Is it possible that you could enlist a group of economists who would create an educational series for the NYT and other papers? 7 day series.Your articles could lead and end the series. "Practical Economics: How to think clearly about your money these days" So very many people are clueless (like me). If nothing else -- maybe journalists would get educated!!!
Rev. Dale, I like your idea of a series in newspapers about economics basics with a personal touch related to what happens to/with their money. It would take enormous work, but it could be really good, particularly if it then gets disseminated across social media.
The NYT article Robert cited merely cites the CBO report. It also quotes the Peter G. Peterson Foundation, which is opposed to SSA and Medicare.
This is the same BS that has been spewed for years. About 20 years ago when I was on an ABA task force, I suggested that. because it takes care of widow(ers), orphans and disabled people it could be mitigated (not eliminated) by endowing the Social Security trust funds to skew the apex of the effect of baby boomer drawdowns of the funds. Although it does not publicize it, SSA has a donation policy: https://www.ssa.gov/agency/donations.html
I've been told by a couple of ex SSA Commissioners that it can help. I've asked the Biden administration and SSA to publicize it. So far no response.
I gain so much information from Robert Reich and Daniel Solomon. Scaremongering and false information have been easier to detect recently as republicans fear IRS regulation and corporations want profit at any cost. I repeat myself, CORPORATIONS AND THE IRS ARE REGULATED BY CONGRESS. Weirdo senators like Scott, Rubio, and Cruz are not only out of step with the majority of America they are attempting to subvert the will of educated, knowledgeable Americans like Dr Reich. I admire the Biden information machine that continues to accurately analyze and act on America's need for direction in foreign relations, infrastructure and democracy.
Robert, I am with you on your comments about Congress needing to act. I also admire the Biden information machine. I just wish he had more media support in getting his message out. Trump's message was appalling, yet the media certainly made sure everyone heard that man's loud mouth every day no matter what he had to say. With Biden, it is different, even though he has important things to say about a range of critical topics. The media has lackluster coverage if any at all, so the people think nothing is being done for them. Ugh!
I appreciate your comment, Ruth. Thoughtful, informed commentary is often found on PBS, Fareed Zacharia GPS on CNN, and I watch Lester Holt Nightly News because it is factual. Perhaps you have other worthy journalism sources to suggest. It is so shameful that a phony garbage mouth like Trump has managed to subvert the narrative in America among so many weak souls who have such a limited view of the American dream. We must all work harder to stimulate the conversation and drown out the insurrectionists.
Robert, Ain't it the truth! The only way I can manage the media is to weigh the different sources to see which is most credible related to a particular story. For anything related to President Biden, I find MSNBC's Chris Hayes to be credible. When it comes to Ukraine, I find the various reporters in the field worthy of listening to. The BBC in general is pretty good with that. When it comes to Israel, I am not finding major media very reliable, so I look to Jewish Voice for Peace and a couple of the Palestinian NGOs valuable. I know bias n media has always been a thing, but it seems to pervade even sources I used to trust, like NPR, PBS, "The New Yorker," and "The Economist" (although "The Economist" has always been on the side of money wherever it is). How do we fix this, I have no idea. I read, listen, and watch a lot because I am retired and have time. How can those working impossible jobs ever have sufficient time to track down the truth?
Very important point about the media, Ruth. Having worked in publishing for almost 20 years, I can confirm that it's all about the ratings/views/consumption of related advertising. Therefore, when buffoons like TFG spew outrageous rants, they'll always capture the eyes and ears of the media. Unfortunate, but the way it works.
Daniel, thanks for the resources, I will check them out. I should have guessed there would be an anti-SS group involved and therefore quoted in the NYT attempt to be "balanced or some such nonsense. I don't know how we can stand up to the wall of media misinterpreting information and not giving a full understanding of what such issues as the debt ceiling mean. A good educator writer like Prof. Reich could do that for them as a guest editor or writer. I am guessing there is not much will for the NYT to do that. It wouldn't cause as much anger and distrust related to our government. Can't have that!
Perhaps the most useful argument re SS and Medicare “sunsetting “is the one regarding income levels not subject to the tax. They’re regressive taxes. When I was in the workforce I regularly got a 6% pay raise by abut April, when I’d maxed out my income subject to the tax.
I would argue that is stupid. Just when I’d paid for a lot of my expenses I no longer paid into SS.
Have no limit on income subject to the tax and it’s solved. And I’d include profits from business income subject to the tax.
I've listened to murmurings in the political theater for some time, and the general consensus surrounding the infusion of younger minds into the status quo in Washington, at present leaves me wondering. Yes, President Biden is up in years and he isn't getting any younger. The call for competency tests being administered to active members who have reached a certain age bracket is somewhat questionable. Why not give those tests to everyone who endeavors to find a job in Washington? From what I've seen the children who have made their way into our political arena need testing far more than our older members. Marjorie Taylor Greene, Boebert, Gaetz, Santos, Jordan, Paul, the "Luna"-tick from Florida, these are only a few who possess immature minds needing more life experiences before they get their feet wet in politics. Allowing babies to represent the voices of a huge number of Americans to me is stupid. The people in question have, in a very short period of time, demonstrated their incompetence beyond any need for explanation. For me, I'll take the grayed-haired gentleman or gentlewoman who has gained experience in the political field over many years of loyal service. Like a lady named Liz or a friend named Joe. To me, kids still suffering from the effects of puberty who find it necessary to show family pictures where children are supporting assault rifles reflect a mental state not suitable to hold office in this country. Or others who fell into the Q-Anan conspiracy hole where satin lives in perfect harmony with Santos, Boebert, and Greene. Talk about sick people, the current Republican party which embraces its youth movement can go jump in the Lake, if she'll have ya. The idiotic minds that are running the show in the Republican party are way too young to be doing anything but enjoying recess on a playground behind a school where they should have paid a bit more attention. Give me gray hair and the experience that goes with it and I'll feel a whole lot better about life in this country. Keep the kids out of politics altogether. At least have them finish their schooling.
Donald, I agree that there are a lot of child-adults in DC and in state legislatures all over the country. That is because that is all the Republicans have to offer. They have their child-fleet in every state legislature working to disrupt things like spoilt brats and allowed the nonsense of 15 votes to elect a Speaker of the House to go on without anyone adults present on the Republican side saying this is crap! Let's vote for Jeffries! We really can't expect much good from a bunch of toddlers running around our Capitol in DC and the state capitals because they neither have experience nor the wisdom to know when it is time to grow up and start being a responsible adult. All of those you mentioned never had to grow up there was always someone there to cover for them, make excuses for their bad behavior, and keep them as childish as possible. Child-adults are easily manipulated by the rich and unscrupulous. They don't even realize they are being manipulated because they are loving the attention they are getting for their childish pathetic antics. There are young Democrats who are working to make things better for this nation and the world. We should be looking to them as our future rather than spending so much time hearing about or listening to the toddler-Republicans who inhabit the Republican side of Congress and state legislatures.
I live in Colorado. I didn’t bother to google it but thanks for letting me know it took three tries. We tried to District her into Boulder Co but it didn’t work. Red part of the state.
They don’t change the GED questions, always the same. Third times a charm
Jen, Yeah, the child-Republicans in Congress are hard to tell apart. The one thing that is certain, they are selfish and care nothing for anyone but themselves and the power and money they can get. But, people in their states and districts are conditioned to vote for whatever "R" is on the ballot even if they are jerks and totally unsuitable to hold any office anywhere.
The only way that I would leave a gift to SS is if it were a progressive income. In other words, the more money a retiree receives from other income sources, the less the SS payment and that amount is distributed to those making less.
Nancy Williams. NOT just a retirement program. Social insurance. Protects widowers, orphans and disabled people and their families.
And it already is progressive as benefits are skewed and are taxed.
