Mosler's talk is about "Fighting back against slashing social security and medicare". [INSERT STANDARD LIVEBLOG DISCLAIMER.]
So, what is money? We aren't on the gold standard, but we act as though we are.
- We believe in balanced budgets, balanced trade [ed. this is my biggest problem with this whole MMT biz], reserves.
- How can we spend with a gold standard? Via taxes, debts, money printing with fractional reserves.
- Does not apply now.
Gold standard thinking: Democrat cut of Medicare, tax hikes, China, bipartisan committee. Why are we here? They think the gov't has run out of money. "Leaving debt to children." "Going to China."
But we have a nonconvertible currency. So, what is the purpose of currency?
- Provisioning the public sector: command economies, selective command (British Navy). --- OR, today's monetary policy.
What is unemployment? People looking for paid work. So, taxes create unemployment. Gov't spending to employ the unemployed If there is unemployment, then the deficit is too small! Adjust fiscally.
- Fed gov't is not an entity to which we can ascribe money. It creates money.
- WHAT ABOUT INFLATION? WARNING: OVERSPENDING CAN CAUSE INFLATION! OH NOES. Whatever!
Cash is just a representation of the reserves accts at the Fed.
Savings: Federal deficit = cash in circulatinos or in Fed checking/savings. This is the total net savings of $ assets.
He is repeating with a diagram what Kelton just said about taxes being a means of valuating money, generating obligations that must be paid in $.
He gives a one-person-economy example of how deficit spending works. If I am a consultant with $100 in the bank, if I spend it on Treasuries, and then the gov't pays me, I have both the Treasuries and the $100. Circular.
Deficit clock == savings clock.
Mosler: everything else is self-imposed constraints for various reasons.
So now, the meat of the issue: What's the point of social security? Obvious: provision seniors. Collectively rather than individually. And we have NO SHORTAGE of goods to feed and house seniors.
Is there a "problem" with Soc Sec? Are seniors living too well? Is this a misallocation of resources? Is the fund a problem? (The answer to the latter is NO. The fund is just a record. It's just an account.)
REAL PROBLEM: Dependency ratio. If there is a shortage, it's of actual labour/goods to help seniors in the future, not money. But we cut back now because of money issues. But we need education for future productivity, so why do we keep cutting education?
One problem with Soc Sec: contributions are regressive, but payouts are progressive.
Consequences of Social Security growth:
- Lower unemployment
- Fast growth
- Senior life improves too much
If these are problems, we can fix them by raising taxes or cutting benefits. But these are political choices about unemployment and values.
He just touches on China: chinese debt is in an account in the fed. Servicing it is just a matter of shifting money around in the accounts. Chinese debt doesn't matter. We can't both demand a renminbi revaluation AND want to pay it down. [I find this part dubious, he doesn't explain in detail, another talk. Maybe someone will ask him.]
Eurozone: US/UK can't end up like Greece because Greece has no currency sovereignty. Eurozone has no credible deposit insurance. There's no agency in EU to offset down cycles.
(I usually miss a lot here, too fast.)
Q: EU moral hazard?
A: Mosler: need central spending authority, eg, EU Parliament to offset race-to-the-bottom. [Yes!]
Q: [missed question, answer still interesting.]
A: Mosler: Fiat "debt" is not really debt; EU doesn't book "debt" as debt, but you can only have debt when you owe e.g. Gold.
Q: Tragic mistake theory vs. deliberate policy (in deficit hawkery)?
A: Mosler: presume innocence. Actually more damning.
Q response: What is the evidence for innocence?
A response: Presume innocence is a superior rhetorical technique, not on a factual basis.
A response from Mitchell: Did the EU leaders know about options to solve their issue? They knew the options. Not innocent. Doesn't think innocence is a better rhetorical tactic. It was ideological.
Q new: Raising taxes reduces demand? What about wealth accumulation?
A: Mosler: These are all legitimate political concerns. They are orthogonal to the question about whether government will come out of money.
Q response from someone else: Then what about this business with taxes regulating demand? Isn't this about wealth concentration?
A: Mosler: Even raising taxes on the rich can be offset with giveaways. (Wealth concentration in 90s). Still political. And worrying about deficit actually distracts us from dealing with wealth concentration.
A from Wray: Redistribution not via taxes. You need to control income in the first place.
Q on why these things are not publicized well, couldn't quite hear the question. Also on EU.
A: Auerback: says that EU Maastricht, etc, are the most prominent examples of neoliberal overreach, and Greece/PIIGS crisis may be the tipping point.
15 min break. I think I'll post the notes for the first two talks this evening rather than in break.