New Economic Perspectives has the article Replacing the Budget Constraint with an Inflation Constraint by Scott Fullwiler. This is another example of what a terrific job that Fullwiler does to dispel the misconceptions many people have about MMT (Modern Money Theory).  Below are some excerpts that give you just a hint of what you might learn if you read the article at the above link.  Let me further assure you that this article is not nearly as technical as was the Fullwiler discussion mentioned in my previous post Scott Fullwiler: Paul Krugman—The Conscience of a Neo-Liberal?.

As argued bazillions of times, the real point MMT is making is that the government’s budget constraint is the wrong constraint—the correct constraint is whether or not a particular budget position will raise inflation beyond an official target rate (say, 2%, which seems to be the choice of most central bankers).

Let me explain to Mr. Worstall and others how this could work rather easily— …
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We could add quite a bit of detail here if we want, but I’ll just say a few more things. First, it’s quite clear that economists don’t have much expertise modeling how to use the government’s budget stance to manage the macroeconomy via a functional finance rule—but this is largely because they have come to view monetary policy as the main macroeconomic policy tool, not because it’s not possible.
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In sum, let’s stop pretending that replacing a budget constraint with an inflation constraint is so hard. It involves a change in perspective, nothing more and nothing less. It doesn’t give license to policy makers to do whatever they want.

I got another interesting email, this time from Alan Grayson.  His email had a transcript of the video below and a link to his web site.

I don’t agree with some of the ways that Alan Grayson explained all this, but for the most part I am definitely on his side. Or maybe that should be he is definitely on my side.

It is not so much that anything he said was untrue. It is mostly a problem that some of what he said could leave incorrect impressions on people who weren’t thinking about this carefully.

With reference to the email below, I’ll explain a few things that give me pause.

In talking about what foreigners do in trade relations with us.

… foreigners are not buying our goods and services.

What are they doing? They’re buying our assets.

Well, yes, but it is important to differentiate the foreign consumers who cannot afford to buy our goods and services from the foreign oligarchs who are buying our assets. It makes a huge difference when thinking of assigning blame and when thinking of what actions to take to right the wrongs being done to our middle-class.

Another one that bothers me a little is the following:

So we lose twice. We lose the jobs, and we are driven deeper and deeper into national debt – and, ultimately, national bankruptcy. That is the end game.

I am not exactly sure what debt he is talking about, but our federal budget deficit is not it. Mistakenly letting people confuse one thing for another is a dangerous way to talk. National bankruptcy of the kind he may be thinking about is not the same thing as citizens mistakenly believe will become the consequences of our budget deficits.

In the time limits of a speech and the space limits of an article, it isn’t possible to go into a deep discussion of what is exactly right and what is misleading and why it is misleading. What I would hope is that people like Alan Grayson (and yes, even Elizabeth Warren) could find words that could be just as powerful and yet not have possible unintended consequences.

Here is the letter.

Dear Steven:

This is a statement that I made at a D.C. news conference on trade policy last Thursday:

Trade is a simple concept. You sell me yours, and I’ll sell you mine.

That’s not what’s happening.

What’s happening is that day after day, month after month, and year after year, Americans are buying goods and services manufactured by foreigners, and those foreigners are not buying goods and services manufactured by Americans. We are creating millions — no — tens of millions of jobs in other countries with our purchasing power, and we are losing tens of millions of jobs in our country, because foreigners are not buying our goods and services.

What are they doing? They’re buying our assets.

So we lose twice. We lose the jobs, and we are driven deeper and deeper into national debt – and, ultimately, national bankruptcy. That is the end game.

This is not free trade; it’s fake trade. We have fake trade.

That’s why before NAFTA was enacted and went into effect, this country never had a trade deficit as much as $140 billion a year, while every single year since then — for 20 years now — we have had a trade deficit of over $140 billion a year.

We have had a[n average annual] trade deficit of half a billion dollars now, for the past 14 years.

Look back all across history. Look all across Planet Earth. You will see that the 14 largest trade deficits in the history of mankind are – all [of them] — the American trade deficits for the last 14 years.

