The Conversation has the article Why the federal budget is not like a household budget.

The absolute minimum you should take away from this article is the following excerpt:

Can the government just spend as much as it wants on whatever it wants? Of course not, the result would be out-of-control inflation. Can it spend a lot more than it currently is without substantial negative consequences? Absolutely.

Since I have advanced beyond the stage of having doubts about Modern Money Theory, this article clarifies one point that I wished some MMT expert would have stated very explicitly.
I quote it here on my blog for future reference. [Emphasis added].

Seeking a balanced budget and automatically borrowing any deficit spending (as we currently do) is an effective but unsophisticated way of ensuring government spending doesn’t cause runaway inflation. Taxes and government borrowing remove money from the private sector, creating space for government spending (which injects money into the private sector). Remember, the government does not have to borrow or tax in order to finance spending because they can create money.

This is exactly the way I always thought of this, but I never heard this said explicitly before. In other words, the automatic borrowing that our laws insist on cancels out much of the stimulative effect of deficit spending.

Well, of course, nothing is quite that simple. Money that was in the private sector, but being saved and not spent is not economically stimulative. If the money that was being saved in the private sector anyway gets used to buy government bonds, then the government spending is stimulative if the government spends the money that the bonds represent.

The point being that how much the economy needs to be stimulated is a somewhat separate calculation from how much the government needs to spend. So the creation of money, the selling of bonds, government spending, and the level of taxation are all tools that can be used to modify the behavior of the economy. If the government understood what its goals were in correcting the path of the economy, then it could decide on the right mix of tools to use to try to accomplish our goals.

I just received an email from Bernie Sanders. There are two things I wanted to comment on.

• When one or two adult jobs in the family was enough to support the family, the unemployment rate was a good indicator of how the economy was doing for most people. Now that it takes more than two adult jobs for many families, a low unemployment rate does not paint the picture it used to. Even a 0% unemployment rate, but with employment that was not sufficient to support a family, would indicate a very unhealthy economy that needed to be fixed.
• I am particularly happy to see mention of a foreign policy based on peace, democracy and human rights. There are a lot of ills in this world that could be made better if our foreign policy weren’t so imperialistic.

The Gower Initiative for Modern Money Studies has Warren Mosler’s talk The Good Dream is Factual MMT.

I don’t like to say that taxes don’t fund spending. The word fund is ambiguous. It’s better to say the government doesn’t need your money to be able to spend. But they need you not to have it so that they can spend.

So many people who think they understand MMT don’t get this point. They do like to say “taxes don’t fund spending” even though one of the founders explicitly warns against saying that. As he says here, it is not your money the government needs. What they need is for you not to spend it in competition for resources with what the government needs to spend the money on.

Taxes are more powerful than spending.

This is not always true. Taxes are more powerful than spending for reining in excess spending in the private sector. However, when there is insufficient spending in the private sector, government spending is more powerful than tax cuts.

You can give people all the money you want to get them to spend, but if there is a rational reason for them to want to save rather than spend, you cannot force them to spend. In that situation, the government has to do the spending.

YouTube has the video Warren Mosler, The Euro: past, present and future. The Crossroads Workshop 1 in Zurich. This was published on Mar 29, 2013.

The euro assumed its position on January 1, 1999. Representatives of the prospective member nations achieved political consensus, as manifested in the Treaty of Maastricht. The ‘no bailout’ directive for the new ECB (European Central Bank) emerged as a pillar of the political imperative, intended as protection from a genetic proclivity toward fiscal irresponsibility. Unfortunately the naked heel is but a magnet for the financial market’s arrows.

I don’t know how you could make the explanation any simpler. Still, people cannot believe this when they hear it. The explanation is that people decide on what they are going to believe by gut reaction, and then the search for information or ignore information as necessary to confirm their pre-chosen beliefs. I find the first step is to start to wonder if this guy has something to tell you that is worth understanding. That’s how I started to understand Modern Money Theory.

The only issue I see with this presentation is that the emphasis is too much on monetary policy and not enough on fiscal policy. As Keynes explained in great detail, you can make all the money you want available to the private sector, but you cannot make them spend it on what the economy needs. There are perfectly rational reasons for this behavior that I won’t go into here. The upshot is that when the economy gets stuck in this situation, only direct spending by the government on the necessary items can get the economy going again quickly.

The Real News Network has the two part series What Can Humanity Learn From The Great Law of Peace?

Western “democracies” wrongly prioritize individual rights over the rights of the collective.

Stuart Myiow of the Mohawk Traditional Council explains that the enduring peace depends on our respect for the laws of creation.

What Can Humanity Learn From The Great Law Of Peace (2/2)

The 20 minutes in these two videos is only enough time to give a hint at the profound wisdom that may be here. It will take more independent research to get beyond just the hint.

Here is a MS Thesis for that deeper research – INTERNATIONAL LAW/THE GREAT LAW OF PEACE.

Here is the constitutioin translated into English – The Constitution of the Iroquois Nations

Sturbridge Police Department has the tweet on the number to call.

If you are in Sturbridge/Fiskdale please call: 508-347-2525 ext 0 until further notice.

