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In what is just the most recent example of The Big Lie at work (that the Govt's finances are just like your personal finances and that deficit spending is inherently inflationary), Senator Warren has provided a perfect example of the kind of terrible political choices that Dems must make when they accept the Right Wing framing on deficits. Both Cons and Dems agree on the ridiculous proposition that deficits are actually harmful to the economy and nation. The Cons want to cut spending to reduce the "harmful" deficit and Dems want to increase taxes to reduce the "harmful" deficit.

What is the deficit? The Federal deficit is simply the difference between the amount of money the Govt adds to the economy through spending and the amount of money that it withdraws through taxation. Thats it, not complicated.

So why would Warren and Obama support a policy that has absolutely no chance of passing Congress? Thats easy, they want to make the Cons look bad by choosing rich people over students. The problem with this position is that we don't need tax revenue from rich people in order to spend on socially beneficial programs. The US Dollar comes from the US Govt, not rich people and not from China.

Lets set up a very simple logic chain and analyze Warren's proposal:

1) The US Govt issues the US Dollar. The ability of the Dollar creator to issue (spend) dollars is obviously infinite.

2) The more educated the populace the better

3) High debt loads and tuition are bad for students and the nation

I feel pretty confident that these three assumptions are broad enough to be roughly agreed upon by rational participants.....

So why does the Govt want to make a profit off of students by lending them money instead of just giving them the education?

What do rich people have to do with higher education? Rich people dont add much to inflation from a demand-pull side so if you think spending $60-$100 billion more per year to give every person a chance at a higher education would be too inflationary, raising taxes on millionaires wont solve that problem.

Why is it more important for Dems to show that Con policy favors the rich than it is to actually help the country and our students?

Please, can some of my fellow progressives explain to me why they included the Buffet rule poison pill that guarantees the failure of what is just a marginally better policy than our current student loan policy?

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Comment Preferences

  •  Tip Jar (6+ / 0-)

    "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

    by Auburn Parks on Tue Jun 10, 2014 at 02:14:19 PM PDT

  •  uhhh... (4+ / 0-)
    Recommended by:
    TomP, doc2, Nowhere Man, Piren

    So you're saying there's no such thing as too much debt? You have a fundamental misreading of Keynesian economics. Keynesian economics accepts debt as a good thing, so long as the economy grows at around the same pace as the debt. In other words, the debt to GDP ratio should not grow except in bad economic times.

    •  The diarist is not arguing from a Keysnesian... (11+ / 0-)

      ...point of view;  he's arguing from a modern monetary theorist's point of view.

      Don't tell me what you believe, show me what you do and I will tell you what you believe.

      by Meteor Blades on Tue Jun 10, 2014 at 02:23:54 PM PDT

      [ Parent ]

      •  From a primitive version of it at that. Even some (6+ / 0-)

        MMT folks acknowledge that printing unlimited quantities of money will lead to inflation and/or currency devaluation.

      •  is this how progressives/write? (1+ / 0-)
        Recommended by:
        Kevskos

        decent wages don't eliminate jobs. Republicans eliminate jobs; and workers, and prospects, and then excuse it all and call for more austerity. there is no end to their ignorant, arrogant avarice. only political dinosaurs support their treachery.

        by renzo capetti on Tue Jun 10, 2014 at 03:09:11 PM PDT

        [ Parent ]

      •  I have no clue what he is arguing, can someone (2+ / 0-)
        Recommended by:
        elwior, DeeDee001

        explain it?  Is he simply saying the government should print money to pay for student loans?  I'm all for government-paid 4 year tuition.  But I can't tell what the diarist is proposing or complaining about.

        "Wrong, Do it again!" "If you don't learn to compete, you can't have any pudding. How can you have any pudding if you don't learn to compete?" "You! Yes, you occupying the bikesheds, stand still laddy!"

        by ban48 on Tue Jun 10, 2014 at 03:10:06 PM PDT

        [ Parent ]

        •  All money is printed. In 1980 the GDP of the USA (0+ / 0-)

          was $4 Trillion and the amount of money the Govt had deficit spent to that point was $1 trillion.

          Fast forward 34 years and the numbers are $16 Trillion each.

          Where did that money come from?

          Did it come from China?

          or rich people?

          What does raising taxes on the wealthy have to do with ending student debt servitude?

