tag:blogger.com,1999:blog-2761684730989137546.post933357862643962698..comments2024-03-29T02:19:19.866-04:00Comments on Mike Norman Economics: Cullen Roche — MMT Againmike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger42125tag:blogger.com,1999:blog-2761684730989137546.post-82635803397242308392016-06-14T10:48:48.465-04:002016-06-14T10:48:48.465-04:00So you think Congress could resist voters who woul...So you think Congress could resist voters who would receive about $20,000 each without increasing total purchasing power?<br /><br />Of course the voters are not yet aware of the bonanza they would receive with the proper abolition of government-provided deposit insurance.<br /><br />Still it's just a matter of time before the idea spreads sufficiently. I shall be curious to see how the MMT crowd responds. Some better than others, no doubt.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-73441163333738547542016-06-14T07:49:51.941-04:002016-06-14T07:49:51.941-04:00The money would still need to be spent into the ec...The money would still need to be spent into the economy. See current Congress - not going to happenSalsabobhttps://www.blogger.com/profile/06056713962363584884noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-71583660605353893722016-06-14T07:47:56.565-04:002016-06-14T07:47:56.565-04:00No, primary dealers have to accept the bidNo, primary dealers have to accept the bidSalsabobhttps://www.blogger.com/profile/06056713962363584884noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-89160098222149074292016-06-14T04:49:56.280-04:002016-06-14T04:49:56.280-04:00To answer the question as to why US citizens would...To answer the question as to why US citizens would want to give up government-provided deposit insurance in exchange for non-interest-paying risk-free accounts at the Federal Reserve I just did a simple calc:<br /><br />Assuming $5 trillion* in insured deposits in the US were transferred to inherently risk-free accounts at the Federal Reserves means that about $20,400 should** need to be distributed equally to every adult US citizen (about 245 million) to finance the transfer.<br /><br /><br />*Anyone know what US insured deposits total? $5 trillion is an old approximation and I don't find the FDIC site helpful, perhaps because I loath government-provided deposit insurance and perhaps because they're ashamed of what they do.<br /><br />**Should instead of would because the Federal Reserve would also have to sell assets to mop up most of the reserves it lavished on the banks. This is to prevent a net increase in MB + M1 by the new fiat distribution so inflation hawks can't complain.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-26689737319770138952016-06-14T04:43:40.785-04:002016-06-14T04:43:40.785-04:00This comment has been removed by the author.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-5088308203538102662016-06-13T20:16:31.559-04:002016-06-13T20:16:31.559-04:00And while we have seen periodic failures due to la...<i>And while we have seen periodic failures due to lax regulation and supervision of the asset side of the US banking system, and it’s a work in progress, ... </i> Warren Mosler<br /><br />That work in progress included redlining* at one time so I'm sure Warren Mosler will be happy to learn he was wrong about liability side discipline since we've never really tried it.<br /><br />*which still exists in a more inclusive form since the deposits of the poor of all colors are still trapped within the banking/credit union cartel yet they are the least or non so-called creditworthy.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-54710680017488089832016-06-13T17:15:41.386-04:002016-06-13T17:15:41.386-04:00Disciplining banks on the liability side has been ...<i>Disciplining banks on the liability side has been tried repeatedly and always and necessarily fails. First, it’s fundamentally impractical to the point of ridiculous to expect anyone looking to open a checking account or savings account, for example, to be responsible for analyzing the finances of competing banks for solvency, when even Wall Street analysts can’t reliably do this. </i> Warren Mosler<br /><br />Agreed except for the "necessarily fails" parts since bank liabilities are largely virtual wrt population except during runs on the banks when even the mattress beats a bank deposit and when bank liabilities become crushingly real and largely unmeetable. So how can there be liability discipline with largely virtual liabilities?<br /><br />So how about we make bank liabilities real at ALL times by allowing all citizens to have inherently risk-free accounts at the central bank and by abolishing government-provided deposit insurance and other privileges for the banks?