Here is the explanation of what is going on, FCC launches probe of CenturyLink in wake of nationwide 911 outage.

<sarcasm>Obviously the Russians did this.</sarcasm>

Wordfence has the article 3.2: Finding and Removing Backdoors.

Backdoors can be difficult to find as they are often obfuscated code. Usually if there is one backdoor, there are others that may or may not look the same.

I know I have this sort of stuff on my site, but I have never been able to find it. This gives me a better idea of what to look for. Someday, I might give it another try to look for this.

Here is an article about the kind of thing I actually know I have on the site. 3.3: Removing Spam Pages From WordPress Sites.

Spam pages are files added to your publicly available web site with the intent of manipulating search engine result pages.

The Real News Network has a 5 part series Michael Hudson on TRNN ‘J is for Junk Economics’.

Economist Michael Hudson, author of the newly released ‘J is for Junk Economics,’ says the media and academia use well-crafted euphemisms to conceal how the economy really works.

I am just now getting to understand why I want to read this book.

Here is the first segment.

Michael Hudson on TRNN ‘J is for Junk Economics’ 2 of 5

Michael Hudson on TRNN ‘J is for Junk Economics’ 3 of 5

‘J is for Junk Economics’: Michael Hudson on TRNN (4/5).

Michael Hudson on TRNN ‘J is for Junk Economics’ 5 of 5

Mint Press News has the interview Syria’s Grand Mufti Hassoun Discusses Peaceful Coexistence, Love, and an Inclusive, Nonsectarian Syria

Syria is a civilized country — it embraces all the civilizations of the world because it is the gate to the Orient. So [historically] those who wanted to go to China from Europe passed through Syria. And those who want to go back to Europe pass through Syria. Syria a hundred years ago was far bigger than Syria today. In Syria in 1900, 118 years ago, Palestine, Lebanon, Jordan and Syria were one country. One bank, one currency, one president, and one nation. There were no religious minorities in it. The reason is that it is the land of Abraham, and Abraham was the forefather of all prophets. He was the forefather of Moses, and of Jesus, and the forefather of Muhammad, may prayers and peace be upon them.

This gives quite a different look at the origins of sectarianism in the Middle-East. You won’t hear this from the oligarchs’ news media.

On Contact with Chris Hedges has the interview The history of debt forgiveness.

Economist and author Michael Hudson, author of ‘…and Forgive Them Their Debts: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year’, shares with journalist Chris Hedges how ancient cultures forgave debt cyclically to prevent debt peonage and the rise of an oligarch elite.

This is the first discussion of Michael Hudson’s new book where I got enough detail to understand exactly what he was proposing for the modern world. It turns out that Chris Hedges is the ideal interviewer to get this information to come out. As he says, Chris Hedges has a seminary background so that the religious aspects of the thesis are right up his alley.

The headline of my previous post “He Died for Our Debt, Not Our Sins” becomes meaningful to me in a way that did not become apparent when I read that other article.

The “commercial” interlude in the video should be skipped over. The people who made that commercial obviously never heard the interview they were interrupting. Sort of like the editorial page of The Wall Street Journal. The people writing the editorials and the op-ed pieces seemed to be completely oblivious to the news that was in The Wall Street Journal itself, often on the same day the editorial appeared.

December 26, 2018

I was thinking that part of what Michael Hudson says in this interview undercuts the message of Modern Money Theory (MMT), of which Hudson is one of the founding pioneers. He talks about how important it was for the rulers to collect taxes from the citizens to fund the activity of the government. In fact, MMT makes the technical point that the government does not need to collect taxes in order to fund its activities.

The way Michael Hudson should have phrased it was that the government needed the efforts of the citizens to provide the goods and services to the government that the government needed to carry out its mission for the good of the society. (Hudson did specifically mention the military service, but there is much more than just that.) The fact that the government collects taxes is the incentive for people to do work for the government to earn the currency provided by the government so that they can pay their taxes. Without the collection of taxes, the public could feel free to ignore the government provided currency, and use whatever means they wanted to use for trade among themselves. They could also refuse to do work for the government if their were no incentive to need the official government currency. Since the government only accepts its own currency for payment of taxes, fines, and fees, the citizens must earn at least enough of it to pay those obligations. Of course, while the system of official currency is in place, it is easier to use that system for other trade purposes as well. Since the money is in general circulation, people who don’t provide direct goods and services to the government can earn the official currency by trade with others who do get some of their money directly from the government.

In modern times we are starting to see things like crypto-currencies (Bit Coin) as an alternative to the official currency. So far these have not been major competitors to the official government currency.

Automatic Debt Reduction

Let us not forget the role inflation used to play as an automatic debt reducer. In the days of union strength before 1980, salaries and income kept up with inflation due to contract negotiations with unions and the spill over effect even to non-unionized workers. With long term debt like mortgages and student loans, the principle started to pale compared to people’s income. The inflation effect was just as important as amortization. Eventually the debt was easily paid off.

Now that incomes no longer keep up with inflation, inflation is no longer the friend of the borrower and the bane of the lender. The children of the baby boomers and the millennials are in a completely different economic ballgame than their parents were.