Recent Items

Joe Firestone: Elizabeth Warren – Better, But Not There Yet

Yves here. As Elizabeth Warren inches to the left on overall economic policy, one wonders if she’s actually shifting her views or responding to Hillary Clinton trying to rebrand herself as a populist. In fairness to Warren, it’s difficult not to be deeply inculcated in flawed economic thinking and thus hostage to false ideas like “We depend on China and Japan to finance our federal spending.” I look at my pre-crisis coverage and am embarrassed to see that sort of idea treated as obviously true. But if nothing else, the shift in Warren’s stance may be a sign that the Overton window is moving a smidge away from the right. After all, a big reason the Republicans so badly trounced the Dems in the midterms wasn’t just Democratic party fecklessness, but also that the Republicans kept their Tea Party extremists well out of the limelight and toned down the anti-women, anti-gay (and outside the border states) the anti-immigrant rhetoric. That actually amounts to a shift to the center, even if more for show than for real.

By Joe Firestone, Ph.D., Managing Director, CEO of the Knowledge Management Consortium International (KMCI), and Director of KMCI’s CKIM Certificate program. He taught political science as the graduate and undergraduate level and blogs regularly at Corrente, Firedoglake and Daily Kos as letsgetitdone. Cross posted from New Economic Perspectives

In her recent post-election piece “It’s Time to Work on America’s Agenda” Elizabeth Warren points out that the changes in Washington and in various States aren’t changing the fact that

The stock market and gross domestic product keep going up, while families are getting squeezed hard by an economy that isn’t working for them.

Or to put it another way, it’s not enough to have aggregate indicators going up. We also have to have shared gains and inequality going down, and given our current state of affairs, going down rapidly. She then says:

The solution to this isn’t a basket of quickly passed laws designed to prove Congress can do something — anything. The solution isn’t for the president to cut deals — any deals — just to show he can do business. The solution requires an honest recognition of the kind of changes needed if families are going to get a shot at building a secure future.

That’s what happened in 2009 – 2010. Democrats structured legislation in a vain search for bipartisanship, and in doing so produced:

— an inadequate stimulus bill that lowered unemployment only very slowly,

— a Credit card Reform Bill that did not limit credit card interest rates to non-usurious levels,

— a FINREG bill that still allows Systemically Dangerous Institutions (SDIs) to thrive and threaten the financial system, and that still allows trading in derivatives, and finally:

— a “health care reform” bill that, four and a half years after its passage in early 2010, covers only 10 of the 45 – 55 million people without insurance, leaves us with 35,000 to 45,000 annual fatalities due to the absence of medical care, and still leaves millions of people who have insurance in danger of bankruptcy, due to overwhelming medical bills.

So, Warren is dead-on about this. We don’t need compromise for its own sake, and legislation that creates the short-lived illusion that Congress is finally “doing something” about our problems. What we need, and have needed since the election of 2008 is that Congress actually legislate solutions to those problems, and end the kabuki theatre.

Warren thinks that people

“. . . see a government that bows and scrapes for big corporations, big banks, big oil companies and big political donors — and they know this government does not work for them.”

And again she’s right, but then she goes on with distressing vagueness:

The American people want a fighting chance to build better lives for their families. They want a government that will stand up to the big banks when they break the law. A government that helps out students who are getting crushed by debt. A government that will protect and expand Social Security for our seniors and raise the minimum wage.

I think this under-estimates what people want. In my view, they want more than a fair chance at a better life. They want a good result. That is, they want a better life, period!

Also, they don’t just want a Government that will “stand up” to the big banks. They want a Government that will enforce the law, and not make exceptions for big bankers, torturers, intelligence community members, defense contractors, and local police who violate constitutional rights and run civil asset forfeiture rackets using police state strategy and tactics. That means prosecutions, indictments, and convictions for big shots in each of these areas, because there has to be one law for all Americans, not different legal standards for big shots, the middle class, and the poor.

They also want more than a Government that will just help out students, but rather a Government that will forgive student debt, and, going forward, will provide free education for all Americans through College. They have it in Germany. Of course, we can afford it here too. Why isn’t Warren, one of our two supposedly most progressive professional politicians, advocating that.

Further, I think people want more than a “. . . government that will protect and expand Social Security for our seniors and raise the minimum wage.” I think they want a Government that will increase SS benefits by 50% or more so seniors don’t have to choose between food and medicine, and also a formula for increasing benefits annually that uses the CPI-e to determine benefit increases so that SS benefits will keep up with increases in medical costs. And in the are of the minimum wage, I think they want an increase high enough to make it a living wage.

And it can’t be the same in all areas of the country. A living wage in Kansas is not the same as a living wage in new York City, so, unlike the current minimum wage, the Federal minimum wage has to be cost adjusted across areas of the country, so that each area has a true living, as well as minimum, wage.

Americans understand that building a prosperous future isn’t free. They want us to invest carefully and prudently, sharply aware that Congress spends the people’s money. They want us to make investments that will pay off in their lives, investments in the roads and power grids that make it easier for businesses to create good jobs here in America, investments in medical and scientific research that spur new discoveries and economic growth, and investments in educating our children so they can build a future for themselves and their children.

It’s not free in real resources, including effort, innovation, and providing intelligent and ethical Administration of programs. And I also think that Warren also needs to find a way to incorporate three thoughts into what she says
:
— First, Congress doesn’t spend money. It appropriates money, and then its appropriations are implemented by the Executive Branch which actually spend the money;

— Second, all high-powered money created by the Government including, coins, currency, and reserves, is the people’s money in the sense that it is created under the people’s authority which underlies the Constitution of the United States which authorizes the creation of USD by the Congress and its delegated authorities; but

— Third, the money the Government spends is not the people’s money in the sense that it is the tax revenue collected from the people that the Executive is actually spending. Instead, when the Executive spends money, that is money that is newly created and injected into the private sector by the Government including the Federal Reserve, the Treasury, and their interacting procedures and processes that produce Government spending. Modern Money Theory research has shown that this is true time and again for 20 years now. It is time politicians learned that lesson and began to talk it up and teach the public about it

It is not accurate, and not helpful, for Warren to say or imply that Government spending, whether deficit or otherwise, comes out of funds that have been taxed away or borrowed from the private sector. That’s just not what happens, and when progressives reinforce that myth, what they are telling people is that what the Government can afford is limited to what it can tax and what it can borrow.

To reinforce that frame is to reinforce what Paul Ryan, Peter G. Peterson, and Barack Obama want to do, it is not to reinforce what progressives want to do to create full employment, a stronger safety net, Medicare for All, Environmental and climate security, reinventing energy foundations, infrastructure spending, educational enhancement for all levels of education, and all the rest of the unfinished business progressives would like to deal with.

Before leaders in Congress and the president get caught up in proving they can pass some new laws, everyone should take a skeptical look at whom those new laws will serve. . . .

Always a good rule of thumb. Follow the money!

But the lobbyists’ agenda is not America’s agenda. Americans are deeply suspicious of trade deals negotiated in secret, with chief executives invited into the room while the workers whose jobs are on the line are locked outside. They have been burned enough times on tax deals that carefully protect the tender fannies of billionaires and big oil and other big political donors, while working families just get hammered. They are appalled by Wall Street banks that got taxpayer bailouts and now whine that the laws are too tough, even as they rake in billions in profits. If cutting deals means helping big corporations, Wall Street banks and the already-powerful, that isn’t a victory for the American people — it’s just another round of the same old rigged game.

Eloquent and to the point. But those trade deals should have come in for more comment from her. Those things are more than trade deals. They are sellouts of the United States by people who wish to elevate international corporations above the laws of individual nations. Warren should be forever stating her plain opposition to Fast Track, to TPP, TAFTA, and to every so-called “free trade” deal concluded in the past, or now being proposed. Call them what they are: attacks on the sovereignty of the people of the United States and their representatives in Congress.

Yes, we need action. But action must be focused in the right place: on ending tax laws riddled with loopholes that favor giant corporations, on breaking up the financial institutions that continue to threaten our economy, and on giving people struggling with high-interest student loans the same chance to refinance their debt that every Wall Street corporation enjoys. There’s no shortage of work that Congress can do, but the agenda shouldn’t be drawn up by a bunch of corporate lobbyists and lawyers.

Hard to argue with, but again, the position on student debt, is a little too soft for my blood. Let’s just get rid of that debt, so that it’s not a burden on our future economy and on our best young people. Let’s not just refinance. Let’s just not have those debts. We can afford to pay them outright, now! They’re only in US Dollars, an unlimited resource of the US Government, after all.

Finally, it’s natural for progressives to respond to Senator Warren, she’s got great rhetoric and seems to be on the side of the people. But we need to be skeptical about her and other candidates who claim to be with the 99% and who want to lead us. We need more than rhetoric from them. We need commitments to a specific agenda of legislation that will improve our lives, and remove the scourge of extreme inequality from our democracy.

There are, of course, no such things as absolute guarantees in politics, but I think it’s the obligation of American citizens to get very specific promises from candidates, before we grant them our support and enthusiasm. We failed to get such commitments in 2008, and now we have endless debates about whether particular politicians misrepresented or lied about their positions and broke campaign promises.

We shouldn’t make the mistake of not getting specific legislative commitments in the future, or engage in cults of personality again. Politics is transactional. We need to know what all our candidates will do for us, if they run for a particular office, in exquisite detail. If only to hold them fully accountable for their actions in the next election!

Print Friendly, PDF & Email

166 comments

  1. Ben Johannson

    @Joe Firestone, Re: Climate and Environmental Security

    It is exactly right that these goals will never be realized until we abandon the conservative focus on money as a scarce resource. By emphasizing real resources, MMT teaches us our resource base (the world) must be protected from destructive processes used to generate financial wealth under the current economic paradigm.

    1. Jim Haygood

      ‘It is time politicians learned that lesson [of MMT] and began to talk it up and teach the public about it.’

      Spare us, Lord!

      Should my KongressKlown launch into an MMT lecture, I will hurl a rotten vegetable toward the podium, then make rude hand gestures in front of my crotch as I’m dragged out of the building.

    2. susan the other

      Liz is pro bank as I recall. She doesn’t want to harm their interests. She made a comment a few years ago on Chris Hayes that she “wasn’t ashamed” of trying to find bank-friendly solutions and I think discussion was about student debt and trying to keep their interest rates from going up. It was almost obscene the way she dropped the ball. I wrote her off then and there. Because we can’t have it both ways. We can’t have a healthy planet and financialism any more than we can have a healthy population and financialism. How does our fake capitalist corporatlism make a profit in conservation, in health care, in living wages, in recycling, in environmental protection, in public transportation, in reduced emissions, in sharply reduced growth? The answer as far as I can tell is that it doesn’t because it is by definition impossible. So this dysfunctional relationship with “capital” (i.e. pretend profit) has got to end. Liz will not be the person to oversee that one. My guess is that she like Geithner is simply there to foam the runway.

      1. trish

        One of the most insidious victories of the right is the shift to the right that has infected all aspects of political life- discourse, policy, reporting, voting, etc. – so that Warren is immediately embraced as the progressive savior based on a relative handful of positions she has taken and things she’s said.
        Much of which is simply what should be expected (ie prosecuting criminal behavior), or simply what we did/had in the past before the corporate/finance elite cemented their control over our system (ie student debt).

        And it also seems to me that this hastiness in embracing her as progressive savior is a way for some (ie NPR-listening liberals) of avoiding the work/effort entailed in actually reading in depth on issues, pushing for real change, thinking. I have already seen a few Warren 2016 bumper stickers on little SUVs, suburus, still sporting Obama 2012 ones.

        1. Left in Wisconsin

          What I like about Warren is that she has moved to the left, I think in response to things she has learned over the course of her career, thus demonstrating both that she is capable of learning and also of moving her politics. I agree with Firestone that vague promises or assurances that she “stands with” us aren’t enough, because we have no idea who she “really” is or if she really would do any different than other D politicians who have said similar things in the past (if I could only think of any). Getting specific commitments from her is one way to gauge how far she is willing to go, even if you presume that when push comes to shove, she would likely back track as far as she could (thus the need for maximal shoving from our end).