Not only do YOU get a deduction, your "entitlement" (their word, not mine) is protected.
If the upward slope of the statistical bell shaped curve of the baby boomer generation is flattened, even by a small amount, it moves the date of the apex farther into the future. And as following generations revert to the mean, can take care of itself.
Add this to other fixes, like an algorithm that increases the cap as benefits are increasingly progressive, and the road goes on forever.
There is a huge difference between discussions of the solvency of Social Security and the increasing federal debt. The former is solvent, the latter is escalating at an alarming rate, which should be of concerns to educated people of any political position. Mr. Reich's position on federal debt is misleading and scary. $31 trillion of real debt is a huge problem. Do not discount it or think it is not real or somehow can just be written off.
I have failed to find telling republicans anything to be a wasted effort ( MTG or Qevin). And agree, entitlements is a nice word to make people sound as if they don’t deserve the promised benefits.
I think you are mistaken about the national debt. It isn’t scary. Its not like your mortgage, they’re not going to repossess the country.
It might help you to read about modern monetary theory.
Or look for Larry Kasdens post about the course offered by Newcastle U on economics.
Your point of view if sadly shared by many who don’t understand a sovereign currency issuer cannot run out of money, and that the reason for taxes is not to pay the bills.
I know it’s wild, and I had to read Keltons Deficit Myth three times to really wrap my head around it.
But once the light goes on, you’ll be happier. And better informed so politicians and Larry Summers can’t lie to you any more.
Please study modern monetary theory. We can’t run out of money.
We issue our own sovereign currency.
Inflation is a concern, but if you’ve been paying attention a lot of it is taking advantage of the fact people can pay. Until they can’t, because Powell with his one hammer got them all laid off.
Larry Summers is an idiot. Don’t be like Larry Summers.
Keltons Deficit a myth is a good place to start, and there’s plenty of thought in this area now, which is more than I can say of the Chicago school 18th century approach.
That man on the ground in Ohio just puts more toxic waste at the site of the train derailment. Maybe the authorities can put a few holes in his storage tank and then burn off the sludge as it seeps from his polluted carcass. You would think at some point he would get tired of making a fool out of himself.
Hi Don .... I don't believe Trump is motivated by some of the normal decent leadership instincts we expect of public officials. He is intoxicated with self importance, money and ego and has never paid the price for his errors with his own money. It is time the American voters condemn this phony imposter and identify him for his selfish, corrupt, dysfunctional bigoted behavior by sending him to jail for playing fast and loose with American Democracy.
With the train wreck in Ohio, a new problem has popped up, one that authorities might want to sweep under the rug. Everyone in the know understands thousands of metric tons of contaminated dirt, containing toxic chemicals have to be removed and replaced with clean fill. Ohio borders the Southern shores of Lake Erie, please tell me all that dirty dirt isn't destined to wind up somewhere in one of our Great Lakes. If not there where? That soli has been deemed toxic, where do you dump that amount of an unusable substance? An issue that should be considered relevant. "Inquiring minds want to know." What movie?
Modern Monetary Theory: Economics for the 21st Century
Demystify macroeconomic principles and terminology and discover how Modern Monetary Theory (MMT) provides explanations for some of the world's most troubling financial concerns.
I would suggest using a semi-popular if not popular media figure to do 30-60 second spots explaining these complicated issues in layman's terms. They are not difficult to explain: trumplicans want you to pay them more taxes so they can buy more mansions and yachts. Americans want to expand Medicare and Medicaid so you can retire earlier and AFFORD surgeries, eye glasses and tooth care. DONE.
Thank you for posting this. I wrote my much less helpful comment before I read yours, but it's encouraging to learn that others are slowly becoming aware of, and learning to appreciate, the new insights of MMT. Maybe we can roll this stone away from the mouth of the economic tomb we currently dwell in. The light is there, if people will just step into it.
How is it that conservative bullshitters like Cal Thomas and Mark A. Thiessen get published in my local rag (The Oakland Press - Oakland County,. MI) so often but never Robert Reich? I think I'll put this in a letter to that editor next.
Unfortunately many journalists [sic] have conservative editors who control what they publish. TV is a better way to reach the average American, but Fox News wants a fearful public, not an informed one.
Look no further than the NYTimes's own economist Paul Krugman, who has been writing about the national debt v the deficit for years.
People get confused about the debt and think it's the same thing as the deficit. It's not. The deficit is simple, the difference between what the government takes in through taxes, and what it spends. It's typically $2-3 trillion under a Republican president - because they always cut taxes on the wealthy - then it's back to zero under the following Democratic president - because they tend to raise taxes on the wealthy, and so on ad nauseum. Not a big deal.
On the other hand, the debt is a measure of all indebtedness, and might be a sign of economic activity. So it goes up, for example, with infrastructure spending, even though the deficit may be closed by a responsible president.
You just have to know that the British national debt was 150% of GDP throughout the peak of British imperial wealth and power, in the 19th century. It's not a big deal that it might be 118% of American GDP next year.
I've cited to Krugman previously. I like his idea that another option would involve raising money by issuing “premium bonds” when existing debts come due — bonds whose face value is the same as that of the bonds they replace, so that they don’t officially increase the debt, but offer high interest rates, so they sell for much more than their notional value.
This is a useful idea, but sadly not in the interests of our government or the Times. Our government, which has become one of the main sources of misinformation, doesn't want an enlightened population because then, people might begin to think for themselves. And people who think, are dangerous.
Remember, I'm a throwback to Vietnam, and guessed exactly how the Afghan/Iraq adventure would play out - and wasn't wrong. These folks bring up an issue I banged-on about back then.
Left or right, I have the same concerns.
In case you don't get the connection, it's about the increasing debt and the money involved in supporting this effort, regardless of how noble our effort is.
Overall, we rate 19FortyFive Right-Center Biased based on editorial positions that align with a conservative perspective. We also rate them Mostly Factual in reporting rather than high due to a lack of transparency in ownership.
That's a great idea. It could be a MOOC so we could all spiff up what we remember from Econ 101. Still, though, I don't need Econ 101 to tell me that there are 2 ways to balance a budget: decrease the outflow of money or increase the inflow of money.
How could the NYT have reported so poorly about this?
It's not just an Econ 101 budget to balance. The interest on the debt is a big part of the budget, and the debt is not a fixed rate loan. Congress controls the budget. The FED controls the interest rate. With the FED playing Russian Roulette with the interest rates, balancing the budget is not just math when you have to guess the numbers. Read Reich's post again.
What do I think Robert? I think that if more Americans read your Substack we would probably have an American Revolution on our hands. The American people are so in the dark about the economy, the debt ceiling and how no taxes on the wealthy are hurting the Country, that if they really knew the truth we would have a lot more protesting going on than just the protests about the social injustices we have in this great land.
Oh Ramona, I agree. Now, how do we get more people informed about our economy and willing to stand up to the rich and powerful? It has been done in the past, but with a lot of government support ala Teddy Roosevelt. How do we break folks free from the bits of knowledge that trickle out from the media on the economy that are not actually true, fair, or something they can get their heads around? I do believe we could do it and that Prof. Reich and others like Paul Krugman could make it happen. They could benefit from some more psychology from perhaps someone like Brene Brown who could supply some of the emotional terms that could reach people who don't know they are starving for an understanding of why things are not going better for themselves and their families.
The only politician I ever heard admit that the federal government can’t run out of money is Donald J. Drumpf. And the reporters had zero follow-up questions to his remark.
Rebecca, you are right that the debt ceiling needs to go. It is a point of contention on a regular basis, stopping the serious work of our government. However, Republicans for about the past 40 years or so haven't been much for serious governing, just taking away people's rights and cutting support. The debt ceiling works so well for them so they can yell and whine to look as though they actually care about the debt ceiling or anything else important beyond the money and power they can collect for themselves. It's shameful, but probably the reason the debt ceiling will not go away any time soon.
