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What is the character flaw in Americans that we seem to revel in economic stagnation?  Why don't Americans want to have a full employment economy? The most important thing stopping this country from significantly increasing our standards of living and economic well-being is the myth that the Govt's budget is the same as a household budget.

First, lets look at the proof that our economy is only mediocre using that icky stuff that conservatives hate so much, facts and data.  The twin concepts of the unemployment rate and real median income form the foundation of our economic stagnation.  They should be seen in a yin-yang format and not as one concept being necessarily more important than the other.  They are inextricably linked.
We'll start with the unemployment rate:

You'll notice that since 1980, we've had only three short periods (totaling just over 7 years) of what anyone could honestly describe as even near full employment, <5% unemployment (still much too high IMHO).  Thats 7 years out of 33, an embarrassing 21% of the time.  Without knowing anything else, I would think this is more than enough evidence to know that we are doing something wrong.  And now the 2nd concept, real median income.  As you can see in the graph below, median incomes trend up when unemployment goes down.  This much should be obvious, as the labor market tightens or the supply of the unemployed goes down, the price for labor goes up.  Just like in any other market.  And when median incomes go up, purchasing power and aggregate demand increase, which leads to opportunistic capitalists expanding production and investment in order to try and capture the increased revenue that comes from increased demand.  And when capitalists expand production and investment, they have to hire more workers.  And when they hire more workers, there are less unemployed, which leads to employers having to pay increased wages to buy the decreasing number of unemployed workers.  Which leads to an increase in purchasing power and aggregate demand.  And around and around we go upwards in a virtuous cycle.
So what is the key to sustaining real income growth for the middle and lower class, I bet you all know the answer by now, maintaining full employment.  But how you might ask, we've never been able to maintain full employment?  Follow me below the fold for the answer.

As productivity increases combine with globalization, the private sector simply doesn't need every American worker to produce the total amount of goods and services that Americans can afford to buy.  This is natural in a market economy, if a business owner can produce more goods with less people, then he will.  This is why its not productive for we progressives to complain about businesses not hiring people even with their record levels of corporate profits.  Very few companies are going to expand their workforce just because it will help their fellow Americans, they only do so when increasing sales compel them to.  This is a process that will not end, there is no going backwards in the world of technological and productivity advances.  Therefore, we must re-conceptualize how to employ everyone that wants to work.  
There is only one institution that has the financial capability to employ the unneeded labor, and that is We The People through our elected representatives.  Keep in mind, that an expanded employment program funded by Congress is not meant to be a temporary stimulus measure, its meant to be a permanent fixture that is there to maintain full employment and production. But how can we afford it?  This is the question that allows us to circle back to the myth that we started with at the top of the post, that our Govt's budget is limited in the exact same way as your household budget.  This is actually an illogical position to hold.  The US dollar is an invention, as all fiat money is.  Just as irrational as it would be to claim that an NFL stadium can run out of tickets or the NY subway system can run out of its own transit tokens.  Its impossible for any issuer of any fiat token to run out of that token.

So lets focus on how the amount of money impacts the economic activity of the economy.  There are two main types of money in our monetary system, bank deposits and Govt dollars.  Bank deposits are the main form of money that we transact with on a daily basis, unless you use cash.  And the other is created by the US Govt, cash, reserves, and T-bonds.  Bank deposits expand when private debt expands and Govt money expands when the Govt is spending more of its tokens than it collects back in taxes.  Think about the way bank deposits are created, logically, no bank would ever credit your bank account for free.  You either have to transfer your existing bank deposits from one bank to another, deposit Govt issued cash, or take out a loan.  In exchange for the increased bank deposits when you take out a loan, you must also take on a corresponding liability (your promissory loan note).  There are no freebies in the world of bank deposits and private money.

Now lets focus on Govt money, how its created.  This is most easily understood through a rundown of the accounting that takes place when the Govt deficit spends = create money.  So lets start with the Govt issuing a T-bond for $1000.

Person A buys a T-bond:
Person A's bank deposit                                                   -1000
Person A's Bank's Reserve account at the Fed                      -1000
Person A's Securities (T-bond) account at the Fed               +1000
Treasury's General Reserve Account at the Fed                    +1000
All accountants balance.

