Who's to blame for the slow recovery?

[JohnfrmClevelan]

I've been through quite a few rounds with MMTers on details such as the exact process that is used by our banking system to expand our money supply. Either MMT is incorrect on the details, or many MMTers have a misunderstanding of the meaning of the MMT description of this process.

Or, option 3, the misunderstanding is yours.

The oversimplifications come from the fractional reserve people. The just-plain-wrong stuff comes from the financial intermediation people. You cannot get to where we are without the credit creation model.

 

[JohnfrmClevelan]

Stockpiling the money that is to be spent during recessions.

ImageP is right - the govenment cannot "stockpile" its own currency, not in any real sense of the word.

 

[imagep]

The concept of the federal government stockpiling dollars is similar to the concept that "congress has spent all of our SS money".

When I explain to people that the SS administration purchases interest bearing treasury bonds with it's excess money, they usually say "yea - IOUs that congress can't afford to repay". When they say that, I ask them how it would be better, if the SS just built huge vaults and filled them full of cash which doesn't earn any interest. If they say "yes", then I ask them what would happen if the vault caught on fire or was robbed, and they usually tell me that the money could just be replaced with new money. So I then suggest that maybe instead of filling vaults full of cash, why not an electronic voucher from the treasury or federal reserve for the money, and they are often agreeable to that. then I explain that the bonds that the treasury purchases are better than a voucher because the bonds are purchased at a discount and then redeemed at full face value.

Then I ask them if they have any type of a retirement or investment account, and most of the time they do. I ask them if they have their money in one dollar bills, five dollar bills or do they have it in tens or twenties. When they look at me cross eyed, I say seriously, have you ever actually asked to see the money in your retirement account? then they explain that their account is invested in stocks and bonds, and I say "so you mean your money has been replaced by IOU's".

Right about then they say something about congress spending all the SS money again, or that the bonds can't be repaid, and I just bang my head against the wall.

 

[Ganesh]

It's funny how so many people readily accept only half of the Keynes model... they differ on which half they believe...but it is always only half.

There's limited humour there if you ask me. For full strength chuckle power, you'll have to Google some of the more prominent GOP pronouncements on the subject.

 

[Moderate Right]

I really don't think that MMT'rs define full employment any differently.

I'm only marginally a MMTer (there are some things about MMT that I think are just outright incorrect, but for the most part I believe that the general principles are solid), but I would define full employment as the U3 being 4% or less. We are currently near full employment now.

MMTers just think that that pot of gold is when the policy of the government is that unemployment is kept as low as is practically possible for it to be, regardless of how you define it. There is obviously always going to be some unemployment due to the fact that it takes some days or weeks to match job skills to jobs, go through the interview process, take care of paperwork, etc.

Getting back to the reason that I said I am only marginally a MMT'er, a lot of what I don't agree with MMT on is the wording and descriptions and explainations and oversimplifications that they use. It can be very misleading, and some of it borders the absurd. When MMTers say that we should have a "full employment policy", maybe that's not the best phrase to use. Maybe they should say something like "minimal unemployment" or that "we should minimize the unemployed time of each individual who desires to work" or something like that. I suspect that your issue with the way they define full employment is that they make it sound like it is "absolute", as if there should never be a person unemployed for even a day - and of course that's simply not possible or practical.

I've been through quite a few rounds with MMTers on details such as the exact process that is used by our banking system to expand our money supply. Either MMT is incorrect on the details, or many MMTers have a misunderstanding of the meaning of the MMT description of this process.

They often talk like they want to keep on deficit spending until "everyone who wants a job has one", which is the basics of the MMT job guarantee.

 

[JohnfrmClevelan]

They often talk like they want to keep on deficit spending until "everyone who wants a job has one", which is the basics of the MMT job guarantee.

Is there something wrong with that?

 

[imagep]

Or, option 3, the misunderstanding is yours.

Well yea, that would be the obvious third option.

