If you're like me, you likely missed this podcast from Vox.com, which features an interview between Ezra Klein and Ben Bernanke, because it was published around the holidays. I just got a chance to listen to this podcast today and it includes some helpful comments from Bernanke. While he continues to talk in his usual cautious, almost tortured manner, Bernanke does go through basic Fed operations while answering a question about QE. His descriptions of these processes are nearly identical to what MMT has been saying over the past few years (or decades.)
Klein also reveals his lack of understanding of the nature of money when he asks Bernanke where the Fed "gets the money" to make loans and purchases. The interesting comments start around the 25 minute mark.
36 comments:
"he asks Bernanke where the Fed "gets the money" to make loans and purchases"
Klein is probably thinking: "I wonder who the Fed borrows the money from?...."
In typical libertarian fashion doesnt understand what authority really is...
Doesn't necessarily mean that Ezra doesn't understand monetary operations. Interviews will often play dumb to bring things out.
Maybe Matthews there gets it a little but Klein has never exhibited it...
What the fuck is so confusing about one simple acknowledgement anyway?
The US federal govt is the US DOllar monopolist.
From acknowledging this one simple fact, everything else (MMT) flows naturally.
acknowledging this answers just about every economics question wrt monetary and fiscal ops:
Who controls US Govt interest rates and spending? The monopolist.
What are the limits of fiscal policy? Nothing in the nominal realm as the monopolist creates currency at will
Why are we worried about outstanding TSY CDs? we shouldnt be since we have an infinite supply of the means to "pay off" (whatever that means, as if you can Pay off your IOUs with more of your own IOUs) the CDs..
Secular stagnation theory? impossible with infinite nominal aggregate demand potnetial
Honestly, I just dont know what is so confusing and mystical about fiat currency ops. It has to have more to do with some personal revulsion about "fiat" money and the fact that 'if I have to work for my money or starve to death, why can Govt just create this stuff in infinite amounts?'
Morality on one hand and free market ideology on the other. The first means that money has to be earned and can't be free, and the second that money can't come from government.
I think you guys are onto it, yes. The problem ultimately stems from a self-centered refusal or inability to acknowledge the supremacy of the US government authority.
Klein does NOT understand monetary operations; you can tell because he can't provide any context. He's probably just learning it now.
If Klein did (at the 25 min mark) he would have asked a different question, or would have pointed out what Congress and the US Treasury must do before the Fed does anything; namely, authorize the creation of government-created money. Ditto Klein's understanding of the difference between monetary and fiscal policy. He doesn't know.
"namely, authorize..."
Keyword here being 'authorize'.... these 2 in this discussion have no chance of understanding this... somebody always has to be borrowing in their religious/philosophic paradigm....
Hard to believe that Klein is not acquainted with the basics of MMT, e.g., through Dylan Matthews. I think he probably knows but either rejects it or thinks that if he surfaces it, he will be considered a money crank. Klein is all about reputation.
Dylan Matthews, You know the deficit hawks. Now meet the deficit owls.
See also Joe Firestone's posts at Corrente on MMT at WaPo here.
Klein and Matthews subsequently left the Post for Vox.
Dylan Mathews, Bernie Sanders opens a new front in the battle for the future of the Democratic Party
Randy Wray commented, Is It Time for MMT To Become Mainstream to Save Us from the Second Global Financial Crisis of the Millennium?
Klein missed all this at his own place?
Just because you read something Tom doesnt mean you can understand it... see cognitive biases:
https://en.wikipedia.org/wiki/Cognitive_bias
"Individuals create their own "subjective social reality" from their perception of the input. An individual's construction of social reality, not the objective input, may dictate their behaviour..."
The operative bias here is towards "borrow > default > forgive" it is textbook Old Testament/Hebrew Scriptures 101... somebody always has to be borrowing which eventually leads to the other 2 steps...
I suspect that Klein understands the basics of MMT through Matthews at least but sees reputational risk associated with it.
I don't think it is only him. A whole lot of people understand MMT and are unwilling to take the reputational risk, a point that Warren makes in 7DIF and for which he provides evidence. Some people are lying and I don't that it's Warren.
Have Klein take Bill's Saturday quizzes for a few weeks and see how he does....
He wont even understand the questions. ..
So you are saying Cognitive Biases are bullshit?
Not at all, but they are not the explanation for everything.
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"
Upton Sinclair, "I, Candidate for Governor: And How I Got Licked" (1935), ISBN 0-520-08198-6; repr. University of California Press, 1994, p. 109.
Is that cognitive bias or risk avoidance?
Matt shocking people lies or omits truth because career building? Bernanke the first btw, read his papers from circa 2000, read when he was gov of FED, and read his stuff now.
They are shameless, and it's all because VSP and career building
"Keyword here being 'authorize'.... these 2 in this discussion have no chance of understanding this... somebody always has to be borrowing in their religious/philosophic paradigm...."
Exactly Matt!
Seems to me, the question that needs to be asked is "Is there anyone who doesn't have to borrow from someone else?"
I imagine you would get a pause and a cocked head from Bernanke...... and a slack jaw from Klein.
Being disingenuous is not a cognitive bias!
Well if the biases are a real phenom, then what is the difference between someone just operating under bias and someone who is lying?
iow how do you know when the person is being disingenuous or operating under a cognitive bias?
If someone cannot perceive the biases then they would have to think the biased person was lying otherwise how else could you explain the irrational behavior?
Says in the wiki here: "An individual's construction of social reality, not the objective input, may dictate their behaviour..."
