Modern Monetary Theory

[JackRiddler]

MMT is no more in charge of anything than Bernie Sanders. It's a model of the money system that claims (correctly, I believe, based on my level of study of it, which could be greater) to describe how this system functions; and it's a set of related policy recommendations that generally are not implemented (though currently a game is being played in which they're pretending this is the case, as part of selling at least the first few months of Biden as a revival of the New Deal, which it is not).

[Elvis]

Been doing research on the bank for international settlements and it looks like modern monetary theory was actually the policy of the Basel I accords written up in 1988 and adopted by the G10 economies during the early 90s, which is when this theory started to become popular.

MMT didn't exist until after 1997, when Warren Mosler and some free-thinking economists at UMKC and a few other schools noticed that econ textbooks didn't reflect critical changes to the money system that came in 1971-'73 with the end of the Bretton Woods agreement. They also noticed that the existing process favored the finance industry while short-changing the populace, and—risking their academic careers—they've worked ever since to educate people and change that formula.

Today the BIS is mainly a tourist resort for central bankers, hosting meetings and conducting research. I don't think they're backstopping central banks much.

mmt is an elaborate cover story for the greatest transfer of wealth in all of history.

With all respect, this is a paranoid construction. MMT exponents harshly condemn the ratings agencies and the existing banking system. I suggest reading some actual MMT literature.

MMT economists were alone in predicting the 2008 GFC, and tried to warn policy makers (to no avail, obviously). To say they enabled it is pure fantasy.

Then the market collapses like '08, the mutual funds take a hit and effectively pay off some the debt with working class savings.

"The debt" is not "paid off" with working class savings or any other savings. The so-called "debt" is bond accounts at the Fed, and the dollars never leave that account. A US Treasury bond is a form of US dollars issued by the government. When a Treasury bond matures, the dollars automatically revert to a reserve account (like moving dollars from savings to checking); there is nothing to "pay off."

The false notion that someone, somewhere, someday, is going to have to "pay the piper" is perpetuated by the finance industry, who prefer to force people to borrow from and become indebted to them. This is the systemic fraud that MMT exposes.

(Interest payments on T-bonds are paid with more bond issues, which again, nobody ever has to repay.)

But the banking institution controls the political one. mmt cannot be reformed until there is political reform. there cannot be political reform so long as there is a banking institution.

This happens only so long as we consent to that backwards operating framework that allows banks to influence policy. MMT says the polity, not oligarchs, should control the financial system. I remind that most MMT economists favor abolishing most of the private banking system. Some will leap to frame that as "socialism!!!" but no—when the polity controls finance, it's called democracy.

i fail to see how mmt manages to overcome this.

It's not MMT's job to get big private money out of politics and stop it from stealing our wealth. That's a political choice we make, even if made on the basis of bad information. If voting seems futile, consider strategies to change that conundrum.

seems to me like the ideal of the benevolent dictator.

How dictatorial is a model that inhibits the predatory finance industry from making most resource allocation decisions, and places those decisions in the hands of citizens?

No point advocating for a system when the wrong people are in power to misuse it.

MMT is not a system. MMT describes the existing system; the point is that the people in power are already misusing the system, and they've been getting away with it not least by perpetuating myths and lies about how the system works.

Vote #NoPAC.

[drstrangelove]

we are both looking at the same object. you call it a rock. i call it a tree. there is no argument here. i say there are branches, you say there aren't. if i see something you don't, then we live in different realities. i do not subscribe to your god.

- i say mmt was observable in practise by the early 90s, you say the theory wasn't invented until 1997. i speak of an egg, you a chicken, and headless one at that.
- i talk about debt sold onto mutual funds, created by both commercial banks which is corporate debt and then central banks which is sovereign debt, you talk about how debt is created by the fed and that there is no such thing as a debt securities industry beyond the treasury.

whatever you are talking about, it's not what i'm talking about. you are trying to have an ideological discussion. i'm trying to make observations. conveniently, you've hijacked the term modern monetary theory altogether, as the only current monetary system is the modern one, put into practise by Basel I in the early 90s before this theory even existed.

if god speaks to me, as in, the inflation period after all this stimulus turns out to be 'transitory', then that would be a sign to read the bible. no point investing the time in researching a theory which is either going to be proved or debunked by the end of this economic cycle.

i'll stick to observation and trust my senses for now.

