Posted To Stephanie Kelton’s Substack Newsletter 09/10/2022

In order to get the cooperation of both individual and commercial agents in a climate change agenda , which is an obvious essential, we’re going to have to find the operant factor in the economy, that changed, effects the nature of the entire pattern of economics. That is the definition of a paradigm change. Why is this true? Because a paradigm change is always a beneficial thing for everyone/every agent (except for the monopolistic/dominant/problematic actor in the primary area of the paradigm change) …and there’s nothing like a virtually universal beneficial effect…to get cooperation.This is the only problem with the otherwise very correct perspectives of MMT, Keen’s Minsky’s Financial Instability Hypothesis, Ellen Brown’s Public Banking, Hudson’s Financial Parasitism and Graeber’s History of Debt: They’re only theories and reforms when at this point in history what is needed, no required, is a genuine paradigm change. They all dance arond the operant factor. Keen even says that neo-liberal macro’s most basic outness is “they ignore money, banks and debt”. Also, part of the problem is that everyone is so innured to and afraid of being unscientific that they can’t seem to break out of the reductionistic mindset of investigating and identifying problems (and this is not to bash science per se of course) that they often fail to think in inductive/wholistic terms…for solutions, that is PATTERN solutions.Toss in the fact that the current monetary paradigm hasn’t changed for the entire history of human civilization which means we have become so acculturated to it (Debt Only) that we’re about as unconscious of it as we are of breathing.Finally, if complete conceptual opposition to the current paradigm is one of the historically verifiable signatures of accomplished paradigms…the new concept seems to elude the erudite…even though they talk on and on about needing exactly what the new paradigm is offering. So part of Hegel’s dialectic of thesis <–> antithesis is missing and everyone seems to have forgotten his solution, i.e. synthesis as well.So why aren’t we creating a movement for the new monetary and economic paradigm, a movement that all of the above reform movement’s intentions perfectly align with and that they all could thus integratively combine with and synergize?

Posted on 09/14/2022
The FED raising rates is indicative of how policies that take place in the current chaotically unbounded system and have not recognized the most efficacious place in the economy to implement such policy are completely stupid of course.
If we implemented a 50% Discount at retail sale and then had the FED or some other monetary authority to rebate every cent of that discount back to the retailer we would be implementing beneficial price and asset deflation into profit making economic systems. Such policy would have macro-economic effect as retail sale is the terminal ending point of the entire economic process and hence by definition the terminal summing point for all costs including profit. It is also a point where every individual economic agent participates so that universality is also of macro-economic effect.
The benefits of this policy would be that inflation was forever ended because we’ve never had yoy inflation of 50% and hyperinflations can be avoided with a couple of no-brainer regulations. It immediately doubles everyone’s purchasing power and potentially doubles the free and clear demand for every enterprise’s goods and services. It’s also an offer no retailer can refuse because if they decided not to opt into the policy they would have to get 100% of their price from consumers when all the consumer needed to do would be walk next door where they would only have to pay 50% of the price.
Pair the 50% discount/rebate policy with a $1000/mo. universal dividend for everyone 18 and older and you could eliminate virtually all payroll taxes that every worker and every enterprise pay and you’d have the most beneficial policy program since forever and isolate the monstrously parasitical and costly private banking system from every other legitimate business model.
Take the benefits of these two policies directly to the general populace with a mass movement and you’d be able to herd the entirety of the political apparatus toward their implementation…instead of trying to educate them in complicated, less direct and none isolating of the major bad actor ways that MMT, etc. have been trying to do for a couple decades. MMT etc. are fine and right, they just haven’t figured out the policy program that accomplishes these policy benefits and the place and time of their implementation.

Posted 09/17/2022

Smith’s work is indeed impressive except for one thing: There is no such thing and can be no such thing as free or free flowing markets…so long as we do not effectively deal with the current monopolistic paradigm of Debt Only as the sole form and vehicle for the creation and distribution of money. This economic factor underlies and under cuts every other theoretical consideration. Deal with it and we thrive and survive. Ignore it and, as history has shown us, empires eventually disintegrate. And with climate change thrown in even the possible end of civilization and species survival.

Deal with and change the monetary and economic pattern. It’s the real problem.

JS: The idea of Free Markets sounds good, but there has never been a free market. All markets are manipulated by the Big Money Interests or only they can participate because they have access to huge amounts of capital or financing mechanisms.

