Pelosi Quote

“It is clear we must enter an era of austerity; to reduce the deficit through shared sacrifice.”
– Nancy Pelosi, Dem Leader, US House

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34 Responses to Pelosi Quote

  1. Greg says:

    Hey Warren

    Would love to hear about your trip to NY last weekend and your interactions with the OWS crowd. Did you find some fertile ground anywhere to plant the seeds of MMT?

    Reply

    WARREN MOSLER Reply:

    heavy rain, sleet, wind, no crowd, just a few people in their tents, so didn’t get to talk to anyone.
    only stayed maybe 15 minutes or so.

    Reply

  2. J Kra says:

    Warren (or anyone else),

    According to MMT, many of the Euro countries find themselves in a difficult situation because of an inability to issue currency, coupled with an inadequate central bank. It seems many of the States here in the U.S. find themselves in a similar situation.

    If many Euro countries would be better off with Monetary Sovereignty, would the same be true in the U.S?

    Would the United States be better off with 50 states which are “monetarily autonomous, are monopoly suppliers of their own currency and exist within a freely floating exchange rate system.” ?

    thanks for your thoughts

    Reply

    ESM Reply:

    @J Kra,

    There are fairly large transaction costs associated with trading goods and services across borders with different currencies. Not only do you have to support all of the new fx trading jobs and Bureaux de Change that will be created, but it will be more difficult for consumers to compare prices, leading to further inefficiencies in the market.

    Besides it being highly problematic as to implementation (Federal taxes would still be payable in dollars, so residents would have to pay taxes in two different currencies), there would be little benefit. Given that 80% of fiscal policy is directed by the Federal government, and labor and business are highly mobile across state boundaries (thanks to a common language and a relatively common culture), the gains from being able to tinker with capacity usage and employment at the state level just doesn’t seem to be worth it.

    Reply

    J Kra Reply:

    @ESM,

    Well said. Great response. Thanks.

    Reply

    WARREN MOSLER Reply:

    depends on how well the guy upstairs runs things.

    The US Congress and the ECB/Euro Parliament could immediately move to full employment and more than reasonable price stability if they understood their monetary systems, so either arrangement is potentially just fine in that regard.

    On the other hand, even if the states and euro member nations had their own currencies, and didn’t understand their monetary systems, they could keep their budget deficits too small just like japan has done, and the US and UK are now doing, for example

    Reply

  3. King of Scotland says:

    Really, Nancy? How’s shrinking the economy out of a crisis working out in Greece?

    Reply

  4. No need for Warren to apologise for the Pelosi quote being dated: those geniuses at the IMF are still on about consolidation being impossible without austerity. The debt can easily be reduced by simply printing money and buying back debt (i.e. QE). That on its own would doubtless be too stimulatory and inflationary. Solution: counter the inflationary effect by raising taxes and/or cutting public spending. If for example the inflationary effect of the QE exactly equals the deflationary effect of the extra tax, there is no net effect on demand, GDP, numbers employed, etc. Meanwhile the debt comes down at whatever rate you like. QED.

    For more on this, see my – ahem – “seminal” paper:

    http://mpra.ub.uni-muenchen.de/34295/1/MPRA_paper_34295.pdf

    Reply

    WARREN MOSLER Reply:

    doubtless?
    ;)

    Reply

    beowulf Reply:

    @WARREN MOSLER,

    Doubtless, this story about the S&P downgrade will make you smile. :o)
    Somehow, we dodged buckshot that was fired from three paces away. It’s impressive—and it doesn’t please investors or debt hawks at all. Actually, no: It’s another disaster.
    “All of us budget wonks were ready to say ‘See! We told you!’” says Steve Bell, a former trader and current fellow at the Bipartisan Policy Center.
    He remembers sharing a stage with Pete Peterson, the original debt Cassandra, and the two of them saying “Thank goodness!” when they heard about the downgrade…
    “I hear from fairly solid people,” says Bell, “who say, ‘Boy, the fact that nothing happened doesn’t help your cause, does it?’ I say, ‘No shit.”

    http://www.slate.com/articles/news_and_politics/politics/2011/10/deficit_hawks_ask_what_will_it_take_to_get_washington_to_care_ab.single.html

    Reply

    roger erickson Reply:

    @beowulf,

    If that’s BiPartisan, then we need TriPartisan, or Quadrapartisan. Even that might not be enough. PolyPartisan?

