AK: Oh, Stephanie, there are days I just want to scream and this is one of them. I’ve been avoiding your newsletter throughout all the inflation talk, because I knew that every day would be a day I would want to not only scream, but perhaps try to kill anyone who uttered one more ridiculously false myth about inflation or economics in general.

When the Bidens went to Saint Croix for their holiday, I could not believe the missed opportunity. Saint Croix is, of course, where Warren Mosler lives, and I had this glorious fantasy of the Bidens enjoying a long, leisurely lunch at the Mosler’s. In my dream, I could see Biden’s eyes light up in that moment of comprehension – not unlike Luigi Spaventa’s did when he was the Assistant Treasury Secretary or Treasury Secretary in Italy and Warren, with a couple of questions, enabled him to see that the Italian Treasury was acting procyclical for absolutely nothing. I love that story.

But, as to the urge to scream or maim this morning … What can be done?

First, I thought of an open letter by the country’s thinking economists, but you’ve done that in support of child care relief. I haven’t followed up to see what, if any, effect that letter had or is having, but I’m certain it didn’t sway the hearts or minds of the millions of Americans who have such strong opinions about economics.

The way that misunderstood economic terms trigger reactions in the minds of the public has to be addressed. I mean nearly everyone in the entire country believes the false narratives of economics. Hell, most economists believe them. Changing people’s minds about these corruptive myths is an overwhelming endeavor. How do we do it?

When I think about this (and I think about it a lot), the only solution that keeps coming back, over and over again, is ADVERTISING. Yep, the good old American way. Too simplistic? I don’t think so; the brilliance of MMT is its simplicity, exactly as is the brilliance of Warren Mosler’s mind. Very few people have the ability to look at a thing as something that didn’t exist before and to apply pure logic to it. Warren has that kind of mind. As does advertising.

ADVERTISING is designed to cut through all preconceptions and apply a logical conclusion. The logical conclusion doesn’t even have to be the truth, as far as advertising is concerned, because in itself, advertising has no bias; it has only the parameters we assign to it, be they true or false. But when it’s good, advertising is simple and logical. It’s not easy to make it good, and acquiring converts to a macroeconomics seen through an MMT lense, will make it more difficult than usual because, well … economics.

Deeply entrenched misconceptions for the entirety of our lives. But what could be more challenging, more important, and more fun than creating that campaign? What’s the target group? Everyone? Do you create different campaigns for different target groups – age, economic status, culture, politics, etc?

Hey, the fascists have been doing it for as long as they’ve been around. Keep it simple. Capture minds. Kill everyone!

Me: “When I think about this (and I think about it a lot), the only solution that keeps coming back, over and over again, is ADVERTISING.”

You are absolutely right!
“What’s the target group? Everyone?”

Yes! And what is the single point in the entire economic process that is universally participated in, making any policy implemented at that very point both macro-economically/aggregatively effective and relavant? Retail sale. That is why a 50% Discount/Rebate policy at retail sale is so paradigm changing all by itself. It immediately doubles everyone’s purchasing power, potentially doubles the available demand for every enterprise’s goods and services and as a kicker…ends the biggest present time economic problem everyone is beefed about, namely inflation…by (amazingly) implementing BENEFICIAL price and asset deflation!

And all we need to do is advertise these empirical, temporal universe, universally effecting, macro-economic facts and benefits. All we need is a platform for that paradigm change. It even implements what MMT and every other leading economic reform movement want, handle inflation while increasing fiscal deficits and increase individual demand without causing inflation. Throw in a $1000/mo. universal dividend for everyone 18 and older for life and it even satisfies conservative/libertarian agendas because if every adult is guaranteed $2000/mo. of purchasing power…what are we bothering to pay payroll taxes for welfare, unemployment insurance and social security???

Hit people directly and beneficially right in the pocket book and it’s imminently real to them. Talk about the national debt as if it really doesn’t matter (and as we all know here it doesn’t) and you have to confront 6000 years of the acculturation of the civilization-long paradigm of Debt Only as the sole form and vehicle for the creation and distribution of new money.

Stephanie, are you reading what Alexis and I have posted here?

“Why if you wanted these things didn’t you pass legislation in the first two years of the Trump Administration when you held the Senate, House, and the White House?”