(I cannot rule out the possibility that somewhere on Alpha Centauri there might be a country that has a larger trade deficit. But here on Planet Earth, no.)

Listen, we are in a deep, deep hole, thanks to fake trade. Thanks to fake trade, right now, 1/7th of all the assets in this country — every business, every plot of land, every car – 1/7th of all the assets in the country are now owned by foreigners. And ultimately, if we keep going the way we’re going, they all will be.

That’s why we have the most unequal distribution of income [among all industrial nations] in our country, [and] the most unequal distribution of wealth in our history.

We’re in a deep, deep hole. And there’s a simple rule about holes: When you’re in a hole, stop digging. Stop digging!

So I’m calling upon our leaders. I’m calling upon the American people. Let’s stop digging.

Let’s not only have a trade policy. For once, let’s also have a trade deficit policy.

Let’s deal with the reality that has robbed the American Middle Class now for decades. Let’s address it, and let’s defeat it. That’s what I’m calling [for], right now.

Let’s stop digging deeper. Let’s raise ourselves up, let’s climb out of this hole, and rebuild the American Middle Class. Thank you very much.

Courage,

Rep. Alan Grayson

Who knew that there was so much the President could do help the struggling middle-class without having to ask the Congress to agree? The petition to sign to demand action is President Obama: Expand overtime pay!

Below is the email I received from Robert Reich explaining it all.

If you’ve seen my film Inequality for All then you may recognize Nick Hanauer. He’s the Seattle-based venture capitalist who appeared in it to talk about the damage income inequality is doing to the middle class. Last month, Nick published an important piece in Politico calling on President Obama and the Department of Labor to make more workers eligible for overtime.

Democracy for America, Nick, and I have launched a petition to President Obama asking him to raise wages and create jobs by directing the Department of Labor to expand the number of workers who can receive overtime pay. Below is an email from Nick to one million DFA members across America. Along with 58,472 DFA members, I support this petition and I hope you’ll sign it as well. — Robert Reich

The part below is from Nick Hanauer.

Steven —

I’m getting rich and you’re getting screwed. Sorry. But with a stroke of the pen, President Obama can make sure you get what you earned, without any congressional action at all.

If it feels like you’re struggling harder than your parents did, working longer hours for less money, it’s because you are. Meanwhile, a handful of capitalists like me are growing wealthy beyond our parents’ wildest dreams.

What’s changed? Overtime pay.

Your parents got a lot of it, and you don’t. In 1975, more than 65 percent of salaried workers earned overtime pay — today, just 11 percent do. That’s because the federal government has allowed the overtime threshold to erode to less than the poverty line for a family four. Earn more than $23,660 a year, and business owners like me can make you work unlimited overtime hours for no additional pay at all.

But to get the country back to the same equitable standards we had in 1975, the Department of Labor would simply have to raise the overtime threshold to $69,000. In other words, if you earn $69,000 or less, the law would require that you be paid time-and-a-half for every hour worked over 40 hours a week.

That would mean 10.4 million middle-class Americans with more money in your pockets or more time to spend with friends and family. And if corporate America didn’t want to pay you time and a half, it would need to hire hundreds of thousands of additional workers to pick up the slack — slashing the unemployment rate and forcing up wages.

President Obama could also expand the ranks of workers eligible for overtime pay by ending the exemption that denies overtime to teachers, doctors, computer professionals, and many others. And he can do all this simply by instructing the Department of Labor to change the rules — immediately putting money into the pockets of millions of American workers.

That’s why I’m joining Democracy for America and Robert Reich in calling on President Obama to do exactly that. Sign our petition to the president: Raise the overtime threshold to give more Americans the overtime pay they’ve earned!

Many of my fellow capitalists will warn you that a higher overtime threshold would be a job killer, but the truth is, we already have more capital than we know what to do with. Corporate profits have doubled over the past 40 years to more than 12 percent of GDP; that’s about a $1 trillion a year in extra profits.

But rather than invest in creating jobs or raising wages, executives like me are mostly spending our windfall profits manipulating the price of our own shares through stock buybacks. In fact, over the past decade, public U.S. corporations have spent an astounding $6.9 trillion buying back shares, reducing the total outstanding, and increasing the value of the remaining shares owned by capitalists like me.