  5. Ralph Gardner says:

    Because 100,000 factories out of 450,000 total US factories were moved to China to profit from China’s devaluations and more than 20 million jobs were outsourced we have to sacrifice?

    We should investigate the companies that moved their factories for Anti-Trust price-fixing. When China devalued its currency from 1.5 Yuan per US dollar to 8 Yuan per dollar everything in China became 80% cheaper yet the prices of the products in the US remained about the same. (Now 6.4 Yuan per US dollar and 50% cheaper because of inflation in China)

    Reply

    WARREN MOSLER Reply:

    See the chapter on trade in the 7dif thanks

    Reply

  6. Paul Palmer says:

    “Austerity” has taken on religious overtones.

    Reply

  7. ConcernedYouth says:

    The ignorance of our politicians is beyond belief. We really might not make it. Warren, I find it hard to believe one of the smartest people in the world hasn’t figured out how to use his money to gain political influence. Please, we can’t afford another 4 years of the current political thinking.

    For inspiration:

    “Practical equality of opportunity for all citizens, when we achieve it, will have two great results. First, every man will have a fair chance to make of himself all that in him lies; to reach the highest point to which his capacities, unassisted by special privilege of his own and unhampered by the special privilege of others, can carry him, and to get for himself and his family substantially what he has earned. Second, equality of opportunity means that the commonwealth will get from every citizen the highest service of which he is capable. No man who carries the burden of the special privileges of another can give to the commonwealth that service to which it is fairly entitled. — I stand for the square deal. But when I say that I am for the square deal, I mean not merely that I stand for fair play under the present rules of the game, but that I stand for having those rules changed so as to work for a more substantial equality of opportunity and of reward for equally good service… When I say I want a square deal for the poor man, I do not mean that I want a square deal for the man who remains poor because he has not got the energy to work for himself. If a man who has had a chance will not make good, then he has got to quit… Now, this means that our government, National and State, must be freed from the sinister influence or control of special interests. Exactly as the special interests of cotton and slavery threatened our political integrity before the Civil War, so now the great special business interests too often control and corrupt the men and methods of government for their own profit. We must drive the special interests out of politics… For every special interest is entitled to justice, but not one is entitled to a vote in Congress, to a voice on the bench, or to representation in any public office. The Constitution guarantees protection to property, and we must make that promise good. But it does not give the right of suffrage to any corporation. The true friend of property, the true conservative, is he who insists that property shall be the servant and not the master of the commonwealth; who insists that the creature of man’s making shall be the servant and not the master of the man who made it. The citizens of the United States must effectively control the mighty commercial forces which they have themselves called into being.” -Teddy Roosevelt

    Reply

  8. Joe C. says:

    @Art,

    Obviously, Argentina met the first criteria of effective economic policy; The Heritage Foundation was against it.

    The US could use a Jefes de Hogar, although even after writing that lengthy piece the author couldn’t help but keep coming back to inflation. It’s like watching someone stuck in a maze.

    Reply

  9. Trixie says:

    This occurred on 7/25 during the debt ceiling circus. The full statement:

    “It is clear we must enter an era of austerity; to reduce the deficit through shared sacrifice…

    “The latest proposal from the House Republicans is a short-term plan that burdens the middle class and seniors, and continues this debate about whether we will default in a few months from now.

    “Senator Reid has put forward a responsible plan to reduce the deficit that protects the middle class, and Medicare, Social Security and Medicare beneficiaries. It also includes many proposals already supported by Republicans.”

    The political posturing during the debt ceiling debates were at absurd levels as America had a gun held to their heads. These discussions really were a low point in politics. And from what I remember, Dems were against the ropes trying to hold the line. As we now well know, with only limited success. This was a failure on Obama’s part to let the discourse get as far as it did.