Now the deficit spending (lets use a $1000 SS payment for example):
Treasury's General Reserve Account at the Fed                    -1000
SS Recipient B's Bank's reserve account at the Fed              +1000
SS Recipient B's checking account                                     +1000

Now the accounting doesn't balance, there is a net +1000 in the economy. When the Treasury spent their reserves and sent them to SS recipient B's account, Person A didn't get a debit for $1000. Person A's Federal Reserve accounting notation never changed. And this is the accounting mechanics of how deficit spending adds to the amount of money the private sector has. This is why if you don't do the accounting right, you can't get the macroeconomics right. This is how simple it is for the Govt to create its tokens, by crediting accounting notations at the Federal Reserve.

Now back to charts and graphs:
Here's the most important chart in the world.  It shows the levels of private debt and Govt "debt", now remember that both these debts are equivalent to the amount of money available for exchange.  This graph is scaled as a % of GDP

You can see that the only two periods of private sector debt deleveraging (which is equivalent to the money supply shrinking) coincide with Depressions (in 2009 the Govt stepped in with enough money creation to keep us from a full blown Depression like they are experiencing throughout the Eurozone).  This is an example of correlation actually being causation.   Lets look at the amount of total private debt=money in constant nominal dollar amounts to better understand the scale of money we are talking about here:
Yes, thats over $50 trillion worth of private debt=money created since 1980.  And its no coincidence either that when the money supply goes up, economic activity or spending is able to go up as well.  Remember also that this is in addition to the the money the US Govt has created during the same time period.  T-bonds outstanding were $800 billion in 1980 and almost $16 trillion today.  Here's the catch, when private debt goes up, so does the amount of money it takes to service that debt through interest costs.  And when it goes down or even stays flat recessions and depressions are the result.  The mid-80's experienced a private deb expansion with the S & L scandal and unemployment came down.  Then private debt came down a little in the late 80's and early 90's and the unemployment rate went up.  Then we experienced the dot-com private debt boom which gave us the Clinton surplus and unemployment under 4%, then a small blip in private debt expansion caused the recession that started W's Presidency.  And finally, the housing private debt boom that once again caused unemployment to get into the 4% range.  And when that private sector debt could not be sustained any longer, we now have full-on private debt reduction leading to the Great Recession or Stagnation.  This is why the whole national debt debate is so comical, instead of focusing on the real problem which is the level of private debt, we are obsessing over the only debt that doesn't really matter, US T-bonds.  If we want to have a more sustainable economy, we must endeavor to limit and stabilize the growth in private debt, and substitute risk-free Govt money in its place.  At the end of the day, a growing economy with a growing population, must have a growing money supply in order to maintain the financial standard of living.  Its just a matter of us getting comfortable with the concept of We The People growing the money supply debt-free or growing the money supply with private debt owed to bankers.  I think the evidence is pretty clear which one of these methods has been tried and failed over the last 100 years.  Maybe its time for us to accept a new economic paradigm.

A word on inflation:

You might ask, but how can all those trillions of dollars be created without inflation increasing.  The answer lies in three places: productivity increases, the trade deficit (those US dollars are leaving the country, so they can't be used to bid up domestic prices), and savings (if you have $1 million, and you never spend any of it, there's no way for that money to bid up prices).  After all, inflation is the ratio of money SPENT to goods and services for sale.  Imagine an economy of two people that produces 10 apples a year.  And there are $10 in the economy.  The price level is 10 apples / $10.  Now lets say that productivity increases allow these two to produce 20 apples.  If the amount of money stays the same, we have deflation: 20 apples / $10.  If the money supply grows in an equal amount with productivity, inflation is zero: 20 apples / $20.  If the money supply grows faster than the production of goods and services, we get inflation: 20 apples / $25 dollars.  So creating money does not by itself guarantee inflation, its a ratio.  Furthermore, inflation doesn't care about whether its Govt making the money or the private sector making the money.  So if we tamp down on unstable private sector debt = money creation, and substitute the stability of Govt money, we will all be better off.  And inflation is not something to worry about solely because the money is coming from the Govt and not the private sector.  It doesn't matter where the money comes from.  I will have much more to say about inflation in future posts.  Thanks for reading everyone.  

And remember, MMT = Reality

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Comment Preferences

  •  Tip Jar (7+ / 0-)

    "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

    by Auburn Parks on Sun Sep 29, 2013 at 10:55:51 AM PDT

  •  Many Americans are stupid thanks to evil (2+ / 0-)
    Recommended by:
    radmul, Oaktown Girl

    Rotten Ronnie & the evil RW extremist Rs.

