tag:blogger.com,1999:blog-2761684730989137546.post4282452900691660764..comments2024-03-29T02:19:19.866-04:00Comments on Mike Norman Economics: Hey Democrats, Please Stop Talking about the "Trust Funds"mike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger31125tag:blogger.com,1999:blog-2761684730989137546.post-42043358054449063572014-02-25T15:09:41.334-05:002014-02-25T15:09:41.334-05:00Dan Kervick: "There is no problem with the So...Dan Kervick: "There is no problem with the Social Security Trust Fund as long as people recognize it is just a sub-account of the government's consolidated account, and not some kind of separate, external source of funds or investment returns."<br /><br />Dan, how are people ever going to recognize that if you're telling the people saying that to give up trying to tell people?<br /> Best way to destroy any honest effort to educate people is to argue about it in front of the people to be educated. <br /><br />When an audience sees ANY presenters arguing about their presentation on stage, they're sure not likely to take it seriously. <br /><br />If you weren't a known author on MMT blogs this wouldn't be an issue. Audiences would just see you as another crank undermining the utility of MMT axioms. Since you are seen as an MMT-connected author, you're shooting your co-authors in the foot.<br />Roger Ericksonhttps://www.blogger.com/profile/17515506247888521516noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-50728767196998668872014-02-24T11:38:13.124-05:002014-02-24T11:38:13.124-05:00Marris,
As I see it, there's no evidence that...Marris,<br /> As I see it, there's no evidence that monetary policy can have much affect on asset inflation, EXCEPT by driving labor income down & unemployment up.<br /><br />Mosler been harping for years that the price of liquidity is a very weak control on the volume of liquidity. So dominant players just use holes left in the policy field to shunt risk & consequences to other sectors - notably labor & unemployment.<br /><br />It usually comes down to a useless & net-harmful civil war between people trying to maintain the nominal unitary buying power of hoarded currency, & their own offspring pursuing the always-greater return-on-coordination.<br />http://mikenormaneconomics.blogspot.com/2013/12/conflating-current-fiat-with-future.html<br /><br />Back in the 1960s there was a great, warning segment about this topic, on a sci-fi tv show called "The Outer Limits."<br /><br />In one episode, some supernatural critter offers to grant a greedy guy ONE Wish, and warns him to choose very carefully.<br /><br />He ponder & ponders, and wishes to be the wealthiest & most powerful person, ruling a country with no chance of any dissent.<br /><br />He blinks his eyes & finds himself as Hitler, 3 days before the Reichstag falls.<br /><br />They could have started from day one, but selecting the last days drives home the point more emphatically.<br /><br />Static Assets NEVER guarantee that you know how to use - or even keep - them.<br />https://plus.google.com/104140272098689841413/posts/AWxX3WXrb6V<br /><br />Surely you've played chess? One wrong move (misuses of a static asset) can GUARANTEE that all static assets are eventually lost - no matter how long it takes.<br />Roger Ericksonhttps://www.blogger.com/profile/17515506247888521516noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-66490879275225962342014-02-24T11:33:48.704-05:002014-02-24T11:33:48.704-05:00QTMQTMTom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-46411838914700593872014-02-24T08:21:57.203-05:002014-02-24T08:21:57.203-05:00> How does monetary policy control or "tar...> How does monetary policy control or "target" inflation?<br /><br />By adding or subtracting zero interest money in response to deviations from their target.<br /><br />So if something like a sequester threatens to reduce inflation, the Fed can announce that they will fill the gap. And if necessary, they will do so.marrishttps://www.blogger.com/profile/07508519250212893577noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-10933244960590766962014-02-23T11:09:40.514-05:002014-02-23T11:09:40.514-05:00Inflation is not really a myth, but it is extremel...Inflation is not really a myth, but it is extremely difficult to measure in any definite way. Yet, there is a clear intuitive distinction between the value of something increasing over time, on the one hand, and a mere increase in its money price as a result of an economy-wide increase in money prices.<br /><br />One problem in contemporary measures of inflation is that economists focus too much on the prices of consumer goods, and leave out the prices of labor and capital assets.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-12362215662900804662014-02-23T11:02:42.088-05:002014-02-23T11:02:42.088-05:00Roger, as usual I have not the slightest idea what...Roger, as usual I have not the slightest idea what you are saying.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-6091547204109722352014-02-23T10:58:15.979-05:002014-02-23T10:58:15.979-05:00The Fed pays interest out of income it earns on it...<i>The Fed pays interest out of income it earns on its own portfolio of assets, which are mainly treasuries.</i><br /><br />Mike, not really. That's just like saying, "the Treasury makes payments out of tax revenues." Fed payments are one thing, revenues are another, and there is no operational connection between the two. Whether the Fed operates with a positive balance sheet or a negative balance sheet is a policy matter, not an operational necessity.<br /><br />Fed remission of net earnings to the Treasury is also a policy choice which was unilaterally implemented by the Fed in 1947 and is not a statutory requirement.<br /><br />I don't understand why so many MMTers are so stubbornly committed to making the same error with the Fed that they are so clear in avoiding in the case of the Treasury. <br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-29350457643931354772014-02-23T10:09:52.923-05:002014-02-23T10:09:52.923-05:00Tom Hickey
