Econ video
Short, but very nutrient dense. Hat tip Lou.
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Feral Scholar
Making the Connections
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Feral Scholar
Making the Connections
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Short, but very nutrient dense. Hat tip Lou.
Henry:
New and very good:
Modern Monetary Theory—A Primer on the Operational Realities of the Monetary System
By Scott Fulwiller
http://www.moslereconomics.com/wp-content/graphs/2010/08/MMT-Scott-Fullwiler.doc
30 August 2010, 1:52 pmCurt:
Henery,
I am not an economist so I am not sure that I understood your link.
What I did understand is that the US rulers can provide full employement if they want to. There also seemed to be the implication that deficit spending if the country is at full employment would not be very efficient.
But one question of mine has not been answered. Not all money that is issued by a government gets spent inside the nation much of it in todays world gets spent out side of the nation. So would there not be a lot of temptation to deficit spend even in good times to essentially aquire booty almost painlessly, at least in the short run. If there are 190 countries and many if not all of them are deficit spending would it not be neccessary for a country as a form of self defense to deficit spend as well? Deficit spending is actually a lot like counterfiting only there is no world police to come and arrest the offending government.
There is another issue that is not directly related to this but I see it as somewhat related. That is with the old Jack Kemp trickle down economics idea that seems to be discredited today. I forget the exact word that was used to describe the idea of flat or at least flatter income tax rates. The idea was that as the rich spend more more jobs will be created to build their yachts and vacation homes. If you ask me the wealth did trickle down. It just did not all trickle down INSIDE OF THE UNITED STATES. Then another thing that it seemed to do was help some people with in the US much more than others. As some people earned more money they began building McMansions in the outlying suburbs or gentrifying some neighborhoods in the big cities. The housing bubble made it impossible for some people to live in the nieghborhoods that they worked in requiring long commutes for people who could not afford them.
31 August 2010, 4:32 pmI think that a climate was also created in Amercia that if you did not drive a Luxus or Accura and have a boat and have a big house that there was something wrong with you so you better take an extra part time job so that the world does not figure out that you are making less than 100,000 per year because only people who are not gifted make less than 100,000 a year.
Politicians in America never think about what happens next. They neve ask, What are the consequences of the consequences?
Speaking of that what are the consequences of the consequences if some people try to put the Generals and their supporter in prison? What are the consequences of the consequences if no one tries to put the Generals and their supporters in Prison?
Henry:
Curt,
Good questions. May I suggest you download this? I think it will cover almost everything.
http://moslerforsenate.com/wp-content/uploads/2010/06/7DIF.pdf
More here:
http://moslereconomics.com/mandatory-readings/
1 September 2010, 1:05 pmHenry:
Super-Fast, Non-Ideological Operational Explanation of How the Modern Monetary System Works (From Warren Mosler)
Modern money, after the demise of the gold standard, is akin to a spreadsheet that simply works by computer. As Fed Chairman Bernanke explained on national television on 60 minutes, when the government spends or lends, it does so by adding numbers to private bank accounts. When it taxes, it marks those same accounts down. When it borrows, it simply shifts funds from a demand deposit (called a reserve account) at the Fed to a savings account (called a securities account) at the Fed. The money government spends doesn’t come from anywhere, and it doesn’t cost anything to produce. The government therefore cannot run out of money, nor does it need to borrow from the likes of China to finance anything. To better understand this, think about when a football team kicks a field goal; the number on the scoreboard goes from 0 to 3. Does anyone wonder where the stadium got those 3 points, or demand that the stadium keep a reserve of points in a “lock box”?
Moreover, government deficits ADD to our savings – to the penny – as a fact of accounting, not theory or philosophy. For the Federal government, taxes don’t serve to collect revenue but are more like a thermostat that controls the temperature of the economy. When it is too hot, raising taxes will cool it down. And in this ice-cold economy, a very large tax cut is needed to warm the economy back up to operating temperature.
1 September 2010, 1:09 pmHenry:
Good comment by Tom Hickey on today’s article by Paul Craig Roberts over at Mosler economics:
“The threats to the dollar’s role are the budget and trade deficits. Both are so large and have accumulated for so long that the prospect of making good on them has evaporated. As I have written for a number of years, the U.S. is so dependent on the dollar as reserve currency that it must have as its main policy goal to preserve that role.
Otherwise, the U.S., an import-dependent country, will be unable to pay for its excess of imports over its exports” [P.C. Roberts]
—————————————-
Tom Hickey:
Sounds intuitive, but it’s wrong. Fx is lot more complicated than that. What would actually happen if Americans couldn’t afford imports anymore in the quantity that they are now purchasing is that either imports would decline or their prices would fall. People seem to forget that the US GDP is ~14T and China’s as the runner up is less than 2T. That means that until global demand picks up, other countries are dependent on the US to be the consumer of last resort, and they are happy to fund the capital account surplus this requires. Over time this will gradually correct, but it won’t be overnight or even anytime soon.
http://moslereconomics.com/2010/08/29/bernanke-speech/comment-page-1/#comment-25465
1 September 2010, 3:53 pmCurt:
Henry,
I am only on page 17 of the first link and I am going to quit for the night.