          Too much money creation CAN lead to inflation, but just like how tax cuts for millionaires dont help the economy becausee they cant buy enough pairs of jeans to employ the American people, tax increases on the wealthy dont stop inflation because they can't buy enough jeans to drive up the CPI.

          Whats so hard about this simple concept to understand?

          "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

          by Auburn Parks on Tue Jun 10, 2014 at 03:14:41 PM PDT

          [ Parent ]

          •  The government has forever to pay off that debt at (1+ / 0-)

            an incredibly low effective interest rate. Most of that debt is owed by the US government to US tax payers. Where are the bond market vigilantes like Rick Santelli?
            The US dollar is very healthy and the US is better off economically than most every other country. Your theory is not being proven in reality.

            Credo qua absurdum.

            http://en.wikipedia.org/...

          •  Well, yes, the government can print money. (1+ / 0-)

            And if that is the point you are making, OK.  You appear to be saying 'why doesn't anyone understand what i'm saying" while simultaneously not saying what you want people to understand.  Did I miss something?  I don't see where in your diary you simply suggest the government print more money.  Or is it where you 'analyze Warren's proposal' but are actually espousing your own proposal?

            "Wrong, Do it again!" "If you don't learn to compete, you can't have any pudding. How can you have any pudding if you don't learn to compete?" "You! Yes, you occupying the bikesheds, stand still laddy!"

            by ban48 on Tue Jun 10, 2014 at 04:45:11 PM PDT

            [ Parent ]

            •  It is you who are having a hard time understanding (0+ / 0-)

              If you simply replace the word "print" in your comment with the word "spend" you would describing my position accurately.

              Deficit spending = printing money

              Which is a complete misnomer as the FEderal Govt doesn't actually spend much cash at all. Its 99% digital.

              SO yes, I advocate for the Govt creating more money by spending on its computer programs so that we can have a more educated and prosperous society and not force our younger generations to take on $1.3 Trillion of debt so the Govt can make a profit that it doesn't need.

              Warren is saying we must raise taxes on millionaires in order to pay for lessening the burden on students.

              A) we don't need the more taxes from rich people to pay for our spending. (Tax the rich for income inequality, not because we need their money) This just perpetuates the Big Lie that deficits are inflationary and dangerous and misleads the public about the nature of our Govt's budget.

              B) This guarantees that it will never pass as Cons will never raise taxes on the wealthy

              "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

              by Auburn Parks on Tue Jun 10, 2014 at 06:15:34 PM PDT

              [ Parent ]

              •  Deficit spending isn't the same as printing money. (0+ / 0-)

                Deficit spending implies/requires the selling of bonds which eventually have to be repaid via future tax collections.  Printing money accumulates no such debt and never has to be repaid.  And I am saying "Yes.  The federal government certainly can simply print money and spend it, and the world will not end".  And that is not the same as deficit spending.

                "Wrong, Do it again!" "If you don't learn to compete, you can't have any pudding. How can you have any pudding if you don't learn to compete?" "You! Yes, you occupying the bikesheds, stand still laddy!"

                by ban48 on Thu Jun 12, 2014 at 06:48:33 PM PDT

                [ Parent ]

                •  Oh yes it does. You simply don't understand the (0+ / 0-)

                  process well enough.

                  The Govt spends via the Fed crediting member banks' reserve accounts at the Fed. This is turn causes the banks to credit the actual bank customers demand deposit account. One is Govt money, the other is essentially bank money.

                  So all Govt spending results in an increase in dollar deposits at the Fed. The process is reversed for taxation, with all taxation resulting in a decrease in dollar deposits at the Fed.

                  So a deficit is a net increase in dollar deposits at the Fed. These dollar deposits at the Fed are demand deposits and called Reserves.

                  Issuing bonds results in a debit to reserve accounts at the Fed (checking or demand deposit accounts) and a credit to securities accounts (Timed accounts or savings accounts, very similar to a CD at your local bank).

                  Guess what, both reserves and securities are on the liability side of the Govts balance sheet. They are both "debt" from the POV of the Govt and they are both assets on the balance sheet of the private citizen that has them.

                  Therefore all deficit spending results in a NET increase in dollar denominated Govt liabilities or equivalently private sector assets.

                  Now if you dont want to classify the money in securities or "savings" accounts at the Fed as money, thats fine, but in order to be consistent, you must also not classify your own digital digits in savings accounts as "money" also. Thats a strange POV, but at least you would be consistent.

                  Anyways, thats how it works. Its just simple accounting, which I will provide for you in the next comment.

