Email to Paul Krugman

My name is Chris Heinz. I was born June, 1951, Louisville, KY. Grew up in Jeffersonville, IN. MIT BS Physics 1972. I was a staff scientist astronomer at the MIT Center for Space Research 72-74. Married (still) 1975. We had 2 children born in Louisville & 2 born in Lexington KY where we moved for a job in 1981. My kids are now aged 44-37. 4 grandkids aged 9-1. I retired Sep 2012, after 40 years as a software developer/manager/executive.

In my retirement, I decided to study economics.

I had earlier done a lot of reading in evolutionary psychology & cognitive science and gave it up when I concluded that all of human civilization - mind, language, big brains - came about primarily from sexual selection. Yes, mind, language, ... have some species selection value. But they were primarily sexually selected - the traits thrived because chick's dug 'em. We grew big brains, mind, language so that guys could say "Oh baby, baby, you so fine." & women could reply "Daddy, you so full of shit." Pecking order in 7th grade was indeed what it was all about. This crushed my spirit & led me to quit reading cognitive science books.

I tried the MIT Economics 101 class, downloaded the PDF of the free curriculum reference book. I didn't get much traction with it. [Why are textbooks such a rip off? Do the authors see much in the way of royalties, or is The Man hoovering the $$$ up?]

So I decided to start reading random economics books. Since 2012 I have read/reviewed/summarized 27 economics books.

Link: http://portraitofthedumbass.blogspot.com/2016/08/summary-of-economics-reading.html

You were #4:

June 12, 2013, 1K words, "End This Depression Now", Paul Krugman, 2012.

Link: http://portraitofthedumbass.blogspot.com/2013/06/end-this-depression-now.html

Only 1K words, my worst was the recent review/summary (May 1) of Wray's "Modern Money Theory", 24k words.

In my conclusion on that book, I proposed that MMT should broken into 2 pieces: descriptive MMT and prescriptive MMT.

Descriptive MMT talks about how all money is created by the Fed when congress tells it to, and how taxes destroy wealth. Governments with sovereign currencies do not have to collect taxes to spend money - they create money.

Descriptive MMT I proposed calling MMT.

Prescriptive MMT consists mostly of JG/ELR. The best feature of JG/ELR is that it is counter-cyclic with the economy. But Wray kept describing JG/ELR as an "anchor". I was like, what does that mean?

My conclusions on Wray MMT - you wind up being mentioned in there on 2x different topics. 3 minutes to read total: http://portraitofthedumbass.blogspot.com/2020/05/modern-money-theory.html#myconclusion

After failing to think of a metaphor that encompassed safety nets and anchors,

My subconscious came through at 4:33 this morning (2020-04-30). The metaphor that encompasses anchors and safety nets is a sailing ship.

I realized that the best metaphor for JG/ELR is ballast. If you don't have enough cargo (non-JG jobs), then JG jobs make up the difference. They are counter-cyclic with the economy.

But "ballast" == "dead weight". So, "Ballast Economics".

Foundational Economics sounded good. But, "Foundational Economy" already taken by a Manchester UK group. The latest economics book I read/reviewed was:

July 21, 2020, 6.5k words, "Foundational Economy", the Foundational Economy Collective, 2018.

Link: https://portraitofthedumbass.blogspot.com/2020/07/foundational-economy.html

I read/reviewed that book June/July 2020. OMG, the pandemic totally defined the Foundational Economy: anything that wasn't closed. They also defined the "overlooked economy", which were all the businesses that it totally ticked people off when the pandemic closed them: beauty parlors, barber shops, gyms, pedicure/manicure spas. Their insight totally confirmed by the pandemic is astonishing. IMO, anytime someone predicts the future that accurately, pay attention to them.

I settled on Stability Economics for that to call Prescriptive MMT. I propose it should include, as the things that it studies:

• The Foundational and Overlooked Economies, as a starter.
• JG/ELR (Job Guarantee, US government as Employer of Last Resort).
• Informal caregiving as a JG job.
• Universal Basic Income.
• Permanent stimulus programs, as proposed by Paul Krugman.

