Alan Grayson's e-mail on Moody's warning that it might reduce the US's AAA rating, suggested that Moody's was either threatening a downgrade because it wants to get the Bush tax cuts for the rich extended, or, alternatively, that “Moody's is living in what Aristophanes called "Cloud Cuckoo Land."” He says this because Moody's is upset about the possibility that the US may go over the so-called “fiscal cliff,” even though if it did, it would theoretically result in $560 Billion of deficit reduction annually, without further legislative changes, and it makes no sense on the surface for a rati Read more about Alan Grayson's Right; But He Misses the Larger Point
Who else thinks the President's speech didn't include any plans to create the 29 million full-time jobs for the dis-employed? Please raise your hand!
About jobs he said:
”We can help big factories and small businesses double their exports, and if we choose this path, we can create a million new manufacturing jobs in the next four years.”
The Fiscal Summit Counter-Narrative: Part Eight, Narrative and Counter-Narrative For Fiscal Sustainability
I started this lengthy series by saying:
Well, it's Springtime in DC. Time for the Peter G. Peterson Foundation's annual event. The Fiscal Summit, to be held on May 15, better named the Fiscal Cesspool of distortions, half-truths and lies, is a propaganda extravaganza designed to maintain and strengthen the Washington and national elite consensuses on the existence of a debt crisis, the long-term ravages of entitlement spending on America's fiscal well-being, and the need for long-term deficit reductions plans to combat this truly phantom menace. The purpose of maintaining that consensus is to keep an impenetrable screen of fantasy intact in order to justify policies of economic austerity. that have been impoverishing people and transferring financial and real wealth to the globalizing elite comprised of the 1% or far less of the population, depending on which nation one is talking about.
I then pointed to the first two Fiscal Summit Conferences in 2010 and 2011, identified some of the featured participants in both of these, and the then pending 2012 conference, and identified the primary myths used to form the neoliberal-based deficit hawk/austerian “fiscal sustainability”/”fiscal responsibility” narrative driving the politics of fiscal policy towards debate, discussion and passage of a long-term fiscal policy plan focused primarily on deficit reduction and long-term “fiscal responsibility” and “fiscal sustainability.” I then set out to present a detailed account of the five sessions of the April 2010 Fiscal Sustainability Teach-In Counter-Conference along with comments and references (links) to posts appearing since the Teach-In. The five sessions and accompanying Q & A, covered in posts 2-7 of this series, supplemented by additional post-conference work provide a fiscal sustainability/fiscal responsibility counter-narrative based on the Modern Monetary Theory (MMT) approach to economics.
In this final post of the series, I'll juxtapose the primary claims underlying the neoliberal austerian fiscal sustainability/fiscal responsibility narrative, and the MMT answers to them. The austerian claims all link to MMT-based posts that critique them. The paragraphs following each austerian claim summarize the MMT answers, and the counter-narrative. Read more about The Fiscal Summit Counter-Narrative: Part Eight, Narrative and Counter-Narrative For Fiscal Sustainability
The Fiscal Summit Counter-Narrative: Part Seven, Policy Proposals for Fiscal Sustainability, the Q & A
The way we designed the program of the Fiscal Sustainability Teach-In Counter-Conference, was to introduce the fundamental ideas of Modern Monetary Theory (MMT) in the first three presentations on defining fiscal sustainability, whether or not there are spending constraints on governments sovereign in their currency, and whether deficits, debts, and debt-to-GDP ratios are really a problem for entitlement programs and our grandchildren. Then Presentation Four, by Marshall Auerback, was given to consider the main critique of MMT's stance on deficit spending, the possibility of inflation or hyperinflation.
