By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Cross posted from New Economic Perspectives
We know that the supporters of austerity simultaneously urge us to reject “European socialism” while adopting the key European strategies that drove Europe into recession – twice. American conservatives assume that Europe must epitomize stringent financial regulation. The opposite is true. Europe adopted “light touch” financial regulation pursuant to neo-liberal economic theory. Its embrace of the three “de’s” – deregulation, desupervision, and de facto decriminalization was far more extreme than the United States. The City of London “won” the regulatory race to the bottom with the U.S. European’s adopted the full Basel II reduction in capital requirements without the minimum gearing ratio that the Federal Deposit Insurance Corporation (FDIC) insisted upon. The FDIC prevailed over the intense, but fortunately unsuccessful opposition of the Federal Reserve economists who were the principal architects of Basel II’s disastrous reduction in capital requirements. The result was that European Union banks had roughly twice the leverage of U.S. banks and faced no meaningful regulatory restraints. The result was far larger real estate bubbles in several European nations (as a percentage of GDP) than in the U.S., multiple financial crises, and a Great Recession that reached depression levels in several nations.
Most of Europe was in a weak recovery from that Great Recession when Berlin’s insistence on austerity (a pro-cyclical policy that causes recessions to become more severe) threw most of the Eurozone back into recession and much of the periphery into severe depressions. We have run a “natural experiment.” The U.S. adopted a modest counter-cyclical fiscal policy while Berlin forced Eurozone nations to adopt pro-cyclical fiscal policies. The result has been a modest recovery in the U.S. and a second, gratuitous recession in the Eurozone with depression-level disasters in much of the EU periphery.
Representative Paul Ryan is treated by many in the media as “serious” and “courageous” because of his proposals to reduce dramatically federal payments for social security and health care. He and Governor Romney call for a stringent austerity program to balance the federal budget. Romney has repeatedly taken to calling ending any deficit a “moral” imperative. The media figures who call the public officials who make these deficit claims and proposals “serious” and “courageous” demonstrate how unserious and economically illiterate the media figures are.
The call to “balance the budget” during a weak recovery from a Great Recession is profoundly unserious, wasteful, malicious, and self-destructive. It also displays a callous indifference to suffering of tens of millions of people. Most of all, it is obscene that the media still accepts as fact the myth that austerity would balance the budget. I explained recently why Spain’s austerity program caused its budget deficit to grow. This result is not anomalous – it is precisely what economic theory predicts will often be the result of pro-cyclical fiscal policies. Severe recessions are the leading cause of major budget deficits. Pro-cyclical fiscal policies (austerity) make recessions more severe by reducing private and public sector demand at a time when demand was already severely inadequate.
The unserious nature of the Romney/Ryan’s odes to austerity has been made clear by Romney’s admissions (twice) that adopting austerity at this time would be so self-destructive that it would likely throw the nation back into recession and by the lack of specifics and incoherence of Ryan’s “plan” to purportedly achieve a balanced budget while embracing enormous tax reductions for the wealthy.
The claim that deficits are immoral because they harm our children reverses reality. Austerity is the leading enemy of children. Forcing parents into unemployment and bankruptcy and their homes into foreclosure represents the leading assault on children. Counter-cyclical fiscal policies reduce the severity of recessions and speed recovery. Our automatic stabilizers help our children. Austerity harms our children. The “deficits are a burden on our children” argument rests on another economic myth. It is a myth that a nation with a sovereign currency like the U.S. is not “just like” a household with regard to deficits or surpluses. The U.S. has, throughout our history, overwhelmingly run budget deficits and history shows that every effort to balance the budget and reduce the debt was soon followed by a depression or the Great Recession.
Romney’s “morality” argument about deficits is doubly wrong. There is nothing “moral” about a budget surplus in the sense Romney is using the word. Pursuing austerity when it is likely to cause a recession is primarily insane, but it is also immoral because it causes gratuitous harm to many people, particularly the poor and working class. Unemployment represents economic waste from a societal perspective, but it is also immensely destructive psychologically and socially to the unemployed and their families. Pushing people into unemployment and poverty through austerity is an immoral act. Unemployment is not a necessary “sacrifice” that helps society. Austerity is vicious to the poor and it is wasteful, which makes it doubly immoral.
The media treatment of such facially unserious and self-destructive austerity proponents as serious and courageous is a classic example of creating a “moral panic” (e.g., “Reefer Madness). Accepting the deficit hysteria as a fact has become the media’s test for serious economists. UMKC economists’ self-description is “deficit owls.” UMKC economists recognize that a nation with a sovereign currency is not analogous to a household. One wonderfully revealing example of the effort to create a moral panic about the deficit is the on-line game: “Budget Hero.” Here is how Marketplace describes the game.
A new version of Budget Hero, the online game produced by the Public Insight Network team at American Public Media and the Wilson Center’s Science Technology and Innovation Program, allows you to test your own budget policy and see the effects of those cuts or increased expenses on the federal budget. Let the Bush tax cuts expire, increase revenue. Spend more on a program, see your deficit grow.
The game site shows further sponsors, including the Corporation for Public Broadcasters, the MacArthur Foundation, the Richard Lounsbury Foundation, and Serious Games. The last sponsor proves we are dealing with a “serious” effort; except that the game is a farce that has been gimmicked to ensure the “serious” result. The game proves that it is essential that we adopt austerity and “serious” austerity requires slashing Social Security, Medicare, and Medicaid. How does the game do this?
First, the game is based on the myth that a nation can adopt austerity and ensure that it does not run a budget deficit. Think of Marketplace’s description of the game – if one spends “more on a program” the deficit increases. Spain illustrates why this is not likely to be true during the recovery from a severe recession. Spending more on a program can help spur a recovery and reduce the budget deficit. The game allows a player to choose “Economic Stimulus” as a “badge” (your primary fiscal strategy) but there’s a catch that the game doesn’t include in the badge’s explanation of that strategy – the game assumes that fiscal policy has no effect on economic growth or unemployment. No one believes that assumption is accurate. Any player that follows an “economic stimulus” strategy will experience a prompt “budget bust” failure because the game treats pro and anti-cyclical fiscal policies as having direct budgetary effects but no effects on the economy that would feedback into the budget. That assumption makes no economic sense, but it means that there is only viable strategy for the game. Austerity cannot throw a nation back into recession and increase the budget deficit the way it did Spain. Austerity can only reduce the deficit. The flip side is the game makes it impossible for economic stimulus to succeed in reducing the U.S. budget deficit. It follows that the game does not increase the deficit the way it did in Spain. In the game, stimulus cannot stimulate the economy – it can only increase the deficit. No one serious (or honest) about economics would design a game that is economically illiterate and gimmicks the answer so that austerity is the only viable strategy even though we observe it leading to disaster in Europe. One becomes a “hero” by embracing austerity and causing an economic catastrophe.
Note that the game does not even allow the obvious options to greatly reduce the severity of the recession and increase employment. President Obama’s stimulus proposal had an excellent revenue sharing component that was killed by a coalition of conservative (“blue dog”) Democrats and Republicans. Revenue sharing is a Republican concept that made perfect sense in countering the Great Recession because everyone knew that, unlike the federal government (which has its own sovereign currency), the states and localities faced hard budget constraints that would lead to cutbacks of public services and employment at precisely the worst time. Those cutbacks would harm the public and the economic recovery. Federal revenue sharing allows the states and localities to fund their top budgetary priorities. The game does not allow the player to employ revenue sharing.
The game also does not allow the government to provide funding to establish a “job guarantee” program that would guarantee that workers who were seeking work would be employed. A job guarantee program greatly reduces the economic waste and psychological and social devastation of widespread unemployment. It would greatly aid our recovery. The game does not allow one that option.
Second, the game makes it impossible to “earn” a “Budget Superhero” badge without imposing severe cuts on health care and social security. Any “serious” and “heroic” strategy must impose such cuts. That should cause us, unlike the game’s unserious designers, to question the game’s prominent use of the words “earn” and “hero.” My parents and teachers must have taught me a different definition of the word “hero” than the designers learned. I never knew that it was “heroic” to throw grandma, the poor, the sick (and the combination of all three) under the bus so we could reduce the budget deficit even if we believed the myth that austerity could ensure a balanced budget rather than throwing the nation back into recession and increasing the budget deficit. Propounding the propaganda that the politically powerful and wealthy “earn” the right to be considered “superheroes” by harming the poor, sick, and elderly represents the most morally depraved and dishonest economic idea of the modern era. To see American Public Media, the Corporation for Public Broadcasting, the MacArthur and Lounsbury foundations, and the Wilson Center shilling for this reductio ad absurdum of Social Darwinism is revolting.
