Our monetary system is insane

[David Dennison 18661]

8 minutes ago, Zavala said:

What is a social project? Is this just government funded housing?

So already the current plan plus raise top marginal rates by a lot? Wont they just do the same thing they do now?

https://www.topaccountingdegrees.org/taxes/

I'd rather focus on getting rid of corrupt government and bureaucracies than try to chase down more top earner money in tax dollars. 

Get rid of the loopholes.

[elfenix 34180]

2 hours ago, Nice Guy Eddie said:

One area of the Fed that confuses me is that they basically printed $4 trillion to cover the 2008 (& 2011) crisis via QE.  Except for the fact that we're the US, it's really no difference than Argentina printing new money to pay bills.  And isn't that toxic debt still on the govt balance sheet?

 

argentina printed bills which went into circulation.  QE money didn't go into circulation.  it just gave everyone a bunch of cash on their balance sheets.

https://www.investopedia.com/ask/answers/041415/when-federal-reserve-bank-engaged-quantitative-easing-did-it-add-m1.asp

 

also, you'll notice that M1 increased in that article.  but that's only part of the left side of the equation, MV = PQ.  let's look at M1V:

 

(m1 is a bit absurdly limited - it includes checking accounts but not savings or money market.  m2v, which does, also fell pretty hard)

Edited May 6, 2019 by elfenix

[Guest Lobo]

Monetizing debt is different than monetizing commercial banks for retail withdrawal

[American Swindle 102]

[maninblack 7974]

1 hour ago, American Swindle said:

 

 

 

Pure evil. 

[American Swindle 102]

 Statism Level: Master.

"We can't have competing currencies because to continue our great Swindle, we CANNOT have a decentralized currency that enables individuals to unplug from the House of Cards we built!" 

 

[GRHorn 105]

In other words, buy Bitcoin?

[bernorange 8348]

Quote

A radical world of “helicopter money” - where central banks fund government spending - is “inevitable” as policymakers run out of ammunition ahead of the next recession, top economists have warned.

Central banks are likely to “explore more unconventional policies” in the next downturn and blur the lines between fiscal and monetary policy with radical new tools, such as monetary financing, Deutsche Bank argued.
...

https://www.telegraph.co.uk/business/2019/09/29/helicopter-money-may-weapon-confront-next-recession/

[Rusty Shackelford 414]

2 hours ago, bernorange said:

https://www.telegraph.co.uk/business/2019/09/29/helicopter-money-may-weapon-confront-next-recession/

paywall for me so I don't know if this was expanded on more, but I have been reading that Germany is not playing ball and has been "gasp" running a budget surplus instead of a deficit like Draghi wants them to.

[elfenix 34180]

german economic policy is basically "fuck everyone else in the euro we're getting ours."  and has been for decades.  germans 1) make a bunch of stuff; b) don't buy a bunch of stuff.  since this all has to balance out, it means a bunch of spaniards, greeks, and italians have to borrow money from the germans to buy all the cars the germans are making. 

Edited October 1, 2019 by elfenix

[RDCanecutter 26290]

My impression is that the Euro is basically the Deutschmark + whatever everybody else's bumwad was worth in January 2002, in Deutschmarks.

Though I could be wrong. I drank a hell of a lot during the changeover.

[Thetexashammer 1062]

On 5/9/2019 at 9:52 PM, American Swindle said:

 

 

 

 

Is this guy a D or an R? /rhetoricalquestion

[swraith 336]

german economic policy is basically "fuck everyone else in the euro we're getting ours."  and has been for decades.  germans 1) make a bunch of stuff; b) don't buy a bunch of stuff.  since this all has to balance out, it means a bunch of spaniards, greeks, and italians have to borrow money from the germans to buy all the cars the germans are making. 

Yet somehow the US can’t figure out how to emulate this.

[bernorange 8348]

28 minutes ago, swraith said:

 

Yet somehow the US can’t figure out how to emulate this.

 

We can't emulate this because world reserve currency requires a trade deficit.

