Welcome L. Randall Wray (Modern Money and Public Purpose) (EconoMonitor.com) and Host William K. Black, UMKC Economics, Law  (New Economic Perspectives)

Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems

Money as a means to Fix Problems rather than an excuse for Causing Problems

I am hosting the Firedoglake discussion of my colleague Randy Wray’s new “Primer” on macroeconomics. Macroeconomics is the study of the overall economy – economic growth, recessions, depressions, inflation, unemployment, and employment are big issues that macroeconomics studies. The key policies it addresses are usually divided into fiscal (tax and spending) and monetary policies (the growth of the money supply and setting interest rates). The concept of monetary tools has broadened as we have seen the Federal Reserve change what had been a severely constrained “lender of last resort” function of the central bank into the most massive bailout program in history. Similarly, the central bank’s interest rate setting function that was long focused on short-term rates has expanded into large experiments that attempt to lower long-term interest rates (“quantitative easing”).

The part of the book title most likely to cause the reader to ask: “what does that mean” is the phrase “Sovereign Monetary Systems.” It is the Primer’s key concept. The Primer explains to the general reader something that an enormous number of people with doctorates in economics fail to understand – sovereign monetary systems are enormously different than non-sovereign systems. Those differences have profound implications for our real-world economies. The failure of so many policy makers and economists to understand sovereign monetary systems causes massive, gratuitous suffering. The failure to understand how sovereign monetary systems work causes economists to inflict policies that are not simply ineffective, but immensely self-destructive.

The euro provides a good example of the difference between sovereign and non-sovereign monetary systems. The Nations that joined the euro had to give up their sovereign currencies. The euro is not a sovereign currency because it is not issued or backed by a sovereign nation. We can observe the tragic consequences of the twin policy failure – abandoning their national sovereign currencies and adopting an international currency that lacked sovereignty. Eurozone citizens are being told that because they adopted the euro they must give up essential attributes of sovereignty. The situation is not parallel to the sovereign States joining the United States of America and agreeing to a system of dual sovereignty. There is no “United States of the Eurozone” and no political entity is taking over the lost attributes of sovereignty.

The central economic task of a nation state is to provide full employment and economic growth without ruining the world and without producing damaging inflation. The Primer explains how automatic stabilizers work and how they, not the bank bailouts, saved us from falling into a Great Depression. It explains why, particularly in response to the Great Recession, it was normal and vital for the United States and the Eurozone to run very large budget deficits. The Primer explains the paradoxical nature of many aspects of economics. It is economically rational for individual consumers to respond to a recession by cutting their spending, but the cumulative effect is to make the recession more severe and lengthy (the “paradox of thrift”). The Primer shows why it is essential for the government to increase its spending and reduce taxes in response to the Great Recession. These “counter-cyclical” policies reduce the recession’s severity and length, decreases unemployment, reduces the misery that the recession inflicts. By spurring growth, the counter-cyclical policy also reduces the budget deficit. That makes it a win-win-win-win-win policy.

The Primer explains why austerity (cuts in spending and tax increases) in response to the Great Recession has the opposite effects. Austerity makes the recession more severe and longer-lasting, increases unemployment, adds to misery by cutting spending that aids the recession’s worst victims, and can increase the budget deficit. Inflicting austerity in response to the Great Recession is a lose-lose-lose-lose-lose strategy.

The Primer makes clear that Berlin is telling the Eurozone’s citizens that because they abandoned their sovereign systems they must adopt austerity – that there is “no alternative” to the quintuple losing strategy. It is not a matter of some other government providing the necessary increase in spending and tax reductions that Eurozone desperately needs. Berlin insists that there must be no entity created that it is capable of implementing the quintuple win strategy.

The Primer does more than explain why a Nation with a sovereign currency can and should employ the quintuple win strategy. It shows how and why to design a job guarantee program that will end the waste of leaving people willing and able to work unemployed and suffering. The jobs guarantee program would put the lie to the claim that the unemployed are lazy moochers. That is why those that demonize the poor will fight tenaciously to prevent a jobs guarantee program that will destroy their dogma. Berlin is forcing the opposite strategy on the Eurozone – fierce cuts to worker’s wages that are causing ever greater inequality and substantial emigration of university graduates.

The Primer can prepare you to explain why, for a Nation with a sovereign currency, a “balanced budget” (1) is not the norm historically, (2) would often be harmful, (3) is not essential to prevent the national debt from “spiraling out of control,” (4) does not increase economic growth, (5) has nothing to do with avoiding burdening our children and grandchildren, (6) has nothing to do with China “owning the U.S.”, and (7) is not necessary to avoid inflation, much less hyper-inflation. You will love reading Paul Samuelson’s admission of the pride he took in the role his famous textbooks played in helping to create a myth of the desirability of the balanced budget.

“I think there is an element of truth in … the superstition that the budget must be balanced at all times [is necessary]. Once it is debunked [that] takes away one of the bulwarks that every society must have against expenditure out of control. [O]ne of the functions of old fashioned religion was to scare people by sometimes what might be regarded as myths into behaving in a way that the long-run civilized life requires [p. 200].

“Myth,” “superstition,” and “religion” – functioning to “scare people” – is it any wonder that neo-liberal economists could never take the equivalent of the Hippocratic Oath? They “do harm” as a matter of routine. Keynes explained why economists embraced brutal economic dogmas:

It must have been due to a complex of suitabilities in the doctrine to the environment into which it was projected. That it reached conclusions quite different from what the ordinary uninstructed person would expect added, I suppose, to its intellectual prestige. That its teaching, translated into practice, was austere and often unpalatable, lent it virtue. That it was adapted to carry a vast and logical superstructure, gave it beauty. That it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely on the whole to do more harm than good, commended it to authority. That it afforded a measure of justification to the free activities of the individual capitalist, attracted to it the support of the dominant social force behind authority.

What neo-liberal economists most fear is that we will come to learn how money actually operates and what a Nation with a sovereign currency can accomplish. Please make their worst fears come true – read the Primer.

 

[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions.  Please take other conversations to a previous thread. - bev]

323 Responses to “FDL Book Salon Welcomes L. Randall Wray, Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems”

BevW January 5th, 2013 at 1:40 pm

Randall, Welcome to the Lake.

Bill, Welcome back to the Lake, and thank you for Hosting today’s Book Salon.

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L. Randall Wray January 5th, 2013 at 1:56 pm

Bill: Thanks for the excellent introduction. Before tackling the questions I just want to respond to two points made in the intro.
a) The Euro is one example of a Nonsovereign currency. I wanted to point out that the gold standard presents similar or even worse constraints. Our own US experience with the gold standard showed how it constrained the economy and especially government policy. When we were on the gold standard we had a depression every generation—everyone remembers the last Great Depression in the 1930s but that was just the last one in a long line of them. To get out of the depressions that were common in every country that tried a gold standard, governments had to go off gold—to a sovereign currency or what many call a fiat currency.

L. Randall Wray January 5th, 2013 at 1:57 pm

b) I loved the Keynes quote—how economic theory seems to provide a justification for ignoring injustice. As everyone knows, economists love to say “there is no such thing as a free lunch”. The Keynes quote pokes fun at that—it is pure nonsense. If you have unemployed resources, it is a “free lunch” to put them to work. Here’s my favorite Keynes quote:
“The Conservative belief that there is some law of nature which prevents men from being employed, that it is “rash” to employ men, and that it is financially ‘sound’ to maintain a tenth of the population in idleness for an indefinite period, is crazily improbable – the sort of thing which no man could believe who had not had his head fuddled with nonsense for years and years… Our main task, therefore, will be to confirm the reader’s instinct that what seems sensible is sensible, and what seems nonsense is nonsense. We shall try to show him that the conclusion, that if new forms of employment are offered more men will be employed, is as obvious as it sounds and contains no hidden snags; that to set unemployed men to work on useful tasks does what it appears to do, namely, increases the national wealth; and that the notion, that we shall, for intricate reasons, ruin ourselves financially if we use this means to increase our well-being, is what it looks like – a bogy.” –John Maynard Keynes

William Black January 5th, 2013 at 1:58 pm
In response to BevW @ 1

Great to be back with Randy Wray’s antidote to Pete Peterson.

William Black January 5th, 2013 at 2:00 pm

Here’s the first of the three questions hosts are asked to prepare to kick off the discussion:

1. Why is a Nation with a sovereign monetary system not “just like a household?”

BevW January 5th, 2013 at 2:00 pm

Thank you both for being here today and kicking off the first Book Salon this year.

dakine01 January 5th, 2013 at 2:01 pm

Good afternoon Randall and welcome to Firedoglake this afternoon. Bill, welcome back to FDL this afternoon.

Randall, I have not had an opportunity to read your book so forgive me if you address this in there but just in the past couple of days, I have noticed news stories that are out of the norm in the TradMed. First is the report in the Washington Post on the chief economist for the IMF apologizing for all the pushes towards austerity and acknowledging that it has made things worse.

Then there is the discussion about a “platinum coin”

Do you think either of these items will have any positive affect on the economy or are the entrenched views so hardened that nothing can move them?

L. Randall Wray January 5th, 2013 at 2:02 pm

Thanks; I guess we jumped the gun by a minute or two.

Keynes also has a great quote in the General Theory about skipping those lunches–but I don’t have my copy here with me

Austerity Sucks January 5th, 2013 at 2:03 pm

What is the optimal mode of “base” money creation for an economy with a sovereign fiat currency? Should all new base money be “borrowed” into the economy by government, or printed debt-free? Or some combination of both?

(If none of the above, please specify how and why)

letsgetitdone January 5th, 2013 at 2:03 pm

Hi Bill! Hi Randy! Just wanted to let you know I’ll be commenting too.

L. Randall Wray January 5th, 2013 at 2:04 pm

Hi dakine: yes the IMF is doing a bunch of mea culpa. I like the work of Kumhoff (altho I don’t care for the methdology). They are all now saying “wow government multipliers are a lot bigger than we ever thought” (that means if you cut govt spending by $1 then GDP falls a lot more than $1)

William Black January 5th, 2013 at 2:05 pm

Yes, the Keynes “bogy” quotation is a classic that I bring to mind every time a politician promises to crack down on “fraud, waste, and abuse” — and ignores unemployment, by far the largest waste. Unemployment causes harms well beyond the economic. It does psychological damage and June’s work documents how bad it is socially, e.g., in producing marital discord.

Eric Tymoigne January 5th, 2013 at 2:06 pm

Eric T here too. Will comment too.

bluedot12 January 5th, 2013 at 2:06 pm

I hear an awful lot about the deficit and the debt, like they are “unsustainable”. To what extent are they, if ever, not sustainable and what would be the end result?

L. Randall Wray January 5th, 2013 at 2:06 pm

Austerity: Govt spending increase base money (I prefer HPM–high powered money, and Minsky’s initials) and taxing reduces it, so deficits lead to net add.

Normally as part of monetary policy (to hit interest rate target) the Fed and Treas coordinate to sell bonds to drain any excess HPM (bank reserves).

With QE, and ZIRP (nearly zero interest target) the Fed leaves them in

L. Randall Wray January 5th, 2013 at 2:07 pm

Austerity: to finish, the quantity of base money outstanding is a bit of a bogy–not worth worrying about

William Black January 5th, 2013 at 2:07 pm

NY Fed economists have a very recent piece on the payroll tax (partial) moratorium having even greater stimulus effect than anticipated by Fed economists.

BevW January 5th, 2013 at 2:08 pm

As a technical note,
there is a “Reply” button in the lower right hand of each comment. Pressing the “Reply” will pre-fill the commenter name and number you are replying to and helps for everyone in following the conversation.

(Note: If you’ve had to refresh your browser, Reply may not work correctly unless you wait for the page to complete loading)

L. Randall Wray January 5th, 2013 at 2:09 pm

Blue: (note to all i will simplify your “handles”) If you look at my Great Leap Forward blog at economonitor I dealt with that (also Fullwiler at NEP). These exercises in math sustainability always come down to interest rate relative to growth rate. If r>g then debt ratios rise; otherwise they converge.

so quick answer: keep r low on govt debt and then it is math sustainable

whether that matters is another question

L. Randall Wray January 5th, 2013 at 2:09 pm

ok thx, i’ll try the reply button

L. Randall Wray January 5th, 2013 at 2:11 pm

OK to provoke: sovereign govt in the way we define it (see bill’s summary) can never become insolvent, can never be forced to default, in its own currency

so the whole sustainability issue is a red herring

what does matter is inflation

bluedot12 January 5th, 2013 at 2:11 pm

ok I’ll bite. If r is high (or g in negative?)what does it matter?

