There is a rational middle between Zero deficits on one side and Modern Monetary Theorists on the other. We can fix our infrastructure, extend broadband to everyone throughout the country, even work to moderate climate change — and the economy will be just fine.
At the very least, can we at least raise the bar for the always-wrongs? Those who have been consistently wrong about the dangers of deficits for so long should no longer get the benefit of the doubt. When your core philosophy or a key belief of your ideology is proven wrong — and you refuse to admit error or change — then it is time for everyone else to call out your Bullshit....
Saturday, September 4, 2021
Time to Stop Believing Deficit Bullshit — Barry Ritholtz
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29 comments:
Mike used to have him on his radio show 15 years ago and he never said anything like this … never … he would challenge Mike on Mikes assertions about “the deficit!”…
He's undergone some personal growth...
I doubt it…
Where has this moron been?
https://www.amazon.com/Bankruptcy-1995-Coming-Collapse-America/dp/0316282065
You can’t tell me he never heard of this book back in the 90s…
.
Now 30 years later it’s time to call BS?
He’s an embarrassment….
Leaving a cult is never easy...
Matt,
EXACTLY!!!!
BR is not the only one I have noticed shifting position on this. At least some previously made up minds are changing. Did MMT play a part in this or are they just finally waking up to reality, belatedly?
Go read the thread on Twitter between Rithotlz and myself. Feel free to chime in.
Mike Norman
Wow, tough crowd. Poor guy is just looking for a safe space...
He’s just doing the “deficit dove” position read his words..,
“ There is a rational middle between Zero deficits on one side and Modern Monetary Theorists on the other.”
He’s implying that MMT is not rational.., please…
He’s implying that MMT is not rational.
Looks like his is still playing it like it looks safe but not as goofy. Still wrong though.
When you believe (or are led to believe), you are smarter than you are.
Can anyone find Ritholtz Wealth Management performance?
@Tom Hickey.
Excatly. Equivocal.
If nobody retains USD balances then deficit will be zero…
I used to read a good bit of Ritholzs stuff back in ‘’07, ‘08, before I found Billy Blog, MNE,and the UMKC crowd and I thought he was pretty good. He was very loud about that whole Fox News driven mantra of the ‘07-8 housing crash being a fault of the CRA (community reinvestment act) being a political weapon and a sham. He showed how in fact the loans that were CRA loans actually were performing better because they had limits on borrowing (300k at the time I believe) and had down payment requirements . He showed it was in fact loans that were Jumbo category with lenders who were often times wanting 3% or less of down payment that were the real culprits. He showed how just a few areas of the country were the trigger points and that these collapses caused an irrational panic in the financial world largely triggered by those CDS contracts going bad in large bundles.
He’s a “finance “ guy so he is monetarist in large part. Most finance guys are it seems to me but I he probably has revised his views somewhat over time as any smart person would that held his previous views. Finance is just monetarism with a time factor
I don’t like how he seems to be putting MMT into the deficits don’t matter at all camp. A more accurate label would be. “ If you see inflation, don’t reflexively look to the level of the deficit FIRST” camp. It’s not as simple as “inflation comes from large deficits”
“ these collapses caused an irrational panic in the financial world”
What does this mean? They somehow “panicked” and stopped providing credit?
No way Jose…
Fed increased Reserves by 100s of $B in September 2008 and caused a contraction in lending…
Why are they doing $1T RRP today then? Jerking off?
What is Ritholtz position on RRP?
“Collapse!” is a figure of speech.., they didn’t “collapse!”
What were the regulatory readings of the Depositories throughout that time period? They were providing credit as normal until Reserve Assets were suddenly increased in September by $100Bs for the Depositories to “lend out! and this caused a sudden credit contraction…
Try to leave the Art Degree figurative language out of it and stick to the STEM…
First off … fuck you Franko and your Christofascist /American Taliban lens for seeing the world
Secondly.. I have no idea what Ritholzs position on RRP is…… and don’t care
Thirdly drop your pseudo intellectual “figurative language” vs STEM bullshit. The collapse was referring to a sudden and significant fall in housing prices in certain markets, which really isn’t an inappropriate term to use for sudden fall of considerable degree ……also like apartments in Florida (built by some STEM guy no doubt)) or reputation of Rudy Giuliani (outside Qanon circles). There was also a collapse in stability of Credit Default Swap contracts which were playing a large role in many speculative circles of real estate markets. These were thought to add a layer of safety or stability by selling insurance against default. Great idea in theory and maybe even in practice if you have people interested in pricing them accurately. If contracts were accurately priced (weren’t just given AAA ratings by the powers that give those ratings even when they were absolute garbage) maybe the credit insurance would have acted as they hoped, but it wasn’t and they didn’t so there was panic aka a collapse of calm.