Correct analysis. We should continue to explain the true meaning of the debt as payment for the already spent projects. There is no negotiation on Social Security and Medicare. Taxes on the rich must be enforced at any price.
Dream on, Mark. You could do the same with your personal finances, but I would not recommend it. Credit card debt fits the scenario that one is paying for already spent goods or services. But debt comes with interest payments. There is a difference in paying interest on $5.6 trillion, when George W took over, and the $31.4 trillion now. A huge difference. Don't fool yourself that debt is not real and does not have future implications.
A country's finances are not the same as personal finances.
Balancing the budget would throw most of the population into a severe depression. There would be no funds for any programs and homelessness would explode. The wealthy would sit in their yachts and watch.
So the lesser of evils is to incur debt and raise the ceiling (or eliminate it).
Both Bush presidents and Trump are responsible for the most increases in our debt.
Steve. I like your idea. Maybe if enough of us tell Prof. Reich we think he should get his summary out to the "Times" and other papers, maybe first as an op-ed, then more in-depth, he would do it, something not too long, but very informative would be the right move.
"The US public debt is nothing more than the dollars spent by the federal government that have not yet been used to pay taxes. Those dollars spent and not yet taxed sit in bank accounts at the Federal Reserve Bank that are called 'reserve accounts' and 'securities accounts', along with the actual cash in circulation.
***
Think of it this way- when the government spends a dollar, that dollar either is used to pay taxes and is lost to the economy, or it's not used to pay taxes and remains in the economy. Deficit spending adds to those dollars spent but not yet taxed, which is called the public debt.
So how about what's called 'paying off the debt' as happens to 10's of billions of Treasury securities every month? That's just a matter of the Fed shifting dollars from securities accounts to reserve accounts- a simple debit and a credit- all on its own books. And there are no tax payers or grand children in sight when that happens.
***
.....the public debt is nothing more than a component of what can be called the money supply.... there is no risk of default, there is no dependence on foreign or any other lenders, there is no burden being put on future generations, or any other of those trumped up fears.....
Right, as Stephanie Kelton says, most people believe the government has to tax and borrow before it can spend (T&B)S but it really works the completely opposite way. The government has to spend so it can tax and borrow S(T&B).
You are correct, but that fact is usually rejected out-of-hand by many Americans, including their representatives. It's difficult changing minds; some people have closed minds, so they cannot be reached, but, thankfully, many others would be receptive if reached before the cement sets, thus college would be the ideal place to teach MMT.
Why does investment equate with debt? It is like saying that sleep is debt because you are not working but without the investment in sleep you wouldn't be able to work. Sleep is an investment in re-energizing the body so that it may do what needs to be done the next day.to make you productive in what you are doing.
Agreed, economic ignorance is a terrible thing and is holding us down and back in every sort of way.
The good news, though, is that a handful of macroeconomists have discovered important new insights, things we got wrong before, especially the monetarists like Milton Friedman, but even the startling genius of John Maynard Keynes couldn't see as far as we do today.
Much misunderstood and much disliked, the theorists of Modern Monetary Theory (MMT) can lead us out, if anyone can, of our economic wilderness, our fog of ignorance, our self-sabotaging ways of doing things now. They have perused the historic data and the mechanics of macroeconomics and come up with some fresh, very helpful insights. We were blind, but now we can see.
The bad news, however, is that old school macroeconomists don't get it, so they argue long and vociferously against it, household names like Larry Summers and even Nobel Laureates like Paul Krugman, a very likeable chap. I always read his essays in the NYTimes and comment there at length. These intelligent men were schooled in the best information we had at the time, but the science of macroeconomics evolves, gets better, smarter, wiser. Finally, we can see the light at the end of the tunnel; in fact, we can leave the tunnel if we just will. Boldness is required.
A common problem with doing just that is that understanding and appreciating MMT requires a paradigm shift. You either see it, scales fall magically from your eyes, or you don't. The root of the problem is that most of us perceive and conclude that the federal debt is just like a household's, a corporation's, or the budget of a city, county, or state. It isn't. None of these entities can do all three of the following: set interest rates, tax, and print a fiat currency that has universal acceptance. It's a sea change, a new world of discovery, that we now understand just how important this difference is; luckily, many successful nations, like Japan, England, and the United States have taken advantage of their new knowledge and vastly grown their economies.
I could go on at length, but to fully grasp how beneficial MMT is, you'll need to do some reading and listening to the advocates of MMT, such as, Warren Mosler, the father of MMT, and professors Stephanie Kelton (cf. "The Deficit Myth"), L. Randall Wray (cf. "Making Money Work for Us: How MMT Can Save America"), Bill Mitchell, Hyman Minsky (difficult, but valuable reading), Pavlina R. Tcherneva et alia. Most of these macroeconomists have many free YouTube videos of their MMT seminars and interviews on the topic.
Caveat: Don't be put off by other macroeconomists' unwarranted, invalid criticisms. As noted, they haven't accomplished the necessary paradigm shift, and I doubt that they ever will, because they have invested a lifetime believing in and supporting the theories of monetarism, Keynesianism, or post-Keynesianism.
Wonderfully, but unsurprisingly, Bernie Sanders hired Dr. Kelton as his economic adviser; he gets it, but wisely, for the time being, backs off from it somewhat because the conclusions of MMT are just so strange to most people who have lived a lifetime believing that the government must balance the budget or that we are "running out of money" (Obama believed that) or even that we need to go back on the gold standard. Wrong-headed ideas, all!
So, if you can, find out about MMT. Keeping an open, but critical mind is essential, but rewarding. Progress is possible, even in macroeconomics.
P.S. AOC gets it, too. She knows that we can and should spend the money for a Green New Deal, but, again, that's just too alien for most folks who insist, "You can't spend money you don't have, especially on a hoax like climate change!"
Knowledge grants power for us to make things better. Ignorance, a stubbornness regarding change, and fear of the new by our leaders keep many of us lost, sick, ill-clothed, and ill-fed in the wilderness.
I concur ... economics should be explained more, talked about more and taught for sure. Is one of the ways that can help regular people without an economic background see the way out of a situation that others might want to picture as apocalyptic.
A lot of us may not have gone to college. Economics wasn't taught in high school, at least not in the 1970's. I appreciate Professor Reich explaining complex subjects in his articles. Also, there is a lot of learning in the comments if one takes the time to read.
I graduated HS in 1971 and DID take a course in Economics my senior year, an elective. Think I got a C in it, but it was a start. Aced all my economics classes in college, so it was good prep. It indeed should be required, along with basic money management (bank accounts, saving, taxes, checkbooks, if anyone uses them anymore, credit, loans, etc).
I grew up clueless about money. My parents believed in one thing: SAVING! My Father said “if you want to be poor get a credit card”! They paid cash and invested later because my Mother ( masters in math) learned from her teacher friends about that!
I didn’t even know how to write a check in college because I never had.
And the three of us all went to college and one on to law school.
I came home the first quarter from college with no money in my account because I hadn’t deducted spending from total! My parents did not have a checking account.