<br /><br /><br /><i>The US leaned this the hard way when the banking system was closed in 1934, reopening with Federal deposit insurance for bank deposits for the sole purpose of removing this responsibility from the market place. Regulation and supervision on the asset side then became the imperative. And while we have seen periodic failures due to lax regulation and supervision of the asset side of the US banking system, and it’s a work in progress, <b>the alternative of using the liability side of banking for market discipline exposes the real economy to far more disruptions and far more destructive systemic risk.</b> </i> Warren Mosler [bold added]<br /><br />The allowance of inherently risky-free accounts for all at the central bank means we would have TWO payment systems: One dependent on the banks and one NOT dependent on the banks. Do you think that might reduce systemic risk, Warren?Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-63358991001797649462016-06-13T16:00:58.014-04:002016-06-13T16:00:58.014-04:00Ben, that Tweet was a joke. The follow up was:
Sa...Ben, that Tweet was a joke. The follow up was:<br /><br />Sanders supporters are either geniuses buying super cheap out of the money options or they're pissing money down a hole....<br /><br />In retrospect, it wasn't very funny, but I'm not a very funny person. Cullen Rochehttps://www.blogger.com/profile/04305383286133317610noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-31104354543617459652016-06-13T14:53:21.548-04:002016-06-13T14:53:21.548-04:00Fixing the Small Banks
The Obama administration h...<i>Fixing the Small Banks<br /><br />The Obama administration has been preaching the importance of fixing the small banks and getting them lending again. This will review what I see as the critical issue and how to fix it.<br /><br />First, the answer:<br /><br />1. The Fed should loan fed funds (unsecured) in unlimited quantities to all member banks.<br /><br />2. The regulators should then drop all requirements that a % of bank funding be ‘retail’ deposits.<br /><br />Yes, it is that simple. This simple, easly to implement ‘fix’ will immediately work to restore small bank lending from the bottom up by removing unnecessary costs imposed by current government policy.</i> from http://moslereconomics.com/2009/12/26/fixing-the-small-banks/ <br /><br />So what Mosler wants to do is eliminate any dependence of the banks on retaining depositors and make them pure counterfeiters for the benefit of the rich, the most so-called credit worthy - eliminating any pretense of loanable funds?<br /><br />Well, at least it should shut Krugman up and make it obvious that the rich loot the poor, the least so-called creditworthy, and that there are no such things as patient lenders funding loans for impatient borrowers wrt banks.<br /><br />But, of course, it's 180 degrees the wrong approach. The correct approach is to gracefully reduce the banks to 100% private businesses with 100% voluntary depositors. And that requires the allowance of accounts for all at their respective central banks and the abolition of government-provided deposit insurance and other privileges for the banks.<br /><br />In Warren's defense, the allowance of accounts for all at their respective central banks is a new wrinkle that is nearly unthinkable for most. Probably because it smacks of "666". Nevertheless, it is logically an inherent duty of a monetary sovereign to provide a risk-free storage and transaction service in its fiat for all citizens otherwise it condemns them to relying on private banks, historically a scourge on mankind.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-18292956325730778922016-06-13T14:05:29.021-04:002016-06-13T14:05:29.021-04:00Which is why the MMT crowd should seriously addres...<i>Which is why the MMT crowd should seriously address deprivileging the banks so as to maximize the amount of new fiat that can be injected into the economy for a given amount of price inflation.<br /></i><br /><br />See Warren Mosler's proposals on banking.<br /><br /><a href="http://moslereconomics.com/proposals/" rel="nofollow">http://moslereconomics.com/proposals/</a>Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-43506312681170575292016-06-13T14:00:01.147-04:002016-06-13T14:00:01.147-04:00but only by inflationary concerns within the econo...<i>but only by inflationary concerns within the economy. </i> Salsabob<br /><br />Which is why the MMT crowd should seriously address deprivileging the banks so as to maximize the amount of new fiat that can be injected into the economy for a given amount of price inflation.<br /><br />Not to mention that said privileges loot the poor for the benefit of the rich.