Keep defending your fellow Art degree morons for in reality causing all the credit market “collapses!” with your pos conspiracy theories…
If any system is designed and operated correctly it doesn’t “collapse!”…
Go get your munnie back from whatever Liberal Art institution moron factory you degreed from and take the money and enroll at land grant Ohio State …
Defending? In the post I’m explaining, I have no position that I need to defend.
“If any system is designed and operated correctly it doesn’t “collapse”. Oooooooooh. Your so brilliant Franko! Is that how they will teach me at OSU?….oh wait ….. I’m considered a clinical professor at OSU
I can’t believe no one else has ever thought how to build a collapse free system. A monetary system is a legal, political and social system too. Try to design a collapse free social system. Bet you can’t do that using “free market” principles since designing a system and free market are 180 degrees from each other.
The housing crash involved a heavy dose of fraud. RP promoted a series on it a few months ago.
The housing crash involved a heavy dose of fraud.
The FBI warned of growing mortgage fraud in Sep 2004 and issued another rampant fraud warning in March 2007. Greenspan called it market "froth" in 2005 and did nothing as chief regulator, allowing the banking and finance industry to continue. After the crisis essentially nothing was done about the illegal coverup involving falsifying legal documentation. It was a gigantic ripoff that affected not only the socio-economics of the US but also the political future. It was more than a market"collapse," it was a historical debacle as a result of crime by the privileged class that are above the law.
I documented this but the links did not show up. Don't know what's up with that.
Your documentation got Epsteined.
Seems to me no one was interested when The New Untouchables series came out.
The fraud occurred in a number of ways;
1) As talked about above , the agencies who give ratings regarding the quality of debt contracts were giving the highest ratings to garbage simply because appraisers were paid by banks to do so
2) Mortgage companies were giving loans to people with no verifiable income or job. (NINJA loans as they were referred to).
3) CDS contracts were traded and subsequently owned by someone other then the original lenders. Why is this fraud? A situation could easily be created where bad loans are made and a CDS contract created to insure the default risk. The. CDS contract is then sold (just as mortgages are sold on secondary markets) to a third party. The potential for mismatched incentives is so easily imagined here where a party might prefer the contract default because they can collect the insurance money. Imagine someone getting the rights to collect fire insurance payments on your house, might they set your house on fire?
giving the highest ratings to garbage
More figurative language… do you morons ever use no Figurative language?
Fed morons: “RRR is 10% of deposit liabilities!”
Then… deposit liabilities are $13T…
Fed: “we need to reduce reserves in QT to $1.285T so banks have less reserves to lend out!”
FFR skyrockets…
You guys: “ reserves have evolved from the apes to less than $1.3T by random chance mutation from the apes!”
You all should be locked up in a moron annex at GITMO…
Credit rating agencies clearly state that they do not and cannot perform due diligence. The key word here is "cannot". A court case against Moody's was quickly thrown out. How can you accuse someone of not performing due diligence when they clearly state that they do not perform due diligence?
As for NINJA loans,
The Community Reinvestment Act (CRA) forces banks to make loans in poor communities, loans that banks may otherwise reject as financially unsound. Under the CRA, banks must convince a set of bureaucracies that they are not engaging in discrimination, a charge that the act encourages any CRA-recognized community group to bring forward. Otherwise, any merger or expansion the banks attempt will likely be denied. But what counts as discrimination?
According to one enforcement agency, "discrimination exists when a lender's underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants." Note that these "arbitrary or outdated criteria" include most of the essentials of responsible lending: income level, income verification, credit history and savings history--the very factors lenders are now being criticized for ignoring.
The government has promoted bad loans not just through the stick of the CRA but through the carrot of Fannie Mae and Freddie Mac, which purchase, securitize and guarantee loans made by lenders and whose debt is itself implicitly guaranteed by the federal government. This setup created an easy, artificial profit opportunity for lenders to wrap up bundles of subprime loans and sell them to a government-backed buyer whose primary mandate was to "promote homeownership," not to apply sound lending standards.
Here, read the whole thing: The Government Did It
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