Modern Monetary Theory

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Re: Modern Monetary Theory

Postby JackRiddler » Wed Jan 30, 2019 8:48 pm

.

Bill Gates' favorite graphic, he says, posting it regularly on his feed:

Image

Regarding this stuff about the "conquest of extreme poverty" in particular since the 1980s, so beloved by capitalist ideologues like Gates, Pinker, the Wall Street Journal, the Economist and many others, they rarely admit that half of the supposed gain occurs in China, a one-party communist dictatorship that engages in aggressive protectionism and directs investment priorities from the top (whether or not doing this well and wisely or poorly). The other half is partly attributed to India but mostly a combination of statistical gamesmanship and, above all, monetization of areas and groups that previously lived from subsistence and off the cash nexus -- well or poorly. They are now off the land and considered to have been rescued from the extreme poverty of their traditional existence because they make $2 a day per household, even though they may be crowded up in a favela and their lives may be far lousier than before. There's no examination of actual conditions experienced. The social gains of the last couple of centuries, such as clean water or public health, meanwhile, are largely the product of social struggles moving states to provide some minimum of human decency. They do not arise directly from capitalism, but capitalist ideology is a machine that relentlessly takes credit for the achievement of everything capitalists opposed. Best example, as ever, are the labor gains and relative democracy in nation-states since the nineteenth century. Franchise, ban on child labor, unions, greater access to public higher education, universal health care schemes: all of it came in the West thanks to social struggles stubbornly opposed by most of the capitalist class, to the point of frequent massacres. And later, when there's an eight hour day (until neoliberalism, anyway) and a universal franchise (whether or not "democracy" results), fucking capitalism is supposed to get the credit, and the capitalist propagandists tell us to shut up because We Never Had It So Good. It's tedious.

Anyway, regarding Bill Gates' favorite chart and the myth of the "conquest of extreme poverty," in the same vein as my thoughts but more polished and authoritative, I like this article:

https://www.theguardian.com/commentisfr ... neoliberal


Bill Gates says poverty is decreasing. He couldn’t be more wrong

Jason Hickel

An infographic endorsed by the Davos set presents the story of coerced global proletarianisation as a neoliberal triumph

@jasonhickel
Tue 29 Jan 2019 09.28 GMT

Last week, as world leaders and business elites arrived in Davos for the World Economic Forum, Bill Gates tweeted an infographic to his 46 million followers showing that the world has been getting better and better. “This is one of my favourite infographics,” he wrote. “A lot of people underestimate just how much life has improved over the past two centuries.”

Of the six graphs – developed by Max Roser of Our World in Data – the first has attracted the most attention by far. It shows that the proportion of people living in poverty has declined from 94% in 1820 to only 10% today. The claim is simple and compelling. And it’s not just Gates who’s grabbed on to it. These figures have been trotted out in the past year by everyone from Steven Pinker to Nick Kristof and much of the rest of the Davos set to argue that the global extension of free-market capitalism has been great for everyone. Pinker and Gates have gone even further, saying we shouldn’t complain about rising inequality when the very forces that deliver such immense wealth to the richest are also eradicating poverty before our very eyes.

It’s a powerful narrative. And it’s completely wrong.

Bill Gates
(@BillGates)
This is one of my favorite infographics. A lot of people underestimate just how much life has improved over the last two centuries: https://t.co/djavT7MaW9 pic.twitter.com/kuII7j4AuW
January 19, 2019


There are a number of problems with this graph, though. First of all, real data on poverty has only been collected since 1981.


And even GNP-GDP dates from 1930, starting in U.S. Most countries started that one in the 1950s. Reliable national accounts before then (always retrospective) can be found in Britain back to Marx's time, and maybe a couple of other industrial powers, but are meaningless from anywhere else. (Those are basically glorifications of the tax rolls.) Any so-called economist telling you about "GDP" in 1500 should be expelled from the Academy forthwith, they are lesser than astrologists or corner psychics.

Anything before that is extremely sketchy, and to go back as far as 1820 is meaningless. Roser draws on a dataset that was never intended to describe poverty, but rather inequality in the distribution of world GDP – and that for only a limited range of countries. There is no actual research to bolster the claims about long-term poverty. It’s not science; it’s social media.

What Roser’s numbers actually reveal is that the world went from a situation where most of humanity had no need of money at all to one where today most of humanity struggles to survive on extremely small amounts of money. The graph casts this as a decline in poverty, but in reality what was going on was a process of dispossession that bulldozed people into the capitalist labour system, during the enclosure movements in Europe and the colonisation of the global south.


One that has never ended and continues today.

Prior to colonisation, most people lived in subsistence economies where they enjoyed access to abundant commons – land, water, forests, livestock and robust systems of sharing and reciprocity. They had little if any money, but then they didn’t need it in order to live well – so it makes little sense to claim that they were poor. This way of life was violently destroyed by colonisers who forced people off the land and into European-owned mines, factories and plantations, where they were paid paltry wages for work they never wanted to do in the first place.


There is romanticization of the past here, life was still lousy for most even under those circumstances (if more meaningful to most of them given religious narratives), and the course of child mortality statistics in the same graphic is true enough. The latter change is not attributable simply to "capitalism," however.

In other words, Roser’s graph illustrates a story of coerced proletarianisation. It is not at all clear that this represents an improvement in people’s lives, as in most cases we know that the new income people earned from wages didn’t come anywhere close to compensating for their loss of land and resources, which were of course gobbled up by colonisers. Gates’s favourite infographic takes the violence of colonisation and repackages it as a happy story of progress.

But that’s not all that’s wrong here. The trend that the graph depicts is based on a poverty line of $1.90 (£1.44) per day, which is the equivalent of what $1.90 could buy in the US in 2011. It’s obscenely low by any standard, and we now have piles of evidence that people living just above this line have terrible levels of malnutrition and mortality. Earning $2 per day doesn’t mean that you’re somehow suddenly free of extreme poverty. Not by a long shot.

Scholars have been calling for a more reasonable poverty line for many years. Most agree that people need a minimum of about $7.40 per day to achieve basic nutrition and normal human life expectancy, plus a half-decent chance of seeing their kids survive their fifth birthday.


This is like the statistical analogue to Fight for 15.

And many scholars, including Harvard economist Lant Pritchett, insist that the poverty line should be set even higher, at $10 to $15 per day.

So what happens if we measure global poverty at the low end of this more realistic spectrum – $7.40 per day, to be extra conservative? Well, we see that the number of people living under this line has increased dramatically since measurements began in 1981, reaching some 4.2 billion people today. Suddenly the happy Davos narrative melts away.

Moreover, the few gains that have been made have virtually all happened in one place: China. It is disingenuous, then, for the likes of Gates and Pinker to claim these gains as victories for Washington-consensus neoliberalism. Take China out of the equation, and the numbers look even worse. Over the four decades since 1981, not only has the number of people in poverty gone up, the proportion of people in poverty has remained stagnant at about 60%. It would be difficult to overstate the suffering that these numbers represent.

This is a ringing indictment of our global economic system, which is failing the vast majority of humanity. Our world is richer than ever before, but virtually all of it is being captured by a small elite. Only 5% of all new income from global growth trickles down to the poorest 60% – and yet they are the people who produce most of the food and goods that the world consumes, toiling away in those factories, plantations and mines to which they were condemned 200 years ago. It is madness – and no amount of mansplaining from billionaires will be adequate to justify it.

• Dr Jason Hickel is an academic at the University of London and a fellow of the Royal Society of Arts. His most recent book is The Divide: A Brief Guide to Global Inequality and its Solutions.
Last edited by JackRiddler on Thu Jan 31, 2019 5:44 am, edited 1 time in total.
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Re: Modern Monetary Theory

Postby Elvis » Thu Jan 31, 2019 2:48 am

From the "Non-trashy critique of MMT" posted upthread:

Josh Barro wrote:So while a conventional economic thinker might say you establish a new government program and levy taxes (now or in the future) to pay for it, an MMT thinker would say you establish a new government program and the government prints the money to pay for it. But that does not mean the MMT thinker thinks the new program is free! The government is not constrained by its ability to obtain dollars, but the economy is constrained by real limits on productive capacity. If the government prints and spends money when the economy is at or near full employment, MMT counsels (correctly) that this will lead to inflation, and prescribes deficit-reducing tax increases to reduce aggregate demand and thereby control inflation.

See how we have ended up back where we started? Whether you take a Keynesian view or an MMT view, if the government spends more, it’s likely going to need to tax more, sooner or later.


HOWEVER, "more tax" doesn't dictate a higher percentage; the "pie is bigger" so the same tax level yeilds a bigger, but proportionate amount.

I've found the arguments against MMT to be pretty weak and unsupported by data. Some people just cant get past the brainwashing that says "someday that federal 'credit card' is gonna come due!!"
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Re: Modern Monetary Theory

Postby Elvis » Thu Jan 31, 2019 3:51 am

Stephanie Kelton was on NPR's "Marketplace" with Kai Ryssdal, who took it upon himself to re-explain what Kelton said. :roll:

(I like Kai Ryssdal okay but I don't think he's going to start running with MMT.)

Botton line is, MMT is getting airtime!


I see a sort of MMT Lite being soft-pedaled in some quarters, but that's a start, maybe a necessary step toward undoing the brain damage inflicted by MBA-think. I'll be watching how AOC sells it, if she in fact dares to challenge, directly, the deficit-reduction orthodoxy.
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Re: Modern Monetary Theory

Postby JackRiddler » Tue Feb 05, 2019 8:28 am

.

Framework toward an interesting writing on the history of money and debt, of the 2007-9 crash and aftermath, and of the original New Deal by Ann Pettifor.

How long does a regulated system of economics including taxation underpinning the debt-money system survive when it is destroying the conditions under which it operates?

thenextsystem.org

The latent, unused power of citizens—and the production of public collateral

Ann Pettifor
Political economist and author.

January 24, 2019
https://thenextsystem.org/learn/stories ... collateral

It was just a montage of words uttered over a video in the summer of 2018. Soon the words went viral. They helped unseat a Wall Street-friendly Democrat—one primed to be the next congressional leader. They were uttered by Alexandria Ocasio-Cortez.

This race is about people vs. money. We’ve got people. They’ve got money. A New York for the many is possible. It doesn’t take a hundred years to do this. It takes political courage.

She was right. It did not take a hundred years. All it took was one summer, political courage, a big idea—The Green New Deal—and hard graft. A Green New Deal would subordinate the financial system to the interests of society and the ecosystem, and help transform the economy away from its addiction to fossil fuels, she argued.

The big idea, her hard work and courage were all that was needed to harness latent power: the power of the people of the Bronx.

Her story will underpin the theme that follows. Citizens’ latent and untapped power in countries with sound taxation systems to hold financial elites to account—and implement a Green New Deal. It can be used to transform the balance of power between the people and the private finance sector. It is power that lies in abeyance, repressed by the dominant moneyed class. But suppressed also by the narrow, myopic view that we, and our politicians, have of the potential economic power of citizens.

To harness citizens’ power, it is important to understand that taxpayers have agency over global financial markets. Around the world, taxpayers subsidise, embolden and enrich centres of financial power like those of Wall Street and the City of London. The bank bailouts after the Great Financial Crisis demonstrated that citizens and their publicly financed institutions have the power to protect capitalism’s rentiers from the discipline of the “free market.” Thanks to the backing and firepower provided by millions of honest, taxpaying citizens, central banks deployed immense financial power and bailed out the globalised banking system—stemming a cascade of debt deleveraging that could have contracted the money supply, credit, and economic activity and deepened the crisis.

Thanks to taxpayers, central bankers prevented another Great Depression. It was a great power deployed in the name of citizens, but without their authority—or even their knowledge. To grasp and deploy this financial power in the interests of society and the ecosystem, citizens need to understand that this was and is ultimately our power. It is latent power, not used by citizens to defend the public interest, but by technocrats to defend the interests of private wealth.

