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158 Responses to “Will be in NYC this Saturday at 1pm”
I wish it was more feasible for me to go there. I would love to hear you speak in a small group. I don’t think there are many people more knowledgeable than you on the the use of fractional reserve accounting. I listen to people talk about fiat currency and the government printing money and I just get frustrated. It’s so hard to explain to someone who is not an expert in math why that isn’t necessarily a bad thing. I’ll certainly be interested in seeing the video if it becomes available!
OK. If we’re going to prosecute fraud, let’s prosecute every person that committed Bank Fraud by lying on their mortgage application as well. I’ve never seen a situation where some DOJ prosecutor or State AG missed an opportunity to make a name for himself by prosecuting a case against a high profile target. If they could build a criminal fraud case, they’d bring it. Losing money and making poor judgment calls just isn’t a crime.
I want a job that pays me $10 million a year to do nothing. “Wanting” a job doesn’t mean you get it.
MMT is about understanding the flow of funds, the use of real capital, and the true nature of fiat currency debt. The policies that Warren and others have suggested and the implications for the real economy are far less certain.
I’m still a believer in free markets. MMT should be pushing hard for tax cuts to stimulate aggregate demand. Going beyond that makes MMT a political party instead of a factual understanding that we aren’t going broke!
MMT will be successful because it is inherently true. It gives confidence in changes in the system which can and will work. It describes the operational reality of the system. If someone from an MMT background goes to OWS and spouts nonsense like “You can have a job for doing nothing” then it is not MMT but rather wishful thinking.
The same things you consider worthless endeavors is what you did best. It was a big poker game and you were quite good at playing. You made people believe you were a buyer when you were a seller and vice versa. Now, many of your followers consider that “bankster” illegal activity.
As to tax cuts being a political decision, I see the point but don’t agree. The govt is currently taxing too much for the size of the economy. Cut taxes and then allow the markets (demand) to allocate capital to create jobs.
My main concern with MMT is that while it is functionally correct, many of the more subjective policies that Warren and others have suggested are completely out of touch with mainstream America. In order for MMT to get a fair hearing, you can’t be considered radical. Going to visit the OWS protesters is a bad idea. Suggesting jobs for everyone at $8 per hour is a bad idea if the goal is to be taken seriously. I focus on tax cuts because you can get some well respected mainstream economists to agree that they’re needed. MMT will not be adopted as science in its entirety. It will be piece by piece. Start with tax cuts.
In Stabilizing an Unstable Economy, as I recall, Hyman Minsky postulates that capitalist markets in a closed domestic economy do not clear because prices of goods and services are marked up over the wage bill. In aggregate if workers save from wages and must be paid less than the price of output they produce, so the markup can support profits and payments on debt, then the only way workers can clear the market is to borrow. In aggregate then the behavior of capitalists in a market economy will leave people and other resources unemployed. If the government is roughly the same size as the investment sector then it may be possible to develop automatic stabilizers, using spend and tax policies, to stabilize the unstable economy and operate closer to full employment. The problem is that fiscal policy with automatic stabilizers is more of a technical control system problem that needs to be recognized politically, develop some experimental solutions that generate experience on the matter, and then keep politics out of the operation if a workable solution emerges. It is much easier to see that Fed should control the Fed funds rate rather than Congress due to the political problem interfering with a technical solution, then it is for Congress to authorize automatic fiscal operations, and the design of proper fiscal operations is harder than setting interest rates because too much spending at full employment will cause inflation and too little spending or too much taxes will cause unemployment.
How is that a fallacy of composition? If the market won’t pay $8 per hour but the govt mandates that as a minimum, the govt is preventing a clearing level from being reached.
WARREN MOSLER Reply:
clearing level? when the currency itself is a (govt) monopoly?
I really don’t understand this argument. I think that in a simplified gov, where perhaps all that gov did was to have a tax (and you might even need a flat tax for the argument) on income and provided a fixed wage for menial inane labor (say, carrying bricks back and forth) the conclusion would be that the value of the dollar is tied to an hour of labor – and so it would be incorrect to say that the labor markets can’t clear because the min wage is too high.
But in our world, it is not at all clear that the value of the dollar is being set by the minimum wage. The gov is far too involved in other markets. I’ll go back to an earlier toy example. Imagine a world of 100,000 people. The gov employs 30,000 at some specific wage, and offers a minimum wage job as well that employs 10. Which wage matters as to setting the value of the dollar? I would claim it’s likely not the minimum wage – if the natural ratio of the value of the two jobs is different than the ratio of the wages, then it’s quite possible that the labor market isn’t clearing properly.
Myself + wife + two daughters actually braved the weather! It started not too bad – just some snow, but by the time we parked downtown it was nasty. Yet, we actually made it to the park, all wet and cold, having come that far. Did not find Warren, as we already suspected would be the case. But it turned all for the better – by the time we got back home in the Bronx, our street had numerous fallen trees and huge branches, including one where our car used to be parked.
Apparently the fact that the snow arrived so early when the trees are still full of leaves is what caused the problem – the snow weight on the leaves is too much for the branches to bear. The branches kept falling while we ducked our way into the house!! Crazy..
We came down the day before – my wife loves going to the city anyway, so it wasn’t a wasted trip. I just missed Warren at the park, and we hightailed it out of there – had a pretty harrowing drive back to Boston, but made it in one piece. Crazy, crazy weather.