Nick Bunker — Preparing for retirement when there’s a savings glut

Saving is all the rage — as problem. What to do?

WCEG — The Equitablog
Preparing for retirement when there’s a savings glut
Nick Bunker

Sandwichman — UBI Caritas

The miraculous Max Sawicky resumes wrestling with Universal Basic Income at MaxSpeak. This time the incitement comes from Dylan Matthews at Vox, who argues that a secondary benefit of basic income would be that "it enables a transition to a world of less work and greater leisure."

That would indeed be a good thing. But as the Sandwichman pointed out two weeks ago, advocates for basic income seemingly make exactly the opposite argument. Guy Standing, co-president of the Basic Income Earth Network, cited a recent experiment in India -- and earlier experiments in North America and Europe -- as evidence for the claim that a basic income guarantee "would not reduce labor supply... The simple fact is that people with basic security work harder and more productively, not less."….

You may wish to read the Dylan Matthews and Max Sawicky posts first if UBI is your thing. Even it it isn't best to read Sandwichman anyway. When you finish his post, take a look at Greatest mass extinction driven by acidic oceans, study finds. The likely consequence of this is that capitalism as we know it has hit the wall and needs overhaul. Or else we are headed down the tubes.

Econospeak
UBI Caritas

Sandwichman

Randy Wray — Is It Time for MMT To Become Mainstream to Save Us from the Second Global Financial Crisis of the Millennium?

Some of you will remember that MMT got its first huge mainstream exposure through a Washington Post article written by Dylan Matthews: http://www.washingtonpost.com/business/modern-monetary-theory-is-an-unconventional-take-on-economic-strategy/2012/02/15/gIQAR8uPMR_story.html 

He’s just written another excellent story, this time about Stephanie Kelton going to Washington:
http://www.vox.com/2015/1/10/7521819/sanders-mmt-kelton?utm_medium=social&utm_source=twitter&utm_campaign=vox&utm_content=share:article:top

Economonitor — Great Leap Forward
Is It Time for MMT To Become Mainstream to Save Us from the Second Global Financial Crisis of the Millennium?

L. Randall Wray | Professor of Economics, University of Missouri at Kansas City

Ezra Klein — The depressing psychological theory that explains Washington

Ezra goes all in on George Lakoff without mentioning Lakorr, apparently not realizing that Lakoff has been saying this for years.

Oftentimes when we think we're engaged in reasoned policy discussion we're actually engaged in complex efforts to rationalize the direction in which our tribal affiliations are pushing us. Psychologists call this motivated reasoning. And they've shown its power in laboratory settings again and again and again….

In theory, the two parties represent distinct political philosophies, and those distinct political philosophies help shape their differing policy agendas. In recent years, there's been a lot of interesting work from psychologists arguing that the differences go even deeper than that: Democrats and Republicans intuitively respond to different underlying moral systems, and so their philosophies actually rest on something more fundamental than mere partisan affiliation.

The problem is that human beings are incredibly good at rationalizing their way to whatever conclusion their group wants them to reach. And most policies can be supported -- or opposed -- on many grounds. It's all about which parts people choose to emphasize.

The Washington Post — Wonkblog
The depressing psychological theory that explains Washington
Ezra Klein

L. Randall Wray — MMT’s Mother Wears Army Boots

Randy asks critics to please check what MMT economists and financial professionals have actually said instead of attacking straw men.

Economonitor — Great Leap Forward
MMT’s Mother Wears Army Boots
L. Randall Wray | Professor of Economics, UMKC

Bill Keller — Boomers and Entitlements: The Next Round

Jim Kessler makes the case for the Third Way New Democrat approach to entitlements against Jamie Galbraith. The president, like President Clinton, is a Third Way New Democrat. Revealing.

Read it at The New York Times | Opinion
Boomers and Entitlements: The Next Round
Jim Kessler | Senior Vice President for Policy, Third Way
(h/t Kevin Fathi via email)

Dean Baker responds.

Read it at FDL
Fun With Bill Keller and Jim Kessler about Baby Boomers Abusing Their Kids
Dean Baker

Dylan Matthews joins the fray.

