Stephanie Kelton On Student Debt Forgiveness & The Fundamentals Of Modern Monetary Theory Richard Eskow

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The Zero Houor
Stephanie Kelton On Student Debt Forgiveness & The Fundamentals Of Modern Monetary Theory
Richard Eskow

Bill Mitchell — Banque de France should write off its holdings of State debt

Wednesday today and a short blog. I also have to travel a lot today. But some brief comments on an interesting article from French commentator Michel Lepetit – Nourrir le débat sur une annulation partielle (370 mds€) de la dette publique (April 15, 2019) – which means more or less “Promoting the debate on a partial cancellation (€370 billion) of public debt”. The article proposes that the Banque de France cancels its holding of French government debt (the €370 billion), which could also lead other national central banks in the Eurosystem following suit with respect to their own government debt holdings. He argues that the cancellation (write off) would have no negative social impacts and could help Eurozone governments fund the transition to a low-carbon future. Above all, it reflects an understanding of Modern Monetary Theory (MMT). Michel Lepetit argues that the QE implemented by central banks, especially since the GFC demonstrates the patent failure of the foundations of monetarist dogma (“l’échec patent des fondements du dogme monétariste”).…

Is consolidation of accounts within a single entity like government actually "debt cancellation"? Why not standard accounting practice?

Bill Mitchell – billy blog
Banque de France should write off its holdings of State debt
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Richard Eskow — Picture the United States Without Student Debt

A new report from Bard College’s Levy Economics Institute concludes that this bold idea – cancelling all outstanding student debt – would help the entire economy and create more than a million jobs.

To those who say we can’t afford to cancel this debt, the report poses a new and different question: Can we afford not to?

Cancel and Grow

Using widely-accepted economic tools, the report’s authors – Scott Fullwiler, Stephanie Kelton, Catherine Ruetschlin, and Marshall Steinbaum – found that cancelling all student debt this country would create between 1.2 and 1.5 million new jobs. It would also increase the nation’s GDP by $86 billion to $108 billion per year over the next ten years....

Common Dreams
Picture the United States Without Student Debt

Richard Eskow

Ben Schiller — Want To Stimulate The Economy? Cut Student Debt–Not Taxes

The recently passed Republican tax cut package will cost about $1.4 trillion over a decade, according to independent figures. It’s a very expensive policy that currently is not offset by an increase in government revenue, or by spending cuts.

Another measure would cost about the same amount and it too would be hard to justify as a deficit-busting policy. But it might have greater economic benefits, say economists. That policy would be canceling all student debt.

The contention comes from a paper from the Levy Economics Institute at Bard College, which models the macroeconomic impact of relieving 44 million Americans of what they owe for college. About 90% of the $1.4 trillion is held by the federal government. The rest is in the form of private loans.

This policy would be more macro-economically stimulative because of who the beneficiary is,” says Marshall Steinbaum, research director at the left-leaning Roosevelt Institute, and one of the authors of the report. “The tax cuts will go to higher income households that have a lower propensity to spend the money. We show that reducing the burden of student debt on households enables them to spend more.”...

Fast Company
Want To Stimulate The Economy? Cut Student Debt–Not Taxes
Ben Schiller

Ryan Cooper — The case for erasing every last penny of student debt

Student loan debt is a crushing problem in America. Over 44 million people have such loans, with an average balance of about $30,000 — making for a total debt pile of $1.4 trillion. Unsurprisingly, people often struggle to repay these debts with their entry-level wages after graduating. Student debt is now the most common form of troubled debt, with about 11 percent of them 90 days or more delinquent. Worse still, thanks to Republicans and neoliberal Democrats alike, they are almost impossible to discharge in bankruptcy.
We should try the most obvious solution: Congress should cancel all the debt and have the government pay back the lenders.

Perhaps that sounds radical and unworkable. But a new Levy Institute research paper by Scott Fullwiler, Stephanie Kelton, Catherine Ruetschlin, and Marshall Steinbaum demonstrates that it would be easily affordable and have powerfully positive side effects....

The Week
The case for erasing every last penny of student debt
Ryan Cooper

How Keynes would solve the eurozone crisis

Almost 100 years ago, a young official in the UK Treasury sought to advise European policy makers on how daunting external debts might best be managed. There was, he argued, a limit to the national capacity to service debts. Those expecting further payments were bound to be disappointed. More than that, efforts by creditors to insist on further debt payments would be politically dangerous. “If they do sign,” he wrote to a friend, “they can’t possibly keep some of the terms, and general disorder and unrest will result everywhere.” He recommended a round of debt cancellation among European countries, a plan that would – at the stroke of a pen – remove much of the problem. When he was ignored by creditor governments, John Maynard Keynes quit his post to write the Economic Consequences of the Peace.

Read the rest at The Financial Times | Opinion
How Keynes would solve the eurozone crisis
By Marcus Miller and Robert Skidelsky

(h/t Mark Thoma)

Economic Consequences of the Peace

Mosler mention in the LA Times

As markets were relatively buoyed around the world by hope that Greece's debt woes could be managed, analysts warned that the contentious debt exchange exercise could create a new problem in the dangerous debt crisis plaguing Europe. 

"The idea of Greek default transformed from being a Greek punishment to a gift with the pending question: 'If Greece doesn't have to pay, why do I?' — threatening a far more disruptive outcome that is yet to be fully discounted," Warren Mosler, a distinguished trader based in the Virgin Islands, wrote on his website Mosler Economics.

"That is, should Greek bonds be formally discounted, the consequences of merely the political discussion of that question will be all it takes to trigger a financial crisis rivaling anything yet seen."

Read it at The Lost Angeles Times

Greece bond exchange the largest debt restructuring in history
by Anthee Carassava, Los Angeles Times, Athens
(h/t Roger Erickson at mmt-discuss Google group)

Short article, big plug for Warren!

John Carney — Haircut Contagion Watch: Dallara's Comments

John Carney quotes Warren Mosler again, that's twice today. Thumbs up.

Read it at CNBC NetNet

Haircut Contagion Watch: Dallara's Comments

by John Carney | Senior Editor

John Carney — Will Greece Resolution Spark a Bigger Crisis?

John Carney quotes Warren Mosler in presenting his analysis.

Read it at CNBC NetNet
Will Greece Resolution Spark a Bigger Crisis?

by John Carney | Senior Editor

A banker looks at Graeber's Debt: The First 5000 Years from the vantage of commercial debt

Read it at Crooked Timber
http://crookedtimber.org/2012/02/25/too-big-to-fail-the-first-5000-years/
Too Big To Fail: The First 5000 Years
by Daniel Davies
(h/t Mark Thoma)