    Of course his country was created for evil 1% only, so as long as they are happy.....

    nosotros no somos estúpidos

    by a2nite on Sun Sep 29, 2013 at 11:09:07 AM PDT

  •  "we seem to revel in economic stagnation?" (1+ / 0-)
    Recommended by:
    Gooserock

    Can someone point me to the reveling?

    There is no existence without doubt.

    by Mark Lippman on Sun Sep 29, 2013 at 11:10:55 AM PDT

    •  Let me submit to you as an example of (1+ / 0-)
      Recommended by:
      psyched

      reveling the entire GOP.  The GOP wants the Govt to extract more money out of the private sector through taxation than it provides through spending.  They seem to hate workers and don't care about the unemployment rate.

      "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

      by Auburn Parks on Sun Sep 29, 2013 at 11:15:11 AM PDT

      [ Parent ]

      •  At the top of the diary you referenced "Americans" (0+ / 0-)

        and citing the GOP as an example doesn't work for me.  
        GOP ≠Americans.  A good day for America is a bad day for the GOP and a bad day for America is a good day for the GOP and that rule of thumb is all anyone needs to know about the reason for Republican reveling.

        I wouldn't correlate unemployment with increasing income inequality.  From 1967 to 2012, income inequality has slowly and steadily increased with the majority of it coming after the introduction of the economics known as Voodoo.  Factors like globalization and the devaluation of labor correlate with the problem of ever-increasing income inequality.  Full employment can't solve that problem with a minimum wage falling below the poverty line.  Voodoo has other elements too that tilt the system to the advantage of a privileged few.

        When you get to spending, the debt, and Social Security, I have to pause.  Social Security is funded from payroll taxes and even if spending exceeds revenue these days there's a trust fund holding $2.6 trillion is it in guaranteed government bonds to keep the program funded for a while.

        I don't believe MMT would ignore the revenue from payroll taxes or the trust fund balance but it's Sunday and I'd much rather go for a swim than write more about this.

        There is no existence without doubt.

        by Mark Lippman on Sun Sep 29, 2013 at 11:49:21 AM PDT

        [ Parent ]

        •  Upon re-reading I want to be clear that the (0+ / 0-)

          Social Security Trust Fund doesn't hold bonds because it was necessary for the government to borrow to pay benefits.  No, it holds bonds because revenue collected from payroll taxes exceeded benefits paid for many years and the surplus was borrowed by the General Fund to pay for other government needs.  This should go without saying but it's hard to say who knows what so I'd rather risk overexplaining.  Now for a swim.

          There is no existence without doubt.

          by Mark Lippman on Sun Sep 29, 2013 at 11:53:39 AM PDT

          [ Parent ]

        •  Mark, your claim needs to account for the (1+ / 0-)
          Recommended by:
          psyched

          very clear correlation between rising median income and increasing employment, and its opposite, the decreasing median income that accompanies high rates of unemployment.  Even if there were no taxes at all, the unemployed labor there is, the less you have to pay for it.  Supply and demand, just like every other market.  So while high tax rates on high incomes (not $250,000 a year like most dems want, since people making that much money have next to no say in corporate governance), over $5 million a year perhaps, would indeed help to circulate more of that money into the hands of the middle and working class, thats not the most important reason for stagnating wages.  If you want wages to go up consistently, we must maintain full employment.  There's no way around that foundational principle.

          Where you get it wrong is by stating that the Govt needs to borrow the surplus payroll tax money.  This is illogical, T-bonds are there for private sector savings, just like CD's and savings accounts are at your local bank.  If the Govt taxes $1 or $10 trillion, the ability of Congress to direct its bank (the Fed) to credit and debit accounts on its spreadsheet is completely unchanged.  You need to get passed the household budget analogy paradigm.  Its illogical to think the Govt must get its tokens from other people before it can create the tokens that only Congress has the Constitutional authority to make.

          MMT = Reality

          "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

          by Auburn Parks on Sun Sep 29, 2013 at 12:17:38 PM PDT

          [ Parent ]

    •  We spin record-breaking income inequality... (4+ / 0-)
      Recommended by:
      limpidglass, corvo, janemas, Oaktown Girl

      ...as a "RECOVERY." That is how DINOs--and so many others--revel in economic stagnation. This administration has openly/publicly proclaimed that it specifically supports moderate, Republican economic policy as it existed in the 1980's. That's a travesty unto itself. And, clearly, you think that's just peachy, right?

