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DeLong: "First, what was going on in 1994--and what those of us working in the Treasury and watching the Federal Reserve and the financial markets thought was going on--was not an attack of bond-market vigilantes terrified of rising debt and the prospect of explicit default or implicit default through rapid inflation. "Either DeLong is lying here, or Bob Woodward is lying, or Woodward is reporting falsely, or Rubin/Summers are lying or they are morons, or any combination of the above...Looks like DeLong is finally starting to get it perhaps, and is starting to distance himself from what was popularly reported back then wrt "the bond vigilantes" and how it was viewed by the Clinton economic team (Summers/Rubin etc...) If he (DeLong) was part of that moronfest and still wants to salvage his reputation for today, seems to me he would want to write something like this stating in effect: "well we at the working levels REALLY knew what was going on all the time, blah, blah,... ", "it was the bozos at the top who are morons, blah, blah.."Ugly but perhaps progress in any regard Tom...rsp,
"Consider, by contrast, the passage from Bob Woodward's The Agenda in which Clinton asks the rhetorical question "You mean to tell me that the success of the economic program and my re-election hinges on the Federal Reserve and a bunch of fucking bond traders?"http://nymag.com/nymetro/news/bizfinance/columns/bottomline/199/Here it is right from Woodward and this conflicts directly with DeLong's account here...so is DeLong saying that Clinton's/Obama's advisors and Woodward are morons?Inquiring minds want to know....rsp,
"so is DeLong saying that Clinton's/Obama's advisors and Woodward are morons?" - MattThat's basically what he's saying...he just isn't aware of it yet.
so is DeLong saying thatClinton's/Obama's advisors and Woodward are morons?I would not call Woodward a moron in that I don't think he has the expertise to figure this out. I doubt very much Clinton's advisors like Rubin were morons, either. This was just part of the bankers' strategy to control govt by convincing politicians that "the bond vigilantes" control rates rates rather than the govt (Fed).
Here's more on this from Bloomberg in 2008:http://www.bloomberg.com/apps/news?pid=newsarchive&refer=home&sid=ayrMJ4R.bmLYThis Bloomberg reporting does not agree with DeLongs account wrt "Fed expectations" as being the operative factor either..."Leon Panetta, Clinton's first budget director, says that ``if we continue to run these large deficits, not only bond traders but the securities markets are suddenly going to awaken with concern about whether or not the administration is doing anything to discipline the budget.'' It's revisionist history to suggest that the Democrat policy is based on some sort of Fed expectations... DeLong is completely trying to dispense falsehoods here or just trying to protect his own reputation and is throwing Democrats under the bus....Either is not honorable behavior...
Tom,From Warrens 7DIF:"Ten years ago, around the year 2000 just before it all fellapart, I found myself in a private client meeting at Citibankwith Robert Rubin, former U.S. Treasury Secretary underPresident Clinton, and about 20 Citibank clients. Mr. Rubingave his take on the economy and indicated that the lowsavings rate might turn out to be a problem. With just a fewminutes left, I told him I agreed about the low savings ratebeing an issue and added, “Bob, does anyone in Washingtonrealize that the budget surplus takes away savings from thenon-government sectors?” He replied, “No, the surplus addsto savings. When the government runs a surplus, it buysTreasury securities in the market, and that adds to savings andinvestment.” To that I responded, “No, when we run a surplus,we have to sell our securities to the Fed (cash in our savingsaccounts at the Fed) to get the money to pay our taxes, and ournet financial assets and savings go down by the amount of thesurplus.” Rubin stated, “No, I think you’re wrong.” I let it goand the meeting was over. My question was answered. If hedidn’t understand surpluses removed savings, then no one inthe Clinton administration did. And the economy crashed soonafterwards...."So Warren is wrong here?Warren is wrong in his interpretation of Rubin's mathematically impossible response?Is DeLong trying to say that he (DeLong) doesnt accept Rubin's nonsense like this that Warren documents and DeLong is trying to distance himself from his particpation as DeLong at least has the math skills to see that Warren is right here and Rubin is a complete idiot and DeLong is "gettin' out while the gettin' is good" type of thing...Is your position that Rubin is lying here and he (Rubin) really does understand that what he (Rubin) posits here is mathematically impossible, but he ON PURPOSE, instead prefers to present himself as a moron and make a complete fool of himself like this, looking like A COMPLETE MORON/IDIOT/DUMB-ASS/ mathematically illiterate dope, etc... Rubin has put himself in this position just to "cover up" some sort of "bankers strategy" and "takes one for the team" here?I find that hard to believe as these people's egos are as big as Mount Rushmore...rsp,
"I would not call Woodward a moron in that I don't think he has the expertise to figure this out. "What expertise do I have?What expertise does Paul Meli have?What expertise does J.D Alt have?What expertise does beowulf have?What expertise do YOU have?Expertise??? All you need is elementary arithmetic...Warren Mosler to Rubin: "when we run a surplus, we have to sell our securities to the Fed (cash in our savings accounts at the Fed) to get the money to pay our taxes, and our net financial assets and savings go down by the amount of the surplus.”Rubin in response: “No, I think you’re wrong.”Whaaaaaatttt??????These people (including Woodward) are F-ING ALL IDIOTS Tom .... DeLong perhaps sees this now finally and is trying to distance himself from being associated with these morons as this is being disclosed...rsp,
Well, the charitable position is that these people were only morons and not crooks, although those are not mutually exclusive.But I find it very difficult to believe that Rubin did not know that the govt balance, the domestic private balance, and the external balance must sum to zero as an identity.Rubin was all about "a strong dollar." Fiscally conservative policy strengthens the dollar. See Greenspan 'cringed' at strong dollar talkDean Baker, Bob Rubin and the Strong DollarEmil W. Henry, Jr, Weak Dollar, Strong Dollar-The U.S. strong dollar policy is not strong enough￼￼
Matt, if I were Bob Woodward sitting in on that meeting, I would have believed Rubin. I probably would have inquired of other "experts" all of whom would have backed Rubin.