[Elvis]

whatever you are talking about, it's not what i'm talking about.

We're not looking at the same thing; you're talking about bank regulation, not MMT.

- i say mmt was observable in practise by the early 90s, you say the theory wasn't invented until 1997.

We're indeed talking about different things. The Basil agreements set recommended capital and reporting requirements for banks; it's not MMT.

you've hijacked the term modern monetary theory altogether, as the only current monetary system is the modern one, put into practise by Basel I in the early 90s before this theory even existed.

MMT was not "put into practice" by the Basel accords; MMT is not something you do, MMT describes the currency regime in effect since 1971 (since 1933 for domestic purposes). Changing bank capital requirements, ala the Basel recommendations, is a policy choice (countries are free to adopt the rules or not) and doesn't change the modern macro framework that MMT began to analyze and describe in the late 1990s.

- i talk about debt sold onto mutual funds, created by both commercial banks which is corporate debt and then central banks which is sovereign debt, you talk about how debt is created by the fed and that there is no such thing as a debt securities industry beyond the treasury.

When someone refers to "the debt," they usually mean the "national debt," which means Treasury bonds, and Treasury bonds are different than commercial bonds; that's why I addressed it the way I did. I never suggested (and why would I?) that there's no private debt securities industry, which is something Basel seeks to better regulate. Basel doesn't regulate national currency regimes, like Bretton Woods did. I never talked about debt being created by the Fed, because a Treasury bond (government "debt") is money issued by the Treasury, not the Fed.


The assertion that "MMT" and the Basel accords are equivalent has no root in reality. Luckily for us, MMT economists have written extensively about the Basel accords and—how lucky is this?—they put it all on the Internet for us to read.

This post by MMT co-founder Bill Mitchell clears up some confusion and offers one MMT economist's perspective on Basel III policy. I'll copy some pertinent bits, but I recommend reading the whole piece top to bottom (emphases mine):

Monday, April 5, 2010

Today I have been reading up on the new proposals from the Basel Committee to tighten the capital requirements and introduce new liquidity rules as a further strengthening of the regulatory framework on banks. There is a mountain of literature to get through on all of this.
[...]
We should start by making sure we don’t get into the confusion that seem to commonplace in this sort of debate. There is a fundamental difference between capital adequacy requirements on banks in a regulatory framework and reserve requirements. The two sorts of rules are quite distinct but are often conflated by those who do not know how the monetary system operates.
[...]
Basel III will introduce the liquidity coverage ratio as a response to the global crisis and the BIS is proposing that all international banks hold unencumbered assets equal to all the liabilities that are coming due within the next 30 days. This buffer is designed to offset any bank runs and thus preserve overall liquidity and reduce the need for government bailouts.

The other major change is in Basel III, is that banks would have to maintain a “net stable funding ratio” of 100 percent. This means that they would have to have an amount of longer-term loans or deposits equal to their financing needs for 12 months, including off-balance-sheet commitments and anticipated securitizations.

The main motivation of the capital adequacy regulations was to limit the bank’s capacity to originate loans and providing incentives for them to increase their capital. The flaw in the approach was that the risk-weighted ratio could be increased by increasing capital (the numerator) or reducing assets (denominator). The latter could be achieved by balance sheet restructuring which is exactly what banks did.
[...]
The BIS also note that there is a “link between minimum capital requirements for banks and financial stability and thence output” – the point I made earlier. They say:

Capital requirements for banks attempt to limit excessive risk-taking relative to capital, thereby reducing the likelihood of failures. If they are successful in this, the requirements could, overall, have a positive effect on output.

So tighter capital requirements may limit some credit expansion but provide the conditions for more durable growth cycles by avoiding the speculative bubbles.

Further, from a Modern Monetary Theory (MMT) perspective, there should be no relationship between growth overall and the limiting of private credit. If the increased capital requirements stifle private credit access then there is more space for public goods production and public infrastructure provision.

[more...] http://bilbo.economicoutlook.net/blog/?p=9075

For a detailed MMT analysis, see L. Randall Wray's 2006 paper, "Can Basel II Enhance Financial Stability? — A Pessimistic View." I'll copy the Preface and Wray's concluding paragraph:

Even as the United States enjoys an economic expansion, there is an under-current of concern among economic analysts who follow financial markets. Some feel that the expansion of the credit derivatives markets poses the threat of a crisis similar to the Long-Term Capital Management debacle of 1998. Credit derivatives allow banks to share risks with holders of the derivatives, which are often mutual funds and other nonbank financial institutions.

