There are so many wonderful, pithy paragraphs in the article in New Economic Perspective that I have to repeat it here with emphasis on different sections of the article.

This is way down in the article, toward the end.

Macroeconomic Accounting Instead of CBO/Business Accounting

Macroeconomic accounting is required as a government and political discipline because the importation of business, i.e. “microeconomic”, accounting methods, leads to distortion and discontinuities in the execution of the mission of governments. The use of business accounting is based on a fallacy of composition: that the aggregate of all economic entities in an economy must behave like each of the individual parts. Keynes showed via the Paradox of Thrift that adhering consistently to such a microeconomic path by governments would inevitably lead to economic collapse, especially during a private credit crunch.

New Economic Perspectives has the article Alexandria on the Daily Show: the Moral Economy and Modern Money.

That the US Treasury is authorized to sell Treasury bonds in the amount of the “deficit”, the amount spent over the amount taxed, does not mean government spending is financed by the bond sales, though those bond sales might have a desirable inflation-dampening effect on the demand created by some government spending over tax receipts, as bond sales defer spending on goods and services. Inflation is also a concern of MMT economists but is not assumed to be the automatic result of net injections of more cash into the economy but rather on levels of actual demand for particular goods and services. The US federal government, as are governments like those of the UK, China, Norway, Sweden, India, Russia, or Japan, is in this “monetarily sovereign” in that it doesn’t get its currency from anywhere else other than its own fiscal operations.
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Searching for sources of money to tax puts her, Sanders, and other “find-the-tax-dollars-first” progressives on a collision course with various interest groups that want to hold onto their money and gives those groups ultimate “veto-power” over spending, if they can lobby hard enough against raising taxes as a precondition for social or ecological spending. Taxation in general and higher levels of taxation are required to realize ambitious social visions and contain inflation but the “pay for” spending-to-match-taxation paradigm will put immediate brakes on those visions at the critical initial stages of developing the social and physical infrastructure we need for the 21st Century.

Ocasio-Cortez may be following the lead of Bernie Sanders in accepting the deficit hawk, “pay for” paradigm. Though I have campaigned for and support most of what Bernie Sanders has done, he has continued to follow the “pay for” framework in his public utterances, despite an ongoing association with Stephanie Kelton, a leading MMT economist and the founding editor of New Economic Perspectives. I am fearful that Ocasio-Cortez will follow Sanders’ path in contributing to deficit worry and “tax as revenue source”. Sanders, despite inhabiting the leftmost portion of the American public sphere before Ocasio-Cortez, is, in my view, too cautious in presenting a transformative vision for American society and physical infrastructure.

Watching an interview with Alexandria Ocasio-Cortez is always fun, but that isn’t necessarily the most important part of the article. So I urge you to read the article after watching the interview.

Toward the end of the article the author gets into the real meaty stuff.

I proposed in 2013 that macroeconomists and in particular MMT economists should develop a macroeconomic accounting methodology for use by political parties and governments as a replacement for business accounting methods. Rather than just critique existing CBO or “government as household” methodology, economists, ethicists, political scientists, sociologists and natural scientists should collaborate in creating a way for governments to effectively convert commonly held ethical principles and known factual data about the real world into government fiscal policy that will effectively and beneficially transform our material reality, reform government and related social institutions. Macroeconomic accounting would provide a step-by-step methodology for political leaders and their support staff and consulting scientists and experts to follow through on realizing the public good via better government fiscal policy.

New Economic Perspectives has the article How big does the fire need to be?

I have written about this before, but it bears repeating now—and perhaps it bears repeating every week until somebody with more leverage than me picks the message up and carries it a step further: America (and the rest of the world, for that matter) has the resources needed to limit and mitigate the enormous damage and dislocations that climate-change is now beginning to impose. The “resources” I’m referring to are not dollars. They are materiel, labor, and human ingenuity. The only question is how and when we’ll stop simply raising warning flags and marshal those resources to take real action against the growing challenges.

Maybe this article can finally wake people up to the facts of life. You can’t even imagine what you will learn by reading this article.

People listening to the USA government and its corporate news media tend to have a very distorted view of the Russian involvement in the Ukraine. I found an interesting story that clarifies what happened in what you may find to be an odd place. Michael Hudson wrote a book that was published in 2015, Killing The Host: How Financial Parasites and Debt Bondage Destroy the Global Economy.