Except that I'm not wrong. HA!!!!

 

[Moderate Right]

Is there something wrong with that?

It is a 0% unemployment rate, which is impossible. Hence, chasing the pot of gold at the end of the rainbow, continually deficit spending into oblivion.

 

[imagep]

They often talk like they want to keep on deficit spending until "everyone who wants a job has one", which is the basics of the MMT job guarantee.

Exactly. I mean not every single individual would instantly be employed, it would take a few days or weeks to find suitable employment for everyone, but what we are really discussing is ending massive scale long term unemployment (the type of unemployment that we had during the 1930's, the early '80's, and at the peak ever every recession, and during the 2007-2009 recession.

The way we (as a society) created wealth is we work. Someone drawing unemployment, or sitting at home eating twinkies while watching soap operas, isn't producing any wealth. The "full employment policy" concept is to move those people from unemployment and welfare to productive work where they will create wealth.

I really don't understand why any conservative would oppose moving people from means tested benefits to earned income. Or why conservatives would oppose those people moving from their couch to a productive job.

Which part is it that you personally object to? People working for a paycheck, or is it just the deficit spending part?

 

[JohnfrmClevelan]

It is a 0% unemployment rate, which is impossible. Hence, chasing the pot of gold at the end of the rainbow, continually deficit spending into oblivion.

It's a job guarantee. If someone doesn't want the guaranteed job, the government doesn't pay them. How is that limitless?

This is the problem with you (and Jaeger) criticizing MMT - you guys don't understand it well enough to criticize it. You are (both) criticizing your own misinterpretations.

 

[imagep]

It is a 0% unemployment rate, which is impossible. Hence, chasing the pot of gold at the end of the rainbow, continually deficit spending into oblivion.

You are the one making the claim that we are saying 0%. I can't recall any MMTer saying that 0% would be possible, only that getting as close to possible to 0% would be the ideal goal. I dunno how close we could get to that, we were at 1% unemployment at one point during WW2, and 3% is normal in Japan, so I'm pretty sure that we could get well below 4%.

Imagine how much potential wealth we lost during 2008 and 2009 due to the 10% unemployment. Millions of people sitting at home drawing unemployment, who could have been doing something productive.

 

[imagep]

...You are (both) criticizing your own misinterpretations.

That right there. And nicely said!

 

[Ganesh]

It is a 0% unemployment rate, which is impossible. Hence, chasing the pot of gold at the end of the rainbow, continually deficit spending into oblivion.

The right wing seems to forget that this notion of spending whatever is necessary, no matter how much, to get the economy rolling, and creating employment, has already been tried, and has worked beyond the expectations of nearly all involved.

A crisis occurred at a vulnerable time for the economy, but a decision was made to spend- spend more than ever before in history. All that wanted employment were given it, even some that did not, vast amounts of workers were inducted into government service and put on the public payroll, and the economy was reshaped to met the new challenges, cost be damned.

As the crisis subsided, it was found that debt was no problem. Spending had increased the size of the economy, and educational and other programs had put money into the hands of workers, creating demand for new products. Taxes were high, but mostly on the most able to pay, hence funds that may have been left idle were put to work, while the middle class could still afford to spend. Because there were no asset bubbles fed by huge amounts of unused capital floating around, housing was still affordable.

In short, it worked. The crisis of course was Pearl Harbor.

 

[imagep]

The right wing seems to forget that this notion of spending whatever is necessary, no matter how much, to get the economy rolling, and creating employment, has already been tried, and has worked beyond the expectations of nearly all involved.

A crisis occurred at a vulnerable time for the economy, but a decision was made to spend- spend more than ever before in history. All that wanted employment were given it, even some that did not, vast amounts of workers were inducted into government service and put on the public payroll, and the economy was reshaped to met the new challenges, cost be damned.

