The Unz Review has the Mike Whitney article Washington Announces “Indefinite” U.S. Occupation of Syria and Creation of Kurdish State. Then, Recants.

On Wednesday, Secretary of State Rex Tillerson announced the creation of a de facto autonomous Kurdish state in east Syria that will be supported by the United States and defended by a US-backed “proxy” army of occupation. Tillerson’s announcement was made at a confab he attended at Stanford University at the Hoover Institute.

I have only had a chance to skim this article, but I heard the author talk about it in an interview. There is an amazing amount of info in his interview that clarifies what we are doing in Syria and its implications in the Middle East and around the world.

The interview occurred in the second half of the podcast that I posted on this blog New National Defense Strategy: Arms Race and Great Power Conflict.

Clearing The Fog Radio has the podcast New National Defense Strategy: Arms Race and Great Power Conflict.

The new National Defense Strategy announced last week moves from the ‘war on terror’ toward conflict with great powers. The move from military conflict against non-state actors, i.e. ‘terrorists’, to great power conflict means more military hardware, massive spending on weapons and a new arms race. We speak with Nicolas Davies and Mike Whitney about reasons for the change in defense strategy, the broad impacts it will have and how it will affect areas of conflict around the world.

There is just so much great analysis in this podcast, that I am glad I stumbled onto this. The first interview where the discussion was about US empire clarified a lot of issues for me. Of course, now that I am about 20% into The Pentagon Papers, I see the USA empire issue so much more clearly. The second interview that talked about Syria and North Korea helped clarify those issues for me too.

There is a companion piece on Popular Resistance titled New Defense Strategy: War With Great Nations & Arms Race that is written by Kevin Zeese and Margaret Flowers who are the hosts in the above podcast.

The Consortium News article by Nicolas J.S. Davies is A National Defense Strategy of Sowing Global Chaos.

I have found the Mike Whitney Archive on The Unz Review.

The money that is created by the government of the USA is called fiat money because it is created by a decree. Modern money theory (MMT) gives the theoretical underpinnings of how such money works. The theory does discuss the possibility of inflation and deflation of the money in such a system. If the government puts too much money into circulation, then a unit of money will buy fewer and fewer real assets. To counteract inflation the government merely needs to take money out of circulation.

The theory is just so simple, but looking at practice, we see that the means pf putting money into circulation is easier than taking money out of circulation.

To put money into circulation, the government merely has to buy stuff and credit the supplier of the stuff with some fiat money. Some of that stuff that gets bought, could be bought by the Fed in the form of paper assets of the private sector (this has recently been called quantitative easing) Quite a bit of putting money into circulation can be completely controlled by the Fed without any possibility of interference from Congress or the USA President.

To take money out of circulation the government can raise taxes which is politically difficult to do. It can also sell government bonds. The raising of taxes or the selling of newly issued bonds is not something the Fed has control of. The bond, when sold by the government, takes a large amount of money out of immediate circulation, with the promise to pay you smaller amounts of interest for immediate circulation, and the full principle at a later time, also for full circulation.

If inflation is already stating to get out of control, the government may have to pay you a lot of interest in order to get you to give up immediate spending of your money. Suppose that they had to pay you 20% per year interest. Then in five years the government interest would put as much money back in circulation as the bond had taken out. After that, and particularly when the bond matured, there would be more money in circulation than when they sold you the bond and took some money out of circulation. Depending on how circumstances may have changed over that period of time, this putting the money back in circulation could be counter productive to controlling inflation.

Taxing the money out of circulation and running a budget surplus (meaning taking in more taxes than the government spends) would not have the consequences that bond buying and selling would have, but it would require much more political will than the government could muster.

It is too easy to explain MMT theory without also explaining the practical limitations. In the long run, this is a very bad way to introduce the ideas of MMT to the novice. In the long run, that novice may find out about the practical aspects and feel bamboozled by the initial simple explanation. If MMT is taught and explained without seeming to be hiding anything, then the long term acceptance of the ideas of MMT is more likely.

What the political system needs to remember is that when a concept is introduced to the public with proper explanation and it gets accepted, then over time, new people come into the system who have not been taught the explanation. You can’t assume they understand the purpose of the fiat monetary system if it is not adequately explained to the newcomers.

New Economic Perspectives has the article THE SHIFT: Understanding and Using America’s Fiat Money.

President Obama proposed a Universal Pre-school Day Care program in his 2013 State of the Union Address. He then effectively killed it—pre-SHIFT—by explaining that his program would “cost” tax-payers ten billion dollars a year. But now, post-SHIFT, we don’t have to explain things that way anymore. Now, we explain it like this: Our democratically elected sovereign government is going to issue and spend its Federal Reserve Promissory Notes to pay American citizens to establish, staff, and operate the pre-school education centers American families—and American preschoolers—desperately need. It doesn’t “cost” anybody anything. The American citizens are going to get paid for building and operating something they need to have—provided, of course, they’re willing to be paid with the government’s Promissory Notes.

Generally, I buy the story this article is selling, but I don’t want this story to be oversold.

With regard to the final paragraph as excerpted above, I have this cautionary note.

“The American citizens are going to get paid for building and operating something they need to have—provided, of course, they’re willing to be paid with the government’s Promissory Notes.”

You mean provided, of course, they’re willing to be paid the amount of Promissory Notes that the government will pay for these services.

If the government makes too many promissory notes, people may expect huge amounts of them as payment for their services. When all those promissory notes that have been made by the government come out from under the mattresses of the oligarchs who have not been spending them, then there may be a real problem. The government may find it politically impossible to take enough of those promissory notes out of circulation fast enough to keep up the value of the ones remaining in circulation.