Modern Monetary Theory

[thrulookingglass]

Money is a weapon used to keep people enslaved to violent oligarchical nationalist states.

"One third of deaths - some 18 million people a year - are caused by poverty."

[Elvis]

Money is a weapon used to keep people enslaved to violent oligarchical nationalist states.

Money is also used to organize and marshall resources for socially desirable outcomes. Using money gives us many, many public and personal choices we wouldn't have without it.

War is a policy choice, not some natural consequence of using money. Money was not always invented (and it's been invented many times) for the purpose of war. One of the few long periods of peace in the world was in middle ages China—where the Kublai Kahn introduced a paper currency that greatly facilitated trade and prosperity.

"One third of deaths - some 18 million people a year - are caused by poverty."

Poverty is not caused by money; poverty is a shortage of money.

[Elvis]

Love it—

I now automatically write stuff like this when anyone posts bullshit about the deficit or the "national debt" on Facebook. Saving it here to just fish it out for the next time.

1. "National debt" is a misnomer when applied to the U.S. federal government, Japan, or other currency sovereigns. A "debt" "owed" by a currency sovereign in its own currency is not a debt. It has no relation to the real debt owed by entities who borrow in a currency over which they are not sovereign, such as Greece, Illinois, or me and you. To keep up payments, we need to acquire a supply of the currency in which we owe our debt. The U.S. federal government has no such restrictions, other than the ideological ones. It can freely "repay" any of its dollar-denominated "national debt" at any time, although that would have terrible consequences for the world economy. They are not the ones you think, however.

2. The figure called the "U.S. federal deficit" is not debt. It is a macroeconomic measure of, roughly, the amount of U.S. dollars put into circulation by the means of federal fiscal appropriation, minus the amount taken out of circulation by federal taxation and other revenues over the same period. This amount is offset by the issuance of an equivalent amount of U.S. bonds on the treasury market.

3. Meanwhile, the same U.S. government also issues even more money by monetary means, through the actions of the Federal Reserve in lending to banks and buying their troubled assets. Meanwhile-meanwhile, the private banking system issues the vast majority of dollars, creating these through lending and taking these out of circulation through repayment.

4. In the presently existing world, the U.S. treasury bills resulting from a surplus of fiscal appropriation above taxation function as a foundational element of the larger global financial system. Treasury notes are effectively a form of secured money savings held and circulated among banks and states globally and accepted by all for use as collateral. The global banking system relies on them. This a big reason why the dollar is still the global King of currencies. For American Empire, this is a fundamental instrument of power. "Paying off" all treasury notes would mean a loss of this power.

5. Furthermore, what we call the U.S. deficit is just a fraction of the overall U.S. money supply, most of which is created through private bank lending. The "deficit" talk obscures the relevant macroeconomic question of whether the money supply in productive circulation is properly balanced and adjusted to economic needs and purposes. Hint: currently it is not. That is, unless you are among whose whose need and purpose are to keep almost all of the wealth concentrated in an ever-dwindling number of ever-richer hands. And the current problem is not too high a deficit, or too much money being issued by the federal government! The effective money supply in productive circulation is too low, as compared to the bubble-money supply circulating within equities and derivatives markets, backed and largely provided by the Federal Reserve in order to prop up the continuation of astronomical valuations during a long period of crisis and depression (in reality since 2007, not only 2020).

6. It is false to use the terms deficit or debt for U.S. federal spending by fiscal appropriation above the level of taxation, with the resulting supply of new money in the economy offset by an equivalent supply of U.S. treasury bills. This is a form of confusionism, albeit one sincerely believed by most people, including most economists (another term that should usually be put in scare-quotes). It is an essential part of the overall ideological framework. Among our national Big Lies, it is as important and as misleading as American exceptionalism itself.

7. The genuine belief in, and the deceptive propagation of the bullshit about "national debt" is a big reason we can't have nice things. It is used in the class war waged by deficit hawks in the Congress thanks to the artificial self-imposed "debt ceiling" that periodically allows them to set off spending panics and cut any spending that is going to the people or that isn't going to the military. The myth is intentionally deployed in class war by some of most powerful, most destructive elements of the ruling class, represented for example the late hedge-fund pirate Pete Peterson, who used part of his plunder to back large-scale all-channel propaganda initiatives meant to generate panic about the deficit and the supposed insolvency of the Social Security system.

Numbered to mix and match in future.

.

[JackRiddler]

Money is a weapon used to keep people enslaved to violent oligarchical nationalist states.

True but that's not the subject of discussion on this thread. We are discussing how lies about how the money-system works, told by the same oligarchies and states, make things worse.

[thrulookingglass]

Money is the lie.