BevW January 5th, 2013 at 2:11 pm

EconoMonitor website

Austerity Sucks January 5th, 2013 at 2:12 pm

I see, but let’s say we started fresh, a new economy, new nation, whatever. If we were to conduct optimal monetary mechanics, would new money created base money be done so through a central bank buying bonds the government issues, or just printed directly for government use?

Currently, no new base money enters the system unless the fed computer system creates currency to be used to purchase bonds (which the gov then spends).

In the past, under Lincoln, JFK, US notes were printed to expand the base.

So, should we be printing money debt-free like Greenbacks to be part of the monetary base, in addition to issuing bonds that the Fed buys with fresh new base money? Using multiple avenues or sticking to one?

Or am I incorrectly conceptualizing the whole system?

Eric Tymoigne January 5th, 2013 at 2:12 pm
In response to William Black @ 5

Well the main reason is because a household does not have monetary sovereignty. Households’ IOUs are not accepted as means of payment.

BevW January 5th, 2013 at 2:13 pm

Great Leap Forward – website

letsgetitdone January 5th, 2013 at 2:13 pm

On deficits “adding” See here.

bluedot12 January 5th, 2013 at 2:13 pm
In response to Eric Tymoigne @ 25

Yeah, we don’t have the magic printing press.

Ludwig January 5th, 2013 at 2:14 pm

Comrade Black, on your last visit to the ‘lake, we had this exchange:

Ludwig: Apparently [capitalist criminals] don’t have much faith in capitalist ideology if they are busy scuttling it.

William Black: Exactly, that’s the central point of Jamie Galbraith’s most recent book.

I invite both comrades to please explain what their ideology is and why.

L. Randall Wray January 5th, 2013 at 2:14 pm

Sorry I missed Bill’s Q1 so here’s start of an answer to add to eric’s point:

There are several ways in which our federal government—the sovereign government of our nation—differs from households and firms.

The most obvious is that sovereign government retains for itself a variety of powers that are not given to private individuals or institutions. Here, we are only concerned with those powers associated with money.

The sovereign government, alone, has the power to determine which money of account it will recognize for official accounts (it might choose to accept a foreign currency for some payments—but that is the sovereign’s prerogative). Further, modern sovereign governments, alone, are invested with the power to issue the currency denominated in its money of account.

Clearly, in the USA, our federal government has chosen the dollar; it alone can issue currency denominated in dollars; it makes all payments in dollars; and it requires that we pay taxes in dollars.

William Black January 5th, 2013 at 2:14 pm

Randy can explain how the Fed sets interest rates, why the U.S. borrows (hint: not because it needs “money” to spend) and why because we have a sovereign currency we can borrow at minimal interst rates whereas the eurozone’s periphery is subject to extortion from the bond vigilantes.

L. Randall Wray January 5th, 2013 at 2:15 pm

and here is a bit more:
If any entity other than the government tried to issue domestic currency (unless explicitly permitted to do so by government) it would be prosecuted as a counterfeiter, with severe penalties.

Further, the sovereign government imposes tax liabilities (as well as fines and fees) in its money of account, and decides how these liabilities can be paid—that is, it decides what it will accept in payment so that taxpayers can fulfil their obligations.

Finally, the sovereign government also decides how it will make its own payments—what it will deliver to purchase goods or services, or to meet its own obligations (such as payments it must make to retirees). Most modern sovereign governments make payments in their own currency, and require tax payments in the same currency.

To sum up: you and I did not create the dollar money of account; you and I cannot issue the dollar currency; you and I cannot impose dollar denominated taxes and force payment in dollars.

In addition there are a number of issues surrounding the difference between the “micro” and the “macro”—such as the Paradox of Thrift that Bill mentioned in his introduction. We can get back to those issues later—our federal government is the government for the whole nation and what is true for individual units (households, firms, even local and state governments) is not necessarily true for the nation as a whole.

letsgetitdone January 5th, 2013 at 2:15 pm

Also, one could stop issuing debt instruments and then the problem goes away. You can use Platinum Coin Seigiorage to cover the gap between tax revenues and spending.

Eric Tymoigne January 5th, 2013 at 2:15 pm

If you look at early american experience, Treasury of colonies just printed bills to spend and then redeemed them through taxes.
Then, treasury operations of the US got more and more complicated: central bank, debt ceiling, bond issuance and fed forbidden to be part of primary market. But all this does not chance the mechanisms at the basis of the simple treasury operations.
So in the end it is a matter of choice

Austerity Sucks January 5th, 2013 at 2:15 pm

Essentially I guess I’m asking if it even matters if the money is introduced into the economy through bond issuance of the government, bond issuance of a private entity, or just printed debt-free for the use by the government.

L. Randall Wray January 5th, 2013 at 2:16 pm
In response to Ludwig @ 29

I like very much galbraith’s “predator state” and i think he’s got it right. they sing the song of free mkts but they hate them

Eric Tymoigne January 5th, 2013 at 2:18 pm
In response to bluedot12 @ 28

Actually we do have a printing press with which we can print our own monetary instruemnt (just use your printer). The point is to get it accepted. The government is able to get its monetary instrument generally accepted because of the broad taxing power.
People accepts gov monetary instrument because they know that in the future they can pay the gov with it (there are other reasons but ultimately this is the main one)

L. Randall Wray January 5th, 2013 at 2:18 pm

OK 2 questions about interest rates

Fed sets overnight rate (fed funds rate) and treasury bill rate is about the same (competition since it is close substitute)

sovereign govt can always set this where it wants, including zero

L. Randall Wray January 5th, 2013 at 2:19 pm

Fed could set longer rate (say on 10 yr treasury) by standing ready to buy/sell it. Usually doesn’t do this.

But if it says: “Zirp for the next 5 years”, and mkts believe that, then longer rates will fall in line with the Zirp (ie: some basis points higher–for technical reasons hard to get long rates below 200bp or 2%)

bluedot12 January 5th, 2013 at 2:20 pm
In response to Eric Tymoigne @ 37

What you really mean is they got more guns and police than we do. So who wants my money? I get your point.

L. Randall Wray January 5th, 2013 at 2:21 pm
In response to bluedot12 @ 40

well, we mean sovereignty. it is a lot more than guns and police. there is a system of laws and govt reserves to itself certain powers

Austerity Sucks January 5th, 2013 at 2:21 pm
In response to Eric Tymoigne @ 37

but do we really need a central bank that will only introduce money to the economy if we issue bonds to borrow money and spend?

is this borrowing mechanism purely to set a constraint on us by those who own our debt? can’t we credibly guarantee the market that too much money won’t be printed if we print debt-free money?

is there any way in the modern day to credibly set up a monetary system debt-free where the government prints what it spends and doesn’t issue bonds to a central bank who prints the money?

Keith Wilde January 5th, 2013 at 2:21 pm

Question: Does the book reproduce the Q and A , point form presentation that was available on internet several weeks ago, and which I could not follow because of being in ill health and handicapped by inadequate facilities?

bluedot12 January 5th, 2013 at 2:22 pm

Seems the fed has been working to reduce long term rates. Why?

letsgetitdone January 5th, 2013 at 2:22 pm
In response to bluedot12 @ 40

A corollary is that if the Government’s legitimacy fails, then the currency can very well fail too!

William Black January 5th, 2013 at 2:22 pm

Amen. Well functioning markets where externalities are low are really good things (setting aside the hugely complex issue of what a “market” is). It is hard to make money honestly by producing a product that people like and wish to purchase at a price that produces a sufficient profit to stay in business. That’s why banksters hate honest competition and do everything they can to manipulate them.

L. Randall Wray January 5th, 2013 at 2:23 pm

we certainly need central bank “functions” but they can be done in the treasury. Indeed as you no doubt know the USA was unusual because we created ours as late as 1913

DWBartoo January 5th, 2013 at 2:23 pm

Thank you, Bill and Randy, for joining us this evening.

Do either of you see any realistic possibility that the trajectory of Austerity might be shifted, or does empire end-time capitalism insist upon plundering the last penny as it pillages civil society with the deliberate and intentional destruction of the Rule of Law?

In other words, despite whatever reason any of us might seek to share with our fellow human beings, are we, and let us be honest about this, not required, for the greater “education” of the many, to ride the economic bomb of class warfare right down to actual impact, to societal collapse and experience the full-on brutal reality of a “new” feudalism and heartless “governmental” tyranny in this, the age of the Divine Right of Money?

Were you, either of you, to imagine both our near-term and longer “run” future, what might you see?

DW

Ludwig January 5th, 2013 at 2:23 pm

So, comrade Wray, in shorthand, their ideology is fraud.

L. Randall Wray January 5th, 2013 at 2:24 pm
In response to letsgetitdone @ 45

yes. an important thing we stress is willingness and ability to impose and collect taxes–to keep the currency strong

the USA confederacy was not willing to do this.

L. Randall Wray January 5th, 2013 at 2:24 pm
In response to Keith Wilde @ 43

yes there are Q and A boxes at the end of most sections of the book

L. Randall Wray January 5th, 2013 at 2:25 pm
In response to DWBartoo @ 48

Yes we wouldn’t be doing this if we had given up. Austerity can be ended. But it will take a huge popular outcry

bluedot12 January 5th, 2013 at 2:26 pm

I thought so. It’s about guns.

letsgetitdone January 5th, 2013 at 2:26 pm
In response to Ludwig @ 49

Of course, Ludwig. Did you think it was anything else?

L. Randall Wray January 5th, 2013 at 2:26 pm
In response to bluedot12 @ 44

Fed thinks QE will lower long rates, stimulate borrowing, and get economy going. It is misguided. We don’t need more borrowing. consumers are underwater. We need mortgage relief plus jobs

letsgetitdone January 5th, 2013 at 2:27 pm

Yes, Bill Mitchell at Billyblog has a good case study on the Confederacy’s inflation.

dakine01 January 5th, 2013 at 2:27 pm

the USA confederacy was not willing to do this.

Seems like some things don’t change as that seems to be the MO for a large portion of the former Confederacy today

Eric Tymoigne January 5th, 2013 at 2:27 pm

there needs to be a government authority that issues the final means of payment. that we learned over the 19th century and early 20th. Who does it really does not matter.
There is perceived belief that all these contraints actually do something to prevent inflation and overspending…not so. All constraints can be by passed easily by treasury and central bank cooperation. Doing it now (QE3, Supplementary Financing program) did it in the past (WWII: fed target T-bonds rate and all the yield curve)
Ultimately, what matters for good government is good governance.

Try to limit to one question at a time. Hard to be quick

L. Randall Wray January 5th, 2013 at 2:28 pm
In response to letsgetitdone @ 33

Yes we never need to issue bonds; we can use HPM, and platinum coins work, too

L. Randall Wray January 5th, 2013 at 2:28 pm
In response to letsgetitdone @ 56

confederacy example also in my Understanding Modern Money 1998 book

Eric Tymoigne January 5th, 2013 at 2:29 pm

Yes. Treasury used to issue United states note (same as Federal Reserve note except for the ink that is red). Treasury also now issues demand deposits and time deposits to state and local gov. Of course it does coins too.

bluedot12 January 5th, 2013 at 2:29 pm

I thought that would be the answer. But if rates are low won’t people and businesses want to borrow? At least it seems plausible.

letsgetitdone January 5th, 2013 at 2:29 pm

Thanks!

William Black January 5th, 2013 at 2:30 pm
In response to letsgetitdone @ 45

A joke that Lincoln is reputed to have told, is that as the Confederacy was headed to defeat a Confederate supporter who lived on a river called out to the captain of a passing riverboat: “Do you take Confederate bills.” The captain answered: “Yes.” The man then asked the captain: “how do you take it?” (meaning what exchange rate v. the U.S. dollar) The captain called back: “by the cord.” (i.e., it was only useful as firewood because the Confederacy was collapsing and no one was going to need Confederate bills to pay Confederate taxes becauase no one would be paying those taxes.)

L. Randall Wray January 5th, 2013 at 2:30 pm

If there is a lull let me explain difference betw sovereign and nonsovereign
A country that pegs to a foreign currency (such as in a currency board arrangement) or to gold (the gold standard) must abandon its domestic policy agenda if that conflicts with the exchange rate peg.

Usually what that means is that when there is pressure on the exchange rate, the government must impose austerity—slashing spending, raising unemployment, cutting wages—to increase exports and reduce imports.

Sometimes countries go “whole hog” by adopting a foreign currency—that is essentially what Euroland did when nations adopted the “foreign” Euro. Bill talked about the consequences in his introduction.