"INFLATION is a capitalist myth. ...Tom Hickey<br /><br />"INFLATION is a capitalist myth. Assets APPRECIATE, but prices and wages INFLATE. And, WAGE INFLATION is the big bugaboo." <br /><br />hope you don't mind me quoting you re inflation<br /><br />thanks for clearing that up; never quite sank in that graphically<br /><br />With this many instances of DoubleSpeak prevailing, <br /><br />http://mikenormaneconomics.blogspot.com/2014/02/innocent-active-and-accidental-semantics.html<br /><br />throughout all aspects of our public discourse .... how can we increase Cultural Agility?<br /><br />By tracking the occurrence of unexamined DoubleSpeak examples, can we accurately track the patterns of cultural taboos still slowing discussion & exploration of aggregate options?<br /><br />It may well be that recursively examining our own examples of DoubleSpeak, & tightening tolerance limits for accepting them, is the primary method by which aggregates tune their own agility. <br /><br />Without reducing the confusion from unmanaged DoubleSpeak-taboos, how else do electorate's learn faster [aka, reset net context awareness], as context continuously changes?<br /><br />Roger Ericksonhttps://www.blogger.com/profile/17515506247888521516noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-25978353899706093352014-02-23T10:05:01.279-05:002014-02-23T10:05:01.279-05:00Marris,
much of heterodox economics holds that a...Marris,<br /> much of heterodox economics holds that arbitrarily treating too many nominal variables as real ... is exactly the root of all policy failures;<br /> that's one definition of ideology<br /><br />System survival requires <br /><br />1) setting aggregate goals;<br /><br />2) continuously LEARNING which REAL variables must stay within which, safely adjustable patterns of which tolerance limits (while chasing aggregate goals), and <br /><br />3) letting all the nominal variables float, to settings dictated by the real inter-dependencies between real variables.<br /><br />To keep Adaptive Rate the same (or growing), EVERY variable has to change, unpredictably. <br /><br />It's easier in practice to sort out what new permutations are/aren't workable, if you follow a cascade from real to nominal. NOT the other way around.<br />Roger Ericksonhttps://www.blogger.com/profile/17515506247888521516noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-45585692660589787752014-02-23T08:59:53.253-05:002014-02-23T08:59:53.253-05:00Marris,
How does monetary policy control or "...Marris,<br /><br />How does monetary policy control or "target" inflation?mike normanhttps://www.blogger.com/profile/03296006882513340747noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-38719076519852642432014-02-23T08:59:16.559-05:002014-02-23T08:59:16.559-05:00Dan,
The Fed pays interest out of income it earns...Dan,<br /><br />The Fed pays interest out of income it earns on its own portfolio of assets, which are mainly treasuries. So the Treasury is paying the interest when you think about it, not the Fed. Moreover, the Fed has to first REMOVE those securities (those net financial assets)in order to be able to pay. And it needs to remove more income than it pays out or it won't have the income to pay.mike normanhttps://www.blogger.com/profile/03296006882513340747noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-57290137258192172992014-02-22T23:54:15.662-05:002014-02-22T23:54:15.662-05:00marris, that sounds like Scott Sumner, who thinks ...marris, that sounds like Scott Sumner, who thinks that the Treasury and cb relationship is adversarial.<br /><br />Right now the cb has the policy rate at the floor and is begging Congress to loosen fiscal policy, not realizing that the lower rates are reducing incomes and QE is functioning as a tax, transferring billions in interest income to the Treasury that would have gone to the private sector.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-60482682675768238762014-02-22T23:28:54.224-05:002014-02-22T23:28:54.224-05:00> Actually, taxes as an inflation control have ...> Actually, taxes as an inflation control have been known since the 1940s<br /><br />Oh boy. I agree that increased taxes (tighter fiscal policy) can decrease demand *if the Fed does not respond*. And I agree that looser fiscal policy can increase demand *if the Fed does not respond.*<br /><br />But once we leave the hypothetical world of MMT and look at the *real world*, we see that the Fed *often does* respond to such changes.<br /><br />The Fed targets nominal variables. I guess until MMTers understand that, they're going to be stuck in 1940.marrishttps://www.blogger.com/profile/07508519250212893577noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-11911139858860984282014-02-22T17:27:04.819-05:002014-02-22T17:27:04.819-05:00Dan Kervick,
I'm shocked at your comments.
