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View Diary: Rachel Maddow: "The most persistent [Republican] myth in the modern politics of American money." (120 comments)

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  •  Why are we talking about deficits? (11+ / 0-)

    When demand is low, capacity vastly underutilized, unemployment at double historical norms, concerns over federal deficits are worse than silly, they are dangerous.

    Study the chart on this page to understand the interplay between the public and private sector monetary flows. The problem should become obvious.

    •  And there's the problem (6+ / 0-)

      You're trying to make sense, which is not how to appeal to swing voters. They need to be hit in the gut and smacked on the head to win them over.

      "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

      by kovie on Tue Oct 16, 2012 at 05:03:22 AM PDT

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        •  With effective sound bites (4+ / 0-)

          No need to lie, but definitely a need to dumb down.

          "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

          by kovie on Tue Oct 16, 2012 at 05:30:36 AM PDT

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          •  But that's not what we're doing (4+ / 0-)

            It's all about how we're going bankrupt and burdening our children with debt. That's why we're approaching the "fiscal cliff" which will suck something like a $Trillion per year out of the productive private economy and allow trillions more to flow from productive to financial assets. That is all the result of the false narrative encapsulated in effective sound bites - dumbed-down, inaccurate, but effective sound bites aimed at frightening the people and steering more and more of the nation's wealth into the coffers of the rich.

            •  That's RW framing (7+ / 0-)

              I'm talking about dumbed-down progressive framing, like how infrastructure spending boosts the economy and pays for itself through increased tax revenue. How the rich needs to pay their fair share again. How we can't afford and don't need more wars or massive defense spending.

              "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

              by kovie on Tue Oct 16, 2012 at 05:46:02 AM PDT

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              •  It's Obama's RW Framing (6+ / 0-)

                He has bought into it entirely. Why else would he have put the cat food commission together? What was it's mandate? My recollection is that it was charged with deficit reduction. Even Bernie Sanders buys into this framing which is something progressives should totally disparage. We need to build our framing around the concept that societies build their futures and commonwealth out of the real resources they possess, not out of money.  Money is only a tool, and it is the simplest and most inexpensive tool we can make. Debt and deficit fear-mongering embraces the exact antithesis of this.

                •  I'm no fan of Obama & Dems' framing either (5+ / 0-)
                  Recommended by:
                  qofdisks, Egg, hungrycoyote, elwior, DSPS owl

                  and it's not what I'm advocating. I'm talking genuinely reality-based progressive framing, but "dumbed down" so that even swing voters can understand it.

                  Btw, the deficit IS a long-term problem and it's not RW to say so. What's RW is to say that it's an immediate crisis-level problem or that cutting spending (let alone taxes) is the way to bring it down, both of which are false.

                  Only a more progressive tax system that forces the rich to pay their fair share, targeted spending on needed and useful programs that will boost the economy both now and long-term, and spending cuts in unnecessary and pointless things like many defense programs, can do that. And it's progressive to say so.

                  "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

                  by kovie on Tue Oct 16, 2012 at 06:35:11 AM PDT

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                  •  I am interested to know why (2+ / 0-)
                    Recommended by:
                    hungrycoyote, elwior
                    the deficit IS a long-term problem and it's not RW to say so
                    What is your theory of the long-term damage of the deficit in an economy based on a sovereign non-convertible currency?  
                    •  More to the point, what is Paul Krugman's theory (1+ / 0-)
                      Recommended by:
                      hungrycoyote

                      and that of other actual economists? My understanding that is if left unaddressed, it will lead to runaway inflation and/or severe spending cuts, both of which will hurt the non-rich hard. If you disagree with Krugman et al, please explain.

                      "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

                      by kovie on Tue Oct 16, 2012 at 07:56:31 AM PDT

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                      •  The point is that IS what actual economists (1+ / 0-)
                        Recommended by:
                        hungrycoyote

                        theorize. I offered Stephanie Kelton in my original post but we can add L Randall Wray, Scott Fullwiler, James Kenneth Galbraith, and many others. The neoliberal economic theory under which we have operated since the 70's is falling apart because it's based on a fundamental flaw of reasoning and a misunderstanding of the nature of money. Every so often one of the so-called bright lights of mainstream economists begins to grasp this. Perhaps Bernie Sander's economic "Dream Team" will begin to spread that understanding.

