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View Diary: WHY WE’RE SCREWED (232 comments)

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  •  Bad assumption (4+ / 0-)
    "M suggestion (and it's not just mine) is pretty simple—let the markets take over. Force the banks to mark bad loans to market valuation and then fail and let the bond issuers default. This, basically, is what should have been done by both the Bush and Obama administrations. Unfortunately, that will accelerate foreclosures, decimate pensions, and throw the overall economy into a tailspin."
    This part is right. The mark to market rule should never have been changed, the big banks should have been taken into resolution in late 2008/early2009 and then re-organized and spun off as small community banks. A system of State-owned banks like the Bank of North Dakota should have been organized, and liquidity should have been provided the Government.

    The assumption I object is to is the one about limited money. available Federal money is limited by nothing. Spending in excess of tax revenues is limited only by Congressional appropriations and by the consequence of eventual inflation. See here, here, and here.

    •  Assuming we're out of money (4+ / 0-)
      Recommended by:
      opinionated, pengiep, psyched, mrkvica

      puts the final nail in the coffin. This assumption by those who should know better is the real challenge to overcome.  Why do progressives continue to buy-into the neoliberal lie that we have run out of money?  Yes we need to address and stop the fraud.  But we also need to open our eyes to the real fiscal opportunity before us.  

    •  Monetary limits (1+ / 0-)
      Recommended by:

      You are correct, in the sense that the government owns printing presses that it can turn on or shut off. But all currencies are limited by who will accept them and whether they will agree on what non-currency goods they will give in exchange. That goes for both citizens (unless you abolish private ownership and establish a command economy) and for other countries. In the real world, governments are limited in the extent to which they can devalue/inflate their currencies.

    •  Aha but it is the inflation that policy makers (0+ / 0-)

      are most worried about. I agree with you but the Federal Reserve does not. Krugman has been screaming about this injustice for years.

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