Third, the game makes it impossible to be “heroic” without slashing Social Security and health care for the elderly and the poor because the game has other hidden gimmicks. These gimmicks again take the form of removed options – the game designers refuse to give you alternative means to balance the budget. (Again this assumes solely for purposes of analysis that balancing the budget was desirable.) I will discuss only four of the removed options.
• Increase taxes. The game allows the player to make only modest increases in taxes. Here are the only increases one is allowed to make. These increased revenues are over a decade, so the annual revenue increase of each is only one-tenth the figure shown.
Reform and simplify the tax code: $995 B
Phase out mortgage interest deduction: $215 B
Add 25 cents to gas tax: $291 B
Toxic tax: $25 B
End breaks for big oil: $21 B
No breaks for extractions: $9 B
Carbon tax: $21 B
The game only allows one to increase annual taxes by roughly $160 billion (with a GDP > $15 trillion – a trillion is a thousand billion). Removing the option to have a significant tax increase demonstrates that the game’s designers were “serious,” but in a disturbing and dishonest way. The game designers thought seriously about how to gimmick the game to add to the moral panic that would lead the public to demand that politicians wield their budgetary axes against the elderly, poor, and the sick and would brand such cowards as “heroes.” The designers made it impossible to increase taxes sufficiently to produce a (net) reduction in the deficit.
Considering taxes should also lead us to reexamine the game designers’ use of the word “hero.” “Heroic” should be reserved for an unusual, severe sacrifice. Cutting benefits for other people never warrants that term. Raising one’s own tax rate does at least have an element of sacrifice, but when the middle class and above pay taxes we are not making an unusual, severe sacrifice. Wealthy Americans once routinely paid a far higher marginal income tax rate without claiming that doing so made them “heroic.” We are debasing the word “heroic” if we term the marginal income tax rates that existed under President Eisenhower as requiring “heroic” sacrifices by the wealthiest Americans.
• Cut health care costs. The fastest increase in any expense category, which indirectly drives the interest expense category, is health care. The extreme escalation in health care costs is the largest factor driving the moral panic about budget deficits. The obvious option is a public health care system. The existing insurance-based U.S. health care system provides no better health outcomes than the dreaded Europe (and many argue that Europe produces superior outcomes). We spend roughly twice as much (as a percentage of GDP) as Europe. The savings from adopting national health care would be massive (particularly over the lengthy time period the game employs). The national health care option, alone, would kill the moral panic propaganda. The game designers know about this alternative. It took serious thought for them to exclude it.
• Cut defense spending. The game allows moderate cuts to defense spending but there appears to be a hidden gimmick. The options appear to run out. I experimented by using every permissible defense cut (some of the cards “overlap” and cannot all be used), including the “freeze” defense spending levels game “card.” When I move the “date” bar I find that after a time defense spending begins to rapidly escalate. It is not clear what model is driving the assumption that our default spending level on defense should escalate from the status quo (where we spend more on defense than the nine next-highest spenders on defense – combined) to a far higher level. The game does not allow one to make far larger cuts to defense.
• Establish more effective financial regulation and prosecutions of elite white-collar criminals. The Great Recession is the latest of our recurrent, intensifying financial crises driven by an epidemic of elite accounting control fraud. The Financial Crisis Inquiry Commission reports that considering only the household sector, their losses were $11 trillion. Effective regulation is essential for financial markets. The game treats financial regulation as an expense.
The game designers thought seriously about how to bias every aspect of the game to produce the desired “moral panic” about the deficit. They did so disingenuously while constantly emphasizing their purportedly neutral, bipartisan, and serious approach. There are three motifs:
• Panic!!!!!!
• There is no alternative – anyone who disagrees is not “serious.”
• Turn morality on its head – we’re throwing the poor, sick, and elderly under the bus because we’re making courageous sacrifices for our children.
The game designers used graphics and colors to emphasize the imminent disaster. They created four gauges. From left-to-right they are:
• “Deficit/Surplus.” The designers did not use the conventional red v. black ink of accounting (which would have been bad enough in this context where a deficit is often the prudent policy, but green (safe) and red (danger). The needle’s starting position in 2012 is off the scale in the red! The deficit is greater than $1 trillion – the maximum value shown. One can hear Scotty screaming to Kirk: “Captain, she can’t take much more of this!”
• “Size of Government.” Why is this gauge present at all if the issue is the deficit? The game has a FAQ that tries to answer that question, but the real answer is the developers’ neo-liberal lens as can be seen by the scales and labels used on the gauge. The needle is on the maximum scale value – 25 percent – the biggest of “big” values possible for size of government shown on the gauge. No color on this gauge, but it too is red-lined.
• “Budget Bust.” Panic!!!!! The question is not whether America will collapse, but which year. The designers channel their own Mayan moral panic – wherever you place the year selector as the start date for the game the date of collapse (in red) is 2031. (If you make every defense cut “card” the game permits you push the date back to 2033. Panic!!!! The game scorecard then tells you that while you have not qualified as a budget “hero,” your children thank you for pushing back the date of the collapse by two years.)
• “% of GDP:Debt.” A pulsing, mostly red gauge that shows the inevitability that the American government will be destroyed by a red tide of debt. The starting point for the needle in 2012 in deep in the red region of the gauge.
The words and graphics reinforce the message that it is time to panic. The reader does not need to know that nations like Japan with sovereign currencies have debt-to-GDP ratios twice as large and are able to borrow funds at exceptionally low interest rates, that the U.S. has had larger debt-to-GDP ratios in its history, that the U.S. has run budgetary deficits for the vast bulk of its history and that such deficits helped it become an economic powerhouse, that severe recessions produce large deficits, that counter-cyclical fiscal policies have proven highly effective in reducing the severity and length of recessions (which reduces budget deficits), and that austerity rather than being “serious,” “heroic,” “moral”, or “the only alternative” is a disastrous policy to follow in response to a Great Recession and has intensified the Eurozone’s crises. There is literally no alternative in the game. The game does not allow you to be a “budget hero” unless you cut Social Security and health care.
The messages and explanations that the game designers framed reinforce the game’s fallacious propaganda about fiscal policy and the nature of sovereign currency. I explained the absurd message that the game sends (“Your kids called to thank you”) that claims that our children would thank us for adopting austerity and throwing the nation into a gratuitous depression. The young adult unemployment rate in Spain is roughly 50 percent. The phone call they make to their parents is to say goodbye as they emigrate to other nations. Our kids join the elderly, poor, and sick as the principal victims of austerity.
Similarly, the designers’ explanation of the game spreads two of the most common myths about sovereign currencies and national debt.
“National debt, as a percent of GDP, rises if you spend too much or tax too little.”
“Your budget goes bust when your money runs out for anything other than social security, health care, and interest payments.”
The first phrase falsely assumes that austerity, a pro-cyclical policy that makes recessions worse and can increase deficits and debt, is counter-cyclical. I end with the game designers’ embrace of our favorite myth about money: “your money runs out.” Seriously? If someone believes such a preposterous statement then ask them this hypothetical: if [fill in the name here of the nation you consider most hostile] were to attack us in 2031 – the game designers’ own Mayan “end of days” day that our “money runs out” – would we be forced to surrender?
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So, where can one find the model that you would apply? I ask because in any game such as this the principles you note must be written as code somewhere. Alternate models could be coded. And even tested.
The models that show that if you target full employment at no point in time the debt will explode on you or become a burden.
http://www.levyinstitute.org/pubs/wp_494.pdf
http://www.cfeps.org/pubs/wp-pdf/WP53-Fullwiler.pdf
I disagree.
Not sovereign issuer of currency, massive import/export percentages of economy (much of which is denominated in foreign currency as well as exemplifying the “hot money” problem), CB refusing to do anything, crippled banking sector without credible LoLR, must I go on? Please don’t treat Ireland and Greece as proxies for the U.S., it’s absurd.
Exactly.
OMF, The model is about *sovereign issuers* of currency.
Ireland is like a corporation, sure it can go bust. It is not related to a case of currency issuer in any way.
http://www.economonitor.com/lrwray/2011/11/10/is-this-the-end-of-the-faith-based-european-monetary-union/
I don’t think there’s any game out there that does this. It wouldn’t be fun. There was a game along these lines highly praised by Niall Ferguson, called something like World War. I don’t recall the exact name because my computer didn’t have enough power to run it so I deleted it after getting an idea of who it worked. Basically you had all the major actors in World War II and you selected different policies for them, how much to tax, how much to invest in heavy industry, how large to make your military, stuff like that. It was pretty complicated. Niall Ferguson was exctatic, thinking this was something that would “prove” the counterfactual stories he loves so much. Trouble is like any game it can only be a toy, and the results depend on what assumptions the designers build in to it.
