In early February, Alabama Republican Spencer Bachus called for a meeting between two of the most quietly influential interest groups in the nation's capital: credit unions and community banks.
Bachus, chairman of the powerful House Financial Services Committee, was looking to ensure the passage of a slew of federal favors benefiting both sides. All the lobbyists had to do was show up at a meeting and figure out how to work together.
It was too much to ask.
The Credit Union National Association and the Independent Community Bankers Association immediately agreed to the sit-down, but as the meeting approached the community bankers abruptly cancelled the event, according to lobbyists and congressional staffers familiar with the plans.Read it at The Huffington Post
'We'll Fight This To The Death': The Vicious Capitol Hill Battle Between Banks and Credit Unions
by Ryan Grim and Zach Carter
7 comments:
I'm curious, why doesn't MMT argue for the complete removal of Government Debt, or atleast interest bearing Government Debt?
Shouldn't this also be one of the MMT cornerstones?
Shaun,
You can find an extended discussion of that topic here from the MMT fiscal sustainability teach-in in 2010. Scroll down a ways to the Session 2 Q&A portion.
In addition to recapping the MMT descriptions of how government debt works, Bill Mitchell talks about what happened in Australia when they got close to eliminating the debt (the markets freaked out).
While they mostly stop at establishing the case for the obsolescence of government debt without arguing for its complete removal, at the end Stephanie Kelton outlines what could certainly be the cornerstone of such an argument:
one of the things that you hear a lot about now is the growing size of the national debt and the growing interest burden, and we really need to make that a distributional topic, because it goes directly to this argument that we’re passing this on to the next generation and the generation after that, becomes a generational argument, which it absolutely is not, okay? All of the interest payments will be made by the people who are alive at the time the interest payments come due, and what we’re talking about is a shift of income from those paying taxes to those receiving payments because they’re bondholders. And so the bigger the share of the interest, relative to the size of the economy, the bigger the command of the goods and services the bondholders can wield against the rest of us. And so that becomes a discussion that we definitely would want to have.
Basically, since issuance of interest bearing govt securities is operationally unnecessary under a non-convertible floating rate monetary system, then the interest payments constitute a subsidy, which is a payment to special interests and privileged parties if it cannot be justified as a public good or somehow integral to public purpose, then the practice should be eliminated. Payment of IOR or setting the overnight rate to zero obviates the need for tsys. What's the public purpose then?
In addition to recapping the MMT descriptions of how government debt works, Bill Mitchell talks about what happened in Australia when they got close to eliminating the debt (the markets freaked out).
Thanks for the links. Yea I think I watched that part by Bill before.
Why doesn't MMT simply say fuk the bond markets? The bond markets contribute absolutely nothing to society are the very definition of parasitic. Meanwhile we are being told stories of how the unemployed are too lazy or unskilled, people need to 'earn' healthcare. What a joke!
Someone within MMT needs to take this position, otherwise MMT is hindering people from learning the truth!
Any MMTer knows that the removal of bond market is a logical end-point of MMT thought. If MMT is going to place so much energy into promoting the Job Guarantee, then atleast the same amount of energy should be spent on promoting complete bond removal. A bit more consistency please!
I also believe that it is a simpler message to promote -- Why do we need Government Debt? -- Rather than trying to explain what solvency is, how bonds are issued, Government debt is different to household debt, etc.
KISS
There are a lot of suits that would fight that one tooth and nail. We have started paying IOR though.
The point is to break the erroneous view that govt debt finances govt spending and so it has to be be paid down later with tax revenue.
A first step could be to go to paying IOR, ending the politically imposed deficit offset, and supplying quantity of tsys demanded at the price the govt sets.
Then we could have a rational discussion over what public purpose justifies the interest subsidy. If none, then go to setting the overnight rate to zero and issuing 3 mo T-bills max (with E-bonds for the public as now).
Has anyone seen any data on how much of the interest just gets plowed back in to bonds?
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