Perhaps this video will convince you that there can be results when the grass roots in politics makes a concerted effort.

Keep on signing those petitions, sending emails, making phone calls, commenting on Facebook and Google+, writing blog posts, or whatever you can think of that might give courage to politicians to do the right thing.

As the above video shows, they want and need you to do it, and it works.

Here is even a link to say Thank You, Sen. Reid, for Filibuster Reform.

New Economic Perspectives has the article Regulating Shadow Banking.  The article is mainly a showing of the video below, but I want to give the NEP website credit where credit is due.  I’ll quote their description of the video here:

The Economic Policy Institute (EPI) is holding a conference on shadow banking
You can watch the entire LIVESTREAM below.

The video is over 5 hours long, and I only have had time so far to listen to the first 25 minutes. This covers the introduction in which the parts of the shadow banking system are enumerated, if some of you don’t know what the term “Shadow Banking System” refers to, and the first speaker, Sheila Bair. Bair was the Chairperson of the U.S. Federal Deposit Insurance Corporation (FDIC) until recently.

Her talk was informative as well as the Q&A session after it. I was pleased to note that a staffer from Oregon Senator Jeff Merkley’s office was there to ask a question. That means that the information from conferences like this is reaching the ears of some people in government.

New Economic Perspectives has the article Bow down to the Bubble: Larry Summerian Endorses Bubbleonian Madness and Paul Krugman Embraces the Hansenian Stagnation Thesis by L. Randall Wray. I am beginning to develop a real appreciation for the writings of Wray.

The article is long.  The beginning of the article has references to people and theories with which you might not be familiar.  Do not let that bother you.  It is not really important to know who these people are.  After this entertaining, but perhaps disconcerting bit, Wray gets down to revelations that are easy to understand if you know any economics.  These explanations may change your thinking whether you are anti-Keynesian or you think you are pro-Keynesian.

The long excerpt below exposes you to only one of the trains of thought in the article  that is revelatory.

Indeed, if net investment is constant, and if this adds to capacity at a constant rate, it is extremely unlikely that aggregate demand will grow fast enough to keep capital fully utilized. This refutes Say’s Law, since the enhanced ability to supply output would not be met by sufficient demand. As such, “more investment” would not be a reliable solution to a situation in which demand were already insufficient to allow full utilization of existing capacity.

Vatter and Walker carried this a step further, showing that after WWII, the output-to-capital ratio was at least one-third higher than it had been before the war. Due to capital-saving technological innovations, it takes less fixed capital per unit of output so that the supply-side effects of investment will persistently outpace the demand-side multiplier effects (for example, as a constant level of net investment adds to capacity at a rising rate). The only way to use the extra capacity generated by net investment is to increase other types of demand. These would consist of household spending (on consumption goods, as well as residential “investment”), government spending (federal, state, and local levels), and foreign spending (net exports).

Vatter and Walker believed that growth of government spending would normally be required to absorb the capacity created by private investment. Indeed, they frequently insisted that government spending would have to grow at a pace that exceeds GDP growth in order to avoid stagnation.

This should not be interpreted as endorsement of Keynesian “pump-priming” to “fine-tune” the economy. Indeed, Hansen had previously demonstrated that pump-priming would fail. If government increases its spending and employment in recession, raising aggregate demand and thus, economic activity, only to withdraw the stimulus when expansion gets underway, will simply take away the jobs that had been created, restoring a situation of excess capacity. The larger the government, the harder it becomes to cut back spending because jobs, consumption, income, and even investment all depend on the government spending. According to Vatter and Walker, in a well-run fiscal system, government spending will rise rapidly when investment is rising (to absorb the created capacity), and then will still rise rapidly when investment falls (to prevent effective demand from collapsing). They call this a “ratchet”—rather than countercyclical swings of government spending, “government as a share of the economy should rise indefinitely”. Adolf Wagner had argued that economic development leads to industrialization and urbanization, which generates an absolute, as well as a relative, increase in the demand for more government services (of course, J.K. Galbraith made a similar point). Hence, for political and socioeconomic reasons, government should grow faster than the economy. If it does not, not only will this leave society with fewer publicly provided services than desired, but it will also generate stagnation through the Domar problem.

The great thing about this article comes from its explanation of the reason for events that I have observed.  In particular, I have been noticing our state of excess capacity due to increases in productivity and have been wondering what the ultimate, permanent solution might be.  I had never thought of some of the ideas that are in this article.  If I have ever had an AHA! moment, then reading this article certainly had many major such moments.

I know I keep saying this, but this article has the potential of changing my thinking more than any other article I have read recently.

The Real News Network has the video interview How Can Fed Policy Help Main Street?