With all of these, you are trying to stabilize the amount of demand in the economy. Then maybe Wall Street's swings (if those ever happen again) or a pandemic won't mess things up so much.

I was corporate for 40 yrs. It is totally bad manners to attempt to write into someone else's todo list. But, whatever, here's 3 for you:

1. If you have not already, read "Foundational Economy". It is a quick read.
2. Think about your permanent stimulus program in the context of Stability Economics. In some ways your idea seems to me to be a cousin to UBI. I know you are not a UBI fan.
3. Open your mind to MMT. I was so excited when on Oct 13, Piketty proposed just setting some of the Fed/ECB balance sheet entries to 0. Debt? What debt?
   Link: http://portraitofthedumbass.blogspot.com/2020/10/show-me-national-debt.html

Done with econ. 2 more things:

1. Thank you so much for your music recommendations, particularly Lucius & Lake Street Dive, I have all their stuff. I curate 22,000 tracks of music in my iTunes collection. Lately, all the big players who formerly would send me emails of new releases of artists I had purchased from them no longer do so. Instead, they want me to buy into their subscription streaming service, in which I have no interest. I'm lately getting most new music from Bandcamp. Any ideas? I blog new music as Music In. I would bet you can find some interesting new music there. Lately tho, Music In is suffering from the overhead of #SongOfTheDay in Music Out.

2. In my retirement, I am a semi-professional musician. I've played guitar 55 yrs, sung 62 or so. March-September in pandemic hunker-down, I averaged adding 9 new songs/week to my book. (OnSong app on my iPad, currently at 1048 songs). Towards the end, 2/3 of those were standards. My Standards book is currently at 81. Playing a gig, you do 10-15 songs/hour, depending on availability of solo instruments.
   Sep 10 I came north to Lexington from Naples FL. Time to let things settle in & not ingest new music so vigorously. So I started doing #SongOfTheDay Sep 27.
   6 days/week, #standards here, Jaz Dumoz channel: https://youtube.com/channel/UC-8G0QzZxDOB8cRk1-5n7lA
   Saturday, something newer, Jim Dumas channel: https://youtube.com/channel/UCs7QrCGIS2G_pgRvzKeqlSw
   My vocal intonation started out horrible, maybe from not singing into a mic for 6 months, or not using my voice in lockdown, or recording the songs mid-afternoon pre-bourbon. It may be getting better, maybe not. Still, I make sure my guitar is always in great tune, & these jazz standards have such beautiful chords. So, check out a few. "Easy Street" I got ~85% of most excellent jazz guitarist Barney Kessel's licks. Next up "Cry Me A River" off of the same album, "Julie is her name", 1955, Julie London's premier album, Barney on guitar, Ray Leatherwood on upright bass. Fabulous album.

Best regards, stay healthy.

Why I Hate Libertarianism

This was the last paragraph of the last post. But, it is off topic and worthy of its own post. Voila.

Oh, 1 final point rant: fuck Libertarianism. I mean, seriously, the "I got mine, fuck you" philosophy. Are there any Libertarians anywhere in the world who are not well-off white people? I seriously doubt it. So many economics books try to justify themselves to Libertarians, I say, fuck Libertarianism. When we have a 100% level playing field, without 1000s of years of privileged groups accumulating capital, when he have a socialist, anarchist, post-scarcity utopia, then Libertarianism will I think be somewhat of a moot point. Until then, fuck it.

I really dislike libertarianism. And these recent explanations put forward by Whitehouse in the Supreme Court confirmation hearing, that the Koch brothers are behind the GOP court packing, and are looking forward to "friendlier government, fewer regulations, a Libertarian outlook".

David Koch ran for Vice-President as a Libertarian in 1980.

I tweeted today's vintage Doonesbury from the Newt Gingrich era - late 90's - Newt is the bomb.