As the crisis subsided, it was found that debt was no problem. Spending had increased the size of the economy, and educational and other programs had put money into the hands of workers, creating demand for new products. Taxes were high, but mostly on the most able to pay, hence funds that may have been left idle were put to work, while the middle class could still afford to spend. Because there were no asset bubbles fed by huge amounts of unused capital floating around, housing was still affordable.

In short, it worked. The crisis of course was Pearl Harbor.

That was nicely worded also. Yea, good stuff.

 

[Moderate Right]

Exactly. I mean not every single individual would instantly be employed, it would take a few days or weeks to find suitable employment for everyone, but what we are really discussing is ending massive scale long term unemployment (the type of unemployment that we had during the 1930's, the early '80's, and at the peak ever every recession, and during the 2007-2009 recession.

The way we (as a society) created wealth is we work. Someone drawing unemployment, or sitting at home eating twinkies while watching soap operas, isn't producing any wealth. The "full employment policy" concept is to move those people from unemployment and welfare to productive work where they will create wealth.

I really don't understand why any conservative would oppose moving people from means tested benefits to earned income. Or why conservatives would oppose those people moving from their couch to a productive job.

Which part is it that you personally object to? People working for a paycheck, or is it just the deficit spending part?

So now you are bactracking on the detinition of full employment?

 

[Moderate Right]

It's a job guarantee. If someone doesn't want the guaranteed job, the government doesn't pay them. How is that limitless?

This is the problem with you (and Jaeger) criticizing MMT - you guys don't understand it well enough to criticize it. You are (both) criticizing your own misinterpretations.

It's a 0% unemployment rate and it is impossible, hence the chasing a pot of gold at the end of the rainbow comparison and nothing but an insane justification for limitless deficit spending. Have you now gone conservative on me, guaranteeing everyone a job but if they don't take it then screw them? We have that now with lazy ass people that don't really want to work but instead be on the dole of social programs. There are jobs out there now and they don't want them but we still let them collect money for not working anyway. People that simply don't want to work are not counted in unemployment rates.

 

[Moderate Right]

You are the one making the claim that we are saying 0%. I can't recall any MMTer saying that 0% would be possible, only that getting as close to possible to 0% would be the ideal goal. I dunno how close we could get to that, we were at 1% unemployment at one point during WW2, and 3% is normal in Japan, so I'm pretty sure that we could get well below 4%.

Imagine how much potential wealth we lost during 2008 and 2009 due to the 10% unemployment. Millions of people sitting at home drawing unemployment, who could have been doing something productive.

You are all over the place. A few posts ago you were willing to accept the standard definition of full employment. Now you are talking about 2%, 1%, and even the MMT'rs 0%. What is the unemployment rate when you have a job guarantee and everyone who wants a job can have a job? Who cares if it takes a few weeks or a couple of months to achieve? If everyone who wants a job can have a job then that is a zero percent unemployment rate and that is virtually impossible and nothing but a justification for limitless deficit spending.

 

[JohnfrmClevelan]

It's a 0% unemployment rate and it is impossible, hence the chasing a pot of gold at the end of the rainbow comparison and nothing but an insane justification for limitless deficit spending.

How is it limitless? The govt. pays anyone who wants to work, and they don't pay anyone who doesn't. This isn't the govt. increasing demand until the private sector hires everybody, it's the govt. hiring people directly.

Have you now gone conservative on me, guaranteeing everyone a job but if they don't take it then screw them?

Conservative? God, no. If I were conservative, I'd push for tax cuts for the rich, then blame the poor when those tax cuts didn't increase employment.

We have that now with lazy ass people that don't really want to work but instead be on the dole of social programs. There are jobs out there now and they don't want them but we still let them collect money for not working anyway. People that simply don't want to work are not counted in unemployment rates.

Yeah, it's always the poor's fault for being poor, isn't it? Tell me, is it your fault if you don't earn $1 million/year? I mean, there is plenty of money out there... I'm sure if you just tried hard enough, you could make $1 million/year. Or are ya' too LAZY?