Ludwig January 5th, 2013 at 2:30 pm
In response to letsgetitdone @ 54

Did you notice, comrade, that “why” is left hanging?

I know why. Do our comrades?

Austerity Sucks January 5th, 2013 at 2:30 pm

Whether base money is relevant or not, new money has to get introduced to the economy somehow.

Is it sub-optimal to be borrowing it into the economy to get the Fed to print and buy our bonds?

Should we instead be printing money debt-free to spend it into the economy?

Or should there be some combination of printing money debt-free and printing money to buy gov bonds?

marymccurnin January 5th, 2013 at 2:31 pm

But what about the moral hazard created by ordinary people taking advantage of the big banks and trying to stay in their houses? (snort)

L. Randall Wray January 5th, 2013 at 2:31 pm

So the advantage of adopting your own sovereign currency, and not pegging to something like gold or foreign currency, is you have more domestic policy space

Keith Wilde January 5th, 2013 at 2:32 pm

To Austerity Sucks:

Although JFK is accused in some juvenile circles (to young to remember) of having issued U.S. Notes, what he actually did was to acknowledge the printing of Silver Certificates consistent with the Treasury department’s holdings of silver bullion.

Ironcomments January 5th, 2013 at 2:32 pm

How is MMT going to avert the depletion of natural resources since our consumer society is based on mindless consumption? The belief that monetary – market systems is the best form of allocating resources is a self evident lie.

john in sacramento January 5th, 2013 at 2:32 pm

Huh?

The Red States hated taxes 150 years ago? I’m shocked! Shocked I say!

/s

L. Randall Wray January 5th, 2013 at 2:32 pm

Unemployment is evidence govt has spent too little or taxed too much! You don’t need to measure the amt of base money to determine that–measure unemployment

letsgetitdone January 5th, 2013 at 2:33 pm
In response to Ludwig @ 66

I think they do!

L. Randall Wray January 5th, 2013 at 2:33 pm
In response to marymccurnin @ 68

As the great banking expert Martin Mayer says: a crisis is the wrong time to teach frugality. In any case 80% of mortgage fraud was on the part of lenders

DWBartoo January 5th, 2013 at 2:35 pm
In response to letsgetitdone @ 45

Ah, the question of “trust”.

When the law is used to destroy the Rule of Law, as we see in the unwillingness of the government to prosecute huge criminal fraud, it doubtless raises some questions about whether government may be trusted to concern itself with either the will of the people (who, by a huge majority, would very much like to see legal accountability for the aforementioned criminal fraud) and the dire and genuine NEEDS of the people of jobs, of justice, of democracy, then it might transpire that the people come to question the honesty and intentions of those who claim to “represent” the “interests” of the people … one notes, further, that the political class, which includes the media, are held in contemptible regard at a level of historic proportion.

Thank you, again, lets, for your stellar attempts to encourage thoughtful discussion around our economic plight and possible solutions that deserve, at least, serious consideration.

DW

L. Randall Wray January 5th, 2013 at 2:35 pm
In response to Ironcomments @ 71

Well, I don’t know many followers of MMT who believe “free” mkts are the way to go

In any event, the environmental questions actually become EASIER if you understand how money works. We can financially “afford” environmentally sound practice

letsgetitdone January 5th, 2013 at 2:35 pm

And measure it whether anyone who wants job can’t get one!

DWBartoo January 5th, 2013 at 2:35 pm

I certainly agree, Randy, that a huge popular outcry is necessary, yet what do you imagine the building of that outcry, the understanding behind it, will require?

DW

Ludwig January 5th, 2013 at 2:36 pm

Jim-crackery is an evasion. The fraud is evolutionary and today’s “capitalist” fraud is a means to managed descent.

Austerity Sucks January 5th, 2013 at 2:36 pm

I understand that point and I agree. However, I am unclear on how we should be introducing new money to the economy, normatively speaking…

Should we borrow it from the Fed and spend it?

Or should we be printing it ourselves debt-free and spending it?

Or some combination of both?

Does it even matter?

L. Randall Wray January 5th, 2013 at 2:37 pm
In response to DWBartoo @ 76

We are living through the worst scandals in human history, no doubt. Thousands of top bank officials should be prosecuted, as Bill argues

perris January 5th, 2013 at 2:37 pm

The Primer shows why it is essential for the government to increase its spending and reduce taxes in response to the Great Recession

I would qualify that with “reduce taxes for those who are struggling in the recession”

and I would add

“unearned income should be taxed at a higher rate so more money winds up being spent on hard goods

Ludwig January 5th, 2013 at 2:37 pm
In response to letsgetitdone @ 74

Do you wish to speak for them?

L. Randall Wray January 5th, 2013 at 2:38 pm

Debt free money is not possible. all money is someone’s debt. HPM is debt of govt. You seem to prefer non-interest paying debt. Fine.

bluedot12 January 5th, 2013 at 2:38 pm

Prolly won’t get much argument about that around here.

Eric Tymoigne January 5th, 2013 at 2:38 pm
In response to Ironcomments @ 71

This is a very important question that relates more to the nature of capitalism rather than financial operations. Beyond the immediate scope of this book.
Speaking for myself, a growth-based economic model like capitalism won’t be able to developed technology fast enough to limit resource need. In addition, the more energy and resource efficient we are, the more we use these resources.

Ironcomments January 5th, 2013 at 2:38 pm

So you believe money is necessary for human society to function?

letsgetitdone January 5th, 2013 at 2:39 pm
In response to DWBartoo @ 76

Thanks DW, we political scientists say “legitimacy.” Trust is one element; but there are others.

L. Randall Wray January 5th, 2013 at 2:40 pm
In response to perris @ 83

Purely from the point of view of spurring recovery, you want to reduce taxes on those who a) have high propensity to consume and/or b) have high debt to service.

Neither of those fit many in the top 1% so I’d agree not much reason to give them debt relief

and other reasons to raise taxes on them–excessive inequality is a killer, literally

bluedot12 January 5th, 2013 at 2:40 pm

This interest thing is a mystery. What is the best: low rates or high rates?

Does high interest curtail inflation?

William Black January 5th, 2013 at 2:40 pm
In response to Ironcomments @ 71

No monetary system will “avert the depletion of natural resources.” Individual market decisions cannot properly with negative externalities like climate change. (And Coase’s work actually supports that conclusion because transaction costs are always present.) We need active government intervention against negative externalities.

L. Randall Wray January 5th, 2013 at 2:42 pm
In response to Ironcomments @ 88

Of course not. Humans lived in society for a million years w/o money.

We don’t need money. But we’d have a very much different society.

I’m skeptical we can do it with 7 billion humans

L. Randall Wray January 5th, 2013 at 2:42 pm
In response to bluedot12 @ 91

the conventional view is high rates fight inflation. My view: neither theory nor evidence justifies that view at all.

Austerity Sucks January 5th, 2013 at 2:43 pm

Could you clarify the point on “all money is someone’s debt”?

If the US government abolishes the Fed and prints $100 and gives it to someone, then the US government doesn’t owe $100 to anyone, and the person doesn’t owe $100 to anyone.

Can you expand a bit on how you’re modeling debt?

perris January 5th, 2013 at 2:43 pm

I understand that point and I agree. However, I am unclear on how we should be introducing new money to the economy, normatively speaking…

I believe we should be introducing money through a public workforce that creates a product to show for the introduced money, a bridge, a road, a school

imho, “lending money” so that it can be spent doesn’t do the trick like spending money on jobs directly

as I alwasys say, (paraphrasing lincoln I believe), jobs create wealth, not the other way around

L. Randall Wray January 5th, 2013 at 2:43 pm

High rates raise business costs, get passed along in prices

High rates increase income of govt bond holders, stimulate spending

Until you get to 20%, like Volcker–then you cause massive insolvency and crisis

Ludwig January 5th, 2013 at 2:44 pm

But per Robert Holmes à Court, Australia’s first businessman-billionaire, “in a bear market, the money returns to its rightful owners.”

L. Randall Wray January 5th, 2013 at 2:44 pm

Currency is debt. An IOU.

What does govt owe you? It must take it back in payment (usually of taxes)

Same is true of all IOUs. Must be redeemed on demand. All this is explainied in my book

letsgetitdone January 5th, 2013 at 2:45 pm
In response to Ludwig @ 84

No, Bill and Randy are very capable of speaking for themselves. In fact, I don’t know any people who are more capable than they!

perris January 5th, 2013 at 2:45 pm

thanks for the answer, man you are fast!

and other reasons to raise taxes on them–excessive inequality is a killer, literally

well, the reason to raise taxes wouldn’t be for anything but forcing them to spend the non working funds, for instance, invested income should be taxed at a higher rate then labor income, and there should be tax relief for money spent rather then money saved

and of course you raise taxes where they are way too low in the first place, when that investment in low taxes are not giving us a positive return

William Black January 5th, 2013 at 2:45 pm
In response to perris @ 83

I have written a number of columns explaining that the issue is primarily the net change in taxes. I have urged, for example, tax cuts for the working class (e.g., payroll tax) to counter the (modest) drag on growth that the (modest) tax increases for the wealthy could produce. Multipilier effects of particularl tax cuts also vary and are relevant.

L. Randall Wray January 5th, 2013 at 2:46 pm

I would tax “bads”: bad behavior like speculating

Or for living in a house that is too big and energy-consuming

I love cubic foot of dwelling tax

thatvisionthing January 5th, 2013 at 2:46 pm

Dummy questions here :-) (sorry I have not read all the comments here, just want to ask questions I have had in general) (total non-econ brain)

I think I understand that the idea of a trillion dollar coin is so we can start spending on necessary things like jobs and infrastructure and education and all that that goes lost in austerity. But are we in such a huge hole because real money has gone chasing fantasies via fantastically leveraged bets and offshoring profits and all those kinds of 1% dodges? And wars and MIC?

So my questions are … basically the same question … pick anything useful out of this if there is anything useful and you’re up to wading:

- Does trillion dollar coin just restock some of what has been lost/offshore/stolen, actually just enabling further loser gambling/offshoring/theft? Would trillion dollar coin just be another wasted bailout to the rich?

- How can you be sure trillion dollar coin would go to private/working 99% vs private/speculative 1%? Stephanie Kelton says $10, govt taxes $9, leaves $1 private surplus – and I’m thinking there’s private corporate people and then there’s private you and me, and the twain don’t meet. Everything the government does in the name of helping the 99% seems to be Orwellian – actually harms the 99% to feed the 1% (thinking HAMP and TARP and mortgage settlement). Protects the fraudsters, foams the runway for them.

- Another way of thinking that is, is there a way to mint working, reality-based dollars as opposed to speculative/rentier dollars? If you’re going to invent coins, why not invent a working coin? Even better, a peaceful working coin that could not be spent on war crap.

Thank you both for being here.

Eric Tymoigne January 5th, 2013 at 2:46 pm

Because a monetary instrument is a financial instrument, like a bond.
It is a debt because the issuer (government) must accept it back in payment. It owes the holders of the monetary instrument the promise to accept its monetary instrument in payment.
Monetary creation is best modeled with balance sheets. monetary creation lead to an increase in teh liability of the issuer and an increase in its assets (what the issuer acquired with the monetary instrument)

DWBartoo January 5th, 2013 at 2:47 pm
In response to letsgetitdone @ 89

Yes, and a certain document, from this nation’s early history, makes rather clear those things necessary to a government’s “legitimacy” … and even prescribes a “remedy” when those conditions are not met.

I chose “trust” for it is an easy concept for many people to understand. What happens, for example, if a government no longer “trusts” the people? If it spies upon them, and refuses them the right of public assembly and the redress of grievance?

Just as economists have a hard row of outreach education for the many to hoe, so too, do you political scientists … even as do psychologists, especially those concerned with “social” psychology …

;~DW

L. Randall Wray January 5th, 2013 at 2:47 pm

You don’t want to tax “goods”

Working is good. don’t tax work. The payroll tax is about the worst you can come up with. Well, I guess you could tax charity!

Ludwig January 5th, 2013 at 2:48 pm

Comrade Wray, do you agree that capitalist criminals have exploited derivatives to mask their transformation in decline?

L. Randall Wray January 5th, 2013 at 2:48 pm

Well we DON’T WANT TO USE THE TRILLION $ COIN TO BAIL OUT MORE BANKSTERS!

perris January 5th, 2013 at 2:49 pm
In response to Eric Tymoigne @ 105

what would you think of currency based on a living hour’s wage rather then debt or metal?

for instance, 5 dollar would equal 1/4 hour labor?

L. Randall Wray January 5th, 2013 at 2:50 pm
In response to Ludwig @ 108

think of derivatives this way: most are bets on death.

