MSM wakes up long enough to notice that the MMT blogosphere has long ago and at present come up with a way to legally get us out of this moron-manufactured needless "debt ceiling" crisis.
Post at WaPo WonkBlog here delegated to Plumer as perhaps Klein thinks this "novelty" idea is beneath his direct attention and could potentially taint his tremendous Very Serious Person credentials. Excerpt:
Under this scenario, the U.S. Mint would produce (say) a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed then moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years — without needing to issue new debt. The ceiling is no longer an issue.OK so far, BUT now here may be the line that gets the "MMT Irony of the Year Award":
“I like it,” says Joseph Gagnon of the Peterson Institute for International Economics. “There’s nothing that’s obviously economically problematic about it.”Aaahhhhhhhhhggghhhh!!!!!! (Inner monologue: "Save the hammer for the man.... save the hammer for the man....")
Either they are all bigger morons than even I thought, or looks like Gagnon is going to be fired when he goes in to work at this Peterson place Monday morning.
Gagnon continues:
In theory, this is much like having the central bank print money. But, says Gagnon, the U.S. government would simply be using the money to keep spending at existing levels, so it wouldn’t create any extra inflation. And if it did cause problems, the Fed could always counteract the effects by winding down some of its other programs to inject money into the economy.I just can't believe the stupidity that these monetarist morons continue to exhibit.
Here Gagnon in his first sentence correctly relates price stability to the government spending rate, which is FISCAL policy.
[TIP: STOP RIGHT THERE JOSEPH GAGNON, you got it!]
BUT THEN he makes the assertion that in the face of this hypothetical fiscal process becoming too stimulative and leading to unstable prices, the solution would NOT be to modify this same FISCAL policy, but rather, have the Fed cease to make re-distributional arrangements effecting the duration of the financial assets on its central bank balance sheet.
How do their brains work?
13 comments:
Opa Gangnon style!
The scary thing is that Gagnon is one of the smartest ones there on monetary ops.
I'm trying to come up with a parallel...
it would be like if you had a firm that was exhibiting higher and higher labor expenses and corporate management would think the solution would be to take some funds in the cash account and buy some bonds???
This is just hard to understand how monetarists think... it's off the charts irrational....
rsp,
Put the whole monetary-fiscal aside for now. What is really startling is that Pete Peterson and his Institute and foundations have been leading the country down the debt hysteria rabbit hole leading to austerity and stagnation since the 2008 crash. And yet here's his guy who apparently recognizes that the government's role as currency issuer means that there is no solvency issue, that we can run deficits permanently, that we can easily pay the public debt, and that all we need is some prudent price stability management.
So will Peterson and his "Fix The Debt" hirelings now issue a nice "never mind" statement so we can all go home?
MMT seems to come and go about whether changing interest rates, other things equal, can have an impact on income and inflation. If it does, and if Gangnon is implying perhaps the Fed pushing interest rates up on some products or changing the Fed Funds rate, it could be legitimate and non-idiot, no?
Edmund, I don't think that MMT economist say that pushing interest rates up can't affect inflation. What they say is that monetarism is wrong as a theory because money is not exogenous as assumed. Therefore the causal transmission is not there. Even some moneetarists recognize this and rely on expectations. But that is a very weak transmission mechanism as far as causality goes. They rely mostly on statistical correlation which is not a very strong argument.
What MMT economists agree with is that if the cb sets rates high it may contract borrowing and therefore demand, thereby contracting the economy and increasing the buffer stock of unemployed, which undermines labor bargaining power and lowers wage pressure. They think that this is a very bad method since it relies on inducing idle resources, which is inefficient and wasteful of opportunity.
Address all economic problems using monetary policy is addressing them with a sledge hammer.
"I just can't believe the stupidity that these monetarist morons continue to exhibit."
You catch more flies with honey than vinegar matt. There hasn't been a perfect man in 2000 years, no reason to hammer the guy for being wrong when he's starting to get things right.
Yes, Gagnon is getting pretty darn close.
beo,
Again, I'm NOT "hammering him", just the opposite...
I'm giving him the benefit of the doubt and chalking it up to him just being a disgraced moron on this as these issues seem to exceed his mental grasp mathematically and he is all confused and mixed up and can't self-analyze and see his errors.
Without these cognitive gifts, he is relying on monetarist false dogma for guidance... this issue is beyond his comprehension and I realize it is not his fault he was created this way, with these cognitive deficiencies, and I'm sorry for him.