                  "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

                  by Auburn Parks on Sat Jun 14, 2014 at 05:46:41 AM PDT

                  [ Parent ]

                •  Here's the accounting: (0+ / 0-)

                  Deficit spending, issuing a $1000 bond:

                  Bond Buyer A's checking account: -1000
                  Bond Buyer A's bank's reserve account: -1000
                  Bond Buyer A's securities account: +1000
                  TSY General Reserve account: +1000

                  So the Bond buyer's wealth is the exact same and the number of reserves at the Fed is the same, the balance's balance:

                  Deficit spending $1000 to SS recipient B:

                  SS Recipient B's checking account: +1000
                  SS Recipient B's Banks reserve account: +1000
                  TSY General Reserve Account: -1000

                  There you have it, the balances no longer balance. The reserve activity balances with the TSY going down and the bank's reserve account increasing, but the SS recipient has a brand new $1000 that they didn't have before.

                  In other words, the Bond buyer loses nothing, they simply exchange dollar deposits at a private bank for dollar deposits at the Federal Reserve bank, and the recipient of Govt spending is $1000 wealthier.

                  If you don't get the accounting right, you can't get the economics right.

                  "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

                  by Auburn Parks on Sat Jun 14, 2014 at 05:57:41 AM PDT

                  [ Parent ]

      •  For the record Blades, simply pointing out the (1+ / 0-)
        Recommended by:
        jellyyork

        realities of our current monetary system is not a "POV".

        Either the Govt has the authority to create its own currency or it doesn't, its not a matter of opinion.

        Either Dollars are fiat units of measurement and don't exist in nature and are therefore are in infinite supply because we invented them or they're not, again, this isn't a matter of opinion.

        Either gravity exists or it doesn't

        Either evolution is the process of life or its not.

        Either Govt deficits = non-Govt surpluses or they don't. There is an objective reality to the world. MMT simply acknowledges certain obvious realities.

        "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

        by Auburn Parks on Tue Jun 10, 2014 at 03:35:03 PM PDT

        [ Parent ]

        •  For the record, MMT, like all economic theory... (2+ / 0-)
          Recommended by:
          chuck utzman, Piren

          ...rests on facts, but theorists observe those and interpret them which creates a point of view. We can, of course, all stipulate to certain facts, but after we decide that it's true that the government can print as many dollars as it wants, there are disparate points of view about what the outcome will be if the government prints double or triple or 50 times as many dollars as are now being printed.

          I happen to agree with a lot of MMT theory, especially on full employment, and I agree that the government should invest in free higher education to all who are capable. Likewise, infrastructure.

          But comparing the subjective nature of fiat money and money supply with gravity and evolution goes too far, in my opinion.

          I also don't think you will persuade many people to agree with your analysis if you keep implying that the reason they say they can't understand you is because they are simpletons. Persuasion requires patience and respect for the questions and challenges of those you are trying to persuade.

          Don't tell me what you believe, show me what you do and I will tell you what you believe.

          by Meteor Blades on Tue Jun 10, 2014 at 08:53:32 PM PDT

          [ Parent ]

          •  I appreciate the feedback Blades. We will just (1+ / 0-)
            Recommended by:
            jellyyork

            have to agree to disagree here.

            "We can, of course, all stipulate to certain facts, but after we decide that it's true that the government can print as many dollars as it wants"

            You say this as if it is some commonly held view that has been agreed upon by most people and thus we can move further along with our analysis to the "disparate points of view about what the outcome will be if the government prints double or triple or 50 times as many dollars as are now being printed."

            Unfortunately, I don't think you're correct here. This is not a stipulated fact. Every single day, hundreds of times on all media platforms, people are worrying that we will run out of money. Obama has said as much. Every time someone compares the Govt's budget to a household, or talks about T-securities like they are mortgage debt, they prove that your quote is wrong. Or Greece. Even here at Kos this regularly takes place and it proves that this is not an agreed upon fact.

            "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

            by Auburn Parks on Tue Jun 10, 2014 at 09:50:01 PM PDT

            [ Parent ]

            •  I am using the term in its legal sense... (0+ / 0-)

              ...We can all agree for argument's sake on certain facts in this forum. I didn't mean to suggest that I think everybody already agrees. My mistake for being unclear.