Money and debt
The reason for our political impotence can be found in the fog and mystery surrounding the creation of money and the operation of the monetary system. Thanks to the economics profession’s neglect of money, debt and banking, there is a great deal of misunderstanding and confusion about money and the financial system. Arguments rage about whether money is just “created out of thin air”—or whether gold or bitcoin are real money. Whether bankers and/or governments can just “print” money ad infinitum. Or whether there are limits to the printing of money. The ignorance and confusion is probably no accident. It helps protect the private finance sector from scrutiny: “all the better to fleece you with” to quote the wolf in the fairy tale.

Sensible people (including the Bank of England) agree that money, as Joseph Schumpeter explained, is nothing more than a promise to pay, as in, “I promise to pay the bearer.” As such, money is a social construct, based on trust or promises to pay and upheld by the law.

When someone applies for a loan from a bank, the money is not in the bank. Instead, licensed commercial banks “create” money every time a borrower promises to pay. They make the loan by entering numbers into a computer, and (digitally) depositing funds into a borrower’s account. The borrower promises to pay back the money created by the banker. As guarantee the borrower offers collateral, signs a contract, and agrees to pay interest on the loan.

For that trust to be upheld, the institutions that create money (licensed commercial banks) are supported and regulated by a publicly backed central bank issuing the currency. Regulation ensures that trust between banker and borrower is enforced.

Private bankers can only create new money and operate effectively as part of the monetary system, which includes a central bank. While commercial bankers can digitally create new money at the bidding of a borrower, they cannot print currency or mint coins. Only the central bank can do that. The central bank’s great power is to issue the currency—sterling or the dollar or the rupee –in which new money is created. And to help determine the value of the currency.

That power can be exercised by central banks only because of the collateral backing the currency they create. That collateral is made up of citizens’ tax revenues. The more taxpayers that back the currency, the sounder the tax-collection system, the greater the value of the currency.

This process is illuminated if we compare the collateral that backs up the US Federal Reserve with that of Malawi. The central bank of Malawi, like the Federal Reserve, issues a currency. But Malawi has far fewer taxpayers than the US. Thanks largely to colonialism and to IMF policies, Malawi also lacks important public institutions: an independent central bank; a sound tax-collection system; a system for enforcing contracts or promises to pay (criminal justice); and a well-regulated accounting system for assessing assets and liabilities. Consequently, Malawi’s currency—the kwacha—has little value compared to the dollar. Even worse, due to the absence or weakness of public institutions, Malawi is reliant on other people’s money—obtained via other monetary systems. Access to foreign monetary systems mostly takes the form of loans in dollars, sterling or yen—that are heavily conditional. While some of the money may benefit the Malawian people, the cost of repayment to foreign financial institutions invariably takes its toll on the nation’s financial resources, its human and ecological assets.

It is the lack of monetary autonomy provided by sound public institutions, including a tax-collection system, that renders citizens in countries like Malawi relatively powerless, and vulnerable to predatory foreign lenders. It also explains how and why poor countries remain dependent and subordinate to rich countries. Regrettably the IMF and World Bank actively discourage low-income countries from investing in the vital public institutions essential to a sound monetary system—one that would restore their financial and economic autonomy.

Citizens in countries with sound monetary institutions and a tax-collection system enjoy considerable potential power and agency over the globalised financial system.

Understanding how taxes prop up the value of a nation’s currency for private financiers is a first step in understanding citizens’ potential power. The world’s mobile financial speculators and rentiers prefer to deal in currencies underpinned by stable public institutions, financed and backed by millions of taxpayers. While of course there is trading in many emerging market currencies, speculators prefer to hold sterling, dollars, euros and yen. These currencies are backed by strong economies. But their value is ultimately derived from citizens—willing, honest, law-abiding taxpayers—who provide the revenues that underpin the currency.

Taxpayers do not just pay direct and indirect taxes every day, month or year. Because new taxpayers are born every day, citizens will pay taxes for decades into the future. If our publicly financed state institutions remain stable, tomorrow’s new-borns will go on paying taxes into the future.

To understand the duration of taxpayer power, it helps to look back at the history of the British financial system. Back in 1748 the British government issued perpetual bonds, which were debts with no maturity date for repayment, but which paid interest to lenders at 3 per cent each year. The government had no difficulty selling these bonds (known as “consols“) to the public. Public confidence—that the British government would fulfill its obligations to pay interest on the loans in perpetuity—was high. That confidence was justified, as interest was paid on the bonds each year until finally they were redeemed in 2015.

No other asset has that kind of long-term, safe backing.

Ambitious and manipulative Becky Sharp in Thackeray’s classic nineteenth-century UK satirical novel Vanity Fair wished that she could

exchange my position in society and all my relations for a snug sum in the Three Per Cent Consols…for so it was [wrote Thackeray] that Becky felt the Vanity of human affairs, and it was in those securities that she would have liked to cast anchor.

Becky’s envy derived from the security granted to those with funds enough to invest in the British government’s debt—known then, and for several centuries, as Three Per Cent Consols (shorthand for Consolidated debt). On an inheritance of £10,000 wealthy young women of the nineteenth century could live on the tidy sum of £300 a year; £25,000 would generate a comfortable £750 a year.

Public debt is an asset that earns income—just as a buy-to-let property earns rent for its owner. But while a buy-to-let investor has to sweat to maintain, advertise and rent out the asset, debt earns income effortlessly for the wealthy and for financiers. It does so by paying interest added at a certain percentage per year.

Unlike an investor’s property, debt is light as air, intangible, invisible. The only evidence of its existence is found in database entries, numbers on a balance sheet or in words on a “bearer bond.”

The differences do not end there. A building or property is subject to the laws of physics. It can age, crumble, or be razed to the ground. Football clubs are great assets—because fans are committed long-term, and willingly and regularly pay “rents” to the owner of the asset, for the privilege of watching their team, or by buying a club T-shirt. But clubs can lose value by falling down league tables. Works of art—say a Rembrandt painting—are assets with greater longevity, but are also likely to deteriorate, and in any case, are subject to the whims of fashion.

Not so the government bonds of countries like Britain. While sovereign debts can be defaulted on, safe government debts do not rot with age, as Professor Frederick Soddy (1877–1956) once explained. That is because debts are not subject to the laws of thermodynamics but to the laws of mathematics. As such, debt effortlessly earns income for investors, at mathematical rates. And if the debt is the safe public debt of nations like Britain, the US or Japan, it can do so for a long, fixed period of time.

The British government has since 1694 honoured its debt obligations without fail. In a world of globalised capital flows in which capital sloshes from one part of the world to another, the price of UK government bonds may rise and fall, but their safety and longevity is never in question. That is because the system is managed by public authority, not left to “the invisible hand”—but mainly because most British citizens regularly and faithfully pay taxes.

And to understand why safety is such a big issue for the private finance sector, remember this: the global financial system froze in August 2007 and then collapsed. Not because financiers ran out of money. Not because of a run on the banks. But because everyone in the sector—everyone—lost confidence in the value of assets used as collateral, particularly the value of subprime property mortgages1 on bank balance sheets. Why did that matter? Because the value of subprime assets (mortgages) had been used to leverage inordinate amounts of additional finance through borrowing. If the asset or collateral against which the borrowing had been leveraged was worthless—then the leveraged debt was unlikely to be repaid from the sale of the promised subprime collateral.

The collapse of confidence in asset values (or collateral) led to the collapse of the globalised financial system.

And that is where we, citizen taxpayers, came in. Citizen collateral, in the form of tax revenues, did not collapse in value in the crisis. Instead public collateral maintained the authority of central banks, and gave them the power to issue new central bank money (liquidity) in exchange for assets from private bankers. The process was called Quantitative Easing (QE). The backing of taxpayers enabled central bankers to bail out Wall Street and the City of London. The safety and soundness of our taxes upheld the value of currencies, despite the crisis. This was most evident in the US. Even as the global economy tanked, and financial turmoil soared, the value of the dollar rose.

Central banks used the collateral power provided by citizens to leverage vast amounts of central bank money—about $16 trillion—to bail out the global banking system.

Public debt as a gift to financiers and rentiers
To fully understand the power wielded by central bankers, it is important to understand that each time the government applies for a loan, or issues a bond, it creates a debt—or liability—for the government. At the same time, by borrowing, the government creates a valuable financial asset for the private sector.

Governments regularly (once or twice a month) invite pension funds, insurance companies and other private financiers to finance their bonds or loans, in exchange for promises to pay interest annually, and to repay the principal in full at the end of the term of the loan (bond). This process is in effect no different from a woman seeking a mortgage. She invites a banker to accept her “bond” or promise to repay in exchange for new finance, backs this up with collateral, and commits to pay interest annually and the principal in full at the end of the loan’s term.

Once the commercial banker has issued the finance and accepted the bond, the woman has a liability—to repay the bond. The banker on the other hand, has an “asset”—the woman’s bond or mortgage. It is valuable to the private bank because unlike gold the loan generates income for every year that the woman pays interest. It is probably backed by the collateral of her existing apartment. Plus, the principal on her loan will probably be worth more in real terms when it is finally repaid.

Governments raise finance from both the private finance sector, or from a central bank, in just the same way as an ordinary borrower raises money from a commercial bank. The government promises to pay interest, and offers collateral. The difference between a government’s bond and the woman’s mortgage is that a bond issued by a government with a good record of repayment is a more valuable asset. As such it serves as vital collateral (or “plumbing”) for the private financial system. The woman’s mortgage is also an asset, but will be less valuable because she may not have established a good credit record, and may be backed by just one income (her own). The government by contrast, is backed by a revenue stream from millions of taxpayers.

That explains why government bonds (or government debt) are extremely valuable assets for the private finance sector. They are safe and reliable. They generate income (interest payments) on a regular basis. Debt as a security or asset can be used to borrow (or “leverage”) additional finance. Just as the ownership of a property enables a homeowner to re-mortgage and raise additional sums secured against that property, so safe, valuable financial assets act as collateral for the raising of additional finance. Newly borrowed money, guaranteed against either the original debt/collateral, or against the stream of interest payments derived from the debt, can then be invested, or lent on at a higher rate of return.

To understand leverage, think of a homeowner who borrows £80,000 against a property worth £100,000 with just £20,000 in equity or capital. She has a leverage ratio of four. In other words, she has borrowed four times the equity/capital in her asset. At the time of its bankruptcy Lehman Brothers was said to have a leverage ratio of 44. That’s like having an asset that earns £10,000 a year, and then taking out a £440,000 loan secured against it, to go on a gambling spree. According to the Bank for International Settlements, Wall Street’s investment banks started with a leverage ratio of 22 in 1990, which rose to “the dizzy height of 48 at the peak.”

Leverage on that scale is most easily achieved against collateral that is as safe as public debt. The scale of wealth generated would be unimaginable to a present-day Croesus.

Shadow banking and the collateral factory
There is another aspect to safe, public collateral not widely understood. That is how it is used in the shadow banking system—the private financial system that operates in the financial “stratosphere,” beyond the reach of states and regulatory democracy. Non-regulated bank-like entities that have scooped up the world’s savings (e.g. asset management funds, pension funds, insurance companies) hold vast quantities of cash. BlackRock for example, has $6 trillion in assets. These sums cannot safely be deposited in a traditional bank, where only a limited amount is guaranteed by governments. So to protect the value of the cash, the asset management fund will, for example, make a temporary loan of cash to another in need of it, in exchange for, or guaranteed by, collateral. This exchange is known as a repo—or repurchase arrangement.

