YouTube has the video L. Randall Wray — MODERN MONEY: the way a sovereign currency “works”. Notice that this title says nothing about a theory nor about what government or anyone ought to do. It is just explaining what is. I don’t know why the word “works” is in quotes. This is really the way it works. Ask any qualified accountant to go through the steps with you to see if there is any flaw in the accounting.

Later in the video, he explicitly tells you when he shifts from telling you what is, to when he is considering (just considering) what ought to happen with this knowledge.

For further reading, I will explain how I came to view this 5 year old video.

Steven B. Grumbine posted a link to an article on his Facebook page. In his post he explains the main take-aways from the article. My comment on Steven B. Grumbine’s post was as follows:

The L. Randall Wray video in this article is just fabulous. I have never seen this video before although it is almost 5 years old. Steven D. Grumbine, you serve a very important function of reminding us in how many ways and in how many places this has all been explained in very simple terms that anyone can understand.

One YouTube commenter bemoaned the fact that the video had only been seen 11,000 times at the time the comment had been made. Since then it has been seen another 5,000 times. This is not nearly enough. The power to spread the word is in our hands. We must use that power if we are going to change anything.

The article Grumbine references is from 16 September 2013 on Heteconomist is What Everyone Should Know About Budget Deficits and Public Debt. The article has the above video embedded in it.

YouTube has the video Is Bernie Thinking Of Creating A NEW Political Party?

With about 14 million Democrats leaving their party since Election 2016, Nick Brana has a chance to capitalize on an electorate looking for progressive change. Brana, the former national political outreach coordinator for Bernie Sanders’ 2016 presidential campaign, talks with Lee Camp about his effort to draft Sanders to lead a new independent political party: The People’s Party.

The video mentions the web site Draft Bernie For A People;s Party.

Now this is an idea I could get behind. If it has to be Bernie, then I would accept that. Perhaps he can have Tulsi Gabbard as his VP. Or Nina Turner.

The St. Louis Fed has posted an Address by Former Fed Chair Marriner Eccles, 1938, Responding to Criticisms Leveled by Orval Adams.

Now, just what is it that has been lost that we must save? Have we lost something? I agree that we have, but I doubt that Orval would agree with me as to just what it is. He seems to think that all we have lost is the money the Government has spent in the effort to bring this country out of the deepest depression we ever experienced. What I think we have lost is something different. Rather, I would say, that we have wasted our human and material resources to the extent of far more billions of dollars than are represented in our Government deficits in recent years. And I contend that we cannot afford to go on wasting these resources or failing to put them to better use tha nwe have in the past. Let’s look at the substance and not the shadow. The substance of our wealth is the production of our mines and factories. The shadow is our money. As a nation what we cannot afford is the idleness of millions of able-bodied workers and of the facilities which they should be using to produce the substance.

Now here is something that he said, that does give me pause.

Isn’t it about tiae that we learned this simple truth? Is it so hard to understand that ehen an individual owes money he generally owes it to another individual, but when a nation owes money it owes it to itself? When an individual pays a debt, he pays It to someone else. When a nation pays a debt, it pays it to its own people.

We now know that it isn’t the point that it owes it to its own people so much as it owes in the money that it creates from nothing. If it pays its debts, it can always create more money for other uses, if there are things available to use it for. This gets back to the point that “The substance of our wealth is the production of our mines and factories. The shadow is our money.”

In the free book Seven Deadly Innocent Frauds of Economic Policy Warren Mosler discusses fraud # 2.

Deadly Innocent Fraud #2:

With government deficits, we are leaving our debt burden to our children.

Fact:

Collectively, in real terms, there is no such burden possible. Debt or no debt, our children get to consume whatever they can produce.

One of the things he points out in the discussion of this fraud is the following:

When we operate at less than our potential – at less than full employment – then we are depriving our children of the real goods and services we could be producing on their behalf. Likewise, when we cut back on our support of higher education, we are depriving our children of the knowledge they’ll need to be the very best they can be in their future. So also, when we cut back on basic research and space exploration, we are depriving our children of all the fruits of that labor that instead we are transferring to the unemployment lines.

So yes, those alive get to consume this year’s output, and also get to decide to use some of the output as “investment goods and services,” which should increase future output. And yes, Congress has a big say in who consumes this year’s output. Potential distributional issues due to previous federal deficits can be readily addressed by Congress and distribution can be legally altered to their satisfaction.

So, if we are passing on any debt to our children it is the diminished economic capacity of our nation because we refused to use the tools at hand to get full employment. Ironically, a further debt is that we will leave our children inadequately educated to make the best out of that future economy because we refused to use the resources we had to invest in their education.

From Warren Mosler’s free book Seven Deadly Innocent Frauds of Economic Policy.

Deadly Innocent Fraud #3:
Federal Government budget deficits take away savings.

Fact:
Federal Government budget deficits ADD to savings.
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So what is the role of deficits in regard to policy? It’s very simple. Whenever spending falls short of sustaining our output and employment, when we don’t have enough spending power to buy what’s for sale in that big department store we call the economy, government can act to make sure that our own output is sold by either cutting taxes or increasing government spending.

Taxes function to regulate our spending power and the economy in general. If the “right” level of taxation needed to support output and employment happens to be a lot less than government spending, that resulting budget deficit is nothing to be afraid of regarding solvency, sustainability, or doing bad by our children.