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Sun Sep 29, 2013 at 11:25:39 AM PDT

      [ Parent ]

      •  Obama, on the record, on Reaganomics Dec. 2012... (2+ / 0-)
        Recommended by:
        corvo, Oaktown Girl

        "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

        by bobswern on Sun Sep 29, 2013 at 11:30:24 AM PDT

        [ Parent ]

      •  I haven't seen the Robert Reich documentary but (0+ / 0-)

        I was on the conference call with him and Dean the other day.  I don't know who this "we" is that's doing the spinning of which you speak.  

        To me this is a matter of perception. With every economic report that comes out the GOP talks about how rotten it is and if the report isn't bad enough for their agenda we get to hear Jack Welch say "Dese numbiz don't smell right."
        At least we have an insight into why Republicans are such a failure with Arithmetic.  They think it's a discipline that involves the use of their noses.

        Everyone knows the recovery is dismal.  And everyone knows that each recovery since 1980 is weaker than the last.  And everyone knows that the weakness is due to the worsening income inequality.  Of course each recovery is weaker than the last.  The question is how to reverse this disastrous course.  I'm not interesting in bickering with my partners especially when they don't bring any constructive ideas.

        There is no existence without doubt.

        by Mark Lippman on Sun Sep 29, 2013 at 12:02:45 PM PDT

        [ Parent ]

        •  One more thing about Reich and Dean . . . (0+ / 0-)

          I don't agree with the optimism that they expressed but I understand they have to function as cheerleaders.  What else could they say?  Things are terrible.  There's no hope. Abandon ship.  

          There is no existence without doubt.

          by Mark Lippman on Sun Sep 29, 2013 at 12:05:29 PM PDT

          [ Parent ]

        •  For you to submit that I didn't bring any (2+ / 0-)
          Recommended by:
          psyched, bobswern

          constructive ideas to the debate is actually insulting given the time I spent preparing this post.  The only answer that most progressives have is to keep the deficit relatively stable but tax the rich more and then spend additional money on the middle and working class.  This has failed as a political message.  Its why Dems don't have overwhelming majorities around the country.  Americans, culturally speaking, don't want to pay higher taxes.  I don't blame them.  I don't want to give the Govt more money that it doesn't need and can't use.  If you think Americans are ever going to vote to have European levels of taxing and spending (30%-40%) then you are just flat out wrong.  Robert Reich thinks the Govt must get its own money before it can spend.  He is a classic neo-classical economist in that he views the Govt's budget in the same way as a household budget.  This is obviously false.  The Deficit is key to sustainable private sector economic growth.  

          30% spending and 25% taxing (as a % of GDP) is practically no different than 25% spending and 20% taxing or 20% and 15%.  In all 3 of these examples, the Govt is only adding 5% of GDP worth of new money to the economy.  That number needs to be bigger, there is no way around it.

          MMT = Reality

          "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

          by Auburn Parks on Sun Sep 29, 2013 at 12:27:21 PM PDT

          [ Parent ]

  •  Who Says Americans Are Satisfied? (1+ / 0-)
    Recommended by:
    librarisingnsf

    When have they been given the choice for these kinds of economics? What major institutional force in and around the country supports these kind of economics?

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Sun Sep 29, 2013 at 11:11:50 AM PDT

    •  I view the evidence for the satisfaction of (2+ / 0-)
      Recommended by:
      psyched, Oaktown Girl

      to be the unemployment rate.  As the graph of unemployment I provided demonstrates, Americans don't seem to have any problems with the immoral levels of unemployment and idleness over the last 3 decades.  They continue to frequent media that perpetuates the lie that GOvt deficit spending is actually bad for the economy (I can't imagine anything more ridiculous).  

      "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

      by Auburn Parks on Sun Sep 29, 2013 at 11:19:12 AM PDT

      [ Parent ]

  •  Well, the alternative to debt is theft. So, (0+ / 0-)

    I see an increase in our obligations to each other and our recognition of same as a positive.
    On the other hand, everyone doing someone else's bidding for a needed paycheck is not my ideal for society.
    Moving between the work and the home cage in cages on wheels is not my idea of ideal, either.