 

[Moderate Right]

The right wing seems to forget that this notion of spending whatever is necessary, no matter how much, to get the economy rolling, and creating employment, has already been tried, and has worked beyond the expectations of nearly all involved.

A crisis occurred at a vulnerable time for the economy, but a decision was made to spend- spend more than ever before in history. All that wanted employment were given it, even some that did not, vast amounts of workers were inducted into government service and put on the public payroll, and the economy was reshaped to met the new challenges, cost be damned.

As the crisis subsided, it was found that debt was no problem. Spending had increased the size of the economy, and educational and other programs had put money into the hands of workers, creating demand for new products. Taxes were high, but mostly on the most able to pay, hence funds that may have been left idle were put to work, while the middle class could still afford to spend. Because there were no asset bubbles fed by huge amounts of unused capital floating around, housing was still affordable.

In short, it worked. The crisis of course was Pearl Harbor.

So what happened after that? Time for more story telling, and I mean more story telling. I suppose that everything after Pearl Harbor was Ronald Reagan's and GW Bush's fault? Nothing better than a good bedtime story. Please finish. I'm dying to here how it all worked out.

 

[joG]

Yep. And you will simply continue to wander around in the dark.



If you had a basic understanding of macroeconomics, you'd find it matter-of-fact.



Any examples?

>>all repubocrats secretely want the same thing

They sure do a good job of keeping it a secret. Do Democrats secretly support Frumpy's SSE tax plan? Do Republicans want substantial public investments in clean energy?

>>Six months to a year ago, republicans were "testing" using income disparity as a weapon against a democrat controlled White House.

They're still doing that. At the same time, they condemn the Left for its "class warfare rhetoric."

>>But if a democrat was to mention income disparity, every republican would have jumped on them claiming that income disparity doesn't matter and that it's the fault of the individual, and that they are being jealous, bla bla bla.

Yeah, blatant hypocrisy. What else is new? And they confuse jealousy with envy. They're idiots and liars. That's what makes them … Right.



Monetary policy was somewhat accommodative at times during the period. The funds rate dipped a bit in the second half of 1998 but began tightening after that, and the money supply grew at a moderately faster pace Q1 2001 … but that's when the recession, if there really was one, started. I can't see what yer referring to.



As always, only in yer confused imagination.



Which half does the Left reject?

The thing is that you cannot take one o to data rows to determine the effects of a policy mix. This seems to be the way things are done, because media and specialists will tend to concentrate on one or two indicators that appear to them driving factors at that moment. Watching the talking heads over a longer period reveals shifts in the factors they talk about and so that it may be rates or margin lending today but the price of oil or the public debt tomorrow that is pertinent to explain the situation in the economy to their public. That the government and fed and BTW the more responsible talking heads should all have many more data rows and interactions in view is natural though not obvious. It should be the whole matrix that goes into fiscal and monetary policy in all their aspects.

So, while it is possible that one or two markets look uneventful and not consequential to the bubble, this can easily be incorrect in the sense that they were combined with for instance a strong economy roaring back from the switch away from the Cold War economy to peace as was the case during the Greenspan/Clinton bubble. Relative to the previous stretch it might appear that a reduced deficit or even small debt reduction and a linear increase in money was okay. But looking at the results forces the issue. The economy was booming and there were imbalances building on the boom. And, in fact, the central banks discussed the danger of a bubble for which they liked to use the euphemism of asset inflation.

 

[Moderate Right]

How is it limitless? The govt. pays anyone who wants to work, and they don't pay anyone who doesn't. This isn't the govt. increasing demand until the private sector hires everybody, it's the govt. hiring people directly.



Conservative? God, no. If I were conservative, I'd push for tax cuts for the rich, then blame the poor when those tax cuts didn't increase employment.



Yeah, it's always the poor's fault for being poor, isn't it? Tell me, is it your fault if you don't earn $1 million/year? I mean, there is plenty of money out there... I'm sure if you just tried hard enough, you could make $1 million/year. Or are ya' too LAZY?