  2. not_me

    — a Credit card Reform Bill that did not limit credit card interest rates to non-usurious levels, [bold added] Joe Firestone

    Usury is ANY positive interest rate according to Deuteronomy 23:19-20, not just a “high” one. We shouldn’t accept the modern redefinition because it precludes the serious consideration of a private money form, common stock, that requires NO interest and which shares wealth and power rather than concentrate them.

  3. James Levy

    My question is: how far from orthodoxy can one stray and not bring down the wrath of the intellectual gatekeepers? This is where ideas seem to really matter in this political economy. We have an intellectual straightjacket called neoclassical economics (and the neoliberal ideology that goes along with it) that is rigorously policed by a whole cadre of experts, pundits, and academics. Their job is to make sure that ideas outside the canon are ridiculed and dismissed. So how far can an Elizabeth Warren, or anyone else, stray without having their credibility, even their sanity (tinfoil hat) vigorously questioned and their credibility destroyed in a uniform chorus of disapprobation? Might some of the ways she constructs her arguments reflect a need to stay vague so as to avoid the worst sorts of attacks from the gatekeepers?

    1. trish

      this is where I think straying is possible. Warren has a platform (as Obama did) because the ‘teeming masses’ are angry, disenchanted, suspicious, desperate, etc and there’s power there against those gatekeepers, that straightjacket. Neither simple nor easy, no doubt, but it’s power.

      I think more important is whether she’s really a progressive and/or committed to change or is it the same old political rhetoric, pushing the right buttons, etc, to garner support, another dupe-the-desperate ploy…
      and whether she has the wherewithal to counter the expected chorus with facts, over and over and over…

      1. DanB

        As one of her constituents I have a simple acid test: if she remains in the Democratic party she’s confined to being the latest incarnation of hope and change. Her vagueness indicates this is the case. She sent her Wash Post op-ed to those of us on her email list and my reply was “Specifics please…” I expect no reply. I recall when meeting her in 2011 telling her, “But if you run as a Democrat you’ll have to toe the neoliberal line -and your reputation will slowly diminish with each compromise you make to reman in the party. So why do you want to book passage on a sinking ship of national government?” I got no real reply.

        1. Brindle

          Warren’s vagueness in her WaPo piece is what hit me, also that it seemed to have the all to common Obama template of communicating as if you are talking to 6th graders.

          1. jonboinAR

            Which, I suppose, is slightly better than the style Reagan perfected “back in the day” of talking as though to kindergartners. I agree with all of you. She sounds here like the typical pol unwilling to bite the hands (the moneymen) that feed her, so,… {{yawn}}.

          2. Adams

            ‘… then she goes on with distressing vagueness…:” “Warren’s vagueness in her WAPO article….” You want vague? Listen to her interview with Bill Moyers. He tries again and again to get her say something substantive about the meltdown, name names, etc, and all she’s got are platitudes about how we all need to work together to make things better. It was basically, “Close your eyes, and clap your hands, and wish really, really hard…”

            She’s really a lot like Barry. Somewhat hardscrabble start, overcame many obstacles, obviously very bright, steady consistent climb to the pinnacles of power. And she also wrote a book which shows, like Barry in his book, that deep down, she believes totally in the system. It worked like gangbusters for her and Barry, didn’t it? She also clearly believes in the importance of the middle class and knows too much and is too honest to deny that the 99% is being raped.

            However, she thinks that is an anomaly. It would never occur to her to question the basic goodness of the capitalist system and American democracy. Which makes her a hawk on more than the middle east.

            Like Krugman, she occasionally sends out signals that she is “getting there.” But she will never arrive. Still, she’s a very nice lady and her heart’s in the right place….

            Definitely a great LOTE candidate, (on domestic policy, not FP) if that’s your cup.

            1. James

              It would never occur to her to question the basic goodness of the capitalist system and American democracy. Which makes her a hawk on more than the middle east.

              And that’s the inflexion point we’re at right now, isn’t it? Can our system as currently conceived even possibly put up a candidate and a platform that is truly outside the box of current thinking? And if not, why not?

              I think in the answers to those two questions, suspected by many if not most, but spoken by few, lie the answers to our current predicament. In that sense, our current “inverted totalitarian” nightmare is a lot more like the old-fashioned totalitarian nightmare of yore than we’d like to admit.

              1. jonboinAR

                I don’t have the inclination right at the moment to look up “inverted capitalism”. I have in the past, but can’t right now think of what it means, so forgive me if what I say is already incapsulated inside your reference,… but the system isn’t putting up the candidates we need because the system vets the candidates it desires and only chooses, naturally, obedient puppy-dogs. Groups and individuals who operate and think outside of the system would have to put up, and fund, their own candidates if they expected the ultimately elected ones to behave differently once in office and how to do that when it costs zillions to get anyone noticed, let alone elected?

          3. Optimader

            The problem is EW doesnt want to narrow down her landing zone too soon and bho realized it really didnt matter as long as he rattled off the platitudes with a reassuring tempo

        2. Mike

          I’m also a constituent of Warren, and Markey. My letters to either of them bring a “template” response that could come from any Dem, Republican or nightly news anchor. For example the following from Markey about Ukraine concerns. Seems silly to state it, because it’s so clear to me, they’re all captured and doing the work of the oligarchs. Shame on anyone who falls for the puppet show.

          +—————————————————-
          Thank you for contacting me about the situation in Ukraine. I appreciate hearing from you on this important matter.

          Russia’s annexation of Crimea, a region that has long been part of the independent and sovereign state of Ukraine, is an affront to international law and to the right of the Ukrainian people to determine their own destiny. Russia’s actions directly undermine the worthy efforts the United States and our European partners have made in the post-Cold War era to build a Europe that is whole, free, and at peace. I stand by President Obama’s decision to impose sanctions and visa restrictions against individuals responsible for violating the sovereignty and territorial integrity of Ukraine as well as targeted sanctions related to the defense, finance, and energy sectors. I will continue to call on our European allies to take similar actions. I also strongly support expanding assistance to Ukraine to ensure that the Ukrainian people have the resources they need to weather this difficult period.

          The current crisis began on November 21, 2013, when the European Union (EU) confirmed that the Ukrainian government would not sign a proposed Association Agreement between Ukraine and the EU. Instead, it appeared that Ukraine intended to pursue closer trade and diplomatic relations with the Russian Federation. When news broke of the sudden rejection of the Association Agreement, hundreds of thousands of Ukrainians took to the streets demanding the government’s dissolution. The mass protests demonstrated that many Ukrainians believe that closer ties to the West will help lead to increased prosperity and expanding democratic governance. Ukraine’s parliament then removed President Yanukovych from power and released opposition leader Yulia Tymoshenko from prison. Despite the signal that the Ukrainian people hoped to define their own destiny free from Russian influence, Russia proceeded to occupy and annex the Crimean peninsula.

          I was proud to support the Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act, a bill to impose sanctions on Russians and Ukrainians judged to be involved in violence or human rights violations during anti-government protests and provide additional assistance to the government in Ukraine. Combined with the $15 billion already offered by our partners in the EU, this assistance will be crucial to ensuring that the Ukrainian economy does not go over a precipice and that the Ukrainian people have the resources to keep their hope for a free democracy alive. The key provisions of this bill were included in H.R. 4152 and became law in April 2014.

          In June, I introduced legislation to help Ukraine become more energy independent by boosting the country’s woeful energy efficiency and provide technical assistance to produce domestic natural gas. The bill, the Ukrainian Independence from Russian Energy Act (S.2433), would help Ukraine reduce its reliance on Russia for natural gas. I was pleased provisions from my bill were included in the Ukraine Freedom Support Act of 2014 (S.2828) which was approved by a vote of 18-0 this September by the Senate Foreign Relations Committee and now awaits further Senate action. These important provisions will help Ukraine withstand imminent energy crunch and become a more energy efficient nation.

          I am also proud to be a co-sponsor of S.Res.357, the resolution expressing concern for undemocratic governance and the abuse of the rights of individuals in Ukraine. The resolution was introduced by Senator Robert Menendez on February 12, 2014, and has been referred to the Senate Committee on Foreign Relations where it awaits further action.

          I will continue to stand with the people of Ukraine as they fight for their nation’s sovereignty.

          Thank you again for contacting me about this issue. If I can be of further assistance, please do not hesitate to contact me. To sign up for my newsletter, visit http://www.markey.senate.gov/newsletter. You can also follow me on Facebook, Twitter, and YouTube.

    2. Banger

      Exactly, James–except it’s not an “intellectual straighjacket” so much as a political straightjacket. We don’t live in a constitutional republic with democratic institutions anymore. Warren, to stay in power, has a limited number of words, phrases, and conceptual frameworks she can use if she wants to be in the political game. As for intellectual straightjackets these are forced on academics and journalists by political forces they must obey of die professionally–or, on rare occasions, just die.

      1. Left in Wisconsin

        If anyone ever succeeds in challenging the deep state, or even governing in the interests of working people without directly confronting the deep state, won’t it have to be someone who was let in because they were not perceived to be a serious threat, and then turned once inside? This is the thought that always keeps me interested in the prog flavor of the day. Maybe this will be the one!

    3. Working Class Nero

      I was thinking the same thing, but then again that is the job of a politician – find a clever way of presenting an issue that allows you to defend against the inevitable attacks. The only major political figure in an advanced economy who preaches MMT, Marine Le Pen, found a very good way around this problem. Instead of getting all theoretical about the nature of money and ending up with long pointless MMT debates (like on NC); she cut straight to the heart of the manner. Once out of the Euro, she advocates overturning the 1973 Pompidou-Giscard Law, the result of which would be to empower the Bank of France to “lend” to the government at 0% interest. The practical outcome of this is that obviously the government is never going to have to pay back the Bank of France anything since this is really just printing money. The way she frames this is as a choice between either paying rich banksters interest or just doing an end around and getting the money for free directly from the Bank of France and never paying interest (and by implication the principle either). She forces her opponents to attack her from the Right and to be blatantly supporting the continued enrichment of the rentier classes and acting as “petits Bundesbanksters”.

      If Elizabeth Warren is smart and more importantly, willing, she could find a similar way of presenting the problem, while also avoiding esoteric debates on the nature of money.

      1. EmilianoZ

        If Marine Le Pen ever gets elected and tries something funny like that, the international markets are gonna slaughter the new Franc. It’ll be a repeat of 1981 Mitterrand, only worse. She’d better prepare France for autarky before doing anything.

        1. Working Class Nero

          There is no doubt that there will be an extreme reaction by the jackals of international finance to an eventual Le Pen victory. That’s the dilemma of slave rebellions. You know you are going to piss off massa but the only alternative is further slavery. There are always some slaves who will council maintaining the degrading status quo over the risk of venturing out into the cold hard light of freedom.

          The FN’s anti-globalization and re-industrialization policies are by definition a move in the direction of autarky. I would brand it localarky and a weaker New Franc is very much a good thing. Even in the worse case of non-convertibility, France has enough economic strength to generate hard currency for vital trade needs and has the ability to produce any consumer items they desire. Unemployment will drop precipitously.

          But with Russia and other countries busy establishing an international alternative to dollar hegemony — along with Le Pen’s calls to revive Keynes’ ideas on international trade — the going will certainly be rough, but after some tough times there is a decent chance of France freeing herself from the chains of American dominated neoliberal globalization slavery.

          1. EmilianoZ

            I doubt the French have the capacity to make a computer or cell phone from scratch all by themselves. Maybe no one can at the present time. There was a discussion about that @ Ian Welsh. I’ll quote a commenter named “Badtux”:

            Compare that to a modern computer, which requires components from virtually every continent on the planet, and a *lot* of them. The level of complexity — and amount of feedback required to successfully construct it — has suddenly increased exponentially.

            Everything has been so subcontracted and sub-subcontracted that the ultimate components are dispersed everywhere. I’m guessing that if the Gers or Japs really wanted to make one all by themselves, they’ll manage within a few years. The French? More like a decade or 2.