The Basel II accord, now being implemented in many countries, is hailed as a good form of protection against the risk of a series of bank failures of the type that might cause problems in the derivatives markets. Basel II represents a more sophisticated and complex version of the original Basel Accord of 1992, which set minimum capital ratios for various types of bank assets.

The new accord rests on three pillars: minimum capital requirements,supervisory review, and market discipline. The first pillar is more flexible than capital requirements in the earlier accord, allowing for many more risk categories, and making some room for the use of modern models of risk. The second pillar allows closer cooperation between banks and their home-country regulators and gives supervisors some authority to impose higher capital requirements if conditions warrant them. The third pillar seeks to give investors and depositors the information they need to avoid risky institutions.

As L. Randall Wray argues in this brief, staving off financial instability in a modern economy is a very tall order and probably cannot be accomplished through regulations of this type. Wray espouses the view of our late colleague Hyman P. Minsky that financial fragility arises spontaneously during the course of the business cycle and is an inherent feature of modern capitalism. Certainly, the new regulations are benign; an adequate level of capital can reduce the risks of certain types of bank failures. However, a bank’s ongoing profitability provides its main cushion against insolvency or illiquidity.

Moreover, that transparency can ensure market discipline is also not clear. Wray argues that this proposition relies heavily on assumptions about the availability of information, the markets’ ability to process that information, and its ability to act accordingly. When the incentive of a high return is present, bankers and investors sometimes overlook the level of risk they are taking on.

In addition, banks are very vulnerable to pressures that develop becauseof unfavorable macroeconomic conditions. One example is high interestrates, which can cause events such as the Latin American debt crisis of the 1980s. It is probably safe to say that this crisis would have taken place even in the presence of Basel-type regulations.

There are more promising strategies to lessen financial fragility, Wray points out. Minsky endorsed policies to restrict the sorts of assets banks are allowed to hold, forcing them to use short-term liabilities to finance short-term positions. He even endorsed a plan for making depository banks hold reserves equal to 100 percent of deposits. Other proposals, seemingly unrelated to banking, might help, too. As the recovery of the major commercial banks in the 1990s shows, progrowth policies can work wonders for the health of the banking system. Finally, a more generous Social Security system might help to compensate for the risks taken on by private pension funds, and a national health insurance scheme might alleviate the nation’s number one cause of personal bankruptcies.

Minsky always believed that the health of the banks, and of the financial sector more generally, was crucial for the performance of the economy. In today’s complex financial environment, with its many exotic instruments, he might have been even more concerned with the potential for financial fragility. Wray’s brief makes clear that the Basel II reforms are welcome and helpful, but of only limited potential effectiveness. He points the way to an agenda that is far more ambitious, but that offers a more realistic chance of achieving stability.

As always, I welcome your comments.
Dimitri B. Papadimitriou, President [Levi Institute]
May 2006

[...]

In conclusion, Basel II represents an ambitious international attempt to reduce risk in banking and to decrease unfair competitive advantages across nations that could result from laxer banking standards. The accord could enhance national and international financial stability, although the effects are likely to be relatively minor, not because Basel II is poorly designed, but rather because it does not and cannot do much about the primary sources of financial instability. Complementary policies, including both microindustrial policies and macrostabilization policies of the sort that Minsky advocated, are needed to address the real potential sources of instability. Further, given increasing integration of global finance, it is impossible to ignore the importance of the performance of the global economy. And that is probably the most difficult nut to crack.

[...]
based on a presentation given at the international seminar “Global Finance and Strategies of Developing Countries: Main Trends after Basel II,” sponsored by the Centre for the Study of International Economic Relations and the Institute of Economics of the University of Campinas, Brazil, March 13–14, 2006

http://www.levyinstitute.org/pubs/ppb_84.pdf

drstrangelove, the last thing I want to do is discourage your research into the banking system, you've obviously put some work into it, and I have no doubt that it can yield valuable insights. Some of your starting assumptions however, not least about MMT, don't quite align with the real world. Hopefully the two articles are useful perspective on the Basel agreements.

Basel seeks to protect the private banking system from itself, whereas I think it's accurate to say that most Modern Money theorists would just say nationalize it. Not because "socialism" but because capitalism.