Me: You’re quite right. That’s why we need to end the biggest money interest’s monopoly paradigm, namely finance’s Debt Only pattern. No one else but me is apparently aware of this specific underlying problem. MMT, Steve Keen, Michael Hudson, Ellen Brown…all the leading reforms all dance around the money issue, but they have not cognited on the specific new paradigm concept and the most efficacious policies implemented at the most strategic places in the economic process. All of these reforms could more quickly and easily accomplish their goals if they simply became an integrated mass movement that communicated the benefits of Wisdomics-Gracenomics whose goals are theirs…and more.

JS: I think Michael Hudson does and I also believe Michael’s correct that debt that can’t be paid, won’t be paid therefore that debt needs to be written-off. I believe MMT doesn’t believe the latter which I believe is an error. MMT dances around this and my POV they just play games with this debt.

Me: Yes, treasury bonds are “debts” only because of an act of prestidigitation where the money created is transformed into bonds, most of which are snapped up by the private banks because they are a guaranteed profit making investment. But government debt is really just a side show anyway. It’s private debt that is the real threat. Private debt is what overwhelms economies and empires and the solution to that is integrating monetary gifting directly and reciprocally into the economy at the point of retail sale with a 50% Discount/Rebate policy and the rest of the policy program of the new monetary paradigm. A 50% discount at retail sale effectively and macro-economically implements beneficial price and asset deflation into profit making economic systems because it is a continuously and universally participated in aspect of the economic system. When you’ve terminatedly resolved inflation you’ve ended the major mental hurdle for most people regarding government spending and shut the mouth of every conservative and libertarian pundit who continuously gripes about its so called effects. It also opens up all manner of additional potential beneficial effects that integrate the economic and political agendas of opposing interests like payroll and income tax reductions and economic democracy and the end of poverty via a universal dividend. Finally, it enables the kind of mega-project fiscal funding necessary to confront climate change.
Paradigm changes are always huge steps forward, and mega paradigm changes are mega.

Posted 09/18/2022

JS: Certain paradigm shifts are beneficial, all are tricky, but mega shifts are disastrous!

Me: Depends on what your definition of paradigm change is. I would say all genuine paradigm changes are beneficial evolutions because their effects are always an aspect or aspects of the natural philosophical concept of grace like 1) conscious increase in truthful temporal and/or mental reality (Copernican cosmological paradigm change) 2) increased abundance and more secure survival (change from nomadic hunting gathering to agriculture, homesteading urbanization 3) increased awareness of self awareness and hence a) the human and cosmological reality of morals/ethics, b) the essential psychological sameness and hence brotherhood of every other human (the change from mere survival to homo sapiens/wise and discerning man).
By the way and as an aside, conscious awareness of self and time/process is an aspect of grace and the cosmos is utterly embedded in process/time. That’s why all of the world’s major wisdom traditions suggest we contemplate and look directly at what is in the moment…because that is where the experience of god/grace (not necessarily the various orthodox beliefs about god) …exists…when you/your self awareness actually sees it.
I believe that lesser phenomena like revolutions/”fourth turnings”, are mistaken for paradigm changes. Their effects are chaos leading to change…but not evolution. This is the message of Steve Bannon and the historical demagogue Donald Trump. The “Fourth Turnings” book has a reasonable amount of scholarship to it, but it ignores the fact that empires prior to Rome routinely utilized debt jubilees (forgiveness/grace as in monetary gifting) to renew their social contracts and their domestic economies, and when they stopped doing this their march toward instability and collapse was assured.

JS: We got a long way to go on #3.
Capitalism needs a paradigm shift obviously. What’s the most effective way? I think if we reclaim ownership of our natural resources this probably is the single most impactful. Water, Oil, Gas, Silicon, Lithium, mining of all sorts plus some caps on land owned by private parties and ideally wealth and income caps. And once something is commodified it should be government controlled, at least tightly regulated so the benefits accrue to We the People. Perhaps Worker Owned Enterprises could come into play here, preferably Worker Coops but ESOPS are better than nothing. Or Governmental Departments, like Water, Electric, Infrastructure etc

Me: All of those things are possible…after we change the monetary paradigm with the policies that express and implement it. All of the major reform movements nascently attest to the fact that the current monopolistic paradigm for the creation and distribution of new money is what is at the root of our economic problems. In fact changing the monetary paradigm will have immediate and potential beneficial effects on many other systems, bodies of knowledge and areas of human endeavor. That’s why it will be a mega-paradigm change.

Posted 09/19/2022

Me: Larry is so distracted by the abstract orthodoxies of neo-classical macro that he probably is not capable of conceiving how a 50% discount/rebate policy at the point of retail sale would end private banking’s problematic paradigm of Debt Only, mathematically end inflation forever, immediately double everyone’s purchasing power and so permanently enable the kind of fiscal deficits MMT only hopes could be possible.

