An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
Holy cats, Trixie. That Yglesias gets worse every day. I just posted this on the site:
Matt, for a guy who nearly has seizures every day over the failure of the Fed to engineer looser money, your conviction that the government needs to tax the middle class more so that it can do things is perplexing.
Any day it cares to do so, the US Congress could pass a law authorizing, say, an additional trillion dollars in highly productive and stimulative public investment and job creation, and it could fund the spending by directing the Fed to credit $1 trillion dollars directly to Treasury's account. No new taxes, no new borrowing - just direct money creation of the same sort the Fed accomplishes every day when it buys financial securities from the financial sector, or pays interest on reserves. But using the Treasury channel would allow us to inject the money directly into the real economy, and circumvent a lot of wealthy rent-seeking middle men in the financial sector.
There you go: the monetary loosening you say you want, and maybe even a little inflation. And unlike the tactic of attempting to accomplish economic stimulus by yet more Fed asset purchases from the financial sector, or by having Ben Bernanke bellow, "Let there be 4% inflation" from a mountaintop, this approach would actually work.
The approach of having the US Congress issue directives to the selfsame central bank which Congress itself created as an instrument of its own constitutionally provided monetary authority probably violates some profound shibboleth about central bank independence that you absorbed in Mankiw's classes, or when you were working on Romney's gubernatorial campaign. But maybe some of your readers won't have the same compunctions.
Who IS he? I see his name come across my screen on a regular basis. Don't follow him but thought he was one of the good guys. The only conclusion I can draw is that he is Leeroy Jenkins:
Is there any coordinated effort by modern money people to reach out to any specific people 'in power' or with megaphones? For a while it seemed like John Carney was opening up. The kerfuffle with Krugman got some attention too.
Maybe MMT needs to pick out 1 or 2 potential 2016 presidential candidates, from both parties, that seems high on practicality… and start collectively hammering away at them over the next few years? Somehow bombarding them with pressure and knowledge.
I like Elizabeth Warren. She seems not beholden to special interests and she connects well with people. I think she could easily become our first female president if she committed to the idea.
Anyways. I am curious about strategic efforts. Are there any?
Trixie, Matt Yglesias is one of the most prominent, prolific and long-established bloggers in the blogosphere. He has been blogging since the early 2000's - I think even when he was still a student at Harvard and blogging was a totally new thing. His blog has moved several times. It started out as a completely independent personal blog. It was then part of the TPM (Josh Marshall) universe, but then moved into the Atlantic's stable. Then it went to Think Progress, which is the blogging arm of the Center for American Progress, and now he writes for "Moneybox" at Slate. He has always been regarded as part of the leftish side of the blogosphere, taking generally mainstream, center-left positions.
However, he apparently started out as a somewhat more conservative young man, and worked for Romney's gubernatorial campaign when he was at Harvard. He also has a libertarian streak, and generally tends to take a pro-free market, anti-labor point of view. He also has a long-running opposition to a lot of intellectual property law. He believe more people should move to cities, and that governments should remove a lot of regulations that make it difficult to build high-density urban housing.
He has written two books.
He has lived in DC for several years now, and is very interested in local DC issues. He and Ezra Klein are often mentioned in the same breath as two bright rising stars in the younger generation of the punditry.
He appears to be well-connected with administration sources, and he was one of the bloggers involved in the mini-scandal that erupted over Journo-list:
Matt Yglesias comes from a well to do Cuban American background, having attended a NYC prep school - "Dalton School" that costs $37,000 plus to attend - before attending Harvard. THe snobbishness and upper class "do gooder" attitude comes through in his writing. But that background reflects in his left of center conservative attitude.
From the same sort of upper class background that Obama comes from -- Upper Class - with ethnic pretensions.
JK, I should add, it's always left to the party being approached to go public first. That's just understood and if one violates that rule, one is unlikely to get future access.
"Congress could pass a law authorizing, say, an additional trillion dollars in highly productive and stimulative public investment and job creation, and it could fund the spending by directing the Fed to credit $1 trillion dollars directly to Treasury's account"
You missed a step. Authorization just means giving legal authority for Tsy to spend money on something. However, there must also be a subsequent Appropriation specifying the amount (either a sum certain or a spending formula).
I can't imagine any circumstance where Congress would just order the Fed to credit Tsy's account. It'd be stuffing a $1 trillion into an accounting blackhole. Does it count as a loan (if so, subject to debt limit or not?) or a miscellenous receipt (if so, would it reduce the deficit or remain off-budget?)? Naturally, I think they would do better to direct the US Mint to deposit $1 triilion in coinage but, in truth, that's a superfluous step. Both in the sense the Mint can already do that but also because if Congress is on the act, it'd be easier to simply strike the limitation on US Notes so Tsy could deposit its own money to spend.