            But then I dont know who that “Badtux” is. He just sounds very convincing.

            http://www.ianwelsh.net/the-fall-of-the-ussr/

            1. Working Class Nero

              Obviously there will still be trade. Like I said above, France has a powerful enough economy that they will be able to generate hard (convertible) currency even in the worse case of the New Franc not being convertible. France also has deep contacts in Africa. Asian countries are hardly likely to refuse to trade with France even if the US tries to organize a boycott in response to Le Pen implementing Japanese-style immigration controls. So they will not have a problem procuring vital components and products. After all they are not about to stop drinking coffee but as far as I know that doesn’t grow in France either.

              The irony is that with Keynesian economic policies and reindustrialization, it would not be all that long before an FN led France actually started NEEDING immigration just to fuel its growing economy.

              1. EmilianoZ

                I’ve been thinking that those strong ties with Africa you peak of may be dependent on France being lenient on immigration from those countries. If France decided to turn the spigot off, those countries might decide they’d rather trade with China or the US. I suspect France has been getting a preferential treatment because of those ties and not being too strict on immigration. But I’ll admit I have no proof of that.

            2. Jerry Denim

              The Chinese and the Koreans are mad about wine. The more French the better. Cheese could certainly follow. I’m sure something could be worked out.

        2. Calgacus

          What happened in 1981 was that Mitterand snatched defeat out of the jaws of victory, and was a major step in the destruction of postwar Europe. So the franc’s fx value goes down, for a short time – as economic theory predicts. Whoop-de-friggin-doo! Mitterand avoided a trivial, temporary increased import cost at the cost of permanent, massive economic damage. Arguing that one should impose austerity after such a predictable effect of a “Keynesian” expansion is an argument that the government should impose austerity whenever there is expansion and prosperity “for any reason”, as Abba Lerner pointed out in 1950. In other words, stark raving madness – which is even more the norm in “international economics” than in domestic economics. The main thing, as always is to permanently maintain full employment. Everything else, like foreign trade etc, is a joke compared to that, is a problem that takes care of itself.

          Also, whether a state prints/issues bonds or prints money is a trivial, unimportant matter. (Unless the rates are stratospheric.) They’re the same thing. Everybody used to understand this, but many, perhaps most MMT fans still don’t – such is the power of a few decades of brainwashing in anti-accounting anti-economics.

          1. davidgmills

            But that huge debt allows the politicians to argue that things can’t be afforded.

            If the money was printed rather than borrowed, the public would not fall for the “we can’t afford it” argument.

      2. MyLessThanPrimeBeef

        I would suggest to her a People’s Account (to be managed by their Treasury) at the Bank of France, and the bank lends to the People at 0% interest.

        Their Treasury can then disburse the money equally to all the people of France, or in some equitable way to take into account age (an infant doesn’t need as much as an adult, for example).

        1. Working Class Nero

          The Bank of France will be “lending” to the people at 0% and the FN are calling for a 200 Euro a month increase in the minimum wage (and increases in welfare for poor people) but with the urgent needs of reindustrialization I think a lot of the money will be going into building new plant.

          1. MyLessThanPrimeBeef

            That would be great for the Bank of France to lend directly at 0% to the people.

            If they lend enough, the people will have the money to reindustrialize privately, and also enough to consent to pay for any government involvement at such reindustrialization through taxation.

            1. Optimader

              Beef
              If i could convince a lender to loan me money at 0% id be far more interested in barrowing more than i would be in ever sorting a way of paying it back. Fk reidustrializing anything sailing through the south of france

    4. Steven Greenberg

      Yes, the orthodoxy is a problem. Straying too far from it will have repercussions. She should neither ignore the possibility of repercussions nor give up on the idea trying to educate the public on what is wrong with the orthodox position.

      She is primarily a teacher by her own estimation. Certainly she has long experience teaching students about things that go against what they thought they knew. She should bring those experiences and skills to the public sphere. She needs to develop a plan to get the public to a point where they can throw off the shackles of this orthodoxy and look open mindedly at where the facts take us.

      All of this presupposes that she understands MMT. She has not given much indication that she does. What do we do, if we must first educate Warren on MMT before we can expect her to want to educate others about it?

      I also think her foreign policy views could stand some work. I have urged her to, and I think I see some signs that she is, making a connection between the forces of the oligarchy that she is fighting in this country and what those oligarchs want out of our foreign policy. The malignant influence of the oligarchy is not just a national problem. It is an international problem that is not just limited to the completely obvious domains of financialization of the world economy.

      I don’t think it is too hard to see the interests of the oligarchs in the need to control the oil wealth and other resources around the world. It drives our middle-east policy, our fight with Iran, our fight with Russia, our fight with progressive governments in South America, and almost every area of contention that one can find.

      The “invisible hand” of the market does not require an explicit conspiracy to exert its influence, although there may be plenty of explicit conspiracies out there.

    5. Joe Firestone (LetsGetitDone)

      I think that with Sanders to her left, Warren can go a lot farther to the anti-corporate side than she is now. That’s because the mainstream doesn’t want to see a bloc of Senators forming to their left After all, if Sanders and Warren blocked up, then would Franken, Whitehouse, Brown, and Merkley be far behind. And if that happened, where would things go next. To stop things from getting out of control, the Ds might have to drift towards the side of the 99%. Warren, however, appears to be moving the other way. There’s now talk that she’s about to be brought into the leadership by Reid. So, maybe she’s already proved to them that she can play the same game as the others.

  4. Jill

    Warren is being branded for consumption by progressives. Perhaps she will be 2016 brand of the year. I don’t know, but it is obvious that she’s a commodity and citizens are being ginned up to buy this commodity.

    It isn’t enough to extract promises. Obama made many great promises. The only relevant judgment of a politician is based on their actions. For example, when Obama gave the telecoms immunity after promising he would not do that, his actions were largely excused and ignored. Instead of ignoring her record or excusing it, it needs to be examined. If one does so, I believe it is clear that Warren is not the candidate progressives should support.

    I definitely agree that we need to dump the cult of personality, pronto. There isn’t any savior. This nation cannot be fixed by “the great leader”, only by the work of many citizens on behalf of each other and the environment.

    1. diptherio

      Hear, hear! The cult-of-personality is a wicked, wicked thing (and I don’t mean ‘wicked’ in the Boston slang sense), and must be disposed of as soon as possible. Until we, like the striking IWW workers of yesteryear , can stand up and say “We are ALL leaders, here,” we will continue to get manipulated by one false-prophet after another.

      What is needed is cooperative self-help. Sure, try to move the gubmint in better ways, push for those better policies, but for Goddess’ sake, don’t stop there! We need a new economy—a Solidarity Economy—and wouldn’t you know it, it’s poor people who are leading the way. We could all learn a thing or seven from these folks:

      Cooperation Jackson’s Sustainable Communities Initiative

      Land, Co-ops, Compost: Boston’s Poorest Neighborhoods Are Building a Local Food Economy

      A Workers’ Paradise in Hidalgo, Mexico

      1. Banger

        Indeed. All our efforts must go in the general direction you indicate. Anyone with resources who isn’t working that is not part of any solution.

      2. MyLessThanPrimeBeef

        We are all leaders :)

        Self-help…another :)

        When we eat right, the body heals itself…instead of relying on toxic chemicals the pharmaceutical-industry would like to pump into our bodies.

        In the same vein, the people help themselves with People’s Democratic Currency, not trickle down government spending.

    2. Carla

      In bumper sticker terms:

      There Is No Savior.
      We Are ALL Saviors.

      Or, visualize as “Burma Shave” signs…

      Younger readers, ask your (aged) parents. If you have young parents, you’re out of luck.

      1. Lambert Strether

        Here’s the archive of Burma Shave signs, for those who came in late. Example:

        He lit a match
        To check gas tank
        That’s why
        They call him
        Skinless frank
        BURMA SHAVE

        They always have that sort of dead-pan rhythm and joke, and they always ended BURMA SHAVE (I added it).

        If Warren runs
        We want to see
        Not YouTube vids
        But policy
        BURMA SHAVE

        Make up your own!

  5. EoinW

    I have to flag the intro. Tea Party extremists. My idea of extremists are political parties run by psychopaths and sociopaths. I can think of two off the top of my head. Yet I’m not expecting to read Democratic Party extremists. Perhaps Republican Party extremists on this site. Certainly never Occupy Wall Street extremists!

    Perhaps I’m making a tempest in a tea pot? After all, by stating Tea Party extremists, one could be suggesting there are members of the Tea Party who aren’t extreme. That wasn’t my take on it though.

  6. Banger

    I’ve followed Warren’s career for several years before she became a politician and she understands clearly what is going on and, unlike Obama, has made it clear that her studies show that American families live in a far more precarious world than in the seventies when before economic and political trends started to go south. She is the real deal–there is nothing in her that is fake beyond the necessities of public office. The language she uses today must past muster with the oligarchy that rules us–an make no mistake we live in a society where a fairly narrow band of oligarchs (nobility) rule us. Fortunately, they are divided into uneasy factions and factions of factions but they are united by certain principles that have grown pretty solid particularly after 1968.

    You are allowed to criticize corporations, industries, and individuals but you cannot criticize capitalism. You are allowed to criticize particular security policies–the War in Iraq was badly managed (“mistakes were made”) but you are not allowed to criticize the basic National Security State setup and diminish its percentage of the national budget. You cannot deny the doctrine of American Exceptionalism–you are allowed to go “lite” as Obama has attempted to do. You cannot deny the virtue of “hard work” even when it is obvious that many people are not working very hard just like many of us, when at work, have to pretend to work when we’re not busy as a matter of courtesy and respect for the boss class–we need to show them that they own us which puts lead in their pencils.

    There are many other things you can’t and cannot say and all political operatives and journalists are well versed on the nuances of this. Warren can only say that she wants some kind of fairness for American families–she cannot say that we should guarantee incomes even if she believes it. In America, the oligarchs demand that workers live in fear of losing their jobs they believe, contrary to science, that only fear motivates because that is what, consciously or unconsciously, motivates them. They tend to view life as a matter of “winning” or “losing” and believe those values are what creates and maintains civilization. To the extent we hold that irrational belief is the extent we empower our rulers.

    Once

    1. pretzelattack

      where does she oppose capitalism, or foreign policy for that matter?. she recognizes some of the crimes, and wants more regulation, but she used to be a republican and i think she still is on a lot of issues (not that democrats in general are progressive in any sense).

      1. Banger

        She cannot oppose capitalism in any way, as I said, she isn’t allowed to. It isn’t a question of what she does or does not think–any stated opposition to capitalism is forbidden in official circles. You cannot deviate from the norm. There is a “Washington Style Manual” for rhetoric that, as I said, all operatives and media peole know and follow.

        Warren is a peculiar kind of centrist who believes in old-fashioned republican (small “r”) virtues like fairness, moderation, reason and thoughtful policies. I don’t think she’s a leveler or a socialist or perhaps even a social democrat–but she’s way to the left of anyone else out there other than Bernie Sanders who’s not even a Democrat.

        1. DanB

          With all respect, what good is someone you describe so in these times? Alternatively, she switched views on health care, for example, and deceptively insinuated that she never was for single payer because -get this- her co-authors were the ones who supported it in the book they wrote. I’m sorry, Banger, if she’s the real deal, we need a new deck of cards.

          1. James Levy

            I will take the unpopular view here–we’d better opt not for a lesser evil, but someone who is not evil (if not, in our estimation, good). I’m reminded of watching Stokely Carmichael mocking the shit out of Lyndon Johnson at a rally in 1966. Johnson was the best friend African-Americans ever had in the White House (Lincoln included) yet he had nothing but contempt for the man–NOT GOOD ENOUGH, WHITEY, we want our agenda and we want it NOW! Well, that turned into a goat fuck, didn’t it.

            Warren is not, I think, Obama. She would be head and shoulders better. And if you want to tell me Rubio or Paul are just the same as Warren, you can, but I don’t buy that. With her I think we would have a choice between Evil and Not Evil; good, for the moment, is off the table. If you choose to vote Green or Socialist, that’s great, and I wouldn’t contest that, but I believe that Warren might be worth voting for, and right now she’s Eugene McCarthy compared to the dunderheads she would be running against (Hilary or any Republican).