You won’t be able to pay your mortgage–I bet you lose your house

You will die sooner than actuarial tables assume–derivatives to bet on your early demise

Peasant insurance as in Moore’s filme

Ironcomments January 5th, 2013 at 2:50 pm

So if monetary systems can’t avert human created disaster and it is possible for human to function without money, then what is the purpose of MMT?

Eric Tymoigne January 5th, 2013 at 2:50 pm

The Job Guarantee program does some of what you are referee. Monetary injection comes from paying people for work.
The trillion-dollar coin is really an accounting gimmick between fed and treasury. It does not do anything else.

bluedot12 January 5th, 2013 at 2:50 pm

Volcker: Unless you are on the receiving end. Sounds like a mixed bag. Pensions like it, but can cause inflation.

Austerity Sucks January 5th, 2013 at 2:51 pm

I will need to think about this answer more to really understand it (I’ve ordered your book but it is coming from the UK to Denmark, and will take some time to arrive, but I have read through the the resource provided online).

One last question from me on this issue of money creation:

Is the Federal Reserve necessary? Should we abolish it and take overt control of “the spigot” for new money into the economy? If we did abolish it, would the replacement mechanism look basically exactly the same?

L. Randall Wray January 5th, 2013 at 2:51 pm
In response to perris @ 110

Ah you are onto something: the ELR.

employer of last resort with a living wage

That gives the $ a good base!

L. Randall Wray January 5th, 2013 at 2:53 pm

I’d reform the Fed. What does Fed really need to do?

a) hit overnight rate target
b) be a lender of last resort

That’s it. Should take a staff of 5 or 6 people.

eblair January 5th, 2013 at 2:53 pm

Mr. Wray,
Thanks for being here today. According to former Belgian central banker Bernard Lietaier, he was told personally by his former classmate Paul Krugman to not talk about the money system, that it was a taboo topic, and that if he did talk about it, it would hurt his career. Are economists, afraid of talking about the Federal Reserve system for fear of doing so having negative consequences on their career.

Must see viewing for FDL members, the Krugman bit beginning about the two minute mark: http://www.nakedcapitalism.com/2012/12/former-president-of-the-central-bank-of-belgium-on-why-the-money-system-is-a-tab

L. Randall Wray January 5th, 2013 at 2:54 pm

And to be complete: I’d legislate the overnight rate. I prefer ZIRP. Forever

DWBartoo January 5th, 2013 at 2:54 pm

We do need economic “systems” which provide the resources necessary to human existence, to become more just and sustainable, Randy, and means of “exchange” to facilitate their operation, yet we must move beyond notions of “greed” as being a “good thing”. Which suggests that the days of capitalism, as we have come to know it, are numbered.

Have you any thoughts as to HOW that transition might more peacefully than appears likely at the present moment, might come about?

Whatever outcry may be raised by the people may and must expect the wealthy and powerful to object, to seek to silence and stop the outcry …

Have you any thoughts regarding how the issues we are all concerned with may find a critical mass of acceptance, and the courage to insist upon the changes necessary?

DW

perris January 5th, 2013 at 2:54 pm

*polishes finger nails*

I do boast, I thought that up meself

L. Randall Wray January 5th, 2013 at 2:55 pm
In response to eblair @ 118

nice. let me repeat what one of my colleagues learned in grad school. Her prof said:
“you seem to be the sort of person who likes to think about money. If so you must be the sort who loves to sit in the basement and beat yourself with a rubber hose”

that prof went on to high positions in the IMF and is considered to be the foremost monetary authority in the world today

Austerity Sucks January 5th, 2013 at 2:55 pm
In response to Eric Tymoigne @ 105

“It is a debt because the issuer (government) must accept it back in payment. It owes the holders of the monetary instrument the promise to accept its monetary instrument in payment.”

Thanks! Light bulb just went off. I got it now thanks Eric. Really brought the concept together :)

L. Randall Wray January 5th, 2013 at 2:56 pm
In response to DWBartoo @ 120

read skidelsky’s “the return of the master” on keynes. keynes was brilliant on the “good” society. he was a moral philosopher

perris January 5th, 2013 at 2:57 pm
In response to DWBartoo @ 120

We do need economic “systems” which provide the resources necessary to human existence, to become more just and sustainable, Randy, and means of “exchange” to facilitate their operation

I like to point out that money is nothing but fiat labor

L. Randall Wray January 5th, 2013 at 2:59 pm
In response to perris @ 125

yes the problem we have is that with unemployment, the minimum wage is not effective; as minsky said, we need ELR to make it effective. Anyone can then actually get the minimum wage (living wage in the program); otherwise you get zero.

William Black January 5th, 2013 at 2:59 pm

Some derivatives have existed for centuries. They arose to help farmers deal with the vagaries of production. Overall, most folks think they’ve been helpful and have not led to recurrent fraud or crises.

Any derivative, however, where the folks that want to sell them demand immunity from the laws and regulation, has to be bad for the world.

Ludwig January 5th, 2013 at 2:59 pm

And so, I presume you agree that they’ve been exploited to mask and manage decline. Why then, are you not addressing the decline, comrade?

Eric Tymoigne January 5th, 2013 at 3:00 pm

Sorry guys. Got to go. Was fun.

letsgetitdone January 5th, 2013 at 3:00 pm

The thing is “trust” can go; and state violence can still suffice to ensure acceptance of authority and the currency for a long time. Such governments are not liked or trusted; but they still are “legitimate.”

thatvisionthing January 5th, 2013 at 3:00 pm

Right, well how are you going to stop it? Look at the government we have, the lobbyist law writers, the bought Congress, the Goldman Sachs president, the corporate person Supreme Court. Bill Black writes over and over about the fraud and winks. What makes you think a trillion dollar coin could be minted and spent in our interest and not the banksters when govt is of, for and by nothing but banksters?

L. Randall Wray January 5th, 2013 at 3:01 pm
In response to Ludwig @ 128

who says I am not? I’ve written at least a hundred thousand words on derivatives and the like.

William Black January 5th, 2013 at 3:01 pm
In response to Ironcomments @ 112

No monetary system can ensure good decision-making by a society and its leaders. Any tool can be used for good or ill, but that doesn’t make it useless to design better tools.

DWBartoo January 5th, 2013 at 3:01 pm

Randy, one of our treasured writers at FDL, David Dayen, now departed for a well-deserved respite and other opportunities, spoke of current political gyrations as being “death by spreadsheet”, that austerity presupposes that many will suffer, many will die, and that such a thing is “acceptable” to the current political class, which includes the media, AND to the monied elite.

It is this callousness which we all face, this blithe lack of concern for actual human beings. Be it economic or the aspects of “endless warfare” …

Although more human beings, every day, come to understand that this is our common, worldwide, plight, we have not yet reached a “tipping-point” in conviction and courage, especially within this nation, whose policies, economic and military are wreaking havoc on the environment, the world which makes possible our very existence, and the many human beings and other life-forms who inhabit this world.

DW

perris January 5th, 2013 at 3:01 pm
In response to Eric Tymoigne @ 129

thanks for being here!

L. Randall Wray January 5th, 2013 at 3:02 pm

I see the platinum coin as a way to pressure Obama and congress. Now we all know there is a way around the debt limit. I know Joe sees this differently from me, but I see it mostly as a bargaining strategy

thatvisionthing January 5th, 2013 at 3:03 pm

Wasn’t it “dead peasant insurance”? Saw it a while ago and that’s what comes to mind.

L. Randall Wray January 5th, 2013 at 3:04 pm
In response to DWBartoo @ 134

agree. this is hard. we’ve gone on what i see as a dead end path since 1974. and here we are.

L. Randall Wray January 5th, 2013 at 3:05 pm

there are 2 kinds of bets on actual death: death settlements and peasant insurance. employers buy the second and hope for death. anyone can buy the first.

William Black January 5th, 2013 at 3:05 pm
In response to letsgetitdone @ 130

Again, no one claims that a better designed monetary system means that the government will be a good government. But a good government with a badly designed monetary system is a tragedy that causes immense harm to its people (and sometimes the world) despite the fact that we know how to design a wll-functioning monetary system.

letsgetitdone January 5th, 2013 at 3:05 pm

I don’t even want to use the TDC. I want to use a $60 T coin, so that we take care of the debt ceiling, debt issuance, outstanding public debt as it falls due, deficits for 15 – 25 years from now, and austerity as a credible ideology preventing the Government from spending money on things that benefit the 99%.

thatvisionthing January 5th, 2013 at 3:05 pm

What if government is too corrupt? What can people do at the grassroots? I think I read that in Greece people are making their own coins or money now to exchange between themselves? Just skimmed by that, don’t know what the real story is. But it’s like we’re reality, and we keep waiting for some govt or bankster fairy to touch us with a wand so we matter. It’s backwards. It’s wrong. It’s stupid.

Ludwig January 5th, 2013 at 3:06 pm

I did not say derivatives. I said decline. Where have you written about the strategy of using derivatives to control decline?

L. Randall Wray January 5th, 2013 at 3:06 pm

Oh, Eric Tymoigne just left. Let me plug our new book. We write about the rise and fall of Money Manager Capitalism–of which the Goldmans, the Pension Funds and all the derivatives played a part. It won’t be out for a while, tho

hpschd January 5th, 2013 at 3:07 pm

I remember runaway inflation in the ’60s and ’70s.
I was working at Safeway and my job, all day, every day, was raising prices on shelf stock.

Nixon ended the Bretton Woods deal and fiat currency rates could float. (and tried wage and price and rent freezes)

How did this relate to the inflation?

Ironcomments January 5th, 2013 at 3:07 pm
In response to William Black @ 133

Perhaps society and leaders would make better decisions once the religion of money is removed from existence. Economist such as yourselves are re-enforcing that religion.

bluedot12 January 5th, 2013 at 3:08 pm
In response to letsgetitdone @ 141

I’ve heard you say that before and admire your passion. I mostly think of it as perhaps a good idea that no one will ever use. I hope I am wrong. We may soon see.

William Black January 5th, 2013 at 3:08 pm

Because we’ve tax-advantaged “dead peasant insurance” and removed the usual requirement of having “an insurable interest.”

L. Randall Wray January 5th, 2013 at 3:08 pm

If govt is too corrupt you have to throw it out.

Caveat tho, in every country I’ve ever given a presentation the response always is: Oh that would work in your country because your govt is not corrupt, but it won’t work here.

Take-away message: corruption is everywhere. But in most places (ok, most developed countries) the roads get paved, the mail gets delivered, and the hospitals mostly work ok

Austerity Sucks January 5th, 2013 at 3:08 pm

So you’re for ZIRP legislated forever, but there should still be a central banking system, where big banks get preferential financing directly through them?

Conceptually, the central banking model isn’t a failure?

In other words, the system as it is now isn’t broken structurally, but is just poorly managed, poorly regulated, and poorly configured?

L. Randall Wray January 5th, 2013 at 3:10 pm
In response to hpschd @ 145

BW had little to do w/USA inflation. Our 2 high inflation periods were due to rapidly rising prices in:
energy
food
shelter

I have a paper at http://www.levy.org demonstrating this

Note well: energy and food are global commodities. Price increases had nothing to do with what went on in USA

L. Randall Wray January 5th, 2013 at 3:11 pm

You need the issuer of HPM to act as lender of last resort. Can be Fed or Treas. Easier I think to do it through Fed.

I would not let fed regulate banks. They have no interest in regulation–as Timmy Geithner famously admitted

thatvisionthing January 5th, 2013 at 3:11 pm

Plus I have another question. All the lost wealth. I don’t know if it’s offshored, destroyed or what, but it’s gone from circulation. Is an economy like an ecology, a system of goes round comes round? Is it like a body with wealth bleeding out? Or is that too zero sum to be an accurate analogy? I keep thinking it’s flow, but I don’t really know how to visualize it. In a real body, you have red arteries and blue veins (or is it the other way around?) and it has to circulate evenly or you die.

eblair January 5th, 2013 at 3:13 pm

Have you ever done any day trading Mr. Wray?

letsgetitdone January 5th, 2013 at 3:13 pm

Most who write about it see it as a bargaining strategy, a way of getting around the debt ceiling. But I think that is we have three ways of getting credits into the Treasury spending account; taxing, selling debt instruments, and seigniorage; it’s perfectly natural to use whatever we need to use for public purpose. Politics has made selling debt instruments poison to use. So, let’s end that for awhile, maybe for good, and use seigniorage.

L. Randall Wray January 5th, 2013 at 3:13 pm

IOU $10. I default. You lost 10. Where did it go? Not offshore.