So bottom line is, they won! Convincing and possibly bribing older conservative judges to retire so an inexperienced 30-something, indoctrinated and trained by far-right think tanks, who will then hold the judgeship for 30 years, can take their place. The scoundrels have pulled off a judicial coup.

Meanwhile, at the start of the pandemic, weren't we all saying "Hmmm, maybe having your government small enough to drown in your bathtub isn't such a good idea after all"? And that was before the murderous ineptitude of Agent Orange.

Here's 2 words that raise my blood pressure: Grover Norquist. May he be given bad acid at Burning Man.

I am really hoping it will not take too long to reassemble the US government that Agent Orange had been so busy destroying. I trust those guys - are they the deep state? - to try to do their best for the american people, and with absolutely 0 grifting involved! Science!

I've been sitting on this post. My hero Paul Krugman decided to jump in on my side this morning: "How Many Americans will Ayn Rand Kill?". So although there's clearly a lot more reasons to hate libertarianism, let's let it rip for now.

Show Me The National Debt!

I was so excited on October 13, when the emminent French economist Thomas Piketty published an article in Le Monde [that I picked up through his blog] which included the following statement:

As it is unlikely that the ECB or the Fed will ever decide to put these securities back on the markets or to demand their repayment, the decision to no longer count them in the total public debt could be taken now.

So, take the computer entry for >~= $2T in debt, and set it to 0!

Finally! A fellow traveler! Money is just numbers in computers, it has nothing to do with objective reality. Piketty gained worldwide fame for his 2014 book "Capital in the 21st Century", blogged here, which was the seminal work on economic inequality, how Thatcherism/Reaganism destroyed the 30 years of progress post WWII by the middle class, in which they clawed 15% of GDP back from the top 10% - all gone now. Oh, and BTW, the bottom 50% still got <~= $0.

I tweeted that morning:

Piketty is not 100% cool with all this new debt, because

The orgy of money creation and the purchase of financial securities in fact leads to an increase in stock and property prices, which contributes to the enrichment of the richest. For small savers, zero or negative interest rates are not necessarily good news.

Here's the last 2 paragraphs of the Piketty. I was disappointed that he did not say what might cause inflation to "become substantial again".

It would be different if monetary creation, instead of fuelling the financial bubble, were mobilised to finance a real social and ecological recovery, i.e. by assuming strong job creation and wage increases in hospitals, schools, thermal efficiency and local services. This would alleviate debt while reducing inequalities, investing in sectors useful for the future and shifting inflation from asset prices to wages and goods and services.

However, this would not be a miracle solution either. As soon as inflation becomes substantial again (say 3%-4% per year), we would have to put a stop to money creation and use fiscal means. The whole history of public debt shows this: money alone cannot offer a peaceful solution to a problem of this magnitude, because it leads in one way or another to uncontrolled distributive consequences. It was by resorting to exceptional levies on the better-off that the large public debts of the post-war period were extinguished and that the social and productive pact of the following decades was rebuilt. Let’s bet that the same will be true in the future.

Somehow this prompted me to revisit another finding that I believe totally validates MMT.

I'll repeat my mantra, "Money is Software". And currently, that software has been hacked and is owned by the financial sector aka "Wall Street". I mean seriously, what value do hedge fund managers and most other financial sector species contribute to the human race as a whole? 0! Absolutely 0! They produce nothing real! They have hacked the system to keep generating money to line their and their clients pockets - period. And the rest of the population buys into the "money is real" myth, and lets them get away with it.

In 7 months of pandemic Jeff Bezos's wealth has grown from ~$133B to $200B - is that a sound economic system? Or is that rather an incredibly buggy economic system?

Robert Reich just agreed with me!