I’ll try to quote enough of one chapter to give you the picture about the Ukraine without quoting too much to violate Hudson’s copyright.

The point is that the European Union with the collusion of the USA was trying to raid the Ukrainian economy, and Russia was trying to prevent the raid. The nefarious tricks that our side used finally caused Russia to take action to protect itself. In actual fact, our side’s successful raid on the Ukraine has made a shambles of the Ukraine’s economy.

The most imaginative recent rationales for annulling sovereign debts have been thought up not by Argentina, Greece or Ireland, but by U.S. strategists seeking to enable Ukraine to avoid paying the bonds it has issued or debts run up for gas imported from Russia. In the wake of the New Cold War confrontation in mid-2014 after Crimea voted heavily in a popular referendum to be re-absorbed by Russia, the Peterson Institute for International Economics floated a proposal by former Treasury official Anna Gelpern to deprive Russia of a means for enforcing its loan to Ukraine. “A single measure can free up $3 billion for Ukraine,” she proposed. Britain’s Parliament could pass a law declaring the $3 billion bond negotiated by Russia’s sovereign wealth fund to be “foreign aid,” not a real commercial loan contract worthy of legal enforcement.

This would be a thunderclap shaking international debt markets. Its principle would be logically applicable to U.S. claims “foreign aid,” which includes loans to pay back American bankers and other creditors, as well as World Bank “aid” loans. The bonds held by Russia’s sovereign wealth fund were denominated in euros under strict “London” rules. Furthermore, the fund required at least an AA rating for bond investments. Ukraine’s B+ rating was below this level, so Russia acted in a prudent way to add financial protection by making the bonds payable on demand if Ukraine’s overall debt rose above a fairly modest 60 percent of its GDP. Unlike general-purpose foreign aid, the terms of this loan gives Russia “power to trigger a cascade of defaults under Ukraine’s other bonds and a large block of votes in any future bond restructuring,” Gelpern noted.

As recently as 2013, Ukraine’s public debt amounted to just over 40 percent of the nation’s GDP – some $73 billion, seemingly manageable until the February Maidan coup led to civil war against the Eastern Russian-speaking region. Waging war is expensive, and Ukraine’s hryvnia currency ruptured. A quarter of its exports come from eastern Ukraine, sold mainly to Russia (including military hardware). Kiev sought to end this trade, and spent a year bombing Donbas and Luhansk cities and industry, turning off the electricity to its coal mines, and driving an estimated one million of the region’s civilians to flee into Russia. Ukraine’s exchange rate plunged steadily, raising its debt/GDP ratio far above the 60 percent threshold. That gave Russia the option to make the debt payable immediately, triggering the cross-default clauses it had inserted into the euro-bonds contracted with Ukraine.

Gelpern’s paper accused Russia of seeking to keep Ukraine “on a short leash,” as if this is not precisely what the IMF and most financial investors do. However, “governments do not normally sue one another to collect their debts in national courts.” If this should occur, the pari passu rule prevents some debts from being annulled selectively. That is the problem Gelpern has been describing in the Credit Slips blog with regard to Argentina’s debt negotiations.

Gelpern therefore raises another possibility – that Ukraine may claim that its debt to Russia is “odious,” addressing the situation where “an evil ruler signs contracts that burden future generations long after the ruler is deposed.” “Repudiating all debts incurred under Yanukovich would discourage lending to corrupt leaders,” she concludes.

The double standard here is that instead of labeling Ukraine’s long series of kleptocrats and their corrupt governments “odious,” she singles out only Yanukovich’s tenure, as if his predecessors and successors were not equally venal. An even greater danger in declaring Ukraine’s debt odious is that it may backfire on the United States, given its own long support for military dictatorships, corrupt client states and kleptocracies. U.S. backing for Chile’s military dictatorship following General Pinochet’s 1973 coup led to Operation Condor that installed Argentina’s military dictatorship that ran up that country’s foreign debt. Would a successful Ukrainian claim that its debt was odious open the legal floodgates for broad Latin American and Third World debt annulments?