But that doesnt change the fact that he IS a moron and is occupying apparently a somewhat influential position where the Wash Post would seek out his counsel for wide publication on this issue.... if he had any sense HE SHOULD RECUSE HIMSELF from further commentary and refer Klein's boys over to some of the MMT leaders as I'm sure he probably and for sure his monetarist ilk have been wrong on this from day one when their so called "money supply" went asymptotic and prices collapsed... check the facts.
and btw I'll tell you who IS "hammering him": That would be for instance Roger Mitchell who came out this week with an accusation that people like Gagnon here are INTENTIONALLY LYING (I've NEVER made that claim) to the rest of their countrymen in some sort of Dr Evil evil conspiracy where they all really do know what is going on BUT instead, are making a freewill choice to intentionally deceive their fellow man with false economic analysis and policy recommendations that are directly leading to DEATH and chaos within humanity... imo THIS accusation is "hammering" somebody...
Accusing a body of people of a mass murdering conspiracy with no evidence? Now imo THAT'S hammering somebody...
Here:
http://rodgermmitchell.wordpress.com/2012/12/07/revealing-the-conspiracy-a-recommendation-for-followers-of-mmt-and-monetary-sovereignty/
So who is "hammering" whom?
This guy and all the Peterson funded posse are all morons, I'm sorry for them and there is nothing that I can do about it except try to point this out to people so they too dont get caught up in all of this falsehood also.. that's all I can do.
I'm sorry for them but sometimes you cant sugar coat it if you need to try to get something done quickly with concerted action as literally, people are dying because all of this ignorance that is being foisted upon humanity and exemplified perfectly by Gagnon here... I could CARE LESS if I hurt any of these people's feelings... F THEM ALL THEY ARE ALL MORONS!
I'm "saving my hammer for the man"....
rsp,
@Dan,
"So will Peterson and his "Fix The Debt" hirelings now issue a nice "never mind" statement so we can all go home?"
NO, because Peterson's real motive is to privatize social security before the baby boomers retire and reverse the 40 year river of funds flowing to wall street.
Matt, I think I get the point of your criticism.
You seem to be saying that folks like Gagnon are saying the right things largely because other people in authority are beginning to say them and he agrees with them for some reason. He doesn't actually understand why, and never will because he isn't capable of understanding it, thus he is a "moron".
These folks could never explain why something is true, it will always be their opinion, based largely on someone else's opinion.
Which leads to our dilemma…that most people are not capable of understanding why and are thus "handicapped".
This is less a criticism than an observation, and I suspect it has a lot to do with how we are educated.
So, what is the point in explaining why? Can it succeed?
Looks like we are relying on a certain number of those with true understanding reaching positions of authority or at least respect. Then they may gradually be able to convince others that this is truly "how things work", ie Galbraith and now it seems Krugman.
Gagnon is likely a follower, but at least he's moving in the right direction.
Right Paul,
Dan K expresses it better wrt Gagnon here, the guy who endowed the org he works for here, Peterson, is running another $B operation that claims what Gagnon "finds no problem with" is not even possible, and Gagnon apparently cant even see this contradiction... it's just stunning to me.. the stupidity and lack of mathematical insight these people continue to manifest...
Looks like one foundational thing is being able to recognize and subject ourselves to the authority of the govt to operate the currency monopoly that Warren always talks about...
If you cant see that then you have a good chance of remaining lost imo...
I dont think Peterson can see this authority or from where it comes... so to Adams point, Peterson MAY be looking towards "WALL ST" to save the day, but imo this is because he thinks SS is going bankrupt, govt has no authority and "wall st " has THE solution, etc.....
Perhaps because we humans had operated under metals for so long, humanity has developed a collective blindness to the concept of govt possessing an authority to operate a currency monopoly under civil law....
I think the better we can get in communicating the "math" behind current operations will help many (but not all).
The stubborn ones who cannot see this authority may never get it, I hope that will represent a small minority of humans and thru democratic process we can subdue them... and then the "followers" like Gagnon here will just fall in line with the correct authority.
rsp,
I dont think Peterson can see this authority or from where it comes... so to Adams point, Peterson MAY be looking towards "WALL ST" to save the day, but imo this is because he thinks SS is going bankrupt, govt has no authority and "wall st " has THE solution, etc.....
Perhaps because we humans had operated under metals for so long, humanity has developed a collective blindness to the concept of govt possessing an authority to operate a currency monopoly under civil law....
Even if they don't understand the math, and I find that dubious, they will not change an iota if the mistake is exposed. This is ideological with them and math (insolvent, bankrupt) is just a tool for them to use to advance their objectives, which is "free market" over govt. If one tool breaks, they will just reach for another tool.
Perhaps because we humans had operated under metals for so long, humanity has developed a collective blindness to the concept of govt possessing an authority to operate a currency monopoly under civil law....
I think that this is likely a big factor.
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