An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Thursday, December 6, 2012
Chris Hayes on the Debt Ceiling, Fiscal Cliff and Platinum Coin
I cant help but to view this as he "does not take this seriously" ... Rachel's show is generally "quirky" in my view..
Perhaps this "quirky-ness" is required for an intro... but now he is going to have to get SERIOUS with the proposal if he really believes in it....
The other side knows how to use repetition with their false metaphors. ("fiscal cliff", "fiscal cliff", etc...)
If this guy REALLY believes in this then he has to STAY ON MESSAGE and not just drop it and bring it up again in a couple of months as some sort of "quirky" report....
The other side is RELENTLESS in banging their drum of false metaphor.... RE-LENT-LESS...
f-ing Walker shows up EVERYWHERE with the same falsehoods DAY AFTER DAY AFTER DAY....
I think most journalists think the system will muddle along no matter what we do, that all of these ideas are mere "tweaks" to maybe help until "expectations" come back because after all, if we were more confident we would all spend more and everything would be OK.
If the system collapses over spending cuts they still would not see the cause…the Sun appears to orbit the Earth and that must be the way it is.
They are watching this very thing happen in Europe and they don't see what is causing it, because it is too simple so that can't be it.
Life is very complicated.
If people understood "containers" and the constraints implied by the concept it might make more sense but It appears this kind of cognitive ability must be taught from early childhood.
Maybe this is all just a big joke…everyone actually knows how it really works but just like messing with us, taking our lunch money.
And now for the flip side of the coin (sorry could not resist)
White House Plan over 10 years
$1.6 trillion in tax increases + $350 billion in Medicare/Medicaid cuts + $250 billion in other spending cuts - $400 Billion in new "stimulus" spending ----------------------------------- $1.8 trillion (over to years)
Republican / Boehner Plan over 10 years
$800 billion in tax increases +$600 billion in Medicare/Medicaid/Obamacare cuts +$800 billion in other spending cuts --------------------------------------- $2.2 trillion (over 10 years)
If you divide these numbers by 10 it means that everyone is getting their undies tied up in knots over a difference of between $180 billion versus $220 billion in "savings."
Meanwhile, everyone is ignoring the fact that the federal budget deficit declined by $206 billion in FY 2012 without any tax increases or any spending cuts.
This weak and tepid economic recovery is nevertheless throwing off enough additional tax revenue to organically whittle down the deficit on its own without any help from Congress or the White House. The path of least resistance is to just do nothing and see what another year brings.
Of course this would mean repealing the Budget Control Act of 2011, which was the brilliant kick the can down the road solution to raising the debt ceiling back in August of 2011. However, instead of getting into another battle over the debt ceiling again in January or February, the Fed and Treasury should wave a magic wand over $1.6 trillion of Treasury holdings acquired by the Fed via QE purchases and either declare that it does not apply to the debt ceiling or cancel it altogether.
This Treasury debt held by the Fed is nothing more than an obligation that the government owes itself. Annual interest of about $80 billion in recent years paid by the Treasury to the Fed is subsequently remitted right back to the Treasury.
Canceling this debt would reduce outstanding debt to about $14.6 trillion, which is well below the current $16.4 trillion statutory debt ceiling limit, and it would buy policy makers about a year and a half of breathing space to formulate sensible pro-growth economic policy. The biggest risk at this time would be a policy mistake by the government which only exacerbate the economic mess or trigger a relapse back into recession or depression.
Paul I just saw disgraced Larry summers on cnbc inteviewing some senator and the senator (GOPer) wanted to let the payroll tax holiday expire because it was 'undermining the sustainability of social security"...
This guy (lawyer probably) doesnt understand "containers" I'm afraid and he still gets his information from manifest failed academic economists on "how it works"...
The path of least resistance is to just do nothing and see what another year brings.
Yes. They're crazy. But they have invested so much political capital in convincing the public that there is a budget emergency, that it is almost impossible for them to now say, "Oh, never mind."