Read it at The New York Times
No, Social Security and Medicare aren’t crowding out R&D and education
Posted by Dylan Matthews

Joe Firestone on Dean Baker 2 on Dylan Matthews on MMT

Read it at Daily Kos | Money and Public Purpose
The WaPo MMT Post Explosion: Dean Baker's Second Try (1)

The WaPo MMT Post Explosion: Dean Baker's Second Try On MMT (2)


The WaPo MMT Post Explosion: Dean Baker's Second Try On MMT (3)

by Joe (Letsgetitdone) Firestone

Joe Firestone on Matt Yglesias on Dylan Matthews on MMT

Read it at Daily Kos | Money and Public Purpose
The WaPo MMT Post Explosion: Matthew Yglesias's MMT

by Joe (Letsgetitdone) Firestone

Joe Firestone on Kevin Drum on Dylan Matthews on MMT

Read it at Daily Kos | Money and Public Purpose
The WaPo MMT Post Explosion: Kevin Drum's Take on MMT

by Joe (Letsgetitdone) Firestone

Joe Firestone on Dean Baker on Dylan Matthews on MMT

Read it at Daily Kos | Money and Public Purpose
The WaPo MMT Post Explosion: Dean Baker Weighs In on MMT

by Joe (Letsgetitdone) Firestone

EconomicMaverick — MMT in the House!

After a long hiatus I had to come back and post about this much deserved attention recently given by a mainstream US media organ, The Washington Post, to heterodox economics - specifically the Post Keynesian and MMT (Modern Monetary Theory) schools!

Read it at EconomicMaverick.com
MMT in the House! "Rogue" school of economics gets mainstream press in the Wash Post!

by the Economic Maverick

Joe Firestone on Jared Bernstein on Dylan Matthews on MMT

After stating his general approval for Dylan Matthews's, MMT post on Ezra Klein's blog, and his agreement with MMT on the issue of solvency, a big point that MMT's been trying to get across to the mainstream for years, Jared brought forth a number of points of disagreement, which I'll reply to based on my interpretation of the MMT perspective.

Read it at Daily Kos | Money and Public Purpose
The WaPo MMT Post Explosion: Jared Bernstein's Cool Up To a Point

by Joe (Letsgetitdone) Firestone

Joe Firestone responds to Dylan Matthews on MMT

Read it at Daily Kos | Money and Public Purpose\

WaPo Covers MMT, But Does Its Usual Bad Job: Part One, Some Basics and Solvency

WaPo Covers MMT, But does Its Usual Bad Job: Part Two, Inflation/Hyperinflation

WaPo Covers MMT, But Does Its Usual Bad Job: Part Three, Banking, and Default vs. Hyperinflation

WaPo Covers MMT, But Does Its Usual Bad Job: Part Four, The Victory

by Joe (Letsgetitdone) Firestone

John Carney on Dylan Matthews on MMT

Good read. John gets it that the fundamental issue is the desired size of government, which involves the requisite expenditure to achieve. Tax policy then adjusts effective demand appropriate for maintaining that level, relative to changing conditions. This is the MMT position.

The "right" size of government is a political question. How to achieve it economically is a matter of economic policy. A correct view of economics shows the relevant policy options for doing so.

With this understanding, the country can have an intelligent political debate without bringing in "junk economics" (Michael Hudson) to justify political choices. Then the debate can be on the merits, with voters deciding what kind of country they want to live in and future they wish to create, based on realistic alternatives and opportunity cost, taking trade-offs into consideration.

Read it at CNBC NetNet

Modern Monetary Theory’s Big Weekend: The Problem with Surpluses
by John Carney | Senior Editor

Rodger Mitchell on Dylan Matthews on MMT

As always, Rodger scores some good points.

Read it at Monetary Sovereignty
The Washington Post’s best economics article, ever. And still it’s wrong.

by Rodger Malcolm Mitchell

Yves Smith comments on Dylan Matthews on MMT

In the “wonders never cease” category, the Washington Post, which is normally firmly in the camp of orthodox economic thinking and budget hawkery, ran a very well researched and complementary article by Dylan Matthews on Modern Monetary Theory. This may be a sign of MMT moving out of being regarded in policy circles as fringe (some might say lunatic fringe) to a useful part of an economist’s toolkit.

Read it at Naked Capitalism
Otherwise Good WaPo Article on Modern Monetary Theory Marred by Undeserved Praise of Roosevelt Institute

by Yves Smith

Progressives, who are you going to believe, Matt Yglesias or Jamie Galbraith?

Is the inflation of the 1970s a myth? I don't think it was, but something Dylan Matthews' excellent overview of Modern Monetary Theory illustrates is that some people think it was. That to me is a mistake, and people should try to separate the merits of heterodox macroeconomic theory (which I think are considerable) from a handful incidental political commitments that its adherents have. The core point of MMT is that if you have a freely floating fiat currency then the sovereign can't "run out of money" and the point of taxes is to regulate demand not to finance government activities. But even though this is a "heterodox" view, I think few mainstream people would actually deny it. Instead they think that talking in these terms will lead to dangerous inflation. I think that fear is overblown, but not as overblown as Jamie Galbraith thinks it is....