[Bookman 4611]

On 5/6/2019 at 4:45 PM, elfenix said:

 

argentina printed bills which went into circulation.  QE money didn't go into circulation.  it just gave everyone a bunch of cash on their balance sheets.

https://www.investopedia.com/ask/answers/041415/when-federal-reserve-bank-engaged-quantitative-easing-did-it-add-m1.asp

 

also, you'll notice that M1 increased in that article.  but that's only part of the left side of the equation, MV = PQ.  let's look at M1V:

 

(m1 is a bit absurdly limited - it includes checking accounts but not savings or money market.  m2v, which does, also fell pretty hard)

Not sure I understand how they keep the money out of circulation if money is fungible.

[bernorange 8348]

13 hours ago, swraith said:

 

Yet somehow the US can’t figure out how to emulate this.

 

 

12 hours ago, bernorange said:

We can't emulate this because world reserve currency requires a trade deficit.

Decent read on the subject:

https://moneymaven.io/mishtalk/economics/nixon-shock-the-reserve-currency-curse-and-a-pending-dollar-crisis-CUveB9D01kG03mpO7o-SqA/

[elfenix 34180]

9 hours ago, Bookman said:

Not sure I understand how they keep the money out of circulation if money is fungible.

it was kept on balance sheets to counter toxic assets, rather than being lent out.

Edited October 2, 2019 by elfenix

[Rusty Shackelford 414]

1 hour ago, elfenix said:

it was kept on balance sheets to counter toxic assets, rather than being lent out.

Yeah, the banks supposedly have all these reserves:

https://fred.stlouisfed.org/series/TOTRESNS

Well maybe not every bank? https://www.newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/repo-reverse-repo-agreements/repurchase-agreement-operational-details

[bernorange 8348]

Quote

... the Fed is now actively monetizing debt the Treasury sold just days earlier using Dealers as a conduit... a "conduit" which is generously rewarded by the Fed's market desk with its marked up purchase price.

In other words, the Fed is already conducting Helicopter Money (and MMT) in all but name. As shown above, the Fed monetized T-Bills that were issued just three days earlier - and just because it is circumventing the one hurdle that prevents it from directly purchasing securities sold outright by the Treasury, the Fed is providing the Dealers that made this legal debt circle-jerk possible with millions in profits, even as the outcome is identical if merely offset by a few days.
...

https://www.zerohedge.com/markets/helicopter-money-here-how-fed-monetized-billions-debt-sold-just-days-earlier

Not good my friends... not good.

[Michael Knight 12899]

One day this collapse is gonna happen

[elfenix 34180]

3 hours ago, Michael Knight said:

One day this collapse is gonna happen

david hume has to be right, damnit!

[Junior Miller 1502]

3 hours ago, bernorange said:

https://www.zerohedge.com/markets/helicopter-money-here-how-fed-monetized-billions-debt-sold-just-days-earlier

Not good my friends... not good.

Have to admit I'm not sure how this is working. Is it saying the fed is indirectly purchasing its own issued securities? I'm unclear on how that method would serve to perpetuate this artificial boosting of the markets. Or is it only to make it appear the treasury securities are still a top notch investment and not allow the bottom to fall out? My understanding is limited in this area. 

 

[bernorange 8348]

1 hour ago, Junior Miller said:

Have to admit I'm not sure how this is working. Is it saying the fed is indirectly purchasing its own issued securities?...

No.  US Treasury Dept. sells newly issued Treasuries (which uses cash from the sales to help fund federal government payrolls and expenses). Certain banks (and possibly hedge funds or other very large institutions) buy the Treasuries.  These same banks (and possibly other entities) have special "dealer" status with the Federal Reserve.  They then sell the Treasuries, presumably at a marked up price, to the Federal Reserve (which buys them with money created out of thin air).

 

[Incredulity 11558]

7 minutes ago, bernorange said:

No.  US Treasury Dept. sells newly issued Treasuries (which uses cash from the sales to help fund federal government payrolls and expenses). Certain banks (and possibly hedge funds or other very large institutions) buy the Treasuries.  These same banks (and possibly other entities) have special "dealer" status with the Federal Reserve.  They then sell the Treasuries, presumably at a marked up price, to the Federal Reserve (which buys them with money created out of thin air).