But one thing that jumps out at me is that Mosler wants to make the American dream achievable again. Yet such a goal flies in the face of ecological and resource constaints. I can see perhaps giving a patient some sugar before they have to take their medicine. Perhaps a 3 or 4 year period of a how things could work if global warming and resource depletion were not issues but then unpopular measures are going to have to be taken to bring the party to an end. Can we go back to business as usual as if we have not learned anything about global warming and peak oil and peak **** in the last 15 years?
****other resources for which dwindeling supplies can be perdicted in the comming decades.
2 September 2010, 4:53 pmCurt:
Henry,
3 September 2010, 9:44 amI just finished page 40 and I am really surprised by something that I read. That is the the 2 Trillion dollars that the Chinese government has theoretically made as a result of trade with the US is really nothing more than a bank entry of the US federal reserve that it can either keep in its reserve (checking account) or in US treasury bills (a savings account). But why do the Chinese allow their money to be kept in a “foreign bank account” where the account can be frozen by the US government. Why wouldn’t the Chinese say look we want to withdraw our funds and put them in the Chinese Central Bank where we can use these dollars to buy things that we want from other countries like natural gas from Russia or Cotton from Pakistan, or locomotives from Germany?
Somehow although it was not explained exactly how in the linked article yet I think that the Chinese can actually do that. But maybe they can’t because if they had spent the US dollars in Russia or else where they would not have a 2 trillion dollar balance of US dollars. Or would they maybe they have made a profit of 6 trillion over the past decades and have spent 4 trillio and have 2 trillion left over?
This gets me to my next question that is perhaps even more important. In past wars some beligerents such as Germany have tried to counterfit large amounts of US currency. Such a tactic would seem much simpler today. Let us say that because of all the rotten things that the US has done to Iran a trial is held in Iran and it is determined by the Iranian Supream Court that the US owes Iran 500 billion dollars in repatriations. The Iranian government then declares a few days latter that its elite special forces have intercepted and captured a US electronic payroll transaction and have deposited it in to an account in the Iranian Central Bank. The amount that they captured was One Trillion Dollars they will return 500 billion of it when the US agrees to to be nice to it. The other 500 billion they are going to put in to an account in the Iranian Central bank called US dollar holdings. With this account they are going to buy cars from Korea, submarines from Germany and fighter aircraft from Sweden, and bascially go on an international spending spree. How could businesses in countries that agree to sell things to Iran know whether or not Iran really has the dollars that it claims that it has when everything is now done on a compter spread sheet. Even if the business gets a check they simply deposite that check in a bank which then sends it to the bank that it was drawn on and that bank then either honors the check or does not. When the Iranian bank gets this check issued by the Iranian government in US dollars is there any reason that they would not honor the check? If not then the Malaysian bank or whatever bank will credit the account of the Malaysian business that sold something to Iran. It would be like counterfiting only much easier and impossible to prove who is lying. And furthermore since all of the actors are proffessional liars anyways they could all no doubt come up with a very reasonable story to support their point of view. In fact since the Iranians would never want to turn their well earned dollars back over to the Americans in the first place they need not ever worry whether or not their dollars are counterfit.
Now America could go to war with Iran over this but what if the Iranians went about it very quitely would anyone even notice? I think that I have read somewhere that there is a bank for the national central banks but what if a country or countries said we do not like your monopoly and we are going to open our own bank and keep our own accounts?
Countries could not refuse to do business with Iran forever if has to much natural gas and oil.
I hope that this is an idea that the Iranians could use that would really piss the US rulers off. I do not know if it is something that they may have already thought of.
$urt
Henry:
No disagreement there. I actually wrote Mosler on this point, and he is presumably in agreement. It just isn´t the battle he´s fighting, think.
At any rate, I study this stuff to better understand what is actually going on, not as a guide to what should be going on. As Mosler and others insist, modern money theory is about how the system actually works. Public policy is a different subject, and of course, it is the really important one.
3 September 2010, 8:43 pmHenry:
@Curt
Here´s the latest post at Mosler economics:
Obama speech- not your father’s Democrats
Posted by WARREN MOSLER on September 3rd, 2010
There is a quick fix, a full payroll tax holiday for employees and employers.
His small business proposals show he and the rest of Congress still don’t understand that employment is a function of sales.
There is nothing in their proposals to support consumption, which is the only point of any economy.
I suspect they are afraid of the trade gap and fear domestic consumption will hurt net export growth.
