Modern Monetary Policy

Yep I am about to bore the crap out of my reader…..when it comes to economics the average person glazes over and goes to that “happy place” in the mind until the talk is finished.

But I feel I need to drop some info on my readers……there has been much in the MSM about the Green New Deal and the proposals by a couple of candidates about taxing the rich……

I want to give my reader a look into the policies and the economics of them…..

First the call to “Tax The Rich”……

I don’t consider myself an MMTer, but there is a basic Keynesian concept which has been associated with MMT, which is both true and important. For the federal government, taxes are not about raising revenue, taxes are about reducing consumption to prevent inflation.

The point is that the federal government does not need taxes for revenue, since it can just print money. It instead taxes to create the room in the economy for government spending. This view is sometimes wrongly taken as a “get of jail free” card, where the government can spend whatever it wants without worrying about raising revenue.

That could be true in a deep downturn. However, if the economy is near its full employment level of output, where additional demand will lead to rising inflation, we are pretty much back in the world where we need taxes to offset spending. Any major increase in government spending will lead to higher inflation, unless we have higher taxes or have some other mechanism to reduce demand in the economy.

https://www.counterpunch.org/2019/02/20/modern-monetary-theory-and-taxing-the-rich/

Next how about that Green New Deal that is getting the conservs lathered up to the point that they resurrect a fear from the 1950s……

Much of the Democratic Party, including almost the entire pack of contenders for the Democratic presidential nomination, has embraced the concept of a Green New Deal (GND). This is an ambitious plan for slashing greenhouse gas emissions, while at the same time creating good-paying jobs, improving education, and reducing inequality.

At this point, the specific policies entailed by these ambitious goals are largely up for grabs, as is the question of how to pay for this agenda. One way of paying for it, borrowing from the economic doctrine know as Modern Monetary Theory (MMT), is that we don’t have to.

Modern Monetary Theory argues that a government that prints its own currency is not constrained in its spending by its tax revenue. Some on the left have argued that we can just print whatever money we need to finance a GND. This claim does not make sense.

 
All this is possible…it will NEVER fly with conservs who live and die on tax cuts……a real shame….for this countries needs big ideas once again…..the Repubs are NOT those people.
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How Did The Rich Get Richer?

Closing Thought–20Mar19

If you are social media or watch any main stream media then you have heard all about how the rich got richer…..especially after Trump’s tax cuts…..

May I see a show of hands…..do you know just how did the rich get richer?

Okay would you like to know? Of course you would…it may be one of those issues that helps you who to vote for in 2020….

I could bore the crap out of you with all this monetary policy claptrap or I could turn you on to the cartoons below that make this all so much simpler…….

Something massive and important has happened in the United States over the past 50 years: Economic wealth has become increasingly concentrated among a small group of ultra-wealthy Americans.

You can read lengthy books on this subject, like economist Thomas Piketty’s recent best-seller, Capital in the Twenty-First Century (the book runs 696 pages and weighs in at 2.5 pounds). You can see references to this in the campaigns of major political candidates this cycle, who talk repeatedly about how something has gone very wrong in America.

Donald Trump’s motto is to make America great again, while Bernie Sanders’s campaign focused on reducing income inequality. And there’s a reason this message is resonating with voters:

It’s grounded in 50 years of reality.

https://getpocket.com/explore/item/this-cartoon-explains-how-the-rich-got-rich-and-the-poor-got-poor

Don’t just bitch about stuff……

Learn Stuff!

Corporate Death Penalty

Think back to the 2008 collapse of the economic structure….it was the banks that lead the way and yet they were not punished for killing so many pensions….at best there was a slap on wrist and they promise not to do it again…..and if you will notice they are doing it again,

It is time for the government to bring the pain to these lousy players in our economy.

Bring back a corporate death penalty……

Let’s begin with a SCOTUS dissenting opinion from 1935…..

“The prevalence of the corporation in America has led men of this generation to act, at times, as if the privilege of doing business in corporate form were inherent in the citizen, and has led them to accept the evils attendant upon the free and unrestricted use of the corporate mechanism as if these evils were the inescapable price of civilized life, and, hence to be borne with resignation.

“Throughout the greater part of our history, a different view prevailed.

“Although the value of this instrumentality in commerce and industry was fully recognized, incorporation for business was commonly denied long after it had been freely granted for religious, educational, and charitable purposes.

“It was denied because of fear. Fear of encroachment upon the liberties and opportunities of the individual. Fear of the subjection of labor to capital. Fear of monopoly. Fear that the absorption of capital by corporations, and their perpetual life, might bring evils similar to those which attended mortmain [immortality]. There was a sense of some insidious menace inherent in large aggregations of capital, particularly when held by corporations.”

