John Harvey (MMT in paradigm) takes issue with the confusion surrounding the govt exclusive use of the Modified Accrual basis of accounting here:
It’s not a pension fund into which you put your money when you are young and from which you draw when you are old. It’s an immediate transfer from workers today to retirees today.
What John is saying in effect is that you cant accrue on the right side while using cash basis on the left side... he is recommending Cash Basis for both sides...
"Social Security Is Not In Trouble" https://t.co/9SAhQteaxu— Nathan Becker (@netbacker) December 22, 2016
I know you guys have seen it, but for the few here who haven't ...
ReplyDeleteWarren Mosler on Social Security
https://www.youtube.com/watch?v=Q5M6HI4ZoR4
OT
ReplyDeleteHolidays have begun for me with guests.
Light and late posting and commenting, probably through New Year's.
The Forbes article is now MIA leads to a 404 error
ReplyDeleteUnk,
ReplyDeleteIts a conspiracy!!!!
Seems to come up over and over, here are the relevant links I go to:
ReplyDeleteOne of the best posts ever made on MNE from 4 years ago:
http://mikenormaneconomics.blogspot.com/2012/09/2005-video-of-greenspan-admitting.html
With included links from our own officials. No fake news, no alt-right, no Russians, or whatever shit the media is pushing this week:
https://www.c-span.org/video/?c3886511/2005-greenspan-ryan-024200
http://www.ssa.gov/history/Gulick.html
Holidays have begun for me with guests.
ReplyDeleteLight and late posting and commenting, probably through New Year's.
Merry Christmas, Tom -- and to all here at MNE!
Beverly Hillbillies - Christmas At The Clampetts :)
https://www.youtube.com/watch?v=D1F0vGvAlfg
Merry Christmas, y'all!
ReplyDeleteMerry Christmas everyone!
ReplyDeleteMerry Christmas also to all here!!
ReplyDeletePS... I think Santa uses regular Accrual Basis for his North Pole operations...
Happy Holidays everyone!!!
ReplyDelete(I'm part of the war on Christmas ;-) !!! )
Greg, on Christmas Day, say: "Happy Newton Day!" That should really piss off the headbangers who have somehow allowed themselves to be brainwashed by neoconservative (probably) atheist warmongers into believing that there is a war on Christmas!
ReplyDeleteMatt should be happy with Newton Day, although given that the calendar was changed and so isn't technically true the accounting and mathematics side of him will probably rebel. "Take an accounting course, you dumb son of a bitch," I can hear him yell from thousands of miles away! Matt is right about some things!!!!!!!!!!!!!!!!!!!
By the way, who likes Magic Mike's beard? Looking good, Mike. I always thought of you as an Old Testament prophet, telling the truth and being ridiculed, mocked and hounded for it.
Peace out.
(I look at it as what should be ideally an Israelite holiday...)
ReplyDeleteVia rote: "I have only been sent but for the lost sheep of the House of Israel...." Mat 15:24
Well I am not of the House of Israel and I'm no f-ing sheep and not lost either...
Merry Christmas, Happy Hanukkah, & Sim Sim Sala Bim!
ReplyDeleteThe Forbes article link points to the wrong article.
ReplyDeleteThis is the correct one. The article title is "Why Social Security Cannot Go Bankrupt"
http://www.forbes.com/sites/johntharvey/2011/04/08/why-social-security-cannot-go-bankrupt/#1b900d38619f
From article: "the argument that it is going bankrupt is a non-starter. It is much ado about nothing."
ReplyDeleteWe then should be able to illustrate this via the standard Accounting....
This chart:
ReplyDeletehttps://mobile.twitter.com/BudgetHawks/status/812088835349749760/photo/1
Is what you would always get as the time domain proceeded, if you didn't understand that the subtrahend and minuend in what you were treating as a subtraction were really the input and output of a function...
https://en.m.wikipedia.org/wiki/Function_(mathematics)
This link
ReplyDeletehttps://twitter.com/budgethawks/status/812088835349749760
Gee, Matt, that last one is stunning for their dumb language, meaning completely unneccesary scaremongering: "Interest payments on the national debt will take up even more of the budget as debt and interest rates increase."