So, mental exercise, gedankenexperiment: if we were somehow able to wrest control of the monetary system away from Wall Street, how would we use it create a post-scarcity utopia, the world of Star Trek, where everyone realizes that money is imaginary? Here are the basic principles & constraints we must deal with:

1. Money is not real, it is imaginary. Resources are real. How do we develop an accounting system that recognizes this? My "money is software" post threw out there the concept of maths with all economics numbers as complex numbers, with a real (resources) part and an imaginary (money) part. Or maybe just a tuple, a 2-dimensional vector. I seem to keep coming back to that. How do we do all economic calculations with resource #s in place of or parallel to $$$?
2. We give every person in the world an account with their country's central bank.
3. We presume that Congress/EU/... gives The Fed/ECB/... the power to print money on demand and distribute it however the models say it should be distributed. The goal of the models is to have 0 poverty, and Universal Everything.
4. Things to worry about 1/2: inflation. My contention is: inflation is caused only by supply-side shortages aka not-enough-to-go-around. My contention is: since the 1950s, we are in a post-scarcity economy (Capitalism 2.0 per Peter Barnes). So for most things, particularly digital, zero-marginal-cost things, there is plenty to go around. There will still be constraints, on McMansions, McYachts, McMercedes, etc.
   As Piketty says, if inflation kicks up, then money creation models might have to ramp down. We have lately actually seen the 1st signs of inflation in decades due to pandemic-related spot shortages.
5. Things to worry about 2/2: exchange rates. The entire world has to buy into the concept. If just 1 country starts printing money as needed to meet the needs of its populace, other countries might say "you're cheating", and punish that country by lowering its exchange rate. The only real measure that matters in the world economy: money being created does not exceed real resources.
6. If the 99% are getting provided for this way, the main purpose of taxes is to agressively relieve the 1% of as much of their wealth as is possible. 1 thing about the wealth of the 1%, it has a very low velocity. It just sits in their bank accounts and doesn't place any demands on real resources. So we should not think about redistributing their wealth. Let's distribute wealth from scratch in an amount that doesn't exceed resources, much easier. Let's just destroy the wealth of the 1%, and the power that comes with it, via taxes.
7. Currently-rich countries must help currently-poor countries, how? By propping up their currencies via maintaining a high exchange rate? I think that possibly the Chinese may already be onboard in opening the doors of their manufacturing cornucopia - I love that word, picture to follow - to Africa and anywhere else in the 3rd world that needs more stuff?
   
8. We need to do this ASAP before climate change destroys significant amounts of the currently accumulated capital. I believe that there is enough to go around now, but every climate crisis, whether flooding, fires, hurricanes, ..., destroys some of that.

8 principles/constraints. That seems like enough for now.

I feel pretty good we could make this work for the developed world. Hopefully the concept of "tumbrel insurance" will obviate the need for real tumbrels. The main gedankenexperiment that needs to be performed now: let's take a poor, populous African country, run the numbers, and see if it works.

In My Conclusions on Wray's MMT book, I did a cost estimate for this world. You are creating a fixed demand by having Universal Everything that might help stabilize the economy [Stability Economics FTW!]: to smooth the economic boom and bust cycles caused by the latest financial scam falling through. I estimated $$$ 19% of GDP , 90% of annual budget (2019). So that seems big enough to create a stable economy - as long as real resources aren't exceeded.

We are soooo close on this ...

Further thoughts ...

So much of the wealth of the 1% is in the form of stocks. The ROI on raw capital is now essentially <~= 0%, so where else are you going to invest your money? I don't think that stocks are particularly amenable to destruction via taxation. So maybe we do go on and do redistribution instead. Maybe what we do is, everyone with a net worth > $1B (or $100M?), every year, we transfer 50% of their holdings > $1B into the World or US Common Wealth Trust. That trust every year redistributes 1/2 of its gains into a Universal Dividend [you know, at this point, any program that doesn't start with Universal is BS] Program, distributed evenly amongst all citizens, and lets the other 1/2 ride. Or maybe 1/3 to citizens, 1/3 to Universal Capital Access Fund, and let 1/3 ride.

Or, you could use this to pay off national debts. In his book, Piketty estimated that the US national debt could be retired by a 3% wealth tax for 5 years. Of course, that was before the latest tax cuts and pandemic relief programs. I guess I'm talking about a 50% wealth tax. But, going back to where we started with this post, WHY BOTHER? Just set those cells in the spreadsheet to 0! Easy-peasy! MMT FTW!