Niall Ferguson loves the game of global management. The real-life game which now only benefits the 1% and which has been played with such dedication by them for the last century. Problem: it is a game of growth, a game that only looks backward. That’s what makes it a game. Budget Hero is not a game. It is propaganda. If Budget Hero looked backward it would solve its irrational, circular nonsense with growth because the past always used real counter-cyclical tactics to make the world more efficient economically – for the benefit of the 1%. Why does the 1% now want to slam on the breaks? There is a hidden agenda in all this devotion to austerity and it is hard not to suspect it has to do with global warming and the destruction of the planet. The budget hawks just can’t be that dumb. So this raises the question: Why don’t we address the real problem? Cleaning up the planet is a growth industry just waiting to happen. It is going to require an ocean of counter-cyclical spending.
And a blind faith leap into the future. We’ve always been pretty good at that.
I’ve heard the term used to speculate that as a possibility was “demand destruction”. To essentially slow down drastically the feeding of the parasite upon the host(i.e. humans upon the planet).I can’t say that isn’t happening. After all, the corporate model with infinity on the growth side,obviously doesn’t exist in this world.
Susan, correct: the game is [programmed to produce] propaganda to JUSTIFY putting ALL public “entitlement” funds into a gigantic SLUSH fund of “99% capital/deposits” DESIGNED, via complex extrapolations, to produce INFINITE GAIN for the 1%–via EXPONENTIAL SPINNING OF compound derivatives/CDOs/swaps/ersatz “insurance” vehicles/complex naked derivates, and skimming via HFT with strategic placement of computers.
As with “Private Equity” looters, the 99% “entitlement” funds are the CASH COW to be used as “collateral” for obtaining the PE “buyout loan” THEN to be milked unto death; and which point the CARCASS is discarded or re-used.
The PURPOSE is ever the same: capturing MORE “free” Public “Capital” to feed the infinite appetite of the 1% Beast. “1%DNA Lebensraum Finance” the same.
August 15 will be the 41st anniversary of the US going off the gold standard. 41 years, and we still hear people trying to make monetary arguments as if we were still on the gold standard.
I realize that in the sciences progress moves forward one funeral at a time, but do we really have to wait that long before the rest of the world catches up to the idea that we ain’t in Kansas any more?
Printing counterfeit isn’t a solution. Neither is austerity.
In financial terms, there is no lack of money, the banks are full of it. What’s missing is the economy, it’s too small for the desired level of extraction. It is stagnating under wars, cronyism, corruption, globalization and structural imbalances. Apparently all of these are top priority so the situation ain’t going to change any time soon.
The silly circus of spending heroes vs austerity heroes is just that – a circus. A way of probing which pretend “solution” is going to fool the public better… while the real problems stay hidden.
That imbalance is what causes the real crisis. The PTB solve the dilemma by printing, devaluing the currency so debts can be paid off. This manifests as price rises, further impairing peoples’ ability to purchase. The masses are gradually impoverished, while gov’t borrowing goes out of control. I can imagine the end result of this, but it’s not pretty.. a social upheaval caused by a starving population, especially bad when guns are so prevalent. It’s not necessarily people rising up against authority in a revolution, as much as just rampant lawlessness, robbery, murder, etc.. complete chaos, anarchy. Then the politicians say, ‘see, we told ya so.. you’ll all kill each other without the govt here to save you.’ Then wash, rinse, repeat.
..exactly, ben..
the only discussion allowed by corporate media is “austerity” vs “stimulus”=”quantitative easing…
meanwhile people are in the streets worldwide demanding accountability…
which media disallows discussion of..
Romney, Ryan, and the Republicans, as well as Obama and the Democrats are not unserious. They are criminal and evil. Their ideas about money and government operate in and on the economy are so distant from reality that it is impossible to engage in a meaningful debate on them. It is not that some of their premises are off. It is that all of them are completely wrong. Yet at the same time, all of them just happen to support the looting of the 99%. It doesn’t matter if these representatives of the rich and the elites believe in their arguments. All we really need to look at is cui bono and cui malo, who benefits from them and who is harmed by them. They and theirs benefit, even as we and ours see our homes, jobs, health, wealth, and lives lost.
Isn’t there a minor but potentially confusing typo in paragrah 6? In the 4th line from the bottom, “not” in “not ‘just like'” should be deleted. As the sentence stands, it supports the austerians.
This article makes a good point. It also makes you wonder why MMTers and others haven’t come up with a counter-game that’s based on economic reality. It would be a very important educational tool, since many more people play games than read articles on economics. There also needs to be a game called “Budget Cowards” based on the political reasons underlying and motivating mainstream economic policy that were outlined by Kalecki in the article by him that was recently carried by NC, although Kalecki needs to be updated in a few details.
Re “not”, I was going to raise the same issue – proof reading is very important for stuff like this – this one line could be lifted and widely disseminated as an “accurate” quote from Black and used to refute his own body of work – I suggest he fix this typo lickety split ….
Its a small point but, in paragraph one the three “de’s” as written of deregulation desupervisation and de fact decriminalisation is actually four de’s. Ditch de facto or desupervisation. Neither is necessary.
I greatly admire Bill Black but I am not sure it is worth his valuable time to parse the vapid stupidy concerning this wholly fabricated “deficit cliff”. Anyone with half a brain understands the entire idea is errant nonsense. Those lacking half a brain will not understand Black either.
Public stupidity remains our most intractable problem. The effectiveness of corporatist propagada depends on it, and we will discover soon enough just how serious the problem is.
Jake,
Methinks that assuming that anyone with a half a brain understands this stuff is a mistake. It is a common one, however, on the left, and one of the reasons the left is always left standing at the altar as the right runs off with the bride, IMO
Sorry, a lot of this stuff is not “obvious” or “intuitive” or simple out of the box. In fact it can be quite “non-obvious” or counter-intuitive, or complicated depending on where you are coming from ….
The trick is not to treat your audience like idiots because they “don’t get” when you explain it in the “correct” terms, the trick is to explain it in terms that cause the light bulbs to go on. This can take a lot of effort, and for some the light bulbs never go on, but methinks that is one big difference between the left and the right – the right seems to have perfected a knack for getting the light to go on, while the left contents itself with mocking those lights in folks instead of turning on its own in them ….
Jake, as one who was on the other side of this argument up to a few years ago, allow me to say that you are wrong. Listen to Aquifer. It’s hard to convince people of something even when they are sincere and want to understand. You are not going to talk with them once and a light bulb will go on. You need to give your arguments and provide evidence once, then do it again, then again, and then when you can’t take it anymore, you need to keep doing it.
We need to digest this deconstruction of the latest propaganda offering so we can argue with the yahoos we work with, because they will most definitely be promoting it.
We should develop a game that more accurately reflects reality, no? I for one would gladly donate time to such a venture (I’m a software engineer).
More of Bill Black’s good cop bad cop lament game. Vanilla Greed for Profit vs Pernicious Greed for Destruction. Xtrevilism vs Evilism all served up on a very confining, almost strangling, platter of status quo system twat.
How about a game called “Status Quo Hero” that shows what happens when you change the status quo and remove control of credit and the money supply — now in the hands of the aberrant sociopathic sick few who keep us all engaged in their depravities with tired limited choice solutions like ‘austerity’ and ‘spending’ that in reality mask the status quo limited control and the intentional and willful herd thinning that is going on — and put it instead in the hands of the people through direct democracy. A “Status Quo Hero” game where you really challenge the status quo by calling these aberrant sicko axxhole depraved gangsters what they really are, and admitting the role you play in it when you legitimize and validate that intractable gangster system by appealing to it for change. Yes “Status Quo Hero” a game that challenges the status quo of the many being born into the slavery of the inherited wealth of the few.
Deception is the strongest political force on the planet.
“Status Quo Hero”would include a definition of ‘Bankster Freedom Day’. From a yesterday post…
Has anyone ever computed and created a definition of ‘Bankster Freedom Day’, like ‘Tax Freedom Day’, that is used to describe when the average American has earned enough money (in theory) to pay off his or her total tax obligations for the year?
A ‘Bankster Freedom Day’ definition that would include all; bankster fees in retail and commercial transactions, commercial and mortgage interest, goods stolen, and litigation costs levied AT EVERY STAGE of the production and sale of goods in Scamerica, and yes, globally, (that would include all of the effort revealing and dealing with the yet uncovered fraud and consequences of MERS, out of synch deposit posting fees, LIBOR rate rigging, etc.)? That ‘Bankster Freedom Day’ definition would also include all of the cost of the hardship, early deaths, and cost of tents, of those now living in tent cities as a direct result of the MERS fraud. [Aside: Do you really know who owns your mortgage and note?]