Ukraine’s sale of bonds to Russia’s sovereign debt fund, as well as its contracts for gas purchases were negotiated by a democratically elected government, at low concessionary rates that subsidized industrial and household consumption. If this debt is deemed odious, what of the EU’s insistence that Greece remove its Parliamentary leader Papandreou in 2011 to prevent a public referendum from taking place regarding the ECB loan? Loans made in the face of evident public opposition may be deemed to have been imposed without proper democratic consent.

YouTube has the video The Health Dangers of Roundup (glyphosate) Herbicide. Jeffrey Smith & Stephanie Seneff

Tina Kingston put me onto the video “The Health Dangers of Roundup (glyphosate) Herbicide. Jeffrey Smith & Stephanie Seneff” I am making this a separate post from the Roundup (glyphosate) post because this also addresses the issue of GMOs. I have known about the connection between Roundup and GMOs, but i have never heard such a detailed discussion of why this connection is so bad. It is too bad that Neil Degrasse Tyson has jumped on the pro GMOs bandwagon. He thinks his deep scientific knowledge qualifies him to pontificate on this subject. He claims that there is no scientific connection between genetically modified organisms and harm from that modification. What he does not realize is that it is the GMO in our plants that makes it more likely that Roundup will be used when growing these plants.

Wired magazine has the article The Ultra-Pure, Super-Secret Sand That Makes Your Phone Possible‘

It’s quartz, but not just any quartz. Spruce Pine, it turns out, is the source of the purest natural quartz—a species of pristine sand—ever found on Earth.

Having been involved in one way or another with silicon for all of my career, I thought this article was very interesting without being too overly hyped up except for, perhaps, the title.

Naked Capitalism has the article Asset Prices and Wealth Inequality.

A central finding of this new research is that portfolios differ systematically along the wealth distribution. While the portfolios of rich households are dominated by corporate and non-corporate equity, the portfolio of a typical middle-class household is highly concentrated in residential real estate and, at the same time, highly leveraged. These portfolio differences are highly persistent over time.

An important upshot of this pattern is that relative asset price movements induce major changes in the wealth distribution and can decouple trends in income and wealth inequality for extended time periods. For instance, rising asset prices can mitigate the effects that low income growth and declining savings rates have on wealth accumulation.

This was prominently the case in the four decades before the financial crisis when the middle class rapidly lost ground to the top 10% with respect to income but, by and large, maintained its wealth share thanks to substantial gains in housing wealth.
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By contrast, the top 10% were the main beneficiary from the stock market boom and were relatively less affected by the drop in residential real estate prices. The consequence of substantial wealth losses at the bottom and in the middle of the distribution, coupled with wealth gains at the top, produced the largest spike in wealth inequality in postwar American history. Surging post-crisis wealth inequality might in turn have contributed to the perception of sharply rising inequality in recent years.

You may have an intuition of what has been going on in the economy, but until you read this, you may not understand the magnitude of the shift in wealth.

Before the real estate crash, I tried to explain to some people that they shouldn’t tap the growing equity in their house like it was a piggy bank. That wealth growth did not make up for the stagnant wages they were earning.

Luckily they had me to give them some help to keep their home after the crash.

If you want to read how and why this shift occurred, read Michael Hudson’s 2015 book “Killing The Host: How Financial Parasites and Debt Bondage Destroy the Global Economy”

Until this book gets a lot more readership, we may stumble along like this until our economy is completely drained by the 1%

The National Debit website has the article Q) Federal Taxes Don’t Fund Spending, right? A) Wrong.. It nicely makes the point of whay I say that MMT proonents should stop using the meme “ederal Taxes Don’t Fund Spending”.

The oft-abused phrase “Federal Taxes Do Not Fund Spending” is not entirely accurate. I don’t question anyone’s motive saying it, to be clear, I am 100% positive that each time it is said by an MMTer (Modern Monetary Theory enthusiast), no question it is to promote MMT. Federal gov’t DEFICIT spending (the spending that is not funded by taxes) was only 15% of total spending last year. Besides not being entirely accurate, saying ‘Federal taxes do not fund spending’ veers off course from that first of Seven Deadly Innocent Frauds, which states that it is incorrect to think that federal taxes “must raise funds through taxation”, and that it is incorrect to think that federal “gov’t spending is limited by its ability to tax” (7DIF pg 13). I interpret that as saying that because the federal gov’t is now spending fiat dollars, there is no longer any constraint on federal spending, nor any solvency risk. I don’t interpret that as saying that federal ‘taxes do not fund spending’, but as meaning that the federal gov’t, while it is taking in tax revenues, while it is indeed spending those funds, because it is the issuer of fiat dollars (instead of a user of gold backed dollars), those revenues, those federal taxes are NOT NEEDED to fund spending anymore, a big difference. ’Federal taxes do not fund spending’ is a deadly innocent misinterpretation of this MMT pillar…

It is a long article. I must admit that I pooped out before completely reading it. However, I think it gets things mostly right, even if there is some quibbling over words. The point that is absolutely right is this quote.