Matt, there are some young people who are pretty good thinkers that are influencing public opinion through the media now and Hayes only one of them. I think we need to focus on bringing as many aboard as quickly as possible. I think that the MMT people who located close to the media centers of NYC and DC could become the tip of the spear here. They should also be invited to the Levy conferences, etc.
Thanks for the report Ed. To me, it shows that the deficit is not actually the issue. It's a political agenda concealing a hidden agenda of "starving the beast." And that hidden agenda is not so hidden. Grover Norquist and other GOP strategists have been talking about it for years.
And could you briefly explain the importance of "containers" -- I'm not familiar with the notion.
Thanks, Katie
(remember me? our little run-in. Well, it got me out of lurking. I'm out of a job right now, and am spending some time everyday on Huff Post responding to comments from an MMT perspective. Huff Post is awful, I feel I'm a hero :)
Tom Hickey - I wasn't trying to make the deficit the issue per se. Just trying to defuse the ticking time bomb. If you read some of my posts on Warren Mosler's website you might detect that my leanings on political economy are something of a hybrid of MMT, Supply Side and Austrian school. I don't see it as us vs. them. Instead I am looking for areas where all of these camps can find some common ground. I'm looking for a dialectical interplay to kick things up to a higher level. BTW, aside from Chris Hayes, who else do you have in mind in the media world, because I used to work for Thomson Reuters and had Warren on as a guest on Reuters Insider TV several times. Maybe you saw some of the segments .
Being 73, I would say that you, Mike, John Carney, etc. are youngsters, but I was thinking specifically of smart up-and-comers like Chris Hayes, Cenk Uygur, Rachel Maddow, Ezra Klein, Evan Soltas, etc. People that do homework.
These are the people that are put on specifically to appeal to the 24-54 market segment. This is the segment that MMT needs to aim at, too.
Do you know if Mike has tried getting on air at Current TV or on The Young Turks? I ask because Cenk Uygur has unfortunately always portrayed himself as a "deficit hawk," and I really wish someone from the MMT side would bring him over, given his audience. It seems that same feat has now been accomplished with Sam Seder.
Thanks Tom. The only reason people are talking about it is that Joe Firestone bugged the hell out of people last year to the point Jamie Galbraith actually looked into it himself, saw that it was legal and then started pitching it behind the scenes including(one strongly suspects) Yale law professor Jack Balkin. It was Balkin's endorsement of the trillion dollar coin's legality that led to people like DeLong, Krugman and Yglesias talking it up.
So I'd give credit to Firestone, Galbraith and Balkin for taking the leading oar on this.
One point I haven't seen made, any excess reserves created or maintained by the TDC must have IOR paid on it by the Fed (which charges it back to Tsy). IOR is 0.25%. However 3 month T-bills are at 0.10%. Here's how absurd our situation is, we're worried about the national debt at a time when its actually cheaper to borrow money than to create it out of thin air.
Do you know if Mike has tried getting on air at Current TV or on The Young Turks? I ask because Cenk Uygur has unfortunately always portrayed himself as a "deficit hawk," and I really wish someone from the MMT side would bring him over, given his audience. It seems that same feat has now been accomplished with Sam Seder.
Don't know, but I assume that Mike is exploring all options.
Beowulf for Treasury Secretary
ReplyDeleteI cant help but to view this as he "does not take this seriously" ... Rachel's show is generally "quirky" in my view..
ReplyDeletePerhaps this "quirky-ness" is required for an intro... but now he is going to have to get SERIOUS with the proposal if he really believes in it....
The other side knows how to use repetition with their false metaphors. ("fiscal cliff", "fiscal cliff", etc...)
If this guy REALLY believes in this then he has to STAY ON MESSAGE and not just drop it and bring it up again in a couple of months as some sort of "quirky" report....
The other side is RELENTLESS in banging their drum of false metaphor.... RE-LENT-LESS...
f-ing Walker shows up EVERYWHERE with the same falsehoods DAY AFTER DAY AFTER DAY....
We'll see what Hayes does here...
rsp,
I think most journalists think the system will muddle along no matter what we do, that all of these ideas are mere "tweaks" to maybe help until "expectations" come back because after all, if we were more confident we would all spend more and everything would be OK.