              Don't tell me what you believe, show me what you do and I will tell you what you believe.

              by Meteor Blades on Tue Jun 10, 2014 at 10:33:10 PM PDT

              [ Parent ]

          •  ... (1+ / 0-)
            Recommended by:
            jellyyork

            "But comparing the subjective nature of fiat money and money supply with gravity and evolution goes too far, in my opinion."

            Why do you think this goes too far?

            Clearly, I'm not comparing MMT to evolution, just that the authority to create our national currency rests in the hands of the people through Congress. This is a demonstrable fact via the Constitution and any number of other sources.

            If somebody disagrees, that doesn't change the nature of the fact.

            In the same exact way that just because someone doesn't believe evolution is true, does not mean its not a demonstrable fact.

            In many ways, people who refuse to acknowledge that the US Dollar comes from the US Govt and not China or Rich people are doing the same thing as creationists.

            Which was point all along.

            "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

            by Auburn Parks on Tue Jun 10, 2014 at 09:56:38 PM PDT

            [ Parent ]

            •  My objection is to the idea that ... (0+ / 0-)

              ...human-created political and economic frameworks are comparable to the most profound forces of nature that we don't even yet fully understand.

              Don't tell me what you believe, show me what you do and I will tell you what you believe.

              by Meteor Blades on Tue Jun 10, 2014 at 10:28:27 PM PDT

              [ Parent ]

              •  I hear you brother. It looks like we are just (1+ / 0-)
                Recommended by:
                jellyyork

                getting bogged down in semantics here.

                You are talking on a more abstract meta level, and from that POV, I agree with you.

                I am just saying that the Govt creating the US Dollar is a fact, not a POV.

                "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

                by Auburn Parks on Wed Jun 11, 2014 at 05:14:03 AM PDT

                [ Parent ]

    •  There is such a thing (2+ / 0-)
      Recommended by:
      limpidglass, Kevskos

      as too much private debt which has been the cause of all great economic calamities such as the depression and the GFC. But, alas, you are wrong, there is no such thing as too much public debt, nor does there need to be--from a pure economic perspective--any debt at all. The government could choose to spend without chalking up so called be debt any time it found the political will to do so and it would have zip negative impact on anything except inflation if the economy was already at full resource and labor utilization. The so called public debt is actually nothing more than the real private net saving injected into the economy through deficit spending. If you're interested in doing more than shaking your head and dismissing the above real world facts, try reading Warren Mosler"s Seven Deadly Sins here and then take the time to actually refute the facts he presents. If you can come up with such refutation, we would all like to see it. I've been trying for three years to disprove it and the more I try the stronger the arguments get.

  •  A bit absurd. (5+ / 0-)

    So lets just print money.  Silly.

    Join us on the Black Kos front porch to review news and views written from a black pov—everyone is welcome.

    by TomP on Tue Jun 10, 2014 at 02:23:36 PM PDT

  •  The government can't just issue dollars, (1+ / 0-)
    Recommended by:
    limpidglass

    that function has been handed over to the private Federal Reserve.

    The government can issue bonds and sell them, but that drives inflation and interest rates up, devaluing the dollar-denominated assets held by the very wealthy (remember those trillions of reserves corporations are holding?).

    So what's a politician to do? Devalue the assets of their campaign contributors, or saddle a generation with a lifetime of interest payments to those contributors?

  •  I actually see nothing wrong with (10+ / 0-)

    making rich people pay more money in taxes.

    I say we offer them a choice:  either we can take back control of currency, or they can accept tax hikes, a crackdown on offshoring of both money and jobs, and severe restraints on how much money they can pour into campaigns.

    There is no way for a citizen of a Republic to abdicate his responsibilities. ---Edward R. Murrow

    by SouthernLiberalinMD on Tue Jun 10, 2014 at 02:27:37 PM PDT

    •  There is nothing wrong with raising taxes on the (1+ / 0-)
      Recommended by:
      tardis10

      extremely wealthy, however it is wrong to scuttle a better reality for students and young people because you think we need money from rich people to pay for the socially beneficial spending.

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Tue Jun 10, 2014 at 03:00:06 PM PDT

      [ Parent ]

      •  I'm saying, do what folks did in the 30s (3+ / 0-)

        Politically, I mean. Tell them they can accept the New Deal--or we'll take matters into our own hands, in this case by reasserting control over our own currency. That's something they really really won't like. That's the choice. They don't get to choose option C, which is "continue to fuck everyone over and send the country down the drain."

        What I like about your proposal, among other things, is that, deployed correctly, it would make them realize exactly how fucking good they've had it under the New Deal.