 

The Soviet ball bearing factory would take is raw material from the local steel mill and produce millions of ball bearings.

The ball bearings would be shipped to the local steel mill to be melted in to raw steel.

[Blotto 23434]

18 minutes ago, bernorange said:

No.  US Treasury Dept. sells newly issued Treasuries (which uses cash from the sales to help fund federal government payrolls and expenses). Certain banks (and possibly hedge funds or other very large institutions) buy the Treasuries.  These same banks (and possibly other entities) have special "dealer" status with the Federal Reserve.  They then sell the Treasuries, presumably at a marked up price, to the Federal Reserve (which buys them with money created out of thin air).

 

So it's clear how the middlemen benefit in this scenario, but what benefit does the US government derive by buying treasuries at a higher price than they realized in the original sale? Dumb it down for me, what's the point other than allowing the financial interests in the middle to scalp some money in the process?

[Junior Miller 1502]

23 minutes ago, bernorange said:

No.  US Treasury Dept. sells newly issued Treasuries (which uses cash from the sales to help fund federal government payrolls and expenses). Certain banks (and possibly hedge funds or other very large institutions) buy the Treasuries.  These same banks (and possibly other entities) have special "dealer" status with the Federal Reserve.  They then sell the Treasuries, presumably at a marked up price, to the Federal Reserve (which buys them with money created out of thin air).

 

But isn't that the same thing? The federal government is  indirectly purchasing it's own issued treasuries back. Is the motivation to do so to artificially prop up its own treasuries and fund itself while trying to keep inflation in check? I'm trying to figure out how this benefits the fed more than just printing money to fund itself without going through the whole work around. 

[Incredulity 11558]

1 hour ago, Junior Miller said:

But isn't that the same thing? The federal government is  indirectly purchasing it's own issued treasuries back. Is the motivation to do so to artificially prop up its own treasuries and fund itself while trying to keep inflation in check? I'm trying to figure out how this benefits the fed more than just printing money to fund itself without going through the whole work around. 

Jobs program...half joking.

[Dbeasy 14970]

Ok so fed is creating money out of thin air to pay government deficits. How does this fall apart and what triggers it?

 

And if you have your wealth tied up in stocks, mutual funds, bonds and money market funds, what if anything can you do to prepare for it?

[washparkhorn 9935]

What Goldman Sachs and the Fed already know - (note, they use this to benefits the extremely wealthy rather than Main Street America). A quick rundown of how money really works:

Quote

 

Conventional economic wisdom holds that high federal “deficit spending” runs a serious risk of triggering inflation.

The fiction of dangerous deficit spending rests upon the false assertion that federal income taxes are used to pay for U.S. government spending. As the story goes, if government spending far exceeds tax revenue, it puts our economy in danger and the government may even have to resort to “borrowing” to cover the gap.

Today, only Modern Monetary Theory economists and their followers are courageous enough to reveal the fact that taxes do not fund spending at the federal level. Taxes do play a key role to keep inflation in check and to maintain the stability of the dollar by removing excess cash from the private economy. But once your taxes are recorded, they go to the same place points earned by football teams at the end of the game.

The U.S. has a sovereign currency. That means that our currency was established by law and the federal government is the monopoly producer of the dollar. New dollars are created whenever it pays an obligation.

It doesn’t write a check on an account that tax money was deposited into. There is no such account.

Thus, the question often posed -- “How are you going to pay for it?” -- is irrelevant. Our government can pay for anything that is available for U.S. dollars any time and in any amount. It can never run out of money. It can never go bankrupt.

Being the sole issuer of the currency also means that the feds never need to borrow. They can create more of it any time.

The hitch is, spending must first be authorized by Congress.

What is referred to as the “national debt” is actually the national savings, private cash invested in Treasury bonds, not loans to the government.

