Former Illinois Governor, Blagovich stood trial for selling a US Senate seat. Buying and selling of political office is commonplace. Senator McCain spent $20 million in the recent primary! That's around $75 per voter.
In Michigan, the Republican candidate for governor spent $7.6 million in the primary! This absurdity is buying office plain and simple. And it all masquerades as freedom of speech according to the Supreme Court!
Big campaign contributors get something for their money. The Securities and Exchange Commission sued Goldman Sachs for $! billion and then settled for 550 million in a case of claiming that Goldman mislead investors in a subprine mortgage product. I wonder why?
And now even some Democratic and most Republicans in Congress say we must continue the Bush tax cuts for the rich so as not to spook the recovery. Why do people keep electing representatives who do not legislate in the interest of most ordinary citizens? Answer: by bombarding the public with lies and diverting their attention with reference to gays and abortion.
Friday, September 3, 2010
Thursday, August 26, 2010
Global Reserve Currency
Joseph Stiglitz in his excellent latest book, "Freefall," advocates the creation of a new global reserve currency (ICCs) with "annual emissions." "This would thereby increase global aggregate demand and strengthen the global economy." He acknowledges that the world is able to produce much more, but many have no money to buy it. So why not create more? (He also argues that such a reserve currency would reduce the need for countries to run trade surpluses to accumulate reserves.)
The IMF could create the new reserve currency. Stiglitz cleverly calls it an "emission" and not a loan that would create the obligation to pay interest, much as I have been advocating to solve the problem of inadequate demand currently in the US.
The following is from a 1999 report to the UN from a special commission that Stiglitz chaired.
"the international agency in charge of creating global reserves would simply issue the global currency, allocating ICCs to member countries, much as IMF Special Drawing Rights are issued today. There would be no “backing” for the global currency, except the commitment of central banks to accept it in exchange for their own currencies. This is what would give the ICCs (or SDRs) the character of an international reserve currency, the same way that acceptance by citizens of payments in a national currency gives it the character of domestic money. However, if the issues of global currency received by countries are considered deposits in the IMF or the Global Reserve Bank, and the institution in charge of managing the system is allowed to buy the government bonds of member countries or to lend to them, then these investments would be the “backing” of the global currency, just as domestic moneys are “backed” today by the assets of national central banks (the government bonds in their hands and their lending to private sector financial institutions).
The IMF could create the new reserve currency. Stiglitz cleverly calls it an "emission" and not a loan that would create the obligation to pay interest, much as I have been advocating to solve the problem of inadequate demand currently in the US.
The following is from a 1999 report to the UN from a special commission that Stiglitz chaired.
"the international agency in charge of creating global reserves would simply issue the global currency, allocating ICCs to member countries, much as IMF Special Drawing Rights are issued today. There would be no “backing” for the global currency, except the commitment of central banks to accept it in exchange for their own currencies. This is what would give the ICCs (or SDRs) the character of an international reserve currency, the same way that acceptance by citizens of payments in a national currency gives it the character of domestic money. However, if the issues of global currency received by countries are considered deposits in the IMF or the Global Reserve Bank, and the institution in charge of managing the system is allowed to buy the government bonds of member countries or to lend to them, then these investments would be the “backing” of the global currency, just as domestic moneys are “backed” today by the assets of national central banks (the government bonds in their hands and their lending to private sector financial institutions).
Monday, August 23, 2010
Tax Cuts for Rich
If the tax cuts for the rich are extended, I will be deeply discouraged.
The facts are noted by Paul Krugman in his New York Times column of August 22.
"According to the nonpartisan Tax Policy Center, making all of the Bush tax cuts permanent, as opposed to following the Obama proposal, would cost the federal government $680 billion in revenue over the next 10 years. For the sake of comparison, it took months of hard negotiations to get Congressional approval for a mere $26 billion in desperately needed aid to state and local governments.
And where would this $680 billion go? Nearly all of it would go to the richest 1 percent of Americans, people with incomes of more than $500,000 a year."
This extension is unconscionable, immoral, and surely not in the interest of most citizens. Are the American people not able to understand their own self-interest?
The facts are noted by Paul Krugman in his New York Times column of August 22.
"According to the nonpartisan Tax Policy Center, making all of the Bush tax cuts permanent, as opposed to following the Obama proposal, would cost the federal government $680 billion in revenue over the next 10 years. For the sake of comparison, it took months of hard negotiations to get Congressional approval for a mere $26 billion in desperately needed aid to state and local governments.