We cannot discuss "Modern Monetary Theory" without discussing the "theory" of money itself.

I thought this lecture belonged on this board, though I'm sure this is not the most befitting topic heading.

[JackRiddler]

This is great for providing a useful glossary for understanding various parts of the system. I want to read the Kelton now.

https://lpeproject.org/blog/the-deficit ... the-lines/

lpeproject.org
The Deficit Myth: Banking Between The Lines
By Raul Carrillo
8-10 minutes
“Now, the rest is up to us because we are responsible for each other and to each other.

We are responsible to the future, and not to Chase Manhattan Bank.”

–– James Baldwin
This post is part of our symposium on Stephanie Kelton’s The Deficit Myth. You can find the full symposium here.

Several commenters have argued that The Deficit Myth (TDM) says little about “private finance.” For instance, in an otherwise sympathetic recap, fellow heterodox economist J.W. Mason claims it’s “hardly mentioned….” Mason’s argument broadens into a criticism that MMT ignores private finance dynamics, yielding “holes in the foundation.” Such a claim is baseless—and misleading.

Financiers pop up throughout TDM: as bond vultures, pension thieves, currency crashers, etc., as well as analytical experts. More importantly, they appear as payments systems operators, quantitative-easing counterparties, primary dealers, etc. As the title suggests, Stephanie Kelton has written a best-selling, counter-hegemonic book on “public finance.” Kelton appropriately elevates the power of the public purse to create a “people’s economy” centered on care, rather than predation.

Mason declares that “[t]he book begins with a claim that all money originates with the government.” But in the very sentence Mason then quotes, Kelton merely writes, “MMT takes as its starting point a simple and incontrovertible fact: our national currency, the US dollar, comes from the US government, and it can’t come from anywhere else–at least not legally.” This is not a statement about all money, but one currency—the US dollar. As Chapter 5 clarifies, MMT recognizes a spectrum of monetary sovereignty, with the US, as a global currency hegemon, on one end, and many nation-states in the Global South, indebted in the hegemon’s dollars “to pay for food, medicines, and other critical imports,” on the other.

Mason subsequently suggests MMT ignores “the existence of banks.” This breezes by swathes of MMT literature and contradicts Mason’s previous work acknowledging MMT supports the endogenous money view. Whereas orthodox economists treat banks as intermediaries managing flows of scarce funds, many heterodox economists argue banks do not “pre-accumulate” funds, but issue credit ex nihilo.

Yet here MMT even offers something new: grounding in constitutional and administrative law. For Mason, “[b]anks are money issuers every bit as much as the government.” This may seem intuitive for some; it is empirically untrue for, say, an unbanked person who needs an emergency COVID-19 payment (or is otherwise a victim of the “gentrification of payments”). That is to say, it is incoherent from a perspective that acknowledges financial hierarchy and the constitutive role of public law.

As Nathan Tankus has noted, MMT generally encourages analysts to consolidate the Fed as a legal subunit within the rest of the US government. When one integrates central banking….one definitionally brings banking into the picture. For instance, in Chapter 2, Kelton describes how the Fed issues bank reserves (the public monetary base of the broader banking system) and the Treasury issues bonds (the public monetary base for capital markets). She specifically argues monetary policy, which pushes the banking system to generate stable growth, is usually inferior to fiscal policy. As Kelton writes, banks can’t “…spend money directly into the economy, so the best they can do to promote employment is to try to establish financial conditions that will give rise to more borrowing and spending.”

Mason questions what powers the government actually has over “bank money.” Legally speaking: plenty. As Katharina Pistor argues, the legal tender the state issues sit above “bank money” in the hierarchy of moneyness, because it is “backed by the coercive powers of that state, including the power to unilaterally impose liabilities on others…” Contra Mason’s suggestion, the “function of the regulations and institutions of the financial system” actually do flow from what Kelton characterizes as “government’s monopoly on currency issuance.” In various ways, scholars have argued the government has delegated some of its money-creation power to banks. Indeed, 33 banking law scholars recently submitted an amicus brief to the Second Circuit Court of Appeals, arguing that “[c]reating deposit dollars is a delegated sovereign privilege” and that the Office of the Comptroller of the Currency (the national banking regulator) lacks the authority to charter Silicon Valley firms.

While Christine Desan (and Kelton!) generally approach money and banking as a small-c constitutional project, discussing TDM and MMT through the lens of administrative regulation helps us see how financial power flows from monetary design, fundamentally shaping our political economy.