...Dan Kervick,<br /><br />I'm shocked at your comments. <br /><br />Your persistent angle seems to be acceptance of literal form, not evolutionary pursuit of operational function.<br /><br />Such arguments about form always converge to failure, through the 1,2 punch of literalism:<br /><br />1) that it's impossible to orient humans to reality once it's already been mis-described, and therefore<br /><br />2) THAT WE SHOULD GIVE UP TRYING to change the median context awareness of citizens!<br /><br />With defeatist friends like that masquerading as MMT writers, who needs Benedict Arnolds? Or Quislings?<br /><br />Heck, we don't even need the Scientific Method, since EVERYTHING we know is, by definition, mis-described! <br /><br />No reason to ever change ANY of our other theories either, right?<br /><br />Here's a simple challenge for you.<br /><br />If a given, formal description (of anything) doesn't match functional reality - which one are you going to try to change?<br /><br />And if you don't like the futility of the hopeless approach ... how long will you keep trying to chase reality through additional layers of Kabuki theater?<br /><br />About as long as astronomy clung to Ptolomaic circles?<br /><br />Ever tried Occam's Razor? It requires continual, recursive practice, but it always produces a more honest shave.<br /><br />Roger Ericksonhttps://www.blogger.com/profile/17515506247888521516noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-41092703477461328982014-02-22T13:06:36.662-05:002014-02-22T13:06:36.662-05:00"Inflation" is a capitalist crock.
Ass..."Inflation" is a capitalist crock. <br /><br />Assets "appreciate," but prices and wages "inflate" and "wage inflation" is the big bugaboo.<br /><br />Tell me another fairly tale.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-78311496506597274462014-02-22T08:58:06.189-05:002014-02-22T08:58:06.189-05:00Dan,
Yes those REAL issues are what we should be ...Dan,<br /><br />Yes those REAL issues are what we should be talking about and doing policy analysis about... <br /><br />But dont you think that FIRST, before we can get to those types of discussions we FIRST have to dispense with these false notions of "we're out of money" and "borrowing from the Chinese"?<br /><br />THEN we can get to those types of rational discussions?<br /><br />iow if the President and Congress think "we're out of money!" then those types of discussions can NEVER happen...<br /><br />So I look at what Justin is doing here as trying to FIRST dispense with these falsehoods so that the types of discussions you mention here, which yes STILL have to then happen, can take place...<br /><br />Looks to me like a 2 step process that we cant skip over step 1 and go right to your step 2...<br /><br />rsp,Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-17097329292032296022014-02-21T21:07:57.935-05:002014-02-21T21:07:57.935-05:00Right on!
In somewhat briefer terms:
Is the Soc...Right on! <br /><br />In somewhat briefer terms:<br /><br />Is the Social Security Trust Fund a Liberal Own-Goal? <br /><br />http://www.asymptosis.com/is-the-social-security-trust-fund-a-liberal-own-goal.html#sthash.u2PUDYLC.dpufSteve Rothhttps://www.blogger.com/profile/11895481216028771016noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-69022231732229178272014-02-21T18:34:03.068-05:002014-02-21T18:34:03.068-05:00The Fed can create new dollar assets. It does so e...The Fed <i>can</i> create new dollar assets. It does so every time it pays interest on reserve accounts. But that doesn't mean that it can hit any inflation target it announces.<br /><br />Inflation, in my view, is primarily a matter of the way inflation expectations interact with finance.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-60243818080368381172014-02-21T18:31:31.494-05:002014-02-21T18:31:31.494-05:00Matt, it doesn't seem like this is the same is...Matt, it doesn't seem like this is the same issue. If someone who is convinced that the government <i>can</i> run out of money recognizes that the Social Security Trust Fund isn't anything more than a sub-account of the consolidated Treasury account, they will just say that Social Security Trust Fund can't run out of money <i>unless</i> the Treasury runs out of money. But that will not assuage their anxiety. Indeed, the people who are usually out there pushing the idea that the Social Security Trust fund is just a BS accounting fiction are the budget <i>hawks</i>. They are the ones who never tire of pointing out (correctly in this case) that the "investments" owned by the SSTF are just special issue government bonds representing money owed by one government account to another government account. Focusing on this issue does nothing to persuade people that our current system of retirement support is viable.<br /><br />But now, suppose <i>everyone</i> comes to recognize that the government can't "run out of money" in the same way that the runner of a game can't run out of points. What will change in our public policy debates? My guess is nothing of <i>substance</i>, and only the language of the debate will change. Yes, for any existing level of <i>nominal</i> government commitments to its citizens, the government cannot literally run out of the tokens in which it discharges those commitments. But ...