            1. wbgonne

              I’m with you. Unless Warren turns out to be a total fraud like Obama, she will be a definite step forward (Left) if she runs against Queen Hillary. If Warren doesn’t run, however, she is irrelevant.

                1. wbgonne

                  The concluding scene of Some Like It Hot comes to mind:

                  Jerry: Osgood, I’m gonna level with you. We can’t get married at all.

                  Osgood: Why not?

                  Jerry: Well, in the first place, I’m not a natural blonde.

                  Osgood: Doesn’t matter.

                  Jerry: I smoke! I smoke all the time!

                  Osgood: I don’t care.

                  Jerry: Well, I have a terrible past. For three years now, I’ve been living with a saxophone player.

                  Osgood: I forgive you.

                  Jerry: [tragically] I can never have children!

                  Osgood: We can adopt some.

                  Jerry: But you don’t understand, Osgood! Ohh… [Jerry finally gives up and pulls off his wig]

                  Jerry: [normal voice] I’m a man!

                  Osgood: [shrugs] Well, nobody’s perfect!

                  http://www.imdb.com/title/tt0053291/quotes

                2. TedWa

                  All politicians are well-honed in lying to get elected. Take a look around the world. Maybe she learned to lie so she can be accepted by those around her. It’s very hard to believe she’s a hawk at heart. Bernie Sanders and Warren = a dream team to me. Or else throw in Alan Grayson

    2. Yves Smith Post author

      That is not true. This is American conformism. It is one of the worst cultural diseases we have.

      You can start saying things by starting to say them. That is how you change what is “acceptable” discourse. Krugman, for instance, said loudly that the war in Iraq was a crock before it was “acceptable” to say that. He was attacked but he was not shut down.

    3. Jerry Denim

      God this is awfully 2008. More personality cult, tea-leaf reading, psycho-bable about motives, true intentions, secretly held convictions, three-dimensional chess, blah, blah. I say take Warren at exactly her word and not one penny more, stop there then discount 70% for bluster, politics and the inevitable beat-down she will get by the system. Never dream for a moment that her words are some kind of secret code to hide her inner radical. Deja vu.

  7. Torsten

    Left unsaid was that the American people also want to be safe. Safe from Terrorists! Safe from Ebola! Safe from black people and brown people and yellow people who want to mug us and rape our women and take our jobs. And the way to be safe is with the Army! Or–what’s the difference?–the police! Lock down our borders! Throw Doctors without Borders in the slammer! Military spending is a kind of QE, too: top-down “stimulus” fed through the MIC and Homeland Security. This is an alternate narrative Warren or any other progressive candidate will come up against.

    1. NOTaREALmerican

      Yes, indeed. I think the “Progressives” would be better off if they’d take to the time to figure-out:
      1) some new word for neo-liberal.
      2) how to move their agenda forward accepting the reality that a large percentage* of humans are mean self-serving a-holes.

      * Hey, i didn’t say “most” or “a majority”, I said “large percentage”. Calm down…

    2. MyLessThanPrimeBeef

      When you curb military spending, you will find the money austerity proponents claim we don’t have.

    3. Carla

      The American people also want very, very badly to be safe from poor people. Didn’t you know? Poverty is highly contagious.

  8. Michael

    Warren, Shaheen, Sanders, and those other liberal Democrats are supporters of the military-industrial complex and their mass murder so are guilty of war crimes by association. We the People cannot overcome the Wall Street Empire through their two-party clap trap.

    Let’s keep in mind Warren’s abominable foreign policy record. She, like the rest of the Democrats continue to support endless wars, pro-militarism, occupation, weapons profiteering, and U.S. terrorism.

    Supporting Democrats is a serious political disorder, like alcoholism or returning again & again to an abusive spouse who repeatedly lies to you. It’s easy to fall off the wagon, to make excuses & rationalizations for it.

    Even many whose views are developed enough to recognize such truths
    as the fundamental rottenness of the 2-party system & the complicity of Democrats in all of the Republicans’ major crimes, are still unable to draw the logical consequences of these insights. (Those so naive that they still conceive of Democrats as being the “opponents” of Republicans are another case altogether.)

    The central point is this: capitalist society permits the Democrats to be one of the 2 allowed parties for a very definite reason. It’s not because the Democrats “serve the people.” It’s because in a subtle but effective way, they help the capitalists keep the populace under control by providing them with the illusion of possible change. TPTB don’t want the people “served.” They want them managed, or controlled.

    It is the job, the central social function of the Democrats to always be dangling before the people’s noses vague pseudo-hints of possible change, so as to keep them from bolting from bourgeois politics altogether. It is the Democrats’ intention to never deliver meaningful change, but rather to keep dangling hints of it alluringly forever. This produces control — a populace habituated to remain safely within the lines required by ruling class interests.

    This is why the Democrats NEVER paint a picture of US history that’s the slightest bit accurate — they want a brainwashed population every bit as much as the Republicans do. This is why they NEVER are willing to set forth an honest socioeconomic analysis of why things are as they are — they much prefer that people not understand such things.

    As long as a large chunk of voters can be deceived by the seemingly “nicer guy” act of the Democrats, there is no hope whatever of coming to grips with the core problems of our society. The most dangerous trends — a wasteful consumer society, environmental destruction, grotesque social inequality, and an uncontrollable propaganda/war machine — cannot even be approached within the framework of bourgeois politics, because they all serve ruling class interests. This is what is really being protected, when people opt to support Democrats like Elizabeth Warren just because they seem less blatantly cruel on TV.

    1. Banger

      The Democratic Party is what it is and as you say. There’s no point that I see in supporting it. However, Warren, offers us a climate change in our political system that could be exploited by the left and she bears watching and supporting where she champions reason, fairness and has a concern for the people.

      As for FP, the DP like the RP has to follow the National Security State’s dictats–there is no choice here–just as the journalists must swallow the American Exceptionalist ideology. We are no different than the old Soviet Union. At any rate we work within what is real. We aren’t going to get, at this point, an anti-imperialist candidate. The left shot down Kucinich stupidly and the right is not embracing Ron Paul–his son Rand has lost all credibility by trying to play by Washington’s rules, poor man and getting skewered from all sides. He has no chance.

      9/11 changed everything and caused the U.S. to turn radically to the right in every way. As long as people accept the official explanation of those events this trend will continue.

    2. Jill

      I agree with what you wrote Michael.

      Any politician who is pro endless war (as Warren is) cannot be for economic reform, let alone social justice. The one absolutely precludes the other. Endless war purposefully drains the resources of most people for the benefit of an elite. It also takes the bodies of the poor and sacrifices them to those same few, not only in the US but around the world.

      Others rightly point out that this is exactly the time when a person who would stand up to war mongering and social/economic justice could garner votes. If you want to stay in the elite, it’s true you can’t make fundamental criticism of capitalism, but I think a few traitors to their class could really get somewhere right now! However, I still believe true justice will only come from a citizens movement, one not dependent on a great (dear) leader.

      1. Brindle

        Warren runs right into Einstein’s words:

        “You cannot simultaneously prevent and prepare for war.”

        1. MyLessThanPrimeBeef

          Again, Einstein is being Einstein.

          You prevent being bullied with force by being prepared (practicing with weight lifting with force).

          And as the greatest Zen swordsman, Miyamoto Mushashi showed, a master is great because he doesn’t have to use his sword…he avoids it while practicing arduously everyday.

    3. NOTaREALmerican

      Humans don’t choose to “support democrats” or “republicans”. A given percentage of human brains are configured as daddy-worshipping authoritarians (what we call “conservatives” but are more accurately called crony-capitalists) or mommy-worshipping authoritarians (what we call “liberals” – without a neo – but are bit-more accurately called crony-socialists). The parties exist to create the bullshit NEEDED by these brain configurations. Just as the deities are created by the priests to give authority to the bullshit they create the parties exist to give authority to the bullshit used to screw the “da people”. These humans don’t “choose” the bullshit they believe, their brains resonate to specific bullshit.

      The “Progressives” need better words if they want to overwhelm the bullshit created by the democrats. It would help if they’d find a cool word for “neo-liberal”.

    4. wendy davis

      Excellent comment, Michael. Stir in: Deconstructing Elizabeth Warren’ by Paul Brown, as well.

      He begins:

      “Elizabeth Warren, with her crusade to reform finance, is the darling of many, and there is a movement for her to run for President. But she’s another imperialist hawk in the tradition of Bush II, Obama, and Hillary Clinton. Consider the foreign policy statement in her 2012 campaign for Senate:

      “Secretary of State Hillary Clinton has called for ‘Smart Power’ – the use of defense, diplomacy, development, and other tools to advance US interests in the world. As a Senator, I will pursue a foreign policy that is smart, tough, and pragmatic.” Her Hillary is a super-hawk, deeply committed to fear- and war-waging, and a war criminal.”
      and so on…

    5. Jerry Denim

      They also exist to co-opt any threatening insurgent leftist movement outside of the mainstream that could morph into a third party or otherwise threaten the status quo. Witness the Occupy flash in the pan. The Dem’s wanted the name and the sex appeal with none of the content. The Democratic party as it is organized today must die before we can have true progress.

    6. Joe Firestone (LetsGetitDone)

      That’s exactly why we need to get them on the line as it were with specific commitments. The more promides we have, and the more promises they break, the likelier it is that people will turn to the Greens and we’ll be able to break the two-party grip. Will the Greens bring change. Well, Jill Stein and her Green Party Shadow Cabinet are the real deal I think, but they’ll never get anywhere without angry disillusioned voters truning away from the duopoly.

  9. Rodger Malcolm Mitchell

    Yes, the federal government, being Monetarily Sovereign does not spend tax dollars and never can run short of dollars.

    And yes, the federal government can and should implement the 10 Steps to Prosperity.

    But the real problem is that this has been seen as a problem of politicians’ ignorance, and so, if only we educated these politicians, they would see the light and those 10 Steps would be implemented.

    Nonsense.

    Does anyone really believe that among the President and all his economic advisers, and the entire Congress and all their economic advisers, there is not one person who understands Monetary Sovereignty?

    No, the problem is not ignorance; it is bribery. The uber-rich have bribed Congress and the President (via campaign contributions and promises of lucrative employment later) to ignore the facts. And they have bribed the universities’ economists (via contributions and tenure). And they have bribed the “think tank” economists via financial support. And they have bribed the media via ownership.

    The rich have bribed the politicians, economists and media to widen the gap between the rich and the rest.

    More than dollars, more than expensive toys, the rich crave the gap. It is the gap that makes the rich rich, for without the gap, no one would be rich, and the wider the gap, the richer they are.

    Until one fearless leader (Elizabeth Warren?) speaks these facts, all the education in the world will fall on intentionally deaf ears. And until the leaders say it, the populace won’t believe it.

    1. James

      Bribery and coercion. The bribery’s the carrot for the good little bunnies. After that comes the stick(s). And really now, it’s the sticks that make life so very interesting, don’t ya think?

    2. Joe Firestone (LetsGetitDone)

      I agree in part, Rodger. But, why does there have to be a single explanation, i.e. bribery. Rather than both bribery, and ignorance. There are many people in Congress who don’t believe in monetary sovereignty, and there are others who really are ignorant. But, also, I’m sure there are some, who know it’s true, but think it’s dangerous to their positions and so won’t acknowledge or act in ways consistent with it.

  10. Ulysses

    “It is the job, the central social function of the Democrats to always be dangling before the people’s noses vague pseudo-hints of possible change, so as to keep them from bolting from bourgeois politics altogether. It is the Democrats’ intention to never deliver meaningful change, but rather to keep dangling hints of it alluringly forever. This produces control — a populace habituated to remain safely within the lines required by ruling class interests.”

    This is very accurate. In many cases the people running for office are completely cynical servants of ruling class interests. The only “victories” they will deliver to their base are on issues like gay marriage that pose no threat whatsoever to kleptocratic interests. Elizabeth Warren will certainly not lead the people to achieve the sort of broad, and radical systemic changes that we so desperately need. Whether she is completely cynical is a question that I can’t answer. She may truly think that she is doing at least a little good, at the margins. Sort of like a kid who comforts the victims of a schoolyard bully, rather than take the bold step of organizing the victims to challenge the bully and free themselves from harm.