As Daniela Gabor has argued, the US and European repo markets, the largest in the world, are built on government debt. In other words, “the state has become a collateral factory for shadow banking.”2

The risks of this unregulated market for the global financial system, are scary. One reason is that while someone operating in the real world, say a homeowner, may only once be able to re-mortgage her asset or property, unregulated shadow bankers can use a single unit of collateral to re-leverage a number of times. Manmohan Singh of the IMF has estimated that by late 2007 collateral “churned,” or was used roughly three times to leverage additional borrowing in speculative markets.3

That’s like using the value of a single asset—one’s property—to guarantee additional borrowing from three different banks. In the real world of financial regulation, homeowners are not allowed to do this.

If we are to understand the history of how the rich have become immensely, grotesquely richer on unearned income, while earned income has fallen in real terms, leverage ratios against public assets in the both the real and shadow banking sectors explain a great deal.

In short, the ability to regularly drain a government of interest payments, and to use the asset of public debt to leverage additional finance, is why asset management firms, private equity corporations, insurance companies, pension funds and financial speculators have massively increased their capital gains. It is also why secure government debt is in such demand. Private financiers can’t get enough safe government bonds—or public debt.

The Great Financial Crisis (GFC) triggered a flight away from private debt and to the safety of public debt—especially the safest—British, European and US debt.

This huge financial shock of the GFC led to a massive contraction of the global money supply, and threatened deflation—a generalised fall in prices—which would in turn lead to bankruptcies, unemployment and wage cuts. To counteract that threat, central banks—on our behalf—expanded their balance sheets and, in exchange for collateral (much of which was dodgy or “toxic”), provided extraordinary levels of new credit or liquidity to the private financial system. In the process, civil servant technocrats in central banks protected free-market players from bankruptcy and the discipline of the free market—dealing a considerable blow to the ideology.

The deflation shock cried out for a massive fiscal response. There was an initial, but limited fiscal expansion, which led to what Credit Suisse called a “flood of safe collateral that caused public shadow money (Treasuries, mortgage-backed securities, US government agencies) to soar, fully offsetting the contraction in private shadow money (corporate bonds, asset-backed securities, and non-agency mortgages).” 4

As a result of the panicky demand for public debt, the price of government bonds rose, and because of the way the bond market operates, the yield (“interest rate”) on bonds fell dramatically. Demand for public debt, greatly eased government borrowing (interest) costs.

Pretty soon though, politicians and officials in government treasuries, cheered on by orthodox economists, right-wing think tanks and the media, soon fell back on neoliberal or ordoliberal theory, and imposed fiscal contraction—or austerity. Public investment—government spending—was either slashed or prevented from rising. These double standards –the expansion of finance for the private finance sector, and contraction for the public sector—are intrinsic to orthodox economics, but seldom challenged by the economics profession.

As a result the production of government collateral (public debt) fell.

Austerity and the simultaneous wage freezes and cuts at first worsened the crisis. Since 2010, austerity has both prolonged the crisis, and held back recovery in the US and Europe. The effect of this backward economic policy was to increase insecure, low-paid, low-skilled and unproductive employment, while lowering wages across the board.

In the US, while the initial Obama-led stimulus stabilised the economy, it was insufficient to restore long-term stability. Instead there were severe state and local government spending cuts, households were left to retrench after the subprime trauma, and wages fell in real terms. Between 2009 and 2014, inflation-adjusted wages in the US were flat or falling across a range of available wage measures. More recently, real wages grew, but growth rates for recovery as a whole still trail far behind the 2.0–2.2 per cent annual rates from 1947 to1979. 5

As a result of austerity, the issuance of safe government debt contracted. Why should this matter? Because the low supply of government debt tends to boost (in fact, crowds in) the creation of unsafe private debt, or assets. These unsafe private assets are used instead by the banking and shadow banking system to expand borrowing and credit. Central banks rightly worry that such credit expansion on unregulated, dodgy assets will probably lead to another financial crisis.

Understanding the value of public debt changes our view of it. Like a loan undertaken for a project that will create employment and generate income, public debt, if invested in productive activity, is a good thing. It generates income. Not just salaries and wages for those employed; not just profits for the private sector when salaries are spent on their goods and services; but also tax revenues. Income, corporation and consumer tax revenues, then used by government to repay the debt.

Public borrowing and spending are especially important after a crisis, when the private sector is weak, and lacks the confidence to borrow, invest and spend. Yet most Chicago-school economists view public debt as a threat to the economy. Governments that cannot “balance the books” are regarded as incompetent and hounded by the media. Hostility to public debt varies, but fear is embedded in the German psyche, because the word for debt—“Schuld”—is the same as the word for “guilt.” Saint Matthew’s “forgive us our debts as we forgive our debtors” was interpreted by Saint Luke as “forgive us our sins as we forgive those that sin against us”.

Guilt, sin and the public debt are deeply intertwined, but only in the minds of economists, journalists and the public. Debt becomes something quite different in the minds of financiers and rentiers. To Wall Street. and the City of London, the safe public debt of Britain, Europe and the US is a truly awesome and even phenomenal gift.

They cannot get enough of it.

Until we fully grasp the importance of public debt to the finance sector, immensely wealthy, globalised corporations will continue to parasitically extract rent from public assets; inequality worldwide will continue to widen; and we, the many, will become relatively poorer and powerless.

When enough of us do come to understand this latent power, we will discover that another world really is possible.

Social democrats and the financial system
At the heart of neoliberal ideology—ideas shared by those that economic historian Quinn Slobodian defines as “globalists”—is the belief that the state must shrink as a share of the economy. Second, that private capital markets must remain “free” to roam globally and without friction. In other words, globalised capital markets must have the “freedom” to be detached from the world’s states, and from democratic regulation.

As explained above, the deep irony of the ideological obsession with self-regulating capital markets, austerity and the shrinking of the state is that private financial markets cannot function without the backing of governments, their taxpayers, and the safety of public debt.

The “timid mouse” that is the private finance sector cannot operate without the protection of the “roaring lion” that is the public sector, to quote Mariana Mazzucato.6

Given that safe public assets are so fundamental to the stability of the private financial system, why would right-wing politicians and officials contract their supply? The answer can only be: ignorance, fed by ideology opposed to the collective role of the state.

But what of the left? The Great Financial Crisis was met with shock and disbelief on the left. While many progressive economists had focused on the domestic, tangible economy—the state, markets, labour and trade—they largely ignored the intangible economy, the globalised finance sector.

In the meantime, many had embraced “globalisation”—the ability to travel widely and draw money in any part of the globe; the ease with which globalisation facilitated the import of exotic fruits and vegetables; cheap smartphones; and the gifts bestowed by technology on the globalised system. These were all met with enthusiasm by social democratic parties that turned a blind eye to a global, deregulated financial system that both facilitated these activities, but also threatened systemic failure.

As a result, the left had no coherent response to the collapse of globalised capital markets. Throughout the period of austerity, the left—both in the US and Europe—found itself on the back foot, defensive of social democratic governments that had built up debts as a result of the Great Financial Crisis. Social democratic governments endorsed both QE for bankers and austerity for the majority. This approach guaranteed their downfall, and even extinction. (The French Socialist Party no longer exists as a political force or organisation, and was obliged to sell off its own headquarters.)

These failures weakened the ability of the left to argue that at a time of catastrophic private economic failure, public investment in jobs was essential to restore social, political and economic stability. Instead, taxpayer-backed subsidies and assets were deployed by central banks via QE to protect private profits and capital gains.

No wonder the public revolted.

A first in the many steps that must be taken to transform the economy is understanding. People cannot act to transform what they do not understand. Understanding how taxpayers guarantee and endorse the activities of the globalised, deregulated private financial sector, must be more widespread. Only then can we begin to demand “terms and conditions” for public subsidies and guarantees—and to use that power to regulate and subordinate the globalised financial sector to the interests of society as a whole. To demand that public financial assets be used for public, not private benefit.

This understanding is fundamental if we are to respond to the greatest security threat facing humanity: climate breakdown.

Armed with understanding, we will then need a plan. The Green New Deal is such a plan.

The genius of Alexandria Ocasio Cortez’s Green New Deal is that it provides a broad, comprehensive plan to transform the US economy and tackle climate breakdown. If the efforts of US Democrats led to an internationally coordinated campaign to implement it, the plan has the potential to transform many economies around the world, and to ensure a liveable planet in the future.

But—and it’s a big but—a comprehensive plan for economic transformation will require financing on a grand scale, comparable to that of a nation embarking on war. We know that can be done. Governments have always found money to finance wars.

Back in 1933, President Franklin D. Roosevelt’s plan—the New Deal—found money to fight a war against unemployment and poverty. His administration did so by overturning neoliberal economics, and implementing Keynesian monetary theory and policies. By ensuring that the monetary and financial system was managed by public, not private authority, his government raised the financing needed to lead the US out of the economic catastrophe of the Great Depression. Roosevelt’s New Deal not only created jobs and generated national income. It also tackled the ecological catastrophe that was The Dust Bowl.

Implementation of the New Deal was achieved first, because the Roosevelt’s administration had a clear understanding of the nature of money, and of the publicly backed monetary system. But its success in tackling Wall Street interests was down to political mobilisation, organisation and action. Roosevelt had the political courage and the political ballast to confront, and subordinate, the interests of Wall Street to those of society and the environment.

Any international movement for a Green New Deal will have to summon up the same political courage in countries around the world. Campaigners will have to mobilise, organise and act to renounce the economic ideology that allows the one percent to grow fantastically rich on taxpayer-backed subsidies, bailouts and guarantees—while denying financial resources for public investment, economic and ecological transformation.

Campaigners will have to discover, and then deploy, their latent power to subordinate global finance to the interests of society and the ecosystem.

This article was published in conjunction with the Transnational Institute.
We meet at the borders of our being, we dream something of each others reality. - Harvey of R.I.

To Justice my maker from on high did incline:
I am by virtue of its might divine,
The highest Wisdom and the first Love.

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Re: Modern Monetary Theory

Postby seemslikeadream » Wed Feb 06, 2019 12:19 pm

Cryptocurrency Exchange Says It Can't Access $190 Million After CEO Unexpectedly Died

Bill ChappellFebruary 4, 20193:46 PM ET

QuadrigaCX says it can't reach millions of dollars' worth of bitcoin and other cryptocurrency after its CEO died during a December trip to India. The CEO's laptop is encrypted, the company says.

Dan Kitwood/Getty Images
The QuadrigaCX cryptocurrency exchange says it can't access some $190 million in bitcoin and other funds after its founder and CEO, Gerald Cotten, died at age 30 — without sharing the password for his encrypted laptop.

Cotten was "the sole officer and director" of the Canadian cryptocurrency exchange when he died, said his widow, Jennifer Robertson, in an affidavit that is part of the company's request for court assistance as it seeks protection from its creditors.

The debt filing comes weeks after Robertson announced that Cotten had died — an event she described as "a shock to all of us."

"Gerry died due to complications with Crohn's disease on December 9, 2018 while travelling in India," Robertson wrote, "where he was opening an orphanage to provide a home and safe refuge for children in need."

Robertson, who is executor of Cotten's estate, also announced that Quadriga has put new limits on daily withdrawals, trying to keep pace with demand and resolve transaction problems that lingered through much of last year.

In an update on its website about the debt filing, the exchange says it is facing "significant financial issues" that are keeping it from disbursing customers' funds.

The company says that it has "very significant cryptocurrency reserves" — but that it can't locate or secure those reserves.

As of the end of January, Quadriga had some 115,000 users with balances in their accounts, Robertson said. Those users' cryptocurrency was valued at $137 million in mid-December, with another $53 million in the form of government currency. The bulk of the holdings are in bitcoin; smaller amounts are held in other popular cryptocurrencies, including Litecoin and Ethereum.

Even before Cotten's death, Quadriga was struggling to cope with transaction delays and other problems after legal disputes with a large bank and payment processors resulted in tens of millions of dollars being frozen.