Inflation can occur when there is too much money available in the private economy in relation to the amount of goods and services available to spend it on. If goods are scarce and money is abundant, that money chases the goods and tends to drive up prices.

MMT economists look at deficit spending differently. The historical data show that the U.S. government is typically in a state of deficit spending. And it is only when such spending goes too low that problems arise.

There have been only four years of government surpluses since 1970.

Those were the much-heralded Clinton surpluses. However, as Modern Monetary Theory economists would predict, they were immediately followed by a recession.

In fact, as economics Professor Stephanie Kelton has stated, since 1970, every period during which federal deficits were less than an average of 3.1% of GDP was associated with a recession. The obvious conclusion is that higher government deficit spending coincides with better times for the private economy. Higher “deficit” spending puts more money in the hands of individuals and businesses and generates economic activity.

Although the deficit for 2017 was 3.5%, the CBO projects that from 2018 through 2020 the deficits will be under 3% each year. That is recession territory.

Unfortunately, regions of the country, such as ours, have not yet fully recovered from the last recession. This is not good news.

In this light, the urgent calls to reduce the deficit are disingenuous and harmful. The data is there. The politicians know the economic facts and use them to the advantage of themselves and their donors.

https://www.lcsun-news.com/story/opinion/columnists/2018/02/27/mmt-economists-look-debt-deficit-differently/379809002/

 

 

 

 

 

Edited January 3, 2020 by washparkhorn

[Junior Miller 1502]

That goes 100 percent against every law of economics but if it is true then why all those years of conservatives raging against spending? Why even have any conservatives at all if the US government and currency are so far above to the level of God like that they can print however much they want with zero repercussions? If that's the case then why wouldn't every politician want nationalized health care, unlimited national jobs creation, and everything else fully funded by the government that is "too big to fail"? 

This sounds like republican bullshit excuses for their lack of conservatism over the last 40 years, and if they really believe this then they should be on board with Bernie Sanders 100 percent. 

[washparkhorn 9935]

13 minutes ago, Junior Miller said:

That goes 100 percent against every law of economics

We haven't always been austerity driven Keynesians. Economics, like any other nascent science, is constantly examined. We are moving into the post-Keynesian phase with differing schools of thought now competing for places at the table.  Why?  Because the alarms about deficits have not come true. 

We are still at greater risk for deflation than inflation. And - the olden rule for economies is - Inflate or die. 

From https://www.vice.com/en_us/article/a34n54/modern-monetary-theory-explained

“The government can afford to pay for any program it wants. It doesn’t have to raise taxes,” Kelton added. Because politicians on both left and right don’t get that, “Kids go hungry—bridges don’t get built.” 

Although rarely heard on mass media, among economists this viewpoint is not particularly controversial. Oxford economist Simon Wren-Lewis told me in an email. “Most mainstream, non-ideological economists would agree the US needs more infrastructure investment, and the best way to finance that is through public borrowing.” He continued: “Most people think austerity is mainstream macroeconomics, although it is not. Those who are anti-austerity look for some alternative theory, which MMT provides.”

Why has austerity become convention wisdom outside of economic circles?  We are gullible. We think of federal spending like household spending. It is nothing like your household budget. And billionaires like Peter Peterson have promoted the propaganda against debt for so long - we think of it as gospel. It's not. 

Edited January 3, 2020 by washparkhorn

[maninblack 7974]

1 hour ago, Dbeasy said:

Ok so fed is creating money out of thin air to pay government deficits. How does this fall apart and what triggers it?

And if you have your wealth tied up in stocks, mutual funds, bonds and money market funds, what if anything can you do to prepare for it?

1.) It could be any number of things. My guess is that a break away from the petro dollar will be the most likely trigger. Now that could be precipitated by say a war with Iran but ultimately it'll be the loss of our status as the worlds reserve currency. When this happens the massive stores of US dollars around the world will rush back the US b/c that is the only place those notes are good. They'll buy up everything not bolted down and we'll see hyperinflation. 