        There is no way for a citizen of a Republic to abdicate his responsibilities. ---Edward R. Murrow

        by SouthernLiberalinMD on Tue Jun 10, 2014 at 03:31:07 PM PDT

        [ Parent ]

  •  Merely helping students (5+ / 0-)

    is poison pill enough for republicans.  Until the country comes to its senses our descent will continue.

    •  Maybe they'll be room here for some compromising. (2+ / 0-)
      Recommended by:
      Mike RinRI, Piren

       Take away the tax increase, but leave the reduction in interest costs as a practical and politically popular matter.
        But then again, you might be right, helping students may be enough to drive the Republicans away in droves.
        Helping anyone seems to drive them away, unless it's the uber-wealthy or the large corporations.

      "We the People of the United States...." -U.S. Constitution

      by elwior on Tue Jun 10, 2014 at 02:45:17 PM PDT

      [ Parent ]

      •  This is exactly my point. Make the Cons vote (2+ / 0-)
        Recommended by:
        elwior, nuclear winter solstice

        against student debt relief without the easy cop-out of "raising taxes will hurt the economy".

        IMHO its better for the Dems to point to the actual benefits they've provided for people through actual legislation than to simply say that the Cons are worse because they won't raise taxes on rich people to help out students.

        "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

        by Auburn Parks on Tue Jun 10, 2014 at 02:58:54 PM PDT

        [ Parent ]

    •  I would agree with you here, helping people that (1+ / 0-)
      Recommended by:
      elwior

      aren't wealthy campaign bribers is anathema to Cons, but make them vote against students, don't let them off the hook by saying "we would love to help students, but raising taxes is bad for the economy".

      Thats a more powerful message IMHO

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Tue Jun 10, 2014 at 03:09:13 PM PDT

      [ Parent ]

      •  Yes, I get your point and I hope the proposal (0+ / 0-)

        can be modified, but in the end I don't think it'll help. I do believe they would still vote it down, particularly in the House.

        "We the People of the United States...." -U.S. Constitution

        by elwior on Tue Jun 10, 2014 at 03:19:44 PM PDT

        [ Parent ]

        •  I agree 100%. We cant control what the Cons do, (1+ / 0-)
          Recommended by:
          elwior

          we can only control what we do.

          "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

          by Auburn Parks on Tue Jun 10, 2014 at 03:22:06 PM PDT

          [ Parent ]

  •  Heavy, dude. (5+ / 0-)
    Recommended by:
    elwior, Wisper, TomP, virginislandsguy, Piren

    {Puff puff} That's some heavy stuff, there, man. {Puff puff} Money doesn't exist. Deficits aren't real. {Puff puff} Whoa!! What if they held a war and NOBODY CAME!!! {Puff puff}

    Obi Ben Ghazi to House Republicans: "Use the Farce."

    by edg on Tue Jun 10, 2014 at 02:48:29 PM PDT

    •  LOL. Thats some heavy stuff that Greenspan, (2+ / 0-)
      Recommended by:
      tardis10, katiec

      Bernanke, Marriner Eccles, Frank Newman, Benjamin Franklin, Thomas Edison and Henry Ford were smoking then:

      http://www.dailykos.com/...

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Tue Jun 10, 2014 at 02:56:36 PM PDT

      [ Parent ]

  •  Economics loser, maybe. Political loser, no. (2+ / 0-)
    Recommended by:
    elwior, Piren

    Promising to try to do something good about student debt makes good political sense. People like it when someone promises to to fix something that's broken. Get down in the weeds all you want, but the crux of your dismal argument is economic. Valid, maybe. Politically impactful, not that much.

    •  What is more important.... (1+ / 0-)
      Recommended by:
      Simian

      Make Cons look bad

      or

      Make the lives of millions of young americans better?

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Tue Jun 10, 2014 at 03:07:07 PM PDT

      [ Parent ]

  •  Why do you describe the Buffett rule (3+ / 0-)
    Recommended by:
    elwior, allergywoman, Piren

    as a "poison pill"?  It is quite popular.  This is an election year.  Nothing is getting done anyway.  All proposals now are designed to a) look towards 2015 and b) sharpen the differences between the parties.  This accomplishes both.