You are the one who said offer everyone a job with a job guarantee and if they don't take it then they don't get a check. In other words, screw em! Just as Conservative has been calling Jaeger a liberal, I can now call you a heartless right winger who could care less about the poor's plight, not of their own making. Or are you saying you would give them a social program check anyway, even if they refuse your guaranteed job?

 

[Moderate Right]

The thing is that you cannot take one o to data rows to determine the effects of a policy mix. This seems to be the way things are done, because media and specialists will tend to concentrate on one or two indicators that appear to them driving factors at that moment. Watching the talking heads over a longer period reveals shifts in the factors they talk about and so that it may be rates or margin lending today but the price of oil or the public debt tomorrow that is pertinent to explain the situation in the economy to their public. That the government and fed and BTW the more responsible talking heads should all have many more data rows and interactions in view is natural though not obvious. It should be the whole matrix that goes into fiscal and monetary policy in all their aspects.

So, while it is possible that one or two markets look uneventful and not consequential to the bubble, this can easily be incorrect in the sense that they were combined with for instance a strong economy roaring back from the switch away from the Cold War economy to peace as was the case during the Greenspan/Clinton bubble. Relative to the previous stretch it might appear that a reduced deficit or even small debt reduction and a linear increase in money was okay. But looking at the results forces the issue. The economy was booming and there were imbalances building on the boom. And, in fact, the central banks discussed the danger of a bubble for which they liked to use the euphemism of asset inflation.

AKA, cherry picking.

 

[jmotivator]

And they are correct about that.

Most people forget that our government creates our money. Most money is electronic, and electronic money doesn't really differ in spendability than physical money does. If the government stockpiled money, exactly how would that be done? Somehow I can't see the point in taking mason jars full of electricity and putting them in a vault. Our government can instantly create all the money it needs for economic emergencies and for economic expansion any time it wants to and it can do it instantly. No point in stockpiling it.

And if stockpiling money means taking money from our current money supply, exactly who is it that we want to have less money? The rich? The poor? Corporations? Stores? The consumer? Maybe the government should take that money away from Wall Street.

One thing that MMTers understand very well, but most people don't quite "get" is that reductions in the federal debt means reducing private sector surpluses. I don't really know why we would want to take away from the private sector.

The MMT argument is currently being fought on a hundred different battlefields on DP so I will simply use your reply as verification of my point.

 

[jmotivator]

How is it limitless? The govt. pays anyone who wants to work, and they don't pay anyone who doesn't. This isn't the govt. increasing demand until the private sector hires everybody, it's the govt. hiring people directly.

I think you need to clarify that claim.

 

[Moderate Right]

How is it limitless? The govt. pays anyone who wants to work, and they don't pay anyone who doesn't. This isn't the govt. increasing demand until the private sector hires everybody, it's the govt. hiring people directly.



Conservative? God, no. If I were conservative, I'd push for tax cuts for the rich, then blame the poor when those tax cuts didn't increase employment.



Yeah, it's always the poor's fault for being poor, isn't it? Tell me, is it your fault if you don't earn $1 million/year? I mean, there is plenty of money out there... I'm sure if you just tried hard enough, you could make $1 million/year. Or are ya' too LAZY?

But liberal's seem to believe that ALL of the poor are not lazy ass bums when a lot of them actually are. I'm saying that if someone has no incentive to get out of their holes when they can, then the hell with them. I'm NOT saying that it is always the poor's fault but, it is their fault if they have opportunities but refuse them in lieu of staying on the government tit instead. By the way, how is deficit spending for a job guarantee much different than deficit spending for social programs? Are you saying that you and MMT want to replace social programs with a job guarantee instead, except for the truly disabled (not defined as all those collecting disability)? I might listen to you more if that is what you are proposing, taking dollars away from social programs and transferring them dollar for dollar to a job guarantee program, with the bottom line of not increasing the deficit due to this change.