We get richer. You get nothing. Again, sorry. But we’re only playing by the rules — rules that President Obama has the power to change.

President Obama is showing that he isn’t shy about using his executive powers to do good things for the American people. But the White House needs a strong public push — the president needs to hear from as many of you as possible that overtime pay is to the middle class what the minimum wage is to the working poor, and that a stronger middle class is good for business and good for America.

Join me, Robert Reich and Democracy for America in telling President Obama to instruct the Labor Department to expand overtime eligibility. Let’s raise the wage and put more Americans back to work.

Thank you for standing up for the middle class.

– Nick

The Daily Kos has the article Moderate Dems angry that Warren liberals are raining on their pro-biz parade.  More importantly, this is a discussion of the Politico article Dem moderates, liberals lash out over Dodd-Frank.  The quotes are from the original Politico article.

Tension reached a boiling point during a closed-door caucus meeting Wednesday over the party’s stance toward Wall Street banks, according to multiple sources at the meeting.

Liberal Massachusetts Rep. Mike Capuano incensed the moderates when he said if Democrats support rolling back Dodd-Frank regulations, “you might as well be a Republican.”

Good on you Mike. I always though that Mike Capuano should have been the original Democrat to run against Scott Brown  after Ted Kennedy died.

The vocal infighting highlights the growing divide between the large bloc of “Warren liberals” and the dwindling number of moderate Democrats — a fight that will likely continue next week when Republicans make their second attempt to change the controversial Dodd-Frank law.

There are signs of hope for the Democratic party.

Later talking about a meeting with the “moderates” the article quotes the following:

A Democratic aide, who was in the meeting, said the members also brought up concerns about the government spending bill that passed in December and the lack of pro-business messaging in the mid-term elections.

So the issue is that the progressives aren’t pro-business enough.

Yes the two wings of the party do need to hash out these differences in caucus meetings.  There is some value in a pro-business point of view if you carefully define what business you are pro.  The crooks on Wall Street are not the businesses to favor.

The Progressive wing needs to understand the parts of the moderates’ message that have merit, and I think they do.  Elizabeth Warren has said many pro-business things about businesses that actually contribute to the functioning of the society.  When she says we need to rebuild the infrastructure, who do the moderates think are going to get the contracts to do the work?  It will be private businesses.

The moderates have to come to an understanding of the pathologies in their own position.  Gutting Dodd-Frank is not pro honest business, it is pro crook.  If the moderates don’t get this, then they ought to become Republicans.

This is an argument being fought among some Democrats here in Sturbridge.

Have you got your Warren bumper sticker yet?

Nancy Pelosi has the following press release Pelosi Statement on Republican Homeland Security Funding Bill also posted on her Facebook page where you can comment. Here is what she had to say.

It is clear Republicans’ partisan recklessness knows no limits. House Republicans are threatening a partial government shutdown, choosing a time of rising terrorism to imperil the security of our entire country to satisfy the most radical anti-immigrant fringes of their party.

Good to see Nancy Pelosi making frequent public statements to try to counter the baloney that Boner, McConnell, and Cruz turn out at an ever increasing rate.  Those other guys have been getting a free ride in the media for far too long.

Let’s not  depend on the lame stream media to propagate what Nancy Pelosi says.  We have to do our part (as I have done here) to make sure her comments get spread far and wide.

Time Magazine has the article The Possible Presidential Candidate Who Agrees the Most With Pope Francis.  Time Magazine is always good for a little frivolous commentary on the news.  I wouldn’t take anything it says seriously, but this article tickled my fancy.

Independent Senator Bernie Sanders is Jewish. He’s also the likely 2016 presidential candidate whose political philosophy lines up most closely with the economic and social theories of Pope Francis.

Who knew that Sanders was Jewish?  Maybe the name Bernie was the clue.

“I’m not quite as radical as the Pope is,” he smiles. “But.”

Well, if he is not as radical as the Pope, then his socialism must be safe.