—U.S. Supreme Court Justice Louis Brandeis, 1933 dissent in Liggett v. Lee

https://www.commondreams.org/views/2019/01/08/its-time-bring-back-corporate-death-penalty

The limp wrist attempt to make corporations, especially the banks, was quickly pushed aside as soon as another corporate titan comes to power….time to make any penalties permanent…..time for the government to work for the people and not just the corporations.

This may be wishful thinking but I do feel the country is starting to realize just how bad corporations are acting and want accountability for their CRIMES.

2020 could be the beginning of the revolution to get the greed and corruption out of our society, especially from the corporations.

But first we must VOTE!

Debt And Deficit: Who Knew?

When the news broke that the Dems would take back the House I wrote then that with that bit of news we would see a return of the GOP of caring about the national debt and the deficit…….and viola!……I am hearing the rumblings of such a switch.

May I see a show of hands if any of this makes any sense to you?

First, the debt and the deficit are two different problems…..this video can help understand the economics…….

The news has broken that the national debt for the US is $22 trillion…yep that is Trillion with a “T”…….most of us cannot wrap our heads around that many zeros….it is difficult to understand and as usual I want to help you understand…..

Hopefully those two short videos helped you understand the economics at work here….

Congress does not care about the deficit or the debt (at least for now but that can change over night)…..

Congress has stared into the abyss of debt, and the abyss has stared back. The national debt just topped $22 trillion for the first time ever, yet barely a peep was heard in the halls of the Capitol. The debt-to-GDP ratio has more than doubled in less than 20 years, rising from 33 percent in 2000 to 78 percent today. Within 10 years, it will reach 93 percent, the highest level since just after World War II.

 

While currently the federal budget deficit is around $900 billion, beginning in 2022, it will exceed $1 trillion per year, every year, according to the Congressional Budget Office. Over the next decade, deficits are projected to fluctuate between 4.1 percent and 4.7 percent of GDP, well above the average over the past 50 years.

https://www.theamericanconservative.com/articles/ignoring-americas-abyss-of-debt/

Hopefully this will help when the yelling and the chest thumping begins again…..the GOP needs something they can champion to turn the conversation away from their cowardice in confronting the corruption of the Trump administration.

Those Inevitable Sanctions

Sanctions seems to be the word of the Trump administration…..we have imposed sanctions on Iran, China, Russia, Venezuela and several others…..sanctions are the only diplomatic tactic the president and his band of slow thinking slugs have in their book of “things to do”…..

Recently the Trump admin has issued more sanctions against Venezuela….because they are subverting democracy (at least that is the excuse….this time)……

Personally I do not believe that these sanctions will work without covert action by one of our shadowy groups…sanctions do not work as a sole penalty…..they are basically a feel good attempt to control another nation.

Economic sanctions are the penalties of choice for the start of hostilities with any given nation…..the US uses this penalty liberally (that is with a small “L”)……in recent history sanctions have been imposed in Iraq, Iran, Venezuela (most recently) and in all that time what has it accomplished?

Good question, right?

But what is included in “sanctions”?

The Council on Foreign Relations defines sanctions as “a lower-cost, lower-risk, middle course of action between diplomacy and war.” Money is that middle course, and economic sanctions are the means. Some of the most common punitive financial measures include:

  • Tariffs: Surcharges on imported goods, often imposed to aid domestic industries and markets.
  • Quotas: Limits on the number of goods that may be imported or exported. 
  • Embargoes: Restrictions on or cessation of trading with a nation or bloc of nations. These can include limiting or banning travel by individuals to and from nations.
  • Non-tariff barriers: These are designed to make foreign goods more expensive by complying with onerous regulatory requirements.
  • Asset seizure/freeze: Capturing or holding the financial assets of nations, citizens, or preventing the sale or moving of those assets. 

If the US is honest then they would also state that sanctions only work about 30% of the time…..that is not a good chance for success.

If the reader would like more info on what sanctions are about………https://www.cfr.org/backgrounder/what-are-economic-sanctions

I am opposed to these types of punitive action because they seldom have the intended result of punishing the elites and leadership of any given nation instead the average person suffers far more than the intended targets.

Economic sanctions have long been used as a foreign policy tool, sometimes perceived as the tool of choice for nations where diplomacy has failed to yield desired results. Yet as widely used as they are, and despite the fact that some sanctions may remain in place for years, they generally fail to achieve their objectives. One of the most definitive studies on the effectiveness of sanctions — covering the period from 1915 to 2006 — has shown that comprehensive sanctions are effective at best 30 percent of the time, and that the more comprehensive the level of sanctions, the lower their degree of success. In spite of this, sanctions remain one of the few internationally accepted means (short of military conflict) of attempting to change the behavior of national leaders.

https://www.huffingtonpost.com/daniel-wagner/do-sanctions-work_b_7191464.html

Again the people of the targeted nation suffer far more than the elites…..so the conclusion is that economic sanctions have a dismal record of success…….of course the establishment will point to the success of sanctions against South Africa in the 1980s…..they will ignore the failures like Iraq in the 1990s, Iran since 1979……

In short economic sanctions, in my opinion, are a worthless exercise that punish NO one but the people to the targeted nation……diplomacy is more effective (at least it was prior to the Trump presidency)……

Freaky Saturday–2019 (Part 2)

Saturday my day of mental relaxation and a bunch of “honey dos”……weather is warm for February and seems to linger…looks like our cold weather ended early this year…..

