Naked Capitalism has the post Jamie Galbraith: How Jason Furman and Lawrence Summers Reinforce a Destructive, Debunked Mainstream Paradigm to Support Deficit Spending.

Here is an excerpt from Yves Smith’s introduction to the article.

The fact that the Washington Post depicted an article by Jason Furman and Larry Summers pumping for deficit spending as evidence of an “intellectual revolution” shows how bad a grasp most commentators have on economics. As the post by Jamie Galbraith describes long form, the Furman/Summers argument was incoherent and relied on the “loanable funds theory” (loans come from existing savings and are therefore limited; interest rates serve to balance supply and demand) that was debunked by Keynes nearly 100 years ago.

Here is an excerpt from the Galbraith article itself.

FS therefore arrive at a correct conclusion – interest rates will remain low indefinitely – by a route that requires them to argue that the world has changed in some fundamental, relevant (“structural”) way, for which no evidence exists. The effect is to leave in place an incoherent theory of interest rates, which does not even claim to explain the phenomenon – low long-term rates – that their paper is trying to address. But a correct and viable explanation, as above, of a form long-ago explained carefully by no less than John Maynard Keynes, is readily available and wholly sufficient.

Some times it amazes me how the people who claim to be experts can get things so wrong. In this case it is Larry Summers who continues to be wrong year after year. It is nice to see James Galbraith confirm my thinking that John Maynard Keynes is still correct about some very fundamental economics.

This discussion of the “loanable funds theory” gives me an opportunity to state my explanation of what is wrong with the “loanable funds theory”. In my own quirky way, I explain that private banks do not create money when they make a loan. They create a promise of money to the borrower. As long as the promise of money circulates among customers of the bank, the promise never needs to be fulfilled with actual USA money. If the promised money is given to someone outside the private bank’s customer base, then and only then does the promise of money need to be fulfilled. The bank has many ways to fulfill that promise that I won’t describe here.

The larger the bank is, the smaller the fraction of its promises of money will ever leave its own customer base. Also the money going out is mostly offset by money flowing in from other banks’ customers giving money to the original bank’s customer for deposit in the original bank. Very little of all the private banks’ promises of money ever have to be realized in actual Federal Reserve Bank USA money. Some of that realization will come from “loanable funds”, but not even all of it.

Medium has the article Where does the (economic) buck stop?.

This is the most honest discussion of this situation I have seen coming from the MMT world. I just saw a March 2020 interview with Stephanie Kelton where she did mention the supply shock from the pandemic, but the interviewer wasn’t smart enough to push her to explain more. Actually Stephanie should have answered the question the interviewer failed to ask. I did a little skimming of the Medium article above. Did I miss where he mentioned that the people who are willing to “sit” on the money, and not spend it, are the wealthy who are actually “spending it” to keep the stock market bubble inflated? I am one of those retired folk who will take a hit when the stock market crashes.

The Stephanie Kelton interview is at Stephanie Kelton: MMT, the Crisis, and the Real Economy

YouTube has this excellent post David Harvey- The Crises of Capitalism.

10 years old, but very applicable still. Meaning we never solved the problems that we had 10 years ago. Pay attention to the fact that the speaker admits that he has analyzed the problem, but has not figured out the solution. I worry about the people who have an ideology that they think is the perfect solution.

This is why I call myself a “what worksist”. We need to try various solutions, measure how well they are working, adopt the ones that help, and get rid of or modify the ones that don’t That’s not an easy process, but I think it is the process that was adopted by the Roosevelt administration.

As long as there is population growth, there may need to be economic growth. (Although, some redistribution could minimized some of the need for growth.) This goes along with my idea that people think in binary terms. They think something is good to do or bad to do, without considering the amounts in between 0 and 100% mat be what’s needed.

In the previous article Making Electronic Voting Transparent, I proposed an electronic voting system that allowed the voter to check how his or her vote is recorded in the official vote database. In that system, the voting machine printed a hardcopy receipt for the voter to take home. The receipt showed the vote record and had a serial number that the voter could use to later check the database of votes cast which would be made available online. Nobody but the voter would know the serial number for her or his vote.

Here is how such a system could cheat. The system could memorize the ballots cast, so that it could give all the voters who voted exactly alike the same serial number to check. The actual vote on all but one of these ballots could be modified fraudulently, but the fraudulent votes would have serial numbers that are never printed out for any voter.

If the voting computer program source code were viewable by the public (this is called open source), then experts could look at the code for assigning serial numbers to make sure nothing like this was built in to the software. So, my proposed system could be kept clean of such attempts at fraud.

