[Steve_American]

Today's blog post by Dr. Bill Mitchel.

An official paper by the BoC,
and an article by a small economics newsletter
are highlighted.

http://bilbo.economicoutlook.net/blog/?p=44127

[Steve_American]

A short piece from Dr. Bill Mitchell's blog on how mainstream economists are reacting to --
1] MMT gaining a hearing in the economic world generally.
2] A growing number of leading central bankers {ECB, ARB, BOJ, FED, etc.} are calling for their Gov. to use fiscal policy in the next recession. Saying that monetary policy will be *ineffective*.
3] A growing number of leaders in the insurance industry calling for Central Bank and Gov. bond interest rates to rise so they have a safe way to earn returns.

http://bilbo.economicoutlook.net/blog/?p=44219

Dr. Mitchell is a Prof. of Ecconomics at Newcastle Univ. in Australia and one of the 4 earliest founders of MMT.

[Godstud]

So what is the significance of this for those of us who are not economists?

What is your opinion on this?

[Steve_American]

The significance of this is that the US {and UK, etc.} Gov. {but not nations that use the euro} can deficit spend a lot more than it does now. That this would be good for the economy and get it moving. That this would include spending on a GND. That this is just the same as the current ability of the Gov. to make any 'necessary' military spending. This spending can be good for the mass of the people; for things like free college at all state univ., paying off all college debts, healthcare for all, and a Job Guarantee Program that offers a socially useful {but not profitable} job at $15/hr. to every citizen who wants it.

Note that, currently this is being done for the 1%. For military spending to comp. that make weapons. For tax cuts for the top 1%. for bailing out the banks of the whole world in the GFC/2008. Etc.

I need to post links to Dr. Bill Mitchell's new blogs on MMT and also the MMT Program. Where MMT is just how the money system works and the MMT Program is how he would like to use MMT to help the people instead of the 1%.

Note that, the JG program is part of MMT where it is used to replace the Unemployment Insurance System as the way to have full employment WITHOUT inflation.
Note also that, there must be a GND program on a massive scale. If there isn't one then the new spending will cause more CO2 releases and hurry the end of civilization. According to Bill.
Note that MMT makes no claim that there is no constraint on gov. spending. MMT says the actual constraint is inflation resulting from to many demands being put on the available real resources, including the unemployed and skilled workers.

[SolarCross]

So what is the significance of this for those of us who are not economists?

What is your opinion on this?

The bank just wants the gov (and therefore the taxpayers) to be in even more debt to it so that they make more money. More debt = more interest. It's their business model after all. Asking a bank if MMT is good is like asking a crack dealer if crack can get you high.

This is why people should be able to opt out of citizenship. Getting in debt is anyone's prerogative but it is morally obscene to run up debts for another to pay without their knowledge or permission.

[late]

This is why people should be able to opt out of citizenship.

Of course you can opt out.

I hear Somalia is lovely this time of year.

[SolarCross]

Of course you can opt out.

I hear Somalia is lovely this time of year.

So is Qatar, Norway and Liechtenstein. But thanks for reminding me to lock up my valuables when you come over for tea.

[late]

So is Qatar, Norway and Liechtenstein.

But thanks for reminding me to lock up my valuables when you come over for tea.

Qatar isn't fussy, but I doubt you could afford Liechtenstein.

You are remarkably good at getting things backwards.

What do you like for tea? I make my own blend of English Breakfast.

[SolarCross]

Qatar isn't fussy, but I doubt you could afford Liechtenstein.

You are remarkably good at getting things backwards.

What do you like for tea? I make my own blend of English Breakfast.

I could afford Liechtenstein if I used your credit card.

Do not worry if I run up a lot of bills for you because it is all good for the economy.

[Steve_American]

The bank just wants the gov (and therefore the taxpayers) to be in even more debt to it so that they make more money. More debt = more interest. It's their business model after all. Asking a bank if MMT is good is like asking a crack dealer if crack can get you high.

This is why people should be able to opt out of citizenship. Getting in debt is anyone's prerogative but it is morally obscene to run up debts for another to pay without their knowledge or permission.

If by 'bank' you mean the Fed. Res. Bank, then you are ignorant.

I have said here a few times that, by law ALL the interest paid to the Fed. and in fact all its profits from any source are paid to the Fed's owner, which is the US, so to the US Treasury.