                        As for inflation, it is not the result of deficits. The US Gov issues debt to support interest rates, not to back spending. Inflation happens due to inadequate supplies, or demand in excess of capacity. It has nothing to do with Fed. spending unless the federal government overpays relative to the private economy. Without getting to the point where "too many dollars are chasing too few products" you don't get inflation.

                        •  Krugman is ok with long-term deficits? (1+ / 0-)
                          Recommended by:
                          hungrycoyote

                          News to me. When did he "theorize" this?

                          "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

                          by kovie on Tue Oct 16, 2012 at 08:54:24 AM PDT

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                          •  Really, that's what you read??? (1+ / 0-)
                            Recommended by:
                            hungrycoyote

                            That is certainly not what I wrote. Too bad, I was enjoying this conversation. I am sorry to see us begin talking passed one another.  

                            I believe you raised the question about real economic theory vis a vis real economists. That's what I offered. You may follow Krugman with religious fervor, I merely take his words as enjoyable, thoughtful, and generally well measured. But I do note that he didn't make the cut for Bernie's group, nor for any position of influence in any recent administration.

                            But, if you are a Krugman acolyte, then can you explain the inexorable path from deficit to inflation in his terms. He makes mention of this in a column on March 25, 2011 where he begins:

                            Right now, deficits don’t matter — a point borne out by all the evidence. But there’s a school of thought — the modern monetary theory people — who say that deficits never matter, as long as you have your own currency.
                            This immediately throws up a straw man argument which Krugman then follows to it logical conclusion. Easy when you start with a false premise. However, contrary to Krugman's assertion, MMT says deficits are critically important, they always matter, they are almost always necessary, and they must be carefully calibrated. Aside from that, Krugman got it right.

                            I'm done. If you want to get educated on the subject go to New Economic Perspectives or even go to the Money and Public Purpose group here at DK.

                          •  Why don't we resume this discussion (0+ / 0-)

                            when we both receive our Nobels. Mine should arrive any day now...

                            "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

                            by kovie on Tue Oct 16, 2012 at 11:36:18 AM PDT

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                          •  Ah, yes, (0+ / 0-)

                            Of course, we’re aware that its really called the Memorial Prize in Economics, but c’mon — it sounds so much more prestigious to call it the Nobel.

                          •  See you in Stockholm (0+ / 0-)

                            Don't forget the tux.

                            "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

                            by kovie on Tue Oct 16, 2012 at 12:12:45 PM PDT

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                          •  We'll have a Brännvin (1+ / 0-)
                            Recommended by:
                            kovie

                            I'll buy!

    •  This comment helps explain (2+ / 0-)
      Recommended by:
      hungrycoyote, elwior

      why Republicans have more trust than Dems on the deficit/debt issue.  For the past several decades Republicans talk about balancing the budget and the evils of deficit spending (what "we" do is an entirely different matter, of course).  Dems on the other hand never seem to be worried about deficits.

      But believe me, I do get your point that deficits are not the overriding problem at this point in time.  I'm ok with short term deficit spending in this time of slow economic recovery but we (Dems/Repubs, liberals/conservatives) need to come to some sort of agreement about whether or not we are going to pay for the government that we want or if we are going to pass the costs off to future generations.

      I favor a balanced budget amendment that would require budgets to be balanced on perhaps a three year rolling period.  We have shown that we are politically incapable of being responsible about the deficit and if we are going to behave like children perhaps we should be forced to do the right thing through an artificial rule such as a balanced budget amendment.

