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!!!
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.
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.
"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.....
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.
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.
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.
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!!!
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.
The debt ceiling is a WWI budgeting anachronism. We should just get rid of it.
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.
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?
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.....
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.
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.
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 ?
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.
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!