Undoubtedly because at least some republicans (not the freedom or chaos caucus) understand that guys like Steve Keen have mathematically proven that without fiscal deficits the economy will inevitably slide into recession. Hence their political calculus is let’s pretend we want a balanced budget to pander to our idiocracy while not doing the economically sane thing. After all, all we actually care about is gaining and holding political power…by doing the bidding of Finance which is that the necessity for a new monetary paradigm NEVER BECOME A CONSCIOUS THOUGHT IN THE MINDS OF THE POLIS.

All of the things you list are true, but even if there was some way to resolve those issues without a paradigm change (in other words there isn’t any way to do so) their beneficial effects would be minimal and likely fleeting.  Genuine paradigm changes are PERMANENT. That is historically confirmable. Everything adapts to a new paradigm, NOT the other way around. Republicans, democrats, libertarians and even the Stupid caucus want big change. It’s just that they have not figured out how to actually accomplish it in a way that integrates the best of the agendas of the opposing right/left duality. The new monetary paradigm and its major policies does so in spades. 

I like Mish. He’s very, very astute regarding the operations of the current economy within the present paradigm of Debt Only. Way back in 2007 I realized that his prediction that we were headed for a big housing deflation and so I was able to sell our Mexican condo at the top of the market. So we can often heed his advice…but his advice as well as anyone else’s that doesn’t confront the necessity of a new monetary paradigm…will never permanently resolve the major problems of modern profit-making economies. You have to find a way to temporally implement the new paradigm concept in such a way that it serves its historically verifiable integrative of opposites phenomenon.  In the interests of the economy, the nation and every individual and commercial economic agent in it I would love to have an honest, informed and non-insulting discussion here with Mish on the policies of the new paradigm. 

The entirety of “mathematical-deductive analytical formalism” is only (potentially) helpful up to the point where it drops its reductionistic methodology in favor of paradigmatic/operant concept analysis and then figuring out how to most efficaciously implement the newly discovered new paradigm concept.

Accomplishing that makes erudite dunces out of every analyst still mentally holding onto the old/current paradigm. So has it been since humanity acquired self-awareness and hence also became aware of the reality of ethics, since nomadic hunters and gatherers learned agriculture and started homesteading and urbanization and since helio-centrism replaced geo-centrism.

So will it be when analysts recognize the old/current operant but problematic economic concept of Debt Only for the creation and distribution of new money and discover the best ways to implement Abundantly Direct and Reciprocal Monetary Gifting.

Science is wonderful, necessary, beautiful and delicious…and it exists entirely within the mindset/digestive tract of wisdom. Wisdom insights are always deep simplicities that are the result of the thorough integration of the truths in opposites resulting in a true thirdness greater oneness of the truths in the seeming problematic duality. That is how I have always thought of the Electric Universe paradigm, and this video is an excellent presentation of that paradigm and the process of wisdom.

Reasonable speculation can be a good thing that leads to innovation, but purely financial speculation is one of the major banes in our highly financialized economy. You’re critique of neo-liberal macro that they ignore “money, debt and banks” is spot on, and I really like your PLLL policy. However, why not integrate both price and asset deflation and debt jubilee beneficially into the debt based system with a 50% Discount/Rebate policy at retail sale and a 25-50% debt jubilee policy at the point of loan signing, the jubilee percentage being higher for an industrial purpose and/or an ecologically sane consumer big ticket item.

The Discount/Rebate at retail sale perfectly mimics the Banks’ money creation/accounting process so the effect is beneficial price and asset deflation for the consumer and as the retailer’s discount is rebated back to them they get both their full price plus a potential doubling of demand for their goods and services. Pair this policy with a $1000/mo. universal dividend for everyone 18 and older and you totally eliminate poverty with $24k/yr. guaranteed purchasing power which would enable us to eliminate all payroll taxes for welfare, unemployment insurance and even social security (people who have paid social security taxes for many years would still get a sliding scale of SS check).

As you’re implementing beneficial price and asset deflation by (amazingly) a huge increase in demand that shuts the mouth of every pundit of fiscal austerity and would enable both large decreases in taxation percentage as a futile way to control inflation and open the possibility of funding the mega-projects necessary to confront climate change. These are all ways that such policies integrate the self-interests of traditionally opposed economic and political constituencies.

You could prevent inflation by business models before retail by taking away their tax cuts if they arbitrarily inflate and also taxing any revenue they might garner by such inflation at a rate of 100%. Finally, I would suggest creating a new government department called the Department of Product Innovation, Price Competition, Boycotting and the Public’s Bully Pulpit which would have monthly or even weekly press conferences to point the finger at gamers of the new beneficial policies.