JUST DO THE MATH and realize that retail sale is the optimal point in the entire economic process to implement a macro-economic effect.

Posted 09/19/2022

WG: Every member of Congress should reread (or, sadly, “read”) Stephanie’s brilliant April 2021 NYTIMES column. In about 1,000 words–I didn’t count them–she lays out the argument beautifully as to just how wrongheaded it is for Congress to ask: “How will we pay for it?” It’s actually a trick question to which there is only one possible correct answer, as obvious as it is sensible. “With money.”

Me: Correct, except MMTers say we still have to be aware of the possibility of inflation if supply does not equal demand. A 50% Discount/Rebate policy at retail sale terminally and macro-economically ends concern about that orthodoxy…and enables so many other benefits for every individual and commercial agent.

WG: I don’t know what your 2nd sentence means. Please explain.

Me: I’m glad you asked. Private banks create upward of 97% of our money simply with accounting entries, i.e. debits and credits. The 50% Discount/Rebate policy at retail sale perfectly mimics this process except both the discount and rebate aspect of the policy are monetary gifts…instead of loans/debt. So you go to a local grocery store and buy $50 worth of goods and you only pay $25 for them. The store opens a Sales Discount account and credits it for the $25 of the discount it gave to you. Then the FED or some other monetary authority mandated to fulfill the rebate aspect of the policy debits $25 to that account which means the merchant is made whole on their entire price including profit.
Your and everyone else’s purchasing power is immediately doubled, the available free and clear demand for every good and service is potentially doubled and BENEFICIAL price and asset DEFLATION is macro-economically implemented because retail sale is universally participated in by each and every individual agent. Now if that is not a paradigm changing economic concept (monetary gifting) and temporal universe reality inversion (from chronic erosive inflation to beneficial deflation)… I’ll eat my hat.
Just to answer the generally expressed critiques that every business will raise their prices as a result here are the rebuttals to that:
1) In order to opt into the rebate aspect of the policy (and all of its potential doubling of demand benefits) the merchant will have to pledge that they will compete on price and not inflate unless their overall costs exceed the cost savings that the new paradigm program will also enable (the elimination of their payroll taxes and potential corporate and individual tax cuts of 50-75%). 2) As Business models before retail sale will also benefit from the taxation cuts they will need to pledge that they will not raise their prices or they will be not receive the those benefits and will instead be taxed at a rate of 100% on
any revenue they may (or may not) garner from any price increases. The 50% Discount/Rebate policy is an offer that enterprise cannot refuse because of its huge benefits and huge negative consequences of non-participation as per above. No consumer with half a brain will pay 100% of the retail price when they can walk down the street and only pay 50%. Not participating is economic suicide on top of idiocy for not accepting the commercial benefits of the new paradigm program. Finally, if with all of the tax regimes above inflation is still 2-3% then the discount is simply indexed to 52-53%. and finally, finally, if we have to hire an army of forensic accountants commanded by Bill Black to secure the program….so be it. In a fiat monetary system that has eliminated the possibility of inflation it will only be a relatively small addition to the fiscal “deficit” that will be enabled to greatly increase…because inflation has now been mathematically exiled to the dust bin of history.

Posted 09/22/2022

Me: Capping the cost of energy to consumers while paying energy companies their full price is just a smallish energy only form of my 50% Discount/Rebate policy at retail sale where equal accounting entries macro-economically remedies the major problems that have grown up around the human civilization long current monetary paradigm. Like MMT it’s a nascent awakening to the method of effectively implementing the new monetary paradigm into the economy. But you have to do it with virtually everything…or it just becomes another theory that doesn’t close the paradigmatic door and lets Finance off the hook so they can game it and morph it into a new neo-classicalism exactly like Keynesianism became the present neo-classicalism. No, we are many, Finance is few and a mass movement that communicates the wild benefits of the new paradigm and its policies could herd the entirety of the political apparatus toward general monetary security and ecological survival.
Which is it, half-assed reform-timidity or paradigm change-the mental boldness that recognizes that complete conceptual opposition to the current paradigm is an historical signature of…paradigm change???

M: I know many economists, even of the “left-leaning” type, will probably object to this but to be honest the best way to curb energy prices is probably to just nationalize the utilities. It’s a necessity of modern life and as such shouldn’t be subject to standard “free-market” economic pressures.
Say what you will but this is the best way forward given the ongoing crisis of global warming, as well. Nationalization will allow governments to quickly shift to carbon-free alternative energy, and using MMT and the Job Guarantee would be a powerful tool in this effort.

