Daily Archives: December 18, 2022

Policymaking in a Pan(dem)ic

Stephaie Kelton has a Substack article Policymaking in a Pan(dem)ic.

Talking about the 2020/2021 pandemic recovery, she made the following comments:

We did better this time not because we got better policy from the Federal Reserve. Indeed, we got mostly the same thing we got after 2008—i.e. zero interest rate policy (ZIRP) and massive bond-buying (QE). We did better because Congress delivered not one, not two, but three substantial pieces of legislation that actively supported the economy with around $5 trillion in additional spending.

And so, once again, Deficits Saved the World. But this time deficits didn’t increase mainly due to Congressional inaction—i.e. the automatic stabilizers—but because of the proactive—i.e. discretionary—actions of Congress and the White House.

Did they get everything right? No. Did we need all $5 trillion? Probably not. Could some of that spending have been better targeted? You bet. Should some of it have been set to phase out sooner? Probably.

But remember that the three biggest packages ($2.2 trillion in March 2020, $900 billion in December 2020, and $1.9 trillion in March 2021) were all passed in middle of a global pandemic. For better or worse (I think it was for the better), lawmakers decided it was preferable to err on the side of doing too much as opposed to doing too little.

In the future, we should try to avoid cobbling together multi-trillion dollar fiscal rescue packages in a state of panic. One way to do that is to begin to strengthen our automatic stabilizers. An old rule of thumb advised drivers to consider replacing the shock absorbers in their vehicle every 50,000 miles or so. When it comes to our economic shock absorbers, we’re long overdue for an upgrade.

Michael Hudson Discusses the Future of Europe and Global Restructuring

Naked Capitalism has published the transcript of the interview Michael Hudson Discusses the Future of Europe and Global Restructuring.

Michael Hudson was interviewed Thursday on MEGA, a German news radio program, focusing on the economic impact of the war with Russia on major players, particularly Europe. We have a translated transcript below and will embed the YouTube version (in German) which is expected to be posted early next week.

Here is some of Question 10 and its answer.

10. … What is your take on digital currencies?

MH: It’s not my department. All banking is electronic, so what does “digital” mean? To libertarians, it means no government oversight, but in government hands, the government will have a record of everything that anyone spends.

If you understand data mining, the government already has a record of what everyone spends in crypto currencies. The ledger of these purchases is open to all to view. People think it is anonymous, but data mining takes out the anonymity.

Here is another good zinger that came earlier,

(8.) Currently we saw the collapse and bankruptcy of the crypto exchange FXT. The management of this company seems to be highly criminal. How do you judge that?

MH: Crime is what made crypto a growth sector for the past few years. Investors bought crypto because it is a vehicle for the fortunes being made in international drug dealing, the arms trade, other crime and tax evasion. These are the great post-industrial growth sectors in Western economies. 

Ponzi schemes often are good investment vehicles in their take-off stage – the pump-and-dump stage. It was inevitable that criminals would not only use crypto to transfer funds, but actually set up their own currencies “free of oppressive government regulation.” Criminals are the ultimate Chicago School free market libertarians.