"probably violates some profound shibboleth about central bank independence that you absorbed in Mankiw's classes..."
Matt's mentioned before he's never taken a single Econ class. I'd scoff but neither have I. :o)
I can't imagine any circumstance where Congress would just order the Fed to credit Tsy's account. It'd be stuffing a $1 trillion into an accounting blackhole. Does it count as a loan (if so, subject to debt limit or not?) or a miscellenous receipt (if so, would it reduce the deficit or remain off-budget?)?
Why is it an accounting black hole, Beo? Congress would just have to learn some of the same accounting practices the Fed uses. It's clearly not a loan, so the debt ceiling doesn't come into play. How did Congress do the accounting when it authorized the issuance of greenbacks under the legal tender acts during the Civil War? It's no different except that currently Congress has assigned most of its monetary authority to the Fed rather than the Treasury.
If Congress needs some intelligible way of handling the accounting, how about directing the Fed to pay interest on Treasury TT&L account balances, at a rate and schedule determined by Congress? It has already authorized the payment of such interest on bank reserve account balances - so the accounting is not mysterious. In this case they would just be removing discretion from the Fed, and making the payments mandatory.
This might even be politically palatable, since the public shouldn't be befuddled by the idea that the public treasury should be able to earn interest on its accounts with the Fed, just like commercial banks do.
Beowulf: "Matt's mentioned before he's never taken a single Econ class. I'd scoff but neither have I. :o)"
We've learned time & again that the inverse problem is the far bigger one. Most economists have never, ever taken any OTHER course in reality. Economics doesn't count.
Engineering? Physics? Anthropology? Chem? Biology? Some math, yes, but that doesn't mean they know what 2+2 is for.
16 comments:
And MMT not in the news, because WOW:
The Case for Mitt Romney's Middle Class Tax Hike
http://www.slate.com/blogs/moneybox/2012/08/09/mitt_romney_s_middle_class_tax_hike_he_won_t_defend_it_but_i_will.html
Holy cats, Trixie. That Yglesias gets worse every day. I just posted this on the site:
Matt, for a guy who nearly has seizures every day over the failure of the Fed to engineer looser money, your conviction that the government needs to tax the middle class more so that it can do things is perplexing.
Any day it cares to do so, the US Congress could pass a law authorizing, say, an additional trillion dollars in highly productive and stimulative public investment and job creation, and it could fund the spending by directing the Fed to credit $1 trillion dollars directly to Treasury's account. No new taxes, no new borrowing - just direct money creation of the same sort the Fed accomplishes every day when it buys financial securities from the financial sector, or pays interest on reserves. But using the Treasury channel would allow us to inject the money directly into the real economy, and circumvent a lot of wealthy rent-seeking middle men in the financial sector.
There you go: the monetary loosening you say you want, and maybe even a little inflation. And unlike the tactic of attempting to accomplish economic stimulus by yet more Fed asset purchases from the financial sector, or by having Ben Bernanke bellow, "Let there be 4% inflation" from a mountaintop, this approach would actually work.
The approach of having the US Congress issue directives to the selfsame central bank which Congress itself created as an instrument of its own constitutionally provided monetary authority probably violates some profound shibboleth about central bank independence that you absorbed in Mankiw's classes, or when you were working on Romney's gubernatorial campaign. But maybe some of your readers won't have the same compunctions.
Who IS he? I see his name come across my screen on a regular basis. Don't follow him but thought he was one of the good guys. The only conclusion I can draw is that he is Leeroy Jenkins:
http://www.youtube.com/watch?v=LkCNJRfSZBU
Is there any coordinated effort by modern money people to reach out to any specific people 'in power' or with megaphones? For a while it seemed like John Carney was opening up. The kerfuffle with Krugman got some attention too.
Maybe MMT needs to pick out 1 or 2 potential 2016 presidential candidates, from both parties, that seems high on practicality… and start collectively hammering away at them over the next few years? Somehow bombarding them with pressure and knowledge.
I like Elizabeth Warren. She seems not beholden to special interests and she connects well with people. I think she could easily become our first female president if she committed to the idea.
Anyways. I am curious about strategic efforts. Are there any?