My story is to share , that dis-information or no information can keep us confused about it all
School should teach about money and how to take care of it. Then we all could share in the knowledge of intellectual wealth!❤️
Profit corrupts. Obscene profit corrupts obscenely. I was never a functionalist as a sociologist, but what is the news media supposed to do? What is its function? Provide objective information to maintain an informed electorate, or attract paid readership and advertisers to increase profit for the benefit of shareholders? A reasonable answer would be somewhere in the middle. But the deregulation of the media and corporate mergers in the 80s had the same effect on the media as it did on the other sectors of the economy. Contraction and escalation. Ownership of media contracted to just a few major corporations owning the vast majority of the news outlets. Escalation of profits followed the lack of competition.
it appears that without dictating facts or interpretation, some form of fairness regulation has to come back to the governance of the media. But such regulation would be fraught. The rise of the Right's more authoritarian elements, DeSantis, Abbott, and all the hangers-on who seek to profit from democracy's destruction, should be a warning to the media giants; their support for these autocrats today will cost them everything if they succeed. It seems that for any worldview that purports to possess the Truth, there is an immanent irruption of cannibalization. When all opposition is defeated and only the believers are left, there are still some believers who aren't strong enough in their belief. As Emile Durkheim put it, 'In a society of saints, there will still be sinners.' The media will never be pure enough in their doctrinal distributions. They will be eaten first if they haven't been already.
Regulation of media is only a benefit when there are absolute guarantees that regardless of who is in power, it cannot be used to force the media to tow the party line. Good luck with that. While the deregulation of media under Reagan brought us here, there's no going back, so we have to learn to consume information more responsibly forgoing the innocent trust we had in the Walter Cronkites of the news world. We're adults now where information is concerned. Time to put aside childish dreams of absolute truth, revealed truth, and notions that people in power have our best interests in mind. De omnibus dubitandum est.
Bernie Sanders was interviewed last weekend and brought up the fact that CBS and all the large media outlets are essentially on the leash to their billionaire oligarchs. They don't take on the undercurrent of information that runs counter to the doctrine rammed down our throat.
What about the debt accrued by the Federal Reserve propping up our diseased banking and financial institutions that regularly commit fraud, as in 08. And our perpetual military fiascos running into the trillions as they play out to no positive outcome. And a military budget that teeters close to a cool trill. yearly now. Without any auditing of our Pentagon budget.
And why does the government "have to" issue bonds for every initiative they consider doing, allowing interest towards the grotesquely rich's safe portfolio instrument? They can just hit the keystrokes to fund the bills they enact. Just like the Fed does for banking's bad gambling habits.
Michael Hudson, our finest economist says. Who do you want to run your economy? Wall Street, or a government that should be elected presumably to have the greater good of society in mind. Right now the former calls the shots.
My thought is that you should put this exact letter as a Op-Ed in the NYT. Maybe someone at the paper will actually read it and realize that they are erroneously reporting on the economy.
Some time in the last year I made the mistake of reading the financial statement of the NY Times. It's a HUGE corporation, and it helped me understand where their biases may run.
Professor, great text. With some modifications, this discussion is the same in Europe. My admiration for your inspiration to teach everyone. I'm 78 and like to do something like you to improve the political debates that often are stupid. I write a lot, but nobody reads...
Absolutely right! It's time we started finding a way to talk about economics in a way that most of us will understand. My money is on Yanis Varoufakis. Now there's someone who talks money in a way I understand. My parents thought money grew on trees! At least, that's what they kept telling me.
Hey David, my parents told me over and over that money doesn't grow on trees so we always had to be careful how we use it. I guess that different perspective comes from having very little in money when I was growing up.
My parents struggled to provide. My mom was a high school business teacher towards the end of her professional career. She explained how to save for what I wanted, but that was it. Found credit card debt by trying to keep up with those around me.
Same here. So in one way, I understand that the word “DEBT” was probably successfully identified by conservative focus-groups as a “high-anxiety-word-choice”, like “groomer”, “indoctrination”, and “crime”. It’s successful use to fear-monger the public works, because many of us did NOT elect to take that Econ-101 course as an elective in HS. We just know by experience with sloppy credit card use, that DEBT is terrible. But absent the distinct understanding of how the national economy works, NYT can employ headlines and fear-mongering because it makes them look “balanced, and not liberal”. They are simply “Captured” in my opinion.
What is it with the "New York Times" these days? Have they become infected by Fox Not Nearly News? There was a time such an article as the one Prof. Reich presents here would not have appeared in the NYT. There would have been fact-checking and if not a full lesson in the economics of the debt, there would have been a quick synopsis like the one presented here by Prof. Reich. I can't help but wonder who the NYT is hoping to get as an audience with this nonsense. They have in the past noted that debt increases significantly more under Republican administrations than Democratic ones. So if they know that is true, or at least knew it, why are they publishing this fearmongering hogwash? Who is responsible: owners, editors, writers, fact-checkers, or all of the above? Republicans have hold of a major portion of our media and are really good at getting their lies into the ears and minds of conservative/Republican folks who prefer not to think and sift through information for themselves. Those people still believe "trickle-down" economics worked since Saint Ronnie proposed it. Corporations are delighted with that because it means they will not challenge it with the truth and they will continue to sail off collecting huge profits, paying little in taxes, and supporting the rise in the debt as well as the misinformation or deliberate poor analysis even by the "New York Times." For those corporations and their rich owners and beneficiaries, it's a win-win-win, all-around win while the rest of us lose. Wow!
Is it possible that you could enlist a group of economists who would create an educational series for the NYT and other papers? 7 day series.Your articles could lead and end the series. "Practical Economics: How to think clearly about your money these days" So very many people are clueless (like me). If nothing else -- maybe journalists would get educated!!!
Rev. Dale, I like your idea of a series in newspapers about economics basics with a personal touch related to what happens to/with their money. It would take enormous work, but it could be really good, particularly if it then gets disseminated across social media.
The NYT article Robert cited merely cites the CBO report. It also quotes the Peter G. Peterson Foundation, which is opposed to SSA and Medicare.
This is the same BS that has been spewed for years. About 20 years ago when I was on an ABA task force, I suggested that. because it takes care of widow(ers), orphans and disabled people it could be mitigated (not eliminated) by endowing the Social Security trust funds to skew the apex of the effect of baby boomer drawdowns of the funds. Although it does not publicize it, SSA has a donation policy: https://www.ssa.gov/agency/donations.html
I've been told by a couple of ex SSA Commissioners that it can help. I've asked the Biden administration and SSA to publicize it. So far no response.
Here's an article. https://www.americanbar.org/groups/senior_lawyers/publications/voice_of_experience/2011/winter/social-security-maybe-charity-should-begin-at-home/
I also reiterate that the US could arbitrage our debt -- and could profit by borrowing from countries that have low interest rates.
I gain so much information from Robert Reich and Daniel Solomon. Scaremongering and false information have been easier to detect recently as republicans fear IRS regulation and corporations want profit at any cost. I repeat myself, CORPORATIONS AND THE IRS ARE REGULATED BY CONGRESS. Weirdo senators like Scott, Rubio, and Cruz are not only out of step with the majority of America they are attempting to subvert the will of educated, knowledgeable Americans like Dr Reich. I admire the Biden information machine that continues to accurately analyze and act on America's need for direction in foreign relations, infrastructure and democracy.
Robert, I am with you on your comments about Congress needing to act. I also admire the Biden information machine. I just wish he had more media support in getting his message out. Trump's message was appalling, yet the media certainly made sure everyone heard that man's loud mouth every day no matter what he had to say. With Biden, it is different, even though he has important things to say about a range of critical topics. The media has lackluster coverage if any at all, so the people think nothing is being done for them. Ugh!
I appreciate your comment, Ruth. Thoughtful, informed commentary is often found on PBS, Fareed Zacharia GPS on CNN, and I watch Lester Holt Nightly News because it is factual. Perhaps you have other worthy journalism sources to suggest. It is so shameful that a phony garbage mouth like Trump has managed to subvert the narrative in America among so many weak souls who have such a limited view of the American dream. We must all work harder to stimulate the conversation and drown out the insurrectionists.