Their goal is to have us be the world’s slaves via rising net exports.
This is all very good for business and the stock market, not so good for people who need to work for a living.
These are not your father’s Democrats.
3 September 2010, 8:50 pmCurt:
But Henry, what do you think of my proposed outline for a plot for Oceans 21.
4 September 2010, 5:52 amCurt:
I would like to hear what some of the other readers think of Mosler?
4 September 2010, 12:12 pmCurt:
Well Henry,
8 September 2010, 3:32 amI have finished reading the Mosler link sort of. I skimmed over several of his later list of sins. I did not read his personal history at all. Then I sort of skimmed over his proposals at the end. He could have saved himself the trouble writing about how important US national defense is. I figure that he did that as a politcal move to not to make it easy for his opponents to smear him. The thing is he will not get anywhere near an election win anyways. He is a threat to the system of corruption.
Henry:
Agreed!
8 September 2010, 1:15 pmCurt:
Retirement- Hip Hip Horray- Maybe- Ok there is no good reason for our Social Security money not to be there- What about all of the money that has been invested in Retirement Accounts, IRAs 401ks whole life Insurance Policies ect. ect. All of these systems depend on PROFITS. I do not mean just the usual profits that are needed to maintain and replace infrastructure but actual taking money away from the workers kind of profits.
10 September 2010, 5:54 pmAT ZNet I read about parecon which is short for participitory economics but I bet you knew that already. The idea is that the workers own the means of production. It is kind of funny that know one ever thought of that before. The people who promote it see it as a kind of decentralized socialism. I have to wonder though, why decentralized?
In Capitalism the parasites can move a factory from Tennessee to China causing the workers in Tenn, to lose their low paying jobs and causing the workers in China to some new jobs that will improve their economic condition a little. But under Parecon as I understand it, the workers in Tennessee could decide to move their factory to China AND TO MOVE WITH IT. They keep half of their salaries in China were the costs of living are much lower. They have extra transport costs but with their lower salaries they can cut prices anyways and increase market share and with that give themselves a nice Christmas bonus. Now I seem to recall that in the explination of Parecon there would be no incentive for a company to increase market share. I do not remember how that arguement went though. If I remember correctly it had to do with with how the number of items for an economy is determined. But then it is not really such a decentralized system after all is it. It is more like a guild system then isnt it?
Well in any case the idea that businesses should be owned or even run by the workers of the business does not seem obvious to me. Running a business especially a large one requires that a lot of decisions be made. Each of these decisions effects not only the business but the surrounding community especially if it is a big business.
The surrounding community should get a say in some of those decisions should it not? An externality is an externality regardless of whether a decision was made by some stockholders or a CEO or the workers.
This I think gets me to where I was going even though you probably got lost in all the twists and turning. How should business decisions, I believe the term is micro economic decisions be made? I like the idea of stockholders actually. To me stockholders should be in addition to the workers the nearby community, allah Green Bay Packers, perhaps the state and maybe even the Federal Government, and finally last but not least PENSION FUNDS.
But this brings me to a point that I find a bit disturbing. If a person works an hour and they get paid 10 Dineros per hour and a person puts 10 dineros in a savings account or pension fund in the year 2000 is it fair that this one hour of labor be worth more money in the year 2040 than it was worth in the year 2000? Is it fair that this one hour of work be worth less in the year 2040 than it was worth in the year 2000? If one hour of work saved in 2000 has the same value in 2040 is that fair or unfair? I would just like to say a few phantom words here, productivity, depreciation, savings, interest, compound interest, homemaker, life spans.
For thousands of years humans have taken care of their old folks. You were old when you were to frail to work. It was not usually a very long time before you died.
Is it fair for people to stop working and be only consumers for 30 years before they die? Some one might say, can they afford it? Well the thing is for them to be able to afford it they would of course have to be able to live on their Social Security and then their pensions which have achieved their value by receiving their profits from the same pot that has enriched the robber barons or they have had very high incomes and saved lots of their lifetime earnings. Finally based on Moslers essay I have to wonder does personal savings have any benefit for society? I can see how it benefits the individual. If a person has enough money left over at the end of the year to buy a 14 foot Lund fishing boat If he saves for 5 years he can buy a 20 foot Pontoon Boat with a powerful Mercury Motor. But does that help society? Is it possible for government spending to meet all investment needs if no business is privately owned?
Curt:
Another thing is if the US had a socialist economy how would that effect the development of less developed countries?
10 September 2010, 6:01 pmCurt:
I just heard that Standard and Poors “Don” graded the US governments credit worthiness. So was this a mere act of stupidity? Or, was it the act of vampires bleeding the host?
18 April 2011, 2:55 pmWhat is taking so long for us to get the protection that we pay for? Can the Pentagon not afford silver bullets or wooden stakes?