2.) Hard assets are always a good hedge. And lots of guns and ammunition.  

[hornhorn 100]

5 hours ago, Junior Miller said:

Have to admit I'm not sure how this is working. Is it saying the fed is indirectly purchasing its own issued securities? I'm unclear on how that method would serve to perpetuate this artificial boosting of the markets. 

 

FED buys securities when it wants to increase the flow of money in the market. It does the opposite when it wants to reduce the flow of money. 

By buying this newly created treasury(as debt) from a Bank what it does is it allows that Bank to loan a partial sum(because some of it has to be held to maintain the capital reserves) of those treasuries to lend to other banks at Fed funds rate. This allows those other banks to lend that money to entrepreneurs, companies etc to open new businesses indirectly creating jobs. 

Hopefully this helps.

Edited January 3, 2020 by hornhorn

[Zavala 1384]

The "monetary system" is guaranteed to inflate endlessly to try and pay off the debt. Good for buying homes I guess, bad for everything else.

[Zavala 1384]

14 minutes ago, hornhorn said:

FED buys securities when it wants to increase the flow of money in the market. It does the opposite when it wants to reduce the flow of money. 

By buying this newly created treasury(as debt) from a Bank what it does is it allows that Bank to loan a partial sum(because some of it has to be held to maintain the capital reserves) of those treasuries to lend to other banks at Fed funds rate. This allows those other banks to lend that money to entrepreneurs, companies etc to open new businesses indirectly creating jobs. 

Hopefully this helps.

lol it's just this simple - all wealth is funneled to banks and owners of the financial systems while the debt ceiling increases forever.

[Rusty Shackelford 414]

58 minutes ago, hornhorn said:

FED buys securities when it wants to increase the flow of money in the market. It does the opposite when it wants to reduce the flow of money. 

By buying this newly created treasury(as debt) from a Bank what it does is it allows that Bank to loan a partial sum(because some of it has to be held to maintain the capital reserves) of those treasuries to lend to other banks at Fed funds rate. This allows those other banks to lend that money to entrepreneurs, companies etc to open new businesses indirectly creating jobs. 

Hopefully this helps.

That was the theory, but in reality banks are just buying stonks.

[washparkhorn 9935]

Diagrams and Dollars - How Money Works: https://neweconomicperspectives.org/2014/01/diagrams-dollars-modern-money-illustrated-part-1.html

It's really quite simple.

[elfenix 34180]

 

2 hours ago, Junior Miller said:

if the US government and currency are so far above to the level of God like that they can print however much they want with zero repercussions?

that's not at all what that says. 

[ryskey 447]

2 hours ago, washparkhorn said:

We haven't always been austerity driven Keynesians. Economics, like any other nascent science, is constantly examined. We are moving into the post-Keynesian phase with differing schools of thought now competing for places at the table.  Why?  Because the alarms about deficits have not come true. 

We are still at greater risk for deflation than inflation. And - the olden rule for economies is - Inflate or die. 

From https://www.vice.com/en_us/article/a34n54/modern-monetary-theory-explained

“The government can afford to pay for any program it wants. It doesn’t have to raise taxes,” Kelton added. Because politicians on both left and right don’t get that, “Kids go hungry—bridges don’t get built.” 

Although rarely heard on mass media, among economists this viewpoint is not particularly controversial. Oxford economist Simon Wren-Lewis told me in an email. “Most mainstream, non-ideological economists would agree the US needs more infrastructure investment, and the best way to finance that is through public borrowing.” He continued: “Most people think austerity is mainstream macroeconomics, although it is not. Those who are anti-austerity look for some alternative theory, which MMT provides.”

Why has austerity become convention wisdom outside of economic circles?  We are gullible. We think of federal spending like household spending. It is nothing like your household budget. And billionaires like Peter Peterson have promoted the propaganda against debt for so long - we think of it as gospel. It's not. 