ReplyDeleteIf the system collapses over spending cuts they still would not see the cause…the Sun appears to orbit the Earth and that must be the way it is.
They are watching this very thing happen in Europe and they don't see what is causing it, because it is too simple so that can't be it.
Life is very complicated.
If people understood "containers" and the constraints implied by the concept it might make more sense but It appears this kind of cognitive ability must be taught from early childhood.
Maybe this is all just a big joke…everyone actually knows how it really works but just like messing with us, taking our lunch money.
And now for the flip side of the coin (sorry could not resist)
ReplyDeleteWhite House Plan over 10 years
$1.6 trillion in tax increases
+ $350 billion in Medicare/Medicaid cuts
+ $250 billion in other spending cuts
- $400 Billion in new "stimulus" spending
-----------------------------------
$1.8 trillion (over to years)
Republican / Boehner Plan over 10 years
$800 billion in tax increases
+$600 billion in Medicare/Medicaid/Obamacare cuts
+$800 billion in other spending cuts
---------------------------------------
$2.2 trillion (over 10 years)
If you divide these numbers by 10 it means that everyone is getting their undies tied up in knots over a difference of between $180 billion versus $220 billion in "savings."
Meanwhile, everyone is ignoring the fact that the federal budget deficit declined by $206 billion in FY 2012 without any tax increases or any spending cuts.
This weak and tepid economic recovery is nevertheless throwing off enough additional tax revenue to organically whittle down the deficit on its own without any help from Congress or the White House. The path of least resistance is to just do nothing and see what another year brings.
Of course this would mean repealing the Budget Control Act of 2011, which was the brilliant kick the can down the road solution to raising the debt ceiling back in August of 2011. However, instead of getting into another battle over the debt ceiling again in January or February, the Fed and Treasury should wave a magic wand over $1.6 trillion of Treasury holdings acquired by the Fed via QE purchases and either declare that it does not apply to the debt ceiling or cancel it altogether.
This Treasury debt held by the Fed is nothing more than an obligation that the government owes itself. Annual interest of about $80 billion in recent years paid by the Treasury to the Fed is subsequently remitted right back to the Treasury.
Canceling this debt would reduce outstanding debt to about $14.6 trillion, which is well below the current $16.4 trillion statutory debt ceiling limit, and it would buy policy makers about a year and a half of breathing space to formulate sensible pro-growth economic policy. The biggest risk at this time would be a policy mistake by the government which only exacerbate the economic mess or trigger a relapse back into recession or depression.
Paul I just saw disgraced Larry summers on cnbc inteviewing some senator and the senator (GOPer) wanted to let the payroll tax holiday expire because it was 'undermining the sustainability of social security"...
ReplyDeleteThis guy (lawyer probably) doesnt understand "containers" I'm afraid and he still gets his information from manifest failed academic economists on "how it works"...
We press on.... rsp,
The path of least resistance is to just do nothing and see what another year brings.
ReplyDeleteYes. They're crazy. But they have invested so much political capital in convincing the public that there is a budget emergency, that it is almost impossible for them to now say, "Oh, never mind."
Matt, there are some young people who are pretty good thinkers that are influencing public opinion through the media now and Hayes only one of them. I think we need to focus on bringing as many aboard as quickly as possible. I think that the MMT people who located close to the media centers of NYC and DC could become the tip of the spear here. They should also be invited to the Levy conferences, etc.
ReplyDeleteThanks for the report Ed. To me, it shows that the deficit is not actually the issue. It's a political agenda concealing a hidden agenda of "starving the beast." And that hidden agenda is not so hidden. Grover Norquist and other GOP strategists have been talking about it for years.
ReplyDeleteTom, MMT needs a media PR person.
ReplyDeleteGosh, I hate that. But it's true.
And could you briefly explain the importance of "containers" -- I'm not familiar with the notion.