  11. Steven Greenberg

    My only quibble is that it is unrealistic to demand promises about specific legislation. No President has free rein to get exactly the legislation that she wants. We all know that. So a promise to get the Congress to enact specific legislation is a promise that no one can believe.

    We need to think about what kind of promises we should expect that are within the power of the President to keep. The President can certainly promote certain legislation, fight for certain legislation, take executive actions that are within her power, rally the people to put pressure on Congress, etc. We need to think about what else we should demand that is realistic.

    We don’t need more arguments about unrealistic promises not kept.

    1. Eureka Springs

      One of many reasons I always liked Kucinich is the man had a specific bill, usually in hand or pocket, when he spoke of an issue and what to do about it. You make a good point about promising to pass something but any and all politicians and parties should conduct themselves as Kucinich did… with specifics in writing available for all to see. Warren is clearly not that type of individual and should not be trusted.

    2. James

      I agree that specific promises about specific legislation is unrealistic, whether or not any specific candidate actually intends to deliver on them or not.

      But the bigger question that we should all be asking is why is it that the realistic solutions to our all to real problems, which are bandied about on this board thoughtfully everyday, cannot be realistically asked for, never mind demanded, from a system that is clearly bankrupt of realistic ideas and solutions itself. And until that question gets addressed (and I think we all know why it won’t be), wondering which candidate and/or party is actually going to deliver change that anyone actually wants to believe in will be a moot point. Meet the new boss, same as the old, and all that.

      1. Steven Greenberg

        James, I am afraid one point that I believe in got buried in my post. I do strongly believe that we need to demand specifics of our candidates. We need to seriously think about what form those specifics should take. We could start a discussion about how to formulate specifics in a realistic way. It is not an easy problem to solve, but that does not diminish the importance of solving the problem.

        Let’s have at it.

    3. washunate

      There’s a particular irony here, as well. Firestone has refused to provide details on his own preferred federal budget in the past.

      Perhaps now that he’s called on Warren to provide specific legislative commitments, he’ll meet his own standard and commit to a specific budget proposal of his own?

        1. washunate

          Fair question. Because you are claiming to have answers. And because you are upholding a standard, saying it should apply to Warren.

          Unless you’re endorsing the ‘do as I say, not as I do’ mentality, that’s a pretty big disconnect. The single biggest legislative impact that the President has is recommending a budget to Congress.

    4. Joe Firestone (LetsGetitDone)

      My last comment got eaten up. Don’t know why. So, I’ll give it another try. Claiming that something is unrealistic is often an excuse for constraining debate. I don’t see many people asking candidates to get specific or go home, so I don’t know whether doing so is “unrealistic” or not. I suspect however if people decided that they would not contribute to candidates who did not approach them with a specific platform, then there would be specific platforms that candidates would advance.

      Also, while I agree that the President can’ deliver on legislative promises without a friendly Congress, the President could deliver on promises that don’t require legislation to implement, and she/he could also offer promises conditional on the public electing a Congress friendly to them. Today we no longer see presidential “coattails” in politics. I think we need to see them again, but that won’t happen if the candidates run alone without supporting their party or candidates of other parties that are supportive of their programs.

  12. Brooklin Bridge

    Elizabeth Warren has done little to indicate that, sincere or not, she is anything other than one more player in the Kabuki theater. True, she can at least be counted on to embarrass a few bankers and Wall St. executives, but that is cold comfort to those out on the streets because of them.

    The best way to know beyond doubt if she will follow the same route as Obama is to see if she is nominated to run for office. In so far as she ran for Senator, we know, for instance, that she will stop well short of doing anything significant to disturb the apple cart. Otherwise she would not have been allowed to run, and definitely not allowed to win. Such a test looks to have a major problem; if a candidate so much as runs, you know he/she is just another shill so what’s the point. But it’s not a problem with the test – which is rock solid – it’s a problem with the utter corruption of our political elite to the point that the structures themselves have been captured and rendered useless as anything other than a cruelly ironical veneer.

    1. jrs

      Yes how can what any candidate believes survive the money infusion of the Presidential election? Unless you can somehow get the money to suppose various policies. Otherwise at BEST you have a principled candidate who won’t raise sufficient money and will lose.

      1. Banger

        I think a principled candidate can raise the funds but the person will not be allowed to run. The media will ignore and/or viciously attack them–that always works since today the media is very tightly controlled by oligarchs. Should a miracle happen and such a candidate gets fractions then the game will rapidly escalate into some ultimate solution.

    2. Banger

      Of course! Any candidate that runs on a major party ticket for national office has to sign on, basically, to not disturb the oligarchy. All pos serve at the pleasure of the aristocrats. But, they have some room to maneuver and can, in small ways, change the directions of policy if they can keep some factions within the oligarchy on their side. That’s the system we have and we need to make the best of it I guess.

    3. NOTaREALmerican

      In times of great comfort, when most peasants can “afford” to own a car fit-for-a-prince, the words of the reformers can’t be heard over the pulsing sounds of over sized engines with enhances exhaust systems.

      (Verroom, verroom, this car makes me a real bad-ass, and I bet my neighbors really envy me when I verroom verroom at 5:30 am)

  13. steelhead23

    While I agree with Mr. Firestone, we should be a bit slow to chastise the very few populists we see in the U.S. Congress – especially in areas of ideology (e.g. MMT) that are broadly seen as “wishful thinking” and seen as anathema by the large financial institutions that currently own the U.S. Congress. Obama is a great example that policy doesn’t always follow rhetoric. But we should be careful not to assume that it always does. I believe Ms Warren has demonstrated that her public policy is not far removed from her rhetoric. Let’s work to educate her. I think she’s the real deal and the current choice for those who lean left appears to be HCR or Liz. I like Liz.

  14. washunate

    I am not a fan of critiquing Warren in this light. She is not an establishment leftist, in either a theoretical sense or the Democratic machine sense. She’s a converted Republican, not a Progressive Hero (whatever exactly that is). Her focus is reality, what has actually been happening and what to do about. She is not, has never claimed to be, and shouldn’t be taken as some kind of leftist advocate or guide.

    Of course, among other things, her work helps to point out that just having a job isn’t sufficient, so it’s understandable why MMTers wouldn’t like her. That recognition kinda pokes a huge, gaping hole in the JG Solves All mentality.

    There are just so many factual errors in this post it would take a whole post to address. Perhaps the most important is the misunderstanding of what the Democratic Party has been doing, a blindspot that seems to have described how MMT ideas have been used in political rhetoric for some time.

    The Democrats in 2009-2010 weren’t trying to compromise with Republicans. That’s absurd on many levels, from the fact that the Democrats were sent to change Congress two years earlier, in 2007, to the fact that the Democrats controlled the House, Senate, and White House in 2009 and 2010. In other words, they were doing precisely what they believed in, not compromising with a powerful foe.

    And this seems to be a hard truth to accept for the technocratic mindset of monetary theory. We face a management problem, not a monetary problem. Who cares whether the government has a budget surplus or budget deficit in any arbitrary period of time? What matters is what the government does, both in terms of how it applies taxes and how it allocates spending.

    But of course, better tax and spending policies would force us to address the waste in our nation’s institutions. Such as those cushy jobs academic economists enjoy in our nation’s hallowed halls of learnin’ and monetizin’.

    1. NOTaREALmerican

      Re: What matters is what the government does, both in terms of how it applies taxes and how it allocates spending.

      This sounds vaguely “moral”. Can we expect any economic modelling system to apply morals above model results.

      Let’s see, if I pour a trillion bucks into the “infrastructure funnel” and turn the “growth crank” on my economic model, the “goodness meter” goes off the scale. Surely that is goodness ! Does it matter that lots of the loot poured into the “infrastructure funnel” goes to corruption. Naaa, the economic model proves that goodness will result, so it must be so.

      1. MyLessThanPrimeBeef

        A strong, healthy people can fund all the infrastructure projects they deem high on the goodness meter.

        Can the people be trusted to be that wise?

        Answer – can the government be more trustworthy?

        Thus, priority number one – make the people strong and healthy so the people can heal from within.

        Thus, don’t just describe, but improve the current system so that all new money is for the people to decide what to do with it.

        This should, in some way, address the corruption issue you mentioned.

    2. Calgacus

      I am also not much of a fan of such critiques like Joe’s of Warren. But I am even more in the camp of the “JG Solves All mentality.” That’s because that mentality is the truth. Just the same way that if you get run over by a truck, you might have wonderfully complicated and interesting complex emergent problems caused by successive and interrelated organ failures, brain damage etc. The way to avoid these interesting problems is not to get run over by a truck. That is the advice of a JG – run a national monetary economy the same way every other organization is run, not by psychotic magical beliefs that violently forcing people to work less and therefore consume less – even starve sometimes – will make things “better”. And Warren is right that federal money, JG money should be spent the best way we can figure out.

      In other words, they were doing precisely what they believed in, not compromising with a powerful foe.
      And this seems to be a hard truth to accept for the technocratic mindset of monetary theory.
      Well, I agree with this statement, not hard at all for me to accept. But MMT monetary theory does not have a technocratic mindset, but a philosophical one. That is the problem. Everybody knows MMT already. Sort of, enough to get by in daily life. All MMT is is understanding what one has been saying all along.

      But to do that one has to get to the starting point of all philosophy – the humble realization that :
      I myself can say all these clever things, true things, useful things. But I have no idea what I really mean by them, and maybe I should think about that a little.

      We face a management problem, not a monetary problem. Issuing and taxing money is by far the most important way the government manages the economy.

      What matters is what the government does, both in terms of how it applies taxes and how it allocates spending. This is entirely in agreement with MMT, is emphasized by MMT against crazy mainstream schools that think that it is not true, that screwing around with interest rates is what matters.

      But of course, better tax and spending policies would force us to address the waste in our nation’s institutions. Such as those cushy jobs academic economists enjoy in our nation’s hallowed halls of learnin’ and monetizin’. Yes, people at the U of Chicago, Harvard & many other schools have enormous negative value, and are thus far overpaid. But “heterodox” (a word I hate) economists with the “cushy jobs” at state schools – like UMKC, Utah, UMass AMherst, U of Texas etc. enormously benefit society, and would be worth 10 times their salary. Wish there were 10 times as many of them.

      1. lambert strether

        Well, JG does not solve all. It solves a lot. It solves the problems of regulating the economy by the inhumane and lethal method of throwing people out of work, for example.

        1. washunate

          Lambert, this is the trick in discussing it. The way MMT ideas are used are so varied that it’s impossible to nail down any details unless someone advocates a specific plan. There is no general theory, no broadly applicable principle that being engaged in paid employment is superior to not being so engaged.

          It all depends on the specific wages, working conditions, and output of the time spent working. For instance, you are not seriously suggesting that our prison system is remotely good, are you? Yet it provides work. Both for guards and inmates. Not to mention law enforcement, judges, prosecutors, suppliers, educators…

          1. Lambert Strether

            “The way MMT ideas are used are so varied that it’s impossible to nail down any details unless someone advocates a specific plan. ”

            Unlike what? Revealed religion and the book of Deuteronomy?

      2. Joe Firestone

        Hi Cal, A number of people have now replied with the ‘leave Warren alone’ meme or variations on that meme. But I think this is simple. Do we want a candidates who are commited to legislating specific policy agendas or not? and if we don’t want this then how do we make them accountable later? my view is that real democracy requires accountability and accountability requires policy agendas. That’s it!

      3. washunate

        Thanks for actually addressing the comment. Exchanges with you are some of the most interesting I’ve enjoyed. We are saying rather similar things. Basically, we just disagree on how to solve the problem.

        I understand that MMT is making broader philosophical claims. As Lambert commented a couple of times, he seems to be of the mindset that MMT is more a small tweak to our existing mindset, not a major change. That I think is a disservice to MMT, trying to downplay what it claims. Wray noted that the MMT Insight as he called it is the JG itself, the need to have a buffer stock. You have to choose, so choose wisely.