In large part, Quadriga's biggest crisis lies in how it (as well as many other exchanges) stores cryptocurrency customers' funds — in "hot wallets" that are used for quick-turnaround withdrawals and payments and in "cold wallets" that are stored offline to protect them from thieves and hackers.

Similar to how bank customers might split their checking and savings accounts, the cold wallets hold far more money; they are tapped only when hot wallets run low or when a user wants to make a large withdrawal. What is particularly problematic for Quadriga is that its CEO seems to be the only person who held the keys to those transactions.

"The transfer of coins from the cold wallet to the hot wallet was performed manually by [Cotten]," the affidavit from Robertson states.

Quadriga did not have offices or a bank account of its own; in the court filing, Robertson said, "Gerry ran the business through his laptop, mostly at our home, but also wherever he happened to be."

"I do not have any documents or records" for the business, Robertson added, saying that she had searched the couple's home in Fall River, Nova Scotia, and other locations but had found nothing.

The laptop that Cotten used to move funds between cold wallets and hot wallets is encrypted and locked — leaving the exchange paralyzed after Cotten's death, Robertson said.

"I do not know the password or recovery key," she added. "Despite repeated and diligent searches, I have not been able to find them written down anywhere."

Robertson said she and Quadriga have hired a security expert to try to break the encryption on Cotten's laptop and an encrypted USB key. But she added that so far, the expert has had only limited success.

Saying "there should be in excess of $180 million [Canadian] of coins in cold storage" — or $137 million — Robertson wrote that the company is still trying to access the wallets, in addition to looking into the possibility that Cotten had used other exchanges to secure some of the funds.

That has left Quadriga customers wondering when — and whether — they'll see their money. Discussion boards on Reddit are peppered with skeptical comments about the company's efforts to work out its issues, and some users say they have upwards of $80,000 or $100,000 that has been locked away from them.

"This is a tough lesson learned. I would probably avoid [cryptocurrency] in the future," Quadriga user Elvis Cavalic of Calgary, Alberta, told the CBC news agency. After not being able to withdraw $15,000 [Canadian], he said, "They've left us completely in the dark. I'm kind of preparing for the worst."

In the debt filing, Robertson said she has faced threats and has seen speculation online about whether Cotten is actually alive — some comments on Reddit and elsewhere have speculated that his death could be an elaborate ruse to siphon money away from the exchange's customers.

Robertson's affidavit notes that a copy of Cotten's death certificate was submitted to the court, with the J.A. Snow Funeral Home stating that he died on Dec. 9, 2018, in Jaipur, India.

In seeking protection from creditors, Robertson said she had convened a board of directors to run the company. And she asked the court to give Quadriga "additional time to find whatever stores of cryptocurrency may be available" and resolve other outstanding issues.

"If this cannot be done in an orderly fashion, many, if not all users, may suffer damage," she wrote.

The next legal step for the company is expected Tuesday, when it will ask the Nova Scotia Supreme Court to appoint Ernst & Young to monitor its debt proceedings as an independent third party.

When Quadriga was fully operational, its users could use a variety of means to fund an account with the exchange, from online transfers and automatic deposits to paying via cash or a debit card at thousands of Canada Post locations. Robertson said the many types of deposits made it difficult for the company to stop the inflow of money — even as it lost its ability to access or disburse funds.

Robertson said Quadriga would consider selling its cryptocurrency platform as an option to fulfill its obligations to customers and creditors. Other companies have already come forward to express interest, she said, warning that the platform's value would almost certainly be undercut if the company faced a legal threat from its users.
https://www.npr.org/2019/02/04/69129617 ... unexpected
Mazars and Deutsche Bank could have ended this nightmare before it started.
They could still get him out of office.
But instead, they want mass death.
Don’t forget that.
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Re: Modern Monetary Theory

Postby JackRiddler » Sat Feb 09, 2019 6:12 am

The Green New Deal resolution:
https://int.nyt.com/data/documenthelper ... d/full.pdf

14 pages, well-spaced, easy reading.

Don't let the news coverage or the pundits or the comments sections tell you what it says. No, it does not say that air travel and monster trucks will be banned -- funny how merely mentioning high-speed rail incites that reaction), or most of the crazy stuff you may be hearing fourteenth hand.

Let's see what happens if I try copy-pasting the whole thing.

.....................................................................
(Original Signature of Member)
116TH CONGRESS
1ST SESSION H. RES. ll
Recognizing the duty of the Federal Government to create a Green New
Deal.
IN THE HOUSE OF REPRESENTATIVES
Ms. OCASIO-CORTEZ submitted the following resolution; which was referred to
the Committee on ________________________

RESOLUTION
Recognizing the duty of the Federal Government to create
a Green New Deal.


Whereas the October 2018 report entitled ‘‘Special Report on
Global Warming of 1.5 oC’’ by the Intergovernmental
Panel on Climate Change and the November 2018
Fourth National Climate Assessment report found that—

(1) human activity is the dominant cause of observed
climate change over the past century;

(2) a changing climate is causing sea levels to rise
and an increase in wildfires, severe storms, droughts, and
other extreme weather events that threaten human life,
healthy communities, and critical infrastructure;

2

(3) global warming at or above 2 degrees Celsius beyond
preindustrialized levels will cause—
(A) mass migration from the regions most affected
by climate change;
(B) more than $500,000,000,000 in lost annual
economic output in the United States by the year
2100;
(C) wildfires that, by 2050, will annually burn
at least twice as much forest area in the western
United States than was typically burned by wildfires
in the years preceding 2019;
(D) a loss of more than 99 percent of all coral
reefs on Earth;
(E) more than 350,000,000 more people to be
exposed globally to deadly heat stress by 2050; and
(F) a risk of damage to $1,000,000,000,000 of
public infrastructure and coastal real estate in the
United States; and

(4) global temperatures must be kept below 1.5 degrees
Celsius above preindustrialized levels to avoid the
most severe impacts of a changing climate, which will require—
(A) global reductions in greenhouse gas emissions
from human sources of 40 to 60 percent from
2010 levels by 2030; and
(B) net-zero global emissions by 2050;

Whereas, because the United States has historically been responsible
for a disproportionate amount of greenhouse
gas emissions, having emitted 20 percent of global greenhouse
gas emissions through 2014, and has a high technological
capacity, the United States must take a leading
role in reducing emissions through economic transformation;

3

Whereas the United States is currently experiencing several
related crises, with—

(1) life expectancy declining while basic needs, such
as clean air, clean water, healthy food, and adequate
health care, housing, transportation, and education, are
inaccessible to a significant portion of the United States
population;

(2) a 4-decade trend of wage stagnation,
deindustrialization, and antilabor policies that has led
to—
(A) hourly wages overall stagnating since the
1970s despite increased worker productivity;
(B) the third-worst level of socioeconomic mobility
in the developed world before the Great Recession;
(C) the erosion of the earning and bargaining
power of workers in the United States; and
(D) inadequate resources for public sector
workers to confront the challenges of climate change
at local, State, and Federal levels; and

(3) the greatest income inequality since the 1920s,
with—
(A) the top 1 percent of earners accruing 91
percent of gains in the first few years of economic
recovery after the Great Recession;
(B) a large racial wealth divide amounting to a
difference of 20 times more wealth between the average
white family and the average black family; and
(C) a gender earnings gap that results in
women earning approximately 80 percent as much
as men, at the median;

Whereas climate change, pollution, and environmental destruction
have exacerbated systemic racial, regional,

4

social, environmental, and economic injustices (referred to
in this preamble as ‘‘systemic injustices’’) by disproportionately
affecting indigenous peoples, communities of
color, migrant communities, deindustrialized communities,
depopulated rural communities, the poor, low-income
workers, women, the elderly, the unhoused, people
with disabilities, and youth (referred to in this preamble
as ‘‘frontline and vulnerable communities’’);

Whereas, climate change constitutes a direct threat to the national
security of the United States—

(1) by impacting the economic, environmental, and
social stability of countries and communities around the
world; and

(2) by acting as a threat multiplier;

Whereas the Federal Government-led mobilizations during
World War II and the New Deal created the greatest
middle class that the United States has ever seen, but
many members of frontline and vulnerable communities
were excluded from many of the economic and societal
benefits of those mobilizations; and

Whereas the House of Representatives recognizes that a new
national, social, industrial, and economic mobilization on
a scale not seen since World War II and the New Deal
era is a historic opportunity—

(1) to create millions of good, high-wage jobs in the
United States;

(2) to provide unprecedented levels of prosperity and
economic security for all people of the United States; and

(3) to counteract systemic injustices: Now, therefore,
be it

5

1 Resolved, That it is the sense of the House of Rep
2 resentatives that—
3 (1) it is the duty of the Federal Government to
4 create a Green New Deal—
5 (A) to achieve net-zero greenhouse gas
6 emissions through a fair and just transition for
7 all communities and workers;
8 (B) to create millions of good, high-wage
9 jobs and ensure prosperity and economic secu
10 rity for all people of the United States;
11 (C) to invest in the infrastructure and in
12 dustry of the United States to sustainably meet
13 the challenges of the 21st century;
14 (D) to secure for all people of the United
15 States for generations to come—
16 (i) clean air and water;
17 (ii) climate and community resiliency;
18 (iii) healthy food;
19 (iv) access to nature; and
20 (v) a sustainable environment; and
21 (E) to promote justice and equity by stop
22 ping current, preventing future, and repairing
23 historic oppression of indigenous peoples, com
24 munities of color, migrant communities,
25 deindustrialized communities, depopulated rural

6

1 communities, the poor, low-income workers,
2 women, the elderly, the unhoused, people with
3 disabilities, and youth (referred to in this reso
4 lution as ‘‘frontline and vulnerable commu
5 nities’’);
6 (2) the goals described in subparagraphs (A)
7 through (E) of paragraph (1) (referred to in this
8 resolution as the ‘‘Green New Deal goals’’) should
9 be accomplished through a 10-year national mobili
10 zation (referred to in this resolution as the ‘‘Green
11 New Deal mobilization’’) that will require the fol
12 lowing goals and projects—
13 (A) building resiliency against climate
14 change-related disasters, such as extreme
15 weather, including by leveraging funding and
16 providing investments for community-defined
17 projects and strategies;
18 (B) repairing and upgrading the infra
19 structure in the United States, including—
20 (i) by eliminating pollution and green
21 house gas emissions as much as techno
22 logically feasible;
23 (ii) by guaranteeing universal access
24 to clean water;

7

1 (iii) by reducing the risks posed by cli
2 mate impacts; and
3 (iv) by ensuring that any infrastruc
4 ture bill considered by Congress addresses
5 climate change;
6 (C) meeting 100 percent of the power de
7 mand in the United States through clean, re
8 newable, and zero-emission energy sources, in
9 cluding—
10 (i) by dramatically expanding and up
11 grading renewable power sources; and
12 (ii) by deploying new capacity;
13 (D) building or upgrading to energy-effi
14 cient, distributed, and ‘‘smart’’ power grids,
15 and ensuring affordable access to electricity;
16 (E) upgrading all existing buildings in the
17 United States and building new buildings to
18 achieve maximum energy efficiency, water effi
19 ciency, safety, affordability, comfort, and dura
20 bility, including through electrification;
21 (F) spurring massive growth in clean man
22 ufacturing in the United States and removing
23 pollution and greenhouse gas emissions from
24 manufacturing and industry as much as is tech25
nologically feasible, including by expanding re

