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John
Interests: Website: <a href="http://www.socialchoiceandbeyond.com">Social Choice and Beyond,</a> Jazz, Art, Travel, Societal Architecture, Information Theory, my Grandchildren
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Inflation is the biggest problem potentially. Interest rate policy is not very good at controlling it as shown by Volcker's raising interest rates so high during the stagflation of the 1970s. MMT recommends using taxes to control inflation, but unless that power was given to the Fed or a Fed like independent agency, that wouldn't work because Congress can never agree on much of anything.
Toggle Commented Feb 17, 2021 on Off the Top of My Head at California Free Press
One last remark: MMT recommends that government provide a job if the private sector cannot do so rather than just giving people money. So an ELR program is better than a Universal Basic Income (UBI)which is my opinion also.
Toggle Commented Feb 15, 2021 on Off the Top of My Head at California Free Press
Frank, I would really recommend that you read the book, "Modern Monetary Theory" by L. Randall Wray. He explains all your concerns in great depth and breadth. I got a used copy from Amazon at a decent price. Ellen Brown does not really explain how the Fed works. MMT does. MMT goes into depth about how to control inflation. Rather than 'helicopter money' they recommend an Employer of Last Resort (ELR) program in which the government guarantees everyone a job at say $15.00 an hour. This would be an automatic stabilizer which would work countercyclically. During recession more people would be taken onto the government payroll and during expansions they would be hired away by the private sector. Just like social security it would be automatic so wouldn't require ongoing Congressional approval. It would act as a minimum wage and would save government money for unemployment insurance, food stamps and other poverty programs. MMT maintains that really full employment (not what the Fed calls full employment which is 5% unemployment) will not be inflationary if there are unused productive resources which by definition is what unemployed people are. To repeat QE by definition only applies to the banking system, not to the real economy.
Toggle Commented Feb 15, 2021 on Off the Top of My Head at California Free Press
QE is strictly a program to provide liquidity to banks which the Fed as the "loaner of last resort" can do without Congressional approval. The Fed can just move the money to the banks' accounts at the Fed with a few keystrokes. On the other hand Congress needs to approve the expenditures before the Fed can move money to the Treasury's account also at the Fed. When the $1.9 trillion COVID relief bill is passed by Congress, the Fed will just move enough money into the Treasury's account to cover it if the money is not already in there. The shortfall will be covered by the issuance of Treasury bonds which are then sold on the open market. The primary dealers (mainly big Wall Street banks) are required to buy them, and, if they are not sold to the public, the Fed will take them onto its balance sheet as necessary to keep the Fed funds interest rate where they want it - currently at 0.25%. The Fed provides liquidity and sets the interest rate by either buying or selling Treasury bonds with the primary dealers. Again QE is only a relationship between the Fed and the banking system. For expenditures by government into the real economy for infrastructure, green new deal etc, first there has to be Congressional approval, which is no problem with budget reconciliation and the fact that Democrats control both branches of Congress, then a roundabout system of selling Treasury bonds to primary dealers and then the Fed taking the Treasuries onto its balance sheet. It ends up being similar to QE but more complicated.
Toggle Commented Feb 15, 2021 on Off the Top of My Head at California Free Press
Frank, Modern Monetary Theory(MMT) has a lot to say about inflation. They contend that as long as there are unused productive resources, both in human and material terms, so-called deficit spending will not result in inflation. Certainly with high unemployment there is a significant number of available human resources. Also taxes can be used (hopefully just on the rich) to deflate the economy. They point out that Medicare for All would be deflationary because it would result in much less money being spent on health care while incidentally providing better health outcomes. So there are ways to offset inflation. By the way the trillions that the Fed provided in "liquidity" to bail out the banks in 2008, while not resulting in wage/price inflation, did result in asset inflation since real estate and the stock market have inflated greatly since then.
Toggle Commented Feb 13, 2021 on Off the Top of My Head at California Free Press
That will be the Republican mantra - that the Green New Deal is too radical. It's not too radical if we want to have a habitable planet.
Toggle Commented Jan 6, 2021 on Off the Top of My Head at California Free Press
This was in the New York Times November 23, 2020. I don't think Bill Gates was kicked out of India: "The head of one of the world’s largest vaccine manufacturers had a problem. Adar Poonawalla, chief executive of the Serum Institute of India, needed $850 million for everything from glass vials to stainless steel vats so he could begin producing doses of promising coronavirus vaccines for the world’s poor. "Mr. Poonawalla calculated that he could risk $300 million of his company’s money but would still be more than a half-billion dollars short. So he looked to a retired software executive in Seattle. "Bill Gates, the Microsoft founder turned philanthropist, had known Mr. Poonawalla for years. Mr. Gates had spent billions to help bring vaccines to the developing world, working closely with pharmaceutical executives to transform the market. In doing so, he became the most powerful — and provocative — private player in global health. "By the end of their conversation this summer, Mr. Gates had made a promise: The Bill and Melinda Gates Foundation would provide a $150 million guarantee so the Indian factory could move ahead with production. "It is part of an $11 billion effort to lay the groundwork to procure coronavirus vaccines for more than 150 countries, though it could eventually cost far more when the doses come through. The initiative is led by two global nonprofits that Mr. Gates helped start and bankroll, along with the World Health Organization, which relies on the Gates Foundation as one of its largest donors. "Working behind the scenes is the world’s second-richest man, neither a scientist nor a doctor, who sees himself and his $50 billion foundation as uniquely prepared to take a central part. “We know how to work with governments, we know how to work with pharma, we’ve thought about this scenario,” Mr. Gates said in a recent interview. "As the first vaccine candidates sprint toward regulatory approval, the question of how to immunize much of the world population has taken on added urgency. But nine months in, the success of the vaccine effort, known as Covax, is not at all certain. "So far, it has pulled in only $3.6 billion in funding for research, manufacturing and subsidies for poor countries. Three companies have promised to deliver vaccines, but it is not yet known whether they will be effective. And it may be difficult to secure the necessary billions of doses in an affordable, timely way because the United States and other wealthy countries have cut separate deals for their citizens."
Toggle Commented Nov 29, 2020 on Off the Top of My Head at California Free Press
Frank, The changes you advocate for will start to take place once the Biden administration is in power. Especially climate change which you and I have long advocated for will be a major effort with John Kerry having a cabinet level position for that and Janet Yellen also a climate change advocate. The only question now is which party will control Congress. We won't know until January 6 when they have two runoffs in Georgia for the 2 remaining Senate seats. I think that there will be funds available for a large scale Green infrastructure program one way or other especially since Janet Yellen is in there. As a former Fed chairman she knows the ropes and, I think, will work out deals with Jerome Powell whether or not Congress cooperates.
They were hacking the research, not the vaccine itself.
Toggle Commented Jul 21, 2020 on Off the Top of My Head at California Free Press