Paul Krugman, of “mainstream economics,” says he is responding to some remarks made by Stephanie Kelton, of “MMT economics.” Here is a link to his NYT article: Krugman vs. Kelton.
As usual Krugman resorts to his simple chart showing the relationships between IS1, IS2, IS3, the GDP, and full employment. There are also terms that have always mystified me: “natural interest” and “natural rate.” He pulls out this chart all the time. It does not explain anything. It smacks of the kind of thing confidence men use to steal your money.
There is nothing “natural” about our system of economics except that the humans who benefit from it or suffer from it are natural beings and their actions can dramatically change the way our system works. When a handful of human beings can dictate the functioning of our economy there is nothing “natural” about it. It is even worse when a handful of human beings try to change the way our system works and make it worse instead of better.
Stephanie Kelton and her band of followers are trying to change our system, but she and most of her followers, like Krugman, are all true believers—Kelton and her followers believe in MMT, while Krugman and his followers believe in “mainstream economics.” Neither system works. But, still, Kelton is at least trying to modify our system of economics so that it works for the common good—Krugman does not even try, he is too busy maintaining the status quo.
Kelton’s instinct is correct—human made systems can be changed.Her approach is to change the way we put money into the hands of ordinary Americans, but her approach still includes the need for interest and taxes.
I have designed a system, I call it democrato-capitalism, that eliminates the need for interest and taxes, except when interest is needed to deal with other nations. But in general, money is distributed by the Universal Bank of the United States with the primary goal of giving all citizens equal access to rights, resources, opportunities, and protections which will give them a fair and honest chance to go as far in life as their talents and efforts can take them, thereby giving them a fair and honest chance to build long lives worth living for themselves and their loved ones, including a secure, comfortable retirement.
Our economy is the equivalent of my 1962 Ford Fairlane, with its 220 cu.in. V8, which had a top speed of 75 miles per hour. That engine could barely pull the car, much less my 15-foot ski rig. What our economy needs is an engine that is the equivalent of many diesel locomotives, each with 6,000 hp. Neither Krugman’s nor Kelton’s system will be able to pull the load.
In our current system of economics, tyranno-capitalism, the only way we can put money into the pocket of people in need, say like in the Great Depression, is to cut taxes on the rich so they can invest their windfall in starting new businesses or expanding old ones, thereby creating jobs and keeping the poor from eating their young. But that system does not work as we all should know by now—the only people in that system who are guaranteed to get more money are those whose taxes are cut.
In my system of economics, democrato-capitalism, the way to put money into the pockets of those who need it is to give it to them, in fact it is designed to put money into the pockets of people from birth to death so that they will never again experience the devastating circumstances that were part of the Great Depression, the Dust Bowl, and many other exhibits in our national museum of the horrors of “mainstream economics.”
There is no need for interest. There never has been. It is a knife in the back for children who are born into our so-called “system” of economics.