemployment rates with and without a stimulus plan.  Their estimates, which were widely circulated, projected that unemployment would approach 9% without a stimulus …

Tuesday, June 7, 2011

Banana Ben Speaks: Workers now long-term Unworkers

Comrade Chairman Banana Ben Bernanke is slightly worried about long-term unemployment in the People's Republic of the United States.

Central planning did not work for the Soviet Union. It hasn't worked for Cuba or any Communist nation. Why will Federal Reserve central planning be any different?

Why do 12 people in a closed conference room get to price fix interest rates and decide now much money the government can create?

Chairman Ben S. Bernanke Speech:
At the International Monetary Conference, Atlanta, Georgia, June 7, 2011
The U.S. Economic Outlook --
Developments in the labor market will be of particular importance in setting the course for household spending. As you know, the jobs situation remains far from normal...

Particularly concerning is the very high level of long-term unemployment--nearly half of the unemployed have been jobless for more than six months. People without work for long periods can find it increasingly difficult to obtain a job comparable to their previous one, as their skills tend to deteriorate over time and as employers are often reluctant to hire the long-term unemployed...
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 word cloud via Zero Hedge:
Bernanke Speech And Word Cloud

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This chart shows the problem, a large spike in the average duration of unemployment (now almost 40 weeks) from the Bureau of Labor Statistics:

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discussion:
Michael Shedlock / Mish's Global Economic …:   Bernanke's Self-Serving Bold-Faced Lies
Mark Gongloff / MarketBeat:   Bernanke Sticks to Status Quo, Stocks Dive
Neil Irwin / Washington Post:   Bernanke: Economy can withstand recent setbacks

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