ReplyDeleteFrank Newman explains in his little book about how Treasury transactions work that at the end of August every year, Treasury asks the Federal Reserve for the amount of interest owed for the coming year for all outstanding treasury securities. Then Treasury whomps up some more treasury securities in that amount and sells them at auction. It's in his chapter " Why interest on Treasuries is not a problem for the U.S."
The chaper opens:
"Interest paid on Treasury securities is fundamentally different than the vast majority of government expenditures: interest does not consume economic resources. For many years, economists have distinguished between the total deficit of a government and its “primary deficit,” which refers to the budget deficit excluding payment of interest on Treasuries; the primary deficit is a more meaningful measure of government use of the nation’s economic resources."
Well if Newman "explains" it then why doesn't anybody know this?
ReplyDeleteHere he is wrong about this:
"; the primary deficit is a more meaningful measure of government use of the nation’s economic resources."
This statement doesn't make any functional sense.... we get nowhere...
He is making he same mistakes as the Peterson people....
ReplyDeleteThat's like saying "the thermal loss of a motor is a more meaningful measure of brake horse power..."
ReplyDeleteDoesn't make any sense...
"; the primary deficit is a more meaningful measure of government use of the nation’s economic resources."
ReplyDeleteThis statement doesn't make any functional sense.... we get nowhere...
I read it as meaning the primary deficit transfers private resources to public use whereas interest paid on the public debt doesn't.
However, this is only partially true. Transfer payments do not do this.
He may be thinking that transfer payments are mostly spent on stuff whereas interest income is mostly saved.
He explains "primary deficit" elsewhere in the chapter with these footnotes: "There is a private-sector analog in the use of “EBITDA” by professional investors looking at company financials. The first initials stand for “Earnings Before Interest.”
ReplyDelete"This has been noted by a number of commentators, including Francis X. Cavanaugh, a former treasury official, in his 1996 book The Truth about the National Debt."
As to why no one knosw this? The CBO thought we were going to have surpluses 'as far as the eye can see' in 1999, remember that and crowed about the good fortune? Now they're saying CBO predicts the #SocialSecurity trust funds will be exhausted in 2029." I'm confused why you are quoting the CRFB, #budgethawks. This is the outta money crowd.
Tom, he does. But I'm not about to quote the whole chapter.
ReplyDelete=======================
Matt,
He is making he same mistakes as the Peterson people....
Hunh? He tells people in his book to read Mosler and Fullwiler. Did you read it?
I'm confused why you are quoting Newman he is saying the same thing as CRFB....
ReplyDeleteSo you guys are saying that if the govt buys $1b of fuel and within the same acct period receives 700m of taxes that the govt bought only 300m of fuel?
ReplyDeleteMatt,
ReplyDeleteNo.
Matt, btw, thanks for introducing me to John Harvey. I never read him before. I'm sorta shocked that I haven't, or at least, I have no recollection that I have. I've spent hours this week reacing his past articles.
ReplyDeleteThey are both treating the input and output of a time domain function as an ex post subtraction result...
ReplyDeleteThis is what Warren means when he makes the rote statement "govt spends FIRST and THEN collects the taxes...."
This is an attempt at a rote teaching of what would perhaps be better taught via an active methodology as a time domain function...
J Harvey is 100% in paradigm.... Iirc he collaborates with the MMT people in the academe....
ReplyDeleteTip: The rote ain't workin'....
ReplyDeleteThe rote ain't workin'....
ReplyDeleteSo are you anti-Warren? Sincere question.
What's rote about this? "rote statement "govt spends FIRST and THEN collects the taxes....""
ReplyDeleteIt's accurate. And complicated explanations haven't exactly caught on with the public.
Well the 'complicated' so called isn't working with the specialists either...
ReplyDelete