These posts cut to the heart of the questions we need to be asking about key fundamentals such as democracy, capitalism, banking, central banking, finance, investment, saving, credit, debt, government, sovereignty, public purpose, etc. They boil down the tradeoffs between private banking and nationalized banking.
Institutional role of the Federal Reserve
Winterspeak
All Your Dorks Are Belong to This
Cullen Roche, Pragmatic Capitalism
I got to a small confrontation with Cullen who maintains MMTers have a hidden agenda of nationalizing the banking sector. Not sure about Wray, Mosler etc, but us the dilettantes who promote MMT on the web are simply not sophisticated enough for hidden agendas.
ReplyDeletePeter,
ReplyDeleteHis exhibit A for MMT's "hidden agenda" was this post from Bill Mitchell where he said he favors nationalizing the banks.
In spite of that position having the twin attributes of being very public and explicitly prefaced as "not a statement of MMT principles" it was the cornerstone of his idea that MMT has a hidden agenda of nationalizing the banks.
Peter, Cullen took off from a mention Bill Mitchell made about it.
ReplyDeleteCullen also seems to think that bank nationalization policy follows from the MMT economists assertion that state money is a government monopoly, which Warren has explained simply means that government sets the own rate of its currency (Fed set the overnight rate), and government determines the prices it will pay for goods and services it transfers to public use by operating in markets using its currency, which it creates.
In creating bank money, banks can only create a promise to settle in the currency on demand, e.g., when a customer demands a withdrawal of cash from a deposit account or makes a transfer by check or electronic transfer that clears in rb if not netted. Final settlement after netting takes place using state money, which banks cannot create but must obtain. The govt also sets the standards for loan collateral.
Warren's reform proposals reveal that bank nationalization is not his agenda.
Randy Wray and Bill Black hold that the law requires putting insolvent banks into resolution and that law was disregarded in the case of the TBTF's. But resolution is hardly permanent nationalization, and Bill Black asserts that the claim the TBTF's were not put into resolution was due to complication is just false. Equity holders would have taken the first hit, then debt holders, and management would have been replaced, probably by breaking up the banks into separate division. Bill says it could be accomplished quite expeditiously.
Information update.
ReplyDeleteLevy Economics Institute, Monetary and Financial Structure Research Program:
Beyond the Minsky Moment
Dimitri B. Papadimitriou, Jan Kregel, James K. Galbraith, L. Randall Wray, Greg Hannsgen, Marshall Auerback, Jörg Bibow, Steven M. Fazzari, Michael Hudson, Thorvald Grung Moe, Robert W. Parenteau, Sunanda Sen, Willem Thorbecke, Éric Tymoigne
www.levyinstitute.org/pubs/eBook_2012.pdf
L.Randall Wray:
What Should Banks Do? A Minskyan Analysis
http://www.levyinstitute.org/pubs/ppb_115.pdf
Warren Mosler:
Proposals for the Banking System
http://www.huffingtonpost.com/warren-mosler/proposals-for-the-banking_b_432105.html
Small Banks Being Crushed by the Fed's Game of Musical Chairs
http://www.huffingtonpost.com/warren-mosler/small-banks-being-crushed_b_645944.html
Scott Fullwiler:
How the Crisis Has Changed the Economic Policy Paradigm
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1658234
Scott Fullwiler and L.Randall Wray:
It’s Time to Rein in the Fed
http://www.levyinstitute.org/publications/?docid=1371
Bill Mitchell:
Nationalising the Banks
http://bilbo.economicoutlook.net/blog/?p=12077
James K. Galbraith:
Statement of Professor James K. Galbraith to the Subcommittee on Domestic Monetary Policy and Technology, Committee on Financial Services, US House of Representatives
http://www.levyinstitute.org/publications/?docid=1165
A “People First” Strategy
http://www.levyinstitute.org/publications/?docid=1129
Eric Tymoigne:
It Isn't Working: Time for More Radical Policies
http://www.levyinstitute.org/pubs/ppb_105.pdf
Financial Stability, Regulatory Buffers, and Economic Growth
http://www.levyinstitute.org/publications/?docid=1333
William K. Black:
Statement to the United States House of Representatives, Committee on Financial Services, April 20, 2010
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1607043
Those Who Forget the Regulatory Successes of the Past are Condemned to Failure
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1536531
Good luck reading all of that!