If by 'bank' you mean the private banks, then currently the money supply grows largely because of loans by banks to the people and corps. These loans will have to be paid back {which destroys dollars} or written off {which bankrupts the banks}. Either of these is bad for the economy of the nation. Also, as soon as the banks slow the rate at which they make loans, this automatically reduces the GDP {reducing its growth or later actually shrinking it}. This is the number one cause of Bank Panics and recessions in US history.
. . OTOH, the national debt does NOT ever need to be paid off. Not only that but the US Gov. can always make the payments when the bonds come due, because it can either borrow or just create dollars. This fact has been demonstrated for 325 years now by England, Great Britain, and now the UK. Again, I have said this here twice and you missed it. Or, you don't believe it.
. . In fact, with a fiat currency, the so called National Debt is also the asset of the corps. and people of the nation. This is a fact from accounting. All debts are liabilities of the borrower and also assets of the lender {the initial holder of the contract or note}. If the Gov. just spent dollars into the economy, then they would be assets of the people and corps.
. . Dollars are IOUs of the US Gov. which are only redeemable when you pay your taxes. That is, the Gov. will not give you gold or anything else for them, it only promises to let you pay your taxes with them. But, this gives them value because rich people need to pay their taxes with them too.

[Crantag]

If by 'bank' you mean the Fed. Res. Bank, then you are ignorant.

I have said here a few times that, by law ALL the interest paid to the Fed. and in fact all its profits from any source are paid to the Fed's owner, which is the US, so to the US Treasury.

The Fed is a private organization which is independent from the US government. Shares in the Fed are owned by its member banks (that is, all the banks in the US.) Sort of astonishing that you don't know that.

[Tainari88]

The Fed is a private organization which is independent from the US government. Shares in the Fed are owned by its member banks (that is, all the banks in the US.) Sort of astonishing that you don't know that.

@Crantag you are correct. I was very interested in finding out who in control of all that dough. I think Eisenhower said that the banks were a dangerous component of the US government system because the gov't can't control them.

That is why it is critical to kick their asses right after that debacle in 2008. Obama flinched as they said in the video about the bailout and none of them were prosecuted or got jail sentences. Only Bernie Madoff but the banks with the trillion plus bailouts from taxpayers did not get punished.

It is astonishing that people know about these freaks and continue to not prosecute them with high crimes of the white collar variety that affects millions of people.

[Tainari88]

The bank just wants the gov (and therefore the taxpayers) to be in even more debt to it so that they make more money. More debt = more interest. It's their business model after all. Asking a bank if MMT is good is like asking a crack dealer if crack can get you high.

This is why people should be able to opt out of citizenship. Getting in debt is anyone's prerogative but it is morally obscene to run up debts for another to pay without their knowledge or permission.

Being in debt is a form of slavery always SolarCross no doubt about that one.

At the same time you have to realize banks love debt and interest and fees. It is their bread and butter and reason to exist.

[Steve_American]

If by 'bank' you mean the Fed. Res. Bank, then you are ignorant.

I have said here a few times that, by law ALL the interest paid to the Fed. and in fact all its profits from any source are paid to the Fed's owner, which is the US, so to the US Treasury.

The Fed is a private organization which is independent from the US government. Shares in the Fed are owned by its member banks (that is, all the banks in the US.) Sort of astonishing that you don't know that.

Link where I got the below quote: https://en.wikipedia.org/wiki/Federal_Reserve

The federal government sets the salaries of the board's seven governors, and it receives all the system's annual profits, after a statutory dividend of 6% on member banks' capital investment is paid, and an account surplus is maintained. In 2015, the Federal Reserve earned a net income of $100.2 billion and transferred $97.7 billion to the U.S. Treasury.[23]

Craantag, you said the Fed. "is independent from the US government. Shares in the Fed are owned by its member banks ...".
. . My quote says the all the salaries of the board's seven governors are set by the Federal Gov.

You said, "Shares in the Fed are owned ..." by the private banks in\of the US.
. . My quote says that $97.7 / $100.2 = 97.5% of the net income was paid to the US Treasury. IIRC net income is income before any or all expenses are deducted. So, if I'm right there, 97.5% of the Fed's income goes to the US Gov.. The Fed. pays the salaries out of its income, right? And it pays dividends {6%} on the shares that the member banks own, but this all must come out of the 2.5% that was not paid the the US Gov., right?