I do have a couple of complaints.  In light of my previous posts Janet Yellen on Problems Controlling Bank Excess Reserves and Janet Yellen On Problems of Fiscal Drag and in light of  what Pollin has to say in this interview, it is just ridiculous for the video to start off with “Man In The Street” interviews. 

It is silly to have interviews with people on the street who couldn’t possibly know what Pollin knows about the Fed, how it works, and how the monetary system works. Please, The Real News Network, do not fall into the lamestream media habit of asking people for opinions on things they are unlikely to have an informed opinion about. Would you ask people what they thought about the way surgeons are doing heart transplants in their local hospital? What you asked of the people on the street is just about as ridiculous.

The other complaint is that it would have been good to ask Pollin how his suggestions for taxing the excess reserves might impact the concern of the Fed explained by Janet Yellen.

POLLIN: … All that said–and the Fed is operating by historic standards an extremely aggressive policy by keeping the interest rates for banks so low. But that policy is only a stimulus for the banks so far. The banks have piled up $2 trillion in cash reserves–nothing like that has ever happened, 12 percent of U.S. GDP, while the small business sector overall is still starved for credit. In fact, overall they have not gotten a dime of net new create credit since 2008–again, also unprecedented.

So the problem is not stimulus/no stimulus. The problem is Yellen and Bernanke are practicing a stimulus program that is not well designed to accomplish what needs to get accomplished, which is to deliver affordable credit to small businesses and to expand opportunities for working people, not just for the banks.
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POLLIN: Well, I think they could do two simple things. One, tax the banks for holding so much cash in reserve. The banks are getting this money for free. It’s a zero interest rate policy that the Fed is practicing, and the banks have piled up $2 trillion in cash reserves. So the banks are sitting on a cash hoard. That should be taxed–not all the way down so that it would owe nothing. They do need to have cash reserves to get through any future crises as a cushion, as a safety net, but $2 trillion is wildly excessive. I mean, we could pump in $1 trillion–that’s about 6 percent of GDP–and they would still have $1 trillion in reserve. So that’s number one.

In Janet Yellen’s testimony at her confirmation hearings, Senator Warner asked about the issue of banks having excess reserves on deposit with the Fed. He proposes lowering the interest that the Fed pays the banks on the $2.4 trillion of excess reserves. Yellen talks about his suggestion, and also provides a caution on the problems of implementing his suggestion.

Janet Yellen’s testimony could have been so educational if only more of the public could have heard it. Too bad the press doesn’t understand these issues well enough to realize the need to provide a forum for the public to learn about these topics.

At Janet Yellen’s confirmation hearings, Senator Warner asked a question about the impact of fiscal drag on the economy.  The question is a good one, and Yellen’s answer is also very good.

Yellen explains a little bit about the size of the fiscal drag, the need for the Fed to try to offset it. She does mention that the Fed’s tools for offsetting fiscal drag are not the most effective.

Don Berwick is running for Governor of Massachusetts. I just received an email from him directing me to his web site about His Health Care Platform For Our Commonwealth.

The Triple Aim is absolutely achievable. The current health care payment system pays most hospitals and doctors for volume (how much they do) rather than for results (how well patients do). And, it is not sufficiently focused on the upstream prevention of disease. The result is very high cost without sufficiently high value. Those high costs come right out of the wages of workers – in taxes, deductions, and out-of-pocket payments – and rob both government and families of opportunities to use their hard earned income for other important purposes.

Here is one answer: move our state away from fee-for-service payment and from fragmented delivery into coordinated, team-based, integrated care. For patients and families, this will lead to care that is much more responsive, helpful, and respectful. Outcomes will be better and costs will fall significantly. And, in addition, we need to focus much more on prevention.

This plan is something we ought to consider when deciding who should be our next Governor.

Chairman of the Sturbridge Board Of Selectmen, Tom Creamer, announced his resignation on November 18, 2013. The video of the entire meeting is available from Sturbridge Cable Access TV video on demand.

I have excerpted just the resignation announcement from that video.

From MSNBC we have Will the Senate go nuclear?

Chris Hayes talks about the “nuclear option” with Senator Jeff Merkley Dahlia Lithwick and Alan Frumin.

Of course MSNBC is just a shill for the sane, but what are you going to do?

It’s amazing what you find posted on people’s Facebook pages.   Thanks to Dante Comparetto for putting this on his Facebook page. The title and quote come from Amazing Oasis.

A little girl donates some coins to a street musician and gets the best surprise in return. Well, that’s certainly money well spent.

I just enjoyed the music. I’ll let you think of any political connection that merits me posting it here.