And where would this $680 billion go? Nearly all of it would go to the richest 1 percent of Americans, people with incomes of more than $500,000 a year."
This extension is unconscionable, immoral, and surely not in the interest of most citizens. Are the American people not able to understand their own self-interest?
Copter Cash could improve Japanese economy
Japan's economy remains in the doldrums. Consumers are saving and firms are desperately reducing prices. The problem is deflation, not inflation. The Bank of Japan has pushed interest rates to near zero with little stimulus to investment. To make matters worse, Japan's currency is rising against the dollar, depressing exports.
What's the answer when traditional monetary policy has no effective options?
Answer, Copter Cash. Create more money to overcome consumer reluctance to spend. This could be done by Bank of Japan and the Japanese treasury directly creating money without borrowing and incurring debt obligations.
By the way, this would be a good policy for the US as I have proposed in earlier blogs. Dropping cash from helicopters would be crude, but every one could be sent a check, and of course the government could spend on infrastructure. How would you like a high-speed trans-country railroad to bring us up to European standards? A country without high speed rail is a second rate country. Or maybe you would like a national electric grid that could prevent power failures and be able to transport solar-driven electricity from sunny areas to cloudy cities.
What's the answer when traditional monetary policy has no effective options?
Answer, Copter Cash. Create more money to overcome consumer reluctance to spend. This could be done by Bank of Japan and the Japanese treasury directly creating money without borrowing and incurring debt obligations.
By the way, this would be a good policy for the US as I have proposed in earlier blogs. Dropping cash from helicopters would be crude, but every one could be sent a check, and of course the government could spend on infrastructure. How would you like a high-speed trans-country railroad to bring us up to European standards? A country without high speed rail is a second rate country. Or maybe you would like a national electric grid that could prevent power failures and be able to transport solar-driven electricity from sunny areas to cloudy cities.
Saturday, August 14, 2010
Recession Policy in Germany
Germany is enjoying economic growth despite the world-wide recession. Their policy reported by the New York Times makes a lot of sense to me:
"Government officials here are confident they found the right approach, including a better solution to unemployment. They extended the “Kurzarbeit” or “short work” program to encourage companies to furlough workers or give them fewer hours instead of firing them, making up lost wages out of a fund filled in good times through payroll deductions and company contributions."
"Government officials here are confident they found the right approach, including a better solution to unemployment. They extended the “Kurzarbeit” or “short work” program to encourage companies to furlough workers or give them fewer hours instead of firing them, making up lost wages out of a fund filled in good times through payroll deductions and company contributions."
Wednesday, July 28, 2010
Afghanistan spending
The US has spent $300 billion in Afghanistan. What did we get for our money? The New York Times reports that the Taliban is stronger today than at any time since 2001.
What kind of evidence do we need to change our policy? I am greatly disappointed in Obama. 300 billion would buy a lot of health care and help us get out of this recession, but he and a lot of our politicians do not see the connection.
What kind of evidence do we need to change our policy? I am greatly disappointed in Obama. 300 billion would buy a lot of health care and help us get out of this recession, but he and a lot of our politicians do not see the connection.
Monday, July 26, 2010
Social Security shortfall?
Many commentators view with alarm the fact that the “Social Security Trust Fund will begin to face a long-term cash shortfall by 2016” as reported in the AARP Bulletin, July-August, 2010. The trust fund is simply an accounting device and is not a repository of saved funds. Government spends all the money it collects in every kind of tax for all kinds of purposes. Future expenditures for Social Security and any other purpose depend on Congressional appropriations, and not the balance in some made-up, so-called trust fund.
As Randall Wray puts it, "the trust funds cannot provide external funding for one of the governments own programs, because this is a case of the government 'owing itself.' At the same time, however, this means that it is logically impossible for any one of the government's programs to face a financial crisis on its own, because it is the overall budget that matters--not a single program's finances." Levy Economics Institute, Policy Note, 2005/2.
Instead of being scared by an artificial device, we could be debating modifying the regressivity of social security taxes. How much do citizens want to spend on social security and who should pay. This is the same question we should be debating about national defense and health care.
As Randall Wray puts it, "the trust funds cannot provide external funding for one of the governments own programs, because this is a case of the government 'owing itself.' At the same time, however, this means that it is logically impossible for any one of the government's programs to face a financial crisis on its own, because it is the overall budget that matters--not a single program's finances." Levy Economics Institute, Policy Note, 2005/2.
Instead of being scared by an artificial device, we could be debating modifying the regressivity of social security taxes. How much do citizens want to spend on social security and who should pay. This is the same question we should be debating about national defense and health care.
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