You also may want to look at a previous post Standardize Electronic Voting Technology. There is already a government agency that could oversee the creation of a standard for electronic voting systems.

Naked Capitalism has the article How to Move Beyond Utopian Socialism and Libertarianism

Again, we should experiment and pursue what works best – be it public or private.

As an avowed “what worksist” I would naturally like an article like this. The trouble I see is in deciding who the “we” is who does the experimenting and deciding what works best. I think one of the reasons this all fell apart in the 1980s in the USA is that we forgot that there needs to be a continuous process of educating the public on what the process is experimenting and pursuing what works and why we use such a process. This education process is also needed for the leaders who are driving the experimenting and deciding process to refresh their memories about what they are supposed to be doing. Under FDR, I think there was a good understanding by many of the important actors about this process. The people who followed in power lost sight of the fundamental reasoning behind the process.

The article mentions Milton Friedman. I think that he and his backers were excellent at erasing our memory of what we were trying to do. Milton Friedman came along with a good story about what was wrong with what we were trying to do, and the people who were trying forgot the counter story that justified their behavior. They also forgot that they were supposed to be seeing what works and changing the things that didn’t work anymore.

Naked Capitalism has the post 2020 “Globie”: The Carry Trade. It is a review of the book The Rise of Carry: The Dangerous Consequences of Volatility Suppression and the New Financial Order of Decaying Growth and Recurring Crisis 1st Edition.

The trader benefits only as long as asset prices remain close to their current levels. Volatility can wipe out a position, and the financial losses can spill over to the economy. Those negative consequences bring central banks into the financial markets. Their intervention may reestablish stability, but it allows those who would have suffered a loss to transfer that loss to the public sector. Central bankers acting as lenders of last resort, the authors write, “…underwrite some of the losses associated with carry. This encourages further growth of carry, and a self-reinforcing cycle develops.”

Another way that financialization of the economy robs ordinary people.

The Guardian has the article We were told Joe Biden was the ‘safe choice’. But it was risky to offer so little.

But I think that after days of gnawing our fingers down to the quick, it’s fair to say that Biden was not safe at all, as we always knew. Not safe for the planet, not safe for the people on the front lines of police violence, not safe for the millions upon millions of people who are seeking asylum, but also not even safe as a candidate.

Here is the video starting at Naomi Klein’s part. You can watch the other parts at YouTube if you are so inclined.

Remember the idea of the inside/outside pincer. I prefer to work from the outside part.

Naked Capitalism has the post Replacing Rentier Capitalism Is One of the Defining Challenges of Our Age.

In today’s somewhat bleak political landscape, we need to get serious about building strong counterweights to the power of extractive rentier capital. We need to be smarter about finding sources of leverage and using them to create change – and we need to start somewhere. It’s a formidable challenge; but, as both of these books powerfully demonstrate, it is one of the defining challenges of our age

An article that finally gets to the heart of why arguing capitalism versus socialism, as they are commonly understood, does not address the real issues of the problems we face today.

The two books are ‘Rentier Capitalism: Who Owns the Economy, and Who Pays for It?’ by geographer Brett Christophers and ‘Unions Renewed: Building Power in an Age of Finance’, Alice Martin and Annie Quick

theAnalysis.news has the post What’s the Matter with America? – Thomas Frank.

Thomas Frank, author of “What’s the Matter with Kansas”, joins Paul Jay to answer the question: “why was this election even close”?

I have decided to call this comedy for the nerdy left. This differentiates it from Jimmy Dore comedy.

Naked Capitalism has a post that features the interview Michael Hudson on Financialization and Deindustrialization.

Yves here. Michael Hudson provided a pre-election take on how Trump policies haven’t changed the trajectory of America’s decline as a manufacturer. We’ve stressed that achieving that goal would take a long term commitment to what amounts to industrial policy…something that America is officially allergic to but in fact practices all the time, witness huge explicit and tax subsidies to favored sectors like real estate, finance, higher education, medicine, and of course armaments.

I wish this had come to my attention before the election. It puts the lie to many of what Trump bragged about as his accomplishments. It also has cautions for people who call themselves Capitalists or Socialists. In this interview you can also see the tendencies of Paul Jay to insert his own interpretations to muddy the message of the interviewee. There is so much packed into this interview, that it might be hard for a newcomer to the topic to digest. All I can advise newcomers is not to be discouraged. If you keep at it, you will eventually understand more and more.