The ancients were smarter than every civilization post Rome because they had periodic debt jubilees. So why not make jubilee a permanent continuing part of the economic process with the 25-50% debt jubilee at point of loan signing? The deepest problem economies since forever have faced was the recurring and inevitable build-up of private debt. Let us end that human civilization-long reality. If the private banks can’t live with the policy, then create a truly public national banking system which doesn’t need to make a profit and is willing to abide by the gracious policies of the new monetary and financial paradigm…and resign private banking to the dust bin of history.

What say ye?

MR: Steve, yawner!

Lots of margin calls – – especially ones  involving well-connected clients – – are never made.

NYSE open positions don’t have to be closed for 28 days.  NYSE specialists can naked short traded issues as long as the position is closed by the end of the trading day.  DTCC is owned by the banks. They own clearing, settlement and the rules governing them. Margin interest is a small cost of doing business.

The NY Fed refuses to publish overnight bank data, though required by statute. 

Dark pools, synthetics, derivatives, off-book transactions – – if there were complete data for these exposures – – would reveal the banking system insolvent and has been for years. 

We’re way past 1929. Why? ‘Greenspan put’.

We live in the age of  captive monetary administration, bailouts for insiders and white collar welfare masquerading as financial employment.

Market discipline and moral hazard apply to people like us, not to the British PM, Congress, regulators, administrators and their masters in the financial community.

With unlimited and unaccountable monetary authority, these central planners can abuse public administration and keep the financial ‘circus’ ball in the air indefinitely. 

A market meltdown, which Wall Street will orchestrate, only occurs if bailout is certain. Which it is.

Z.zzzz…..

Me: “We live in the age of captive monetary administration, bailouts for insiders and white collar welfare masquerading as financial employment.”

Correct. And the only way to end that is to change the entire pattern…instead of horse shitting around with mere palliative reforms. The core of the core problem is private finance’s monopoly paradigm of Debt Only as the sole form and vehicle for the creation and distribution of new money. Discover the new paradigm concept and how it can be most efficaciously implemented in the economic process and voila!: what happens with every historical paradigm change occurs, namely, the complete mental and temporal universe inversion of present realities. (Examples: 1) Copernican cosmological paradigm-change from geo-centrism to helio-centrism and the inversion of the positions of the earth and the sun. 2) Nomadic hunting and gathering to agriculture, homesteading and urbanization. 3) The dominance of the paradigm for the creation and distribution of new money of Debt Only which enforces chronic individual, systemic and fiscal monetary austerity along with chronic erosive price and asset inflation to individual, systemic and fiscal monetary abundance and beneficial macro-economic price and asset deflation by integrating the policies of Direct and Reciprocal Monetary Gifting strategically into the economy and the Debt ONLY system.

All any new paradigm concept needs in our technologically advance world is a platform to communicate its transformational benefits.

The primary problem with capitalism (and every other economic system) is the ethic it is driven by. Change that in a significant/applied paradigm changing way and it will alter nearly everything else.

As:

1) the current zeitgeist of Power, Profit and Control is in fact essentially a false/non-existent/non-application of an ethic

2) Power, Profit and Control without an ethic will inevitably lead to domination and corruption

3) every paradigm change has historically been an expression of an aspect or aspects of the natural philosophical concept of grace

4) which is the active form of the universally recognized supreme spiritual value AKA love

5) A primary aspect of grace is Redemption…

Thus, the best possible new applied paradigm concept/ethic for capitalism, and in fact the overall new zeitgeist should be Redeemed Power, Profit and Control.

I have been a student of all of the present leading economic reformers and learned a lot from them. However, no one but myself is analyzing on the operant concept/paradigmatic level when it comes to economics and the money system.

I have written a book that presents the entire policy program of the new paradigm, but a single policy that is the very applied expression of the new paradigm will immediately double everyone’s purchasing power, potentially double the demand for every enterprise’s goods and services and last but not least forever end the biggest present time economic issue, inflation…all in one fell swoop. There are many other benefits possible with the new paradigm that reformers aren’t even aware of.

All a new paradigm/pattern needs in our technologically advanced era to become the “idea whose time has come” is a platform to communicate its incredible benefits. Will Joe be that platform by interviewing me about it and how I happened to come to realize it?