8

1 newable energy manufacturing and investing in
2 existing manufacturing and industry;
3 (G) working collaboratively with farmers
4 and ranchers in the United States to remove
5 pollution and greenhouse gas emissions from
6 the agricultural sector as much as is techno
7 logically feasible, including—
8 (i) by supporting family farming;
9 (ii) by investing in sustainable farm
10 ing and land use practices that increase
11 soil health; and
12 (iii) by building a more sustainable
13 food system that ensures universal access
14 to healthy food;
15 (H) overhauling transportation systems in
16 the United States to remove pollution and
17 greenhouse gas emissions from the transpor
18 tation sector as much as is technologically fea
19 sible, including through investment in—
20 (i) zero-emission vehicle infrastructure
21 and manufacturing;
22 (ii) clean, affordable, and accessible
23 public transit; and
24 (iii) high-speed rail;

9

1 (I) mitigating and managing the long-term
2 adverse health, economic, and other effects of
3 pollution and climate change, including by pro
4 viding funding for community-defined projects
5 and strategies;
6 (J) removing greenhouse gases from the
7 atmosphere and reducing pollution by restoring
8 natural ecosystems through proven low-tech so
9 lutions that increase soil carbon storage, such
10 as land preservation and afforestation;
11 (K) restoring and protecting threatened,
12 endangered, and fragile ecosystems through lo
13 cally appropriate and science-based projects
14 that enhance biodiversity and support climate
15 resiliency;
16 (L) cleaning up existing hazardous waste
17 and abandoned sites, ensuring economic devel
18 opment and sustainability on those sites;
19 (M) identifying other emission and pollu
20 tion sources and creating solutions to remove
21 them; and
22 (N) promoting the international exchange
23 of technology, expertise, products, funding, and
24 services, with the aim of making the United
25 States the international leader on climate ac

10

1 tion, and to help other countries achieve a
2 Green New Deal;
3 (3) a Green New Deal must be developed
4 through transparent and inclusive consultation, col
5 laboration, and partnership with frontline and vul
6 nerable communities, labor unions, worker coopera
7 tives, civil society groups, academia, and businesses;
8 and
9 (4) to achieve the Green New Deal goals and
10 mobilization, a Green New Deal will require the fol
11 lowing goals and projects—
12 (A) providing and leveraging, in a way that
13 ensures that the public receives appropriate
14 ownership stakes and returns on investment,
15 adequate capital (including through community
16 grants, public banks, and other public financ
17 ing), technical expertise, supporting policies,
18 and other forms of assistance to communities,
19 organizations, Federal, State, and local govern
20 ment agencies, and businesses working on the
21 Green New Deal mobilization;
22 (B) ensuring that the Federal Government
23 takes into account the complete environmental
24 and social costs and impacts of emissions
25 through—

11

1 (i) existing laws;
2 (ii) new policies and programs; and
3 (iii) ensuring that frontline and vul
4 nerable communities shall not be adversely
5 affected;
6 (C) providing resources, training, and
7 high-quality education, including higher edu
8 cation, to all people of the United States, with
9 a focus on frontline and vulnerable commu
10 nities, so that all people of the United States
11 may be full and equal participants in the Green
12 New Deal mobilization;
13 (D) making public investments in the re
14 search and development of new clean and re
15 newable energy technologies and industries;
16 (E) directing investments to spur economic
17 development, deepen and diversify industry and
18 business in local and regional economies, and
19 build wealth and community ownership, while
20 prioritizing high-quality job creation and eco
21 nomic, social, and environmental benefits in
22 frontline and vulnerable communities, and
23 deindustrialized communities, that may other
24 wise struggle with the transition away from
25 greenhouse gas intensive industries;

12

1 (F) ensuring the use of democratic and
2 participatory processes that are inclusive of and
3 led by frontline and vulnerable communities and
4 workers to plan, implement, and administer the
5 Green New Deal mobilization at the local level;
6 (G) ensuring that the Green New Deal mo
7 bilization creates high-quality union jobs that
8 pay prevailing wages, hires local workers, offers
9 training and advancement opportunities, and
10 guarantees wage and benefit parity for workers
11 affected by the transition;
12 (H) guaranteeing a job with a family-sus
13 taining wage, adequate family and medical
14 leave, paid vacations, and retirement security to
15 all people of the United States;
16 (I) strengthening and protecting the right
17 of all workers to organize, unionize, and collec
18 tively bargain free of coercion, intimidation, and
19 harassment;
20 (J) strengthening and enforcing labor,
21 workplace health and safety, antidiscrimination,
22 and wage and hour standards across all employ
23 ers, industries, and sectors;
24 (K) enacting and enforcing trade rules,
25 procurement standards, and border adjustments

13

1 with strong labor and environmental protec
2 tions—
3 (i) to stop the transfer of jobs and
4 pollution overseas; and
5 (ii) to grow domestic manufacturing
6 in the United States;
7 (L) ensuring that public lands, waters, and
8 oceans are protected and that eminent domain
9 is not abused;
10 (M) obtaining the free, prior, and informed
11 consent of indigenous peoples for all decisions
12 that affect indigenous peoples and their tradi
13 tional territories, honoring all treaties and
14 agreements with indigenous peoples, and pro
15 tecting and enforcing the sovereignty and land
16 rights of indigenous peoples;
17 (N) ensuring a commercial environment
18 where every businessperson is free from unfair
19 competition and domination by domestic or
20 international monopolies; and
21 (O) providing all people of the United
22 States with—
23 (i) high-quality health care;
24 (ii) affordable, safe, and adequate
25 housing;

14

1 (iii) economic security; and
2 (iv) clean water, clean air, healthy and
3 affordable food, and access to nature.


VerDate Nov 24 2008 09:55 Feb 07, 2019 Jkt 000000 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 C:\USERS\WPBURKE\APPDATA\ROAMING\SOFTQUAD\XMETAL\7.0\GEN\C\OCASNY~1.
February 7, 2019 (9:55 a.m.)
G:\M\16\OCASNY\OCASNY_005.XML
g:\VHLC\020719\020719.032.xml (717120|3)

We meet at the borders of our being, we dream something of each others reality. - Harvey of R.I.

To Justice my maker from on high did incline:
I am by virtue of its might divine,
The highest Wisdom and the first Love.

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Re: Modern Monetary Theory

Postby Grizzly » Mon Feb 11, 2019 4:54 pm

How to change the course of human history | David Graeber & David Wengrow
https://thisishell.com/interviews/1040-dahr-jamail

Shifting from this current power structure into the right way of living with the planet would absolutely be revolutionary and radical. It would mean everything has to change, literally. How we transport ourselves, how often and how far we transport ourselves, how we get our food, how we earn money, how we take care of our families. There is no question that this is going to happen, the question is do we want to come willingly, or are we going to be dragged kicking and screaming while things are collapsing around us?
“The more we do to you, the less you seem to believe we are doing it.”

― Joseph mengele
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Re: Modern Monetary Theory

Postby Belligerent Savant » Mon Feb 11, 2019 5:08 pm

JackRiddler » Wed Jan 30, 2019 7:48 pm wrote:.

Bill Gates' favorite graphic, he says, posting it regularly on his feed:

Image

Regarding this stuff about the "conquest of extreme poverty" in particular since the 1980s, so beloved by capitalist ideologues like Gates, Pinker, the Wall Street Journal, the Economist and many others, they rarely admit that half of the supposed gain occurs in China, a one-party communist dictatorship that engages in aggressive protectionism and directs investment priorities from the top (whether or not doing this well and wisely or poorly). The other half is partly attributed to India but mostly a combination of statistical gamesmanship and, above all, monetization of areas and groups that previously lived from subsistence and off the cash nexus -- well or poorly. They are now off the land and considered to have been rescued from the extreme poverty of their traditional existence because they make $2 a day per household, even though they may be crowded up in a favela and their lives may be far lousier than before. There's no examination of actual conditions experienced. The social gains of the last couple of centuries, such as clean water or public health, meanwhile, are largely the product of social struggles moving states to provide some minimum of human decency. They do not arise directly from capitalism, but capitalist ideology is a machine that relentlessly takes credit for the achievement of everything capitalists opposed. Best example, as ever, are the labor gains and relative democracy in nation-states since the nineteenth century. Franchise, ban on child labor, unions, greater access to public higher education, universal health care schemes: all of it came in the West thanks to social struggles stubbornly opposed by most of the capitalist class, to the point of frequent massacres. And later, when there's an eight hour day (until neoliberalism, anyway) and a universal franchise (whether or not "democracy" results), fucking capitalism is supposed to get the credit, and the capitalist propagandists tell us to shut up because We Never Had It So Good. It's tedious.

Anyway, regarding Bill Gates' favorite chart and the myth of the "conquest of extreme poverty," in the same vein as my thoughts but more polished and authoritative, I like this article:

https://www.theguardian.com/commentisfr ... neoliberal


Bill Gates says poverty is decreasing. He couldn’t be more wrong

Jason Hickel

An infographic endorsed by the Davos set presents the story of coerced global proletarianisation as a neoliberal triumph

@jasonhickel
Tue 29 Jan 2019 09.28 GMT

Last week, as world leaders and business elites arrived in Davos for the World Economic Forum, Bill Gates tweeted an infographic to his 46 million followers showing that the world has been getting better and better. “This is one of my favourite infographics,” he wrote. “A lot of people underestimate just how much life has improved over the past two centuries.”

Of the six graphs – developed by Max Roser of Our World in Data – the first has attracted the most attention by far. It shows that the proportion of people living in poverty has declined from 94% in 1820 to only 10% today. The claim is simple and compelling. And it’s not just Gates who’s grabbed on to it. These figures have been trotted out in the past year by everyone from Steven Pinker to Nick Kristof and much of the rest of the Davos set to argue that the global extension of free-market capitalism has been great for everyone. Pinker and Gates have gone even further, saying we shouldn’t complain about rising inequality when the very forces that deliver such immense wealth to the richest are also eradicating poverty before our very eyes.

It’s a powerful narrative. And it’s completely wrong.

Bill Gates
(@BillGates)
This is one of my favorite infographics. A lot of people underestimate just how much life has improved over the last two centuries: https://t.co/djavT7MaW9 pic.twitter.com/kuII7j4AuW
January 19, 2019


There are a number of problems with this graph, though. First of all, real data on poverty has only been collected since 1981.


And even GNP-GDP dates from 1930, starting in U.S. Most countries started that one in the 1950s. Reliable national accounts before then (always retrospective) can be found in Britain back to Marx's time, and maybe a couple of other industrial powers, but are meaningless from anywhere else. (Those are basically glorifications of the tax rolls.) Any so-called economist telling you about "GDP" in 1500 should be expelled from the Academy forthwith, they are lesser than astrologists or corner psychics.

Anything before that is extremely sketchy, and to go back as far as 1820 is meaningless. Roser draws on a dataset that was never intended to describe poverty, but rather inequality in the distribution of world GDP – and that for only a limited range of countries. There is no actual research to bolster the claims about long-term poverty. It’s not science; it’s social media.

What Roser’s numbers actually reveal is that the world went from a situation where most of humanity had no need of money at all to one where today most of humanity struggles to survive on extremely small amounts of money. The graph casts this as a decline in poverty, but in reality what was going on was a process of dispossession that bulldozed people into the capitalist labour system, during the enclosure movements in Europe and the colonisation of the global south.


One that has never ended and continues today.

Prior to colonisation, most people lived in subsistence economies where they enjoyed access to abundant commons – land, water, forests, livestock and robust systems of sharing and reciprocity. They had little if any money, but then they didn’t need it in order to live well – so it makes little sense to claim that they were poor. This way of life was violently destroyed by colonisers who forced people off the land and into European-owned mines, factories and plantations, where they were paid paltry wages for work they never wanted to do in the first place.


There is romanticization of the past here, life was still lousy for most even under those circumstances (if more meaningful to most of them given religious narratives), and the course of child mortality statistics in the same graphic is true enough. The latter change is not attributable simply to "capitalism," however.