Robert, Ain't it the truth! The only way I can manage the media is to weigh the different sources to see which is most credible related to a particular story. For anything related to President Biden, I find MSNBC's Chris Hayes to be credible. When it comes to Ukraine, I find the various reporters in the field worthy of listening to. The BBC in general is pretty good with that. When it comes to Israel, I am not finding major media very reliable, so I look to Jewish Voice for Peace and a couple of the Palestinian NGOs valuable. I know bias n media has always been a thing, but it seems to pervade even sources I used to trust, like NPR, PBS, "The New Yorker," and "The Economist" (although "The Economist" has always been on the side of money wherever it is). How do we fix this, I have no idea. I read, listen, and watch a lot because I am retired and have time. How can those working impossible jobs ever have sufficient time to track down the truth?
Very important point about the media, Ruth. Having worked in publishing for almost 20 years, I can confirm that it's all about the ratings/views/consumption of related advertising. Therefore, when buffoons like TFG spew outrageous rants, they'll always capture the eyes and ears of the media. Unfortunate, but the way it works.
Daniel, thanks for the resources, I will check them out. I should have guessed there would be an anti-SS group involved and therefore quoted in the NYT attempt to be "balanced or some such nonsense. I don't know how we can stand up to the wall of media misinterpreting information and not giving a full understanding of what such issues as the debt ceiling mean. A good educator writer like Prof. Reich could do that for them as a guest editor or writer. I am guessing there is not much will for the NYT to do that. It wouldn't cause as much anger and distrust related to our government. Can't have that!
Perhaps the most useful argument re SS and Medicare “sunsetting “is the one regarding income levels not subject to the tax. They’re regressive taxes. When I was in the workforce I regularly got a 6% pay raise by abut April, when I’d maxed out my income subject to the tax.
I would argue that is stupid. Just when I’d paid for a lot of my expenses I no longer paid into SS.
Have no limit on income subject to the tax and it’s solved. And I’d include profits from business income subject to the tax.
You can spread it out.....
In reality FICA funding is not part of the general revenues.
Politics and new blood.
Donald Hodgins <silencenotbad@gmail.com>
10:09 AM (14 minutes ago)
I've listened to murmurings in the political theater for some time, and the general consensus surrounding the infusion of younger minds into the status quo in Washington, at present leaves me wondering. Yes, President Biden is up in years and he isn't getting any younger. The call for competency tests being administered to active members who have reached a certain age bracket is somewhat questionable. Why not give those tests to everyone who endeavors to find a job in Washington? From what I've seen the children who have made their way into our political arena need testing far more than our older members. Marjorie Taylor Greene, Boebert, Gaetz, Santos, Jordan, Paul, the "Luna"-tick from Florida, these are only a few who possess immature minds needing more life experiences before they get their feet wet in politics. Allowing babies to represent the voices of a huge number of Americans to me is stupid. The people in question have, in a very short period of time, demonstrated their incompetence beyond any need for explanation. For me, I'll take the grayed-haired gentleman or gentlewoman who has gained experience in the political field over many years of loyal service. Like a lady named Liz or a friend named Joe. To me, kids still suffering from the effects of puberty who find it necessary to show family pictures where children are supporting assault rifles reflect a mental state not suitable to hold office in this country. Or others who fell into the Q-Anan conspiracy hole where satin lives in perfect harmony with Santos, Boebert, and Greene. Talk about sick people, the current Republican party which embraces its youth movement can go jump in the Lake, if she'll have ya. The idiotic minds that are running the show in the Republican party are way too young to be doing anything but enjoying recess on a playground behind a school where they should have paid a bit more attention. Give me gray hair and the experience that goes with it and I'll feel a whole lot better about life in this country. Keep the kids out of politics altogether. At least have them finish their schooling.
Donald, I agree that there are a lot of child-adults in DC and in state legislatures all over the country. That is because that is all the Republicans have to offer. They have their child-fleet in every state legislature working to disrupt things like spoilt brats and allowed the nonsense of 15 votes to elect a Speaker of the House to go on without anyone adults present on the Republican side saying this is crap! Let's vote for Jeffries! We really can't expect much good from a bunch of toddlers running around our Capitol in DC and the state capitals because they neither have experience nor the wisdom to know when it is time to grow up and start being a responsible adult. All of those you mentioned never had to grow up there was always someone there to cover for them, make excuses for their bad behavior, and keep them as childish as possible. Child-adults are easily manipulated by the rich and unscrupulous. They don't even realize they are being manipulated because they are loving the attention they are getting for their childish pathetic antics. There are young Democrats who are working to make things better for this nation and the world. We should be looking to them as our future rather than spending so much time hearing about or listening to the toddler-Republicans who inhabit the Republican side of Congress and state legislatures.
Ruth-- A case of the blind leading the mimes.
Great reply Donald Hodges to people that question Joe Biden's ability to govern. Thank you for putting what I've been thinking into perspective!
To get me right it's Hodgins, no es. But it OK I've been dealing with this name for awhile now. You probably have already guessed it, I'm old. LOL
Thank you for the correction. Hope it was o.k. to share your comment. I will change the spelling of your name.
Which lunatic from Florida? The child molester or the massive welfare fraudster? Or the other senator? Damn it’s hard to keep track.
Boebert doesn’t even have a GED . I think some fundamental civics questions would rule out many of them.
Jen-- I spoke recently with someone who lives in Boebert's home state, you can put your mind at ease, On her third try Boebert got her GED.
I live in Colorado. I didn’t bother to google it but thanks for letting me know it took three tries. We tried to District her into Boulder Co but it didn’t work. Red part of the state.
They don’t change the GED questions, always the same. Third times a charm
Jen, Yeah, the child-Republicans in Congress are hard to tell apart. The one thing that is certain, they are selfish and care nothing for anyone but themselves and the power and money they can get. But, people in their states and districts are conditioned to vote for whatever "R" is on the ballot even if they are jerks and totally unsuitable to hold any office anywhere.
The only way that I would leave a gift to SS is if it were a progressive income. In other words, the more money a retiree receives from other income sources, the less the SS payment and that amount is distributed to those making less.
Nancy Williams. NOT just a retirement program. Social insurance. Protects widowers, orphans and disabled people and their families.
And it already is progressive as benefits are skewed and are taxed.
Not only do YOU get a deduction, your "entitlement" (their word, not mine) is protected.
If the upward slope of the statistical bell shaped curve of the baby boomer generation is flattened, even by a small amount, it moves the date of the apex farther into the future. And as following generations revert to the mean, can take care of itself.
Add this to other fixes, like an algorithm that increases the cap as benefits are increasingly progressive, and the road goes on forever.
As always Dan, thanks for your clarification of a complex subject. I am once again "enlightened".
And you have to wonder if there's any way to curb these foundations like the Pete Peterson one who pump out propaganda while sheltering huge fortumes.
There is a huge difference between discussions of the solvency of Social Security and the increasing federal debt. The former is solvent, the latter is escalating at an alarming rate, which should be of concerns to educated people of any political position. Mr. Reich's position on federal debt is misleading and scary. $31 trillion of real debt is a huge problem. Do not discount it or think it is not real or somehow can just be written off.
Tell that to the Republicans, and read the CBO Report that, as usual, confabulates "entitlements" with the deficit.
"Educated people" does not include the Peterson Foundation or anyone who knows US history. .
I have failed to find telling republicans anything to be a wasted effort ( MTG or Qevin). And agree, entitlements is a nice word to make people sound as if they don’t deserve the promised benefits.
I think you are mistaken about the national debt. It isn’t scary. Its not like your mortgage, they’re not going to repossess the country.
It might help you to read about modern monetary theory.
Or look for Larry Kasdens post about the course offered by Newcastle U on economics.
Your point of view if sadly shared by many who don’t understand a sovereign currency issuer cannot run out of money, and that the reason for taxes is not to pay the bills.
I know it’s wild, and I had to read Keltons Deficit Myth three times to really wrap my head around it.