In other words, when saying ‘taxes don’t fund spending’, these MMTers mean well, but unfortunately they are not advancing MMT (they have no idea how ridiculous they sound to a non MMTer)…

If MMTers don’t want to sound ridiculous and turn off anybody who might be tempted to look into MMT, they should stop making themselves look ridiculous right out of the gate.

“From Democracy to Oligarchy” is title of chapter 18 of the Micahel Hudson book Killing The Host: How Financial Parasites and Debt Bondage Destroy the Global Economy.

I think the point is that it is private bank created debt that is a far more serous threat to us all than is federal government “debt”.

Here is an excerpt from near the end of the chapter.

The popular media distract attention from how it has been possible for the Federal Reserve to create what is now more than $4 trillion in Quantitative Easing without spurring price and wage inflation. Morally, why have the banks’ large uninsured depositors, bondholders and gambling “counterparties” been bailed out in a period of debt deflation for the rest of the economy? Why did the Fed not create this credit to pay off the debts? Why were the debts left in place, leading to foreclosures that destroyed entire neighborhoods while the largest banks were rescued to resume their extravagant bonuses and dividend payouts?

Selling out voters to campaign contributors promoting pro-One Percent policies has led both major U.S. political parties to be distrusted by large swaths of the electorate. In view of how the Occupy Wall Street demonstrations won worldwide emulation by catalyzing awareness of how big money has corrupted our government and our economy, it seems remarkable that no Democratic or other would-be left coalition has sought to mobilize the widespread rejection of today’s pro-bank policy. Advocacy of truly socialist policies might stun the beltway class with its popularity, as Syriza has done in Greece (described in Chapter 24 below).

The Tea Party (and libertarians with roots in the anarchist tradition) fail to realize that only a government strong enough to tax and regulate Wall Street can check today’s financial and rentier power grab. Attacking “big government” without distinguishing between Big Oligarchy and a Progressive Era mixed economy – what used to be called socialism – dilutes efforts to regulate and tax wealth, and ends up being manipulated to support the vested interests, Koch Brothers-style.

I am learning some nuances about Modern Money Theory that had escaped me up till now. The economic difference between FED created money and private bank created money is that private bank created money entails debt and interest payments to the private banks that created the money whereas FED created money spent into the private sector does not produce any personal debt to the members of the private sector.

Federal government debt, unlike private, personal debt, does not require any person or corporation in the private sector to pay back that debt. The government sector debt created by deficit spending will be paid with money created by the FED.

New Economic Perspectives has the article Bank Whistleblowers United Told DOJ to use 4506-T as Kryptonite v Banksters.

Had the regulators (particularly the Fed through its HOEPA power) required each bank making liar’s loans to conduct a 4506-T audit, the senior managers would have faced a dilemma. They could stop the fraudulent lending or provide DOJ with a great opportunity to prosecute them. The bank CEOs’ response to the internal audits showing endemic fraud and the retaliation against the whistleblowers combine to offer superb proof of senior managers’ ‘specific intent’ to defraud. The reasons for the failure to prosecute were some combination of cowardice and politics. If Democrats win control of the House they can use their investigative powers to force each bank regulator to cause every relevant financial institution to conduct a 4506-T audit.

Of course, the Republican Senate and House chairs could order those steps today. We are not holding our breath, but BWU’s co-founders are eager to aid either, or both, parties restore the rule of law to Wall Street. Instead, we are rapidly creating an intensely criminogenic environment on Wall Street that will eventually cause a severe financial crisis.

The level of corruption in our government displayed by its refusal to prosecute white collar crime is past the point where it is intolerable. Even our most progressive politicians aren’t pushing hard enough against this corruption.