How long each year do we work for banksters?
Deception is the strongest political force on the planet.
Good concept, quite in line with ‘an economy of fraudulent personas’.
Yes YankeeFrank, it’s the right idea. I’m a software engineer for JPL in Pasadena, I would love to work on such a project. Perhaps we could crowd source some funds for such a project. How about a game called “Banksters” or “Virtual Econ” . I’ve felt for a long time that computer games are an important social medium and art form that have been neglected by the “left”.
“I’m a software engineer for JPL in Pasadena ..”
Pass word to your co-workers, the best way to sell the rovers is to post summaries of what is being discovered and projected significances.
Put the public in the middle of the discoveries.
Don’t just ask for more funding, put the public in the very middle of the discoveries.
Otherwise the thinking public will assume the reason it is not being done is because of some undisclosed ‘issues’.
Seriously.
Its been done Frank. Welcome to city 17… its safer here… where Wall st is just one building… running the entire show…
http://www.youtube.com/watch?v=_1NOm3YmSVM&feature=related
Skippy… Which then leads us too… oh course… escape from city 17 part I and II
http://www.youtube.com/watch?v=ZKffQO2UZBE&feature=related
PS… even has Krugmans aliens… snicker.
Every element of how politicians debate the budget is simply Kabuki theater. They pretend we the US has no assets. The cash basis accounting they refer to on the airwaves is gamed as well….this is intentional. The last US CAFR I looked at said the largest outlay is an accounting fiction. The count the future obligation to pay said medicare and Medicaid as a cash payment made today. Who knows what else they game to make it appear the Us is broke. The is simply plundering of the public. Trust in the guise of fiscal.discipline.
Listen up! We’ve been brainwashed and our collective ignorance and fear is preventing “We The People” from acting in our collective interest … the more than 7 Billion of us who are not UHNW individuals and NEVER will be.
History makes clear a ugly truth! We The People need to TAX all Ultra High Net Worth Individuals – CentaMillionaire$ and Billionaire$ – out of existence and we need to do it as soon as possible!
All UHNW or Income above $10,000,000 will be TAXED by We The People at 100%.
Our Government CLEARLY does NOT represent We The People and anyone who can think should know that is true. Events leading up to today should make it CLEAR – that CENTAMILLIONAIRE$ and BILLIONAIRE$ own ALL governments WORLD WIDE – and the MOST DISPICABLE PROPAGANDA is coming from those GOVERNMENTS who claim these Bastards wealth creates jobs when in FACT their Financial Corruption and manipulation of markets alone, clearly proves the opposite to be TRUE. These UHNW individuals and Their political cronies want We The People to believe that if we JUSTLY TAX these GREEDY MALIGNANT NARCISSISTS out of existence, the whole world will collapse into a deep depression! It has clearly become the MANTRA of their Governments – World Wide.
This article seems like propaganda to me. It’s not that Mr. Black isn’t telling the truth about R&R and the foundations. He is. It’s the strange insert about Obama: “President Obama’s stimulus proposal had an excellent revenue sharing component that was killed by a coalition of conservative (“blue dog”) Democrats and Republicans…” We’ve seen that before. Congress stopped Obama from closing Gitmo, single payer universal healthcare, indefinite detention of the innocent, etc. Why is Mr. Black flogging this excuse for Obama?
Further all of the solutions he mentions are contrary to both Obama and Romney’s lackiness with regards to US power elites (as Hugh points out).
I appreciate that Mr. Black points out how supposedly repetutable entities are in fact propagandizing us, leading us to certain conclusions and ruling out viable alternatives from the git go. I thank him for that. But I get the sickening feeling that he is engaging in his own propagnadization of our population, basically aimed at the same well educated people as those he criticizes.
It has been profoundly disheartening to see such intellectual dishonesty among people who should be calling it as it is-no exeptions.
“It has been profoundly disheartening to see such intellectual dishonesty among people who should be calling it as it is-no ex[c]eptions. ”
This may mirror how COMPLETELY corrupted it all is known to be.
Bill Black has been on the front lines for the duration of this so-called recession. Which is actually a synthetic, engineered depression; but that one is for the history books. He has been the one consistent voice exposing all the bullshit. When he talks budget he focuses on budget, he doesn’t digress to all the other political crap. Bill Black has a laser focus and we will all benefit from his expertise, whether we appreciate it or not.
The trick is that the real problems and the real solutions aren’t in the budget, they are in what you called “all the other political crap”.
The “laser focus” is on the wrong target entirely… and intentionally. His words, and yours, are nothing more than circus propaganda.
And you back this up, how?
Circus propaganda? Well at this point i would say her comment runs at least 3 rings around yours ….
I’ have already enumerated the problems earlier in this thread. Cronyism, corruption, globalization, structural imbalances. Corruption caused the demise of Glass-Steagall and the rest of the New Deal. With corrupt regulations in place, more deficit means more corruption.
Too many foundation-payed “progressives” are actively engaged in covering up the real problems and their history.
Ben,
ISTM that when talking about a subject, focusing in on what is essential to that subject and refusing to be distracted by peripherals is, in general a good thing. So the fact that Black doesn’t get involved in the political BS surrounding the discussion – “squirrel” – when he talks about it is a good thing, IMO. This is not, however the same thing as saying that the budget issue trumps all the other stuff you talk about. I get from your comment that you seem to think Black is the one introducing the squirrel when, in fact, ISTM, Black is the one pointing out that all this fuss about a “deficit” is the real squirrel ….
Jill,
The revenue sharing may well have been an excellent proposal – the issue of why it was killed and who killed it is another story, outside the scope of the article – it could well be that it was left in there by Obama as a decoration, knowing full well it would be killed, just as “public option” was a good idea that was “killed”.
At this point I have to agree with S-t-o about Black ….
Aquifer and Susan the other,
How do you both read the following?: It’s from an interview on Democracy Now.
“WILLIAM BLACK: Finance is supposed to simply be a middleman to help the real economy. It in fact now completely dominates and is a parasite on the real economy. German austerity has pushed the entire eurozone into recession and the periphery into Great Depression-level unemployment. And the same arguments are being made in the United States and are used as a pretext to try to destroy Social Security, Medicare and Medicaid. It is economically illiterate, but politically attractive.
AMY GOODMAN: Your assessment of President Obama versus President Bush?
WILLIAM BLACK: Well, less bad on this subject, but President Obama is also—feels that he must politically say there’s a vital need to balance the budget, which is to say, to have austerity, even though he’s looked at Europe and seen that the worst possible thing you can do in a great recession, or the attempted recovery from a great recession, is to start reducing the spending and such.
And Obama needs to go back to what he originally proposed, which was brilliant. It was a Republican idea: revenue sharing. We all knew that the states and localities, unlike the federal government, cannot run significant deficits, and that there was going to be a financial holocaust that was going to reduce vital services and throw hundreds of thousands of public workers out of work when they were most needed and exacerbate the great recession and dramatically slow the recovery. So, the recovery bill that—the stimulus bill that President Obama proposed had that provision. The Blue Dog Democrats, the conservative Democrats, and the Republicans got together to kill that. And unfortunately, the Obama administration didn’t fight for it.
Here’s what we know. The Wall Street Journal just ran an op-ed saying, don’t allow the federal government to help the states. That tells you that’s what they’re scared of. It would be economically brilliant, it would be politically brilliant, to bring back the revenue sharing provisions, which are, after all, a Republican idea, and make the Republicans make the call that they want a financial holocaust throughout America, and they want us to slip back into a recession.”
My question remains why Black thinks Obama is only doing the politically necessary thing instead of doing exactly what he is told to do, just as Mitt Romney would. Further, why is getting oneself elected seen as a fair tradeoff to an economy lying in ruins? Should we not be able to expect a one term president who actually wants to redress a crisis?
I am interested in your thoughts but do not want to steer the thread off its main point–that people are being propagandized by a media that many trust. I think this point is well argued and as I said earlier, I thank him for demonstrating this.
LOL – hoisted on my own petard? Touche!
Hmmm, i wonder if it is “unfortunate” that Black does this in the same way it is “unfortunate” that Obama does what he does?
But, for the sake of argument;
Black’s description of the idea of “revenue sharing” as both “brilliant” and a “Rep idea” is interesting – “bipartisan” praise, methinks and here he is being, from his perspective, intellectually honest. And he describes Obama’s action as doing what he thinks is “politically necessary” – which is quite true, we all know that’s all O ever does – so i don’t know that one can say that this is “defending” Obama unless you think that Black thinks it laudable to behave in this fashion, which the rest of his critique, ISTM, belies …
It seems to me that “doing what is politically necessary” = “doing what he is told to do” where bringing in mega bucks is considered politically necessary and the only way to do that is to do what one is told by those who have the bucks, so i am not sure this can be seen as “defending” Obama – but i guess that is up for discussion ….
