Posts Tagged ‘Money’

The passing scene: January 3, 2015

January 3, 2015

Social Programs That Work by Ron Haskins in The New York Times.

Many social welfare programs fail.  The Obama administration has identified some that succeed.   While this does not change my unfavorable opinion of the President’s policies overall, I think he is entitled to credit for having this research done.

This City Eliminated Poverty and Nearly Everybody Forgot About It by Zi-Ann Lum for Huffington Post.

Between 1974 and 1979, the small city of Dauphin, Manitoba, guaranteed all residents a basic income—employed or not, able to work or not.  What was the ultimate outcome of this radical experiment?  Nobody ever bothered to check and find out.

What’s Wrong With Georgia? by Alana Semuels for The Atlantic.

Scott Walker has failed Wisconsin and Minnesota is the proof by Jimmy Anderson for the Milwaukee Journal-Sentinel.

Georgia and Wisconsin are the latest American states to discover that a Third World economic strategy—low wages, low taxes, low services and low regulation—is not a successful formula for creating jobs and promoting economic growth.

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The logic of modern monetary theory

July 10, 2014

Modern monetary theory seems wacky to me.

But try as I might, I can’t find any logical flaw in the basic idea.

Governments create money.  Why, then, do governments ever have to borrow money?  Why can’t they simply print the money they need to cover deficits.

One answer:  It would be inflationary.   But inflation is too much money chasing too few goods and services.   To the extent that government spending would generate goods and services that otherwise would not exist, new fiat money would not be inflationary.  And to the extent that there was a danger of inflation, the excess money could be soaked up through taxation.

MMT supporters said last year’s debt crisis and government shutdown were unnecessary.   The government should simply have created a trillion-dollar platinum coin (which is supposedly authorized by an obscure law), deposited the coin in a Federal Reserve Bank and used the new money to buy up the excess government bonds.

Again, I can’t see any logical flaw.  If the Federal Reserve has authority to create money to buy up bonds, why can’t it buy up Treasury bonds, liquidate them and reduce the national debt?

But the whole idea makes me uneasy.  I do think the U.S. government ought to be spending more money than it is for infrastructure, education, scientific research and other things needed to the nation’s future.   That’s not the same thing as thinking there should be no limits at all.

I fear MMT would remove a sense of limits.   I willingly pay taxes to support police, firefighters, schools, public roads, water and sewerage service and so on.  I’m not so sure I would willingly pay taxes just to reduce the money supply.

David Graeber on debt as a false religion

September 9, 2013

If debt through compound interest is an obligation with no upper limit, and if it is in law an obligation which transcends all other obligation, then the idea of debt is like a religion—the sacrifice of all other values to Mammon.  Or so it has long seemed to me.

debt230People today world are still sold into slavery to pay their debts.  Nations are required by international organizations to sacrifice the welfare of their people in order to pay debts to international banks, even debts incurred by previous rulers to acquire the means to keep their people down.  Overhanging debt holds back our economy, yet a write-down of debt seems unthinkable.

David Graeber is an American who teaches anthropology at Goldsmiths, University of London; he also is an anarchist who was one of the originators of the Occupy Wall Street protest.   In his book, Debt: the First 5,000 Years, he attempted to explain the origins of the moral, religious and social meaning of debt.

Debt: the First 5,000 Years is profound, interesting, difficult and, at times, sometimes questionable.  Graeber clarified and expanded my own insight about the nature of debt.  He made me see world history in a new light.  I wonder about some of his assertions, but do not have the knowledge to refute.  I would willingly take a semester course with this as a textbook.

You can click on the title above to get Graeber’s outline of his idea for the book.   In what follows I’ll try to explain what I got out of it.

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Who are the richest billionaires?

September 1, 2012

Randall Munroe, creator of the web comic xkcd, is a great creator of infographics.  The chart above is a section of his new poster about money and its distribution.  The list of billionaires is from last year’s Forbes.  A lot of the names were unfamiliar to me, so I looked them up on Wikipedia.

Carlos Slim made his billions by buying the Mexican government telephone system at a bargain rate and jacking up phone rates.

Bill Gates, as almost everyone knows, is a founder of Microsoft.

Warren Buffett is an extremely successful investor/speculator in the stock market.

Bernard Arnault is a Frenchman who owns Louis Vuittron and other luxury goods companies.

Larry Ellison is founder of the Oracle software company.

Laksimi Mittai is CEO of the world’s largest steel company, which is based in India.

Amancio Ortega is a Spanish merchandiser of luxury clothing.

Eike Batista is a Brazilian mining and oil-and-gas magnate.

Mukesh Ambani is CEO of India’s Reliance Industries, who expanded the family textile business back into polyester fibers and then into the oil and gas industry.

Christy Walton is one of the heirs of Sam Walton, founder of the Wal-mart store chain.

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