        What I critique is that fundamental approach. I argue that we don’t have to choose, because we can’t choose. It’s a choice that doesn’t actually exist. Buffer stocks are illusory, not real. Whether we’re talking gold or silver or copper or wheat or unemployment or full employment. National sovereignty means that the politicians change the rules when the rules would otherwise prevent them from doing something they want to do.

        One potential outcome of full employment is slavery. Who is it that gets to determine the conditions of employment? Because someone has to. It’s a judgment call, a matter of management, of organization, of discernment, of implementation. There is no such thing as a ‘job’ in general. There are only specific jobs.

        The more effective method in a system of political economy is to set up a mechanism for providing a safety net to people that is automatic, that doesn’t involve human judgment, that operates outside of the system of formal employment, indeed, one that competes with employment – namely, social insurance. You avoid the ‘truck’ of hard times by having mechanisms to send payments directly to people having hard times. Jobs are an extremely inefficient and roundabout way of addressing starvation and illness and so forth. It’s why the discussion about MMT has to happen at the more fundamental level of philosophy and ideology and values and assumptions. The protestant work ethic, the notion that work is good in and of itself, is of course a valid preference. But so is the opposite, the notion that work is only as valuable as the output it produces. By this value system, jobs are merely a means to an end, not an end themselves.

        As far as wanting more professors, and more highly paid professors, I do have to dissent there. Randy Wray, for example, is already in the top 10% of wage earners. No need to add a zero to his compensation. And we certainly don’t need more economists – of any stripe. This is one of the basic public policy tensions in an MMT environment. Why should some workers make significantly more than others? There has to be a justification, a standard, by which such inequality can be determined to be warranted or unwarranted.

        1. Joe Firestone (LetsGetitDone)

          Well, thanks. That’s a very substantive comment. First, I’m not for the JG alone. I favor a JG and a Basic Income Guarantee (BIG) at about 50% the JG living wage.. My point of view on this and other things related to the JG is in my series here Parts Fourteen and Fifteen in the blog series cover the MMT philosophy as I see it.

          On buffer stocks, I think MMT views on the subject assume that the political system allows and supports markets, so that there is labor market composed of people who want jobs. Note that last condition. I don’t think MMT is making any claims about needing to choose a buffer stock relative to people who for whatever cannot, or don’t want employment.. Given these assumptions, MMTers claim there must be a buffer stock of some kind applying to the labor market and that a buffer stock of the employed at a living wage is better than other buffer stocks, including a buffer stock of the unemployed.

          Also, MMTers believe that such a buffer stock provides a price anchor holding down inflation, since the tight employment created by the JG is anchored by the JG living wage, and if people at the bottom of the wage scale begin to demand wages much higher than the living wage employers will be able to refuse such wage demands and higher others from the JG buffer stock at a wage above the living wage but lower than the wage demands being presented to the employer. I have to say I don’t see a problem with this reasoning.

          On your slavery point, I think it’s metaphorical at best, but I do agree that to the extent a JG is like UK workfare it would be something not worth supporting. However, the MMT JG is emphatic that job roles would be structured locally by non-profits groups, perhaps local governments, and the JG participants themselves and not the Federal Government which would only be the paymaster providing wages directly to enrollees in the program. There would be a diversity of jobs in the program limited only the ingenuity of the various stakeholders in the process and their ability to define community needs and job roles needed to fulfill them. So choices of kind of employment in the JG would be plentiful. But, of course, there will always be some people who won’t want to do any of the jobs that the JG would have available,but prefer to work on their own endeavors incompatible with what is available in the private sector or in the JG.

          It’s to accommodate people in this group, people who can’t work, and people who want to stay home and care for children or parents that I favor a BIG. In proposing a BIG at 50% of the JG living wage I’m acutely aware that this may not substantial enough for people who can’t or don’t want to work. So, I’m open to proposals that the BIG be pegged at a higher percentage of JG compensation. My one requirement is that there be enough of gap between the JG wage and the BIG that there is a positive financial incentive substantial enough to induce people who don’t work in the private sector to do JG work. I want that because I think JG work will, on the whole be valuable to the communities that structure it and add value to our economies and our real wealth, and also because then, having participated in the JG, it will be possible for people to return to the private sector if they choose to do so at a later time, whereas if people choose to live on a BIG for an extended period, then many of them may become unemployable and find that the BIG is a dead end for them.

          BTW, assuming a JG living wage cost adjusted by region would vary between $10 (think rural Kansas) and $24 per hour (think NYC), and average about $16.00 per hour across the US, I would peg the BIG at an average of $8.00 per hour, which is higher than today’s minimum wage, at least on average..

    3. lambert strether

      JG solves all mentality” Rarely does one see a straw man that ginormous combined with an insult and italics. Well played.

      1. washunate

        Why thank you. I figure the fact you comment means I’m hitting a nerve.

        The thing is Lambert, that’s how silly JG arguments have been sounding to people outside the ideological tribe. Firestone literally called high value platinum coins a game changer. Wray literally said that minimum wage jobs would solve 2/3 of poverty. In any sort of reality driven, evidence-based analysis, those are silly claims. And then there’s net deficit spending. Which is kinda what we’ve been doing. Like, a lot.

        MMT is fundamentally flawed to assert that monetary policy requires a buffer stock. Buffer stocks don’t work. No matter how much we may desire them to.

        1. Joe Firestone (LetsGetitDone)

          I said a $60 T platinum coin would be a political game changer, not a $1 T platinum coin or platinum coins in general. These distinctions are very important. In addition, I don’t see how you can deny it would be a political game changer, when the presence of $60 T in reserves in the Treasury spending would immediately put to rest any objections against progressive economic legislation on grounds that we couldn’t afford the increase in the debt, simply because the debt would be getting paid off and no new government debt would be getting issued.

          Further, on Randy’s claim about the JG. That claim makes perfect sense if you assume the JG rates I proposed above. Given those rates, a family in NYC with 2 adults working would have an income of nearly $100,000 per year. That’s not lavish for the big apple, but it is enough to get out of poverty.

  15. Jim

    Joe Firestone argues that “all high powered money created by the Government including coins, currency and reserves is the people’s money in the sense that it is created under the people’s authority which underlies the constitution of the United States…”

    But Joe Firstone also argues “…that the money the Government spends is not the people’s money in the sense that it is the tax revenues collected from the people that the executive is actually spending. Instead, when the government spends money that is money that is newly created and injected into the private sector by the government including the Federal Reserve the Treasury and the interactlng procedures…”

    Does this latter statement translate into an endorsement the power of the State over the people?

    How far is MMT willing to push the power of the State?

    Is such a State-centered policy agenda the best policy prescription for our emerging totalitarian system?

    Is an interpretatlon of money as being primarily a creature of the State mean that a powerful State is of central importance to our potential prosperity?

    What are the key assumptions of MMT that gives the power of the State central billing?

    Can one be progressive without endorsing MMTs interpretation of money?

    Can one be progressive without endorsing a Strong State?

    1. MyLessThanPrimeBeef

      Jim, thanks for that comment. Joe seems to try to answer some of the questions I have been asking. I am still not clear and hopefully from responses to your comment, I will know more.

    2. skippy

      Replace the term state with corporation, do the points you make, stay the same, change for the better or get worse. I would also add, as it seems your major concern is concentration of power, that the JG [BIG lite or not] provides a remedy in that regard.

      Skippy…. as FEAR is the operative tool in use at the moment, it would seem any mechanism which diminishes that leverage, would provide more democracy all around. My2cents….

      1. Jim

        Why not launch a left politics which is critical of both Big Capital and Big State.

        What’s left of the Left seems obsessed with the necessity of viewing Big State as an instrument of liberation–when there are many other more radical(i.e. getting to the roots) alternatives which seem to fit more closely with our more highly individualistic culture.

        For example, how about a left-wing populism which seeks a fairer distribution of growth through an advocacy of widespread ownership of productive property. The Left is certainly capable of seeing the difference between the direct property ownership of a small business, small farm or cooperative and that of a large national or multinational corporation. Unfortunately in the US, the word pro-business has come to mean pro-multinational corporation.

        My perspective has long been built around the premise of a necessary critique of both Big Capital and Big State because from my perspective these modern power formations (which began to emerge after the civil war) are now jointly running our lives.

        1. skippy

          Persoanly I consider quality before size, pop ratios, increased activity’s and the neg – pos externalities they present.

          Hyper individualism is not a worldwide condition and largely a result conditioning, so its a case by case issue, with possible changes in the near to far term.

          Rear view mirrors can only tell so much, does one become overtly biased by some antiquarian concept born for lack of knowlage and are quite problematic when looking into the future [expectations vs. ever changing reality].

          Well plutocrats that drink their own success, as some kinda of affirmation of their master race managerial powers, is a conundrum, when the operative mind set is survival of the fittest free markets. Yet memes can do and can change.

        2. lambert strether

          I believe in making the state smaller by ending the empire and its associated powers. That’s separate from the issue of whether money creation should be democratically controlled. A big vs. small axis is too simplistic..

            1. Jim

              Why is it the MMT emphasizes the primary importance of central bank money creation when under our present system of banking both the central bank and the private commercial banks collectively create both loans and deposits simultaneously out of thin air?

              Isn’t this a State-centered bias which may have institutional political ramifications?

              1. Joe Firestone (LetsGetitDone)

                I think you have it wrong. What MMT emphasizes is the creation of Net Financial Assets by the Government including Congress, the Fed, and the Treasury. The reason why is is because the banks don’t create net financial assets. They always create assets offset by liabilities.

              1. skippy

                If I may…

                “How they managed to live, the two of them, to live on nothing, He only knows, He the Most High who feeds the birds that find them nests, The poor woman could not account for her daughter’s ecstatic face, made exquisite by fasting and self-sacrifice and hope. Borrow, the helpless being could not. 3eg, she would not, Steal she could, and did. Peaches, apples, pears; figs that the satiate pigs did oat not, but let lie on the ground be side them to rob, Huldah and her mother ate. Fruit from the trees fresh hand-picked, not wind-fallen, they could have had for the asking, but no man gave unto them. The heart of the country whose latch-string hangs out for even the stranger was closed against the widow because she kept hugging her grief instead of getting up and hustling. To the little man of the family, her mother’s inability to do for herself, for them, was neither reprehlensible nor pitiable, but natural. The idea of begging, borrowing or stealing never once entered the child’s head. The food question was to be solved only by work-or, in extreme case, by sale of what one owned. The child ate what was sot before heliar, nor asked a question of its whence. There came a day when they lack ed even windfalls. Almost caught in her neighbor’s orchard, the widow could steal no more. The will was not strong ‘enough to force the foot, the hand.

                Lot him march to the music which he hears, however measured or far away,

                skippy… holding out on good fellow, if such is possible.

    3. Calgacus

      What are the key assumptions of MMT that gives the power of the State central billing?

      No assumption at all, but the fact that states in the modern world have more power than any other money issuer. You can just replace “the state” in any theoretical MMT statement by “the most powerful money issuer, the one whose money is most desirable”. In the middle ages, merchant princes, banks could be more powerful, and state money could trade at a discount to their money. This is not the case now. There’s always going to be some top dog. Who do you prefer, a democratically controlled one, or an autocrat? Of course the power hungry would be autocrat will always try to corrupt the democracies. But their main, nearly their only tool is deceit used to divide and conquer the many so they attack each other instead of their oppressor,.