So, in your estimation is Black someone to not pay any attention to?
Aquifer,
We should certainly listen to Bill Black. He obviously has a fine mind and makes excellent arguments. This post alone brought important information to light.
Here’s my point. Have you noticed that leftist intelligentsia have been swift, unequivocal and merciless (and may I add accurate and well deserved) in their condemnation of Ryan? They are completely comfortable just coming out and showing how this man is a hypocrite, how his policies will harm most people in the US. There’s no hesitation, no backing off, no attempt to say, well, he’s a good guy and all, maybe just a little misled by the people around him, maybe not all that strong of a person, well, he really means the best but he’s confused. No one is under any illusions about who Ryan is.
We need that utter clarity from left wing intelligentsia about Obama. Obama is a man who believes the same things as Ryan, a man who is also a hypocrite and whose policies harm most of the people of the US.
I think this lack of clarity is part of the reason why the left doesn’t have much traction with people. I notice that left wing intellectuals have trouble wrapping their minds around Obama in ways they do not have with Romney and Ryan. Some intellectuals seem genuinely confused. Other people? I can’t tell if they are confused or shills. Both speak the same way.
Defense, health care and financial regulations are not something that powerful Republicans and Democrats disagree about. They hold exactly the same positions on these issues. One set holds them openly, the other, slightly less openly. I would like to see leftists just call it like it is. If Ryan and Obama agree on things, let it be stated openly, unequivocally and with deserved condemnation.
The ideas Black discusses are destructive indepently of the person advocating them. A strong argument against the ideas helps take issues away from political personalities and puts the consequences of the ideas in the context of people’s lives. That is powerful.
Jill,
I cannot disagree with any of what you say – I can’t help thinking that these guys/gals are so immersed in the TINA miasma that they wind up tripping into the lesser evil hole, though they would not describe it as such…
I wonder if their analysis/description would be any different if they suspended their disbelief long enough to consider that there was an alternative and they didn’t have to “choose” which of the duopoly schmucks was better. It is interesting how one’s perspective about a situation changes when one feels one HAS alternatives ….
Great post by Professor Black! Please keep pointing out how immoral those supposedly moral people are.
The national debt of a monetary sovereign is not only fascist (the poor pay taxes so the rich can receive usury) but also gives the national debt holders perverse incentives to oppose further debt issuance to protect the real interest rates they receive on that debt.
Sovereign debt (of a monetary sovereign) holders love deflation because:
1) It does not increase default risk for them because a monetary sovereign can ALWAYS pay its debts in the money it creates.
2) Real returns go up.
So those who oppose deficit spending are seeking to make huge, risk-free returns thereby! Misery merchants indeed during a Depression! How moral is that, to profit off misery that one creates?
The National Debt has to go. It is fascist (government for the rich) and confusing besides. Risk-free returns are welfare, not the result of proper investment. So why do we have welfare for the rich?
There we go… into the alternative universe of F. Beard.
In it, deficit spending is the only way to create money… Isn’t that cool? A counterfeiter gets monopoly on money and gets to say how much of his “borrowed” money he can steal. Nice job if you can get it.
Deficit spending as a way of creating money is corruption and destroys the economy. It’s that simple.
In the Beard universe, the “holders of sovereign debt” would make more money in deflationary environment. Absolutely untrue, they would lose money, because they bought the debt at higher prices and will have to sell it at lower.
Then again, “the holders” are mostly the Fed, paying with pure counterfeit, which means that the government buys it’s own debt, counterfeiting along the way. The Fed is just a shell.
Says Beard: “a monetary sovereign can ALWAYS pay its debts in the money it creates”. Really? ALWAYS? In real terms? What really matters is real terms. Can the sovereign pay anything in real terms? Utter nonsense! It’s simply a scheme to steal in REAL TERMS – steal the real, pay with counterfeit, unleash corruption, destroy the economy. Happens every time.
F Beard, you are a genius… in your comment, you managed to type in more falsehoods than letters.
Real terms? REAL terms? Money is real? Well the paper and ink is but for the rest …
Money is like property – it is whatever the law says it is. It was created by law and its status can, and does, I might point out, change on the whim of law, or Fed policy which seems to amount to the same. Unless of course, you think that somewhere in those first seven days God said “And let there be Money” and lo money came into being and God said, “It is good!” Was that before, or after He created Man? (maybe after He created Woman, who took all the money He had created and went shopping …., but i digress ….)
That money is real in the same sense that food and water are is the big LIE that our whole system perpetuates and why our whole economy is upside down – real needs made subservient to money, instead of vice versa – hmmm maybe TBAT was the Lie told by the serpent, the Original Sin that got us kicked out of the Garden … I don’t remember there being any mention of a Money Tree there …..
Hmmm – somehow THAT became TBAT – Hamlet sneaking up with those pesky Bs again ….
Who said that money is real? I was talking about nominal counterfeit vs real GOODS which is the meaning of the phrase “real terms”. I suggest you learn some economics otherwise you’ll continue arguing with yourself.
You say that “the money is whatever the law says it is” but this statement is trivial, it caries no information. There is good law and there is bad law, likewise there’s good money and bad money. Law isn’t some kind of a magic excuse for every nonsense we dream up.
likewise there’s good money and bad money. votersway
What is your definition of “good money?”
And i suggest you define your “real terms” before you dismiss a critique. Assuming that “of course” EVERYONE knows that “real terms” in this context is a term of art that means what you say it means tells me you may have had your head stuck in an economics text a bit too long. I live in a “real” world where “terms” is not = to “goods”….
If you start out by saying what you mean maybe, just maybe, folks will understand what you say ….
First of all, a perfect monetary system is far too different from what we have ever had or even considered. Transitioning to such a system would be a serious hazard in itself.
Next, the monetary system is just one part of the economy. It can’t cure problems in other parts, like red tape, cronyism, preferential legislation, corruption, licensing schemes, unlimited liabilities, etc. Essentially, there is no way to have a sound monetary system in such an environment.
With that in mind, I’ll list several simple improvements to the current system, including things that have been in place and have shown good results. It’s kind of pointless dream perfection if we can’t make these relatively small steps.
1. Return Glass-Steagall, investment and commercial banking should be separated. In the investment banking sector, limit the amount of leverage, to say, 20%. The rest should be cash savings, stock and bond swaps. Those who want more leverage should consider running mutual funds instead.
2. A truly fixed government debt limit – it’s pointless to allow extending it, growing debt is counterfeiting. It’s equally important to limit the percentage of debt that the Fed, banks and foreign entities can hold. Strictly speaking these entities should not be allowed to hold any government debt… but whatever. 20% total, seems more than enough for that too.
3. Balanced trade – a very important requirement. There is no way to fix your financial system when half of your money can get stuck overseas.
4. Bank loses are recovered starting with the property of bank executives and owners, down to some low exemption level. FDIC should try to recover as much as possible from them before paying insurance claims. No bailouts of any kind. Personal responsibility is the only way to make banking work.
5. Firm limits on bank size. Too big to fail must not exist. Open the books of the Fed for good and set clear rules for borrowing from it. Do whatever is necessary to stop the secrecy and favoritism of that institution.
That’s it. It may sounds complex but there is no way around it. The current system is even more complex, so the above changes would allow the removal of some ineffective regulations.
2. A truly fixed government debt limit – it’s pointless to allow extending it, growing debt is counterfeiting. votersway
No it’s not. What is counterfeiting is that government money is legal tender for private debts. And a fixed money supply is another form of theft since it rewards risk-free money hoarding while driving down wages since a growing population has to compete for a fixed supply of money. Moreover, progress requires taking risks so a fixed money supply is a receipt for economic stagnation.
The true solution is coexisting government and private money supplies per Matthew 22:16-22 (“Render to Caesar …”) and absolutely no government privileges for any private money or money form including the banks.
Make that “recipe”, not “receipt”.
In the investment banking sector, limit the amount of leverage, to say, 20%. votersway
What about the commercial banks or is that who you mean? And if you do then ANY leverage is a form of counterfeiting. 20% leverage means commercial banks can create 5 times base money as debt. So counterfeiting is fine if it is limited to a mere 500%?
3. Balanced trade – a very important requirement. There is no way to fix your financial system when half of your money can get stuck overseas. votersway
The way to fix that is to abolish Federal borrowing. Then foreigners can either spend their export earnings for US products (including assets but US assets are under US Government control) or keep the money in which case we got stuff for free!
Open the books of the Fed for good and set clear rules for borrowing from it … votersway
The Fed creates money (real legal tender) as it lends it to the banks.
