New Economic Perspectives has a post MMT and Debunking AMI: Positive Money . (Modern Money Theory, American Monetary Institute)

Steve Grumbine talks with NEP’s L. Randall Wray for Real Progressives LIVE. Topics include MMT and Debunking AMI: Positive Money and other important and relevant economic issues that affect the progressive agenda.

Here is the YouTube video of the conversation.

This is a wonderful interview that will introduce so many people about what Modern Money Theory is all about, and why it is so important for us all to understand it. That being said, let me go on to one suggestion for improvement that I have.

The one thing I think needed to be discussed and analyzed was the inflationary period from the end of LBJ’s term through Nixon, Ford, and Carter, and into the Reagan administration. To state that the last time we faced resource constraints was WW II might turn people off who remember the LBJ to Reagan period. I know MMT and Wray can explain it, so I think that omission needs to be fixed quickly.

I read a lot of speculation on what makes people vote or not vote, but I have not found the study where people were asked “What Would It Take To Get You To Want To Vote?” If you know of such a study or poll, can you let me know?

For people trying to increase voter turnout, wouldn’t you think there would be some people out there asking this question?

Until just now, I never thought to ask that question.

The Roosevelt Forward blog has the post Interview with Randall Wray: Truths and Myths of the Federal Reserve. It is a short article, and I will print a significant portion of it as an excerpt from it with my own emphasis added.

Bernanke had long argued that what Japan needed was “quantitative easing” to supplement the zero rate policy. He was always vague about what that means, but he had this idea that the Fed can “push on a string“-encourage banks to lend and borrowers to borrow by “pumping liquidity” into the economy. This would take the form of increasing bank excess reserves-providing them with far more reserves than they wanted to hold-on the belief they would then lend.
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Banks will not lend and borrowers will not borrow because they know we are in a deep and long recession.
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So to provide a more direct answer: the Fed can neither create nor cure recessions and crises. It can determine the overnight interest rate, and it can provide reserves on demand. It can also buy anything for sale simply by crediting reserves (a point Bernanke made in testimony before Congress). We used to think the Fed would never buy bad private assets-but Bernanke changed all that. However, only appropriate fiscal policy could have led to a quicker recovery. We did not get that.

LS: Of course, the inevitable next question has to be: who owns the Federal Reserve which issues the reserve currency of the world?

RW: The Fed is a creature of Congress, created in the 1913 Act, with subsequent legislation dictating functions and policies. In other words, it really is a branch of government, albeit an unusual one since there are private shareholders. Does the Fed cater to financial institutions? Yes, but so does the Treasury-and as we know, Goldman Sachs has been running the Treasury for the past three Presidencies-Clinton, Bush and Obama. I think that is of greater import than is Wall Street’s control of the Fed. Capture of regulators is nothing new. But it’s become more obvious and complete since Clinton, who essentially delivered Washington to Wall Street. Washington then deregulated finance, which responded by “Hoovering” up 40% of all US corporate profits. The triumvirate of Rubin, Greenspan and Summers led the charge, and then added Paulson, Geithner and Bernanke. Remarkably, only Greenspan’s reputation has suffered in the collapse-and of this team he was the only one who actually raised some doubts during the speculative bubbles that followed.

My thanks to Real Progressives for their valiant efforts to publicize this information in their Facebook post.

Wray knows that the “private shareholders” are more like paying passengers in a taxi. For the time that they are paying, they get to tell the taxi where to go, but they don’t own the taxi.

the Fed has expanded its balance sheet to $2 trillion.

For the sake of ease of calculation, let’s say that the $2 trillion is sitting as excess reserves of the private banks from which the Fed bought these “assets”. Let’s assume that the Fed pays 25 basis points (0.25%) in interest for letting private banks leave their excess reserves with the Fed. The private banks are earning $5 billion a year on their $2 trillion of excess reserves that they cannot find any productive use for. I think I could comfortably just retire on $5 billion a year. I wouldn’t even have to touch the $2 trillion nest egg, unless I got bored in retirement with nothing to do. Consider this Social Security for the banks.

By the way, if you read the short article and have trouble understanding most of what Wray says, then you cannot have an informed opinion about the economy, the national debt, banking regulation, or a whole host of other important topics. Now that you know what it is that you don’t know, get yourself educated before you make any statements that can be believed as informed opinion.

Tulsi Gabbard has the news release Rep. Tulsi Gabbard, Lawmakers Call For Reinstatement of Glass-Steagall.

Background: In 1933, the Banking Act—also known as the Glass-Steagall Act—passed amid an atmosphere of chaos and uncertainty to address banking failures of the Great Depression. The goal of its lead cosponsors, Rep. Henry Steagall and Sen. Carter Glass, was to separate commercial and investment banking and restore confidence in the American banking system. In 1999, Congress repealed the Glass-Steagall Act and removed the barriers between investment banking and traditional depository banks. This action gave financial institutions and investment firms access to the deposits of the American consumer, which then were used to gamble on the Wall Street casino.

While I do favor a restoration of a modern adaptation of the Glass-Steagall act, and I was opposed to its repeal in 1989, I do realize that there are differences between 1933 and now. One difference is the recognition that the loanable funds model of banks is in low repute among some modern economists. See the article Banks are not intermediaries of loanable funds – and why this matters.

Problems in the banking sector played a seriously damaging role in the Great Recession. In fact, they continue to. This column argues that macroeconomic models were unable to explain the interaction between banks and the macro economy. The problem lies with thinking that banks create loans out of existing resources. Instead, they create new money in the form of loans. Macroeconomists need to reflect this in their models.