A stipend/revenue sharing policy to state and local governments is a good idea and I have suggested that also in my book. The ultimate stabilizer and “revenue” sharing policy however is a 50% Discount/Rebate policy at retail sale. Why? Because everybody participates in retail sale making a 50% discount to the price of virtually everything an immediate and continuous MACRO-ECONOMIC doubling of everyone’s purchasing power. It also will potentially double demand for every enterprise’s goods and services so it integrates the self interests of both the consumer and enterprise. Finally, it will forever end inflation because we’ve never had 50% y/o/y inflation let alonf moment to moment such inflation rate. And with the proper carrot and stick taxation regime you can stop most if not all anti-social arbitrary price rises by all business models not just finance.

The real problem with economic theory is not even the leading reforms are analyzing on the operant concept/paradigmatic level. Hence thats what they are…reforms, when if you find the new operant concept and how to most efficaciously apply it…you’ve changed the ENTIRE pattern of the economy and also in this case the money system.

Part of the reason reformers are stuck in the current paradigm is they are so caught up in their abstractions that they don’t look directly at the economic process itself. Hence retail sale occurs hundreds of millions of times every day but no one sees the potential personal, commercial and systemic benefits of the retail price discount/rebate policy.

Reformists also miss the “knock on” benefits that come with genuine paradigm changes. Like for instance if you combine the 50% Discount/Rebate policy with a $1000/mo. universal dividend you make the payroll taxes every working person and every enterprise pay for welfare, unemployment insurance and even for social security completely redundant including their concommitant bureaucracies. That would raise everyone’s net pay 8-12%, cut business costs and insure every adult had $24k/yr. income for their entire adult life instead of having to work for 45+ years to get probably less than $2000/mo. Job guarantee? Sure, that also aligns with the new monetary and financial paradigm. Why not? When you’ve utterly ended any possibility of inflation you shut the mouth of every conservative and libertarian pundit and can run the kind of fiscal deficits to fund any rational program including a new Works Project Administration like the job guarantee, and even the under planeting or off planeting of the worst carbon emitting means of production so we don’t kill off most of the flora and fauna of the planet.

Paradigm changes are the most integrative of opposites and problem resolving phenomenon humans ever experience. They are the synthesis of Hegal’s dialectic that puts egg on the face of everyone who can’t see anything but the conflict of thesis and antithesis.

Here’s a few more problem resolutions and economic benefits of the new monetary and financial paradigm:

1) re-industrialization of the US in the most technologically efficient and ecologically sane way possible
2) elimination of most of the costly international supply chains we now have with China etc.
3) the opportunity for China to stop being paranoid about the fractious nature of their diverse cultural heritage and make a new social contract with their people…by implementing the new paradigm program in their own country
4) Imagine the possible social and psychological benefits of creating a continuous daily infrastructure for everyone to consciously or even unconsciously self actualize gratitude for being gifted 50% of the price of everything they buy…instead of feeling resentful about chronic inflation and thrashing around blaming everyone and everything…except the current human civilization long monetary and financial paradigm???

MMTers, Steve Keen, Michael Hudson, UBI advocates and Ellen Brown need to stop being erudite dunces and awaken to the power of the paradigmatic level of analysis.

DC: This conversation is way past orthodoxy nonsense that is just repackaged classical economics that was discarded to the trash bin during the great depression.

BS

This time is not different. Progressive fantasy economics, encouraged by new age economics, are leading our economy to a dark place.

20% of our debt it owned by the Treasury. MMT. 33% is owned by foreigners. The rest is owned domestically. The supposition that a direct transmission of credit from and to our government may at times work on the margin. However it does not happen in isolation. Inflation which can be transmitted by our currency weakening increasing the supply of money tipping the economy into an inflationary period as we are seeing now. Japan has seen its currency get destroyed by a third by essentially MMT. Essentially all salaried workers in Japan have seen their wages go down by a third while imported goods prices skyrocket. Japan with D?GDP at 250% is in a prisoners dilemma. They need to raise rates to defend their currency but the cost could send the country into a default.

Britain in the 70’s had 90%+ marginal tax rates, Fiat currency. An MMT paradise. It had to borrow from the IMF. Inflation was over 20%, a technical default. Each time the Callaghan government went to finance expenditures the currency collapsed. They only escaped through tough measures and going for growth.

I’d love to hear from the professor why I might be wrong but MMT as an expression of Keynesian economics that fits a coercive political philosophy is sadly “au courant” but wrong. Debt matters.

Me: Orthodoxies. Errant orthodoxies. Sorry. Debt that is actually debt matters. “Debt” that is actually just plain old money but is immediately prestidigitized into “debt” by the FED or treasury so it becomes a guaranteed asset primarily for the banks…is “DEBT”. That characterizes the national “debt”.

