Six Myths That Hold Back America by Frank Newman
He published a little-noticed fiscal policy book last year that follows some of the themes long pushed by Warren Mosler & a long history of people working in currency operations.
Frank Newman's six myths:
1) Asian nations are bankrolling the U.S.
2) Treasury issued securities crowd out the private sector
3) If everyone tries to save more, the nation will save more, and investment,
GDP, and employment will increase
4) If the government reduces the deficit, then national saving and
investment will increase
5) Today’s deficits create great burdens of tax for our children
6) If the U.S. does not get its deficit reduced soon, treasuries will face the
same problems as Greece and Ireland
Per Wikipedia, Newman's a banker and former US Treasury Department official.
(never heard of him before today)
http://en.wikipedia.org/wiki/Frank_N._Newman
Seems to be in the crowd avoiding full employment as a political potato too hot to handle.
http://pragcap.com/who-should-replace-ben-bernanke-and-timothy-geithner
10 comments:
I'm about three-quarters into it.
The content is about 90-95% consistent with the MMT/post-keynesian/NIPA view.
One divergence is that he seems to think central bank purchases of government debt is inflationary (I can't recall if I read this in the book or if it's from an interview with the author).
Another minor irritant is that he posits that money is never destroyed. Don't know is this is a heuristic simplification but it tends to contradict the notion that the payback of loans cancels out their issuance.
Overall, a good book. The policy recommendations that flow from the analysis are sound.
My students are reading it along with the 7DIFs. MMT'ers have been in contact with Frank--good guy.
"Seems to be in the crowd avoiding full employment as a political potato too hot to handle."
http://pragcap.com/who-should-replace-ben-bernanke-and-timothy-geithner
I was the person on that thread who mentioned Newnan (and included a link back to Mike's book plug), and I have no idea what you mean by that.
b,
I think Roger meant "Job Guaranty" here not full Employment per se... as being the "hot potato"... ie many folks see the JG as a bridge too far politically ... rsp
Got it. The organization of the federal govt is such that any job guarantee would be administered by the Secretary of Labor (and only after being enacted by Congress).
The Secretary of the Treasury may or may not think a JG would be a good idea, but its not really in his wheelhouse.
Well... there was one exception. It would be interesting to hear George Shultz's take on the JG. Before he was Tsy Sec, he was Labor Sec and before THAT, he was a labor economist. He's still alive, Erickson should look him up. :o)
http://www.hoover.org/fellows/10657
@Beowulf
"Shultz left government service in 1974 to become president and director of the Bechtel Group, where he remained until 1982."
I've met people who've met Shultz, & they say he's really difficult to even contact, with a impenetrable team running interference. You know how to get an audience?
Just check out Schultz's recent interview on WSJ:
http://online.wsj.com/article/SB10001424052702303740704577523541037952090.html
Jose here's Schultz:
"Mr. Shultz dwells at length on the national debt, and on the Fed's role in enabling it: "It's startling that in the last year, three-quarters of the debt that's been issued has been bought by the Fed and the balance has been bought by other countries, so U.S. citizens and institutions are not on net buying U.S. debt. . . . The Fed doesn't have an unlimited capacity because when it buys the debt what it's doing is monetizing the debt. Sooner or later that has got to get out into the economy. Can't be held forever. And when it does in that kind of volume—as Milton Friedman taught us, inflation is a monetary phenomenon—it's gonna be hard to control."
What an idiot... rsp
Thanks for the info Matt. Kind of ironic that someone who was with Nixon when he pulled the plug on the gold standard doesn't recognize its ramifications.
Matt,
Exactly. The guy is pretty hopeless.
The good side of it is that our leaders in the 2010s are maybe not so bad after all - when compared to the what the U.S. had in the 70s or 80s.
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