"Matt, if I were Bob Woodward sitting in on that meeting, I would have believed Rubin. I probably would have inquired of other "experts" all of whom would have backed Rubin."Tom, as an engineer, if I had been involved In the design of a process that caused the machine i was entrusted to be operating to fail catastrophically I would have been sued three ways to Sunday and never been trusted with an important project again.Plus, engineers and other designers are usually making honest mistakes...these clowns are claiming to be experts but know nothing of the system they are entrusted to maintain.Our entire governing body is corrupt and incompetent.Read this, a response I received after writing my sitting Senator from Florida, Bill Nelson:....."While the challenges are immense, a bipartisan deficit reduction agreement has the potential to unleash a new wave of economic growth and job creation. Achieving an agreement will require both sides to set aside partisan differences in order to find common ground. I will continue to press my colleagues to put the interests of the nation first. Please don’t hesitate to contact me again."Sincerely,Bill Nelson
right Paul,If you think about it, the math required by Rubin to understand what Warren told him is the same available to an 8 year old running a lemonade stand selling a dixie cup of lemonade for 25 cents who has to make change for a dollar...Rubin, who is a US Treasury Sec. does not have these math skills available to him, what a disgraced moron ...rsp.
MattI'm sorry, but to someone steeped in the dogma, as Rubin is, Warren's explanation:“No, when we run a surplus,we have to sell our securities to the Fed (cash in our savingsaccounts at the Fed) to get the money to pay our taxes, and ournet financial assets and savings go down by the amount of thesurplus.”sounds so convoluted that I can barely even understand it. It sounds much more logical to say the government buys Treasuries and gives you cash. That adds to savings.Again, this is the big problem with MMT. There has been ZERO effort on the part of the MMT leadership to improve on the language, i.e. make it more understandable.Even something as simple as "credit bank accounts," makes no sense to people.Resp-Mike
So, Mike, without the histrionics you use on the morons, what do you suggest as a starting point and how would you approach the myths held by much of the public? I imagine you have put this info out somewhere so if you want to just give me links that would work.I do agree that getting the language right is critical. I also think we have to set up a competing moral frame to counteract the frame of the immorality of debt that is so prevalent. Perhaps the idea of Christianity and Bruce Springsteen that we always take care of each other and our idea that the best vehicle for funding that is the Federal government.
The most common myth is "we're borrowing money from China", followed by "we're bankrupt", so I suggest working on simple but descriptive responses to those first...you know, like "there is no Santa Claus".
John, the basic insight of MMT according to Warren is that a govt sovereign in its own currency is the monopolist, meaning, it sets the rate of interest as it chooses and pays the prices it chooses to move private resources to public use.Therefore there is no affordability issue wrt govt allocating real resources to itself as long as they available in quantity so that govt allocation doesn't lead to inflation. This means that govt can always purchase idle resources at a price that won't lead to inflation, since the private sector is not bidding on those resources.Most of the arguments against MMT and "Keynesianism" have to do with affordability, price stability and currency volatility. But they are not well stated and are easily dispensed with.This doesn't mean that there are not issue involving macro wrt policy. Basically, they involve analyzing effects of various policy options on growth (investment, production, and productivity), employment, price stability and the exchange rate. MMT has set forth its approach in terms chiefly in terms of fiscal policy and shown why monetary policy is less efficient and effective.
Warren: "“No, when we run a surplus,...Lemonade stand girl: "No, when somebody gives me a dollar when my lemonade only costs a quarter...."Warren: "we have to sell our securities to the Fed (cash in our savings accounts at the Fed)....Lemonade stand girl: "I have to reach into my pouch to take out the difference in change..."Warren: "to get the money to pay our taxes,..."Lemonade stand girl: "in the amount that is the difference between my 25 cent price and my customers dollar..."Warren: "and our net financial assets and savings go down by the amount of the surplus.”Lemonade stand girl: "and even though I have to provide 75 cents change, since my customer gave me a dollar to begin with, I still end up 25 cents net because of the sale..."THEY ARE F-ING ALL MORONS!!!!!
Tom -- I understand all that. But even that explanation, while short, includes a few 25-cent words and phrases. I'm looking for suggestions to use with people who have no idea what volatility, allocation, and other terms mean. I was also hoping to get a response from Mike about what his approach might be to someone he didn't expect to understand or misunderstand econ to begin with. I've been able to teach a few people and like some others I've come across those who say "of course the gov't can create all the dollars it needs". Those people are usually less formally educated, therefore not indoctrinated.But, I'm still looking for any new or additional ways to express these ideas as simply as possible. The more I think about it, the more I believe that a moral frame of "taking care of our own" might get some traction against the neo-liberal putdowns of the poor and disadvantaged.Hope everyone has Happy Christmas and a Merry New Year.
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