One other random thought. 1 completely outside-the-box idea from Wray's MMT book was the elimination of corporate taxes. These have 2 bad side effects:

1. They create a race to the bottom, with countries like Ireland and Liechtenstein leading the race by offering minimal corporate taxes.
2. They encourage bad corporate behavior, such as advertising and borrowing, and anything else that can be taken off of the bottom line.

Yes, maybe corporations are people, but they really don't care about how much money they have. So, as they are on some level morons, give corporations a free ride. Attach the fiscal liabilty to the stockholders based on the value of their stock, which hopefully should reflect the success and profit of the corporation. Ban stock buybacks and set the tax rate on dividends and capital gains to 70% or so. Force harvesting of capital gains, what, annually? Every 3 years? And definitely don't let them get wiped out when stocks are inherited. But again, the whole world must buy in.

Speaking of inheritance. I find it hilarious that all the conservative types who insist everyone must earn everything from scratch and pull themselves up by their bootstraps still want to leave fortunes to their children. Why exactly shouldn't they want those children to start from scratch, work hard, create businesses or whatever, and bootstrap themselves? How is it that trust-fund kiddies get a free pass on all that?

[There was a point rant on Libertarianism here, moved to a new post.]

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#MMT Twitter DM Rant

I'm feeling like I'm kind of done reading economics for a while. Instead, I will maybe be harvesting the crystals from the supersaturated solution in my brain. I got followed by (and followed) on Twitter a guy who ID'ed as "concerned that government debt will keep my sons from having the same opportunities that I have had." Obviously in need of a #MMT intervention. Here we go:

Show me the national debt. A nation that has its own currency never has to collect taxes or create debt to spend money. Congress tells the Fed to print $$$, the Fed prints $$$.

If someone set the National Debt to 0 in all the government computers, how would we know the difference?#MMT FTW!

My first car, 1966 Ford Fairlane cost $2,460. Same car today would be $30,000. I think inflation is the long-term outcome of spending money that you print out of clear air. Can you give me an historical example of a country that printed as much money as they wanted and had a good outcome?

And I think inflation hurts the people at the bottom of the ladder the most. Gas can go to $50 a gallon and I’m still gonna drive around some. I have been priced out of the local housing market. I bought real estate here in the 80’s and 90’s, and I could not afford it today.

Inflation is caused by supply side shortages, not too much money in circulation (monetarism). My 1st car was a 1974 light blue Ford Pinto station wagon purchased new for $3200 I think.

Most of the inflation of our lifetime was created by the Arab Oil Embargo of the early 70s. The tripling of the cost of oil created an artificial shortage of the primary commodity of the economy.

But there was some inflation in the mid-late 60s caused by the the Federal gov competing with the civilian sector for resources as it ramped up for the Vietnam war.

Supply side shortages === resource shortages. Per #MMT, real resources are all that matter. Money is just bookkeeping. The $ is a unit of measure. It is created in computers as desired.

My review of the main MMT book wound up being way too long. http://portraitofthedumbass.blogspot.com/2020/05/modern-money-theory.html

This 56 minute video is a better intro to #MMT. https://www.youtube.com/watch?v=mKICOEY9l6w

Do you trust the government to control this? Do you have an example historically of where this has worked?

Real estate is indeed a real resource that becomes scarcer as population grows.

Re what you just posted, I trust the government more than I trust the oligarchs - although they are currently pretty hard to tell apart. I'll send you a recent rant I did. I proposed taking National Debt from 1x GDP to 1000000x GDP. What would happen? I have no idea. It would an interesting experiment.

But, would the 50% of US citizens currently with <= $0 net worth be worse off? I doubt it.

So, no, no historical examples, everyone up to now has been drinking the "money is real" koolaid. A great experiment. To create a future where no one is poor and no one is hungry.

Your slide on MMT is very good! Thanks, I will reuse.

