Jim Kessler makes the case for the Third Way New Democrat approach to entitlements against Jamie Galbraith. The president, like President Clinton, is a Third Way New Democrat. Revealing.Read it at The New York Times | Opinion
Boomers and Entitlements: The Next Round
Jim Kessler | Senior Vice President for Policy, Third Way
(h/t Kevin Fathi via email)
Dean Baker responds.
Read it at FDL
Fun With Bill Keller and Jim Kessler about Baby Boomers Abusing Their Kids
Dean Baker
Dylan Matthews joins the fray.
Read it at The New York Times
No, Social Security and Medicare aren’t crowding out R&D and education
Posted by Dylan Matthews
Both the Baker and Matthews replies were very good. Where's the MMT reply?
ReplyDeleteWhere are the Baker and Matthews' replies?
ReplyDeleteObviously, Galbraith has the better of the argument and the Kessler post is illiterate nonsense...
I left a comment there, Joe, but either they are late reviewing and approving comments or it is not going to happen at all.
ReplyDeleteI said that comparing the US, UK, Japan, Canada, Australia and other currency issuers with the EMU countries was like comparing the US federal govt. with state govts. The federal govt is the issuer and the states are the users. The ECB is the issuer and the national govts are the users. The EMU countries face a solvency constraint like all currency issuers, while the US, UK, etc. do not.
The notion that the US has to give up one desirable thing to another desirable thing due to affordability is a neoliberal canard.
But its obvious that the Third Way New Democrats are for cutting entitlements anyway. They are just looking for a cover to do so.
Baker: "Spending money puts people to work. Contrary to a bizarre cult in policy circles, it does not matter whether money comes from the private sector or public sector –dollars will get people to work. And the people who get those dollars will spend them and put other people to work. If Keller and Kessler want to be responsible baby boomers they will do everything in their power to try to get us back to full employment quickly so that so many children do not have to grow up in families that are troubled by unemployment. The next generation will thank them for their efforts, I assure them."
ReplyDeleteGrrrrrreat stuff...
Baker was on yahoo this week here:
http://finance.yahoo.com/blogs/daily-ticker/fed-hints-more-action-waiting-dean-baker-asks-113811876.html
For Dean Baker: wrt the topic of Monetary Policy discussed in the Yahoo hit, at this point, there is nothing the Fed can do, FISCAL policy has to be employed at this point. Suggest you get on THIS message....
rsp,
Dan,
ReplyDeleteThis is from JG here:
"On the budget, you go on to assert that “the arithmetic simply doesn’t work.” If you mean that the federal fiscal position is unsustainable – a widely-held view – you are again misinformed. How do we know? Partly, because the markets clearly have full confidence in the US fiscal position – as evidenced by the record low long-term interest rates at which people with money are willing to lend to the US Government. And if you don’t trust the markets, you can also look at the numbers, as I do here. Either way, the conclusion is the same. Contrary to repeated scare- mongering, the United States public debt position is not unsustainable."
My emphasis.
JG believes (imo) that "money" is exogenous to the govt.
iow, I read this as JG believes that govt has to go outside of it's own legal authority, ie to the non-govt sector, to be able to obtain "money" to be able to spend for govt provision. This is "gold standard thinking".
This is patently FALSE.
FALSE in many ways, not the least of which is the present LEGAL option (steadfastly chronicled by Joe) that Treasury has to be able to deposit a large platinum coin with the banking system to top-over the TGA with balances that can be used to execute appropriations.
So JG takes the same view on "money" as Peter Schiff, only JG claims that things will work out this way while Schiff claims they not work out eventually as the exogenous sources of "money" to the govt will decide not to provide the "money".
This line of reasoning used by JG can easily turn into a "no it won't... yes it will" type of claim and counter claim.
It is a weak form of argument and easily can lead to some type of reducto by the other side.
It's a line of argument that won't ever work because the whole premise of exogenous money that it is based on IS FALSE.
The stronger form of argument is the mathematical one based on the closed systems approach.
Where to paraphrase Warren "to do a reserve drain, you first have to have done a reserve add".
So the basis of this Democrat group "Third Way" (should read "Moron Way") position that the US Treasury is dependent on limited exogenous sources of "money" logically cannot be refuted by JG here if JG concedes the point that the USD system is based on exogenous "money".
Turns into a "he said... she said" quickly AND WE CONTINUE TO GET NOWHERE.
So I dont see how JG's line of argument can ever work with these people. You end up playing right into their hands.
Rsp,
Matt,
ReplyDeleteThat's a great little nugget you found hidden in there.
And your follow-up is spot-on.
You have illuminated the apparent fact that most minds are confused by the Treasury bond-selling operation that transforms enabling into "borrowing".
It only takes one simple sleight-of-hand to turn their brains into mush.
No wonder the simple shell-game has been so successful through the ages.
Matt, I agree. I think JG is playing into their frame. However, he's very aware of PPCS and also supportive. In fact, I suspect he was the person who reached Matty Ygelsias, Felix Salmon, and Jack Balkin, to look at PPCS and help us reach the mainstrean a year ago.
ReplyDeleteBtw, I have a petition to Obama up on minting the $60 T coin, here: http://signon.org/sign/end-austerity-mint-the
ReplyDeleteMy impression of JG is that he tries to chip away at the mainstream without going full-frontal at it, as full-frontal mostly gets you dismissed without review. Krugman has made this point (though not about MMT) a number of times in his blog. A survey of "top" mainstream journals would seem to confirm this point. (Note that JG is listed as a presenter in the upcoming second MMT Italia conference in October.)
ReplyDelete