Daily Archives: January 20, 2017


HOW ARE YOU GOING TO PAY FOR IT?

Райчо Марков posted the article HOW ARE YOU GOING TO PAY FOR IT?. This is a speech written by Warren Mosler.

Warren Mosler: “So how do you like this unsolicited speech I drafted for him (PRESIDENT BERNIE SANDERS – well apparently not anymore)”:

Early on, he wrote these words for Sanders to speak.

And before I begin, I’d like to thank my chief economist, Professor Stephanie Kelton, a specialist in economic policy as well as Federal Reserve Bank monetary operations, for educating me on this critical question.

Stephanie Kelton is a name you will see in several places in my blogs and posting, so I wanted you to know who she is.

Now, for a little tantalizing bit of meat from the “speech”.

The public debt is nothing more than all the dollars spent by the government
that haven’t yet been used to pay taxes.

And those dollars stay in the economy as someone’s savings until they get used to pay taxes.

Think of it this way – when the government spends a dollar, someone has to have it.

And if it also taxes away that dollar, that dollar is gone from the economy.

But if the government spends a dollar and doesn’t tax it away, it stays in the economy as someone’s savings.

And most all of that savings is right there at the Federal Reserve Bank in bank accounts that they call Treasury bonds, notes, and bills. Yes, all those Treasury’s are just dollars in savings accounts at the Federal Reserve Bank with fancy names.


Don’t Listen to Milton Friedman. There is a Free Lunch If There is a Lunch to be Found

I don’t care what you do and do not understand about economics, this explanation is so simple and obvious that I doubt many will fail to understand it.

Ellis Winningham has posted his article Don’t Listen to Milton Friedman. There is a Free Lunch If There is a Lunch to be Found on his web site.

Is lunch what you used as payment to buy lunch, or is lunch what you eat? I’ll ask again – do you eat US Dollars or do you eat the food purchased with US Dollars? You can be hungry at noon and have $60,000 burning a hole in your pocket, but if there is no food anywhere to be found, what good does that $60,000 do you as far as lunch goes? Lunch is the thing you consume, not the thing used to purchase the thing you consume. Food is a commodity, US Dollars, British Pounds are not. US Dollars are just a voucher used to obtain lunch.

The article goes on to explain what MMT is saying and what it is not saying in terms so simple that most people should be able to understand it easily. Understanding may be different from accepting. I am sure that some people will continue to think that they must have been tricked into something by this article. In the long run, I don’t believe these doubters will be able to find any tricks in the article, and more and more people will get to acceptance.

Once we get to acceptance by a large enough population, the oligarchs will have lost their grip on our minds. From that point forward, anything becomes possible.


Supply Side Economics and Demand Side Economics

Isn’t it obvious that if there is a supply side economics, there must be a demand side economics?

I take supply side economics to mean that when supply is not adequate to meet demand, you want to work on increasing supply harder than working on decreasing demand. I think that makes an awful lot of sense.

The proponents of a single prescription that works for all diseases fail to ask if there might be a different prescription for a different disease. If there is supply side economics to cure one disease, isn’t it natural to ask if there is demand side economics to act on a different disease?

I take demand side economics to mean that when demand is not adequate to meet supply, you want to work on increasing demand harder than working on decreasing supply. I think that makes an awful lot of sense.

It didn’t take much to come up with demand side economics. All I had to do was to swap the words demand and supply.

The problem with adherents of supply side economics is not that their is a flaw in the theory. The problem is not knowing when that theory applies, and not knowing the obvious theory to apply when the situation changes.

There is no contradiction in being a proponent of supply side emphasis when it is needed and demand side emphasis when it is needed.

To me, it seems so obvious that I don’t know why more people aren’t saying this, and why it has taken me so long to write this.