But once the light goes on, you’ll be happier. And better informed so politicians and Larry Summers can’t lie to you any more.
"a sovereign currency issuer cannot run out of money, and that the reason for taxes is not to pay the bills."
Bingo!!! That should be running on a banner of every TV program 24/7
Now where did you learn that? It took me three trips thru Keltons Deficit myth
If one more person tells me that Summers is the smartest guy in any room I think I'll explode.
Please read J.D. Alt's book Diagrams and Money and find out what the national debt really is. Or read Stephanie Kelton's book The Deficit Myth.
Please study modern monetary theory. We can’t run out of money.
We issue our own sovereign currency.
Inflation is a concern, but if you’ve been paying attention a lot of it is taking advantage of the fact people can pay. Until they can’t, because Powell with his one hammer got them all laid off.
Larry Summers is an idiot. Don’t be like Larry Summers.
Keltons Deficit a myth is a good place to start, and there’s plenty of thought in this area now, which is more than I can say of the Chicago school 18th century approach.
Tax the Rich!
Trump in Ohio!
Donald Hodgins <silencenotbad@gmail.com>
11:50 AM (0 minutes ago)
to
That man on the ground in Ohio just puts more toxic waste at the site of the train derailment. Maybe the authorities can put a few holes in his storage tank and then burn off the sludge as it seeps from his polluted carcass. You would think at some point he would get tired of making a fool out of himself.
Hi Don .... I don't believe Trump is motivated by some of the normal decent leadership instincts we expect of public officials. He is intoxicated with self importance, money and ego and has never paid the price for his errors with his own money. It is time the American voters condemn this phony imposter and identify him for his selfish, corrupt, dysfunctional bigoted behavior by sending him to jail for playing fast and loose with American Democracy.
Look up the symptoms a person experience who suffers from "Dyslexia" and see if it rings a bell.
He’s trying to distract and compete. Not great news coming out of Georgia. Sad impression of a human being, and not successful.
Dirty dirt.
Donald Hodgins <silencenotbad@gmail.com>
5:24 AM (0 minutes ago)
to
With the train wreck in Ohio, a new problem has popped up, one that authorities might want to sweep under the rug. Everyone in the know understands thousands of metric tons of contaminated dirt, containing toxic chemicals have to be removed and replaced with clean fill. Ohio borders the Southern shores of Lake Erie, please tell me all that dirty dirt isn't destined to wind up somewhere in one of our Great Lakes. If not there where? That soli has been deemed toxic, where do you dump that amount of an unusable substance? An issue that should be considered relevant. "Inquiring minds want to know." What movie?
MMTed and edX MOOC – Modern Monetary Theory: Economics for the 21st Century – enrolments now open
MMTed invites you to enrol for the edX MOOC – Modern Monetary Theory: Economics for the 21st Century – is now open for enrolments.
It’s a free 4-week course and the course starts on February 15, 2023.
You will be able to learn about MMT properly with lots of videos, discussion, and more. Various MMT academics make appearances.
For those who have already completed the course when it was previously offered, there will be some new material available this time.
New video and text materials will be presented to discuss the current inflationary episode from an MMT perspective.
There will also be a few live interactive events where students can discuss the material and ask questions with me.
Further Details: http://www.mmted.org/
Modern Monetary Theory: Economics for the 21st Century
EDX.ORG
Modern Monetary Theory: Economics for the 21st Century
Demystify macroeconomic principles and terminology and discover how Modern Monetary Theory (MMT) provides explanations for some of the world's most troubling financial concerns.
Cool. But Ted Talks don't reach the mainstream people. That's who needs to learn. People in Marjorie Taylor Greene's district, people in Ohio.
I would suggest using a semi-popular if not popular media figure to do 30-60 second spots explaining these complicated issues in layman's terms. They are not difficult to explain: trumplicans want you to pay them more taxes so they can buy more mansions and yachts. Americans want to expand Medicare and Medicaid so you can retire earlier and AFFORD surgeries, eye glasses and tooth care. DONE.
Thank you for posting this. I wrote my much less helpful comment before I read yours, but it's encouraging to learn that others are slowly becoming aware of, and learning to appreciate, the new insights of MMT. Maybe we can roll this stone away from the mouth of the economic tomb we currently dwell in. The light is there, if people will just step into it.
Thanks and I'd suggest people read J. D. Alt's book Diagrams and Dollars. It's very simple, short and inexpensive but it's only available on Kindle.
THANK YOU!
Just signed up
This is the future of education. End child apartheid; close the classroom. Keep the teachers; rewrite their job description.
How is it that conservative bullshitters like Cal Thomas and Mark A. Thiessen get published in my local rag (The Oakland Press - Oakland County,. MI) so often but never Robert Reich? I think I'll put this in a letter to that editor next.
👏👏👏👏👏👍
It's not education they need. They're not dumb. They've sold out.
A little of both
Unfortunately many journalists [sic] have conservative editors who control what they publish. TV is a better way to reach the average American, but Fox News wants a fearful public, not an informed one.
Look no further than the NYTimes's own economist Paul Krugman, who has been writing about the national debt v the deficit for years.
People get confused about the debt and think it's the same thing as the deficit. It's not. The deficit is simple, the difference between what the government takes in through taxes, and what it spends. It's typically $2-3 trillion under a Republican president - because they always cut taxes on the wealthy - then it's back to zero under the following Democratic president - because they tend to raise taxes on the wealthy, and so on ad nauseum. Not a big deal.
On the other hand, the debt is a measure of all indebtedness, and might be a sign of economic activity. So it goes up, for example, with infrastructure spending, even though the deficit may be closed by a responsible president.
You just have to know that the British national debt was 150% of GDP throughout the peak of British imperial wealth and power, in the 19th century. It's not a big deal that it might be 118% of American GDP next year.
So, settle down and stop the muttering.
I've cited to Krugman previously. I like his idea that another option would involve raising money by issuing “premium bonds” when existing debts come due — bonds whose face value is the same as that of the bonds they replace, so that they don’t officially increase the debt, but offer high interest rates, so they sell for much more than their notional value.
https://www.nytimes.com/2023/01/19/opinion/columnists/democrats-debt-ceiling.html
Also see my other suggestions above. Take advantage of low interest rates in other democracies.
Now that's an interesting idea to keep the bonds afloat
Excellent idea!!
This is a useful idea, but sadly not in the interests of our government or the Times. Our government, which has become one of the main sources of misinformation, doesn't want an enlightened population because then, people might begin to think for themselves. And people who think, are dangerous.
Something to not overlook in this discussion: https://www.msn.com/en-us/news/world/joe-biden-s-surprise-ukraine-trip-is-already-a-disaster/ar-AA17ImyO
Remember, I'm a throwback to Vietnam, and guessed exactly how the Afghan/Iraq adventure would play out - and wasn't wrong. These folks bring up an issue I banged-on about back then.
Left or right, I have the same concerns.
In case you don't get the connection, it's about the increasing debt and the money involved in supporting this effort, regardless of how noble our effort is.
per https://mediabiasfactcheck.com/1945-19fortyfive-com/ :
Overall, we rate 19FortyFive Right-Center Biased based on editorial positions that align with a conservative perspective. We also rate them Mostly Factual in reporting rather than high due to a lack of transparency in ownership.
https://mediabiasfactcheck.com/
Excellent thought.
That's a great idea. It could be a MOOC so we could all spiff up what we remember from Econ 101. Still, though, I don't need Econ 101 to tell me that there are 2 ways to balance a budget: decrease the outflow of money or increase the inflow of money.
How could the NYT have reported so poorly about this?