Counter Current News has the article No Outrage For Palestinian Cartoonist Who Was Arrested and Jailed In Israel.

The State alleged that Saba’aneh had contacted a publishing company about publishing his cartoons in a book. That Jordanian publisher also put out a book about Palestinian prisoners. The State of Israel said that this book was a threat to national security. Saba’aneh’s contact with this publisher was thereby used as a pretext to lock up the controversial cartoonist before he could connect with a broader audience via this publishing house.

Saba’aneh was ultimately sentenced to five months in jail after serving out his informal and continuously extended detention. He was also fined 10,000 shekels for his “contact with a hostile organization.”

Well, I mean jailing someone is not like a terrorist attack that killed people.  OK, what about the article These 17 Journalists Were Killed by Israel In Gaza?

It should be emphasized that killing of journalists and media workers is a violation of international law.

Thanks to Tim Wise for posting this on his Facebook page.

January 12, 2015

Just to give myself some cover against people who might think this post is outrageous for whatever reasons, I have this additional information from one of the respondents on Tim Wise’s post.

The comment mentions the article Death threats to Haaretz journalists appear on right-winger’s Facebook page. In commenting on a political cartoon that Haaretz had published, this article said the following:

The cartoon that sparked the death threats (captions in Hebrew read: 10 journalists killed in attack on Charlie Hebdo in Paris (top), about 13 journalists killed last summer in attack on Gaza (bottom)

What I take away from this exchange is that if an Israeli newspaper can remark about journalists killed in Gaza, then the topic should not be taboo for me to even mention. This is to say nothing about the reported comments from the right wing in Israel. I’ll let you think about that part of the story on your own.

Alan Grayson has this post on his Facebook page.

Here is the link to congressmanwithguts.com.

Thanks to Elizabeth Ann St John for putting this on her Facebook page.

I am glad that Alan Grayson is getting the recognition he deserves. If Nancy Pelosi hadn’t been afraid of using Grayson as a spokesman for the party, she might still be speaker of the house.

If Elizabeth Warren will not run for President in 2016, we need to remember that there are people like Sanders, Merkley, and Grayson that would make fine candidates. It is getting to the point where Warren has to make it crystal clear. She needs to day not only is she not now running for President, but she will not run in 2016. Then we can get serious about finding another candidate.

Naked Capitalism has the article Wolf Richter: Subprime Spikes Auto Sales, Delinquencies Soar, Industry in Total Denial, Fallout to Hit Main Street.

These aren’t just a few individual cases, but much of the hollowed-out, over-indebted, underpaid middle class, the new American proletariat, the 62% of the population that has no emergency savings to cover a $500 car repair or medical bill. These households face, as the Federal Reserve said last year, “large-scale financial strain.” They’ve been bypassed by the Fed’s “wealth effect.” And with tighter lending standards, many of these folks won’t be able to buy a new car.

If you are one of those people who may now be under water in your car loan, don’t say you haven’t be warned.  Not there there is much you can do about it now.  And not that you will be reading this blog post.  However, the rest of us should take heed.  Even if your finances are in perfectly good shape, you should remember that the collapse of 2009 affected us all.  I wouldn’t be taking any expensive vacations to Florida right now. Oops.

Naked Capitalism has the post Scott Fullwiler: Paul Krugman—The Conscience of a Neo-Liberal? published on March 28, 2011.  This is one of the best counter-attacks on Paul Krugman’s attempts to discredit MMT that I have read. It is not just a  counterattack, but it is also an explanation of a lot of MMT. Your mileage may vary.  So this is another one of the posts that I make purely for my own benefit in recording the location of the article.

The article concluded with the following:

To conclude by way of reiterating the main point here, one need not agree with MMT that the three assumptions Krugman makes are incorrect. The overarching problem is that Krugman has simply assumed the Neo-Liberal macroeconomic model is correct and the MMT view is incorrect. This is far different from actually demonstrating that MMT is incorrect, which Krugman has yet to even attempt.

By the way, I stumbled across this article while wending my way through some of the links in the article of my previous post Is It Time for MMT To Become Mainstream to Save Us from the Second Global Financial Crisis of the Millennium?