Comments on: Obama: Too much debt could fuel double-dip recession

By: knapp

knapp — Fri, 20 Nov 2009 14:11:52 +0000

It appears we’ve reached a point where Stability is Destabilizing. The strong rebound in the financial markets and the stability in the ecnonomy (despite the high unemployment)has shifted popular concerns back to the gov’t deficit and politicians are more likely to play the “fiscal conservative” card going into 2010. And since most of the intervention appears to have helped Wall Street more than Main Street, there is an element of anti-plutocracy in the call for a pullback in government intervention. Obama’s top-down approach is coming back to haunt him.

By: Mike S

Mike S — Thu, 19 Nov 2009 13:53:54 +0000

I agree on this. I am pretty sure Larry Summers has not even given this any serious thought, and most people in economics has never even heard of this idea.

Almost all economists accept the “fed monetization” theory of money creation, because thats what they know and what they were taught. I’ve never read Stigum, but I bet in that book it has the monetization theory implicit on every page.

You read papers by economists, they have as basic assumptions the government must balance its budget over the long run. I just read Mankiw’s savers spenders model, and one of 4 assumptions was that the government must balance its budget over long periods.

By: warren mosler

warren mosler — Thu, 19 Nov 2009 09:47:04 +0000

thanks, Matt, appreciate the support!

the book release might be as early as Feb 18.

By: Winslow R.

Winslow R. — Thu, 19 Nov 2009 03:27:30 +0000

Nice to see Thoma link to Harrison who links to Scott Fullwiler.

http://economistsview.typepad.com/economistsview/2009/11/obamas-wrongheaded-thinking-on-the-deficit.html

Almost mainstream. Krugman seems to be helping dig a new channel though Thoma is still talking about balancing the budget once things get ‘back on track’.

By: knapp

knapp — Thu, 19 Nov 2009 01:19:46 +0000

We all knew this was coming when he picked his team of economic advisors before the election and then subsequently picked Summers for a key cabinet position and Peter Orzag as Director of OMB. No change, all status quo.

By: Matt Franko

Matt Franko — Thu, 19 Nov 2009 00:28:12 +0000

Tom, I hear ya.
I think Bernanke is what I call a “historic economist”, studied the depression (many PHD economists seem to me to have really studied history, not like Scott Fullwiler and others like him (ie Warren) who post here who I classify an “analytical economist” and really breaks down the accounting and quantitative aspects) and Geithner I think studied “government” (I could be wrong). So they are not going to lead in this area.
I heard/saw this today that Michael Boskin (former GHW Bush admin now at Hoover/Stanford) is out today promoting a payroll tax cut, link here. I’m going to post some supportive comments at the WSJ and try to steer some readers perhaps over to Warren. Resp,

PS the more we can do to promote Warrens ideas in the blogosphere prior to him getting out there in earnest next year, the less slings and arrows he will have to take, and hopefully avoid the “Ross Perot Treatment”.

By: pebird

pebird — Wed, 18 Nov 2009 23:36:43 +0000

I think these guys know exactly what mechanisms are available to them. Remember Cheney “deficits don’t matter”. Now he is a little smarter than Summers, but they all received the memo.

I think it is by intention that spending is constrained – with reduced money supply, there is a 100% probability of bankruptcy and foreclosure activity. If the intention is to accumulate real property in exchange for garbage debt issuance, then a good strategy would be to feign ignorance of MMT.

I’m just a conspiracy theorist at heart.

By: Tom Hickey

Tom Hickey — Wed, 18 Nov 2009 22:35:40 +0000

OK, I get that lots of smart people don’t get MMT because of the blinders they wear. Can’t really expect Obama to get it unless someone explains it to him. Summers probably doesn’t even get it, he is so deeply entrenched in the established narrative and its memes.

But explain to me how Ben Bernanke and Tim Geithner don’t get this when they work with national accounts every day. Why don’t they just say to the president, “Sir, from our side this is Monopolyâ„¢ money. We are the sovereign issuer of out currency and we operate without revenue constraints, unlike the user, who is revenue constrained. Don’t compare apples and oranges.”

By: Winslow R.

Winslow R. — Wed, 18 Nov 2009 18:16:09 +0000

There must be some possible scenario he has in mind? He’s been thinking about Afghanistan a lot lately.

Likely just pandering to fiscally conservative independents rather than bothering to educate.