A number of economists have argued against the austerity policies pushed by the ECB and the German, French, and Italian governments. They had voiced the concern that contractionary fiscal actions act pro-cyclically and would inevitably drive the European economy into a deep depression. They have repeatedly argued that aggregate demand repression would ultimately hit the very core of the euro system: Germany.
Does shredding dollar bills destroy wealth?
This question offers an opportunity to ascertain to what extent money (in the form of dollar bills) does, or does not, embody wealth.
By Andrea Terzi
Europe should hold another summit where all 17 euro nations agree on a general tax cut. This could be a VAT cut across the board, or an income tax cut, but it is imperative it is a progressive tax cut, i.e., boosting disposable income of low and middle income recipients.
At the same summit, Euroland governments will further announce that
- The “lost revenue” will be collected through Eurobonds
- Eurobonds will be guaranteed by the EFSF, backed by the ECB
- The same summit should announce that more issues of Eurobonds will follow to “fund” an ambitious plan for upgrading the European communication, transportation and digital infrastructure.
By Andrea Terzi
The Civilized Money View (aka MMT, or Modern Monetary Theory) has historical precedents:
First, the notion—developed by Adam Smith—that the wealth of a nation is measured not by monetary values, but by its capacity to produce goods and services.
Second, the notion of money—developed by John Maynard Keynes—that any modern state claims the right to declare what money is.
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Net income and capital expenditure
The flow-of-funds account as well originates from the double-entry ledger book, and it can be seen as an extension of the income statement. In the latter, “net-income generated” is the balance between revenue (on the credit side) and current expenditure (on the debit side). If positive, net income is a source of funds, which are used for purchasing capital goods, acquiring financial assets (lending), or reducing liabilities.
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At a time when the Loch Ness monster (that is, the Tobin tax) rears its head again in public debate, it may be useful to review why a transactions tax on currency trading is unlikely to prevent speculations or serve any genuine public purpose.
By: Andrea Terzi
The Economist (Dec 31, 2011) gives a good fair account of neo-chartalism, and a momentous recognition of Warren Mosler’s long fight to have it accepted!
Like all new (and meaningful) views of the world, neo-chartalism develops from a number of forerunners, whose ideas are revamped under a new format.
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By: Andrea Terzi
One claimed objective of the single currency area in Europe is (or should I say was?) to create a large single market for producers. But now the ECB is pressing national governments to gear their policies to enhance competitiveness so that they can “count on external demand” and increase their net exports! Mario Draghi, President of the ECB, and a key figure in the team now managing the European crisis, made this statement while responding to an Italian journalist, in the Q&A session of the ECB press conference of 8 December 2011.
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By: Andrea Terzi
German central bankers (current and former) continue to voice their hostility to what the financial community now calls a Euro-style Quantitative Easing (aka big bazooka). This is the possibility that the ECB (directly, or through the EFSF) make an unlimited commitment to purchase euro bonds and remove the spreads. Axel Weber, Juergen Stark, and Jens Weidmann have already voiced sharp criticism of the ongoing ECB’s sovereign bond purchase program (SMP, Securities Market Programme), saying it threatens the independence of the ECB.
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by Warren Mosler
1. A full FICA suspension to end that highly regressive, punishing tax and restore sales, output, and jobs.
2.$150 billion in federal revenue sharing for the state goverments on a per capita basis to sustain essential services.
3. An $8/hr federally funded transition job for anyone willing and able to work to facilitate the transition from unemployment to private sector employment.
4. See my universal health care proposals.
5. See my proposals for narrow banking, the Fed, the Treasury and the FDIC.
6. See my proposal’s to take away the financial sector’s ‘food supply’ by banning pension funds from buying equities, banning the Tsy from issuing anything longer than 3 month bills, and many others.
7. Universal Social Security at age 62 at a minimum level of support that makes us proud to be Americans.
8. Fill the Medicare ‘donut hole’ and other inequities.
9. Enact my housing proposals.
10. Don’t vote for anyone who wants to balance the federal budget!!!!
- The austerity infection now spreads to the core?
- Understanding dollar bills: Is this guy destroying wealth?
- Adding long needed aggregate demand to Euroland
- Civilized Money View vs. Monetarist Keynesianism
- 13. The flow-of-funds account and the net financial position
- Tobin Tax Monster
- The crisis and the blogosphere have opened mainstream economics up to new attack
- Not only in Germany: The ECB now wants export-driven growth for whole Europe!
- QE Euro-style: There is no alternative to the ECB writing the check
- Warren Mosler’s proposals for the 99%
- 12. Income statement and net income
- Solutions to the euro crisis
- Does this sound familiar?
- The speech by President Barack Obama we have been waiting for! (Ghost written by Warren Mosler)
- 2011 Mecpoc lecture
- Does the ECB understand sector financial balances?
- 11. Balance sheet and net worth
- Interview with Randy Wray, Regarding the Next Crisis (Part 2)
- 10. Accounting for debits and credits
- Congress: You Are the Scorekeepers for the U.S. Dollar, Not a Player!
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- walid M: An excellent and easy to reference guide to what MMT is ... [...]