No doubt bank savings deposits do play some role in bank lending, and these deposits need to be protected. However, any policy aimed at protecting those deposits needs to be aware of how banks operate today. The ability of the Federal Reserve Bank to create US high-powered money without any constraint of the gold standard which we left in the early 1970s may play a significant role in commercial banks’ ability to lend with little regard for the amounbt of deposits they have. The paper on loanable funds model breezes over one issue in their description of how the banks make a loan transaction and a countervailing deposit transaction at the same time. That issue is that the loan is not callable for an agreed term of the loan, but the countervailing deposit can be and probably will be withdrawn almost immediately. I would guess the backup of the Federal Reserve is what makes this all possible. I still think my idea of banks borrowing at wholesale and lending at retail is what explains a lot.

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The Hill has the article Gabbard to repay cost of Syria trip.

Democrats and Republicans alike were critical of the decision, with members of both parties voicing concerns with the trip in light of Assad’s human rights record.

What The Hill failed to tell you is that “Assad’s human rights record” has been tampered with by our government and its “intelligence” agencies. There are a number of reporters and Syrian residents who will attest to the views that our corporate press refuses to report. Whether the corporate press thinks these people are right or wrong, why won’t they even tell you that these people exist? Is there only one side of the story they want you to know? Is that called reporting all the news so you can make up your own mind? Or is it that the responsibility of the corporate press is to keep you from knowing what they think you shouldn’t know?

The corporate press has no problem telling you of the tiny number of scientists who dispute global warming. In this article they have no trouble taking a dig at the facts in the story by telling you the propaganda line that they want you to believe about Syria.

And speaking of David Petraeus in my previous post here is the Washington Post article David Petraeus: Anti-Muslim bigotry aids Islamist terrorists mentioned in that post. Leave it to the Washington Post to publish something like this.

While Islamist extremist networks do not pose an “existential” threat to the United States in the way that Soviet nuclear weapons once did, their bloodlust and their ambition to inflict genocidal violence make them uniquely malevolent actors on the world stage.

No irony here for Petraeus to go on and say the following:

For that reason, I have grown increasingly concerned about inflammatory political discourse that has become far too common both at home and abroad against Muslims and Islam, including proposals from various quarters for blanket discrimination against people on the basis of their religion.

I suppose the words “bloodlust” and “genocidal violence” are not thought of as inflammatory. Sorry David, you can’t have it both ways. You can’t use inflammatory language and then profess your concern over people using such language.

I think David Petraeus should read his own advice

But it is precisely because the danger of Islamist extremism is so great that politicians here and abroad who toy with anti-Muslim bigotry must consider the effects of their rhetoric. Demonizing a religious faith and its adherents not only runs contrary to our most cherished and fundamental values as a country; it is also corrosive to our vital national security interests and, ultimately, to the United States’ success in this war.

So why did Petraeus choose to use words that were “corrosive to our vital national security interests’?

CNN has the article Why ISIS is celebrating Trump’s immigration ban.

In a recent Washington Post op-ed, retired US Army Gen. and former CIA Director David Petraeus said he has grown increasingly concerned about anti-Muslim rhetoric in the United States.

“As policy, these concepts are totally counterproductive,” Petraeus said. “Rather than making our country safer, they will compound the already grave terrorist danger to our citizens. As ideas, they are toxic and, indeed, non-biodegradable — a kind of poison that, once released into our body politic, is not easily expunged.”

In the spirit of being fair and unbalanced, CNN goes on to add the following to their article:

The number of American Muslims who radicalize is small, especially when compared with other Western countries, said William McCants, director of the Brookings Institution’s Project on US Relations with the Islamic World.

Law enforcement experts estimate that about 250 Americans have tried to join ISIS, far fewer than the thousands who have flocked to Syria and Iraq from countries such as France and Belgium.

“I would argue that American Islam is doing something right in contrast to these other countries,” McCants said.

I would argue that the Atlantic and Pacific Oceans provide somewhat of a barrier for American Muslims wanting to go to the Caliphate compared to those lining in Europe. Perhaps it is not only American Islam is doing something right but America (USA) that is doing something right, Well, that is until Trump arrived upon the scene. In the USA, we have far more acceptance of diverse people that some countries in Europe. We do not ban the wearing of religious garb as they do in France. We do not insist on English being the official language. There are a lot of things we do right that Trump wants to start doing wrong.

Counterpunch as the article Celebrating Dr. King with the Departure of Barack Obama by Ajamu Baraka.

It is not too late, even with the election of Donald Trump, but it will take courage and clear thinking in order to shake ourselves free from the strange, hypnotic trance that has gripped liberals and progressives of all stripes. Dr. King pointed us in the right direction just before he was assassinated when he reminded us that we were living in revolutionary times. King argued that the U.S. needed to get on the right side of the world revolution and that required a revolution of values in U.S. society. With the U.S. gripped in an unsolvable capitalist economic crisis that has deepened poverty, exacerbated racism and xenophobia, intensified class contradictions and struggle, and produced a Donald Trump, the liberated knowledge and experience of the black liberation movement in the U.S. is actively creating new ways of living and seeing the world that will liberate all of us.

This is the reality of a new world that Dr. King could see from the mountaintop – and that is a world that a visionless, opportunist technocrat like Obama and a moribund liberalism could never imagine.

Wow, what a powerful statement this article is. In his own book, Barack Obama stated that he decided to go to Harvard University to learn where the levers of power were. I guess he learned his lessons well, and he worked those levers of power mercilessly.

New Economic Perspectives has the short article When will the EU and the ECB Stop Torturing the Greeks?

The International Monetary Fund believes Greece’s debt is “highly unsustainable” and will reach 275% of gross domestic product by 2060 unless the country’s loans are significantly restructured, according to a draft confidential review of the country’s economy.

I have found some of the worst enemies of Greece among USA citizens with a Greek background. The ones to which I refer blame the laziness of the Greek people, and refuse to understand what the international financial community is doing to Greece.