Me: It may come to that if sanity does not prevail. However, why not just place a larg-ese tax on commodity speculations and solve the consumer’s problem with inflation by implementing a 50
% discount/rebate policy at retail sale. And if the banks, commodity exchanges and all business models other than finance don’t abide by the new rules then they don’t get the tax benefits that the new monetary paradigm enables and ultimately they risk losing their rebate privileges as well. In other words seek the cooperation of enterprise with the incredible profitability benefits that virtually all business models can reap from the new monetary paradigm because self interest is a very strong motivator, but if anyone cheats just utilize the sovereign power of a gracious government, that everyone is willing to stand with because its policies just doubled their purchasing power with the 50% discount policy, and off with their heads.

PB: The problem with applying the Lens of MMT would be that any meaningful implementation arising from it would require Truss to sever the conduits through which the British fiscal and taxation system sluices the national wealth to the commercial banks and onwards to the very wealthy, which is simply not a tolerable or viable proposition in a political system that is effectively a financier-led oligarchy. The role of the chancellor of the exchequer is not to define fiscal policy – it is to generate statements of justification for the fiscal policies defined by the recipients of the national wealth.

Me: You’re correct that any benefit to the general populace is going to be temporary. All the more reason then to start a mass movement that communicates the incredible benefits of the policies of a new monetary paradigm. We labor with finance capitalism, so why not isolate finance from the self interests of the general populace and the rest of the legitimate economic/actually productive business models by doubling the individual’s purchasing power and hence potentially creating twice as much demand for every business’s goods and services???

Posted 09/23/2022

Me: The whole system is designed for Finance to remain a “Colossus bestride the world”. It’s bad enough that private finance has a monopoly on the creation of the life’s blood of every economic agent, namely money, but it’s insane that they are allowed a monopoly paradigm on the sole form and vehicle for its creation and distribution, namely DEBT ONLY.
If MMTers want to be serious about dealing with inflation and thus enabling fiscal deficits (monetary gifting to government agents) they will have to consider integrating monetary gifting DIRECTLY into the economy and the individual via a 50% Discount/Rebate policy at retail sale and the rest of the policy program of the new paradigm.

WG: OK, Dan Davies tweets that there shouldn’t be tax cuts for the wealthy during inflationary conditions. But we know that rich folks have a propensity to save, and so even if we do tax them appropriately during this time it will do little to affect inflationary pressures. The gov’t would be clawing back money that wouldn’t have been spent otherwise.
How about this idea? Fabulously wealthy people (anyone remember John Beresford Tipton?) love to give their money away once they’re on “easy street.” Why not give them the choice of being taxed or gifting their favorite non-profit organization? Neo-Nazi groups need not apply. They might argue that giving tax money away to the gov’t is simply wasteful. OK, so don’t do it. Give the equivalent amount of taxable money to the charitable organization of your choice. This idea already exists in the form of “tax deductible” contributions, but let’s make it explicit (tax deductions on steroids) to amplify the magnanimous generosity of the wealthy making grants to those in need.
In other words, if we’re going to take money away from rich folks, let’s make sure we’re not involved in some ridiculous charade of “reducing the deficit.” Let’s guarantee that the money is well spent.

Me: There’s actually a policy that enables this in my book. Taxation of income is not an effective anti-inflationary method. Now don’t get me wrong, taxation is a legitimate and necessary function/right of government to help direct the economy in rational ways, but with 1) the new monetary paradigm that would not only end inflation forever but implement BENEFICIAL price and asset DEFLATION and 2) wed to the fact that sovereign fiat monetary systems don’t actually require income taxes for funding…it frees us from well intentioned but unnecessarily high taxation.

Posted 09/24/2022

JM: I wish MMT’s critics would take a course teaching “The Deficit Myth” and be required to pass a test on it afterwards. (Without the test, they would there physically, but mentally somewhere else developing reasons why MMT won’t work.)
Like all theories to become popular, a paradigm shift will have to occur among the economists and experts who were brought up on and perhaps even teach monetarism or Keynesianism. They just are too inflexible mentally to see up and over the box they are in; it does take a degree of objectivity and willingness to learn new things. One of my professors said that the human mind is infinitely resistant to new learning. 