If people want to work and earn money but don’t want to spend it, fine! Government can either keep cutting taxes until we decide to spend and buy our own output, and/or buy the output (award contracts for infrastructure repairs, national security, medical research, and the like). The choices are political. The right-sized deficit is the one that gets us to where we want to be with regards to output and employment, as well as the size of government we want, no matter how large or how small a deficit that might be.

What matters is the real life – output and employment – size of the deficit, which is an accounting statistic. In the 1940’s, an economist named Abba Lerner called this, “Functional Finance,” and wrote a book by that name (which is still very relevant today).

It was interesting to read how many economics experts of the highest caliber did not understand this until Warren Mosler explained this to them. It is obvious that the academic discipline of economics is different from the academic discipline of accounting. However, if economists don’t know how to do the accounting of the money on which they opine, should they stop offering opinions on that for which they cannot account?

Seven Deadly Innocent Frauds of Economic Policy is a book written by Warren Mosler.

For those who are tempted to think, “Oh no, another deadly dreary economics book that I won’t be able to understand”, here are some words from the beginning of the book.

In the next few moments of reading, it will all be revealed to you with no theory and no philosophy- just a few hard cold facts.

Before you get to the book, you may want to know what an innocent fraud is. Here is the book’s explanation.

The term “innocent fraud” was introduced by Professor John Kenneth Galbraith in his last book, The Economics of Innocent Fraud, which he wrote at the age of ninety-four in 2004, just two years before he died. Professor Galbraith coined the term to describe a variety of incorrect assumptions embraced by mainstream economists, the media, and most of all, politicians.

From the overview of the book, I give you the list of the seven frauds that Mosler discusses.

1. The government must raise funds through taxation or borrowing in order to spend. In other words, government spending is limited by its ability to tax or borrow.
2. With government deficits, we are leaving our debt burden to our children.
3. Government budget deficits take away savings.
4. Social Security is broken.
5. The trade deficit is an unsustainable imbalance that takes away jobs and output.
6. We need savings to provide the funds for investment.
7. It’s a bad thing that higher deficits today mean higher taxes tomorrow.

Once you understand these things for the frauds that they are, you can free yourself from the tyranny of the oligarchs who control both of our political parties. Then we can get on to the business of saving this country from disaster for the non-oligarchs. There are more of us than there are of them, so it is for the good of the country as a whole to make life livable for the non-oligarchs. The oligarchs will lose some of their power, but I think they will still do alright for themselves.

The only thing that can really hurt the oligarchs is for them to get carried away to the point where the rest of society revolts. This revolution will really do the oligarchs in like what happened in the French Revolution and the Russian Revolution. We would be doing the oligarchs a favor by regaining control peacefully so that they can continue to live the good life with just a little less of the goods.

Steven D Grumbine has the Facebook post The hive mentality of the vote blue apologists is bordering on pathological. Here is part of what he said.

The hive mentality of the vote blue apologists is bordering on pathological. It is literally impossible to have a discussion about facts ranging from economics to geopolitical strategy or civil liberties because they are steeped in a religion… deifying “vote blue”… they have forsaken the ability to think beyond just falling back into the hive.

I find it useless to try to explain The Modern Money Model to neo-liberals who still think that federal government deficits are inherently bad and Clinton’s surplus was good. They brag about Obama’s cutting the deficits without realizing that these cuts helped prevent full economic recovery for anybody but the wealthy.

Naked Capitalism has the article Don’t Side With Neoliberalism in Opposing Trump.

During the Bernie Sanders campaign I heard a high-level official give a powerful speech blasting the Trans-Pacific Partnership Act for the harm it would bring to workers, environmentalists and to all who cared about protecting democracy.

Donald Trump now has signed an executive order pulling out of the TPP negotiations.

Is this a victory or a defeat for the tens of thousands of progressives who campaigned to kill the TPP?

I agree with the gist of the article and the caveat that Naked Capitalism added. However, I feel the need to add a caveat of my own.

This is not quite right “Trade deals are bad deals unless they enforce the highest health, safety, environmental and labor standards.”

Labor in the developing countries consider some of this to be the developed countries’ trick of preventing the people in the developing countries from getting jobs. There is some truth to this idea. When we negotiate trade deals, we must remember that in a fair negotiation neither side gets everything it wants, but each side must get enough of what it wants to agree to the terms of the negotiation.

The trouble with past trade pacts is that only the corporations on both sides of the deal were represented. In the future, labor and environment on both sides must be represented in the negotiations.

Thanks to Raj V. for awakening me to the issue many years ago. My take on how to respond to the issue is mine, though. I am not sure if Raj V. would agree.

Counter Currents has the article Trump Orders Military To Prepare For War.

The order further instructs Mattis, in the words of the Washington Post, which obtained a copy of the order prior to its formal release, “to examine how to carry out operations against unnamed ‘near-peer’ competitors, a group which US officials typically identify as China and Russia.” And it commands the Pentagon and the Office of Management and Budget to develop a “military readiness emergency budget amendment” that would increase military spending in the current year and increase the budget for 2018 and thereafter—increases to be offset by cuts to social spending.

if this is accurate (and I have no reason to believe the Washington Post), now might be the time to start worrying. In case you think Hillary (or Bernie or Jill Stein ) would have been better, look into the following book:

The American Deep State: Wall Street, Big Oil, and the Attack on U.S. Democracy (War and Peace Library) by Peter Dale Scott

Steven Grumbine of Real Progressives has some ideas about restoring sanity to the Progressive Movement. The YouTube video is 2017-02-02 And the insanity hits its stride false pride and fake revolutionaries be true to the ….

And, by the way, the problem is not George Soros nor the Rothschilds.