All that is fine, as long as the increased spending grows the economy by the same amount.  Or rather, all things being equal, it increases spending, net of interest, in a way that keeps the money spent and taxed in roughly the same ratios as before.  The increased debt still has to be mildly productive, or the equity in the system starts to actually decrease.  Even though we've been growing our debt, the economy has been growing by roughly the same amount.  We're in deep shit only when we keep adding debt to the balance sheet and the economy consistently grows slower than the debt.

[washparkhorn 9935]

12 minutes ago, ryskey said:

All that is fine, as long as the increased spending grows the economy by the same amount.  Or rather, all things being equal, it increases spending, net of interest, in a way that keeps the money spent and taxed in roughly the same ratios as before.  The increased debt still has to be mildly productive, or the equity in the system starts to actually decrease.  Even though we've been growing our debt, the economy has been growing by roughly the same amount.  We're in deep shit only when we keep adding debt to the balance sheet and the economy consistently grows slower than the debt.

Exactly. There has to be a need for what is produced. 

Taxation is the drain when needed to take out excess money. 

[Incredulity 11558]

2 hours ago, washparkhorn said:

Exactly. There has to be a need for what is produced. 

Taxation is the drain when needed to take out excess money. 

So explain 1970’s  tax rates and inflation 

[washparkhorn 9935]

2 hours ago, Incredulity said:

So explain 1970’s  tax rates and inflation 

Stagflation of the 70’s?  The Great Inflation? 
 

Cost-push inflation with high unemployment is not the dreaded demand-pull inflation. That was the birth of the neoliberal winter.  wrong policy then. Did not improve with high interest rates.  improved with saudis opening up the oil spigot.

more later - sorry. Laker game. 

[washparkhorn 9935]

And I agree with bern’s concerns of shocks to the system making inflation a risk with any economic theory. The Jobs Guarantee is a shock absorber for stagflation. Demand-pull inflation is drained off with taxes under MMT. 

Edited January 4, 2020 by washparkhorn

[bernorange 8348]

On 1/3/2020 at 12:39 PM, Blotto said:

So it's clear how the middlemen benefit in this scenario, but what benefit does the US government derive by buying treasuries at a higher price than they realized in the original sale? ...

Presumably, the middlemen are only buying because they have a guaranteed resale to the Federal Reserve lined up.  If the Fed weren't backstopping the sales, the original auctions would likely go much different (and possibly result in Treasuries going unsold which would also be bad, but in a different way).  Foreign countries have slowed down purchases of Treasuries.  I suspect domestic buyers are also doing the same.  The Fed is (indirectly) stepping in to cover the difference.

On 1/3/2020 at 12:43 PM, Junior Miller said:

But isn't that the same thing? The federal government is  indirectly purchasing it's own issued treasuries back. ...

No.  The US Treasury Dept. is part of the government.  The US Federal Reserve is a different entity that is technically a private institution.  Their charter actually prohibits direct purchasing of Treasuries.  We aren't supposed to be a banana republic.

On 1/3/2020 at 3:17 PM, washparkhorn said:

... the alarms about deficits have not come true. ...

Yet.  That's the thing about Russian Roulette.  You play the game with a revolver that can chamber 1,000 rounds and click the trigger for 100 or so times and begin to feel bulletproof.  The problem is, when you do eventually find the bullet, it's going to be a bigger problem than you can handle.

Maybe this (the POMO operations subsidizing the funding of our government with monopoly money) is a temporary thing.  I sure hope so, because if it continues, the natural result will be an acceleration of a currency crisis for the US Dollar.  We might even just skip over the high inflation problem and go straight to hell.

[washparkhorn 9935]

8 hours ago, bernorange said: That's the thing about Russian Roulette.  You play the game with a revolver that can chamber 1,000 rounds and click the trigger for 100 or so times and begin to feel bulletproof.  The problem is, when you do eventually find the bullet, it's going to be a bigger problem than you can handle.

Maybe this (the POMO operations subsidizing the funding of our government with monopoly money) is a temporary thing.  I sure hope so, because if it continues, the natural result will be an acceleration of a currency crisis for the US Dollar.  We might even just skip over the high inflation problem and go straight to hell.