<br /><br />Could it have a problem in that the government's nominal commitments grow so large that paying out those commitments without increasing revenues shrinks the anticipated real value of those payments via inflation, and shrinks the real value of everyone's monetary savings? Yes.<br /><br />Could it have a problem in that the ratio of retirees to workers might grow so large that a decent quality of life cannot be provided to all of those retirees without pacing a cruel and unjust burden on younger, working people? Yes.<br /><br />Could it have the problem that maintaining the real value of its commitments without inflation results in a decision to slash other more future-oriented investment programs benefiting the young? Yes.<br /><br />So my feeling is that most of the really hard problems about how to socially organize and manage a sustainable retirement system are being avoided by this incessant focus on the government's magic money well.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-84586389053204689492014-02-21T18:02:06.663-05:002014-02-21T18:02:06.663-05:00Lincoln mentioned taxation as an inflation control...Lincoln mentioned taxation as an inflation control when he issued greenbacks to fund the Civil War without borrowing. Inflation remained under control in the North.<br /><br />The Confederacy apparently didn't understand this principle and they weren't in the same position to collect taxes as the North either. They experienced hyperinflation of the currency.<br /><br />On the policy rate relative to core inflation see <a href="http://economistsview.typepad.com/economistsview/2005/12/the_expost_real.html" rel="nofollow">The Ex-Post Real Federal Funds Rate and Inflation</a>Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-31357976717331830782014-02-21T17:24:44.317-05:002014-02-21T17:24:44.317-05:00Marris,
Actually, taxes as an inflation control h...Marris,<br /><br />Actually, taxes as an inflation control have been known since the 1940s...You need to read some of the stuff from Marriner Eccles and Beardsley Ruml on that. And yes, the Fed can pick whatever inflation target they want, this doesn't mean they can do anything about it necessarily. Remember the Fed can only change asset composition, it cannot create new dollar assets.The Just Gatekeeperhttps://www.blogger.com/profile/06725052297330669528noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-8147169491451900702014-02-21T16:32:53.358-05:002014-02-21T16:32:53.358-05:00> Federal taxation functions as a control on in...> Federal taxation functions as a control on inflation and aggregate demand, and is entirely unrelated to spending.<br /><br />Misleading at best, wrong at worst. Especially in a world where the Fed can pick an inflation target. The Fed can loosen or tighten monetary policy whether taxes rise or fall.<br /><br />Sorry, but as long as the Treasury uses accounting, you might as well have stuff flowing through tubes. Sorry, but we don't live in MMTopia.marrishttps://www.blogger.com/profile/07508519250212893577noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-66445077624398165952014-02-21T16:27:00.636-05:002014-02-21T16:27:00.636-05:00Dan this is from winterspeak's recent post:
&...Dan this is from winterspeak's recent post:<br /><br />"Palley spends some time talking about how it is common knowledge that "sovereign issuers of money are not constrained financially in the normal sense". Great. And yet we hear continual talk about the US Govt running out of money. So it may be common knowledge for Palley, but it is not common knowledge more broadly, and if MMT is working to popularize that understanding he should be applauding it not yawning. "<br /><br />I agree with winter here that "it is NOT common knowledge" that we cannot "run out of money!"... most people are believing that we CAN "run out of money" you yourself have posted an old video of the President himself saying so over at RE....<br /><br />So how do you make an empirical case for the fact that we cannot "run out of money"? I look at what Justin is doing here as trying to illustrate for people empirically (as much as abstract accounting can be "empirical") that we "cannot run out of money".... which Justin MAY be able to get thru to some people, ie non-libertarians who have the maths, with this type of an illustration and it may be helpful... in those cases... but of course not all cases as many people dont have the maths and are libertarians...<br /><br />rsp,<br /><br />Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-247255964122246942014-02-21T15:59:13.590-05:002014-02-21T15:59:13.590-05:00There is no problem with the Social Security Trust...There is no problem with the Social Security Trust Fund as long as people recognize it is just a sub-account of the government's consolidated account, and not some kind of separate, external source of funds or investment returns.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-51764040192798475562014-02-21T15:45:09.676-05:002014-02-21T15:45:09.676-05:00Maybe the best thing is to burn the trust fund. It...Maybe the best thing is to burn the trust fund. It is not debt held by the public. It is like me writing an IOU to myself and convincing you it is a trust fund. What nonsense. Jonfhttps://www.blogger.com/profile/08422916863145293925noreply@blogger.com