    •  Posion pill wrt to the Cons and actually passing (0+ / 0-)

      a bill that will make life better for millions of our fellow citizens

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Tue Jun 10, 2014 at 03:06:15 PM PDT

      [ Parent ]

      •  NO bill is going to pass this year. Nothing. (3+ / 0-)
        Recommended by:
        allergywoman, Simian, Piren

        Zero.  Nada.  Hamna.  Get it?  
        EVERYTHING is pointing either to next year or the elections.  This is VERY popular.  It is something to run on.  Who gives a flying fuck what the Cons think?

        •  I respect your opinion wrt to the politics. We (0+ / 0-)

          simply disagree on whats better politics.

          I think providing real benefits (or at least trying to) is better than political food fights.

          "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

          by Auburn Parks on Tue Jun 10, 2014 at 03:38:07 PM PDT

          [ Parent ]

        •  and btw, you're right. there will be no significan (0+ / 0-)

          bills passed this year.

          "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

          by Auburn Parks on Tue Jun 10, 2014 at 03:39:25 PM PDT

          [ Parent ]

  •  Isnt this the second (0+ / 0-)

    silly diary about student debt in two days?  Wasnt there one yesterday involving unlimited money with no interest ever for everyone... ...or something?

    Красота спасет мир --F. Dostoevsky

    by Wisper on Tue Jun 10, 2014 at 03:08:29 PM PDT

    •  Whats silly about the diary? (0+ / 0-)

      Do you think the US Dollar comes from China or rich people?

      Do you think that US Dollars are found in the ground?

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Tue Jun 10, 2014 at 03:10:17 PM PDT

      [ Parent ]

    •  It isn't silly to consider (6+ / 0-)

      anything at all. For example,a society might decide that investing in an educated citizenry is sufficient payback on multiple levels and subsidize higher education for all. Few strings,limited accountability...you know,like we do for the DOD.

      "George RR Martin is not your bitch" ~~ Neil Gaiman

      by tardis10 on Tue Jun 10, 2014 at 03:37:49 PM PDT

      [ Parent ]

  •  taxation is better then inflation. (2+ / 0-)
    Recommended by:
    Nowhere Man, Piren

    Taxation makes it clear who is paying,

    inflation makes it hard to tell who is paying.

    If you tax income, you can predict it,

    if you tax wealth, you can predict it.

    if you inflate, you have no idea what will happen.

    inflation also eats at people on pensions.

    •  Where is the inflation: (1+ / 0-)
      Recommended by:
      katiec

      https://research.stlouisfed.org/...=

      And Pension assets along with T-securities:

      https://research.stlouisfed.org/...

      So what were you saying again?

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Tue Jun 10, 2014 at 03:23:19 PM PDT

      [ Parent ]

      •  do you havea problem w/ revenue? (1+ / 0-)
        Recommended by:
        Piren

        measures?

        •  Not sure what this comment means. (0+ / 0-)

          "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

          by Auburn Parks on Tue Jun 10, 2014 at 06:26:21 PM PDT

          [ Parent ]

          •  you seem to prefer printing dollars (1+ / 0-)
            Recommended by:
            Piren

            to collecting and distributing dollars.

            you can grow the money supply to match population and GDP growth, but, you are better off looking towards
            revenue measures and fiscal measures to run routine
            ops.

            •  Deficit spending is a necessary condition for (1+ / 0-)
              Recommended by:
              patbahn

              sustainable economic growth, especially with a trade deficit. Its just math:

              http://soberlook.com/...

              When the deficit gets too small, recessions result:

              http://mythfighter.com/...

              Mostly because absent a strong contribution to the economy via the Govt deficit, combined with a trade deficit and decreasing income shares for labor, the only periods of real inflation adjusted income growth have come when unemployment approaches and gets below 5%. Unfortunately, this has taken giant private debt booms and has happened less than half the time sine 1983.

              Private debt:

               http://static.seekingalpha.com/...

              And real wage growth with unemployment:

              https://research.stlouisfed.org/...=

              Basically it boils down to this:

              If the unemployment rate is too high => the deficit is too small

              If inflation is too high => the deficit may be too big

              "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

              by Auburn Parks on Tue Jun 10, 2014 at 07:04:32 PM PDT

              [ Parent ]

    •  what is the deal with inflation? (3+ / 0-)
      Recommended by:
      tardis10, katiec, Auburn Parks

      People are so fearful of it. If there's inflation, there are policies that the government can institute to bring it under control. I assume, since economists are so worried about inflation, they've studied it and developed tools to fight it. It's not like the end of the world.