Thanks,
Katie
(remember me? our little run-in. Well, it got me out of lurking. I'm out of a job right now, and am spending some time everyday on Huff Post responding to comments from an MMT perspective. Huff Post is awful, I feel I'm a hero :)
y,
ReplyDeleteI'd love to know who Beuwolf actually is.
And I'm scared of our next Try Secretary, and I don't even know who it is, but I'm very, very scared.
Tom Hickey - I wasn't trying to make the deficit the issue per se. Just trying to defuse the ticking time bomb. If you read some of my posts on Warren Mosler's website you might detect that my leanings on political economy are something of a hybrid of MMT, Supply Side and Austrian school. I don't see it as us vs. them. Instead I am looking for areas where all of these camps can find some common ground. I'm looking for a dialectical interplay to kick things up to a higher level. BTW, aside from Chris Hayes, who else do you have in mind in the media world, because I used to work for Thomson Reuters and had Warren on as a guest on Reuters Insider TV several times. Maybe you saw some of the segments .
ReplyDeleteI'd love to know who Beuwolf actually is.
ReplyDeleteLawyer Carlos Mucha, proving that not all lawyers are a**holes, as the lawyer jokes would suggest.
"containers" = open and closed systems used in modeling.
ReplyDeleteYes, Ed, I saw some of those clips. Good stuff.
ReplyDeleteBeing 73, I would say that you, Mike, John Carney, etc. are youngsters, but I was thinking specifically of smart up-and-comers like Chris Hayes, Cenk Uygur, Rachel Maddow, Ezra Klein, Evan Soltas, etc. People that do homework.
These are the people that are put on specifically to appeal to the 24-54 market segment. This is the segment that MMT needs to aim at, too.
Tom,
ReplyDeleteDo you know if Mike has tried getting on air at Current TV or on The Young Turks? I ask because Cenk Uygur has unfortunately always portrayed himself as a "deficit hawk," and I really wish someone from the MMT side would bring him over, given his audience. It seems that same feat has now been accomplished with Sam Seder.
Thanks Tom. The only reason people are talking about it is that Joe Firestone bugged the hell out of people last year to the point Jamie Galbraith actually looked into it himself, saw that it was legal and then started pitching it behind the scenes including(one strongly suspects) Yale law professor Jack Balkin. It was Balkin's endorsement of the trillion dollar coin's legality that led to people like DeLong, Krugman and Yglesias talking it up.
ReplyDeleteSo I'd give credit to Firestone, Galbraith and Balkin for taking the leading oar on this.
One point I haven't seen made, any excess reserves created or maintained by the TDC must have IOR paid on it by the Fed (which charges it back to Tsy). IOR is 0.25%. However 3 month T-bills are at 0.10%. Here's how absurd our situation is, we're worried about the national debt at a time when its actually cheaper to borrow money than to create it out of thin air.
Do you know if Mike has tried getting on air at Current TV or on The Young Turks? I ask because Cenk Uygur has unfortunately always portrayed himself as a "deficit hawk," and I really wish someone from the MMT side would bring him over, given his audience. It seems that same feat has now been accomplished with Sam Seder.
ReplyDeleteDon't know, but I assume that Mike is exploring all options.
"proving that not all lawyers are a**holes"
ReplyDeleteAND
that some lawyers can also "do the math"... beo is a bit of an enigma in this regard (also;) imo.... a very balanced intellect... rsp
Talk of the platinum coin is everywhere these past couple days...
ReplyDeleteHere's Carney...
http://www.cnbc.com/id/100285772
"Talk of the platinum coin is everywhere these past couple days..."
ReplyDeleteAdam,
Good news... That's what we need to happen, this is how the other side operates ie Battology: useless repetition
Our "memes" need to match theirs with equal and opposite magnitude and phase.... if we can get access to the "soapboxes"...
rsp,
Matt, Ive always been a believer in "the cream rises"…and so it should happen here.
ReplyDeleteRemember, just a few short years ago many thought everything was hunky-dory. Then the bottom fell out.
When the person that did everyting right all his her/life lost everything the reason to look for a better way became a big priority.
This comment has been removed by the author.
ReplyDelete