I have been watching the treatments that the medicos are using to try and help people with problems like PTSD…..I posted about the use of seem psychedelics from the 60s…….https://lobotero.com/2019/02/02/freaky-saturday-02feb19/

Since I wrote that there have been more studies that have shown promise on a wide array of mental problems…….

The reputation of the synthetic drug MDMA has changed dramatically since it was outlawed in 1985. Right now, it’s the centerpiece of a Food and Drug Administration-approved Phase III clinical trial on its ability to help heal the damage caused by post-traumatic stress disorder when used alongside therapy. While those trials are underway, scientists are seeking to understand the long-term impacts of MDMA, preparing for a future where it’s widely used to treat illness .

https://www.inverse.com/article/53143-psychological-effect-mdma-drug

Then there is the study of the “demon” of the 60s….LSD……

New neuroimaging research provides evidence that the psychedelic drug LSD alters the capacity of the thalamus to control the flow of sensory information to other areas of the brain.

The thalamus is a small section of the midbrain through which most sensory inputs from the body flow. The new findings, which appear in Proceedings of the National Academy of Sciences, indicate that LSD decreases information filtering in the thalamus — allowing more information than normal to flood into the brain.

“LSD and other psychedelics induce unique effects on perception and emotion. These effects could on the one hand be interesting to understand certain symptoms in psychiatric patients (for example schizophrenia), but they could also be clinically beneficial for the treatment of other illnesses (for example depression),” said study author Katrin Preller of the University of Zurich.

https://www.psypost.org/2019/02/lsd-allows-more-information-to-flood-into-the-brain-by-altering-activity-in-the-thalamus-53062

The use of the drugs could be disastrous if not tightly controlled….but if these can help someone suffering from PTSD or other mental problem then I say give it a chance before it is condemned.

I must go out to the garden and start getting it ready for the crop this year…….hope everyone has a good day and give someone a hug…make their day.

Be Well, Be Safe……

Sucks To Be A Farmer!

I know I spend a lot of time watching and writing on foreign affairs and international situations……I try to keep an eye on the doings domestically……the one that needs attention is our FARMERS.

I have written about what Trump’s tariffs are doing to our farmers….https://lobotero.com/2018/07/25/the-coming-farm-aid/

There is more news that farmers are starting going broke at an accelerated rate……

Farmers in the Midwest are filing for bankruptcy at record rates as a result of President Trump’s trade war.

Bankruptcies in courts that cover the largest farm states in the country were nearly double in 2018 what they were in 2008, The Wall Street Journal reports.

The 7th Circuit Court of Appeals, which covers a region that includes Illinois, Indiana and Wisconsin, received twice as many bankruptcy filings in 2018 as it did in 2008, during the height of the Great Recession.

The 8th Circuit Court of Appeals, which includes Iowa, Minnesota, Missouri, Arkansas, Nebraska and both Dakotas, saw a 96 percent increase in bankruptcy filings last year compared to 2008.

https://www.rawstory.com/2019/02/midwest-farmers-going-broke-record-rates-thanks-trumps-trade-war/

American farmers feed the world….what will happen when there are fewer and fewer of them to grow food?  Importation will prove expensive…..so forget that…..

We could always depend on lab grown meat……but that may not be all it is cracked up to be…..

High impact: Proponents of lab-grown meat say it could one day supplant livestock—particularly cattle, a huge source of greenhouse-gas emissions.

The problem: Animal-free meat might be worse for the environment, researchers from the University of Oxford argue in a new report. They say previous studies have clumped together all emissions from cattle, rather than analyzing individual gases. Methane, for example, has a greater impact on warming in the short term, but it remains in the atmosphere for only around a decade, whereas carbon dioxide persists and accumulates for centuries, coauthor professor Raymond Pierrehumbert told the BBC. Emissions from the lab will be almost entirely made up of carbon dioxide.

A pinch of salt: It’s eye-catching, but this finding comes with plenty of caveats. Lab-grown meat isn’t even on sale to the public yet, and the researchers are making a lot of assumptions about meat consumption and future availability of lab-grown meat that may prove incorrect. For now, its climate impact may prove one of the smaller barriers to its adoption: for one thing, it’s still ridiculously expensive to produce.

Thoughts?