In other words, Roser’s graph illustrates a story of coerced proletarianisation. It is not at all clear that this represents an improvement in people’s lives, as in most cases we know that the new income people earned from wages didn’t come anywhere close to compensating for their loss of land and resources, which were of course gobbled up by colonisers. Gates’s favourite infographic takes the violence of colonisation and repackages it as a happy story of progress.

But that’s not all that’s wrong here. The trend that the graph depicts is based on a poverty line of $1.90 (£1.44) per day, which is the equivalent of what $1.90 could buy in the US in 2011. It’s obscenely low by any standard, and we now have piles of evidence that people living just above this line have terrible levels of malnutrition and mortality. Earning $2 per day doesn’t mean that you’re somehow suddenly free of extreme poverty. Not by a long shot.

Scholars have been calling for a more reasonable poverty line for many years. Most agree that people need a minimum of about $7.40 per day to achieve basic nutrition and normal human life expectancy, plus a half-decent chance of seeing their kids survive their fifth birthday.


This is like the statistical analogue to Fight for 15.

And many scholars, including Harvard economist Lant Pritchett, insist that the poverty line should be set even higher, at $10 to $15 per day.

So what happens if we measure global poverty at the low end of this more realistic spectrum – $7.40 per day, to be extra conservative? Well, we see that the number of people living under this line has increased dramatically since measurements began in 1981, reaching some 4.2 billion people today. Suddenly the happy Davos narrative melts away.

Moreover, the few gains that have been made have virtually all happened in one place: China. It is disingenuous, then, for the likes of Gates and Pinker to claim these gains as victories for Washington-consensus neoliberalism. Take China out of the equation, and the numbers look even worse. Over the four decades since 1981, not only has the number of people in poverty gone up, the proportion of people in poverty has remained stagnant at about 60%. It would be difficult to overstate the suffering that these numbers represent.

This is a ringing indictment of our global economic system, which is failing the vast majority of humanity. Our world is richer than ever before, but virtually all of it is being captured by a small elite. Only 5% of all new income from global growth trickles down to the poorest 60% – and yet they are the people who produce most of the food and goods that the world consumes, toiling away in those factories, plantations and mines to which they were condemned 200 years ago. It is madness – and no amount of mansplaining from billionaires will be adequate to justify it.

• Dr Jason Hickel is an academic at the University of London and a fellow of the Royal Society of Arts. His most recent book is The Divide: A Brief Guide to Global Inequality and its Solutions.


Good read. Worth 'bumping' again, even in the same page, because it offers a glimpse as to how 'charts' and statistics can be utilized as tools to give LIES the veneer of legitimacy/validation. They're not: They're LIES, impacting millions of lives.
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Re: Modern Monetary Theory

Postby Grizzly » Tue Feb 12, 2019 12:48 pm

But, but ... "the poor will always be with us"! Ask, Jebus!
“The more we do to you, the less you seem to believe we are doing it.”

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Re: Modern Monetary Theory

Postby Jerky » Tue Feb 12, 2019 1:47 pm

DING DING DING!

Absolutely 100% concur with everything Wombat says here (altho I've been meaning to educate myself about monetary policy for years and procrastinating on it like crazy, so I do sincerely thank Jack and this kick-in-the-pants article for re-kindling that desire).


Now to peruse the rest of this thread.
Jerky

Wombaticus Rex » 24 Sep 2018 12:34 wrote:Cool to see an MMT thread on RI.

I think the strength and weakness of MMT is bound up in the same fact: it's not a Utopian framework, it's an attempted explanation of what has been happening in the era of exhorbitant privilege. Because according to tenets of macroec, the US economy should have flown off a cliff onto the barren desert floor -- instead we've been riding a five-lane superhighway in the sky.

This means that the tenets of MMT could all just be based on, say, a nuclear capable global empire, rather than any intrinsic properties of state economies, or even the global exchange currencies of a world system running on petroleum.

That said, I'd much rather have an explanation for how things work than why.

MMT will make slow progress with the intelligensia because it is so alien to the post-70's "national conversation" rituals of the pundit class. Even if they understand it perfectly at their dinner parties, it's a bit unspeakable in the ring.
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Re: Modern Monetary Theory

Postby JackRiddler » Thu Feb 14, 2019 4:42 pm

.

An earlier radical economic vision and how it was prevented. Article touches upon many of the same (perpetual) issues.

blackagendareport.com | Black Agenda Report
When Jamaica Led the Postcolonial Fight Against Exploitation
Adom Getachew
13 Feb 2019

In the 1970s, a bloc of Third world states forced the UN to take seriously the unequal distribution of global wealth.

“The New International Economic Order was conceived as the international corollary to the domestic projects of socialism.”

This essay appears in Evil Empire and is adapted from Worldmaking after Empire: The Rise and Fall of Self-Determination.


In 1972 the socialist left swept to power in Jamaica. Calling for the strengthening of workers’ rights, the nationalization of industries, and the expansion of the island’s welfare state, the People’s National Party (PNP), led by the charismatic Michael Manley, sought nothing less than to overturn the old order under which Jamaicans had long labored—first as enslaved, then indentured, then colonized, and only recently as politically free of Great Britain. Jamaica is a small island, but the ambition of the project was global in scale.

Two years before his election as prime minister, Manley took to the pages of Foreign Affairs to situate his democratic socialism within a novel account of international relations. While the largely North Atlantic readers of the magazine might have identified the fissures of the Cold War as the dominant conflict of their time, Manley argued otherwise. The “real battleground,” he declared, was located “in that largely tropical territory which was first the object of colonial exploitation, second, the focus of non-Caucasian nationalism and more latterly known as the underdeveloped and the developing world as it sought euphemisms for its condition.” Manley displaced the Cold War’s East–West divide, instead drawing on a longstanding anti-colonial critique to look at the world along its North–South axis. When viewed from the “tropics,” the world was not bifurcated by ideology, but by a global economy whose origins lay in the project of European imperial expansion.

“Manley looked at the world along its North–South axis.”

The sovereignty of former colonies was undermined by their economic dependence on former colonial powers, a condition Kwame Nkrumah called neocolonialism.

Imperialism, for Manley, was a form of not just political but economic domination through which territories such as Jamaica were “geared to produce not what was needed for themselves or for exchange for mutual advantage, but rather . . . compelled to be the producers of what others needed.” Between the 1940s and ’60s, the first generation of anti-colonial nationalists, including Norman Manley, Michael’s father, had largely liberated their countries from the political chains of empire by securing independence. Anti-colonial nationalists aspired to use their newfound sovereignty to transform the political and economic legacies of imperialism. As a member of the second generation of postwar nationalists, Manley viewed his election as an opportunity to realize this aspiration for postcolonial transformation. Given “the condition of a newly independent society encumbered with the economic, social and psychological consequences of three hundred years of colonialism,” Manley hoped his political program would secure “individual and collective self-reliance” as well as political and economic equality. His platform of democratic socialism for Jamaica inaugurated an ambitious project of land redistribution, state control of key industries, stronger rights for organized labor, worker ownership of industries, and the expansion of health care and education.

“Anti-colonial nationalists aspired to use their newfound sovereignty to transform the political and economic legacies of imperialism.”

However, this vision of postcolonial transformation was limited by the very forms of dependence and inequality that it sought to overcome. Because postcolonial states remained primary good exporters with national economies dependent on products such as bauxite, cocoa, coffee, cotton, sisal, and tea, their domestic economic policies were subject to the vagaries of the international market. This contradiction between the achievement of political sovereignty and the persistence of economic dependence, famously captured in Kwame Nkrumah’s term neocolonialism, was heightened as Manley inaugurated his socialist project. Already beginning in the late 1960s, prices for primary products in international markets experienced a precipitous decline. Coupled with OPEC’s 1973 oil embargo, which heavily burdened new postcolonial states dependent on oil imports, the decline in commodity prices resulted in steep foreign exchange shortages and exacerbated postcolonial states’ reliance on debt.

The end of this story is a familiar one. By the 1980s, unable to service their debt, postcolonial states entered structural adjustment agreements with the World Bank and International Monetary Fund (IMF). While Mexico’s 1982 default is often viewed as the beginning of this process, Manley’s Jamaica was the first victim of the Third World debt crisis and began structural adjustment in 1977. Then in his second term, Manley acceded to the terms of the IMF’s stabilization program, which required a 30 percent devaluation of Jamaica’s currency; major cuts in public expenditures, especially in the wages of public sector workers; and the privatization of state assets. Long before Greece’s SYRIZA, there was Manley and his PNP.

Although the 1970s ended with postcolonial capitulation to the new age of neoliberal globalization, the decade had begun on a very different note: with a radical call from the Global South for a New International Economic Order (NIEO). Announced in the UN General Assembly with the Declaration on the Establishment of a New International Economic Order (1974) and the Charter of Economic Rights and Duties of States (1974), the NIEO was conceived as the international corollary to the domestic projects of socialism Manley and other anti-colonial nationalists were pursuing. How did such an ambitious effort—to create an egalitarian global economy—emerge?

“In his second term, Manley acceded to the terms of the IMF’s stabilization program.”

Despite the opposition of the United States and its allies, Third World states used their majority in the UN to force the organization to address the unequal trade relations between the Global North and South.

A decade prior to passage of the Declaration on the Establishment of the NEIO and the Charter on Economic Rights and Duties of States, the Afro-Asian bloc of states in the United Nations had come to recognize a possible source of strength in their majority in the General Assembly. They mobilized to create the United Nations Conference of Trade and Development (UNCTAD). Unlike the World Bank and IMF, which were created prior to the postwar surge of decolonization and empowered states of the Global North, UNCTAD was organized as a forum to address trade and development in the Global South. Despite the opposition of the United States and its allies, Third World states used their majority to place the Argentine economist and dependency theorist Raúl Prebisch at the helm of this new agency. It was in UNCTAD, and then on the floor of the UN General Assembly, that the policy prescriptions of the NIEO were first articulated and backed by a group of Third World states that had organized themselves under the name G-77. In its ambition to transform international economic relations, the NIEO addressed critical issues that included the ownership of resources in land, space, and the seas; the growing power of transnational corporations; and the transportation of goods in an increasingly globalized commodity chain. At its core, however, the NIEO was concerned with the unequal relations of trade between the Global North and South.Proponents of the NIEO saw in this inequality a distorted and damaging international division of labor, one that, according to Manley, consistently relegated postcolonial states to “the low end of the ‘value added’ scale.” Until something changed, they would be condemned to serve as “planter and reaper,” economically subservient to the Global North with its manufacturing economies, high incomes, and domestic consumer markets.

To overcome the dependence that structured international trade, UNCTAD and the postcolonial statesmen who supported the NIEO looked for lessons in the welfare states of the twentieth century. These systems, constructed by the labor movements of industrialized societies, were by the 1970s at the peak of their success in diminishing domestic inequality. The assumption that an egalitarian global economy could be modeled on the welfare state thus depended on viewing the position of postcolonial states as structurally analogous to the working class and rural sector within the states of the Global North. This analogy, transposing from the domestic political economies of the Global North to the political economy of the whole planet, shaped the politics of the NIEO in two ways.

“At its core, the NIEO was concerned with the unequal relations of trade between the Global North and South.”

First, it framed Third World solidarity as an assertive class politics. As Manley noted, the postcolonial world “now proclaimed itself the Third World to mark its transition from an age of apology to one of assertiveness.” According to Julius Nyerere, president of Tanzania and one of Manley’s collaborators, postcolonial states had constituted themselves as an international “trade union of the poor.” The G-77 in the UN General Assembly—as well as commodity associations modeled on OPEC that would negotiate the price of products such as bauxite and coffee—were manifestations of this trade unionism. Like the labor movements of the nineteenth and twentieth centuries, their demand for economic equality was predicated on the view that the postcolonial world had produced the wealth that the Global North enjoyed. In this recasting of economic relations between the Global North and South, the NIEO’s proponents reimagined the international arena as a site for a politics of redistribution that extended far beyond the discourses of aid and charity.