    4. Erick Borling

      Jim, when Joe wrote that the money Government spends is not the people’s money, he means that government spending in all forms is not dependent on revenue (taxes, etc). However, when he wrote that all (“high-powered”) money creation is the people’s money, he was indicating that economic policy is public-purpose oriented, not state-oriented. In my elementary understanding of MMT, I understand that in order for money to have credibility, it must be disseminated by a monopoly issuer (the U.S. government) who enforces it’s use through taxes or some requirement to use that currency. Without that monopoly and some kind of requirement to return that money to the issuer (through taxes or something) the money loses it’s currency as legal tender. This process need not be inherently unfair; as the fairness of implementation is a policy decision, not an inherent characteristic of the mechanism. MMT is agnostic about policy, but so far all proponents of MMT are distinctly progressive and vocally oppose totalitarianism. I think you might really enjoy this article and find it very illuminating; Keeping It Real: Law, Coercion, & The Frontiers of Public Finance by Raúl Carrillo

    5. Joe Firestone

      I think this is a red herring. The constitution of the United States gives the Congress, a branch of the Government, the right to create money to promote the general welfare. The language there as interpreted by the Supreme Court is today understood as giving the Government the right to create coins, currency, and reserves and to issue these. What’s totalitarian about that. It’s been a normal power of the Government for more than 220 years now. I think inequality is a problem, that climate change and evirnmental destruction are problems, that the lack of social and economic justics, and the not so gradual subversion of our democracy by those in power are problems, but the fact that the Government has a monopoly on issuing high-powered money isn’t a problem. It is an opportunity for democracy and for the people, provided of course that we can take back democracy from the plutocrats.

      1. Jack King

        I don’t see how MMT could work in the real world. The Quantity Theory of Money would indicate that with a significant increase in the supply of fiat money that we would end up with hyper inflation. There are all kinds of shortcut plans out there to try and manipulate outcomes. But Dang…there always seems to be those dreaded unintended consequences.

        1. skippy

          @jack king,

          If I were to quantify yourself by 2 dimensional metrics, when you were actually multidimensional, how would that effect the results.

          “The problem today is that some — I think of the Austrians, but also some quantity theorists — are still thinking with this frame of reference in mind. In extreme form some claim that when the gold price rises this proves a fall in the value of money. But they are committing the same fallacy as the Bank of England in the Bullionist debates. Namely, they are discussing the value of the currency outside of the dominant framework of reference. Because the value of international currencies is no longer defined in terms of the value of gold — i.e. because by general agreement countries do not use gold as a reference point — when money devalues in relation to gold this only has bearing for those who hold gold. It has no general macroeconomic bearing on the actual value of the currency.”

          http://fixingtheeconomists.wordpress.com/2014/05/03/why-the-value-of-contemporary-money-is-not-dependent-on-the-value-of-gold/

          Additionally – http://fixingtheeconomists.wordpress.com/2014/03/03/bidding-war-the-quantity-theory-of-money-and-the-price-level/

          Skippy… compounding of error comes to mind, linear vs. multivariate.

          1. Jack King

            Actually the very same Quantity Theory of Money formula (MV = PY) destroys the use of gold for M. Because not enough gold can be produced to support real GDP (Y), the result will be deflation which is an economy killer. But the sword swings two ways if fiat money is used for M, and increased in excess of Y.

            1. skippy

              Y is massively problematic in quantifying it, in GDP, from the onset. Then V becomes problematic in short time frames tho’ generally holds true in the long run, but I digress.

              At the end of the day it comes down to Money Supply and Interest Rates: Endogenous or Exogenous?

              Milton Friedman, in particular, used the quantity theory framework to reach powerful, if erroneous, conclusions about absolutely central questions in real world economics. Among other things, Friedman explained the 1930s Depression as having resulted from irresponsible Federal Reserve management that led to a massive contraction of the U.S. money supply. Friedman also argued that inflation was “always and everywhere” due to central banks allowing the money supply to expand faster than the potential growth rate of real output.1 This was the analytic framework that led to the revival and ascendancy of monetarism and allied traditions, including the neoliberal approach to economic policy that, beginning in the 1970s and continuing to the present, has become dominant throughout the world.2 To advance a revived Keynesian theoretical approach, as well as a policy framework focused on promoting economic growth with full employment, it was necessary to develop a thoroughgoing critique of the notion of exogenous money embedded in the quantity theory.

              This is the historical context in which the early work 1Friedman (1968) is a good overview essay of his approach to monetary theory. 2Two valuable histories of neoliberalism are Harvey (2005) and Glyn (2006)

              http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_151-200/WP177.pdf

              Skippy… I would also add that monetarism and New Classical economics was – is a sociopolitical policy advocacy front for special interests, more so than one of national interests.

              1. Jack King

                “Y is massively problematic in quantifying it, in GDP, from the onset. Then V becomes problematic in short time frames tho’ generally holds true in the long run, but I digress.”

                Massively problematic? I would have to disagree. The initial GDP figures are off a bit, but are adjusted within a month or so. As far as V, it is relatively constant.

                “At the end of the day it comes down to Money Supply and Interest Rates: Endogenous or Exogenous?”

                Taking a half truth and worshiping it as reality is not going to yield efficacious results. At the “end of the day” it comes down to monetary AND fiscal policy.

                “Milton Friedman, in particular, used the quantity theory framework to reach powerful, if erroneous, conclusions about absolutely central questions in real world economics.”

                OK, Skippy…fair enough. But tell me this. Let’s go back to the old days and use gold as M. What do you believe would happen, and why?

                1. skippy

                  What makes you think I would have anything to do with gold, bimetalism or 100% reserve. Did you even read the links or just scan the para header, it does stipulate JG. IMO try page 14 on the peri umass link.

                  The bit about Friedman ties neoliberalism to him e.g. a key architect to our economic and political problems. So no cheering there.

                  Per V – unless its assumed fixed its useless, “inflation — or changes in the general price level — are not explained by the monocausal and mathematical quantity theory.

                  In an endogenous money world, although monetary factors play a role, changes in individual prices that cause inflation/deflation can also be driven by independent non-monetary causes, such as supply side factors, costs, wages, demand factors, without being driven by imagined exogenous money supply changes.

                  Hyper inflationistas still don’t grok trade shocks, cogitative pathology so thick its damn near impenetrable.

                  Skippy… worst part is you state “I don’t see how MMT could work in the real world”. Guess what, it is operational reality right now [BOE came right out and made a public statement], and not advocacy for future policy. I recommend you up grade you reading base.

                  1. Jack King

                    What makes you think I would have anything to do with gold, bimetalism or 100% reserve.

                    Absolutely nothing, Skippy. I was simply have you go through this excercise to see if I could gage your thinking.
                    Let me try again:

                    Let’s go back to the old days and use gold as M. What do you believe would happen, and why?

                    Did you even read the links or just scan the para header

                    Nope…didn’t read it. Massive links are the lazy way of attempting to make a point. They also are an attempt to bring the discussion to an end. Why not make a brief summary of the point in the link…in your own words…and we can further the dialog.

                    The bit about Friedman ties neoliberalism to him e.g. a key architect to our economic and political problems. So no cheering there.

                    Friedman had some good ideas, so didn’t Keynes, and so didn’t Robert Mundell. Instead of claiming all or nothing, why not mesh the best of all of them. If demand is slackening, run some deficits. But what about supply? Keep businesses hiring with a friendly business policy. On the monetary side, expand the money supply to match the demand for it.

                    Per V – unless its assumed fixed its useless, “inflation — or changes in the general price level — are not explained by the monocausal and mathematical quantity theory.

                    V does generally reflect stasis. But over time it will fluctuate, just as all the variables in the equation do. If we head into a recession, V will slow, just as Y on the other side of the equation slows.

                    Now how about giving your answer to the question above.

                    1. skippy

                      Oh you don’t like papers that concisely unpack arguments or buttress OP, but, prefer fencing, OK.

                      In that case, gold – just another asset class in a sea of asset classes, completely subject to the psychology those that fetish it w/ a dash of gaming thrown it. As far as concepts in a vacuum i.e. GLD as M goes its equivalent to the second coming.

                      Friedman was a criminal at worst, followed by pervasive low ethical standards, something about fruit not falling far from the tree with his off spring imo, AnCap sorts. Its curious when juxtaposed and extenuated with Carl Menger’s mob, he was seen as a progressive in his early days, tho his protegee reverted to mean barely into 2nd gen.

                      If you can’t understand the information provided on the issues with V already supplied, I don’t see the point in going further with that topic. V as a stand alone observation can inform but, when incorporated into the algebraist quantity formula, used to quantify economic activity, its more a case of conditioning than informing.

                      Skippy…. quire, PDK is that you?

                    2. Jack King

                      Skip…you didn’t answer the question…So, .I will do it for you. If you had gold for M, since the supply of it increases so stubbornly, you would have only an M increase of say 1%. Let’s assume V goes up 0.5%. But Y jumps 5%. In the equation MV=PY, P must drop drastically to balance. In short, we have deflation. The result, ultimately is a recession. This is not just theory. We have empirically seen this demonstrated over and over again as for a good chunk of the 20th century we gradually eliminated the gold standard.

                      The reverse of this is going from gold to a fiat money supply and using the Firestone approach to churn up the money supply. the result now according to the equation which has been empirically proven accurate is hyper inflation. We need to walk…..no run away from such a policy.

                    3. skippy

                      Look the equation is gibberish even if you cheery pick data and call it empiric. Please provide the so called empirical evidence, you word is insufficient.

                      Per your hyper inflation meme, what on earth are you talking about. 24Trillion in assorted hijinks has barely staved off deflation [unless one considers equity stuffing for remuneration gaming] . Then you completely leave out the shadow sector in your computation, which is orders of magnitude larger than the open market.

                      Milton got his ass handed to him when he tried his hand in the game, only off by about 6K percent imo. Yet at the end of the day neoliberalism was as an ideological cover for capital accumulation by multinational corporations.

                      Skippy…. money cranks are blinded by their own pathological tendency’s or worse payed hacks.

                    4. Jack King

                      Please provide the so called empirical evidence, you word is insufficient.

                      You can do the research….gold has a long history. It is well known that the FEDs inability to expand the money supply was one of the main reasons for prolonging the depression. We won’t be put in that straightjacket again.

                      Per your hyper inflation meme, what on earth are you talking about. 24Trillion in assorted hijinks has barely staved off deflation

                      Deflation was quelled by TARP. And were are you getting $24 trillion?! Hell, the national debt is only $17 trillion. Where is that $24 trillion? Firestone said we could pay down the national debt with all the M that’s been created. Why not just pay the bills with all this created money rather than take on more debt? Why not start paying bond holders off with this magic money instead of seeing the debt continue to climb?

                      As far as why we haven’t seen inflation set in yet , it is just a matter of time. Inflation is not just a function of the money supply. There are many cost push factors like energy which are holding back the dike.

                    5. Lambert Strether

                      “You can do the research.” Just because he can doesn’t mean he should. You’re the one who should back up your statements. Don’t ask others to do your work for you.

                    6. skippy

                      @Lambert,

                      Actually I have done – the home – work. The curious thing is the commenter states they attempted to engage my thinking by remote, rather than coming out with clear and concise questions, bit of recon, avoid foot chewing.

                      Funny thing, the commenter is utilizing key libertarian pressure points in order to drive the conversation into their preferred framing. Constantly avoiding the material presented in whole format and not truncated like verses in some religious tomb. Evidence by their inability to distinguish between the neo – new [neoliberal] Keynesian, still obedient in slavish devotion to the Quality theory and the Post Keynesian views on the tautological quality’s imbued in the Quality theory and resulting incoherence. Which is further exacerbated by their reckoning that the GD was a monetary event due to elasticity, more so than another phase of anti social endemic criminality.

                      The elasticity could be reasonably argued as just an objet d’art fromage sort of biblical jubilee, to take off the hard ship from those that matter most in society. Where austerity is just another term for amortization for the under classes thingy. Yet the commenter is ginger about MMT getting to much traction in a wider audience, it could fall into the wrong hands you know…. so its convenient to disparage it by tossing out the old stalwarts of magic money, why not pay off bond holders, et al.