William Black January 5th, 2013 at 3:13 pm
In response to Ironcomments @ 146

Actually, Randy’s work de-mystifies money. It exposes the dogmas of neo-classical economics that are often relics of the worship of gold.

Ludwig January 5th, 2013 at 3:14 pm

we’ve gone on what i see as a dead end path since 1974.

And so you don’t understand. This is capitalists’ end game.

thatvisionthing January 5th, 2013 at 3:14 pm

Damn walnut shells. Where’d you put it?

L. Randall Wray January 5th, 2013 at 3:14 pm
In response to eblair @ 154

No, are you marketing it? I have no interest. Seems like a dumb thing to do. If you believe finance theory there is a risk-return tradeoff. The extra return on risky stuff just compensates for the risk. You might as well go safe.

letsgetitdone January 5th, 2013 at 3:15 pm
In response to William Black @ 140

That’s a good way to put it!

L. Randall Wray January 5th, 2013 at 3:16 pm
In response to Ludwig @ 158

Ok then you believe capitalists are stupid.

I don’t. Short sighted? Yes. Misinformed? Massively. Selfish? Youbetcha.

DWBartoo January 5th, 2013 at 3:16 pm

Isn’t it interesting that the “path”, embarked upon in the mid-seventies, also happens, by happy coincidence, one imagines, to include the stagnation of wages for the many and the sudden influx of surplus capital to the pockets of the elite … thereby allowing them to “capture” regulatory agencies and the “government”?

IT is, absolutely, a “dead end” path.

And turning from it is hard simply because, beyond massive civil confrontation, the people have NO means or methods of changing the “charted” course and both of the legacy parties, despite what certain economists (think Krugman) would have us “believe”, are playing the kabuki of end-time greed and power.

I much appreciate MMT’s adherents and enjoy the perspectives which you and others share, yet “economics” is indeed the “dismal science” in the eyes and minds of many, so you shall have to reach hearts if your notions are to gain traction and prevail, or even influence future pathways.

I offer that not as criticism, but as encouragement.

DW

zapster January 5th, 2013 at 3:16 pm

What should be done about the enormous overhang of private debt? Obviously getting everyone back to work to be able to pay it off makes great sense, but I’ve read that private debt globally now exceeds any hope of enough production to ever pay it off by something like >50x. Obviously it won’t ever be paid, and much of it seems to be the result of layers and layers of derivative interest debt–which never was related to productivity anyway.

wigwam January 5th, 2013 at 3:17 pm

Why do so many economists think that we must cover our tax deficits via borrowing rather than the issuance of fiat money?

eblair January 5th, 2013 at 3:18 pm

You should do it. Just with a few hundred dollars. In fact I would very strongly recommend it to everyone here. Just enough to make it meaningful. I was not trained as an economist. But by doing some day trading I was able to see first hand in quite dramatic fashion just how rigged and manipulated the whole system is. Vegas has nothing on our so called “markets”.

letsgetitdone January 5th, 2013 at 3:18 pm
In response to bluedot12 @ 147

I don’t expect it to happen under Obama; though he may just use the TDC. But, I always believe that it’s good to ought for the best we can get. It’s the only way that people can learn that there is a best!

L. Randall Wray January 5th, 2013 at 3:18 pm

1929 = collapse of Finance Capitalism. Replaced by New Deal (and WWII, led to managerial welfare state capitalism

2007 = collapse of Money manager capitalism

Not saved, but propped up to go back to doing what they were doing.

They will collapse again. New opportunity awaits

L. Randall Wray January 5th, 2013 at 3:19 pm
In response to DWBartoo @ 163

Yes, that is part of the reason I chose that date: stagnation of wages, following on from stagnation of labor unions (with some exceptions, of course)

L. Randall Wray January 5th, 2013 at 3:20 pm
In response to wigwam @ 165

they don’t understand the actual real world monetary operations

the spending comes first, logically, then the bond sales

you must have the HPM to buy the bonds

bluedot12 January 5th, 2013 at 3:20 pm
In response to Ludwig @ 158

Comrade, if we don’t find a way to put some twenty plus million back to work and end the horrendous difference between the 99 and 1 percenters, I think this could be the end time. And yet the idiots in DC are more concerned about the unsustainable debt.

L. Randall Wray January 5th, 2013 at 3:20 pm

the monetary ops are more complicated than that, but that is what it boils down to

perris January 5th, 2013 at 3:21 pm
In response to eblair @ 166

do tell please

Ludwig January 5th, 2013 at 3:21 pm

Ah. It ends up again with stupidity. But, no, that is not my conclusion. Vicious bastards, yes.

This fraud deserves much more rebellion than “they don’t have the right answer” or “are dumb”. Why do you wish to oppose fraud with gimmicks?

L. Randall Wray January 5th, 2013 at 3:21 pm
In response to bluedot12 @ 171

I’d say 25 million new full tiime jobs are needed

how? ELR AKA job guarantee

William Black January 5th, 2013 at 3:21 pm

See the FCIC report and the memo available on the FCIC website written by the Fed’s long-time head of supervision. It shows how institutional factors leave Fed supervision a continual failure.

bluedot12 January 5th, 2013 at 3:21 pm
In response to letsgetitdone @ 167

Agreed.

L. Randall Wray January 5th, 2013 at 3:22 pm
In response to Ludwig @ 174

Not a good answer at all. You’ve got a golden goose, but you are hungry so you roast it.

I’d call that stupid, not vicious.

DWBartoo January 5th, 2013 at 3:23 pm

Capitalists are not stupid.

Yet, as a Brit friend of mine is wont to say, “Aye, but it may be that they are too clever by half …”

One does wonder sometimes, Randy, if capitalists can even imagine the possibility that they might just put themselves out of “business”, permanently, and the human species out of a home?

Just a wee ponderation.

;~DW

masaccio January 5th, 2013 at 3:24 pm

Randy, could you talk a bit about the connection between the chartalist view of money and the ideas in your primer?

thatvisionthing January 5th, 2013 at 3:24 pm

They will collapse again. New opportunity awaits

Are we just waiting for another collapse and hoping better creatures arise next time? What are you looking for?

L. Randall Wray January 5th, 2013 at 3:24 pm

To be clear: individual capitalists and rich folks don’t have to be stupid to do what they are doing. Individual self-interest alone can drive us down the dead end path.

It is the collective problem that they will kill their golden goose

Ludwig January 5th, 2013 at 3:25 pm
In response to bluedot12 @ 171

Ok. But are you following? The comrades have neglected the deeper strategy here. Do they argue that strategy is conspiracy?

I don’t believe they can, comrade.

DWBartoo January 5th, 2013 at 3:25 pm

Bingo!

Ah, the collapse, next time …

Just want to tell you how much I am enjoying this Salon, Randy.

I’ve had the opportunity of several chaps with Bill Black, here, and value this opportunity of speaking with you quite as much!

;~DW

Ludwig January 5th, 2013 at 3:26 pm

So you believe they are stupid.

L. Randall Wray January 5th, 2013 at 3:26 pm
In response to masaccio @ 180

Chartalism or State Money approach is a component of modern money theory (MMT). Derives from Knapp and Keynes. Idea, simplified: the state chooses the unit of account, imposes taxes in that unit, and spends by issuing HPM in that unit.

bluedot12 January 5th, 2013 at 3:26 pm

Job for everyone? Sure. So who do we have to elect to see that happen. Sorry. It is freaking depressing watching this for the past four years and nothing but half steps while no banker at all goes to jail and we spend our resources in stoopid wars. Sorry for the rant. But these are my hot buttons.

William Black January 5th, 2013 at 3:26 pm

As we discussed earlier, they manipulate markets because they hate competition. The CEO wants a “sure thing” — they want to be wealthy regardless of the quality of their products. The collective result of many individual CEOs manipulating markets can be a disaster (what neo-classical economists delight in calling “unintended consequences” — but always use to attack governmental efforts to aid the poor). None of this requires a vast, secret conspiracy or even requires that a Great Recession be profitable for “capitalists” as a whole.

L. Randall Wray January 5th, 2013 at 3:28 pm

and then, usually, everyone else uses the same unit of acct in which to denominate their own debts. We can call that “private money creation”

a little known ambassador of the Queen of England, A. Mitchell Innes actually explained this better than knapp or keynes.

he integrated the state theory of money and the credit theory of money

i edited a 2004 book on that, “credit and state theories of money”. I think it has excellent contributions and reproduces 2 articles by innes.

hpschd January 5th, 2013 at 3:29 pm

What is the title of the paper at http://www.levyinstitute.org/

L. Randall Wray January 5th, 2013 at 3:30 pm

In my view, the 1913 and 1914 articles by Innes are the 2 best articles on money ever published

An amazing guy. He had 2 other publications:
Martyrdom in our times (on incarceration–a must-read.
and Beekeeping.

Austerity Sucks January 5th, 2013 at 3:31 pm

To what extent do large foreign-currency-denominated debts threaten the sustainability of a sovereign economy in the MMT model?

letsgetitdone January 5th, 2013 at 3:31 pm

I like Hugh’s disemployment measure. As of the latest BLS report there are 28.328 million disemployed.

wigwam January 5th, 2013 at 3:31 pm

Thinking of the dollar as a transferable tax credit seems to unite the two.

L. Randall Wray January 5th, 2013 at 3:31 pm
In response to hpschd @ 190

On inflation? Umh….look for co-authored paper by me and dimitri papadimitriou; we did several on the theme of “the fed is flying blind”

If i get a few minutes, i’ll look

William Black January 5th, 2013 at 3:32 pm
In response to bluedot12 @ 187

As you know, the failure to prosecute is something we’ve been emphasizing at UMKC for years. We share your frustration, but our response is to be relentless in pushing for change. We have succeeded in more unlikely environments, e.g., the Reagan administration, where both Parties tried to block our efforts and drive us out of office.

L. Randall Wray January 5th, 2013 at 3:32 pm

govt should not denominate its debt in foreign currency. That’s how you get into trouble and have to go hat in hand to IMF.

I’d make it illegal everywhere.

bluedot12 January 5th, 2013 at 3:33 pm
In response to William Black @ 188

of course, it is a fraud. I think our friend Ludwig has said as much. Look at what has happened in this country for the past nearly forty years. Now the fools want to bankrupt the country so they can make off with more loot and beggar more of us. But the debt, you know, it is unsustainable gotta get control of it.

Ludwig January 5th, 2013 at 3:33 pm

Yes. That is the eternal conceit of Platonists. The herd is stupid.

But the market is a fraud. Stupidity is not the capitalist herd’s crime, it is duplicity.

Mod Note: Please return to the original topic of the book

L. Randall Wray January 5th, 2013 at 3:33 pm
In response to wigwam @ 194

Absolutely. sounds like Warren Mosler!

L. Randall Wray January 5th, 2013 at 3:34 pm
In response to bluedot12 @ 187

Not saying it is politically easy to push ELR/JG. Been trying for almost 20 yrs. Hyman Minsky tried in 1960s as alternative to War On Poverty–which he argued would fail. It did.

Austerity Sucks January 5th, 2013 at 3:35 pm

To clarify, you’d make it illegal for ALL American entities, or just the US government to issue debt in foreign-denominated currency?

bluedot12 January 5th, 2013 at 3:35 pm
In response to William Black @ 196

Yes, I often stop by and check out your own rants.

DWBartoo January 5th, 2013 at 3:35 pm
In response to letsgetitdone @ 193

“Disemployed”? A superb term, lets. Might you provide a link?

DW

Matt Hathaway January 5th, 2013 at 3:36 pm

The US infrastructure (roads, bridges, electricity grid, etc) has something like a 2 trillion dollar gap just to bring it up to modern standards. We could employ millions of people tomorrow if the government just decided that this was a good and necessary thing to do. Instead we’re talking about bringing down the deficit. * sigh *

L. Randall Wray January 5th, 2013 at 3:36 pm

Only talking about govt. If you as a firm or household issue debt in foreign currency and cannot come up with it to service debt, you default. No big deal, happens every day.

zapster January 5th, 2013 at 3:36 pm

With automation throwing a wrench in the works, I think the idea will come to life again, simply because robots can accumulate more money than they can spend, so to speak ;)

L. Randall Wray January 5th, 2013 at 3:38 pm
In response to Matt Hathaway @ 205

Yep, not to mention we are an aging society and the only things that last long enough to take care of elderly in the future are: infrastructure and education of our kids who will be the workers of the future.

so what do we do? slash spending on both.

Ludwig January 5th, 2013 at 3:39 pm
In response to William Black @ 188

they manipulate markets because they hate competition.