[JackRiddler]

.

It's not Covid and it's also not monetary expansion or increased spending that has been causing sectoral inflation for consumers. Good history of Japanese industry, also...

Why There are Now So Many Shortages (It's Not COVID)

https://www.youtube.com/watch?v=b1JlYZQG3lI

[Elvis]

It's not Covid and it's also not monetary expansion or increased spending that has been causing sectoral inflation for consumers. Good history of Japanese industry, also...

Why There are Now So Many Shortages (It's Not COVID)

Great video, thanks!

[Elvis]

Did you catch this? From 2008?

http://www.levyinstitute.org/pubs/pn_08_1.pdf

I did catch that, somewhere—it's excellent—thanks.

Did you see this one from June 17 by Zach Carter? I haven't read it all yet—it's long and I've been short—but I planned to post it, here's the link & title:

https://newrepublic.com/article/162623/ ... t-spending

The End of Friedmanomics

The famed economist’s theories were embraced by Beltway power brokers in both parties. Finally, a Democratic president is turning the page on a legacy of ruin.

[Elvis]

Short article by Robert Hocket pointing out some interesting nuances; with many links. Also I love anything that pokes fun at Peter Schiff.

https://www.forbes.com/sites/rhockett/2 ... b0996c36c9

All Money Is ‘Fiat Money,’ Most Money Is ‘Credit Money’

Robert Hockett
Jul 4, 2021

There seems to be some confusion afoot about what ‘fiat currencies’ are, whether the dollar is one of them, and whether it ought or ought not to be. Much of this stems from latterday gold enthusiasts like Peter Schiff and, ironically, what I call his Cryptopian antagonists.

Goldbugs use ‘fiat’ as a term of opprobrium, suggesting that money by decree is a threat to liberty and currency value alike thanks to the power conferred on the state or its agent – the central banker. Cryptopians talk the same talk, thereby infuriating the likes of Schiff.

Schiff’s beef with the Cryptopians is that they replace what he views as one valueless instrument – the fiat dollar – with another, the so-called crypto asset – neither of which bears any ‘intrinsic’ value. Only substances like gold, Schiff maintains in his guise as a latterday exponent of ‘commodity money,’ retains that.

In this dispute we should count Schiff the dubious ‘winner,’ for at least he is backhandedly recognizing, unlike the Cryptopians, that scarcity alone, while necessary to what the political economists dubbed exchange value, is not sufficient. Some additional form of value is likewise requisite.

‘Intrinsic’ could work here, were we to unpack it as ‘use’ of a particular sort. Unfortunately, that is where Peter gets lost. For gold’s use in jewelry and the like is not sufficient, even in conjunction with its finitude, to render it ‘intrinsically’ monetary – any more than like characteristics on the part of diamonds render them suitable as for use as currency in contemporary economies.

Gold didn’t become monetary because it was precious. It became precious when it became monetary – much like silver throughout, but not so much after, its tenure as money. Both were made monetary, as it happens, for other reasons – namely their malleability for purposes of stamping with sovereign imagery (‘minting’), combined with their corrosion-resistance.

And there is the rub. First came the fiat – the decree of the form legal tender would take (coins, bullion, etc.). Then came what I’ll call ‘the specs for the specie’ – the material best adapted to conforming with that form. In this sense, gold was as ‘fiat’ as paper and bank drafts are now – and as gold/dollar exchange rates early last century were. (The ‘gold standard’ was a standard, after all.)

In this light, I am able partly to endorse a recent appeal by FT’s Brendan Greeley to stop calling our money ‘fiat money.’ Unfortunately, I cannot endorse his particular reasons for doing so. My own reasons I have in effect just suggested. To call it fiat money is just to call it … money.

Greeley’s reasons for rejecting the term ‘fiat money,’ at least as applied to the US dollar, are more obscure. He seems to think bank, and central bank, money’s credit character rules out its fiat character. If so, I fear he has lapsed into category error. Like saying that 'Robert is tall rather than human.'

It looks to me as though the source of Greeley’s error might be his apparently running-together (a) how a would-be monetary instrument is legally or conventionally deemed monetary, with (b) how that instrument is legally or conventionally issued. The 'fiat' moniker generally pertains to (a), while the 'credit' moniker generally pertains to (b).