      Apparently deflation, and the attendant austerity and joblessness and poverty and hopelessness and destruction of human resources and infrastructure are OK. We're fine with that no matter how many people starve and die. It's more important to avoid even the possibility of inflation than to do anything about all this.

      But inflation OMG we're all gonna die! Aaaaah! Even though inflation happens much, much, much more rarely.

      This is just a mental block, that keeps us from running our economy in a sane way.

      Taxation makes it clear who is paying
      In a government sovereign in its own currency, taxes don't fund anything. It used to be that if you paid your taxes in cash, the US government would shred the money. They don't actually need the money!

      Taxes are to redistribute wealth, because a lopsided distribution of wealth is harmful to society. They also allow governments to encourage or discourage certain behavior by imposing costs on it, which is a useful function. But they don't fund anything.

      The government is paying for what the government does, by its ability to deficit spend without limit in its currency. Not you or I.

      "In America, the law is king." --Thomas Paine

      by limpidglass on Tue Jun 10, 2014 at 04:00:59 PM PDT

      [ Parent ]

      •  I think the concern of many... (0+ / 0-)

        is that there is a tremendous amount of money overhanging the economy that is parked in various places. The places where it is parked have experienced tremendous inflation - the stock market, certain commodities, the housing/rental market in many places. As long as all that money stays there or is slowing brought back to the general economy, it isn't a problem. However, if an inflationary scare happens, a lot of this money could go quickly rushing into any kind of concrete good that could be quickly acquired. I'm not sure (and I don't think many are) of exactly what that might look like. If that does begin to quickly happen, policies and tools that the Fed and the government have to contain it might not be able to react quickly or strongly enough to prevent a big problem.

        •  There is no evidence in the USA that inflation is (0+ / 0-)

          a runaway effect.

          Furthermore, Taxation reduces the amount of money the private sector has. So the ultimate solution to any inflation problem is to simply cut the deficit and or run a surplus. Inflation is not dangerous in our modern economy.

          "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

          by Auburn Parks on Wed Jun 11, 2014 at 05:16:35 AM PDT

          [ Parent ]

          •  I respect that this is your view... (0+ / 0-)

            but an awful lot of experts aren't so sure. If there is some country that would like to try this out, I'd be all for it. If it works for them, then I might be more open to trying some test here.

            There are some failed tests to point to. Zimbabwe went down in flames - and now actually uses the dollar cause they totally ruined their own currency. Venezuela seems on their way to an interesting situation. I know, I know - we would do it differently and I do accept that, but it does give many cause for concern.

            •  Now I see where your confusion lies. (0+ / 0-)

              You think:

              That I think we should do something differently in order to "try this out". What you are missing is that I'm not advocating for any serious changes in the current mechanics of federal spending.

              I'm describing how it works right now. You're simply misinterpreting how things work today.

              You can see a good number of these economic 'experts' saying exactly what I'm saying. You must not believe them:

              http://www.dailykos.com/...

              "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

              by Auburn Parks on Wed Jun 11, 2014 at 05:26:37 PM PDT

              [ Parent ]

  •  I could accept... (0+ / 0-)

    that just funding the current numbers of college students might be possible without incurring an inflationary problem in the general economy. However, I think it would cause a devastating inflation problem in the higher education economy. I also think that a huge number of additional students would go off to try college and the total price tag to continue this would spiral upwards. We would see a raft of new "universities" open up to suck up all the new students with all their crisp new dollars. As it is now, there are far too many students entering university who do not have the proper preparation or motivation and there are far too many institutions serving then that are just diploma mills. As much as we would like to believe that everyone would be better off with a college education, this is simply not practical even if the costs were all 0.

    The other problem is that we are continuing in a period of an oversupply of college educated students attempting to enter the workforce. I don't see this as improving anytime soon. As I posted before, this leads to postings like, "Wanted - outgoing and well spoken person to serve as receptionist. Must have a degree in Communications or a related field."

    Now your answer to this might well be that government should create employment opportunities for these people and should pay for it the same way that is being suggested to pay for their education in the first place - just create the money. This is where I now begin to have a problem because I'm not convinced that it is settled science that the economic expansion gained by creating jobs and employing these individuals would suck up all the created dollars to avoid inflationary problems. I'm not sure that all of these positions could be made to be productive to truly create the necessary economic expansion.