The social reality gleaned from a reading of the Hebrew Scriptures is that somebody is always borrowing from someone... there is no straight "issuance" or "origination" in the Hebrew Scriptures... which I would bet these 2 are well trained in as well as their fellow tribesmen wannabes in Christendumb.... reading these scriptures creates the cognitive biases they operate under and all they effectively know is "borrow > default > forgive... rinse and repeat..." ..... they cant get out of it...
Tom the Upton Sinclair quote could easily be made by someone who was blind to the biases that the other person was operating under...
Like Bill always writes "neo-liberal lies!"... well 'neo-liberal' is a figure of speech so how can a figure of speech be lying?
Or now we will start to be treated to "the lies of the Deep State!" as if another figure of speech could be lying...
Figures of speech cannot be lying, people can be lying I suppose, but people can also be operating under severe cognitive biases...
I think it is difficult to know for sure in many cases whether someone is operating under unconscious bias or intentionally lying. Because denial is common psychological disposition.
For example, research shows that when people are confronted with facts that contradict their beliefs, many double down on their beliefs rather than question them. Interestingly also, the better educated a person the more likely they are to double down.
"What are the limits of fiscal policy? Nothing in the nominal realm as the monopolist creates currency at will"
You forgot about the 'currency crisis'.
Those who use to shout 'bond vigilantes' are now shouting 'currency crisis'.
You know if they are lying if there is a record of contradictory history record specially comparing between when they hold a position of authority and when they don't.
They probably consider "you can't do anything about it because...", still a dishonest position though.
Cognitive Biases.
I read the book, Compassionate Mind by Dr Paul Gilbert, which is about mindfulness based Cognitive Behaviour Therapy. Most psychologists tend to be liberals and tolerant, and the intro of his book he says about how we might have nice things nowadays, like widescreen flat LCD TV's and Hi-Fi's, but do we actually have time to enjoy them, he asked? We today work like mad at our jobs which have become too stressful, he says, and then asks, is it worth it? (I'm paraphrasing because I read it a long time ago).
I took this to mean an attack on neoliberalism. But on another blog I used to visit there was a traditional conservative guy there I used to like, and he had read the book and he blamed our stressful lives all on the government, saying there was too much tax, with too much government meddling meddling in our lives, etc. That was why we have too work so hard, he said.
We had both read the same book as me and he completely got it completely wrong (what Paul Gilbert said in the introduction). I couldn't believe it. Now you might say that we both had Cognitive Biases, but I don't think I had it as much as him. The book mentioned nothing about government, just about our workload being too much and our jobs being too stressful, while we are now spending too many hours at work and often staying too late. I put him right about this but he was a very nice person and neither of us wanted to get too political on this mindfulness based site.
But I astonished me how he interpreted the book so different to me. No wonder the neoliberals and the Conservatives get away with so much blue murder. And the more they put us into the austerity and the worst it gets, the more people like my friend above believe that we haven't have enough of it yet.
Klein never held a position of authority....
Bernanke might understand the operations thru rote learning/memorization of procedure after 8 years on the job ... but still doesnt understand them or what potential policy options they portend or imply like we do...
Kevin that's a libertarian bias... ie "anti-authority"..
You see the libertarians get as far as fomenting "opportunities!" which is NO guaranty... they'll reflexively say things like "well, in life there are no guarantees!" which is observably FALSE.... guarantees are issued everyday all the time...
"what is the difference between someone just operating under bias and someone who is lying"
cognitive bias follows from laziness and generates (semi) Innocent Fraud
lying AFTER learning the truth follows dishonesty and generates Outright Fraud
Is someone too lazy to think still an Innocent Fraud? JK Galbraith seemed to politely give them the benefit of the doubt in his book, but certainly implied that many were either of limited intellect or outright liars.
But I astonished me how he interpreted the book so different to me.
It's called trolling.
We had both read the same book, but he thought the author was complaining about big government, and how it was ruining our lives. But the author did not mention anything about government meddling. Rather the opposite. The author only spoke about how hard our jobs had become nowadays because of too much competition, which had been the policy of governments, for sure, but conservative ones, or right wing neoliberal 'socialist' ones. Talk about completely letting neoliberalism and turbo capitalism off the hook. Neoliberalism is all about ruthless competition, and red raw capitalism.
"23" 'The land must not be sold permanently, because the land is mine and you are but aliens and my tenants." Leviticus 25:23
Their bias is everything is borrowed and comes with terms Roger.... (to them...)
Look at how the neo-cons are responding to Trump who wont take their munnie (which will of course come with terms...)... even though he has made numerous assurances that he is a great friend of the current nation of Israel... he wont take their munnie though so that doesnt sit well with them... they much prefer to obtain terms with Jeb...
Franklin Graham is out right now on a nationwide crusade in advance of the elections he is is from the other day:
https://twitter.com/Franklin_Graham/status/684505912929722368
"America is being stripped of its religious heritage as secularists and progressives continue to attack our Biblical values. "
Well .... his 'biblical values' create a bias within him of "borrow > default > forgive"...
Somebody always has to be borrowing under terms of default with these people they're simply biased...
Matt Bernanke has a paper around 2000 listing things the govt could do in case of a depression/recession like 1930. OMF and heli-money are listed amongst them.
Yeah but ask him if heli-money is a fiscal operation and see what he says....
His "helo-money" schtick is proposed as a remedy to deflation... we havent had any deflation...
He has testified that we simply have a skills mis-match that is creating the unemployment and has REPEATEDLY scolded Congress that they are borrowing too much money and the borrowing is unsustainable and they need to get their fiscal house in order its hurting confidence...
nivekvb,
Are you and your friend on the same page as to the definition of neo-liberalism?
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