It's not just an Econ 101 budget to balance. The interest on the debt is a big part of the budget, and the debt is not a fixed rate loan. Congress controls the budget. The FED controls the interest rate. With the FED playing Russian Roulette with the interest rates, balancing the budget is not just math when you have to guess the numbers. Read Reich's post again.
What do I think Robert? I think that if more Americans read your Substack we would probably have an American Revolution on our hands. The American people are so in the dark about the economy, the debt ceiling and how no taxes on the wealthy are hurting the Country, that if they really knew the truth we would have a lot more protesting going on than just the protests about the social injustices we have in this great land.
Oh Ramona, I agree. Now, how do we get more people informed about our economy and willing to stand up to the rich and powerful? It has been done in the past, but with a lot of government support ala Teddy Roosevelt. How do we break folks free from the bits of knowledge that trickle out from the media on the economy that are not actually true, fair, or something they can get their heads around? I do believe we could do it and that Prof. Reich and others like Paul Krugman could make it happen. They could benefit from some more psychology from perhaps someone like Brene Brown who could supply some of the emotional terms that could reach people who don't know they are starving for an understanding of why things are not going better for themselves and their families.
Talk about it to everyone. Ask people where money comes from. They will have no idea and it’s a start.
The only politician I ever heard admit that the federal government can’t run out of money is Donald J. Drumpf. And the reporters had zero follow-up questions to his remark.
Stan of Stanistan ; Not surprising!
Well said, Ramona.
Thank you Liz!
😻
The debt ceiling is a WWI budgeting anachronism. We should just get rid of it.
Rebecca, you are right that the debt ceiling needs to go. It is a point of contention on a regular basis, stopping the serious work of our government. However, Republicans for about the past 40 years or so haven't been much for serious governing, just taking away people's rights and cutting support. The debt ceiling works so well for them so they can yell and whine to look as though they actually care about the debt ceiling or anything else important beyond the money and power they can collect for themselves. It's shameful, but probably the reason the debt ceiling will not go away any time soon.
Correct analysis. We should continue to explain the true meaning of the debt as payment for the already spent projects. There is no negotiation on Social Security and Medicare. Taxes on the rich must be enforced at any price.
Dream on, Mark. You could do the same with your personal finances, but I would not recommend it. Credit card debt fits the scenario that one is paying for already spent goods or services. But debt comes with interest payments. There is a difference in paying interest on $5.6 trillion, when George W took over, and the $31.4 trillion now. A huge difference. Don't fool yourself that debt is not real and does not have future implications.
You forgot to factor in inflation.
A country's finances are not the same as personal finances.
Balancing the budget would throw most of the population into a severe depression. There would be no funds for any programs and homelessness would explode. The wealthy would sit in their yachts and watch.
So the lesser of evils is to incur debt and raise the ceiling (or eliminate it).
Both Bush presidents and Trump are responsible for the most increases in our debt.
All advanced economies have debt.
Absolutely
Exactly! Robert, The freakin’ Times needs to reprint your column page one. For the love of God, do you have to call the plays AND snap the ball?
Steve. I like your idea. Maybe if enough of us tell Prof. Reich we think he should get his summary out to the "Times" and other papers, maybe first as an op-ed, then more in-depth, he would do it, something not too long, but very informative would be the right move.
Simply sharing this article to social your media networks is an immediate tangible start.
Send letters to the editors.
Warren Mosler is an American economist and co-founder of the Center for Full Employment And Price Stability at University of Missouri-Kansas City
https://m.facebook.com/story.php?story_fbid=10213402304550859&id=1196858889&_rdr
"The US public debt is nothing more than the dollars spent by the federal government that have not yet been used to pay taxes. Those dollars spent and not yet taxed sit in bank accounts at the Federal Reserve Bank that are called 'reserve accounts' and 'securities accounts', along with the actual cash in circulation.
***
Think of it this way- when the government spends a dollar, that dollar either is used to pay taxes and is lost to the economy, or it's not used to pay taxes and remains in the economy. Deficit spending adds to those dollars spent but not yet taxed, which is called the public debt.
So how about what's called 'paying off the debt' as happens to 10's of billions of Treasury securities every month? That's just a matter of the Fed shifting dollars from securities accounts to reserve accounts- a simple debit and a credit- all on its own books. And there are no tax payers or grand children in sight when that happens.
***
.....the public debt is nothing more than a component of what can be called the money supply.... there is no risk of default, there is no dependence on foreign or any other lenders, there is no burden being put on future generations, or any other of those trumped up fears.....
Right, as Stephanie Kelton says, most people believe the government has to tax and borrow before it can spend (T&B)S but it really works the completely opposite way. The government has to spend so it can tax and borrow S(T&B).
You are correct, but that fact is usually rejected out-of-hand by many Americans, including their representatives. It's difficult changing minds; some people have closed minds, so they cannot be reached, but, thankfully, many others would be receptive if reached before the cement sets, thus college would be the ideal place to teach MMT.
Yea! Right you are. If you were here, I'd give you a hug.
Why does investment equate with debt? It is like saying that sleep is debt because you are not working but without the investment in sleep you wouldn't be able to work. Sleep is an investment in re-energizing the body so that it may do what needs to be done the next day.to make you productive in what you are doing.
Agreed, economic ignorance is a terrible thing and is holding us down and back in every sort of way.
The good news, though, is that a handful of macroeconomists have discovered important new insights, things we got wrong before, especially the monetarists like Milton Friedman, but even the startling genius of John Maynard Keynes couldn't see as far as we do today.
Much misunderstood and much disliked, the theorists of Modern Monetary Theory (MMT) can lead us out, if anyone can, of our economic wilderness, our fog of ignorance, our self-sabotaging ways of doing things now. They have perused the historic data and the mechanics of macroeconomics and come up with some fresh, very helpful insights. We were blind, but now we can see.
The bad news, however, is that old school macroeconomists don't get it, so they argue long and vociferously against it, household names like Larry Summers and even Nobel Laureates like Paul Krugman, a very likeable chap. I always read his essays in the NYTimes and comment there at length. These intelligent men were schooled in the best information we had at the time, but the science of macroeconomics evolves, gets better, smarter, wiser. Finally, we can see the light at the end of the tunnel; in fact, we can leave the tunnel if we just will. Boldness is required.
A common problem with doing just that is that understanding and appreciating MMT requires a paradigm shift. You either see it, scales fall magically from your eyes, or you don't. The root of the problem is that most of us perceive and conclude that the federal debt is just like a household's, a corporation's, or the budget of a city, county, or state. It isn't. None of these entities can do all three of the following: set interest rates, tax, and print a fiat currency that has universal acceptance. It's a sea change, a new world of discovery, that we now understand just how important this difference is; luckily, many successful nations, like Japan, England, and the United States have taken advantage of their new knowledge and vastly grown their economies.
I could go on at length, but to fully grasp how beneficial MMT is, you'll need to do some reading and listening to the advocates of MMT, such as, Warren Mosler, the father of MMT, and professors Stephanie Kelton (cf. "The Deficit Myth"), L. Randall Wray (cf. "Making Money Work for Us: How MMT Can Save America"), Bill Mitchell, Hyman Minsky (difficult, but valuable reading), Pavlina R. Tcherneva et alia. Most of these macroeconomists have many free YouTube videos of their MMT seminars and interviews on the topic.
Caveat: Don't be put off by other macroeconomists' unwarranted, invalid criticisms. As noted, they haven't accomplished the necessary paradigm shift, and I doubt that they ever will, because they have invested a lifetime believing in and supporting the theories of monetarism, Keynesianism, or post-Keynesianism.
Wonderfully, but unsurprisingly, Bernie Sanders hired Dr. Kelton as his economic adviser; he gets it, but wisely, for the time being, backs off from it somewhat because the conclusions of MMT are just so strange to most people who have lived a lifetime believing that the government must balance the budget or that we are "running out of money" (Obama believed that) or even that we need to go back on the gold standard. Wrong-headed ideas, all!