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-44244749631731079122016-06-13T12:35:01.997-04:002016-06-13T12:35:01.997-04:00The real power, however, of federal spending/credi...<i> The real power, however, of federal spending/credit creation within the endogenous banking system is that it cannot be refused by the system ...</i> Salsabob<br /><br />Of course it can be refused but who would be silly enough to do so, especially if they have unavoidable taxes to pay?<br /><br />Or if you mean that fiat is largely trapped within accounts of the usury cartel at the central bank and that thus interest rates in fiat can be driven to near zero by federal spending, the solution to that is not IOR or other welfare for the banks and the rich but to allow everyone to have inherently risk-free accounts at the cb and abolish government provided deposit insurance.<br /><br />Btw, brilliant comment otherwise.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-32657889261558601512016-06-13T11:43:10.555-04:002016-06-13T11:43:10.555-04:00Cullen has made a major contribution to the field ...Cullen has made a major contribution to the field with his insights of the monetary sovereign having "outsourced" 'money printing' to the banking system. The fundamental tweak he needs is with what he calls the hierarchy of money within that mechanism. His metric is the relative size of spending/credit creation in the economy, and the federal government, although the largest single entity, pales against all non-federal spending/credit creation. The real power, however, of federal spending/credit creation within the endogenous banking system is that it cannot be refused by the system and it does not need to be paid back, on net, but rolled over indefinitely. No non-federal entity has this power within the endogenous money-printing system that has been outsourced to the private sector.<br /><br />When the capitalist system drives toward unemployment, it is the monetary sovereign that can address that by spending, even without further taxation (that would be counter productive), and not be constrained by any borrowing limits within the banking system, but only by inflationary concerns within the economy. That is unique and powerful.<br /><br />Cullen knows all this and could connect the dots within the banking system mechanism he has elegantly laid out; it just that he is perhaps too concerned with those who can't seem to accept his basic framework because it looks like it threatens the power of the monetary sovereign when it actually does not.Salsabobhttps://www.blogger.com/profile/06056713962363584884noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-12856823556136349352016-06-13T11:34:58.047-04:002016-06-13T11:34:58.047-04:00This comment has been removed by the author.Salsabobhttps://www.blogger.com/profile/06056713962363584884noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-84257554774081292362016-06-13T10:19:56.478-04:002016-06-13T10:19:56.478-04:00https://mobile.twitter.com/cullenroche/status/7395...<i>https://mobile.twitter.com/cullenroche/status/739590855497895936</i> Ben Johannson<br /><br />"Free stuff", Cullen?<br /><br />Or restitution* for legalized theft by the government-privileged banks and the most so-called creditworthy, the rich?<br /><br />If you want to attack socialism, the place to start is with socialism for the rich and special interests such as usurers. And then guess what? Less socialism will be needed for the rest of the population.<br /><br /><br />*Though it's more like amelioration on the cheap than true restitution.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-56178159051757226472016-06-13T08:44:44.508-04:002016-06-13T08:44:44.508-04:00Here you are with the now standard "grifters&...Here you are with the now standard "grifters" meme.<br /><br />https://mobile.twitter.com/cullenroche/status/739590855497895936Anonymoushttps://www.blogger.com/profile/11018306000410021518noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-5091764733664717682016-06-12T19:42:42.961-04:002016-06-12T19:42:42.961-04:00I attack the poor? How, by consistently advocating...I attack the poor? How, by consistently advocating for a trillion dollars in annual deficit spending for the last 7 years? At some point your baseless name calling and blatantly misleading comments become tiresome....Cullen Rochehttps://www.blogger.com/profile/04305383286133317610noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-71204957108152542482016-06-12T19:10:22.761-04:002016-06-12T19:10:22.761-04:00if one of the goals of taxing is to create unemplo...<i> if one of the goals of taxing is to create unemployment then why not provide work for everyone.