Me: Yes, as Max Planck said (I believe) “Science advances one funeral at a time.” Ironically the human mind is both the hardest and easiest thing to change in the entire cosmos. It just takes modicums of knowledge, self honesty and the will to actually look at different points of view.
If MMTers really wanted to be influencial they would bother a whole lot less trying to convince “the authorities” and put a whole lot more effort in building a mass movement that communicated the benefits to all economic agents of a new monetary paradigm as I have posted here many times. A new paradigm which conceptually and theoretically perfectly aligns with MMT and which temporally enables virtually all of their goals.

Posted 09/24/2022

SG: She misses the opportunity to say that MMT worries about inflation from too much money “printing” more than most orthodox economists do.
She also fails to own up to the fact that MMT focuses its theory on transfers of money from the Federal Government sector that creates USA money to all the sectors that are not Federal government sectors that are users of USA money, but not creators. The balance of this transfer is very important, but equally important these days is who in these other sectors get the money. MMT does not purport to address this missing piece, but also fails to identify how important this missing piece is.

Me: You’re observations re: MMT are actually accurate, but MMT is a lot closer to the truth than the present orthodoxy of neo-classical macro because it conceptually aligns with the new monetary paradigm (monetary gifting). Oddly Libertarianism, which appears to be what you espouse, also, rhymes with the new paradigm in that they want to see deflation occur…which is an attempt to invert the present reality of chronic erosive inflation. It’s just that they haven’t cognited on how we can create beneficial price and asset deflation and so they must insist on an incredibly painful orthodoxy of the need for deflation. (Libertarianism also rhymes with paradigm changes in that one of their primary signatures is complete conceptual opposition to the present paradigm.)

This situation mirrors the Copernican cosmological paradigm change in that helio-centrism initially was actually less accurate in predicting planetary motion than the Ptolemaic model even though helio-centrism turned out to be true. It took Kepler’s discovery of the ellipse to make helio-centrism the more acurate model. I hasten to mention that the universally beneficial macro-economic deflationary effect of a 50% Discount/Rebate policy at retail sale is remarkably analogous to Kepler’s laws of planetary motion confirming the new Copernican paradigm.

SK: “It’s basically about the relationship between income and debt and how it evolves over time.”

Me: “It’s basically about the relationship between income and debt and how it evolves over time.”
Correct. And the answer is guaranteeing that individual agents always have a decent level of income…so that all but illegitimate commercial agents can compete in an ACTUALLY stabilized system. Illegitimate as in private finance because as I have posted here before it is always an exterior to the actual productive process incredibly costly and domineeringly profitable force injected either pre-production or post retail sale exposing it as a complete and de-stabilizing parasite.
If you don’t see this its largely because of the last 5000 years of the acculturation of the present paradigm for the creation and distribution of new money, that is Debt Only, is blinding you.
Unfortunately the truth is there has been no actual evolution from the current paradigm AT ALL. New paradigms expose erudition as simply hide bound reformist orthodoxy. I’m sorry, study historical paradigm changes. Paradigms like wisdom insights are deep truthful simplicities. That’s why I titled my book Wisdomics-Gracenomics…because what we need to do is rise to wisdom, and because the pinnacle concept of wisdom according to ALL of the world’s wisdom traditions is the natural philosophical concept of grace as in love in personal action…and systemic policy…unless we just want to illogically deny/ignore the value of wisdom, especially in our temporal affairs.

JL: It’s the suppression of interest rates and QE which has turned a large fraction of economic units into ponzis even prior to raising interest rates. You need a period of pain to eliminate the excess which will now be much larger than if we didn’t have a hyperactive fed.
I hope you understand that it was the MMT policies of fed and treasury which caused inflation to spike and now requires a painful adjustment.

Me: Sorry, thats a bunch of horse hockey worn out and never true orthodoxy from the libertarian perspective. Rather than spew conservative/libertarian or even liberal orthodoxy why don’t we embrace a true thirdness greater oneness of truths, workabilities, applicabilities and the highest ethical consideration possible. This would be possible with policies that not only solve the deepest problems of our economy, but create hope instead of cynicism and apathy, insure greater purchasing power for the individual, greater profitability for truly competitive commercial agents, enable us to hopefully survive climate change and last but not least accomplish the wet dream of libertarians, namely price and asset deflation but without the pain that they mistakenly think is necessary to accomplish such.
A 50% Discount/Rebate policy at retail sale is the very temporal expression of the new monetary paradigm. It and the rest of the new paradigm policy program is what MMT and the rest of the spectrum of economic theory want to see happen. Drop your orthodoxies and just do the simple but macro-economically effective math with the above universally beneficial policy. I dare you.

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