Second, the domestic analogy cast the postcolonial project as an effort to internationalize the postwar social compact between labor and capital. The NIEO was, to use Gunnar Myrdal’s term, a “welfare world” that would democratize global economic decision-making and redistribute the gains of global trade. In the absence of a world state armed with the coercive power of taxation, this international welfarism sought to deploy the United Nations to regulate market prices of primary commodities, provide compensatory financing when prices fell unexpectedly, remove protectionist barriers in the Global North, and provide “special and preferential treatment” for the products postcolonial states produced. UNCTAD justified this set of policy prescriptions by insisting that the international community had “a clear responsibility towards developing countries that have suffered a deterioration in their terms of trade in the same way as Governments recognize a similar responsibility towards their domestic primary producers.” This responsibility was not framed as a rectification or reparation for past injustices of the global economy. Instead, it was a claim that internationalizing the welfare state was necessary for overcoming the structural inequality of global trade—and thereby, for achieving a postimperial global economy. Just as the workers’ movements of the Global North had, in their struggles for unions and socialism, built democracy in Germany, Britain, France, and the United States, so too would the states of the Global South, in pursuing global economic equality, achieve a new world political order.

“The NIEO was a ‘welfare world’ that would democratize global economic decision-making and redistribute the gains of global trade.”

The welfare world of the NIEO marked the high point of anti-colonial politics in the United Nations and indicated a sharp break with the postwar status quo. If the right to self-determination had universalized legal equality for postcolonial states, the NIEO radicalized the meaning of sovereign equality. In the hands of postcolonial states, sovereign equality now entailed equal decision-making power within the United Nations. According to the Charter of Rights and Duties, the juridical equality of all states and their equal status as members of the international community granted them “the right to participate fully and effectively in the international decision-making process in the solution of world economic, financial and monetary problems.” This claim of equal legislative power grounded the more ambitious claim that sovereign equality had material implications: it required and entailed an equitable share of the world’s wealth. According to the Declaration on the Establishment of the NIEO, the welfare world aimed for “the broadest co-operation of all the States members of the international community, based on equity, whereby the prevailing disparities in the world may be banished and prosperity secured for all.”

Postcolonial states constituted themselves as an international “trade union of the poor,” with demands predicated on the view that the postcolonial world had produced the wealth that the Global North enjoyed.

Fearing that Third World states would launch commodity embargoes on the model of OPEC’s 1973 oil embargo, Western statesmen initially pursued a conciliatory policy of appeasement in public even as they criticized the NIEO privately. In this context, postcolonial states gained allies among social democrats in the Global North and secured small victories. For instance, with the addition of Part 4 to the General Agreement on Trade and Tariffs, postcolonial states were able to secure lower tariffs in the Global North on some of their goods. Moreover, postcolonial states were freed from the requirement of reciprocity in trade agreements with the Global North. These special and preferential provisions recognized the unfair character of international trade and sought to strengthen the position of postcolonial states.

“In the hands of postcolonial states, sovereign equality now entailed equal decision-making power within the United Nations.”

However, the political openings that made possible these concessions and enabled the Third World to demand the NIEO proved narrow. With commodity prices declining and debt skyrocketing, the bargaining power of postcolonial states eroded rapidly. By the end of the 1970s, the era of neoliberal globalization had dawned, displacing visions of a welfare world. Leading the opposition to the NIEO, the World Bank and IMF rejected its aspiration to democratic and universal international economic law. Instead, these financial institutions insulated the global economy from political contestation by recasting it as the domain of technocratic expertise. In doing so, they rejected the claim that the global economy could be subject to demands for redistribution. The colony went free, stood for a brief moment in the sun, then moved back again toward servitude—this time to the empire of debt.

Almost forty years after the triumph of neoliberalism over the NIEO, it is difficult to imagine that another world was possible. In accepting this triumph as inevitable, we have forgotten that decolonization promised not only to free nations from foreign domination, but also to remake the world. From our perspective, the wave of independence movements that followed World War II is largely associated with the moral and legal delegitimization of alien rule, the transition from colony to nation, and the expansion of the international society to include previously excluded African, Asian, and Caribbean states. In this view, anti-colonial nationalists appropriated the principle of self-determination and the modular form of the nation-state, expanding and universalizing languages and institutions with a European provenance.

This is a compelling narrative because it describes the world that emerged from decolonization. In the three decades between 1945 and 1975, UN membership had grown from 51 states to 144. At the turn of the twentieth century, European states ruled 84 percent of Earth’s surface; by 1975 the remnants of alien rule, largely in southern Africa, appeared to be anachronistic and barbaric holdouts. However, this narrative obscures some of the most innovative aspects of the politics of decolonization by eliding its global ambitions. And it thereby misses the mechanisms by which empire reasserted itself, persisting into our time and reinforcing global white supremacy.

“By the end of the 1970s, the era of neoliberal globalization had dawned, displacing visions of a welfare world.”

The insight that democratic self-governance depended on an international context conducive to its exercise emerged out of a sense that empire’s globalization could be made egalitarian but could not be reversed.

When African and West Indian nationalists met at the Fifth Pan-African Congress in Manchester in 1945 to articulate a global vision of decolonization, national independence was high on their agenda. But it was only one part of an internationalist framework that looked forward to “inevitable world unity and federation.” From Ghana’s Nkrumah, who helped to organize the Pan-African Congress, to Jamaica’s Manley, anti-colonial nationalists pitched decolonization on this global scale to address the global character of imperialism. In their view, empire was a globalizing force that unequally and violently integrated disparate peoples and lands. With the gun and the lash, it had made a single world from many. It produced, according to W. E. B. Du Bois, a global color line through which Europe dominated the “darker . . . races of men in Asia and Africa, in America and the islands of the sea.” This structure of racial hierarchy endured well after the achievement of juridical independence, finding a new form in Manley’s “real battleground,” which demarcated the postcolonial world and the Global North.

Seeking to undo international economic hierarchies and shore up the right to self-determination, the NIEO sought to realize the aspiration to “world unity and federation” by creating international frameworks that would support self-rule at home. This novel combination of nation-building and world-making—the idea that democratic self-governance depended on an international context conducive to its exercise—emerged out of the sense that empire’s globalization could be made egalitarian but could not be reversed. The world was already unified, under the terms of white supremacy and capitalist exploitation. As Manley pointed out, the Caribbean itself was a global formation and could not be disaggregated from the international political and economic relations in which it was embedded. This extreme form of extraversion necessarily required moving beyond national insularity.

“Empire produced a global color line through which Europe dominated the ‘darker . . . races of men in Asia and Africa, in America and the islands of the sea.’”

The ideal of a national independence disembedded from the world was not only a fantasy for decolonizing nations—it was also increasingly impossible for the Global North. Anticipating the contemporary dilemmas of neoliberal globalization, Manley argued that international entanglements of trade, capital flows, and financialization, as well as the emergence of transnational private actors, threatened to undermine the capacity of all states to steer and regulate their national economies. For Manley, the multinational corporation revealed the growing contradictions between the international economy and the bounded nation-state. In creating an international system of political management for the world economy, the NIEO would supplement the diminished role of the state. It would create a system for political and democratic regulation of the global economy, ultimately benefiting all states and peoples. Thus while anticolonial nationalists reimagined international institutions for the postcolonial condition, their vision extended beyond the Global South.

The democratic decision-making and global redistribution at the heart of the NIEO could yet again be a source for inspiration, especially in our present moment when the tension between nationalism and internationalism electrifies political debate. Brexit, the election of Donald Trump, and the wave of authoritarian populism surging across the West all frame national insularity as the solution to an age of neoliberal globalization. By withdrawing from international institutions, erecting barriers to global trade, and closing borders to migrants, the new right in the Global North aspires to realize a vision of national independence that Manley and other anti-colonial nationalists already realized was impossible fifty years ago. But if the right’s model of national insularity is impossible, the neoliberal globalization that displaced anti-colonial world-making, and has been the order of the day since the 1980s, is equally untenable. Its vision of an economy insulated from political contestation and its rejection of distributive justice nationally and globally have magnified inequality and contributed to the rise of the new right. One vision would insulate nation-states from the world; the other, the world from its people. In this context, demanding a return to the liberal world order—as leading scholars in international relations and international law have recently done—is an inadequate response. It obscures the ways that the illiberal backlash of our moment emerged out of the inequalities and hypocrisies of that very same system.

From our vantage point, the welfare world of the NIEO might appear utopian and unrealistic. But to dismiss the world that decolonization aspired to make is to refuse to reckon with the dilemmas we inherited from the end of empire. It is to evade our responsibility to build a world after empire. Our world, like Manley’s, is characterized by a battleground of widening inequality and ongoing domination. We cannot simply recreate the 1970s vision of a welfare world, but we can take from its architects the insight that building an egalitarian and postimperial world is the only route to true democratic self-governance.

Adom Getachew is the Neubauer Family Assistant Professor of Political Science and the College at the University of Chicago. She is author of Worldmaking after Empire: The Rise and Fall of Self-Determination.
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Re: Modern Monetary Theory

Postby Elvis » Fri Feb 22, 2019 5:31 pm

Crossposting from the AOC thread:

https://www.forbes.com/sites/rhockett/2 ... f33d374d7f
51,825 viewsJan 16, 2019, 07:15pm
The Green New Deal: How We Will Pay For It Isn't 'A Thing' - And Inflation Isn't Either
Robert Hockett

Representative Alexandria Ocasio-Cortez’s announcement of an ambitious new Green New Deal Initiative in Congress has brought predictable – and predictably silly – callouts from conservative pundits and scared politicians. ‘How will we pay for it?,’ they ask with pretend-incredulity, and ‘what about debt?’ ‘Won’t we have to raise taxes, and will that not crowd-out the job creators?’

Representative Ocasio-Cortez already has given the best answer possible to such queries, most of which seem to be raised in bad faith. Why is it, she retorts, that these questions arise only in connection with useful ideas, not wasteful ideas? Where were the ‘pay-fors’ for Bush’s $5 trillion wars and tax cuts, or for last year’s $2 trillion tax giveaway to billionaires? Why wasn’t financing those massive throwaways as scary as financing the rescue of our planet and middle class now seems to be to these naysayers?

The short answer to ‘how we will pay for’ the Green New Deal is easy. We’ll pay for it just as we pay for all else: Congress will authorize necessary spending, and Treasury will spend. This is how we do it – always has been, always will be.*

The money that’s spent, for its part, is never ‘raised’ first. To the contrary, federal spending is what brings that money into existence.

If years of bad or no economic education make that ring counterintuitive to you, you’re not alone: politicians and pundits who ought to know better are with you. But the problem is readily remedied: just take a look at a dollar (or five dollar, or ten dollar, or … dollar) bill. The face you see is George Washington’s – a public official’s – not yours or some other private sector person’s. The signatures you’ll find, for their part, are those of the Treasurer and the Treasury Secretary, not yours or some other private sector person’s. And the inscription you’ll read across the top is ‘Federal Reserve Note,’ not ‘Private Sector Sally’s Note.’

‘Note’ here, note carefully, means ‘promissory note.’ Money betokens a promise. Hence money’s relation to credit. We’ll come back to this later. The money that Treasury spends is, in any event, jointly Fed- and Treasury-issued, not privately issued. That is to say it’s the citizenry’s issuance, not some single citizen’s issuance. It’s like a promise we make to each other. Hence the term ‘full faith and credit’ you’ll hear about when asking what ‘backs’ our currency and our Treasury securities.