    While I do not agree with the economists' dictum that "man prefers leisure and must be bribed to work," people having to work otherwise they can't eat is not an ideal, or a moral condition. So, when politicians proudly proclaim "no free lunch" I know who's to be shunned. Especially when they are members of Congress and the originators of all dollars.

    Try thinking of dollars as if they were pens and pencils and then consider the effect of Congress confiscating everyone and only doling them out to the select.

  •  Re (0+ / 0-)
    Just as irrational as it would be to claim that an NFL stadium can run out of tickets or the NY subway system can run out of its own transit tokens.
    Both of these institutions can run out of seats, though, which would make printing more tickets/tokens than a certain amount economic suicide.

    (-5.50,-6.67): Left Libertarian
    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

    by Sparhawk on Sun Sep 29, 2013 at 11:24:53 AM PDT

    •  Sure, but just as how the economy and (1+ / 0-)
      Recommended by:
      psyched

      population are constantly growing, the NFL stadium's number of seats are constantly growing through infrastructure investment (money to expand the stadium).  The analogy works, you just conveniently left out one of the most important facts in order to support your ideological POV.

      "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

      by Auburn Parks on Sun Sep 29, 2013 at 11:39:04 AM PDT

      [ Parent ]

  •  Most Americans are neither satisfied with (1+ / 0-)
    Recommended by:
    radmul

    nor reveling in "economic mediocrity."  Maybe you, the diarist, are doing so, because "mediocrity" is hardly acceptable even as an ironic euphemism for what's actually going on.

    Consider: Half of Americans don't vote, and many of the ones who do feel like they're making a Hobson's choice each time they do so -- and of course the choices are predetermined by the moneyed interests.

    I submit that at least half of America is emotionally entirely dissociated from The Great American Experiment in Democracy, and many of the rest are resigned to lesser-evilism.

    Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

    by corvo on Sun Sep 29, 2013 at 11:57:55 AM PDT

    •  All the things that you describe are true, (1+ / 0-)
      Recommended by:
      psyched

      but whereas you don't think its evidence of complacency and satisfaction with mediocrity, I do.  We are both welcome to our opinions, and we can define things in the ways the make the most sense for us personally.  I just can't figure out how else to describe our situation given the things that you insight-fully point out.

      "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

      by Auburn Parks on Sun Sep 29, 2013 at 12:21:05 PM PDT

      [ Parent ]

  •  I don't agree with what you said: (0+ / 0-)

    "The most important thing stopping this country from significantly increasing our standards of living and economic well-being is the myth that the Govt's budget is the same as a household budget."

    You are insulting the intelligence of the American people. We understand that the government has the ability to adjust its income if it chooses. We understand that an ordinary family cannot make such and adjustment. But what we mean when we say that the government should be run like a family is that money should be spent on sensible things that will build a future for all the members of the family.

    Might and Right are always fighting, in our youth it seems exciting. Right is always nearly winning, Might can hardly keep from grinning. -- Clarence Day

    by hestal on Sun Sep 29, 2013 at 03:52:43 PM PDT

    •  No, the difference is that unlike your family (1+ / 0-)
      Recommended by:
      psyched

      the Govt issues the US dollar.  Its not about the Govt raising taxes.  If taxes were zero dollars, the Federal Govt still has the infinite capacity to enter numbers into the Fed's computer spreadsheet.  Did you even read the post?

      If you think the Govt is revenue constrained, just like your family, I'm sorry brother but thats just illogical.

      MMT = Reality

      "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

      by Auburn Parks on Sun Sep 29, 2013 at 04:00:29 PM PDT

      [ Parent ]

      •  I said nothing about taxes, and I said nothing (0+ / 1-)
        Recommended by:
        Hidden by:
        psyched

        government being "constrained." You are imagining things, just as you were when you made the stupid statement that I quoted above.

        And in the second response to my comment you again accused me of saying things that I never said. So, clearly, you did not even read my comment. I told you at the start that I disagreed with your statement and  your blood pressure went up. You lost control and fired off the first comment before you even edited it, and then you thought of something else to hurl at me, so you rushed to post it less than two minutes later.

        Go away, kiddo, you are beginning to annoy me.