So, if you can, find out about MMT. Keeping an open, but critical mind is essential, but rewarding. Progress is possible, even in macroeconomics.
P.S. AOC gets it, too. She knows that we can and should spend the money for a Green New Deal, but, again, that's just too alien for most folks who insist, "You can't spend money you don't have, especially on a hoax like climate change!"
Knowledge grants power for us to make things better. Ignorance, a stubbornness regarding change, and fear of the new by our leaders keep many of us lost, sick, ill-clothed, and ill-fed in the wilderness.
I concur ... economics should be explained more, talked about more and taught for sure. Is one of the ways that can help regular people without an economic background see the way out of a situation that others might want to picture as apocalyptic.
A lot of us may not have gone to college. Economics wasn't taught in high school, at least not in the 1970's. I appreciate Professor Reich explaining complex subjects in his articles. Also, there is a lot of learning in the comments if one takes the time to read.
I graduated HS in 1971 and DID take a course in Economics my senior year, an elective. Think I got a C in it, but it was a start. Aced all my economics classes in college, so it was good prep. It indeed should be required, along with basic money management (bank accounts, saving, taxes, checkbooks, if anyone uses them anymore, credit, loans, etc).
Yes Kim,
I grew up clueless about money. My parents believed in one thing: SAVING! My Father said “if you want to be poor get a credit card”! They paid cash and invested later because my Mother ( masters in math) learned from her teacher friends about that!
I didn’t even know how to write a check in college because I never had.
And the three of us all went to college and one on to law school.
I came home the first quarter from college with no money in my account because I hadn’t deducted spending from total! My parents did not have a checking account.
My story is to share , that dis-information or no information can keep us confused about it all
School should teach about money and how to take care of it. Then we all could share in the knowledge of intellectual wealth!❤️
I don't recall my school teaching economics, but I must confess, I probably didn't look hard. I do not have strong math skills. I never have.
Then you are, for some, ripe for the picking.
I've managed thus far.
Profit corrupts. Obscene profit corrupts obscenely. I was never a functionalist as a sociologist, but what is the news media supposed to do? What is its function? Provide objective information to maintain an informed electorate, or attract paid readership and advertisers to increase profit for the benefit of shareholders? A reasonable answer would be somewhere in the middle. But the deregulation of the media and corporate mergers in the 80s had the same effect on the media as it did on the other sectors of the economy. Contraction and escalation. Ownership of media contracted to just a few major corporations owning the vast majority of the news outlets. Escalation of profits followed the lack of competition.
it appears that without dictating facts or interpretation, some form of fairness regulation has to come back to the governance of the media. But such regulation would be fraught. The rise of the Right's more authoritarian elements, DeSantis, Abbott, and all the hangers-on who seek to profit from democracy's destruction, should be a warning to the media giants; their support for these autocrats today will cost them everything if they succeed. It seems that for any worldview that purports to possess the Truth, there is an immanent irruption of cannibalization. When all opposition is defeated and only the believers are left, there are still some believers who aren't strong enough in their belief. As Emile Durkheim put it, 'In a society of saints, there will still be sinners.' The media will never be pure enough in their doctrinal distributions. They will be eaten first if they haven't been already.
Regulation of media is only a benefit when there are absolute guarantees that regardless of who is in power, it cannot be used to force the media to tow the party line. Good luck with that. While the deregulation of media under Reagan brought us here, there's no going back, so we have to learn to consume information more responsibly forgoing the innocent trust we had in the Walter Cronkites of the news world. We're adults now where information is concerned. Time to put aside childish dreams of absolute truth, revealed truth, and notions that people in power have our best interests in mind. De omnibus dubitandum est.
Love the use of “irruption”!
Bernie Sanders was interviewed last weekend and brought up the fact that CBS and all the large media outlets are essentially on the leash to their billionaire oligarchs. They don't take on the undercurrent of information that runs counter to the doctrine rammed down our throat.
What about the debt accrued by the Federal Reserve propping up our diseased banking and financial institutions that regularly commit fraud, as in 08. And our perpetual military fiascos running into the trillions as they play out to no positive outcome. And a military budget that teeters close to a cool trill. yearly now. Without any auditing of our Pentagon budget.
And why does the government "have to" issue bonds for every initiative they consider doing, allowing interest towards the grotesquely rich's safe portfolio instrument? They can just hit the keystrokes to fund the bills they enact. Just like the Fed does for banking's bad gambling habits.
Michael Hudson, our finest economist says. Who do you want to run your economy? Wall Street, or a government that should be elected presumably to have the greater good of society in mind. Right now the former calls the shots.
My thought is that you should put this exact letter as a Op-Ed in the NYT. Maybe someone at the paper will actually read it and realize that they are erroneously reporting on the economy.
Some time in the last year I made the mistake of reading the financial statement of the NY Times. It's a HUGE corporation, and it helped me understand where their biases may run.
Professor, great text. With some modifications, this discussion is the same in Europe. My admiration for your inspiration to teach everyone. I'm 78 and like to do something like you to improve the political debates that often are stupid. I write a lot, but nobody reads...
Jeez I wonder who is funding the NYTIMES ?
Keith Olson ; I don't buy it.
Absolutely right! It's time we started finding a way to talk about economics in a way that most of us will understand. My money is on Yanis Varoufakis. Now there's someone who talks money in a way I understand. My parents thought money grew on trees! At least, that's what they kept telling me.
Hey David, my parents told me over and over that money doesn't grow on trees so we always had to be careful how we use it. I guess that different perspective comes from having very little in money when I was growing up.
If they were children of the Depression (and the dust bowl, as my mother was) they learned to save.
Doesn’t mean they knew anything about economics (my parents didn’t) but it’s useful for the neocon “economists”.
My parents struggled to provide. My mom was a high school business teacher towards the end of her professional career. She explained how to save for what I wanted, but that was it. Found credit card debt by trying to keep up with those around me.
My parents never discussed money with me. I learned the hard way about debt.
Same here. So in one way, I understand that the word “DEBT” was probably successfully identified by conservative focus-groups as a “high-anxiety-word-choice”, like “groomer”, “indoctrination”, and “crime”. It’s successful use to fear-monger the public works, because many of us did NOT elect to take that Econ-101 course as an elective in HS. We just know by experience with sloppy credit card use, that DEBT is terrible. But absent the distinct understanding of how the national economy works, NYT can employ headlines and fear-mongering because it makes them look “balanced, and not liberal”. They are simply “Captured” in my opinion.
Yes, in the German language, “Debt” is the same word as “Guilt.”
Same
What is it with the "New York Times" these days? Have they become infected by Fox Not Nearly News? There was a time such an article as the one Prof. Reich presents here would not have appeared in the NYT. There would have been fact-checking and if not a full lesson in the economics of the debt, there would have been a quick synopsis like the one presented here by Prof. Reich. I can't help but wonder who the NYT is hoping to get as an audience with this nonsense. They have in the past noted that debt increases significantly more under Republican administrations than Democratic ones. So if they know that is true, or at least knew it, why are they publishing this fearmongering hogwash? Who is responsible: owners, editors, writers, fact-checkers, or all of the above? Republicans have hold of a major portion of our media and are really good at getting their lies into the ears and minds of conservative/Republican folks who prefer not to think and sift through information for themselves. Those people still believe "trickle-down" economics worked since Saint Ronnie proposed it. Corporations are delighted with that because it means they will not challenge it with the truth and they will continue to sail off collecting huge profits, paying little in taxes, and supporting the rise in the debt as well as the misinformation or deliberate poor analysis even by the "New York Times." For those corporations and their rich owners and beneficiaries, it's a win-win-win, all-around win while the rest of us lose. Wow!