Both (a) and (b) involve law, convention, or both. And in that sense credit instruments are indeed fiat-reminiscent too (in Greeley's adopted YouTube parlance, 'memes') - notwithstanding Greeley’s apparently wanting to treat contractually extended credit as something less legal or conventional in character than is ‘fiat money.’

In fact both (a) and (b) involve what is socially deemed to 'count' for some social purpose or purposes. But what matters here, and what Greeley seems to me to overlook, is that the social purposes to which (a) and (b) respond, though practically related, are analytically distinct - we could change how we do (a) or (b) without changing how we do the other.

In effect, all tradable assets – the stuff of (b) above - involve credit. (Hence the endogeneity of most of ‘the money supply,’ and the associated need of central bank modulation and allocation.) That is evidenced by the ubiquity of such liability-redolent legal terms of art as 'note' ('Federal Reserve Notes,' 'Treasury Notes,' private sector 'promissory notes,' etc.), 'bills' ('Treasury Bills,' Fed 'dollar bills,' private sector 'bills of exchange,' 'bills of sale' tradable as 'receivables,' etc.), and 'bonds' ('Treasury Bonds,' private sector corporate 'bonds,' etc.) in commercial and financial settings.

In contemporary commercial and financial systems, only the central bank’s liabilities, among all of the liabilities sampled above, are socially deemed 'legal tender,' and this is pretty much all that calling them 'fiat money' now entails. (Hence the Fed's, investors', or both’s having to 'monetize' – that is, purchase – non-monetary credit instruments (e.g., US Treasury promissory instruments and, indirectly, borrower promissory notes) by swapping Fed promissory notes for them.)

The practical relation between functions (a) and (b) as discharged in contemporary financial systems accordingly seems to me best viewed not as that of set to disjoint set, but as that of proper subset to set: …

What socially 'counts' as legal tender in payment - that is, in discharge of a liability, hence as monetary - under present arrangements also counts as an asset; but not all things that count as assets count in payment, hence as monetary. (They could in theory, just as we could in theory restrict money to non-credit instruments - shiny bricks or crypto whatsits - as we once did; but happily we legislate otherwise.)

For more on the ‘how's and the ‘why's here, please see this, this, this and this, along with many of my previous columns in this forum..

One final point: The J.S. Mill quote that that Greeley reports – in which Mill … forgive me … coins the term ‘fiat’ — is a very nice catch. Léon Walras is another classical 19th century figure whose reflections on fiat and fiduciary money are forgotten and hence now unexpected when we find them.

The classicals were far more hep to how money works than we … pardon me again … credit them with. It is just some of their less encyclopedic followers who make them look foolish. Might I suggest we ‘go back to the source[s]’?

[Elvis]

I can't recommend this Hockett interview enough, it's a dense 57 minutes but I think well worth the time.

I especially like the part about the putrification of economics teaching. The whole thing is great.

MMT, Central Banks, Economics Depts & Public Policy -Robert Hockett


https://www.youtube.com/watch?v=oxmXRgRrV9k

[Elvis]

Interview with Rohan Grey, good explanations and some fascinating (to me) stuff. First half is mainly about central banking and the Fed, and bitcoin, but if nothing else, listen from about the 40:00 minute mark to the end.

For example, I didn't know that Ecuador has a unique—"revolutionary"—system giving every citizen an account at its central bank with digital wallets. Apparently these are also rolling out in Senegal and other countries. Discussion of how anonymous CBDC cash works is illuminating. (Isn't that crazy?!")

The eventual focus is the idea of public banks and the question of whether or not they should completely supplant private banks. The answer to that seems to be "no but..."

In light of this interview, I must modify an earlier claim I made that 'MMT wants to abolish the private finance industry'; Warren Mosler has offhandedly suggested that, but I think Mosler's intent is more along the lines that Grey outlines here: stamp out too-powerful "too big to fail" banks and encourage small, highly regulated, private for-profit banks that serve local commuities. Main reason: freedom. But these private banks—that do perform a social good—would always be subsidiary to public sources.



https://www.youtube.com/watch?v=eP3CkeMfw54

[Grizzly]

Microdosing the SHADOWY SUPER-CODERS

[Elvis]

Microdosing the SHADOWY SUPER-CODERS

Max, Max, Max... central banks don't cause misery, bad policy causes misery.


I'll watch the rest & comment later---thanks!