And how long have we known this baffling gem? A long time, comrade.

I suggest that you are missing the coordination that results in the plunder of wealth. What economist do you know addressed this plunder as strategy rather than “accident”?

L. Randall Wray January 5th, 2013 at 3:39 pm
In response to zapster @ 207

I long ago wrote a paper in Journal of Economic Issues on the problem with robots. we won’t need workers so won’t have consumers, so the only profitable activity will be speculation in Martian Ocean Front Condo Futures.

Hey, we’re half way there!

Shoto January 5th, 2013 at 3:39 pm
In response to Matt Hathaway @ 205

We could employ millions of people tomorrow if the government just decided that this was a good and necessary thing to do.

Yup. Moreover, the government would be investing in long-term assets which would allow the US to more effectively compete in a global marketplace. Isn’t that, after all, what the transnational bosses are always banging their tin drums about? Criminals and hypocrites.

karenjj2 January 5th, 2013 at 3:39 pm

I prefer to call the “payroll tax” a disability, retirement and medical INSURANCE deduction. 30% of Social Security insurance payments are to non-retired disabled, children, and widows. It is deferred income.

Great discussion. Thank you!

William Black January 5th, 2013 at 3:40 pm

The Fed (FOMC) minutes leading up to the crisis show that (1) they knew inflation was minimal and not causing any harm, (2) they were obsessed with the risk of inflation breaking out, and (3) they kept bringing up anecdotes designed to imply that huge inflation might be right around the corner even as the economy was hurtling towards the Great Recession.

thatvisionthing January 5th, 2013 at 3:40 pm
In response to William Black @ 188

Hey, that reminds me! A name that comes up from time to time is Catherine Austin Fitts. Somebody pointed me to her paper The Myth of the Rule of Law: or How the Money Works: … a while ago, and it’s long and involved but I think her point was something like the government basically works like a vast criminal conspiracy (I used Matt Taibbi’s description of MERS). She was in the first Bush administration (Assistant Secretary of Housing) and apparently got kicked to the curb for trying to develop transparent, effective policies when the real game was in the shadows and feeding big fish. She wrote this in 2001:

What we were creating was a society in which certain institutions were not only not allowed to fail, but were guaranteed profits using taxpayers’ credit. The best part yet was that every time the taxpayers and their credit bailed these folks out, they and their investors got to keep 100% of the equity. So heads you win, tails you stick the losses to the taxpayers. Large banks are not allowed to fail. This set the stage for a long series of taxpayer financed rescues: the Mexican bailout, the “restructuring” of Russia, and the Long Term Capital Management bailout.

It’s a long paper, that’s in the section on HUD and the RTC. 2001, not 2008!

What do you think?

bluedot12 January 5th, 2013 at 3:40 pm

I need to put this out there again since it is in the news all the time. Are our current deficits and debt unsustainable or will they become so in the near future?

letsgetitdone January 5th, 2013 at 3:40 pm
In response to DWBartoo @ 204

Just follow the link to Naked Capitalism and read the piece. It’s in there, and the piece you’ll be reading is a one of his monthly reports on the BLS report.

Austerity Sucks January 5th, 2013 at 3:41 pm

Theoretically, could a large, influential private business build up enough credibility to take on a debt load that was unsustainable in a foreign currency, which could then drag down the American society?

L. Randall Wray January 5th, 2013 at 3:41 pm

And why do we slash education and infrastructure?

because if we spent more it would burden future workers with debt!!!

so they will have to work without being educated and with a crumbled infrastructure in order to support us old geezers.

Boy what a brilliant way to reduce their burden.

Shoto January 5th, 2013 at 3:41 pm

the only profitable activity will be speculation in Martian Ocean Front Condo Futures.

Lloyd Blankfein has probably already got some action going on that deal…

hpschd January 5th, 2013 at 3:41 pm

thanks

Looking at The Levy Economics Inst, online.

I am overwhelmed!

Ludwig January 5th, 2013 at 3:41 pm
In response to zapster @ 207

robots can accumulate more money than they can spend

On the contrary, robots seem to “re”produce quite well on that accumulation.

joebhed January 5th, 2013 at 3:42 pm

We started fresh in 1776 after great struggle to establish our monetary system. Franklin said that the refusal of the British to allow the Colonies their own money system was the main cause for the Revolution.
The Constitution placed the power to create the nation’s money with the public, as a governmental function. The people’s money system.
Despite this history, for the past 100 years we have had a system of private money creation, through the Federal Reserve System. Please don’t focus on whether “The Fed” is private or not. The banks that create the nation’s money, and receive the full benefits of that power are private entities, so we have a private system of money creation. It uses methods designed to benefit the bankers. One is reserve-based banking.
It is unfortunate that we might focus on some private central banking metric and fail to discuss the basic concepts of the national monetary system as they relate to who has the money creation and issuance power.
As a legal matter.

DWBartoo January 5th, 2013 at 3:42 pm
In response to Matt Hathaway @ 205

“We” are NOT talking about the deficit, Matt, the political class is talking about it. The REASON they are talking about it and NOT the infrastructure, is that the political class is trying to deliver even more wealth to the 1%.

If you check out the actual content of the “fiscal cliff” settlement(!), then you will find that massive perks, tax breaks, tax write offs and NO mention of carried interest (remember Mitt?) are its main “attractions”.

Am I being cynical in telling you this? No.

However a whole bunch of someones are being VERY cynical … and, they are lying or engaged in clever if subtle deceit.

“We”, you and I, are not even part of the discussion. AS George Carlin said, “It is a big club, and we’re not in it!”

DW

bluedot12 January 5th, 2013 at 3:43 pm

I have another question that is often asked. Is it smart to have a SS fund and to increase the payroll tax to make it more sustainable? (there’s that word again.)

L. Randall Wray January 5th, 2013 at 3:43 pm
In response to bluedot12 @ 215

Read my piece from earlier this week on leaping over the fiscal cliff at my GLF blog. Yes deficits and debt are sustainable.

zapster January 5th, 2013 at 3:44 pm
In response to William Black @ 213

One inflation angle that I’ve wondered about concerns the amount of money currently tied up in derivatives and in corporate accounts that they simply can’t seem to find a use for. Is there any scenario where this huge slush fund would suddenly end up flooding into the real economy? Is there enough out there to become inflationary, or will the economy simply expand to make use of it, should that happen?

DWBartoo January 5th, 2013 at 3:44 pm
In response to letsgetitdone @ 216

Thank you, letsgetitdone. There are a number of links on this thread I shall be pursuing.

DW

L. Randall Wray January 5th, 2013 at 3:45 pm
In response to bluedot12 @ 224

No. Trust fund = govt owes itself. In any case sovereign govt can always meet all commitments as they come due, inc socsec.

when should we tax in order to take care of seniors 75 years from now?

Not NOW!!! Maybe in 75 yrs.

why do you tax? so workers cannot consume all their output. to leave something for granny.

bluedot12 January 5th, 2013 at 3:45 pm

Whew. Thought so. but who knew?

L. Randall Wray January 5th, 2013 at 3:46 pm

So payroll taxes today take income away from workers. Do we need to do that to leave something for granny?

of course not. we have 25m without jobs. give them jobs. we all can have more, including granny.

William Black January 5th, 2013 at 3:46 pm

I’m more concerned than Randy by this. Consumers often have no conception of the currency risk they take in borrowing in a foreign conspiracy. It appears to be much cheaper to borrow in the sronger currency because the interst rate is much lower. If the home currency depreciates against the stronger foreign currency the interest rate the borrower must pay can suddenly increase dramatically. Defaulting on your home loan is a very big deal that can lead to homelessness and terrible situations for the kids.

BevW January 5th, 2013 at 3:47 pm

Have you seen this month’s The Atlantic?
What’s Inside America’s Banks?

Some four years after the 2008 financial crisis, public trust in banks is as low as ever. Sophisticated investors describe big banks as “black boxes” that may still be concealing enormous risks—the sort that could again take down the economy. A close investigation of a supposedly conservative bank’s financial records uncovers the reason for these fears—and points the way toward urgent reforms.

Your thoughts??

bigbrother January 5th, 2013 at 3:47 pm

I am concerned we are ripped off by FED taking bad paper from TBTF Bansters. Case in point Bof A was $5 a share starting last year now over $11. Why do the banks get to unload their crap on US citizens?

eblair January 5th, 2013 at 3:47 pm
In response to zapster @ 226

There is very little collateral backing those derivatives. The ratio is maybe 10-1 or more. It has all been rehypothecated numerous times in London.

wigwam January 5th, 2013 at 3:47 pm

why do you tax?

Because the value of the dollar is a matter of supply and demand. Tax provides the only intrinsic demand and also reduces the supply.

letsgetitdone January 5th, 2013 at 3:48 pm

Here’s the link to GLF.

Shoto January 5th, 2013 at 3:48 pm

Mr. Wray: What would be your opinion as to why the ideas being discussed here don’t break through to the beltway MSM, and to the Congress and the Executive branches? In the end, the concepts don’t seem too terribly difficult to grasp.

L. Randall Wray January 5th, 2013 at 3:48 pm
In response to William Black @ 231

Agree with bill. specifically happened in europe all over the place. a disaster.

need strong consumer protection. Go elizabeth warren!

the problem was bank fraud–over here and over there. consumers had little idea of what they were doing.

but if GM wants to issue euro-denominated debt, i would not make that illegal.

bluedot12 January 5th, 2013 at 3:48 pm

Whew again. Say that to even progressives and they get squirrely with you.

bluedot12 January 5th, 2013 at 3:49 pm

You should come around here more often.

Austerity Sucks January 5th, 2013 at 3:49 pm

Half the country right now seems to want to cut spending and doesn’t understand the implications.

Half the country right now is scared about the debt for purely emotional reasons, often invoking “think of the children/grandchildren’s future”.

Many of us have been out there trying to educate them on the differences between Household and Government finance…but there’s still a large loud Wrong-wing that is repeating the lies over and over again about Debt being bad and Spending cuts being necessary.

The question is, how can we get the teahadists to drop their emotional anti-intellectualism and adopt a populist and practical policy for growth and full employment?

L. Randall Wray January 5th, 2013 at 3:49 pm
In response to BevW @ 232

Of course, and absolutely. the big 12 banks are massively fraudulent and massively insolvent. They will cause another GFC. The only question is when.

hpschd January 5th, 2013 at 3:49 pm

I cannot recall ever being so blown away by an FDL Book Salon. I’ll have to read the book and hope I can understand it.

The Toronto library system lists two books in a search of L. Randal Wray:

“The global financial crisis : what have we learnt?”

and

“Macroeconomic theory and its failings”

The MMT Primer is not in the system, but I’ll request it.

Thanks for an intense Book Salon!

wigwam January 5th, 2013 at 3:49 pm

The payroll tax holiday has a Zandi multiplier of 1.29, while the Bush tax cuts get a multiplier of .29.

thatvisionthing January 5th, 2013 at 3:49 pm

Still back at my grassroots question. Could a state manage things differently? I’m in California, what can Jerry Brown do that the federal government won’t? Lots of creative, hardworking people in California who are now unemployed/disemployed (I’ll have to go find that). Ellen Brown has pointed out the idea of state banks like the Bank of North Dakota that was in Capitalism: A Love Story special features. I’m still thinking that if we could figure out how to start wealth with people instead of waiting for it to trickle down via bankster fairy wands, that’s worthwhile pursuing. And then my brain stops. I don’t know how.

L. Randall Wray January 5th, 2013 at 3:50 pm
In response to bluedot12 @ 239

I know. I was so amazed that they fought tooth and nail against the payroll tax holiday–which had a multiplier of at least 1.5. Now we took that away and will lose above 2% of GDP and a million jobs. The progressives are now happy, i suppose.

DWBartoo January 5th, 2013 at 3:51 pm
In response to William Black @ 231

Glad you point that truth out, Bill, as Randy’s comment,@206, seemed to regard “default” much too casually, although one imagines he was considering less dire consequence than loss of a home, or educational opportunity, and so on.

DW

Ludwig January 5th, 2013 at 3:51 pm

Well then, perhaps comrade Wray would care to address the question.

What economist do you know addressed [neoliberal] plunder as strategy rather than “accident”?

To manage capitalist decline, you know.

L. Randall Wray January 5th, 2013 at 3:52 pm
In response to hpschd @ 243

Hi those are not books. You can prob get both of those online at http://www.levy.org.

the modern money primer is at amazon on sale. sorry to be a salesman…..

much of it is free as a series of blogs at NEP. Not as good as the real thing, but you can get much of this there.

