“Quantitative easing” was supposed to be an emergency measure. The Federal Reserve “eased” shrinkage in the money supply due to the 2008-09 credit crisis by pumping out trillions of dollars in new bank reserves. After the crisis, the presumption was that the Fed would “normalize” conditions by sopping up the excess reserves through “quantitative tightening” (QT) – raising interest rates and selling the securities it had bought with new reserves back into the market.
Modern Monetary Theory (MMT) is getting significant media attention these days, after Alexandria Ocasio-Cortez said in an interview that it should “be a larger part of our conversation” when it comes to funding the Green New Deal. According to MMT, the government can spend what it needs without worrying about deficits. MMT expert and Bernie Sanders advisor Prof. Stephanie Kelton says the government actually creates money when it spends. The real limit on spending is not an artificially imposed debt ceiling but a lack of labor and materials to do the work, leading to generalized price inflation. Only when that real ceiling is hit does the money need to be taxed back, and then not to fund government spending but to shrink the money supply in an economy that has run out of resources to put the extra money to work.
- There is no such thing as “taxpayer money.”
- Taxes do not pay for government spending. (Nor does debt. No revenue is needed.)
- Leftists who continue to talk as if “taxpayer dollars” must be collected to “pay for” government programs are undermining Medicare-for-all and every other progressive policy initiative.
Global University for Sustainability on Jul 11, 2018
The interview with Professor Michael Hudson was conducted on 7 May 2018 in Beijing, by Professor Lau Kin Chi and Professor Sit Tsui Jade. Professor Hudson talked about his formative years, and his turn to economics from music as he found his mentor Terence McCarthy’s speech about economics beautiful and aesthetic. He recalled his experiences in research and teaching, and the background leading to his writing the many books on imperialism, balance of payment, history of debt, and fictitious capital. The interview was edited by George Lee, and produced by the Global University for Sustainability, July 2018.
OpenUnivoftheLeft on June 5, 2018
Left Forum 2018: As our demands grow bolder—true full employment, the rebuilding of the social safety net starting with Medicare for All, an overdue green and just transition—so will the naysayers’ inevitable refrain: “How will you pay for it?” Developments in our understanding of monetary theory and the money system has, thankfully, illuminated a path forward out of the trap of austerity: when we understand how money actually works, we know that the obstacles to bold action at a national scale on jobs, healthcare, and climate are political, not economic.
War has indeed become perpetual and peace no longer even a fleeting wish nor a distant memory. We have become habituated to the rumblings of war and the steady drum beat of propaganda about war’s necessity and the noble motives that inspire it. We will close hospitals. We will close schools. We will close libraries and museums. We will sell off our parklands and water supply. People will sleep on the streets and go hungry. The war machine will go on.
“Commercial banks create money, in the form of bank deposits, by making new loans… 97% of the [money] currently in circulation [is] created by commercial banks themselves.”
— “Money creation in the modern economy”, Quarterly Bulletin, 2014 Q1, Bank of England
Predictions are that we will soon be seeing the “nuclear option” — central bank-created money injected directly into the real economy. All other options having failed, governments will be reduced to issuing money outright to cover budget deficits. So warns a September 18 article on ZeroHedge titled “It Begins: Australia’s Largest Investment Bank Just Said ‘Helicopter Money’ Is 12-18 Months Away.”
As Congress struggles through one budget crisis after another, it is becoming increasingly evident that austerity doesn’t work. We cannot possibly pay off a $16 trillion debt by tightening our belts, slashing public services, and raising taxes. Historically, when the deficit has been reduced, the money supply has been reduced along with it, throwing the economy into recession. After a thorough analysis of statistics from dozens of countries forced to apply austerity plans by the World Bank and IMF, former World Bank chief economist Joseph Stiglitz called austerity plans a “suicide pact.”
RussiaToday on Mar 8, 2012
In this episode, Max Keiser and co-host, Stacy Herbert, discuss boating accidents with Sharkboy and Lava Girl and a futures market to lay off your Blythe Masters risk. In the second half of the show, Max talks to Dr. Michael Hudson about Modern Monetary Theory at the University of Missouri – Kansas City and about the Chicago Boys gutting the economic competition, literally.
2,181 Italians pack a Sports Arena to learn Modern Monetary Theory:
The Economy doesn’t Need to suffer Neoliberal Austerity
I have just returned from Rimini, Italy, where I experienced one of the most amazing spectacles of my academic life. Four of us associated with the University of Missouri at Kansas City (UMKC) were invited to lecture for three days on Modern Monetary Theory (MMT) and explain why Europe is in such monetary trouble today – and to show that there is an alternative, that the enforced austerity for the 99% and vast wealth grab by the 1% is not a force of nature.
Brussels wants the keys to the national treasuries of the 17 Euro-countries. Only this way can they save the Euro, they say. The ESM-treaty has already been signed. If the national parliamentarians ratify it, it will be the end of our sovereign democracies. Do we want that? Is there an alternative?
For those who know how the money system works, the logical solution to today’s problems are fairly simple. A bank reform. On TV, at least in the Netherlands, the subject is still taboo , but if you want to know how it works, you can find an explanation here. (And if you already know all this, you can scroll immediately to 2. bank reform.)
Henry Ford said, “It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
We are beginning to understand, and Occupy Wall Street looks like the beginning of the revolution.
talkingsticktv on Nov 3, 2011
Ellen Brown author of “The Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free” talking about the public banking system and the Bank of North Dakota October 26, 2011 at Kan Hall, University of Washington, Seattle, WA.