So who 'owns' the Fed.? Is it the share holders or is it the one who sets the salaries and gets 97.5% of the net income. BTW, the US Gov. also decides who the Fed's leaders are, i.e. the board's seven governors, and others too.

The independence of the Fed. is a fiction. It is there to give it and the US Gov. "plausible deniability" for the damage the actions of the Fed. may cause to the US economy. This is now part of the Neo-liberal plan to take the power over the economic well being of the people away from the Gov. and give it to the Corporations.

[Tainari88]

@Steve_American check out this link it explains the history of the fed reserve and how it is kind of a secret at what it is and does:

https://www.wanttoknow.info/financialba ... AgQAvD_BwE

I think it supports @Crantag 's argument Steve.

[Steve_American]

@Tainari88,
Take a look at my reply to Crantag and rethink your 2 above replies.

The people of the US currently have the assets that the total deficit spending by the US gov. over the last 225 years has created. These assets are in the form of dollars and\or US bonds.
. . The National Debt will never be paid off and in fact is rarely even paid down. The last time it was paid down some was from 1997 to 2000, and this caused a recession known as the Dot Com Bubble. The National Debt should not be paid down. To even *try* to do so always causes a recession or depression. This was always true in history.

The Fed. pays 97.5% of its net income to the US Treasury. The 2.5% it doesn't pay to the US Treasury are its expenses. What US corporations do you know of that have a 97.5% rate of profit and 2.5% expenses? This seems very cost effective to me.

So, just about every person in the US does not understand the economy. This is because mainstream economists teach economics wrong. What they teach is mostly false. Two examples are: 1] the Fed. is independent, and 2] the National Debt is a burden on the people of the US. There are many, many other false things they teach.

[Steve_American]

@Steve_American check out this link it explains the history of the fed reserve and how it is kind of a secret at what it is and does:

https://www.wanttoknow.info/financialba ... AgQAvD_BwE

I think it supports @Crantag 's argument Steve.

I just glanced at it.
I think it is just an example of the lies the mainstream economists write to confuse the public.
My quote above said the 97.5% of the Fed's NET INCOME in 2015 was paid into the US Treasury. That leaves just 2.5% to pay all its expenses and the dividends to its share holders.
My main source is MMT Professors of economics.
People like Warren Mosler, Dr. Bill Mitchell, Dr. Stephanie Kelton {who got married recently and has a new name IIRC}, and Dr. Randal Wray.

The article you linked didn't even point out the banks are not constrained by their deposits at all when they make loans. This is because --
1] The rule that they need reserves to total 10% of their total loans does not apply on the day the loan was made. It applies about a week later. This means that the bank has a week to get the deposits to meet the reserve requirement. When the bank made the loan it deposited that amount of magic dollars into an account at the bank, the account holder then spent the money over the next few days, this mostly moved the dollars to another bank, some of those dollars will be returned to the 1st bank by the people who got them from the borrower. And 2] the 1st bank can always borrow reserves from other banks at a very low rate to meet the reserve requirement a week after the loan was made. The short way of saying all that is -- "Loans create Deposits and Deposits create Reserves".

Therefore, banks can make loans without any limit until they choose not to.
They generally choose not to when the economic news tells them that the people are finding it hard to make their payments.
Until this point about 5% to 10% of the growth in the GDP is from bank loans. When the banks stop lending this drops the growth in the GDP by 5% to 10%.
A drop in GDP growth of 10% will be a recession.
That is, the lending causes a bubble in the economy, this bubble can not continue to grow, it always stops growing, and this causes a recession. The whole world is in a bank loan bubble now and it will break fairly soon. Tomorrow or in 5 years. Fairly soon.

[SolarCross]

Being in debt is a form of slavery always SolarCross no doubt about that one.

At the same time you have to realize banks love debt and interest and fees. It is their bread and butter and reason to exist.

Nothing consensual is truly slavery. Debt can be consensual, and on a individual level it generally is. Where all this gets dubious is when one gets another in debt without their knowledge or consent, from that a condition of slavery can be manifested.

[late]

I could afford Liechtenstein if I used your credit card.

Have you been there? It's really quite pricey.

[late]

Nothing consensual is truly slavery. Debt can be consensual, and on a individual level it generally is. Where all this gets dubious is when one gets another in debt without their knowledge or consent, from that a condition of slavery can be manifested.

If you look at the history of capitalism, it started with the evolution of financial instruments.

He prob doesn't even know it, but he's advocating mercantilism, or something even more primitive.