Take the “finance franchise” view. Like MMTers, Saule Omarova and Bob Hockett argue banks can generate rather intermediate finance capital; this is why much banking regulation exists in the first place. Like Omarova and Hockett, all MMT economists support robust, precautionary financial regulation (especially in the form of price-stabilizers). Warren Mosler sees US banks as corrupted “public/private partnerships”, arguing for a bright-line barrier between vanilla banking and capital markets. Scott Fullwiler has long argued banks do not seek deposits to expand lending, asserting that “the only relevant quantity constraint on creating a loan is capital—assuming capital requirements are strictly enforced…,” ultimately agreeing with Omarova and Hockett that regulatory stricture is “social and legal practice.”

In the “money as infrastructure” view, Morgan Ricks frames bank chartering as procurement. Following the Civil War, only state-chartered or nationally-chartered institutions have been allowed to incur bank deposit liabilities, creating a logical site for regulation. MMT legal scholar and white-collar criminologist Bill Black agrees, but notes the Law and Economics movement has driven a race-to-the-bottom in charter-based enforcement.

Of course, the global financial crisis did not flow merely from chartered banks. In a 2012 law review article, MMT economist (and Hyman Minsky protégé) Randy Wray analyzed the role of “shadow banking” in the run-up. For Wray, as for Ricks, the popularity of the orthodox “intermediation view” of banking bears some blame for deregulation. Wray’s argument finds harmony with Omarova and Hockett, who argue shadow banks dangerously “amplify and replicate the core banking franchise”, necessarily taking advantage of the legal foundations constructed for chartered banks by the Fed and Treasury. We all agree shadow banking now creeps from Silicon Valley; MMT legal scholars are taking their shifts on the watchtower.

Oddly, accurately acknowledging what MMT says about private finance hardly changes the mission. Around the world, MMTers and our allies are fighting to shift power from undemocratic banks and other corporations to domestic legislatures and treasuries. This is geopolitically crucial: as Pistor argues, capital’s international mobility is ultimately backed by the laws of England and New York State, “a few international treaties, and an extensive network of bilateral trade and investor regimes, which themselves are centered around a handful of advanced economies.” In Chapter 5, Kelton argues for the permanent regulation of international capital flows. More importantly, she follows MMT economist Fadhel Kaboub in promoting direct job creation, energy and food independence, and South-South trade partnerships.

TDM doesn’t ignore private finance—it fights for public finance. While the book doesn’t nakedly stoke class war, it’s not shy about power. Readers know the context. Today, Wall Street and Silicon Valley distribute the necessities of social reproduction—healthcare, housing, education, etc.—by shouldering everyday people with debt in racialized and gendered ways. This renders our economy especially vulnerable to the pandemic. As MMT economist Zdravka Todorova has argued: in a monetary production economy even carework can only continue for so long without public funding. Wall Street already lives in many of our heads — and charges us rent on our thoughts. TDM shows everyday folks how we can push private finance out of our lives and we can instead care directly for people, community, and planet.

[Elvis]

^^^^

push private finance out of our lives

Music to my ears.

I've seen Mason on Twitter, that's a great response. Patting myself on the back for having read most of the reference stuff (some of it is posted in this thread).

Banks have a serious responsibility. They've abused it.* Fuck them.

During "Occupy Seattle" in 2011, I was still trying to figure out the money system but I was on the right track with my "BOYCOTT BANKS" message. In subsequent days I added "USE CREDIT UNIONS" along the bottom. A local Fox News photographer lined up this shot to get the Bank of America sign over my sign.

000 - Occupy Seattle Oct 6 2011 M.jpg

* I mean in particular the TBTF banks & usual culprits.

[Grizzly]

If the truth can be told so as to be understood, it will be believed ~Terence McKenna

Pecora courts

1980 Interest rates deregulation control

The Lewis Powell Memo: A Corporate Blueprint to Dominate Democracy
https://www.greenpeace.org/usa/democracy/the-lewis-powell-memo-a-corporate-blueprint-to-dominate-democracy/





Caught on from here: http://www.rigorousintuition.ca/board2/viewtopic.php?p=690399#p690399



https://en.wikipedia.org/wiki/Ferdinand_Pecora

ANYBODY PAYING ATTENTION?!

Where Jackriddler sucked me into watching what I thought would be an hour long Q&A turned out to be 2hrs and 32 mins 47 seconds, and as boring as it was, it was enthralling to say the least, with no more or less than 8 to 12 beer-stein throwing moments!



Bastid!

Afterburn...
I fully believe they took out David Rolfe Graeber Skripal style

[JackRiddler]

uh, episode one as elvis linked it is an hour, the discussion that followed about as long. Not sure which link you followed. Just watched it today (the episode only).

[Elvis]

The Lewis Powell Memo! I was trying to recall details of that just the other day (to win an impromptu debate). A key document. Thanks.

