Daily Archives: January 1, 2013


Functional Finance and the Debt Ratio—Part I

New Economic Perspectives has a series starting with Functional Finance and the Debt Ratio—Part I. The articles come with the warning:

This five part series will explore at length (warning!) and in detail (another warning—wonk alert!) the MMT perspective on the debt ratio and fiscal sustainability.  While the approach suggests a macroeconomic policy mix and strategies for both fiscal and monetary policies that most neoclassical economists currently believe are unsustainable, ultimately the MMT preference for a significant role for fiscal policy in macroeconomic stabilization is shown to be consistent with traditional neoclassical views on fiscal sustainability.

MMT is Modern Monetary Theory.  While this is heavy going  for the uninitiated (including me), it is still worthwhile to read.  A learning style that works for me is to read papers  on a topic that add even a little bit to my understanding of the topic.  If I then take the necessary time to ponder what I have read and process it in my conscious and subconscious mind, the next item I read on the topic will be more worthwhile.  I make no claim that this process works for everybody.  I can only attest to what works for me.

In this learning process, it is not necessary to buy the premise of what you are reading.  It is only necessary to understand what they are trying to say.  Eventually you may achieve your own informed opinion on the matter.

At the time of this blog posting, only two of the five parts have been published.


Economy Wrecker Alan Greenspan Was Central to the Formation of the Campaign to Fix the Debt

Truth Out has the opinion piece Economy Wrecker Alan Greenspan Was Central to the Formation of the Campaign to Fix the Debt.

Lest you forget who Alan Greenspan was or what he did, there is this introductory paragraph:

Alan Greenspan will go down in history as the person who has done more damage to the U.S. economy and society that anyone who was not a foreign enemy. In fact the destruction he wreaked through his incompetence would also exceed the damage caused by almost all would-be enemies as well.

Regarding the headline of the article author Dean Baker comments

“The Campaign to Fix the Debt started to come together at a salon dinner held in the backyard of Senator Mark Warner, Democrat of Virginia, in the fall of 2011. …

And who was at this meeting?  None other than Alan Greenspan:

The person most responsible for wrecking the economy — and incidentally adding trillions of dollars to the debt — was there at the founding of the Campaign to Fix the Debt.

Unless Alan Greenspan can give you an in depth explanation of his mistakes of the past, I can see no reason to listen to his advice for the future.  Unless he can convince us he has learned a lot from his past mistakes, it may be safest to assume he has learned nothing.