    If by “shared” sacrifice, she was referring to taxing the filthy rich? I approve of that message, since there is no other way to shut down the conversation that all new spending has to be offset with spending cuts elsewhere. NOT that raising the debt ceiling was new spending, but that is how it was being presented.

    So why a reference to this quote today? Is it relevant? Because I am still suffering from debt-ceiling-PTSD. And this is nothing but a trigger.

    Reply

    beowulf Reply:

    @Trixie,
    So why a reference to this quote today? Is it relevant?
    Come on, its one thing to argue something a politician said, say, 30 years ago is irrelevant, but you can’t use the “youthful indiscretion” defense for remarks made 3 months ago!

    She could have shut this down very simply by saying, “I agree with President Clinton that the Constitution requires the government to borrow when its necessary to spend according to appropriations that Congress has passed into law, no law. not even adebt ceiling law can override the Constitution”.
    If Pelosi and half of the House Democrats hadn’t voted for the debt ceiling bill, it would have died on the floor (Boehner needed 218 votes and only 174 Republicans were willing to vote aye). Here’s the sick part, since Boehner THOUGHT he had 218 votes lined up, he hadn’t bothered negotiating a compromise deal Pelosi, so the Democrats saved him from a tremendous loss of face for literally nothing.

    Reply

    Trixie Reply:

    @beowulf,

    Oh, I don’t disagree. At all. Nor am I trying to defend her.

    I’m not trying to be stupid here, I simply didn’t understand the point of the post. At a minimum, post the date (I didn’t notice it initially on the link), full statement, and put it in its proper context. As I go scrambling on the internet thinking this was something she said today only to end up rolling my eyes. Do we really need to rehash ANY of debt ceiling discussions?

    Reply

    beowulf Reply:

    @Trixie,
    “Do we really need to rehash ANY of debt ceiling discussions?”

    Definitely, the same people are going to be taking the same positions with every budget (and possibly debt ceiling) vote between now and election day.

    WARREN MOSLER Reply:

    If I had known it was that old I would not have posted it
    My error

    WARREN MOSLER Reply:

    I should have dated it sorry!

    Trixie Reply:

    @beowulf,

    “Definitely, the same people are going to be taking the same positions with every budget (and possibly debt ceiling) vote between now and election day.”

    Tis very true. So, if this post was to resurface the debt ceiling discussion, I simply cannot agree that this is where we start. And the absolute LEAST of my concerns was this full statement from Pelosi.

    Shall we start from the beginning?

    Reply

    Trixie Reply:

    @Trixie,

    In which I talk to myself.

    I’ve been thinking about this post, and I’m not going to engage in witch hunts to crucify someone who was wearing the LEAST amount of clown make-up (as ironic as that is). There is no other reason for this post other than that.

    Good luck with it. I’m out.

    WARREN MOSLER Reply:

    Again, my error sorry.

    WARREN MOSLER Reply:

    The reason is to show that with even the top dem thinking this way good chance there’s a slug of deficit reduction on the way.

    And don’t forget it’s an imaginary gun.

    We need a much larger deficit.

    Reply

  10. Alex says:

    The debt driven selling off of America was not shared so why should the sacrifice during the collapse be shared?

    Steal the weatlh through printing money and distributing through the system top down and then socialize the loses through “austerity” when the debt system collapses.

    Pelosi and GW Bush are more alike then then the other %99 of Americans, both are the problem and 100% out of touch.

    Reply

    WARREN MOSLER Reply:

    Why should there be any sacrifice when there are surplus real resources?

    Reply

    Ant Reply:

    @WARREN MOSLER,

    Yes. If you have surplus money at your house and I have none, You owe me some resources. For the good of all.

    Reply

  11. Henry says:

    I’m sure she will set a heroic example of shared sacrifice.

    Reply

  12. RyanVMarkov says:

    Great, with such political opponents from both sides – Democrats and Republicans – an MMT candidate can’t ask for more!!

    Reply

  13. Tom says:

    So sad.

    Is it too late to try another planet?

    Reply

    ESM Reply:

    @Tom,

    Too early.

    Reply

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