                      As far as the bailout figures go I used the middle of the road figure, tho the Levy Institute goes as far as 39T, per Barry Ritholtz post –

                      http://www.ritholtz.com/blog/2011/12/bailout-total-29-616-trillion-dollars/

                      Cumulative facility totals, in billions

                      Source: Federal Reserve
                      Facility Total Percent of total
                      Term Auction Facility $3,818.41 12.89%

                      Central Bank Liquidity Swaps 10,057.4(1.96) 33.96

                      Single Tranche Open Market Operation 855 2.89

                      Terms Securities Lending Facility and Term Options Program 2,005.7 6.77

                      Bear Stearns Bridge Loan 12.9 0.04

                      Maiden Lane I 28.82(12.98) 0.10

                      Primary Dealer Credit Facility 8,950.99 30.22

                      Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility 217.45 0.73

                      Commercial Paper Funding Facility 737.07 2.49

                      Term Asset-Backed Securities Loan Facility 71.09(.794) 0.24

                      Agency Mortgage-Backed Security Purchase Program 1,850.14(849.26) 6.25

                      AIG Revolving Credit Facility 140.316 0.47

                      AIG Securities Borrowing Facility 802.316 2.71

                      Maiden Lane II 19.5(9.33) 0.07

                      Maiden Lane III 24.3(18.15) 0.08

                      AIA/ ALICO 25 0.08

                      Totals $29,616.4 100.0%

                      >

                      Source:
                      BERNANKE’S OBFUSCATION CONTINUES: THE FED’S $29 TRILLION BAIL-OUT OF WALL STREET
                      L. Randall Wray

                      Skippy… personally it seems the libertarian party is morphing again, rejiggering its self for branding, sorta white washing history again.

                      PS. hows the thingy going in TX King, just watch your step when you exit the secures, its a doozie.

                      PSS. amends for the formatting…

                    7. Jack King

                      Constantly avoiding the material presented in whole format and not truncated like verses in some religious tomb.

                      Now we have the pot calling the kettle black….Exhibit A is your constantly avoiding my query to you about gold. As far as my avoiding your points, much of it is because of your writing style which is extremely esoteric and glutted with obfuscation. That coupled with acronyms which I’ve never heard of along with extensive misspellings, make it virtually impossible to follow. If it is a real discussion you want (which I doubt), I suggest you tweek your writing style.

                      As far as the bailout figures go I used the middle of the road figure, tho the Levy Institute goes as far as 39T, per Barry Ritholtz post –

                      Bingo….so it was bailout money that you were talking about?! And here I thought it was something like QE. Once again your cryptic writing style needs to be tamped down if you really wish to communicate…..Skip…you do realize that virtually all the bailout money has been paid back don’t you??? In many cases with interest.

                    8. skippy

                      AH’hhh… Jack… talk about obfuscation, you have completely abandoned your Quantity theory line of argumentation, resorted to laying down all the ***confusion*** on my part, mumble something about common acronyms that your not familiar with [yet you don’t specify] and tell me how to conduct myself if I want to have a – REAL – conversation with you.

                      Next you double down, when I proffer supporting evidence wrt your quire on relief numbers by – oh “I thought you were talking about QE” – when in actuality the number much bigger.

                      Lastly you hand wave away the entire episode with the canard that its all been payed back with profit [to the citizens[?] or bonuses]. By the way can I get some profit w/ intrest too on toxic assets TA]RP, you know, a second round on the previous profit from fraud.

                      http://www.nakedcapitalism.com/2009/08/more-bogus-bailout-reporting-as-big-banks-repay-bailout-money-us-sees-a-profit.html

                      Your shtick its as bad as D. Friedman calling QE a Keynesian stimulus, he didn’t take to well to being corrected.

                      Skippy… if science was run this way…. oh yeah… some how economics has front run that too now in the order of things in the Universe….

                    9. Jack King

                      Next you double down, when I proffer supporting evidence wrt your quire on relief numbers by – oh “I thought you were talking about QE” – when in actuality the number much bigger.

                      A “$24 trillion” loan to banks and insurance companies whose principle must be paid back is not exactly what “M” is in the equation, now is it Skippy boy. By the way, your writing skills have improved….but I still had to pause a bit with “wrt”.

                      By the way can I get some profit w/ intrest too on toxic assets TA]RP, you know, a second round on the previous profit from fraud.

                      My my Skippy….you are getting a bit off topic aren’t you? What happened to the discussion on Firestone’s MMT? But not to worry. If there is fraud I’m sure the Justice Department will quickly put all the those evil bankers in jail.

                      P.S. I wonder why Liz Warren isn’t lighting a fire under the Justice Department’s ass. Hmmmm…I wonder.

                    10. skippy

                      I’ve already made my point on M wrt [with regard to] its use in Quantity theory, monetarism was rebuked some time ago, yet some still cling to vestiges, institutionalized or Upton comes to mind.

                      The relief is attached to your hyper inflation expectations, to wit, I pointed out via the 29T inability to provide even a modicum of it.

                      Still waiting for – any – citations to buttress your claims, especial the empiric.

                      “If there is fraud I’m sure the Justice Department will quickly put all the those evil bankers in jail.

                      P.S. I wonder why Liz Warren isn’t lighting a fire under the Justice Department’s ass. Hmmmm…I wonder.” – king

                      You accuse myself of going off topic and then lay that pile of excrement.

                      skippy… reductive logic built on shifting sands and motile goal posts, prima facie libertarians are the managerial master race, Darwin surely awaits.

                    11. Jack King

                      You accuse myself of going off topic and then lay that pile of excrement.

                      Skippy boy….was it not you who stated the following?

                      By the way can I get some profit w/ intrest too on toxic assets TA]RP, you know, a second round on the previous profit from fraud.

                      As everyone can see, it was YOU who brought up fraud. Wonder why Liz Joan-Of-Arc Warren (along with the Justice Dept) is ignoring all these fat cat bankers who are supposed to be criminals. I think I got it..they must think the bankers fall into the same category as illegal aliens, and we should just let them skate. Nah…that couldn’t be it….but we do know the real reason don’t we Skippy boy.

                      The relief is attached to your hyper inflation expectations, to wit, I pointed out via the 29T inability to provide even a modicum of it.

                      Skippy boy….the $29T was fiscal policy not monetary policy. This had zero effect on M in the equation.

                      Now it is time for you to man up and answer my query which you continually evade. With all of the extra $$$ we have created, why is the debt still climbing? Firestone stated that we could pay off the debt and buy new debt with this magic money. Ipso facto, why isn’t the debt decreasing???

                    12. Ben Johannson

                      Jack, do us a favor and identify the bill passed by Congress which authorized $29 trillion in loans, as only Congress can enact fiscal measures.

                    13. Ben Johannson

                      Now it is time for you to man up and answer my query which you continually evade. With all of the extra $$$ we have created, why is the debt still climbing? Firestone stated that we could pay off the debt and buy new debt with this magic money. Ipso facto, why isn’t the debt decreasing???

                      The statute requires Treasury to issue securities in equal measure to deficits. Everyone knows that.

                    14. Jack King

                      Not sure where Skippy came up with the $29 trillion figure, but we were specifically talking about TARP. The end result was changes to company’s balance sheets. That is NOT monetary policy. I’m sure you agree, correct?

                      The statute requires Treasury to issue securities in equal measure to deficits. Everyone knows that.

                      OMG! Yes, but they also must payoff of principle when bonds come due. Ergo, if there is all this funny money around to reduce the debt, why the hell does it keep increasing (It’s now approaching $18 trilliuon)?

                    15. skippy

                      29T was a typo, 39T stands per Barry’s link.

                      No Tarp was not the only component being discussed as it was – relief – that was the topic.

                      “I don’t see how MMT could work in the real world. The Quantity Theory of Money would indicate that with a significant increase in the supply of fiat money that we would end up with hyper inflation.” – king

                      The whole thing started with your assertion that Quantity theory of money would translate to hyperinflation as an increase in [M {0/1?}]

                      http://www.tradingeconomics.com/united-states/money-supply-m1

                      vs.

                      http://www.usinflationcalculator.com/inflation/historical-inflation-rates/

                      Bar a trade shock, good luck with the hyper inflation.

                      But yeah, watch the relationship between the end of QE and T-bills to corporate debt and interest rates.

                      Skippy… first you cry hyper inflation and then weep about debt w/ flailing arms about a bunch of other stuff.

                      ps. Yes there is a long line of criminals, we might even need to exhume some.

                    16. Jack King

                      I am amazed that you would think that TARP, et al will affect the supply of money. Initially you came across like you knew something. But it would appear that you are an empty suit.

                      The whole thing started with your assertion that Quantity theory of money would translate to hyperinflation as an increase in

                      And I still do. Right now there are other headwinds keeping prices down…a screwed up fiscal policy which is holding the economy back, and increased supply of oil are the two biggest factors. It a dance between fiscal and monetary policy. Don’t put all your forecasting chips in one area.

                      So Skippy boy…why is the national debt still increasing with the massive increase in funny money? Actually why am I bothering. It’s obvious you are way over your head.

                    17. skippy

                      Never said tarp would affect M, the term used was originally hijinks which then was rephrased to relief. To make it clear I am talking generally about all alphabet programs ZIRP et al.

                      Next was the the inchoate nature of the Quantity theory, right from its metaphysical roots. Yet all you could do was engage in repetitive dialog whilst attempting to use the same theory in predicting an out come.

                      Next you confuse MMT with a future operational system and then try to lay some sort of blame on it for economic problems???

                      Fiscal is problematic due to ideological capture, I think its called neoclassical synergism which originally started out as AET, yet at the end of the day is all just a corporatist political agenda. Seems it blew up in their face and are in bad need of scape goats i.e. government, MMT, democracy, Keynesian, ev’bal in the world.

                      National debt is a accounting function, tho at this time it seems the upper quintile need some elasticity, other wise the trickle down sparkle pony dies.

                      Skippy… ideological over shoot is a bitch… eh… reminds me of the roll out of ACA… funny how looting enterprises never function according to the prospectus… live the dream Jack…

                    18. Jack King

                      Never said tarp would affect M

                      Then why did you launch into a long list of banks and the specific amount they received. Then pointed out:

                      The whole thing started with your assertion that Quantity theory of money would translate to hyperinflation as an increase in [M {0/1?}]

                      then queried:

                      Bar a trade shock, good luck with the hyper inflation.

                      Looks like you are trying vainly to backpeddle Skiperino.

                      Fiscal is problematic due to ideological capture, I think its called neoclassical synergism which originally started out as AET, yet at the end of the day is all just a corporatist political agenda. Seems it blew up in their face and are in bad need of scape goats

                      Well this sounds mildly interesting. I assume you are talking about the housing bubble. Specifically what fiscal policies are you referring to that brought the economy down?

                    19. skippy

                      No back peddling need due to your interpretation issues, more like projection to establish your preferred framing.

                      No the housing is just an event that made a much bigger problem visible and more open to discussion. The actual problems are manifold wrt housing, Yves has noted on this.

                      Skippy… fiscal policy did not bring down the economy, ideology did, unenlightened self interest is this blogs nomenclature.

                    20. Jack King

                      No the housing is just an event that made a much bigger problem visible and more open to discussion. The actual problems are manifold wrt housing, Yves has noted on this.

                      The genesis of the problem was in housing. Bush actually saw this coming as far back as 2003 when he sent his treasury secretary John Snow to Congress asking that a new agency be funded to oversea GSEs (Like Freddy and Fanny). Congress did a thumbs down. Then in 2005 Greenspan went to Congress and said basically the same thing and that the problems with Freddy and Fanny were “systemic” and they needed to be reigned in. It was then that Barney Frank got up and made his famous “Chicken Little” speech, and any proposed reforms were killed. At that point our fate was sealed. For your entertainment I present the following:

                      http://www.youtube.com/watch?v=iW5qKYfqALE

  16. Ysaac

    Why dont you guys write to Warren then, explaining how the monetary system actually works? There’s a similar debate in england that is going to take place soon in the parliament.

  17. Paul

    Correct me if I am wrong but I don’t believe that there is any politician or progressive media personality that remotely acknowledges even the most basic MMT concepts. Why should Warren be any different? The political realities render the impact of MMT moot – To say that the federal government is not a household is too radical to be voiced.

    1. Joe Firestone

      So, let’s see if I understand, since everyone else in the Congress adheres to the Peter G. Peterson view of money, then Warren should do that too, and not be expected to recognize something different? Well, I’m sorry. She’s supposed to be different and better than the others. So, I expect her to pay attention to public finance issues and to at least be aware of the MMT view. Has she, after all, never heard of Jamie Galbraith

Comments are closed.