I would like to capture this conversation in a blog post. Do you mind if I include your content anonymously?

Sure no problem, I’ve enjoyed the conversation.

1 last thought. There is 1 other thing you must worry about besides inflation: that is currency conversion rate.
If you just print too much money, the rest of the world says "You're cheating" & your exchange rate goes down.
But, US is still in a unique position. There is no current alternative to the $ as the world's default currency. There is not near enough of any other currency in circulation to replace the $. Why? Because no one else is running the debt we are. But, that could change. But only if other nations want to start running much larger debts.

Somehow, I think that's the right way to go. Every government with its own currency should roll the $ presses, & keep them rolling. Let evolution the invisible hand sort it out.

I believe we have been in a post-scarcity economy (Capitalism 2.0) since the 1950s. (Capitalism 1.0 = scarcity economy.) There is enough of everything to go around - except maybe McMansions. Else why would corporations be spending $B convincing us to buy crap we don't need? Now just need to convert into post-scarcity utopia (Capitalism 3.0). Easy-peasy!

#MMT Twitter RT Rant

I'm feeling like I'm kind of done reading economics for a while. Instead, I will maybe be harvesting the crystals from the supersaturated solution in my brain. Via Twitter:

Show me the National Debt.
If someone set the National Debt to $0 in all the computers in the world, where exactly would we notice the difference?
The main purpose of our monetary system is to make sure rich people stay rich.
#NationalDebtIsaMyth #MMT FTW!

Thx to #COVID19 , US National Debt has surged past 100% of GDP. Disaster! Catastrophe! Ummm, not that I noticed.
Japan has been running National Debt > 200% GDP for 30 years. #MMT FTW!

So, what if the National Debt is 1000x GDP? 1000000x GDP?
If interest rates are negative, as they are some places in Europe, & close in the US, that's a money maker! #MMT FTW!
Please, show me the National Debt. A picture, please.

#Economics #EconomyOfPlenty #PostScarcityUtopia
#MMT, FTW!

#UBI #UniversalBasicIncome #UniversalNutrition #UniversalHealthCare #UniversalHousing #UniversalEducation #UniversalCapitalAccess
Hep me, @scottsantens !

#SongOfTheDay

From the start of pandemic lockdown in late March til I came home to Lexington in early September, I averaged over 9 new songs in my book per week. Lately, 3/4 of these are standards, 1900-1970. I have enjoyed playing an hour or so from my lanai in Fl or my back patio in KY, but I'm in KY now and it's getting too cold for playing outdoors in the evenings.

So I've started posting 1 song/day to YouTube. For the jazz standards, I created a persona/account Jaz Dumoz. Here is the URL for that channel:

https://www.youtube.com/channel/UC-8G0QzZxDOB8cRk1-5n7lA

I'm hoping that maybe post pandemic I can play Giuseppe's or Creux or other places that feature jazz, and can point them at this channel as a virtual audition.

I've currently got ~75 standards in my book, another 10 or so in the to-be-worked-up list, and 1-1/2 years of "Peter Gunn" episodes to watch. I'm going to target using those 6 days/week. 1 day/week, I will post something newer or different. So far, "September", 1978, my favorite Earth, Wind, & Fire song. Those I am posting to this YouTube channel as my old musical alter ego Jim Dumas:

https://www.youtube.com/channel/UCs7QrCGIS2G_pgRvzKeqlSw

I'm tweeting YouTube link after I post each song, tagged #SongOfTheDay, #song, #music, and #standards if appropriate.

I've done 5 so far. Most takes required so far has been 3. Only problem is, my intonation is back to sounding like shit. I used to think it was really bad. I couldn't listen to recordings of myself. Then, a couple of years ago, it seemed to get a lot better. These recordings, it is back to sounding bad. Maybe because I'm doing them mid-afternoon rather than nights when my voice has had some bourbon lube? Or maybe in lockdown mode I'm not getting to use my voice enough? Not sure, but I'm not going to worry about it for now - just plow ahead and hope it gets better.