    Also, once this becomes the answer for all problems, then it can just run away politically. If one program is created and supported by magic money, then why can't we just buy all new ornaments for the tree in the same way - why not just buy a whole new forest of decorated trees while we are at it?

    I have some buddies from our business school who I sometimes have lunch with. Two are economists and one is a finance guy. They go round and round about this exact topic all the time.

    •  Banks too create "magic money", because (0+ / 0-)

      money is pretty magical, ie, created out of our ability to think numerically, which is pretty magical.

      Currency makes up only 3% of our money stock, the rest is private bank money.

      The big difference is that the private sector uses currency/dollars to pay off it's private bank debts.

      It's sort of silly to be worried about too much currency in relation to private debts  --  unless you're equally concerned with limiting the bank's ability to create credit out of thin air too.

      •  Hey KatieC. I just wanted to point out that (1+ / 0-)
        Recommended by:
        katiec

        MMT considers all CB balances (direct liabilities of the Federal Govt), both reserve accounts and savings accounts as US currency. Just like how you consider both the numbers in your checking account and your CD or savings accounts to be "money".

        With this as the interpretation (more accurate IMHO), those numbers come out to $42T in bank credit and $16T in Govt credit, or 75% to 25%.

        "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

        by Auburn Parks on Wed Jun 11, 2014 at 05:20:51 AM PDT

        [ Parent ]

    •  What is the constraint on fiscal spending is the (0+ / 0-)

      question you are asking.

      If we deficit spend on education why cant we on SS?

      The question is political in nature. If you want the Govt to create a higher % of the money than banks (and I do) with expanded programs, then we need tighter lending and thus money creation standards for the banks. Which is why our modern neo-liberal Govt loves deregulation, they hate and fear deficits so they've had to rely on banks to create more of the money. And we've gotten bubbles, instabilities, and huge private debt levels.

      Another way to think of this is to consider just how high an inflation the populace is willing to live with. Now, I personally don't fear inflation as long as REAL wages are rising faster, then our financial standards of living are still increasing. Are people OK with 4% inflation? 5%? 1%?

      Its impossible to know, we have to run the experiment.

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Wed Jun 11, 2014 at 05:39:28 AM PDT

      [ Parent ]

  •  MMT Point Of View (1+ / 0-)
    Recommended by:
    Auburn Parks

    I was just making this point in comments about the petition on Facebook.

    "She doesn't need a plan to raise funds. Our government makes its own funds, like when it needs trillions to bail out the banks without raising taxes.  Closing tax loopholes  is a laudable goal.  If it makes strategic sense to link the two goals, only then is it a good idea to pretend that the two are related."

    I might add that there was no inflation when the Fed created the trillions to bail out the banks.  That doesn't mean that there will never be inflation when you create trillions of dollars out of thin air.  It  just means that under the right circumstances (a deep recession that is about to go into depression), you can do this with no bad (actually a lot of good) consequences.

    •  You are spot on here. (0+ / 0-)

      The correct way to analyze the deficit is in its proper context. What is the private economy doing. If the private sector is creating money like crazy through a private debt bubble, then there will be significant less room and need for Govt deficits.

      Between 2000 and 2008, the US generated roughly $2 Trillion worth of new money each year. it was like 80% private and 20% Govt deficits.

      Between 2008 and 2010. Private sector money or debt actually contracted. So although the Govts deficit was $1.4 trillion, the growth in the money supply was actually only $1 trillion.

      So in order to have maintained the same $2 trillion a money supply growth that led to basically no inflation during the earlier 2000's, the Govt's deficit would have needed to be $2.4 Trillion per year for those two years.

      It matters what is going on in the other two sectors (Foreign and private)

      http://soberlook.com/...

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Wed Jun 11, 2014 at 05:27:38 AM PDT

      [ Parent ]

  •  The Depths of Warren's Tactical Acumen May Exceed (1+ / 0-)
    Recommended by:
    Auburn Parks

    Wouldn’t it be ironic if the Republicans started to point out that you could give student loan relief without compensating for it somewhere else in the budget?  That may be the only way that the Republicans can get away from the false choice accusation of either supporting students or supporting billionaires.  I’d believe that this is a very sly tactic that Warren has thought up if it weren’t for the fact that she seems to believe in this false choice in other remarks she frequently makes.  Or is the level of her slyness just much deeper than I can imagine?

    •  That would be awesome and ironic (0+ / 0-)

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Wed Jun 11, 2014 at 05:28:05 AM PDT

      [ Parent ]

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