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Mon Feb 11, 2013, 08:50 PM

Thom Hartmann: How MMT Will Save America & the World

Thom Hartmann interviews Dr. Michael Hudson, President-Institute for the Study of Long-Term Economic Trends (ISLET) / Author, "The Bubble and Beyond" Website: http://michael-hudson.com/ about modern monetary theories.

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Reply Thom Hartmann: How MMT Will Save America & the World (Original post)
alp227 Feb 2013 OP
Cary Feb 2013 #1
undergroundpanther Feb 2013 #2
xtraxritical Feb 2013 #3

Response to alp227 (Original post)

Mon Feb 11, 2013, 09:07 PM

1. Thanks for posting this.

But not everyone agrees with this. Witness Paul Krugman:

Right now, deficits don’t matter — a point borne out by all the evidence. But there’s a school of thought — the modern monetary theory people — who say that deficits never matter, as long as you have your own currency.

I wish I could agree with that view — and it’s not a fight I especially want, since the clear and present policy danger is from the deficit peacocks of the right. But for the record, it’s just not right.

The key thing to remember is that current conditions — lots of excess capacity in the economy, and a liquidity trap in which short-term government debt carries a roughly zero interest rate — won’t always prevail. As long as those conditions DO prevail, it doesn’t matter how much the Fed increases the monetary base, and it therefore doesn’t matter how much of the deficit is monetized. But this too shall pass, and when it does, things will be very different.

More at his blog, here: http://krugman.blogs.nytimes.com/2011/03/25/deficits-and-the-printing-press-somewhat-wonkish/

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Response to alp227 (Original post)

Mon Feb 11, 2013, 10:08 PM

2. As long as we value the rich's well being over the poor we will have debt.

Strip away the technicalities and you are left with two ways to think about the debt crisis. One is as a battle between the past and the future. The vast majority of Greece's debts are historic commitments made to creditors by previous governments, sometimes in very dubious circumstances. Yet Athens has been forced to prioritise repaying these old loans over generating economic growth, or future income. One result of that policy has been to snatch away whatever chance the Gasparinatos kids might have had of decent lives.Something similar is happening in Britain. David Cameron came to office with the primary goal of paying down debt. Less than two years later, his ministers are now obliged to go on the BBC at regular intervals to explain why more than a million young people are out of work. Study after study shows that a young adult unemployed at the outset of his or her career suffers permanent damage to their prospects, yet this government's economic policy favours the past even though it means ruining the future.

Why? This brings us to the second way to think about any argument over debt: as a fight between creditors and borrowers, or the haves and the have-nots. The creditors have the money and therefore the whip-hand over the borrowers.

Meanwhile, economists at the IMF estimate that Greece should actually have 75% wiped off its debt burden – and market prices indicate that figure should really be over 90%. But economic reality has been no match for the stranglehold bankers have on European politicians – who, by the way, swore last month that no other country would fail to pay its loans in full.

Ultimately, a loan is a social arrangement and, like any other contract, it can be renegotiated. A few decades ago, archaeologists discovered the first ever legal contract in Lagash in modern-day Iraq. Dated back 4,400 years and carved into the bricks of a Mesopotamian temple, it was for the cancellation of debt. It's claimed that countries that don't repay their loans will be frozen out by lenders. Yet, as I wrote here last year, IMF economists have recently argued that "the economic costs are generally significant but short-lived . . . we almost never can detect effects beyond one or two years."

In his recent, brilliant history Debt: the First 5,000 Years, the anthropologist David Graeber calls for a modern-day debt jubilee, a cancellation of all debts, just as they had in Mesopotamia. His suggestion is provocative, but it should be taken seriously. Because the longer we keep protecting the haves over the have-nots and honouring the past while destroying the future, the worse this debt crisis will get
And yet economic history is full of examples of successful debt default. When American Airlines declared recently that it was bankrupt and couldn't carry on repaying its loans, it was applauded by Wall Street analysts as "very smart". The whole point of company insolvencies is to work out the value and viability of the underlying enterprise; if it can carry on, banks and other creditors get squared off at vastly reduced sums and the productive part of the firm is back in business.



Debt is the results of usury and greed dominating fiscal and social policy..

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Response to alp227 (Original post)

Tue Feb 12, 2013, 01:27 AM

3. Treasury bonds can be purchased directly from the treasury by anyone with no banks involved.


The program is called Treasury Direct. (Edited because DU did not display the link properly.) Here's the web address - https://www.treasurydirect.gov/

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