So I see you are in favor of counterfeiting if it’s done for the benefit of the banks.
Begone hypocrite!
[Mr. Moderator: Previous comment of mine has formatting errors, please delete. Thanks.]
There we go… into the alternative universe of F. Beard.
In it, deficit spending is the only way to create money… Isn’t that cool? A counterfeiter gets monopoly on money and gets to say how much of his “borrowed” money he can steal. Nice job if you can get it. votersway
Actually, government money, after a universal bailout of the population, include non-debtors, from debt to the counterfeiting cartel, the banks, should be legal tender for government debts ONLY. The problem therefore is not deficit spending per se (some deficit spending is good, btw, else gold mining under a gold standard should be banned) but that it is not directly given to the victims of the counterfeiting cartel, the general population.
Deficit spending as a way of creating money is corruption and destroys the economy. It’s that simple. votersway
No it isn’t:
1) Government has a perfect right to create government money. Whoever else, pray tell? You? Gold miners?
2) Deficit spending need not be price inflationary if the rate of new money creation * velocity < the real economic growth rate.
In the Beard universe, the “holders of sovereign debt” would make more money in deflationary environment. Absolutely untrue, they would lose money, because they bought the debt at higher prices and will have to sell it at lower. votersway
No. A deflationary environment means that yields on investment drop. And yields and bond prices move in opposite directions so if yields go down (because of a depressed economy, for example) then the price of existing bonds goes up (because they pay a higher interest rate than the new bonds). So the existing holders of sovereign debt have a perverse incentive to oppose new sovereign debt issuance since that tends to drive yields up and thus the price of existing bonds down.
Then again, “the holders” are mostly the Fed, paying with pure counterfeit, which means that the government buys it’s own debt, counterfeiting along the way. The Fed is just a shell. votersway
A monetary sovereign has no need to borrow in the first place. And the Fed should be abolished.
Says Beard: “a monetary sovereign can ALWAYS pay its debts in the money it creates”. Really? ALWAYS? In real terms? What really matters is real terms. Can the sovereign pay anything in real terms? Utter nonsense! It’s simply a scheme to steal in REAL TERMS – steal the real, pay with counterfeit, unleash corruption, destroy the economy. Happens every time. votersway
The problem is that government money is also legal tender for private debts, which it should not normally be. But the existence of the government backed counterfeiting cartel, the banks, while typical, is not “normal.”
[Mr. Moderator: Two of my comments are in moderation. Please delete the first one since it has formating errors that I corrected in the first. Thanks!]
Beard, you are free to think as you wish. I have nothing to change in my comments and I’m unwilling to waste time explaining obvious matters. You either have no idea how the bond market works or you don’t quite understand what I’m saying. Anyway, case closed.
You either have no idea how the bond market works or you don’t quite understand what I’m saying. votersway
Putting It All Together: The Link Between Price And Yield
The relationship of yield to price can be summarized as follows: when price goes up, yield goes down and vice versa. Technically, you’d say the bond’s price and its yield are inversely related.
Here’s a commonly asked question: How can high yields and high prices both be good when they can’t happen at the same time? The answer depends on your point of view. If you are a bond buyer, you want high yields. A buyer wants to pay $800 for the $1,000 bond, which gives the bond a high yield of 12.5%. On the other hand, if you already own a bond, you’ve locked in your interest rate, so you hope the price of the bond goes up. This way you can cash out by selling your bond in the future.
Read more: http://www.investopedia.com/university/bonds/bonds3.asp#ixzz23bjsjxoz
But in a previous comment you said:
In the Beard universe, the “holders of sovereign debt” would make more money in deflationary environment. Absolutely untrue, they would lose money, because they bought the debt at higher prices and will have to sell it at lower. votersway
It appears that you are the one who does not understand how the bond market works.
Real money?What does that mean?deficit spending is just a term used to describe the current ongoing obligation of a gov’t;which is a tool of the population that that gov’t was created by. If the “people” are spending,for the good of the people. What is wrong with that. as long as they are really buying something or paying people, and not just speculating.The people will continue into the future,ad infinitum.That debt, is just an accounting tool.
whereas,
If the gov’t is creating money for the money supply,by spending into circulation,that is just a function of the necessary increase in the money supply to keep up with population growth ,so as not to trigger deflation…
Our money we use now is being created by private corporations as debts. they issue bonds,create obligations and any and every other thing that takes nothing, and says, you may put this amount on your accounting record now for what you will owe back later.all of our money is fiat money. this money gets floated around by everyone paying back debts to all sorts of players who take profits and there is no regulation as to what we can create… look at bernie sanders discovery that the fed. has created 16 Trillion dollars to “balance” the books of large corporations and banks.. just in the last decade…money creation (even if that “money” never made it into the “money supply”)is a force run amok…700 someodd trillion in derrivatives, in a world with 72 trillion in actual “money”.Between 2000 and 2006, the world mney total went from 36 trillion to 72 trillion…for what?You think that stuff was “real”.
It would make much more sense to allow a sovereign body to be the sole creator of money. Then, MAYBE there could be some transparency. and that money, could do what it was intended for. the masses.Money is not a thing. It is a social contract.The crap in my pocket says it belongs to the federal reserve.. screw the federal reserve… I want greenbacks. Then at least I would have american money… and not just the paper of an amalgamation of banks doing as they see fit to ruin our world.
SEE: HR2990 “the NEED act”
Methinks a good deal of the problem lies in educating the public. The idea of the Fed budget being constrained in the same way a household budget is so “logical” to most that folks consider it “obvious” – an analogy that makes “perfect sense” and encloses the terms of the discussion.
The second part comes from the first – as soon as the analogy is accepted, the need for “balance” is “obvious” and the whole discussion becomes one of how to do it; of course then we get bound up in whose “values” are transcendent in how to meet this “need for balance”- thus the “poor v war” discussion … – “squirrel” –
Seems to me the urgent need for the left is to come up with, and propagate, a new analogy that is as “obvious” and understandable as the household budget one and press it home until it becomes the one folks use to think about this issue ….
It is not enough to say the household budget analogy is false and point out why – that just leaves a vacuum that need to be filled with a better analogy.
Again, critique is not enough, you have to provide a good alternative – in this case a better analogy that folks can wrap their minds, and hearts, around, and use to guide them in their policy preferences ….
Most people’s eyes glaze over at the mere mention of how money and government operate in the economy. MMT addresses some of this, but its insights are initially strongly counter-intuitive and MMTers have often seemed perversely pleased to be as obtuse as possible in their explanations. Also they have sought to graft on to their theory fiscal policies like a jobs guarantee, and this has been controversial.
My approach is to say forget the money for a moment. Think about what kind of a society you want and then ask yourself do we have the people and physical resources to create that society. Once that question as been answered in the affirmative, then the money aspects are just so much bookkeeping of how resources are and need to be distributed in the economy to create that society.
Excellent idea! And the best solution. The hard part, ISTM, is the “getting folks to forget about money” part. That is why I suggested we start by at least trying to get them to think differently about it, once it is seen as a tool that we create to use to get to a goal, and not the goal itself whose form and dimensions are fixed by some external deity – the Market – we could concentrate on going where that takes us – which is quite where you suggest.
We are at alpha and we need to get to omega in our thinking – the question for discussion is how many grades can we skip to get there. I guess that i am of the opinion that we can’t skip too many ….
MMT is a scheme more corrupt than what we have now. It’s worse than the current banana republic finance, but it’s wrapped in pseudo-scientific jargon.
I compare it to a Gulag, controlled by a counterfeiter. The people, aka inmates, have the following choices – to be fleeced by counterfeit or to be fleeced by taxation. Remarkably, the taxation is to be put in place to… counter the counterfeit-induced inflation. Of course, that inflation is unleashed by that same taxing/counterfeiting government.
In the taxation/counterfeiting sense do have MMT now, but we still lack the crown jewels – unlimited deficit and the job guarantee. Well it’s nothing less than forced labor, how else can people be completely squeezed? It’s a Gulag after all.
Really counter-intuitive stuff… No wonder the MMTiers can’t make themselves say it clearly.
It can’t get more corrupt than that. I have real contempt for the people who support MMT and they deserve it.
MMT (but not the JG) is 1/3 of the solution . The other parts are:
1) Genuine private currencies for private debts only. Fiat would be legal tender for government debts only but could be voluntarily accepted for private debts too.
2) A universal bailout of the entire population, including non-debtors, with new fiat plus a ban on further credit creation during the bailout period.
BB,
You seem to have a lot of contempt for folks here, so who are the folks you “admire”?
Seems to me the urgent need for the left is to come up with, and propagate, a new analogy that is as “obvious”. Aquifer
Assume we are under a gold standard:
1) Deficit spending = mining gold.