Trixie, Matt Yglesias is one of the most prominent, prolific and long-established bloggers in the blogosphere. He has been blogging since the early 2000's - I think even when he was still a student at Harvard and blogging was a totally new thing. His blog has moved several times. It started out as a completely independent personal blog. It was then part of the TPM (Josh Marshall) universe, but then moved into the Atlantic's stable. Then it went to Think Progress, which is the blogging arm of the Center for American Progress, and now he writes for "Moneybox" at Slate. He has always been regarded as part of the leftish side of the blogosphere, taking generally mainstream, center-left positions.
However, he apparently started out as a somewhat more conservative young man, and worked for Romney's gubernatorial campaign when he was at Harvard. He also has a libertarian streak, and generally tends to take a pro-free market, anti-labor point of view. He also has a long-running opposition to a lot of intellectual property law. He believe more people should move to cities, and that governments should remove a lot of regulations that make it difficult to build high-density urban housing.
He has written two books.
He has lived in DC for several years now, and is very interested in local DC issues. He and Ezra Klein are often mentioned in the same breath as two bright rising stars in the younger generation of the punditry.
He appears to be well-connected with administration sources, and he was one of the bloggers involved in the mini-scandal that erupted over Journo-list:
http://en.wikipedia.org/wiki/JournoList
Matt Yglesias comes from a well to do Cuban American background, having attended a NYC prep school - "Dalton School" that costs $37,000 plus to attend - before attending Harvard. THe snobbishness and upper class "do gooder" attitude comes through in his writing. But that background reflects in his left of center conservative attitude.
From the same sort of upper class background that Obama comes from -- Upper Class - with ethnic pretensions.
JK: "Anyways. I am curious about strategic efforts. Are there any?"
You can be sure there are, but in private.
Tom,
Interesting. Why do you suppose it's done in private? Is it to not put anyone 'on the spot' in the public eye? If that's the case, that IS strategic.
JK: "Why do you suppose it's done in private?"
This is just the way things are done, especially when politicians are involved. Hardly MMT specific. Just "good manners."
JK, I should add, it's always left to the party being approached to go public first. That's just understood and if one violates that rule, one is unlikely to get future access.
Tom,
Thanks for the insight.
"Congress could pass a law authorizing, say, an additional trillion dollars in highly productive and stimulative public investment and job creation, and it could fund the spending by directing the Fed to credit $1 trillion dollars directly to Treasury's account"
You missed a step. Authorization just means giving legal authority for Tsy to spend money on something. However, there must also be a subsequent Appropriation specifying the amount (either a sum certain or a spending formula).
I can't imagine any circumstance where Congress would just order the Fed to credit Tsy's account. It'd be stuffing a $1 trillion into an accounting blackhole. Does it count as a loan (if so, subject to debt limit or not?) or a miscellenous receipt (if so, would it reduce the deficit or remain off-budget?)?
Naturally, I think they would do better to direct the US Mint to deposit $1 triilion in coinage but, in truth, that's a superfluous step. Both in the sense the Mint can already do that but also because if Congress is on the act, it'd be easier to simply strike the limitation on US Notes so Tsy could deposit its own money to spend.
"probably violates some profound shibboleth about central bank independence that you absorbed in Mankiw's classes..."
Matt's mentioned before he's never taken a single Econ class.
I'd scoff but neither have I. :o)
I can't imagine any circumstance where Congress would just order the Fed to credit Tsy's account. It'd be stuffing a $1 trillion into an accounting blackhole. Does it count as a loan (if so, subject to debt limit or not?) or a miscellenous receipt (if so, would it reduce the deficit or remain off-budget?)?
Why is it an accounting black hole, Beo? Congress would just have to learn some of the same accounting practices the Fed uses. It's clearly not a loan, so the debt ceiling doesn't come into play. How did Congress do the accounting when it authorized the issuance of greenbacks under the legal tender acts during the Civil War? It's no different except that currently Congress has assigned most of its monetary authority to the Fed rather than the Treasury.
... and it would reduce the deficit.
If Congress needs some intelligible way of handling the accounting, how about directing the Fed to pay interest on Treasury TT&L account balances, at a rate and schedule determined by Congress? It has already authorized the payment of such interest on bank reserve account balances - so the accounting is not mysterious. In this case they would just be removing discretion from the Fed, and making the payments mandatory.
This might even be politically palatable, since the public shouldn't be befuddled by the idea that the public treasury should be able to earn interest on its accounts with the Fed, just like commercial banks do.
Beowulf: "Matt's mentioned before he's never taken a single Econ class.
I'd scoff but neither have I. :o)"
We've learned time & again that the inverse problem is the far bigger one. Most economists have never, ever taken any OTHER course in reality. Economics doesn't count.
Engineering? Physics? Anthropology? Chem? Biology? Some math, yes, but that doesn't mean they know what 2+2 is for.
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