L. Randall Wray January 5th, 2013 at 3:52 pm
In response to wigwam @ 244

NYFed now says it was higher multiplier.

William Black January 5th, 2013 at 3:52 pm
In response to zapster @ 226

Any scenario. One can conceive of truly weird scenarios in which all $2+ trillion in corporate cash is suddenly used in the same day to purchase assets that are very scarce producing “bottlenecks” and inflation. The fact that corporations are sitting on so much cash tells us, however, that the status quo has grossly inadequate deand and that inflationary risks are currently not present.

Matt Hathaway January 5th, 2013 at 3:53 pm
In response to DWBartoo @ 223

Funny thing is, we — you, me and everyone else — elected the “political class”. It didn’t just fall right out of the sky. Seems we do have a voice, but just tend to speak poorly with it.

BevW January 5th, 2013 at 3:54 pm

As we come to the end of this great Book Salon discussion,

Randy, Thank you for stopping by the Lake and spending the afternoon with us discussing your new book and discussing money theory with us.

Bill, Thank you very much for Hosting this great Book Salon.

Eric, Thank you for stopping by today also.

Everyone, if you would like more information:

Randy’s website (Modern Money and Public Purpose) and book (Modern Money Theory)

Bill’s website(s) (UMKC) (New Economic Perspectives)

Thanks all, Have a great weekend.

Tomorrow: It is your time to talk with me about the Book Salon. I’m looking forward to hearing from you. – bev

If you would like to contact the FDL Book Salon: FiredoglakeBookSalon@gmail.com

FDL Book Salon has a Facebook page too

L. Randall Wray January 5th, 2013 at 3:54 pm

Sorry, no. States are not sovereign. they need federal govt help.

States can try to issue their own “currency” (local currency units–Ahnold tried it). Problem is you need taxes to drive it, and Gresham’s law can work against you (people pay taxes with your local currency and hoard the fedgovt dollars).

Argentina went thru all this with patacones,.

Ludwig January 5th, 2013 at 3:54 pm
In response to Matt Hathaway @ 252

Comrade Bartoo, a softball for you.

DWBartoo January 5th, 2013 at 3:54 pm

One truly wonders about such “progressives”, Randy.

What are they thinking? What are they feeling?

“Concerned”, I guess, that it might make Social Security more politically “vulnerable”. At least that is the refrain, I hear bandied about.

Timid lot, it seems.

DW

eblair January 5th, 2013 at 3:55 pm
In response to William Black @ 251

Isn’t the reasons that corporations are sitting on so much cash is that they don’t trust each other? I’m probably not stating this correctly, but haven’t the markets for short term paper dried up?

Austerity Sucks January 5th, 2013 at 3:56 pm
In response to William Black @ 231

Private-sector household borrowing in foreign-currency isn’t a problem in the US now (as far as I know).

But, in many parts of Eastern Europe, for example, they issue mortgages in Swiss Francs…and back in the 90′s a lot of yen-denominated debt was being sloshed around the world to finance private household consumption.

I’m just thinking aloud when I wonder if foreign currency-denominated debt should be more closely controlled, and how that would affect bankers and their currency “hustle”.

Dr. Black (or Dr. Wray or any other participants here), do you have any recommendation for a text that provides an overview of the Modern Foreign Currency Market? It seems to be a source of major instability internationally, since it is poorly regulated. I don’t know how the actual computer systems are set up so that an American bank can hold a digital wad of Japanese Yen. Maybe these sort of systemic details aren’t important, but maybe they are? Is there some well-known consultancy that sets up the computer systems for the big banks to securely control for any abuse that could occur and affect sovereignty (like Chinese banks screwing with our digital-dollar system)?

L. Randall Wray January 5th, 2013 at 3:56 pm

Bev: I don’t recognize that website. my 2 websites are:

great leap forward at economonitor

and

new economic perspectives at UMKC

just google–you’ll find them!

William Black January 5th, 2013 at 3:56 pm
In response to wigwam @ 244

The (false) rationale for the Bush tax cuts for the wealthy was not the multipilier effect (demand), but incentives. The wealthy were supposed to work much harder (not consume more) producing wealth. They are the only “wealth creators” — right?!?

DWBartoo January 5th, 2013 at 3:56 pm
In response to Matt Hathaway @ 252

No, Matt, we really do NOT get to choose. Only by daring to vote beyond the legacy parties, R and D, do you stand a chance of electing folks who are not lying or dissembling …

The “lesser of two evils” nonsense ought to make that crystal clear.

DW

L. Randall Wray January 5th, 2013 at 3:57 pm
In response to DWBartoo @ 256

I can guarantee you they don’t understand money. I’ve talked with many of them. They buy the whole idea that US govt is running out.

bluedot12 January 5th, 2013 at 3:57 pm

I don’t buy into it but the argument goes (a) SS does not contribute to the deficit and we have to keep it that way and (b) if there is not sufficient “savings” the PTB will surely cut SS. Oh wait, they’re planning to plunder it and medicare now.

L. Randall Wray January 5th, 2013 at 3:58 pm
In response to eblair @ 257

i think mistrust plays some role. but the bigger reason corps are not spending is because they doubt we are really going to recover. they are right.

wigwam January 5th, 2013 at 3:58 pm
In response to William Black @ 260

I’m still waiting for them to trickle down on me. ;-)

William Black January 5th, 2013 at 3:59 pm
In response to BevW @ 253

Thanks Bev and Randy and everyone who participated! Drive Pete Peterson nuts by reading the antidote to his efforts to panic you into making Wall Street even richer by privatizing Social Security.

thatvisionthing January 5th, 2013 at 3:59 pm

So we DO need [sovereign govt/bankster] fairies to make us materialize?

Citizens not equipped with self-pulling bootstraps?

:-(

L. Randall Wray January 5th, 2013 at 3:59 pm
In response to bluedot12 @ 263

Yes, it is like you put your spouse’s IOUs in the cookie jar and that somehow solves the “problem” that your household is running a deficit.

to be clear, it is not a problem at all that USA govt is running a deficit. but the socsec trust fund changes nothing. what matters is the overall govt balance.

and the deficit is a good thing now! don’t raise payroll taxes!

DWBartoo January 5th, 2013 at 4:00 pm

Thank you, Randy and Bill, for spending time and thought with us. A most superb Book Salon.

Thank you Bev, as always.

And great appreciation to the freedom fighters who gather here.

(If Randy and Bill have time to stick around for a while, I’m certain that many others will join them.)

DW

bluedot12 January 5th, 2013 at 4:00 pm

Randy, Bill, Lets, Eric et al thanks for a great salon. You too Ludwig.

William Black January 5th, 2013 at 4:00 pm

I agree with Randy.

Austerity Sucks January 5th, 2013 at 4:01 pm

Thanks Dr. Black and Dr. Wray for your time and brains!

One last thing, why isn’t there an e-book version available for purchase? Some of us can’t wait for big heavy lugs of information to come through international mail.

L. Randall Wray January 5th, 2013 at 4:01 pm

Yes thx to all, esp to bill for hosting and bev for running the thing and to others for comments

come on over to NEP and GLF some time.

i have some hungry kids (I’m in NY at it is past dinner time)

it was fun.

bluedot12 January 5th, 2013 at 4:01 pm

I like that line. Gonna steal it.

thatvisionthing January 5th, 2013 at 4:01 pm
In response to William Black @ 260

The wealthy were supposed to work much harder (not consume more) producing wealth. They are the only “wealth creators” — right?!?

Wait! That’s what I just asked Randy Wray!

L. Randall Wray January 5th, 2013 at 4:02 pm

ok this really is truly last one

the publisher is palgrave. i don’t know their policy on ebooks. check the publisher’s site……

Ludwig January 5th, 2013 at 4:02 pm
In response to bluedot12 @ 271

Yeah, well I did behave myself satisfactorily, no?

eblair January 5th, 2013 at 4:03 pm
In response to Ludwig @ 278

Good questions Ludwig.

DWBartoo January 5th, 2013 at 4:03 pm

Kind of makes one wonder, Randy, just how well prepared they are to do their jobs?

If the “progressives” are that poorly informed, then one may only imagine the grasp of the “centrists” and those leaning even further to the “right crowd and no crowding” “public servants”.

Ah well, the best government that money can buy.

Perhaps “not understanding” is a requirement?

;~DW

thatvisionthing January 5th, 2013 at 4:04 pm

Thanks to you and Bill and Joe and Eric for being here, and Bev for hosting. Much obliged.

bluedot12 January 5th, 2013 at 4:05 pm
In response to Ludwig @ 278

Yes, as per usual.

DWBartoo January 5th, 2013 at 4:05 pm
In response to Ludwig @ 278

You was spectacular, Ludwig.

A pleasure to watch you at work, always.

;~DW

perris January 5th, 2013 at 4:06 pm

thanks!

Matt Hathaway January 5th, 2013 at 4:06 pm
In response to DWBartoo @ 261

Wow. Vote 3rd party. Never heard that before. Thanks for totally blowing my mind with awe and wonder.

Ludwig January 5th, 2013 at 4:06 pm
In response to DWBartoo @ 283

But I got my answer, comrade. To

What economist do you know addressed [neoliberal] plunder as strategy rather than “accident”?

Silence.
I advise everyone to understand the meaning of silence.

DWBartoo January 5th, 2013 at 4:08 pm
In response to Matt Hathaway @ 285

Ah well, it might catch on, Matt.

Who knows, especially if we give it a try?

Did you?

I did.

And plan to continue doing so …

;~DW

DWBartoo January 5th, 2013 at 4:11 pm
In response to Ludwig @ 286

I think you simply overwhelm ‘em, Ludwig, and, in confusions of the moment, opportunity is lost.

However, don’t give up.

You will get through.

Patience, it is, only, after all …

You get ‘em thinkin’.

And the rest of us are payin’ attention.

DW

Matt Hathaway January 5th, 2013 at 4:12 pm
In response to DWBartoo @ 287

I’ve been doing it for years. This was my point. “We” get the government we elect. However sophomoric that may sound, it seems to hold true.

eblair January 5th, 2013 at 4:13 pm
In response to Ludwig @ 286

He dodged my question too about whether economists are afraid to talk about the Federal Reserve.

And frankly, while the FDL book salon is far and away the most civilized part of the forum, his dismissive tone about day trading is sadly so typical of economists, and really merited an equally dismissive rejoinder. The cliche is that those who can’t do, teach. But what of those who never even tried? Could you imagine a music theorist who doesn’t play any instrument? That’s today’s economist. He a priori knows that he couldn’t learn anything from day trading? Many day traders read the economic news closer than anybody and see interrelations. It’s a dangerous attitude. And the stakes are too high not to start calling bullshit on it.

thatvisionthing January 5th, 2013 at 4:23 pm
In response to Ludwig @ 286

Silence as space
Silence as table setting or coloring book

- Richard Meltzer

Silence can be a gift too, depends on you.

Stares off…

:-)

joebhed January 5th, 2013 at 4:24 pm

Of course debt-free issuance of money is possible.
Not only did Lincoln do it with Greenbacks, but it was advocated for by over 400 economists in support of the 1939 Program for Monetary Reform, authored by Fisher, Douglas, Knight and others, and as modeled in the IMF Research paper by Benes and Kumhof.
Money is not debt.
Money is what we use to pay debt.
Debt free issuance of money would be possible even with the Platinum Coin.

Ludwig January 5th, 2013 at 4:25 pm
In response to eblair @ 290

An empirical approach, you say? Perhaps the professors believe they already know the most important levers. Perhaps day trading would provide an answer to their silences. I doubt it, comrade.

Ludwig January 5th, 2013 at 4:29 pm

I mean more silence as incapacity not opportunity.

This is a performance. Still, this is an immense question. One that should have been rehearsed.

thatvisionthing January 5th, 2013 at 4:32 pm

He wasn’t totally silent. He said this to me @149

If govt is too corrupt you have to throw it out.

Caveat tho, in every country I’ve ever given a presentation the response always is: Oh that would work in your country because your govt is not corrupt, but it won’t work here.

Take-away message: corruption is everywhere. But in most places (ok, most developed countries) the roads get paved, the mail gets delivered, and the hospitals mostly work ok

eblair January 5th, 2013 at 4:34 pm
In response to Ludwig @ 293

A look at the fraud. An idiot like Krugman wouldn’t give some silly argument about how the oil markets can’t be manipulated with futures contracts because he, or at least other economists, could actually see it. One should experience as many things as possible comrade, especially things that are very close to your field and easy to experience. That’s all I’m saying. It’s not ideology, just basic methodology.

Ludwig January 5th, 2013 at 4:35 pm

That’s not an answer to my question comrade. It’s an evasion.

