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View Diary: China Cuts US Credit Rating. Obama Cuts Hawaii Vacation Short. (171 comments)

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  •  I think Krugman is beginning to come around (2+ / 0-)
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    Larsstephens, ImpeachKingBushII

    to the MMT perspective. His most recent arguments against austerity are very much on point. I think many MMT'er would go a lot further with stimulus and most importantly a job guarantee program of some sort to eliminate voluntary unemployment. With the government as the employer of last resort providing what would form the economy-wide pay base for performing useful work instead of paying a stipend for being idled. This employment from the bottom up would be intensely stimulative since it will all be spent on consumption and basic needs. This is a buffer pool of labor maintained in a working state rather than an idle state, a factor that should facilitate a return to private sector employment as the economy improves. The Fed does a similar thing with reserves. When reserves build beyond requirements interest rate are pushed down. The Fed sells bonds to put those excess reserves to work. When reserves fall short the fed buys bonds sending money back for reserve duty. Fed is mandated to maximize employment and productive output while keeping prices and interest stable. A big mandate since all they really have solid control over is the interest rate. But the idea of maximum or full employment is enshrined in law - if only it were enshrined in fact. Problem is the neoliberal belief that inflation goes rampant as soon as unemployment dips below 6%. They have no evidence, but they ARE convinced of this and a number of other fallacies. They neglect to mention that at peak employment during the Clinton years there was only 1 job seeker per job opening. That was as close as you get to full employment. And wasn't that inflation in the late 90's and 2000 just awful? NOT! But that is another rant.

    •  we appear to think the same way... (1+ / 0-)
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      Old Surgeon

      ...I've always advocated for a work program similar to FDR's as a social safety net, not meant as a primary or permanent jobs source. I had hoped Obama would emulate him more in deeds not just in words. But  he's coming around. I'm a lot more comfortable knowing he's in the WH. Thanks for your input. It was was very informative and a real learning experience for me. Look forward to your next diary.

      "I wish to have no connection with any ship that does not sail fast, for I intend to go in harm's way." John Paul Jones

      by ImpeachKingBushII on Wed Dec 26, 2012 at 08:20:17 PM PST

      [ Parent ]

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