Another Comment in the Washington Post

Another article in the Washington Post, discussing my senator #MoscowMitch's plan to let all the states go bankrupt, compelled me to preach the MMT gospel! Hallelujah, time for a Jubilee!

Note, I have an electronic subscription to the Washington Post, the article may be behind a paywall.

Congress needs to provide relief to states, companies, and individuals in whatever amount necessary. #MoscowMitch's line about "borrowing money from future generations" is either disingenuous or ignorant, with Mitch it's hard to tell which. The US government never borrows money. Following the orders of Congress, the Fed creates money by crediting private bank reserve accounts, operations that occur completely in computers. Taxes destroy money to keep the money supply under control. The Treasury sells bonds to hit interest rate targets and thereby guide the economy, not to "borrow money". The Treasury never has to sell bonds.

#MMT FTW! Now is the time. If it's appropriate, and interest rates are greater than zero, we can worry about the excess Dollars generated when we are out of this mess.

Note, to compute a blue sky upper bound on the amount of relief that could be provided: GDP is currently ~$21T, the national debt is ~$24T. Japan has had a national debt of 2x GDP for 2 decades without serious consequences. If we go to 2x, we have $18T to play with.

Comment in the Washington Post

I am out of practice, it is taking me a while to get my stride writing my review/summary of "Modern Money Theory". I'm currently in Chapter 3.

Meanwhile, I was forced to comment on this clueless, old school article in the Washington Post, by Robert Samuelson. [snark]Samuelson has the same last name as a famous economist.[/snark] Note, I have an electronic subscription to the Washington Post, the article may be behind a paywall.

Wow, after just having finished reading "Monetary Money Theory" by Wray, this article comes across as totally clueless. Why does he think the debt is bad? Public debt === private savings.

He mentions 100% of GDP with a possible inference that that is bad, with no mention of Japan running at 200% of GDP for decades. He worries about "borrowing" to finance the debt. The US doesn't have to borrow, the Fed can just print the money. That's where all our money comes from anyway.

The basic premise of MMT is simple: inflation and other problems only come about when there are real shortages of real resources. Money is just points, meaningless in the long run. The distracting and ultimately stupid question, who will pay for it? Answer, the Fed. Just roll the presses. Easy peasy. It's how Baranke "financed" QE in 2009.

If he's really worried about debt, let's go back to 94% top income tax rates, like during the golden age of the 1950s under Ike. Let's set capital gain and dividend taxes at 3-4x those on wages - or even higher, if we eliminate corporate taxes to stop the current international race to the bottom as Wray suggests. Let's institute a 3% wealth tax on fortunes over $10M. Let's implement a micro-tax on all financial transactions, the amount to be determined by how much would eliminate day trading and other forms of parasitism in our economy.

Oh wait, our oligarchs wouldn't like any of those much. I have a much better idea: [sarcasm]let's cut Medicaid, Medicare, Social Security, and privatize the USPS because .. our oligarchs hate those.[/sarcasm]

Time for an economic system that works for everyone, not just the 0.01%.