2) A balanced budget = a ban on gold mining.
3) A budget surplus = dumping gold in the ocean.
Actually, 3) should be “Dumping gold back down the mineshaft.”
I think actually dumping it in the ocean works better: tax money is erased and is never coming back, is not stored like people imagine. And each spending is creation of new money. The ocean example is thus great!
The problem i see with this is that it seems to me, with my common person brain, that deficit spending = mining gold is not “intuitive” – the equivalency is not immediately apparent. I think we need something that one’s first reaction to is “Yesh, that makes sense!” And not “Huh?” Something we all are familiar with and deal with a lot …
Well, it at least gives the gold bugs pause!
Well, i guess I am thinking about folks i know for whom the gold standard isn’t an issue one way or the other, but who very much relate to the idea of living on a budget. So how can we explain that the gov’t not only doesn’t have to, but, in fact, should not live on a budget in the same way?
So how can we explain that the gov’t not only doesn’t have to, but, in fact, should not live on a budget in the same way? Aquifier
Ask them: “Where do you think money comes from anyway?”
the ATM?
sigh, that’s the problem – we are at the same level as “where does your water come from?” – the faucet –
But i think you are headed in the right direction in the sense that we have to start at a very different level when we talk about this stuff than we have heretofore …..
sigh, that’s the problem – we are at the same level as “where does your water come from?” – the faucet – Aquifier
Yes, because our water supply is very reliable. But if it became unreliable then a lot of people would suddenly become VERY interested.
The bankers have screwed up as they always do. The flow of money has become unreliable. Once more the topic of where does money come from is hot.
“Seems to me the urgent need for the left is to come up with, and propagate, a new analogy that is as “obvious” and understandable as the household budget”
I think the point is that there really is no analogy. The false analogy is constructed in order to limit the (potentially) limitless power of the state.
The current cabal only deploys that analogy, imposing limits on the power of the state, when the interests of the many are at issue. When the cabal wants something itself, the power of the state is once again (potentially) limitless.
Ron Paul, for example, professeth that he would deploy that analogy to limit the (potentially limitless) war making powers of the state. And that he would kill Medicare and Social Security (except that old farts like himself have become too dependent on it).
Liberals don’t trust what Ron Paul professeth and even if they did trust it, Ron Paul is not running the cabal that runs the US government and so liberals see no good use for the potentially noble lie that is the false analogy.
C’est la vie. Go USA!
As far as analogies go, however, I will agree with Beard that turning all that power over to the likes of Goldman Sachs and Citibank and JP Morgan is counterfeiting.
Counterfeit money for a counterfeit state.
I agree the analogy is false, but the problem is it is simple, understandable, sounds “reasonable”, and is couched in familiar terms that folks can relate to on several levels which is why it is so pervasive and hard to dislodge. But dislodge it we must or it will persist in being the 800 lb “squirrel” in the room and crowd out what really needs to be discussed …
“unlike the game’s unserious designers,”
Not “unserious”. This kind of propanda being shoved down the throats of the ignorant is deadly serious in its intent. Say rather: Malevolent, Spurious, Maglignant, Malicious,Malign,Baleful,Vengeful,Rancorous,Vicious,Vindictive,Spiteful,Bogus,Contrived,Deceitful,Doubtful,Dubious,Wrongaffected,apocryphal,and or Bent..or all the above.
Dr. Black, I find this piece very disconcerting. It does not surprise me that the game fails to include positive economic feedback for federal spending. What does surprise me is that the right has flat out caught on to the nature of our culture – a video game to sell its ideology. Pure Machiavellian. Generally, I think the left is more hip to cultural shifts than the right, but this proves me wrong. I implore you to contact Ironbutterfly above and work to develop a more accurate game, or perhaps to develop a virus that would attack Budget Hero, modify its code, and insert a budget/economy feedback mechanism. Let the gamer wars begin!
It would sure be a shame if somebody hacked this thing.
heh, heh, heh – wish i knew how ….
Strawman article based on an erroneous assumption … namely that the monied elite powered agenda WANTS a free, democratic and prosperous country.
Wrong.
What they WANT is an all pervasive, all powerful police state oligarchy in which 99% of the profits flow into their coffers.
The gutting of constitutional protections, indivual rights and Habeaus Corpus, the myraid surveillance and ‘total information’ projects and programs, the ever more sophisticated software to track any and all internet activity, names, faces, body parameters, gaits and voice recognition, the militarization of the DHS and police forces across the country, the DHS buying hundreds of millions of rounds of ammunition … so many economic based articles just IGNORE this data, assign it little or no significane.
It’s mind boggling.
It could not be clearer, they WANT the people of this nation impoverished and powerless and are very very busy preparing for the massive backlash that will follow from the inmplementation of their austerity plan from hell. It matters not TO US who is president, it only matters to THEM, this is going down in the next four years and national emergency measures and martial law where needed will prevail across the land, this presidential campaign is all about positioning, who gets to rule the ‘hood.
The tech has arrived to make an absolute 1984 style police state possible and the ruling elites time has arrived,
And they are chomping at the bit.
spigzone, precisely so.
“Give me Liberty, or Give me Death!” – Patrick Henry
What a brilliant ruling by the United States Supreme Court on the affordable health care act (Obamacare). Stunningly brilliant in my humble opinion. I could not have ask for a better ruling on a potentially catastrophic healthcare act than We The People Of The United States received from our Supreme Court.
If the court had upheld the constitutionality of the individual mandate under the commerce clause it would have meant the catastrophic loss of the most precious thing we own. Our individual liberty. Thank you! Thank you! Thank you! Supreme Court.
There is no mandate to buy private for-profit health insurance. There is only a nominal tax on income eligible individuals who don’t have health insurance. This is a HUGE! difference. And I suspect that tax may be subject to constitutional challenge as it ripens.
This is a critically important distinction. Because under the commerce clause individuals would have been compelled to support the most costly, dangerous, unethical, morally repugnant, and defective type of health insurance you can have. For-profit health insurance, and the for-profit proxies called private non-profits and co-ops.
Equally impressive in the courts ruling was the majorities willingness to throw out the whole law if the court could not find a way to sever the individual mandate under the commerce clause from the rest of the act. Bravo! Supreme Court.
Thanks to the Supreme Court we now have an opportunity to fix our healthcare crisis the right way. Without the obscene delusion that Washington can get away with forcing Americans to buy a costly, dangerous and highly defective private product (for-profit health insurance).
During the passage of ACA/Obamacare some politicians said that the ACA was better than nothing. But the truth was that until the Supreme Court fixed it the ACA/Obamacare was worse than nothing at all. It would have meant the catastrophic loss of your precious liberty for the false promise and illusion of healthcare security under the deadly and costly for-profit healthcare system that dominates American healthcare.
As everyone knows now. The fix for our healthcare crisis is a single payer system (Medicare for all) like the rest of the developed world has. Or a robust Public Option choice available to everyone on day one that can quickly lead to a single payer system.
Talk of privatizing/profiteering from Medicare or social security is highly corrupt and Crazy! talk. And you should cut the political throats of any politicians giving lip service to such an asinine idea. Medicare should be expanded, not privatized or eliminated.
We still have a healthcare crisis in America. With hundreds of thousands dieing needlessly every year in America. And a for-profit medical industrial complex that threatens the security and health of the entire world. The ACA/Obamacare will not fix that.
The for-profit medical industrial complex has already attacked the world with H1N1 killing thousands, and injuring millions. And more attacks are planned for profit, and to feed their greed.
To all of you who have fought so hard to do the kind and right thing for your fellow human beings at a time of our greatest needs I applaud you. Be proud of your-self.
God Bless You my fellow human beings. I’m proud to be one of you. You did good.
See you on the battle field.
Sincerely
jacksmith – WorkingClass :-)
Yo, Jack – in case you hadn’t noticed – the end result is the same – forcing more of the public’s dollars into the private insurer’s hands and delaying any serious discussion of single payer because, “shucks, maybe this (bs) plan will work, we need to give it a try before we go back to the drawing board!” This is what it was designed to do – kill 2 birds with 1 boulder – subsidize private insurers and derail single payer, and that is why it was upheld. Roberts is a crafty fellow ….
It seems to be the case that a major reason progressives cannot formulate a real alternative to the status quo is because many of their assumptions about the nature of the modern U.S. Nation-state are wrong.
For example, Progressives seem to assume that the State is ultimately autonomous from Capital. But the U.S. State has never really been autonomous from private capital and especially private finance capital. Our first experience with a fiat currency(a currency not redeemable for a specific amount of Gold or other valuable commodity) was the Greenback, which was created in the 1861-63 period and lasted until 1879).
