Naked Capitalism has reprinted the interview it calls Keynesianism and the Great Recession.

One can say that the Obama administration’s failure to reinvigorate the economy after eight years and to reform the banks was the central factor that lost the elections for Hillary Clinton.
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But this wasn’t a defeat by default. On the economic issues that motivate many of these voters, Trump had a message: The economic recovery was a mirage, people were hurt by the Democrats’ policies, and they had more pain to look forward to should the Democrats retain control of the White House.

The problem for Clinton was that the opportunistic message of this demagogue rang true to the middle class and working class voters in these states, even if the messenger himself was quite flawed. These four states reflected, on the ground, the worst consequences of the interlocking problems of high unemployment and deindustrialization that had stalked the whole country for over two decades owing to the flight of industrial corporations to Asia and elsewhere. Combined with the financial collapse of 2007-2008 and the widespread foreclosure of the homes of millions of middle class and poor people who’d been enticed by the banks to go into massive indebtedness, the region was becoming a powder keg of resentment.

One of the reasons I focus this blog on economics issues is the fact that failure to understand economics has major political repercussions. This drives major repercussions on our quality of life in the US and in the world.

Real Progressives has the interview Rohan Grey of the Modern Money Network joins Real Progressives.

When I tuned in near the beginning this was in the middle of a discussion of relieving the student debt problem. That was such a great discussion that I would have been satisfied for that to be the topic of the whole interview. The interview just kept getting better and better as it went on to other issues.

Rohan Grey likes to discuss these issues with the precision that I relish. He is far more interested in just telling you the plain truth than he is of coming up with an explanation that will get you to buy into what he says. At one point he discussed exactly why I believe that it is a bad idea to use an argument that fuzzes over some truths in order to get you to believe in the premise. In my experience, a technique that fuzzes the truth will always come back to bite you. If you have a good and honest story, just tell the truth about it.

I have been known to attack explanations of the Modern Model Model if they stray into trying to ignore some thorny questions. I have found that if you really understand the model, there are perfectly true explanations of those thorny problems. The true explanation is better than the fuzz.

Business Insider has the article There’s an intriguing sociological reason so many Americans are ignoring facts lately.

It’s a sociological issue we ought to care about a great deal right now. How are we to correct misinformation if the very act of informing some people causes them to redouble their dedication to believing things that are not true?

There is a technique that I have used when the conditions were favorable and I could think of a way to use it. Instead of trying to give people facts to counter their beliefs, sometimes it is good to just take them down a path of discovery where they can come to the realization of what the facts are.

It is not always easy to find a path of discovery that will work. One technique that has worked in business comes up when people tell you something cannot be done. I ask them to go through a thought exercise with me. I ask them to pretend that they were going to try to achieve the impossible task. First, let’s talk about what the roadblocks will be. Then one by one, I ask them to think about what they would do to overcome each roadblock. With a group of creative people, sometimes they will think of how to overcome each roadblock they can think of. Then you give them the task and let them have at it.

Lately with the Modern Money Model, rather than a direct explanation of it, I have discovered through articles that I have read that it is easy to talk about the Game of Monopoly. There are situations that comes up in that game which closely mimic how our economy and the central bank actually works. However, you don’t mention that connection until they have told you exactly what would happen in Monopoly. After they have figured out for themselves what happens, then they are more likely to see how it happens in real life. This is no coincidence. The earliest versions of games like Monopoly were created to be educational tools.

WikiPedia article History of the board game Monopoly

The history of the board game Monopoly can be traced back to the early 20th century. The earliest known version of Monopoly, known as The Landlord’s Game, was designed by an American, Elizabeth Magie, and first patented in 1904 but existed as early as 1902. Magie, a follower of Henry George, originally intended The Landlord’s Game to illustrate the economic consequences of Ricardo’s Law of Economic rent and the Georgist concepts of economic privilege and land value taxation.

NiemanLab has the article This site is “taking the edge off rant mode” by making readers pass a quiz before commenting.

The team at NRKbeta attributes the civil tenor of its comments to a feature it introduced last month. On some stories, potential commenters are now required to answer three basic multiple-choice questions about the article before they’re allowed to post a comment.

This sounds like s great idea. I might be able to open this blog to more comments if I had a tool like this.

NRKbeta developer Henrik Lied built the tool as a WordPress plugin, with the questions randomized for each user.

I’ll have to see if the plugin is available.

Yes Magazine has the article How the U.S. Government Could End the Student Debt Crisis Today.

Instead of loaning students money, the federal government could just pay for their tuition, without causing any significant economic problems.

This is a great article, so read it for the explanation of how we could make America great again.

There is one flaw in it that is typical of how Progressives try to educate people on the way the economy works. We need to get over doing this because being honest never hurts.

To prove that inflation isn’t caused by government deficits, we talk about the inflation of the 1970s caused by OPEC, but not the U.S. government. If people remember their history and the guns and butter policy during the Vietnam War of LBJ (Lyndon Johnson), then they will claim that LBJ actually started the inflation. They would be right. We don’t have to shy away from this fact. We can use it as a teaching tool of what happens when we do actually try to use more resources than the economy is capable of supplying. LBJ wanted to fight a very expensive war in Vietnam, far more expensive than our wars in Iraq, Afghanistan, Syria, Lebanon, and Yemen, to name just a few. However, LBJ did not want to disturb the lives of civilians (other than sending their sons and daughters off to die in a war.) So LBJ refused to use taxes to siphon off demand for resources from the private sector so he could use those resource in the war.