Read it at Slate | Money Box
Inflation Denialism
By Matthew Yglesias
(h/t Ben in the comments)

Who are you going to believe, Matt Yglesias or Jamie Galbraith? Maybe Matt should have taken counsel and consulted with Jamie before making a fool of himself.

Why are some many progressives clueless about issues that are vital to advancing their interests?

Michael Hudson comments on Dylan Matthews MMT post

Dear Stephanie at al.,

    I was appalled at the ignorant article in the Washington Post on MMT. It repeated the usual canards.

Most serious are the following:

With it (a federal budget deficit), inflation would rise, and so would the prospects of hyperinflation. Me: No. Look at the mental switch here: Inflating BOND prices by bidding them up (thus lowering interest rates) is assumed to inflate CONSUMER prices and COMMODITY prices. But interest rates are an ELEMENT of price, so this element of their cost comes DOWN.

            The past 30 years – since interest rates peaked at over 20% in 1980 – have seen the largest bond market rally in history. But consumer and commodity prices have NOT followed suit.

            The Bailout created the greatest jump in public debt in American history. But again, consumer prices and wages did NOT rise. The aim of the bailout was to support the price of real estate, and especially that of packaged junk mortgages.

            That is the basic failure of MV=PT. The “P” refers to consumer prices. Where are asset-prices? Where is the role of asset-price inflation? There is no market in financial securities, no WEALTH in the junk-Keynesian, crypto-neoclassical view of Samuelson etc. He is applauded precisely for NOT understanding that there is a financial sector and that 99% of money is spent on financial instruments (bonds, mortgages, packaged bank loans, stocks, and now derivatives). He focuses on 1% of the money supply, and acts as if the economy indeed still operates on barter.

            But even in the Stone Age and Bronze Age it operated on credit, not barter. So we are not even talking of an anachronistic theory here, but a parallel universe that never existed – and when you think about it, never COULD have come into being. I think Milton Friedman once said that his theory really would work only for a Communist economy – that is, one without speculation in financial claims on wealth.

             “You can’t just fund any level of government that you want from spending money, because you’ll get runaway inflation and eventually the rate of inflation will increase faster than the rate that you’re extracting resources from the economy,” says Karl Smith, an economist at the University of North Carolina. “This is the classic hyperinflation problem that happened in Zimbabwe and the Weimar Republic.”

Me: Wrong again. The Weimar inflation stemmed from the balance of payments. The Reichsbank created deutsche marks and threw them onto the foreign exchange markets to raise the money to pay reparations to the Allies (who turned around and paid the United States for arms purchases made prior to U.S. entry into the Great War).

    These issues may come up in Italy — or are they too complex for the audience, Paolo?

Michael Hudson

http://finance.groups.yahoo.com/group/gang8/message/16437

Stephanie Kelton responds to Dylan Matthews at Ezra's

Stephanie commented:


keltons
2/19/2012 1:58 PM MST


It was very nice to see Dylan Matthews, who is a young journalist and not an economist, recognize the growing influence of MMT. The piece does get a number of things wrong (perhaps inevitably, given the sheer volume of work we have produced over the last 10-15 years). We'll be working to clear things up on our various websites (including:
www.neweconomicperspectives.org and via our Twitter feed @deficitowl).

We hope readers will not jump to erroneous conclusions about MMT. We have gotten a great deal right over the years (the S&P downgrade, the Eurozone debt crisis, QE, US interest rates, inflation, etc.). While Austrians screamed, "Zimbabwe", we explained that QE is nothing but an asset swap and that idle reserves -- whatever their magnitude -- will not "chase" any goods. And while "Keynesians" worried about the impact that large deficits would have on US interest rates, we calmly explained the flaws in the loanable funds framework and insisted that rates would remain low as long as the Fed was committed to low rates (as the Bank of Japan has shown for decades). And while Nobel laureates, like Robert Mundell, were espousing the virtues of a common currency in Europe, we warned that the new design would put bond markets in charge of government policies. At some point, being right should actually count for something.

Tschäff responds to Dylan Matthews on MMT

Read it at This Episode of Life — Ideas Worth Saving and Sharing

A friendly response to Ezra Klein's "You know the deficit hawks. Now meet the deficit owls."

by Tschäff

(Recommended by Scott Fullwiler via Twitter)

Note: Ezra Klein did not write that piece. It was by Dylan Matthews, posted at Ezra WaPo blog.