This fiat currency became part of a nationalized monetary system (which had incrementally evolved from an ideal of local fiscal control to a Hamiltonian vision of a powerful centralized State with the potential to raise revenue and float debt.
The centralization of money back in the 1860s also helped to create a powerful client group (private finance capital) which, through its role in the floating of government bonds developed an enduring interest in the health of an emerging State structure of power– thus Big Capital and Big State became intertwined both historically and financially.
This reciprocal relationship between the State and Capitalism is the foundation of our contemporary structure of power.
Taken this collaboration of interests and personnel over the past 150 years, the progressive hope for the National State to now somehow act autonomously from Capital and in our best interests, is to hope for the impossible.
It seems to be the case that a major reason progressives cannot formulate a real alternative to the status quo is because many of their assumptions about the nature of the modern U.S. Nation-state are wrong.
For example, Progressives seem to assume that the State is ultimately autonomous from Capital. But the U.S. State has never really been autonomous from private capital and especially private finance capital. Our first experience with a fiat currency(a currency not redeemable for a specific amount of Gold or other valuable commodity) was the Greenback, which was created in the 1861-63 period and lasted until 1879).
This fiat currency became part of a nationalized monetary system (which had incrementally evolved from an ideal of local fiscal control to a Hamiltonian vision of a powerful centralized State with the potential to raise revenue and float debt.
The centralization of money back in the 1860s also helped to create a powerful client group (private finance capital) which, through its role in the floating of government bonds developed an enduring interest in the health of an emerging State structure of power– thus Big Capital and Big State became intertwined both historically and financially.
This reciprocal relationship between the State and Capitalism is the foundation of our contemporary structure of power. Taken this collaboration of interests and personnel over the past 150 years, the progressive hope for the National State to now somehow act autonomously from Capital and in our best interests, taken their collective history, is to hope for the impossible.
It seems to be the case that a major reason progressives cannot formulate a real alternative to the status quo is because many of their assumptions about the nature of the modern U.S. Nation-state are wrong.
For example, Progressives seem to assume that the State is ultimately autonomous from Capital. But the U.S. State has never really been autonomous from private capital and especially private finance capital. Our first experience with a fiat currency(a currency not redeemable for a specific amount of Gold or other valuable commodity) was the Greenback, which was created in the 1861-63 period and lasted until 1879).
This fiat currency became part of a nationalized monetary system (which had incrementally evolved from an ideal of local fiscal control to a Hamiltonian vision of a powerful centralized State with the potential to raise revenue and float debt.
The centralization of money back in the 1860s also helped to create a powerful client group (private finance capital) which, through its role in the floating of government bonds developed an enduring interest in the health of an emerging State structure of power– thus Big Capital and Big State became intertwined both historically and financially.
This reciprocal relationship between the State and Capitalism is the foundation of our contemporary structure of power. Taken this collaboration of interests and personnel over the past 150 years, the progressive hope for the National State to now somehow act autonomously from Capital and in our best interests, taken their collective history, is to hope for the impossible.
It seems to be the case that a major reason progressives cannot formulate a real alternative to the status quo is because many of their assumptions about the nature of the modern U.S. Nation-state are wrong.
For example, Progressives seem to assume that the State is ultimately autonomous from Capital. But the U.S. State has never really been autonomous from private capital and especially private finance capital. Our first experience with a fiat currency(a currency not redeemable for a specific amount of Gold or other valuable commodity) was the Greenback, which was created in the 1861-63 period and lasted until 1879).
This fiat currency became part of a nationalized monetary system (which had incrementally evolved from an ideal of local fiscal control to a Hamiltonian vision of a powerful centralized State with the potential to raise revenue and float debt.
The centralization of money back in the 1860s also helped to create a powerful client group (private finance capital) which, through its role in the floating of government bonds developed an enduring interest in the health of an emerging State structure of power– thus Big Capital and Big State became intertwined both historically and financially.
This reciprocal relationship between the State and Capitalism is the foundation of our contemporary structure of power. Taken this collaboration of interests and personnel over the past 150 years, the progressive hope for the National State to now somehow act autonomously from Capital and in our best interests, taken their collective history, is to hope for the impossible.
seems to me that wherever you copied that from,isn’t worth copying again.The greenback was redeemable in gold, as was all US issue currency during the gold standard years.The story of money in this country is an old one,long before 1860.The first and second bank of the US,both had long stories,and a long list of abuses… most notably that until jackson ended the second bank,the major shareholders in both banks were british,and thus used money to “keep their colonies”paying off.Hamilton was the one who established our credit with our former owners,he was all for servitude of this nation to the banks.That was the use of the federalism tool.What lincoln tried to do with the greenbacks was to assert our sovereignty.and to conclude much of anything based on a fiscal crisis post civil war,is a little much to hang on the greenback.This was an era where local banks issued their own money. and depending on who they were,and where they were. their face value was redeemable at a percentage.. not the whole.There is no example in history of a problem with our national currency.All the panics and recessions and depression were where “we”used other peoples money. I also don’t think you know what a progressive is.Today, look at HR2990 “the NEED act”. as it adresses this very issue. And kucinich is a progressive…..
Sorry for that triple post!
I wrote this story on Minnesota Public Radio – the “subsidiary” of American Public Media(altho in this case the tail wags the dog – MPR is much bigger than APM) a decade ago titled “Money Public Radio.” This is an organization run by greedy bastards concerned with nothing so much as enriching themselves at the public teat.
http://news.infoshop.org/article.php?story=20060216105727775
Geoff: Thanks for your note about Budget Hero. We read Bill’s post about Budget Hero and I’ll share with you what we wrote to him. The upshot is that despite the incendiary headline, the substance of his critique is worth paying attention to, and certainly deserves our consideration.
Thanks, Andrew
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Andrew Haeg
Product Manager / Co-Creator
Public Insight Network
American Public Media
ahaeg@americanpublicmedia.org
651.290.1314
http://about.me/andrewhaeg
Twitter: @andrewhaeg
Help cover the news: http://bit.ly/PublicInsightNetwork
Dear Bill,
We read your recent blog on Budget Hero with some interest. I wanted to provide some background on the game and its history for perspective.
As we were designing the game in 2007, we made an early decision to build it on the Congressional Budget Office model and long-term fiscal policy outlooks. The CBO model is not the only model but CBO’s non-partisan status and their frequent updates provided a useful foundation for the game over the past four years. Any model choice involves trade-offs and the CBO model is no exception.
The CBO model uses a ‘static’ scoring procedure that has been criticized from both the right and the left. Many of the points you made in your blog, we have heard from across the political spectrum, i.e., that the game does not appreciate the stimulative effect of cutting taxes or creating jobs programs. We do try to include information on secondary impacts of policies on the cards within the game where we discuss ‘pros’ and ‘cons’ and other implications (these might involve job impacts, as well as social, environmental, or national security implications of the policies). On the impact side, we pull data from a wide variety of sources, which we reference. We also work with CBO, the Congressional Research Service, GAO, and other think tanks to vet the policy descriptions.
When we launched the updated game in July, we also included specific information on the issue of ‘static’ versus ‘dynamic’ scoring developed with input from CBO and various Congressional offices (below).
We are updating the game now, and would be glad to set up a time for a call to discuss some of your suggestions on how to improve the game.
Regards,
Dave
A note about “scoring”
This game relies on a technique known as “budget scoring” to determine the relative costs and gains of the policy choices you make while playing it. A score is a value determined by the Congressional Budget Office (CBO) that estimates how much a given policy will impact the federal budget. It is only an estimate.
In this game, as in the Congress, we are using “static” scoring, which does not weigh the possible effects on individual or group behavior on the economy of any given policy change. For example, raising or lowering taxes or spending by $1 trillion ignores the economic impact of that decision and only scores that as a $1 trillion change to budget. As another example, CBO’s scoring system assumes tax relief expires, but that spending programs will continue — leading some to claim that there is a built-in bias for higher taxes and more spending.
There is a debate about whether CBO’s static scoring rules accurately reflect the real impact on spending and revenues. As an alternative to static scoring, some have suggested the CBO produce a parallel scoring system to better account for individual and institutional economic changes due to enacted policy. This is known as dynamic scoring which would assume that people will alter their behavior when you change tax rates.
So while the game is true to the rules that Congress abides by in making budget, tax and spending decisions, some would argue it is not a true reflection of the budgetary impacts the choices our policy makers have made.
David Rejeski
Director, Science & Technology Innovation Program
Woodrow Wilson International Center for Scholars
Washington, DC
Goldman Sachs, Citibank and JP Morgan need to be examined. But lets face it this is David vs. 20 goliaths who happen to run the world. I wish him the best of luck.