We could talk about the tremendous rise in industrial productivity since the days of LBJ. Right now we are closing factories and putting people out of work because the economy is capable of producing so much more than we are able to buy. This is the very time (as opposed to LBJ’s time) when the government needs to be boosting people’s purchasing power, not reining it in. How do we permit our politicians to apply economic “solutions” appropriate for another season at exactly the wrong moment in history? LBJ should have been reining in private demand instead of promoting it, and now we should be promoting private demand instead of trying to force austerity through budget balancing efforts.

YouTube has the video MMT: A Balanced Budget Amendment Would Be Disastrous

If people knew that a balanced budget amendment would be a suicide pact we US citizens agree to, I wonder if there would be so much interest in it. Maybe the citizens of the US are tired of leading the world, and they just want to give up.

Think of playing the Game of Monopoly. If it had chance cards where you had to pay for exports, and if the bank never gave out more money than it took in, how many rounds of the game could there be before all the players ran out of money?

Real Progressives had a great interview tonight, Guest Pavlina Tcherneva on Real Progressives: History of Income Inequality.

Paulina Tcherneva said that the manufacturing jobs won’t come back and we have to adjust to making service jobs good jobs. All of that is true, but it misses a very important point. The Modern Money Model shows that there is no dollar constraint on our economy. The real constraint is the ability of the economy to produce the goods needed that can be bought with the dollar.

With automation and robots, the jobs won’t come back, but the productive capacity could come back if the factories (with few workers} were located in this country and were subject to US laws and regulations.

There are many fewer people doing farming these days than there were in the early 1900s, yet we produce far more food. In the future, there will be many fewer people working in factories, but we will be producing much more manufactured goods unless we move all of our factories to foreign countries.

For us to take advantage of the policy freedoms that our sovereign money gives us, we have to have the productive capacity of our economy to allow us to enjoy the lifestyle we all want.

New Economic Perspectives has the May 17, 2012 article Playing Monopolis Monopoly: An inquiry into why we are making ourselves so miserable. Don’t let the word Monopolis throw you. This is just mostly regular Monopoly.

If you have ever played or think you can learn to play the children’s board game of Monopoly, then you can understand this explanation of Modern Money Theory.

It wouldn’t surprise me to learn that the inventors of this game had in mind exactly this goal of teaching. (So look this idea up on Google and find the WikiPedia article History of the board game Monopoly.)

There is a Huffington Post article written in 2010 by Warren Mosler. The article is Taxes For Revenue Are Obsolete. Mosler introduces the article with the following statement:

April 15th has come and gone, but the issue of taxation remains the course de jour. I was recently forwarded an article entitled Taxes For Revenue Are Obsolete, written in 1946 by Beardsley Ruml, the former Chairman of the Federal Reserve Bank of New York and published in a periodical named American Affairs.

The following is an excerpt from what Beardley Ruml wrote in 1946.

The necessity for a government to tax in order to maintain both its independence and its solvency is true for state and local governments, but it is not true for a national government. Two changes of the greatest consequence have occurred in the last twenty-five years which have substantially altered the position of the national state with respect to the financing of its current requirements.

• The first of these changes is the gaining of vast new experience in the management of central banks.
• The second change is the elimination, for domestic purposes, of the convertibility of the currency into gold.

This shows that what the Modern Money Model describes as the way our sovereign currency works was well known in 1946. If people in 1946 understood this back then, why do people find it so hard to accept now? It is just amazing what knowledge we seem to have lost over the last 71 years.

History.com has the article FDR takes United States off gold standard.

On June 5, 1933, the United States went off the gold standard, a monetary system in which currency is backed by gold, when Congress enacted a joint resolution nullifying the right of creditors to demand payment in gold.
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The government held the $35 per ounce price until August 15, 1971, when President Richard Nixon announced that the United States would no longer convert dollars to gold at a fixed value, thus completely abandoning the gold standard. In 1974, President Gerald Ford signed legislation that permitted Americans again to own gold bullion.

For a long time, I have known about the $35 per ounce price of gold and the restrictions on owning gold in the United States. This article told me about some details that I had not realized.

I didn’t realize that went “off the gold standard” since 1933. I did know that we were really off the gold standard since 1971.

How did we manage to go off the gold standard in 1933 and 1971? The Bretton Woods agreement is the answer.

Within the Final Act, the most important part in the eyes of the conference participants and for the later operation of the world economy was the IMF agreement. Its major features were:

• An adjustably pegged foreign exchange market rate system: Exchange rates were pegged to gold. Governments were only supposed to alter exchange rates to correct a “fundamental disequilibrium.”

One final piece of history from the WikiPedia article.

The institutions were formally organized at an inaugural meeting in Savannah, Georgia, on March 8–18, 1946.

I record this information here to pave the way for the next item I am about to post.