US Fiat money is unsinkable until it hits an iceberg it did not see coming. I agree. A large external shock would probably crash any economy we could devise - but it is the magnitude of the fall that is rightfully concerning. And MMT allows us to understand how we were able to bail out the banks using trillions without massive inflation. And why we can spend more on a bottom up approach the next time. 

The economy is evolving quickly. We have hollowed out the middle and working classes. We are started to see the lower fringes of the upper class starting to understand there is nothing below them propping them up. I posit the greatest weakness of this economy is the weakness of the middle and working class. If they go completely - and many are one paycheck away from ruin - we will see a collapse that will take down all but the very, very few. 

I look at MMT and similar theories as supporting a buildup of the working and middle classes - a bottom up approach to avoid a financial collapse. We bailed out the banks with trillions - and none of that filtered down. Shouldn't we consider building back up the working and middle classes to keep capitalism working in the US?

Or do we just let the top .001 pull the plug as they retreat to their citadels and private islands during the troubles bound to come with the current trajectory?

[elfenix 34180]

8 hours ago, bernorange said:

Yet.  That's the thing about Russian Roulette.  You play the game with a revolver that can chamber 1,000 rounds and click the trigger for 100 or so times and begin to feel bulletproof.  The problem is, when you do eventually find the bullet, it's going to be a bigger problem than you can handle.

you're assuming the bullet exists.

[washparkhorn 9935]

4 minutes ago, elfenix said:

you're assuming the bullet exists.

You are right. MMT assumes the bullet exists, but we can handle significantly more before it becomes a live round. And MMT believes we can manage that risk effectively. Goldman Sachs believes the same thing because we tried it and it worked - for a select few they would like to continue funneling money to. I think we should take the Squid's word for it - after all they reinflated themselves and their buddies quite well. 

We should have let them go. F'ing bastards created the toxic sludge. But they did allow us to test out the effect of dumping trillions into the economy to help out a privileged few. The needle didn't move on inflation. We went into austerity mode far too quickly. 2008 did a lot of damage that still exists today (and has worsened for many). Austerity wasn't needed. We needed some of those dollars to go to the middle and working classes to make up for Goldman and Friends' mistakes. They were trusted, they blew it, we reanimated them for the benefit of those who profit from them. Bully for them.

It is time to turn off the austerity lever. Austerity is not normal in this economy. The US economy thrives when there is no austerity. It falls into recessions and depressions when austerity measures are put in place. Austerity has been in place since the 1970's. And there has been damage - because of austerity. How many recessions will it take to understand when we are bouncing around with anemic growth - demand-pull inflation from too much money chasing too few items is not occurring. 

Housing requires its own analysis and solutions. We have too few housing units. Why - artificial suppression of affordable housing. Affordable  - as in working and middle class housing. You don't have that as much in Texas as the rest of the urban United States. Your housing policy has until lately been very accommodating of affordable housing. In other cities and states, affordable housing stock has been severely limited by gentrification and gentrifying New Urbanism city planning. I think the ideals of New Urbanism are sound, but the effects - like other neoliberal policy - have hit the middle and working classes hard. It has become  in reality  a vehicle for punch-down classicism - and all the assorted ills that come with that exclusionary viewpoint. But the wealth gap has increased with housing, which demonstrates many have been left behind in working and middle classes. And a non-functioning working and middle class is not what made  America the dynamo of economic activity that it was and is.

It is time to invest in Americans. They drive this economy. The nation needs all of them living a good life. That is the essence of the American Dream - a wide road to a better life. MMT may provide a framework to keep the capitalist system running and the American Dream an aspiration.

Might not hurt to try a different idea - since it worked for the wealthiest through Wall Street. 

[hornhorn 100]

10 hours ago, washparkhorn said:

I look at MMT and similar theories as supporting a buildup of the working and middle classes - a bottom up approach to avoid a financial collapse. We bailed out the banks with trillions - and none of that filtered down. Shouldn't we consider building back up the working and middle classes to keep capitalism working in the US?