Finally, Presentation Five, which we'll cover in this post was designed to highlight the proposals for full recovery favored by the MMT economists. These proposals are the counter to the austerity proposals of Paul Ryan, Pete Peterson, Erskine Bowles and Alan Simpson, David Walker, Barack Obama, and the rest of those convinced that the US Government has solvency/debt/deficit problems that must be solved by some combination of spending cuts and tax increases. Read more about The Fiscal Summit Counter-Narrative: Part Six, Policy Proposals for Fiscal Sustainability
One of the raps on deficit spending in neoliberal circles is that it will trigger substantial inflation or hyper-inflation. Even when mainstream economists grant the MMT point about the impossibility of the US becoming involuntarily insolvent, they will still insist that sustained deficit spending is a bad idea because it will inevitably lead to unmanageable inflation. A variant of their critique is that especially “pure deficit spending,” I.e. deficit spending without issuing debt instruments to absorb the increase in the money supply created by deficit spending, will be an inflation trigger. Read more about The Fiscal Summit Counter-Narrative: Part Five, Inflation and Hyper-inflation
The Fiscal Summit Counter-Narrative: Part Four, The Deficit, the Debt, the Debt-To-GDP Ratio, the Grandchildren, & Fiscal Policy
The neoliberal austerian ideology often emphasizes the consequences of excessive deficit levels, a high national debt, and a debt-to-GDP ratio. Among those supposed consequences are rapidly increasing and high interest rates in the bond markets, inability to “borrow” to pay for imports, inability to maintain spending levels on entitlements like Social Security, Medicare, and Unemployment Insurance, an increasing threat to government solvency, and a growing national debt burden that will have to someday be repaid by heavily taxed children and grandchildren. Read more about The Fiscal Summit Counter-Narrative: Part Four, The Deficit, the Debt, the Debt-To-GDP Ratio, the Grandchildren, & Fiscal Policy
The Fiscal Summit Counter-Narrative: Part Three, Are There Spending Constraints On Governments Sovereign in Their Currencies?
[This is an important series of posts. As the elite tees up for Grand Bargain™-brand catfood, it's important to understand that the entire ZOMG!!!!! Teh debt!!!! narrative is not merely fakery, but fakery that's funded by those who will benefit from the looting, and that's not you. --lambert]
An issue at the core of all the fuss about fiscal sustainability is Government solvency. The deficit hawks and doves believe that Governments sovereign in their own currency can run out of money if they keep deficit spending, and keep borrowing to do it. They believe that if deficit/debt levels are high enough, then Government insolvency can occur, because eventually the burden of interest on the public debt will crowd out all other public spending and investments. So, they are for working towards debt/deficit reduction, “reforming” (i.e. cutting) entitlement spending, and raising taxes, though not necessarily on the rich. Read more about The Fiscal Summit Counter-Narrative: Part Three, Are There Spending Constraints On Governments Sovereign in Their Currencies?
Matthew Yglesias posting in Slate, also gave us a few words on Dylan Matthews's post about Modern Monetary Theory (MMT). He starts with this thought: Read more about The WaPo MMT Post Explosion: Matthew Yglesias's Reaction to MMT
Kevin Drum, posting in Mother Jones, also threw his hat into the ring of discussion about Dylan Matthews's post about Modern Monetary Theory (MMT). Kevin begins by characterizing MMT as “. . . . Read more about The WaPo MMT Post Explosion: Kevin Drum's Take on MMT
This post concludes my critical evaluation of Dylan Matthews's, post published on Ezra Klein's blog called “You know the deficit hawks. Now meet the deficit owls.” Read more about WaPo Covers MMT, But Does Its Usual Bad Job: Part Four, The Victory
This post continues my critical evaluation of Dylan Matthews's, post published on Ezra Klein's blog called “You know the deficit hawks. Now meet the deficit owls.”
Here's the next exchange envisioned by Dylan: Read more about WaPo Covers MMT, But Does Its Usual Bad Job: Part Three, Banking, and Default vs. “Hyperinflation”
This post continues the critical evaluation of Dylan Matthews's, post published on Ezra Klein's blog called “You know the deficit hawks. Now meet the deficit owls.”
The Inflation/Hyperinflation Bogeyman Read more about WaPo Covers MMT, But Does Its Usual Bad Job: Part Two, Inflation/Hyperinflation
It was very welcome to see The Washington Post cover MMT with a reasonably favorable post by Dylan Matthews, published on Ezra Klein's blog called “You know the deficit hawks. Read more about WaPo Covers MMT, But Does Its Usual Bad Job: Part One, Some Basics and Solvency
This is an introduction to a series of 16 posts I began in reply to a number of posts by John Carney at the CNBC blog and Cullen Roche at Pragmatic Capitalism, and discussions replying to them. The posts by Carney and Roche criticized the MMT Job Guarantee (JG) proposal. Read more about The Job Guarantee and the MMT Core Series