        Might and Right are always fighting, in our youth it seems exciting. Right is always nearly winning, Might can hardly keep from grinning. -- Clarence Day

        by hestal on Sun Sep 29, 2013 at 07:34:30 PM PDT

        [ Parent ]

        •  really? this is your statement: (1+ / 0-)
          Recommended by:
          psyched

          "We understand that the government has the ability to adjust its income if it chooses. We understand that an ordinary family cannot make such and adjustment."

          Does "adjust its income" not refer to taxes?  How else does the Govt get income?  So much for you saying nothing about taxes.

          And here's the other part of what you wrote that I was responding to:
          "You are insulting the intelligence of the American people."
          They deserve it.  

          So there you have it.  I copied and pasted your exact words.  So obviously I read your comment and responded directly to what you said.  I included no non-sequiturs.  I put no words in your mouth.  I created no strawmen.  I simply responded to directly to your comment.  Seriously, did you even read my comments to you?

          And finally, you came to my post, and you responded to me.  Nobody is forcing you to read what I wrote.  I didn't hold a gun to your head and make you comment here.  If I am annoying to you, feel free to not respond and we can continue to ignore each other.  Good day to you sir or madam

          MMT = Reality

          "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

          by Auburn Parks on Sun Sep 29, 2013 at 08:01:43 PM PDT

          [ Parent ]

        •  Hide rated (0+ / 0-)

          for ad hominem attack on the diarist.
          .
          .


          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 Sep 29, 2013 at 08:49:17 PM PDT

          [ Parent ]

          •  I would like to hear you justification of your (0+ / 0-)

            hide rating.

            Might and Right are always fighting, in our youth it seems exciting. Right is always nearly winning, Might can hardly keep from grinning. -- Clarence Day

            by hestal on Mon Sep 30, 2013 at 03:19:56 AM PDT

            [ Parent ]

            •  It was hide rated (0+ / 0-)

              as I said, for ad hominem attack on the diarist. That should be enough explanation.
              .
              .


              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 Mon Sep 30, 2013 at 12:21:29 PM PDT

              [ Parent ]

    •  Oh, and the American people most assuredly (2+ / 0-)
      Recommended by:
      Wbern, psyched

      deserve to have their intelligence insulted since they keep electing Republicans and Democrats that want to shrink the deficit.  Its bad for the country for the Govt to extract more money from the private economy through taxation than it adds to the money supply by spending (running a surplus).  Clinton's surplus is hugely responsible for the terrible state of our economy today.

      MMT = Reality

      "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

      by Auburn Parks on Sun Sep 29, 2013 at 04:02:40 PM PDT

      [ Parent ]

  •  A wonderful diary (0+ / 0-)

    Keep up the good work!
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    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 Sep 29, 2013 at 08:51:21 PM PDT

  •  I liked the diary (0+ / 0-)

    Auburn. Thanks. I agree that far too many Americans think in terms of the Household analogy and think the Government has limited financial resources and must balance its budget the way a family does. I've even blogged about that when Romney tried to use the Household analogy in an Infographic his campaign generated last year.

    That said, I'm not sure that our belief in this is why we accept mediocrity. I think a change occurred in American thinking about the influence Presidents and politicians have over the economy during the 1970s and the Ford and Carter Administrations. First, Ford, took the classical Republican position emphasizing non-intervention in the economy, and relied on the Fed for any interventions. Second, then Carter, the first Democratic President to actually believe in the Household analogy, consistently prioritized inflation control, and budget balancing (attempted), rather than unemployment in his four years. So, basically he took the position that the economy would get better if he practiced austerity and put his faith in the Fed to constrain inflation.

    By 1981, I think people had lost faith in the ability of Presidents to manage the economy's cycles through deficit spending. Reagan, of course, brought in supply-side economics first and had his tax cut intervention, but the "good" economy of the 1980s seemed to be a product of FED actions and bank activities rather than due to Federal fiscal policy. By the time of Bush's Administration, the pattern was established with the aid of the mass media that the power of fiscal policy involving deficit spending to affect the economy was limited, and that pattern maintained itself through the Clinton and most of the Bush43 Administrations.
    By the time of the crash, most people accepted that Fed and monetary policy were more important than fiscal policy, and this belief goes along with the idea that the President really isn't responsible for a poor economy.

    So that's where we stand now, and it implies that people would be less angry at Executives who didn't make jobs the no. 1 priority, as Presidents did from the end of the War until the Ford and Carter Administrations.

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