</i> Kristjan<br /><br />Give people a BIG and assets such as land and they'll find their own, by definition, meaningful work to do, much as they used to before they were dispossessed by the government-privileged* banks of their farms, businesses and the commons. Or they can volunteer to work for others or for government if they need to be ordered around.<br /><br />*including implicit privileges such as the lack of a fiat accounting and transaction service for all citizens provided by the monetary sovereign. This has left the citizens to the mercy of private banks.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-9513064452599547002016-06-12T19:01:40.908-04:002016-06-12T19:01:40.908-04:00MMT's explanation for unemployment is function...MMT's explanation for unemployment is functionally identical to Keynes'. In both Knightian uncertainty resulting from monetization tends toward a sub-optimal and unstable level of resource utilization.Anonymoushttps://www.blogger.com/profile/11018306000410021518noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-17655716441613161052016-06-12T18:56:23.298-04:002016-06-12T18:56:23.298-04:00Yoi attack the poor, you're a conservative. Yo...Yoi attack the poor, you're a conservative. You advocate pain for others' own good, you're a conservative. End of discussion.Anonymoushttps://www.blogger.com/profile/11018306000410021518noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-74522544212000506402016-06-12T18:11:59.509-04:002016-06-12T18:11:59.509-04:00This comment has been removed by the author.Ahttps://www.blogger.com/profile/17386123430230365251noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-66709095607727998982016-06-12T17:20:49.522-04:002016-06-12T17:20:49.522-04:00"Not that an ELR is justice either since it s..."Not that an ELR is justice either since it subsidizes (via worker training/disciplining) and supplements private sector wage slavery with public sector wage slavery."<br /><br />Well you could argue that state with its violence is not justice. Once you get passed that then you have to ask: if one of the goals of taxing is to create unemployment then why not provide work for everyone. Kristjanhttps://www.blogger.com/profile/09592440548093816331noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-44274048020678034202016-06-12T17:01:22.188-04:002016-06-12T17:01:22.188-04:00Yes, as I stated above, that quote was anecdotal a...Yes, as I stated above, that quote was anecdotal and a dangerous generalization. It does not reflect my actual view. Cullen Rochehttps://www.blogger.com/profile/04305383286133317610noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-78235328791618469422016-06-12T16:54:59.371-04:002016-06-12T16:54:59.371-04:00"Well, this is where we differ. You guys see ...<i>"Well, this is where we differ. You guys see no need for unemployment. I do. I think it serves an incredibly important psychological component to any healthy economy. I’ve feared for my job and been unemployed. Those moments shaped who I am and what I’ve become. </i> CR<br /><br />Irrelevant. Injustice is not permissible despite whatever (questionable) good it may accomplish in the victim's character.<br /><br />What you should aim for is justice and ask why people should be so desperate as to need to slave for others in the first place?<br /><br />Not that an ELR is justice either since it subsidizes (via worker training/disciplining) and supplements private sector wage slavery with public sector wage slavery.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-25633151106657190682016-06-12T16:39:56.783-04:002016-06-12T16:39:56.783-04:00I was not trying to throw a bobm at you, I still r...I was not trying to throw a bobm at you, I still remembered that comment and I was looking for It. I didn't know you have changed your views. To be honest I stopped reading you just around that time. So I might not know youur newer stuff. NFA makes perfect sence to me. It is a good way of explaining It. I think Minsky and other Post Keynesians have said that deficit spending and economic growth will not solve unemployment problem. That is why ELR program is needed, not to mention that it is anti inflationary stabilizing measure. <br /><br />One size will never fit all. I was lucky enough to meet Randy recently, He was a lecturer in Estonia . He said that during FDR 13 million jobs were created by government and there was not a single major corruption issue with the program, now It would be different and the program would have to be decentralised probably. So the same doesnüt fit even America today in his opinion. I don't see why Argentina canõt have full employment and ELR program. Kristjanhttps://www.blogger.com/profile/09592440548093816331noreply@blogger.com