Raúl Carrillo — Hy Minsky, Low Finance: Modern Money, Civil Rights, and Consumer Debt

Lawyer and Monder Money Network director Raúl Carrillo's presentation at the MMT conference. Must-read for all interested in MMT.

(1) First, I’d like to impress upon folks a theme that I’ll be stressing throughout the conference: when it comes to the economy, law is not merely a governing force (as many on the right would have economists believe) nor a reflective force (as many on the left are inclined to think). It is also a constitutive force. What I mean by that is that the law doesn’t just intervene into the economy on the back end, and it doesn’t merely reflect deeper forces in the economy either. Rather, a lot of the economic concepts we talk about not only have a particular meaning in the context of specific legal parameters, but they only exist given the deeper architecture of legal regimes, in the sense of systems design. I’m going to do my best to articulate what that means and what that looks like when it comes to consumer finance.

(2) Second, I’m going to talk about how people actually experience the government’s failure to sufficiently spend money for public purpose. People don’t experience the absence of MMT-insights as policy failures in a grand sense. They experience it as personal pain. Over time, that pain can become chronic, but at first, it’s acute. For some of us, it’s devalued assets, houses, cars, etc., but most people in this country live paycheck-to-paycheck — or no-paycheck-to-no-paycheck — and thus experience the survival constraint pain on the liability side, where their debt is expounded, compounded, and sometimes straight-up fabricated. And within this group…there is what we call “disparate impact” in the legal world. As Sandy Darity, Darrick Hamilton, and other fellow travelers consistently point out, for many folks on the periphery, especially people of color who lack intergenerational wealth, the lack of MMT informed-policy means permanent austerity and perpetual depression.

With that in mind, we must cultivate a way to talk about Modern Money from the bottom-up and from the outside-in. We have to draw maps from people’s suffering to the macro failures. I personally think we can do this best by talking about (1) consumer debt, (2) criminal justice debt (which Prof. Harris is going to cover), and (3) taxes (which Prof. McCluskey will discuss).…

Modern money is a legal institution first and foremost, as chartalism, or the theory of state money, makes clear. There is no "natural money." Money-use, initially as credit, grew out of informal custom and was later was institutionalized formally in law. and The constitution and operation of this now highly formalized legal institution has vast social, political, and economic implications, especially considering that it can be captured by special interests through a political process involving asymmetric power.

New Economic Perspectives
Hy Minsky, Low Finance: Modern Money, Civil Rights, and Consumer Debt
Raúl Carrillo, staff attorney at New Economy Project, an economic justice non-profit in New York City

David Dayen — Greenspan Imagines Better, Alternate Universe in Which Greenspan Was Not Fed Chair

Alan Greenspan, the policy failure whose tenure at the Federal Reserve helped create the conditions for the largest financial crisis in nearly a century, was inexplicably given a major newspaper platform on Monday to opine about regulation, which he ideologically abhors.

So it came as a surprise to read the second paragraph of his Financial Times op-ed, wishfully describing an alternative history of 2008, if only there had been robust regulation.

“What the 2008 crisis exposed was a fragile underpinning of a highly leveraged financial system,” Greenspan writes. “Had bank capital been adequate and fraud statutes been more vigorously enforced, the crisis would very likely have been a financial episode of only passing consequence.”

Greenspan must have temporarily forgotten that he had the power to accomplish both of these priorities as Fed chair.

Before the Consumer Financial Protection Bureau, the Fed had primary responsibility over consumer protection, including rule-writing, supervision, and prohibition of unfair and deceptive practices. They even were charged with resolving consumer complaints.

Greenspan famously did none of this during the inflating of the housing bubble from 2002 to 2006, instead extolling the virtues of adjustable-rate loans and mortgage securitization, even as fellow Fed governors and the FBI publicly warned about looming fraud. The responsibility for vigorously enforcing fraud statutes, then, fell to Greenspan, and he ignored it.…

The wizard behind the veil has no clothes.

The Intercept
Greenspan Imagines Better, Alternate Universe in Which Greenspan Was Not Fed Chair
David Dayen

Thom Hartmann — This Is What Happens When Congress Is for Sale

So now [subsequent to the passing of H.R 933], Monsanto is free to develop, plant, and sell all sorts of genetically modified foods, without fear of being sued or prosecuted if they fail to abide by the federal government’s health, safety and environmental standards.

But just how did this teeny tiny provision get into an appropriations bill in the first place?

That’s where Missouri Republican Senator Roy Blunt comes in.
According to the New York Daily News, Blunt helped to carefully craft the provision’s language with the direct help of Monsanto.
Why would he do that you might ask?

It could be because, according to the Center for Responsive Politics, Sen. Blunt received nearly $65,000 in campaign contributions from Monsanto between 2008 and 2012.

In fact, Blunt has been the largest Republican Party recipient of funding from Monsanto in recent memory.

The good news here is that this provision that protects Monsanto from judicial oversight expires after a year.

The bad news is that this little provision with a big impact is just a symptom of a much larger problem in America today.

Right now, any corporation with money to spend can team up with elected officials, and slowly but surely tear away at our governmental protections.

Truthout
This Is What Happens When Congress Is for Sale
The Daily Take, The Thom Hartmann Show | Op-Ed

Thom Hartmann reports:

You need to know this. A little-known provision in the most recent budget appropriations, which passed through Congress last week, is a big deal for biotech giant Monsanto – and GMO opponents. The so-called "Monsanto Protection Act" shields the maker of genetically modified seeds from being sued by consumers who claim they've been harmed by their products. On Tuesday, President Obama signed the spending bill into law, which means the controversial GMO provision will remain in place for at least six months until the government needs a new bill to fund it's operations. Since it's passage a week ago, more than 250,000 people have signed a petition opposing the measure, and activists have gathered outside the White House to protest. Opponents are expressing anger not only about the "Monsanto Protection Act" content, but also about the secretive way the legislation made it's way into the final appropriations bill. Reports suggest that many members of Congress were not even aware the provision was slipped into the spending bill. The International Business Times reported on the story, noting, "The message it sends is that corporations can get around consumer safety protections if they get Congress on their side. Furthermore, it sets a precedent that suggests that court challenges are a privilege, not a right." It should be a right to know what is in our food. And it should be a right to hold companies liable when they poison consumers. We must ensure that the "Monsanto Protection Act" is overturned. Call Congress and tell them to repeal this provision now.

Sen. Graham — CFPB ‘Stalinist

And he gets the facts about the law wrong on top of the ridiculous hyperbole.

Read it at Raw Story
Graham: The CFPB is a ‘Stalinist era’ thing

by Andrew Jones

Financial reform is Communist? Who would have guessed without being told.

Related: Frum: Fox News creates an ‘alternative knowledge system’

by David Edwards at Raw Story

Republican pundit David Frum goes after Fox for distortion of the news.