Or do we just let the top .001 pull the plug as they retreat to their citadels and private islands during the troubles bound to come with the current trajectory?

Trillions? It was $245.2 billion forcibly LOANED to banks to accept toxic assets. Also $245.2 billion isn't trillions. Not to CR it but your Math is Bernie level off. This intentional multiplication of numbers is deceitful. 

An extremely left Source: https://projects.propublica.org/bailout/

[washparkhorn 9935]

16 minutes ago, hornhorn said:

Trillions? It was $245.2 billion forcibly LOANED to banks to accept toxic assets. Also $245.2 billion isn't trillions. Not to CR it but your Math is Bernie level off. This intentional multiplication of numbers is deceitful. 

An extremely left Source: https://projects.propublica.org/bailout/

Not so much - but the PR campaign by the financial sector to downplay the numbers has been effective, I suppose, so thank you! 

"There have been a number of estimates of the total amount of funding provided by the Federal Reserve to bail out the financial system. For example, Bloomberg recently claimed that the cumulative commitment by the Fed (this includes asset purchases plus lending) was $7.77 trillion. As part of the Ford Foundation project “A Research and Policy Dialogue Project on Improving Governance of the Government Safety Net in Financial Crisis,” Nicola Matthews and James Felkerson have undertaken an examination of the data on the Fed’s bailout of the financial system—the most comprehensive investigation of the raw data to date. This working paper is the first in a series that will report the results of this investigation.

The extraordinary scope and magnitude of the recent financial crisis of 2007–09 required an extraordinary response by the Fed in the fulfillment of its lender-of-last-resort function. The purpose of this paper is to provide a descriptive account of the Fed’s response to the recent financial crisis. It begins with a brief summary of the methodology, then outlines the unconventional facilities and programs aimed at stabilizing the existing financial structure. The paper concludes with a summary of the scope and magnitude of the Fed’s crisis response. The bottom line: a Federal Reserve bailout commitment in excess of $29 trillion."

Matthews and Felkerson - University of Missouri at KC, 2011 -  $29,000,000,000,000: A Detailed Look at the Fed’s Bailout by Funding Facility and Recipient, http://www.levyinstitute.org/pubs/wp_698.pdf

 

[hornhorn 100]

8 minutes ago, washparkhorn said:

Not so much - but the PR campaign by the financial sector to downplay the numbers has been effective, I suppose, so thank you! 

"There have been a number of estimates of the total amount of funding provided by the Federal Reserve to bail out the financial system. For example, Bloomberg recently claimed that the cumulative commitment by the Fed (this includes asset purchases plus lending) was $7.77 trillion. As part of the Ford Foundation project “A Research and Policy Dialogue Project on Improving Governance of the Government Safety Net in Financial Crisis,” Nicola Matthews and James Felkerson have undertaken an examination of the data on the Fed’s bailout of the financial system—the most comprehensive investigation of the raw data to date. This working paper is the first in a series that will report the results of this investigation.

The extraordinary scope and magnitude of the recent financial crisis of 2007–09 required an extraordinary response by the Fed in the fulfillment of its lender-of-last-resort function. The purpose of this paper is to provide a descriptive account of the Fed’s response to the recent financial crisis. It begins with a brief summary of the methodology, then outlines the unconventional facilities and programs aimed at stabilizing the existing financial structure. The paper concludes with a summary of the scope and magnitude of the Fed’s crisis response. The bottom line: a Federal Reserve bailout commitment in excess of $29 trillion."

Matthews and Felkerson - University of Missouri at KC, 2011 -  $29,000,000,000,000: A Detailed Look at the Fed’s Bailout by Funding Facility and Recipient, http://www.levyinstitute.org/pubs/wp_698.pdf

 

Did you read the paper? The amount you're parroting is the cumulative facility(as in repo facility, auction facility, SWAPS, etc.) to make the money move, not the actual bailout. To have an expanding economy, Federal reserves of all countries have to back central banks with cumulative facilities. 

Actual bailout loans still stand at $245.2 billion which were paid back, with interest.