[Grizzly]

A couple weeks ago, Someone posted an interesting announcement from the US financial crimes website:
https://www.fincen.gov/news/news-releases/statement-fincen-regarding-unlawfully-disclosed-suspicious-activity-reports

I was waiting to see what they were talking about, and then I see these articles today:

Leak reveals $2tn of possibly corrupt US financial activity
https://www.theguardian.com/us-news/2020/sep/20/leak-reveals-2tn-of-possibly-corrupt-us-financial-activity

Dirty money pours into the world’s most powerful banks
https://www.buzzfeednews.com/article/jasonleopold/fincen-files-financial-scandal-criminal-networks

[Elvis]

BBC is giving MMT more airtime. But like all MSM outlets, they rely far too much on conventional economists & commentators, the more alarming their warnings, the better. This is changing a little, as, over time, BBC interviewers get hip to econ bullshit instead of swallowing whatever some "expert" says (because economics is assumed to be dull and inscrutable).

Sept. 18 they had as a panelist Stephen Keen, a well-known Australian MMT economist, to discuss economic responses to the Covid-19 crises. Unfortunately, Prof. Keen was "balanced" by a Cato Institute crackpot named Jeffrey Miron, who is also unfortunately on the faculty at Harvard.

Miron talked a crapload of shite, reciting all the myths & lies about government deficits and the "national debt" and so on (listen to believe). But the host then introduced Keen, and asked—in a raised-eyebrow tone—"Professor Keen—Is that really true?" That moment was quite satisfying for me. None of it was true, and Keen brilliantly proceeded to eat Miron's libertarian lies for lunch.

Miron persisted, though, and a bit later trotted out one of the most common and disingenuous arguments by those scratching desperately to find fault with MMT: (paraphrasing) "If MMT is true and deficits & the debt don't matter, then why not just give every man, woman and child a million dollars?" Miron has to know he's wrong to even pose the question—c'mon, man. This fallacious argument is deployed frequently as MMT gains ground in the public discourse. It's idiotic and reflects either dishonesty or a lack of any actual reading of MMT literature.

The other two panelists were "balanced" similarly: Tim Jackson is a colleague of Keen's and made excellent points of his own. Betsey Stevenson, on the other hand, like Miron, grossly mischaracterized MMT: 'I don't agree you can just create infinite money by adding zeroes at the Fed'—just dumb (and she's a prof at U Michigan!).

Above all, Miron and Stevenson repeat the utterly false claim—how can two economists from top universities even do this, and do they really believe it?—that the "national debt has to be paid back with taxes."

This stewpot of disinfo, coming from ostensibly "respectable" sources, is more harmful than any Russian bot army. People need to be aware of it and not stand for it.

https://www.bbc.co.uk/programmes/w3cszcnf
Covid unemployment: a new crisis?
The Real Story

How does surging unemployment complicate the global response to the pandemic?

53 minutes


Contributors


Jeffrey Miron - The Department of Economics at Harvard University and Director of Economic Studies at 'The Cato Institute'

Betsey Stevenson - Professor of Public Policy and Economics at the University of Michigan

Tim Jackson - Director of the Centre for the Understanding of Sustainable Prosperity at the University of Surrey

Steve Keen - Honorary Research Fellow at University College London and author of 'Can We Avoid Another Financial Crisis'

Also: a few days prior, I heard James Galbraith—son of John Kenneth and a very MMT-friendly economist himself—on BBC touting a job guarantee with no pushback from the interviewer! (Normally we'd expect to hear, "Yes but won't that cause inflation?" etc. It was refreshing.)

[JackRiddler]

This is

1. MMT only by implication, and not entirely,

2. entirely based on the work of the economist Richard Werner, whose appearances on financial channels are used many times throughout,

3. a history of Japanese political economy from WWII to the bubble and crisis years, with much great footage in illustration,

4. hampered by continuous ominous music, in the style of nearly all documentaries nowadays, which I have come to hate,

5. analytic and comparative regarding the role of central banks, the neoclassical economics education given to generations of technocrats and bankers, bubbles in various places and times, and the use of crisis (including its engineering) as an instrument of political power play,

6. very interesting to watch,

7. something to discuss.


https://www.youtube.com/watch?v=p5Ac7ap_MAY

[Grizzly]

Unfucking believable ^^^

Even though I knew it all along. The Banach–Tarski Paradox. What a magic trick!

[JackRiddler]

Unfucking believable ^^^

Even though I knew it all along. The Banach–Tarski Paradox. What a magic trick!

Ok, math genius, I looked it up and can't say I really get it. Could you do us humanities majors a favor and explain how this fits here? Which post are you responding to?

(Things can be broken up and rearranged back into their prior shape but different sizes? An infinite number of balls can be made out of one ball? I don't get it as a thing in math, but maybe as a metaphor for something here.)