This fact of public finance bears real consequences. Chief among them for present purposes is that ‘raising the money’ is never the relevant question for federal spending, any more than ‘finding the promises’ is a question for people who make and keep promises to one another. The relevant question, rather, is what limits, if any, there are on the promises we can make and fulfill. How many promissory notes, in other words, can Fed and Treasury issue without ‘over-promising’?

This is, effectively, the question of inflation – the question of promises’ outstripping capacity to redeem promises and hence losing credibility as promises. (The ‘cred’ of ‘credibility’ is the ‘cred’ of ‘credit,’ not to mention of ‘credo’ – or ‘faith.’) This is precisely why lawyers, accountants, and economists schooled in the simple mechanics of public finance always tell you the relevant constraint upon spending is not some non-existent ‘fundraising constraint,’ but ‘the inflation constraint,’ also known as ‘the resource constraint.’

The truth of the resource constraint is that money usually can be publicly issued and spent only at a rate commensurate with new goods and services supply. If the money supply grows too rapidly for goods and services to keep up, you get the old problem of ‘too many dollars chasing too few goods’ – inflation. If the money supply grows too slowly to keep up with productive capacity, you get the opposite problem – deflation, a far more serious threat, as we’ve seen since the crash of ‘08.

Over the past four decades or so, inflation in consumer goods markets – so-called ‘Consumer Price Inflation,’ or ‘CPI’ – has been by and large nonexistent in the ‘developed’ world. Our problem has been just the opposite – deflation. That is what slow, ‘anemic,’ and even ‘negative’ growth rates across the ‘mature’ economies in recent decades have been about. What inflation we’ve had has been concentrated in financial markets, where the ever-more rich in our ever-more unequal societies gamble their winnings. Meanwhile those below the top have had to spend less and borrow more, bringing deflation and, worse still, debt-deflations after the financial crashes inevitably brought on by asset price hyperinflations in our financial markets.

Which takes us to the Green New Deal. Representative Ocasio-Cortez, whose educational background is in economics, understands as few leaders seem to do that our problems of late have been problems of deflation, not inflation. She also knows well that both inequality and the loss of our middle class have both caused and been worsened by these deflationary trends, along with their mirror images in the financial markets: our asset price hyperinflations – ‘bubbles’ – and busts. Her Green New Deal aims to do nothing short of reversing this slow-motion national suicide – and end our ongoing ‘planet-cide’ in the process.

Because the Green New Deal aims at reversing undeniable long-term deflationary trends in our national economy, there is reason already to deem inflation fears, sure to be stoked by conservative pundits and scared politicians, a silly canard. But we can go further than this. We can catalogue theoretical, empirical, and policy instrument reasons to laugh such fears off.

The theoretical case against inflation worries is straightforward and comes in two parts. Recall the popular ‘too much money chasing too few goods’ adage above. What this slogan captures is that inflation is always a relational matter. It’s about money supply in relation to goods and services supply.

The Green New Deal aims to stoke massive production of a vast array of new products, from solar panels to windmills to new battery and charging station technologies to green power grids and hydroelectric power generation facilities. The new production and new productivity that renewed infrastructure will bring will be virtually unprecedented in our nation’s history. This will be more than enough to absorb all new money spent into our economy. It will also distinguish the Green New Deal starkly from pseudo-stimulus plans of the recent past, none of which flowed to production or infrastructure and nearly all of which simply inflated financial markets.

The second theoretical reason not to fret about Green New Deal inflation is related to but distinct from the first. It is that our economy now is operating at far below capacity even as is, before the Green New Deal adds to capacity. Labor force participation rates still languish at historic lows, and wages and salaries have yet to catch up even to such little growth as we’ve had since our crash of ten years ago. Indeed they have stagnated for decades. These are classic indicators of slack – slack which by definition is opportunity-squandering, and which the Green New Deal now aims to ‘take up.’

The empirical case against inflation worries corroborates the theoretical case, and can also be made from a number of angles. Note first that billions of dollars in tax cuts flowed into the economy during the Reagan years, while multiple trillions more in both tax cuts and war spending flowed during the George W. Bush years. The tax cuts of December 2017 pumped yet more trillions – two of them – into the economy just a bit over a year ago. And still we have seen nothing – nothing – in the way of undesired price inflation in consumer goods and services markets. Indeed no ‘developed’ economy has seen significant CPI inflation for some forty years. Why do inflation ‘Chicken Littles’ think ‘this time [or place] is different?’

My referring to ‘undesired’ price inflation just now hints at another empirical reason to scoff at inflation scolds. Since 2012, the Fed has formally aimed at a 2% inflation target that it has informally targeted even longer. Yet in only a few quarters during all of these years has it managed, just barely, to reach it. If the Fed with its massive balance sheet cannot get our inflation rate up to its very low 2% target even while trying to do so, why does Chicken Little think things will grow scary even should the Fed seek one day to tamp prices down?

The final empirical reason to dismiss the inflation Scaredy Cats comes from investors themselves. For years now the Treasury Department has issued ‘inflation-protected’ securities along with traditional ones. The ‘spread’ between prices of the former and prices of the latter is effectively a measure of investors’ inflationary expectations: if they are willing to pay substantially more for inflation-protected than for ordinary Treasurys, they have substantial inflation fears; otherwise not. So what is that spread? It is virtually nil, and has been for years.

But what if the Green New Deal works so well that inflation comes anyway, Chicken Little now asks, notwithstanding all the theoretical and empirical reasons to discount such worries? Here we find even more reasons for comfort. For the ‘toolbox’ of counter-inflationary policy instruments is filled to near overflowing. Let’s consider a few of them.

We can begin with the familiar. [very important--->] Targeted taxes and bond sales, long familiar to most of us, have long been employed to absorb ‘excess money’ during times of high growth. This is precisely what they are for. Because money is issued by citizenrys rather than citizens as noted above, sovereign taxes and bond sales are never about ‘raising money,’ but about ‘lowering money aggregates.’ If inflation should one day emerge, we shall use them accordingly. Once again: always have, always will.

We should note also that such tools can be targeted at specific sources of inflation. A financial transaction tax such as that favored by Representative Ocasio-Cortez and Senator Bernie Sanders, for example, would operate on financial market inflation – asset price ‘bubbles’ – of the sort that have plagued us in recent years. A ‘value added tax’ – a ‘VAT’ – on particular items that become objects of speculation would work similarly. Such are the real aims of taxation – to act on incentives and press down on price pressures – not to ‘raise money’ we already issue. We know how to use them, and can use them again should it ever prove necessary.

Similar truths hold of the other familiar anti-inflationary policy instrument just mentioned – sovereign bond sales. Treasury already offers a variety of these instruments, classified by time-to-maturity and yield. Such classification offers the option of soaking up money from different sectors of society, from those seeking short-term yield to those seeking longer-term yield. These sales are swaps of unspendable instruments for spendable instruments – dollars, a.k.a. 'legal tender.' The New York Fed trading desk does this daily to fine-tune the money supply – we call its activities ‘open market operations.’ It would do likewise, save in the opposite direction, were inflation ever again to become ‘a thing.’

Turning now to less familiar policy instruments, note next that much of financial regulation both can be and should be deployed in the cause of what I call money modulation – that is, inflation- and deflation-prevention. Banks ‘create’ – they generate – money by lending; any banker will tell you that. So do most other financial institutions – especially those of the so-called ‘shadow banking’ sector. This is the sense in which credit is money, or what smart economists call ‘credit-money.’

Regulations that we impose upon credit-extension are accordingly regulations on money-creation. Require banks to raise more equity capital per dollar’s worth of credit that they extend, and you effectively lessen the amount of dollar-denominated credit, hence money, that they can generate. Place greater limits on what kinds of lending or investing they can do, and you do likewise.

We call these things ‘capital’ (or ‘leverage’) and ‘portfolio’ regulation, respectively. And though we initially developed them to protect individual institutions and their depositors or investors, we now use them also to modulate credit aggregates economy-wide. It’s called ‘macroprudential regulation,’ and its rediscovery post-crash in the last decade is one of the signal achievements of the post-crisis era. But its importance for Green New Deal purposes is that it’s a powerful anti-inflationary as well as anti-deflationary tool, all thanks to money’s relation to credit.

As if these tools were not enough, there are yet others we could use but don’t use as yet, presumably because we’ve not needed to yet. I’ve proposed these in other work. One is for the New York Fed trading desk to buy or sell not only Treasury securities of varying maturities and yields, but also other financial instruments – in order to target specific prices of broad economic significance when they grow too low or too high (what I call ‘systemically important prices’).

During the Fed’s experiments with ‘quantitative easing’ (‘QE’), for example, commodity prices ended up rising in ways that harmed lower income Americans. I therefore proposed the Fed ‘short’ commodities in its open market operations to put downward pressure on their prices. Though I worked at the Fed at the time, the central bank didn’t take me up on my suggestion. But it could have done so. And it can in the future, in as narrowly targeted a manner as necessary, if ever inflation emerges. And with a balance sheet of its size, it can influence prices quite massively.

A final way we might combat inflation, should it ever emerge, is by use of a new infrastructure that I’ve proposed elsewhere. Suppose, for a moment, that the Fed offered what I call interest-bearing ‘Citizen Accounts’ for all citizens, instead of just offering ‘reserve accounts’ to privileged banks as it does now. Were it to do so, we’d not only eliminate our nation’s ‘financial inclusion’ problem in one swoop, we’d also gain a most powerful money modulation tool.

During deflations like that after 2008, for example, the Fed could drop debt-free ‘helicopter money’ directly into Citizen Accounts rather than giving it to banks in the hope that they’ll lend (which they didn’t – hence the notorious ‘pushing on a string’ problem of the post-2008 period). And were inflation ever to emerge, the Fed could likewise simply raise interest rates on Citizen Accounts, thereby inducing more saving and less spending.

I believe that the ‘fintech’ revolution renders something like what I’m proposing here all but inevitable. The point for present purposes, though, is simply that once this thing happens we’ll have yet another quite powerful anti-inflationary and anti-deflationary policy tool – and therefore yet more reason not to be timid about moving ahead energetically with the Green New Deal.

Have I succeeded, then? Have I convinced you both that there isn’t a ‘pay for’ challenge and that there isn’t, thanks to a multitude of theoretical, empirical, and policy lever reasons, an ‘inflation’ challenge either? If you are bold, know finance, and care about our future, you probably didn’t need much convincing. If instead you are frightened, financially untutored, or cavalier about our economy or our planet, please buck up, wise up, and suit up. It is time to say game on for the Green New Deal.


Robert Hockett writes on legal, financial and economic subjects and serves as a regular advisor to regulators and legislators. His book, A Republic of Owners, will be published later this year.
“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.” ― Joan Robinson
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Re: Modern Monetary Theory

Postby Grizzly » Mon Feb 25, 2019 2:18 pm

“The more we do to you, the less you seem to believe we are doing it.”

― Joseph mengele
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Re: Modern Monetary Theory

Postby Elvis » Mon Feb 25, 2019 3:49 pm



I assume Gromen is referring to the U.S. ending the international convertability of the dollar to gold, i.e. taking the U.S. off the gold standard internationally (the "Nixon shock" of 1971; FDR and congress ended the gold standard domestically in 1933).

Can you tell us more about Gromen's views? And is there some point you're making with that post? Just very curious. I can't really nail down Gromen's position from a cursory search. He seems "okay" with MMT, although here, is he calling for a return to pre-1971 gold covertability?
“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.” ― Joan Robinson
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Re: Modern Monetary Theory

Postby Elvis » Tue Feb 26, 2019 7:06 pm

This is a bit of a grind but contains lots of explanations:

http://www.levyinstitute.org/pubs/wp_778.pdf

Working Paper No. 778
Modern Money Theory 101: A Reply to Critics
by Éric Tymoigne and L. Randall Wray
Levy Economics Institute of Bard College
November 2013
“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.” ― Joan Robinson
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