[Elvis]

Microdosing the SHADOWY SUPER-CODERS

Yeah, Max and his friend are believers in private everything, IMO grossly mischaracterizing a lot and just missing the whole point of money.

For example, I think they miss the point of a central bank creating the conditions for banks to be profitable—which is: if we want retail credit for cars and homes and so on, then private banks need to be profitable. The profit motive—in a properly regulated environment—helps assure that banks issue loans only to creditworthy borrowers. Max & co. toss out the examples of JP Morgan and Goldman Sachs; there I must agree, and I would just get rid of those financial Godzillas. But small, local banks can be a good thing for the communities they serve. Even better, public banks—ro just give everyone a personal account at the central bank and set up local lending facilities (repurpose existing bank branches?). A big problem is access to the financial system. Check this out!

The re-launch of Postal Banking is a very good direction to go, but this plan sucks for its corporate branding and limited approach.

https://www.nbcnews.com/politics/politi ... s-rcna2502

Can a post office be a bank? New services test a progressive priority

A recently launched Postal Service pilot program expands the limited financial services the agency offers in four cities, a potential first step toward a return to postal banking.

Oct. 4, 2021, 4:00 AM PDT / Updated Oct. 4, 2021, 10:01 AM PDT
By Julie Tsirkin and Phil McCausland

WASHINGTON — The U.S. Postal Service has quietly begun offering a handful of new or expanded financial services in four cities, a potential first step toward a return to postal banking, which advocates say could help rescue the agency's finances and assist millions of people who have limited or no access to the banking system.

Tatiana Roy, a spokesperson for the Postal Service, said in an email that the pilot program — a collaboration between the Postal Service and the American Postal Workers Union — began Sept. 13 and that it aligns with the goals set out in the 10-year plan the Postal Service announced in May.

Postal banking was not explicitly called for in the plan, which Roy said would help the agency "achieve financial sustainability and service excellence," but it is a longtime desire of progressive politicians and advocates whose attempts to push it through Congress in recent years have been met with little success. It would require an act of Congress to re-establish postal banking beyond the limited services the Postal Service is beginning to test, but the pilot program could act as a proof of concept.

New services include check cashing, bill paying, ATM access, expanded and improved money orders and expanded wire transfers. Select Postal Service locations in Washington, D.C.; Falls Church, Virginia; Baltimore; and the Bronx, New York, are participating.

Mark Dimondstein, the president of the American Postal Workers Union, said the test run was "a small step in a very positive direction."

“We view expanded services as a win for the people of the country, a win for the Postal Service itself, because it will bring in new revenue, and, of course, a win for the postal workers who are extremely dedicated to the mission," Dimondstein said in a phone interview.

Check cashing is the biggest change in services the Postal Service provides. Customers can use payroll or business checks to buy single-use gift cards worth up to $500. Checks larger than $500 will not be accepted.

Many people do not have easy access to banks, but most can find a post office. Sixty-nine percent of U.S. census tracts with post office retail locations — representing 60 million people — do not have community bank branches, according to a study published in May by the University of Michigan.

A lack of access, the costs associated with banking and a distrust of the banking system also have discouraged some people from using banks, leaving them out of the system entirely.

About 8.4 million households, or 6.5 percent of households in the U.S., are "unbanked," according to the Federal Deposit Insurance Corp., and 18.7 percent of U.S. households (24.2 million) are "underbanked" — meaning they may have checking or savings accounts but also use financial products and services outside the banking system, such as payday lenders.

“It’s a case of market failure where the banking industry is not interested in serving these people because they’re not profitable enough and where the Postal Service, because it is a government service, can step in and help with that market failure and ensure those services are available," said Christopher Shaw, a historian who wrote the books “Money, Power, and the People: The American Struggle to Make Banking Democratic” and “Preserving the People’s Post Office.”

With 1 in 4 American households unbanked or underbanked, advocates for postal banking see a huge opportunity for the Postal Service to provide access to an essential financial system while bolstering its own economic position.

Sen. Kirsten Gillibrand, D-N.Y., hailed the pilot program and said that it should encourage Congress to pass her bill that would bring back postal banking in full and "generate as much as $9 billion per year for the USPS, helping to shore up its finances."

