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View Diary: Debt Deficit Delusion and Deception (17 comments)

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  •  That's what we've been doing (2+ / 0-)
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    David PA, psyched

    The government spends interest-free money. In unrelated transactions, it sells bonds to keep interest rates from going to zero. It is the debt money that is problematic because it bleeds off productive capital into non productive financial assets - rents. Without the intervention of the federal government in the bond market, the natural rate of interest would prevail, and that is close to zero.

    In general, private sector surplus is desirable but it is the distribution of the surplus that is at issue. Our current economy is configured to funnel most of that surplus into financial rather than productive assets. This overwhelmingly favors the top echelon of the economic pyramid. If rather than supporting financial assets the government served as the employer of last resort, that would significantly improve the productive economy by generally increasing aggregate consumer demand. This would eliminate involuntary unemployment, and in lieu of unemployment compensation - pay for being idle - there is always guaranteed work. Is this practical? It is certainly the case that in non-monetary societies this is the case. In feudalism the serfs were never unemployed, nor were slaves under slavery, nor those in many communal tribal cultures.

    •  Obama and Romney budgets call for $1T deficits for (0+ / 0-)

      for four years or more going forward.

      Though, of course, Romney wants to put a much bigger chunk in the military and less in the safety net.

      Obama sure would like one of his jobs bills to pass. Obama's more direct approach would create more jobs, of course.

      So, even Randian Ryan isn't wanting to reduce government spending - he just wants to spend it in ways that would create fewer jobs and help the middle and lower income groups less.

      •  Unfortunately (2+ / 0-)
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        David PA, psyched

        That $1T is mostly going to be captured by the financial sector rather than the productive economy. We really need to push infrastructure now. It's the only way in the current system to pump money preferentially into the productive economy and actually get value in return. Without demand, there's no reason on earth for any company to hire. Tax brakes just go in the pocket and, for the wealthy, into more financial assets.

        •  Yes ... found another good article via your link (1+ / 0-)
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          •  Lots of good info on that site (2+ / 0-)
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            David PA, psyched
            •  NEP is "MMT Central" (2+ / 0-)
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              psyched, Old Surgeon

              However there's lots of good stuff here too. And btw, I blog both here and at NEP. I'm Joe Firestone.

              •  Thanks, I've seen your name at NEP (2+ / 0-)
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                psyched, clonal antibody

                I didn't know that topic was also being explored here at DK. I'm just learning about MMT. Honestly, when some of the ramifications of the theory became clear, I actually wept. How much damage have we done our people through arrogance, stupidity and greed? It's astounding. There's so much we could have accomplished. Now there's so damn much rust and so much need.

                •  Reposted your diary to... (0+ / 0-)

                  Money and Public Purpose.

                  You should follow this group on dKos if you're interested in MMT.

                  Thank you for this fine diary.

                  For the first time in human history, we possess both the means for destroying all life on Earth or realizing a paradise on the planet--Michio Kaku.

                  by psyched on Sun Oct 07, 2012 at 06:31:30 PM PDT

                  [ Parent ]

                  •  Thank you, I shall. (1+ / 0-)
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                    •  Check out this site as well. (1+ / 0-)
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                      Bill Mitchell.

                      He has tons of blogs on the site for review, from every aspect of the discipline.

                      •  Just to second this (0+ / 0-)

                        Bill is one of the three contemporary MMT "fathers" along with Warren Mosler and Randy Wray. All three are close. Bill and Randy and Bill will soon publish a major book together. Warren is personally very close to Bill and has supported research centers and research efforts of Randy and Bill. Among the three I'd say that Bill is best when it comes to the formal development of MMT and its mathematics. At the same time, Bill's writing is very passionate and full of his moral sense. There's too little of that in economics in my view. Bill is a real crusader, as is Randy. Warren is more the persuader, "the cool hand Luke" among the three guys. He's more the person who likes to work inside and has faith in the process of educating the elites.

                        Others now involved with MMT are also very passionate in their writing. Bill Black, Michael Hudson, and Jamie Galbraith come to mind. Their thinking is broadening the MMT synthesis as the years pass. Other very important figures are Marshall Auerback, Pavlina Tcherneva, Mat Forstater, Scott Fullwiler, Jan Kregel, and, of course, Stephanie Kelton, the editor-in-chief of the NEP blog. Stephanie may be the best communicator of the bunch. Her writings and presentations are extremely well-crafted to introduce people to MMT. She can simplify, while still being precise. Warren's great at simplifying too, btw.

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