      We cannot solve our problems with the same thinking we used when we created them. Albert Einstein

      by theotherside on Tue Oct 16, 2012 at 07:56:27 AM PDT

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      •  Sometimes deficits are necessary (2+ / 0-)
        Recommended by:
        hungrycoyote, elwior

        Like in a recession or during wartime.  A balanced budget amendment would have devastating consequences in a poor economy.

        "When I was an alien, cultures weren't opinions" ~ Kurt Cobain, Territorial Pissings

        by Subterranean on Tue Oct 16, 2012 at 09:29:07 AM PDT

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        •  I think you are correct. You don't want to (2+ / 0-)
          Recommended by:
          hungrycoyote, elwior

          balance the budget in a recession.  That's why I would favor some type of mechanism where we are forced to balance the budget over a rolling period.  Recessions tend to be relatively short in duration and if you were required to balance the budget over the course of a 3 or 4 year rolling period that would seem to be reasonable.

          So if in year 1 you have a budget surplus of lets say 100 billion dollars, you then enter a recession and your deficit is 250 billion dollars.  In the next two years you would then have to develop a budget surplus of 150 billion dollars if you had a rolling 4 year period where at the end of each 4 year period you had to balance the budget.  

          I'm not beholden to the 4 year period.  That may be too artificially short.  But if you do it over a rolling period then it greatly reduces the very valid point that you raised in your comment.

          Hey, but let's "look on the bright side, there's always suicide" if that doesn't work.  (Based on your sig line I think you would appreciate that last comment because I never met a wise man (but) if so he's a woman.)

          We cannot solve our problems with the same thinking we used when we created them. Albert Einstein

          by theotherside on Tue Oct 16, 2012 at 09:58:55 AM PDT

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          •  We have 200 years of deficits (1+ / 0-)
            Recommended by:
            elwior

            because we are a wealthy industrial powerhouse, and, by accounting identity, you cannot have sustained private sector surpluses without either trade surpluses or federal deficits to balance the equation. Think of riding a bicycle. Every so often you have to pedal a little, sometimes you come to favorable terrain and you don't need to pedal at all. What you can't do is recapture those pedal pushes back into your legs. Once they're spent, they're spent, just like when the government spends NEW money into existence.

            We are a nation with sovereign money. Our society builds its future and commonwealth out of the real resources we possess, not out of money.  Money is only a tool, and it is the simplestand most inexpensive tool we can make. 

            This is a fundamental strength of America. The eurozone lacks this fundamental strength as each nation has relinquished monetary sovereignty to the ECB. They are currency users. America is a currency issuer.

      •  Republicans talk about deficits (2+ / 0-)
        Recommended by:
        hungrycoyote, elwior

        when Democrats are in power, to rein them in. They do not talk about deficits when Republicans are in power. Who was it that said 'deficits don't matter'? Dick Cheney. Any trust Republicans have on this issue is based on lies.

        “Last night I stayed up late playing poker with Tarot cards. I got a full house and four people died.” -- Steven Wright

        by tytalus on Tue Oct 16, 2012 at 09:53:22 AM PDT

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        •  As a lifelong Republican this is one of (2+ / 0-)
          Recommended by:
          hungrycoyote, elwior

          many, many, many reasons why I'm supporting the "other" team for the foreseeable future.  Deficits do (eventually) matter.  Shoot, what are we currently paying on interest on the debt?  Isn't it somewhere in the $500 to $600 billion a year figure?

          Can you think of other programs to support that would be better for society than spending $500 billion a year on interest payments?  I sure can.

          We cannot solve our problems with the same thinking we used when we created them. Albert Einstein

          by theotherside on Tue Oct 16, 2012 at 10:12:02 AM PDT

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          •  On that, I think we agree (2+ / 0-)
            Recommended by:
            hungrycoyote, elwior

            I'm considering what arguments Democrats will need, the next time they balance the budget and Republicans come back with tax cuts for the rich to fix that surplus problem.

            “Last night I stayed up late playing poker with Tarot cards. I got a full house and four people died.” -- Steven Wright

            by tytalus on Tue Oct 16, 2012 at 10:25:31 AM PDT

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