“This is a great first step toward creating a postal bank,” Gillibrand said in a statement on Monday. “While the products it will offer are not as expansive as those contained in my legislation, the Postal Banking Act, a pilot program will demonstrate the value to these communities, and show that the USPS can effectively service underbanked urban and rural communities."

There are critics and skeptics, however.

Paul Merski, the vice president for congressional relations and strategy for Independent Community Bankers of America, a trade group for small banks, emphasized that the Postal Service has not provided anything beyond a few simple financial services in nearly 55 years.

“This is just a bad idea that doesn’t seem to want to go away,” Merski said. “The post office is having trouble financially keeping up with just the delivery of mail and losing billions of dollars year after year for over a decade now. You should not have a repurposing of the post office to do financial services — financial services have never been more complex. The Postal Service is in no way, shape or form equipped to compete in the financial services space.”

Postal banking was once a popular option for lower-income people after Congress passed legislation to establish the Postal Savings System in 1910. It aimed to encourage working people and immigrants to use the banking system while generating enough money to pay for itself.

The program started in January 1911, and by 1947 deposits in the system had peaked at $3.4 billion. In the 1960s, deposits declined to $416 million as more consumers turned to banks after they raised their interest rates and began providing further guarantees similar to those offered by the federal government. In 1967, the Postal Service began to phase out the program.

A report from the Postal Service Office of Inspector General in 2014 advocated for the Postal Service to return to some form of postal banking and said that “by improving existing financial services and expanding into adjacent products, the Postal Service could generate $1.1 billion in annual revenue after a 5-year ramp up.”

Some fear, however, that Postmaster General Louis DeJoy is not fully backing the pilot program and may undermine efforts to expand it further. Many advocates of the Postal Service have expressed a lack of faith in DeJoy, citing his close ties to former President Donald Trump and the Republican donor class, as well as his efforts to make the Postal Service more business-oriented.

Porter McConnell, co-founder of the Save the Post Office Coalition, took issue with the small size of the pilot program and the decision to test it only in major urban areas, rather than the rural communities most lacking in such services.

“He is doing the least he can do,” McConnell said of DeJoy. “What would it look like if there was a forward-looking postmaster general who was really strategic about new sources of revenue, serving new populations and building a post office into the community hub that it should be for the 21st century? If you think about that, this all is a little less exciting.”

Still, a new, more permanent postal banking program is outside the postmaster general's purview.

Democrats in the Senate and the House — including progressives Sen. Bernie Sanders, I-Vt., and Rep. Alexandria Ocasio-Cortez, D-N.Y. — have recently pushed legislation that would re-establish postal banking. Larger pilot programs have also been in recent appropriations bills.

“To get something expansive and permanent, Congress really has to get involved and make it happen,” said Shaw, the historian.

Of course the predictable lame objections float up:

Risk of government snooping undermines the case for postal banking

American Banker

6 days ago
Opinion

[stickdog99]

mispost

[Elvis]

So you want to know more about the $1 trillion coin.

Start here.

https://rohangrey.net/files/coinage.pdf

Administering Money: Coinage, Debt Crises, and the Future of Fiscal Policy

74 Pages

Rohan Grey

Date Written: February 11, 2020

Abstract

The power to coin money is a fundamental constitutional power and central element
of fiscal policymaking, along with spending, taxing, and borrowing. However, it
remains neglected in constitutional and administrative law, despite the fact that money
creation has been central to the United States’ fiscal capacities and constraints since at
least 1973, when it abandoned convertibility of the dollar into gold. This neglect is
particularly prevalent in the context of debt ceiling crises, which emerge when Congress
fails to grant the executive sufficient borrowing authority to finance spending in excess
of taxes. In such instances, prominent legal and economic scholars have argued that the
President should choose the “least unconstitutional option” of breaching the debt
ceiling, rather than impeding on Congress’s even more fundamental powers to tax and
spend. However, this view fails to consider a fourth, arguably more constitutional
option: minting a high value coin under an obscure provision of the Coinage Act and
using the proceeds to circumvent the debt ceiling entirely. Reintroducing coinage into
our fiscal discourse raises novel and interesting questions about the broader nature of,
and relationship between, “money” and “debt.” It also underscores how legal debates
over fiscal policy implicate broader social myths about money. As we enter the era of
digital currency, creative legal solutions like high value coinage have the potential to
serve as imaginative catalysts that enable us to collectively develop new monetary myths
that better fit our modern context and needs.

(edited to link published version)