Ludwig January 5th, 2013 at 4:36 pm
In response to eblair @ 296

Yes. And some experiences are dangerous to one’s professional health.

Ludwig January 5th, 2013 at 4:42 pm
In response to Ludwig @ 298

Is their profession a dead end too?

eblair January 5th, 2013 at 4:44 pm
In response to Ludwig @ 298

Ask Andrew Maguire

DWBartoo January 5th, 2013 at 4:54 pm
In response to Matt Hathaway @ 289

Ah, now I understand, Matt.

If “we”, the people, “get” the government we supposedly “deserve”, then I shudder to think of what the next one might reveal about “us” …

Perhaps, when voting is what most “believe” comprises “democracy”, we can “expect” only the “best government money can buy”?

Possibly, our collective grasp is less evolved than “sophomoric”, perhaps it is myth filled and manipulated by those who “shape” opinion and “engineer” understanding?

DW

Ludwig January 5th, 2013 at 4:55 pm
In response to eblair @ 300

Yes, gives the lie to “corruption” as an explanation.

But what can one expect from the priests on the apocalypse? It’s their trial and they’re the judges.

Pffft.

Ludwig January 5th, 2013 at 5:01 pm
In response to DWBartoo @ 301

perhaps it is myth filled and manipulated by those who “shape” opinion and “engineer”

And so soon after the capitalist apotheosis. One should never trust too much success. And be prepared for when it fails.

Capitalism is fraud. We need reeducation.

thatvisionthing January 5th, 2013 at 5:07 pm
In response to Ludwig @ 297

Another possible way to see it: You asked him a really specific thing in a sequence he didn’t buy and had even argued against up to that point. Might even say you were asking leading questions, or putting words in his mouth. “Finish my sentence, comrade.” Could be seen that way. He didn’t ignore you throughout. He had an extended back-and-forth with you which you bought none of. That was a fork too far maybe. I dunno. If we had nested comments and if I had read through all the comments it might be easier for me to follow what was said, so all I’m saying here is to be taken with spoons of salt.

As it is, my impression is that the question of corruption isn’t what they’re focusing on. It’s not something they want to use in their model. Wray did say @137 (and Joe as well @167) that he wanted to use the trillion dollar coin idea not as a means to an end now but as a way to engage Obama and Congress on policy options. Open minds. If they set the star high enough, maybe we’ll walk our way out of the muck without noticing that we ARE walking out of muck.

?

athena1 January 5th, 2013 at 5:12 pm

OMG, I can’t believe I missed this Salon! Boo.

eblair January 5th, 2013 at 5:16 pm
In response to Ludwig @ 303

What will you teach them about gold? Not to fight over it?

thatvisionthing January 5th, 2013 at 5:25 pm
In response to athena1 @ 305

Was good, and I missed 2/3 of it at least. Much to go back and read now.

Ludwig January 5th, 2013 at 5:28 pm

How’s this: that would have been an evasion if that were their answer.

There was no extensive back and forth but the performance is for the purpose of selling a book – adequate for silence to be denied as an answer. Of course.

And so on to a focus on tactics in a crisis. But, as we all know, this crisis has been aborning for a long time. If one walked into this muck but cannot explain how (let alone why one wasn’t radicalized earlier), I have no hope for your hope.

I put a much higher probability on my interpretation.

Ludwig January 5th, 2013 at 5:30 pm
In response to eblair @ 306

Please rephrase.

thatvisionthing January 5th, 2013 at 6:42 pm
In response to Ludwig @ 308

How is it? It turns me off. And I don’t agree with it. But I haven’t read through all the comments yet and maybe I’ll change my mind.

juliania January 5th, 2013 at 6:58 pm

This was really a stellar book salon, and I’m sorry to have missed it, though it has helped me enormously. Thanks to guests and all the contributors.

I have to say that I am one of those apparently mistaken people who didn’t like the withholding tax cut. There should have been, certainly, the kind of increase in spending power it provided, and nobody who opposed it was opposed to some kind of stimulus, but it should have come from a different quarter. I found the critique there to be very shortsighted.

The assault on Social Security is very real, even if an economist who has other things to think about doesn’t quite see it. Nor were we who opposed the cut concerned about our own current retirements, but about those of our children and grandchildren. ‘Don’t worry, creating more jobs will solve the problem’ would certainly be one answer – so would raising workers’ salaries (or even, heaven forbid, employing them full time with benefits).

That is not what anyone presently in power is intending to do. Were they, they could have had the stimulus without fiddling with the withholding tax and had the same effect. And us grannies wouldn’t have gotten queasy at all – we would have rejoiced along with rightminded economists!

Ironcomments January 6th, 2013 at 12:30 am

Again, what is the point of MMT? It will not avert human created distruction of the planet and fiat currency is a scam, why listen to these high priest?

Ludwig January 6th, 2013 at 1:18 am
In response to Ironcomments @ 312

Here is the tomb of the liberal tradition, comrade. Capitalism strafes the world and these fools recite incantations. Was Keynes this much of a front man and fraud?

If not a pathetic tradition, then a pathetic end.

MMT the morphine for your otherwise bitter end. Say your prayers beforehand, comrades.

perris January 6th, 2013 at 4:06 am
In response to joebhed @ 292

I think you missed his point, you can issue money without debt but money itself IS debt, money is caveat labor, labor is owed for the money you have, that’s debt of service

DWBartoo January 6th, 2013 at 6:17 am
In response to Ironcomments @ 312

“Economic systems”, ironcomments, are necessary to human existence, be they “simple” systems of procurement of those resources necessary to human existence or “complex” systems of manipulated fear and greed, wherein the relation to the source of those resources, planet earth, is obscured or even denied. Bluntly, we human beings need earth to survive, while the earth has little “need” of our presence.

“Money” is simply a means, fraught with all you mention, of exchange based upon “trust” of “something” real and tangible behind it … and you are correct, it is the act of labor, the process of making useful things which it, ultimately, should and MUST come to reflect.

“Money” could simply be “trinkets of exchange”, like shells or beads, whose purpose is good will and the building of what might be hoped to be the construction of trust among those who “exchange”.

Economics is a game.

The “rules”, the conceptions and understandings behind that game determine how the game is “played”. Is it played with the understanding, for example, that the current players are merely borrowing the earth from distant descendants, say seven generations hence, or is it perceived as “evident proof” of God’s good graces, a cushy life, and a guarantee of entry to “heaven” by those who have amassed such huge amounts of “wealth” as to shown their “piety” and “goodness”? (In such a “view”, human kind is understood to hold dominion over the planet with no obligation of taking care of it … or each other.)

Simplistic, yes, I know, but I hope that we might understand that the fault does not lie in our stars, but in the poverty of our collective imagination, and lack of informed “conscience” at the center of our social mythology.

Remember, “we”, we citizens of the USA, are not “exceptional” by accident, it is what we “believe” beyond conviction, beyond doubt, and well beyond reason. We have been taught to “believe” … and that “belief” is what is used to manipulate and control both opinion and behavior, to the extent that we go to “war”, which is another “game”, in the “defense”, not of ourselves, but of the greater game of capitalism, to ensure the “freedom” of “free enterprise”.

Who may doubt, by this time, that capitalism is inimical to democracy?

What does that suggest?

Beyond the Shadow, who knows …?

DW

juliania January 6th, 2013 at 9:03 am

I realize this is way late, but I have been thinking about this overnight, and one question I would have asked (again sorry not to have been in on the active discussion) relates to the idea of sovereignty and the issuance of trillion dollars to deflate the debt ceiling, however one wants to do it, supposing that one can indeed just make that happen. The question is, if the US is an entity unto itself in this matter, unlike Europe, which was the axiom on which all else was based, what becomes of the imperial decision to have important commodities trade only in dollars worldwide? Worldwide investors in our inflated economy? Are we really sovereign in this instance?

And I am more and more troubled by the answer that was given to thatvisionthing @149.

As an alternative to gigantic moneyside inflationary moves, what would happen should the enormous student loan debt simply be forgiven? Debt has been forgiven before. Maybe the same problem for international investors. Yet, could it not be traded into services instead of entirely forgiven? Say, let those with this debt pay it off by going out and planting trees in the mountains, seeding the prairies, developing sustainable agricultural practices by rotating herbivores and mobile chickencoops on pastureland(labor intensive but it works!), building windfarms and solar arrays etc. etc. This would simply be an extension of the idea of teacher training programs, a little different from the CCC but serving a dual purpose of ‘paying down’ debt while improving infrastructure. (I think the author was suggesting programs something like this in some of his earlier comments.)

Again, excellent discussion, Bev. You don’t supply a comment thread (at least I didn’t see one) on your request for input so far. But I would say the salon is so good always, just keep on keeping on!

thatvisionthing January 6th, 2013 at 10:48 am
In response to juliania @ 316

And I am more and more troubled by the answer that was given to thatvisionthing @149.

I was more troubled by his answer to me @109.

Weren’t we all shouting in our messages to Congress before the 2008 banker bailout — DON’T DO IT!!! — and they went ahead and did it, “to save the economy”? And now we’re trying to save the economy some more, funny how we’re always in this same spot. How in the world can you guarantee a trillion dollar coin will be spent on wealth creation (jobs) and not more wealth corruption this time? Even if you could, it’s Congress, tweedledumb, get real.

Being circular here, @109 was reply to my @104, where I said the same thing. And if MMT’s trillion dollar coin is an ice-breaking concept to expand policy option thoughts, MY trillion dollar coin is an ice-breaking conceptualization on getting real. As in, can we?

Ludwig January 6th, 2013 at 11:15 am
In response to DWBartoo @ 315

Economics is a game.

Yes, you speak from that conservative understanding. You have left something out. Economics is a deadly game. The current situation is not the result of corruption. It is the end of a deadly game.

Moreover, the defrauded are arrayed before you and their ongoing delusion an execution in the deadly game.

The report and delineation of that ongoing fraud is essential.

Ludwig January 6th, 2013 at 11:48 am

And to Juliana @316.

[1] are we in such a huge hole because real money has gone chasing fantasies via fantastically leveraged bets and offshoring profits and all those kinds of 1% dodges?

and

[2] Does trillion dollar coin just restock some of what has been lost/offshore/stolen, actually just enabling further loser gambling/offshoring/theft?

The silence of these priests to the purpose of fraud #1 surely hints at the fraud of #2. The crisis has obviously passed beyond corruption. It has passed beyond “control fraud”. The capitalist fraud has corroded the belief system of its priests and their dreams only live in mockery and denial. They are prisoners of fraud and unable to confess.

They are entombed in deceit.

The system cannot happen upon self-correction — it is dedicated to perpetuation of fraud. One cannot stop this while denying to its victims its true aim.

DWBartoo January 6th, 2013 at 12:41 pm
In response to Ludwig @ 318

It need not be deadly, Ludwig, yet “economic activity”, the provision of the resources necessary to human life is … necessary.

My point in calling it a “game”, is that like any and all games, the rules can be changed, as we both agree that they must be changed.

It becomes deadly, as you properly suggest, when bereft of principle and humanity, and as I suggest, when the deliberately deadly and dead-making “game” of war is engaged to protect “access” to the perceived resources.

Need it be that way?

Of course not.

The question is, can “enough” of us realize the truth of that and imagine something better, more just, more humane, and more sustainable?

And then may we find the courage to insist upon that “something better” becoming manifest … rather than “manifest destiny” or other excuse for hegemony, for genocide, for plunder, for fraud, for manipulation and for the destruction of the planet’s capacity (or even its “willingness”) to continue to support human life?

You are absolutely correct in your contempt for deceit, Ludwig, but let us not bandy semantic evasions about, let us find words and concepts upon which we might agree.

What we seek cannot be achieved by force, but only through reason and recognition of common plight, recognition of common purpose, and recognition of a shared, common home, a wee, small planet in the immensity of universe of which our knowledge, grand as we might consider it, is like a mud puddle … compared to the vast ocean of our ignorance, our collective ignorance, our learned prejudice and far too ready willingness to make war, whether class war or bloody, endless war.

Too many imagine that the purpose of life is to “make” money, to make war, or to make “ends” meet …

It is not merely bread we need, but roses, too …

DW

DWBartoo January 6th, 2013 at 12:42 pm
In response to Ludwig @ 319

Well said.

DW

Ludwig January 6th, 2013 at 2:44 pm
In response to DWBartoo @ 321

And so to you, comrade Bartoo.

Until we meet again. Capitalism is fraud.

juliania January 8th, 2013 at 9:32 am

Thank you, Thatvisionthing and Ludwig.

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