So don’t worry about it….just awaken to what has always de-stabilized domestic economies, namely PRIVATE PERSONAL AND COMMERCIAL DEBT, and on what will break up the monopoly paradigm of DEBT ONLY…which is to strategically integrate the new monetary and financial paradigm of Direct and Reciprocal Monetary Gifting into the debt based system.

RP: The currency itself is a government IOU, regardless of if it’s a green dollar or yellow dollar (treasury security). That US Federal Government IOU is excepted as means of payment in many areas of the world or can be exchanged for foreign currencies. You can exchange your yellow dollars for green dollars anytime you want. Just what do think the US Federal Government owes holders of Federal Government IOUs. You can pay Federal Taxes, fees and fines, but outside of that the only thing you’re going to get for your 20 dollar IOU is two 5s and a 10. You can buy whatever is for sale in US dollars with those US government IOUs (fed debt) any place in the world. They will remain in circulation or savings till the US government redeems in federal taxes. The only thing the US federal government owes is US dollars. US dollars are tax credits which drive’s the need for the currency (value) and assures acceptance at your local car dealer.

This quantity theory of money as the source of inflation has zero empirical evidence to support the theory in the real world (name one). The primary driver of inflation over that last 30 years has come from abusive market power coming primarily from energy, health care, housing and education sectors. Other than those primary area’s it’s always been something to do with a problem on the supply side. The high tax increases during WW2 in the UK and the US, was to control inflation due to the retooling of production to war supplies. As Keynes put it in his 1940 book “How To Pay For The War,” “moving from the Age of Plenty to the Age of Scarcity.”

The 70s and 80s oil price shock drove the inflation (cost push). US inflation around 20%, nothing to do with the money supply creating too much demand.

The US economy had been suffering from lack of aggregate demand for 50 years with high levels of unemployment and underemployment. This is not characteristic of the currency issuer issuing to much currency (Federal government “debt”).

Since COVID, demand has out stripped supply due to changes in consumer demands (what people buy) and loss of production from COVID. Other factors driving inflation are energy prices and abusive market power. This “federal government debt” you’re so worried about is responsible for the recovery of the 22 million jobs lost during the pandemic. IF you want to focus on debt you need to focus on private sector debt, that’s where the problems come from yet not word from you on private sector debt.

The value of the US dollar on the foreign exchange market is up, not down! How do Orthodox models explain that? It doesn’t sound like the capital market flows are to worried about the US dollar Armageddon. The backward fundamental starting of thinking that the taxpayers funds the federal government as opposed to the federal government funding the taxpayer is the starting point that leads to a bunch of nonsense that doesn’t add up.

Me: Excellent exegesis Rick. Especially your last point that the continual build up of PRIVATE debt is where the actual problem exists. That’s why my twin policies of 1) a 50% Discount/Rebate at retail sale which goes a long way toward addressing the failure of American wage gains for the 99% over the last 50 years and 2) my 25-50% Discount/Debt jubilee at the point of loan signing which (finally) continuously integrates debt jubilee into the economic process…are so paradigm changing. Imagine buying a new $60k Tesla for $30k and when you go to the finance guy you only have to borrow $15k. If you buy a $40k internal combustion auto you pay $20k at retail and get a 25% debt jubilee at Finance so you only borrow $15k.

I love MMT’s (correct) observations regarding the money system. I love Steve Keen’s (correct) Minsky’s Financial Instability Hypothesis. I love Michael Hudson’s (correct) Financial Parasitism Hypothesis. I love Ellen Brown’s (now somewhat watered down) Public Banking. Why? Because they are all valid observations regarding the paradigm of “money, debt and banks”. Their only problem is they are palliative reforms instead of an Operant Concept/Paradigm Changing program…like what I advocate.

So should we maintain the lesser value of reform or go for the gusto with paradigm change where all of the valid research is acknowledged and integrated into a more ethical, efficacious and PERMANENT survival phenomenon???

Intellectual vanity only hurts for a moment, but the death by a thousand cuts where an excellent reform like Keynesianism gets morphed into neo-classical macro leaves the well intentioned full of frustration and regret.

The real shame is the experience of god is so often farther from the individual than the belief in god.

Even if you knew you had a purpose, but you didn’t know what that purpose would be or exactly why it would become your purpose for 45 years of your adult life…because the postulate behind the purpose was to “get knowledge, get wisdom and whatever you do, get understanding” in a society that does a lot to distract you from finding exactly that, often even in the areas that should lead you directly to it…It’s still a wonderful life.