John Maynard Keynes
As a consequence of loose monetary policy with a fiat currency, the United States is rapidly descending into an economic reality of Modern Monetary Theory, or MMT. While MMT (also known as Chartalism) is typically associated with its Keynesian predecessor and the policies of the Left, new developments reveal that both parties are responsible for the slip into a brave new economic world.
Essentially, there are four preconditions in Modern Monetary Theory:
1) Money enters the economy through government spending, as the total amount of money is constrained not by gold but by the total output of the national economy;
2) Government spending is speculative as it prints as much money as it needs to control production and, as a byproduct, employment, and spending beyond productive capacity leads to inflation;
3) Taxes do not pay for expenditures but are instead a way to throttle private sector demand; and
4) The government is the issuer of the currency, sovereign governments that issue their own currency are never insolvent, so debts essentially don’t matter.
Professor Peter Boettke is a University Professor of Economics and Philosophy at George Mason University; the BB&T Professor for the Study of Capitalism, Vice President for Research, and Director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at GMU.
In The Wall Street Journal, Bruce Caldwell, an editor of F.A. Hayek’s work, said Prof. Boettke has done more for Austrian economics than anyone in the last decade.
Boettke’s new book Living Economics: Yesterday, Today, and Tomorrow is published by the Independent Institute. When not in the classroom, he shares his great insight and wit on his blog, Coordination Problem.
No, seriously, that is what this man has become. He recently blogged a chart on his blog (inappropriately—or maybe entirely appropriately—named “Conscience of a Liberal,”) showing first quarter growth for five countries:
He then goes, “Wait, what? Japan as star performer? What’s that about? Actually, no mystery.”
Japan’s economy expanded faster than estimated in the first quarter, boosted by reconstruction spending that’s poised to fade just as a worsening in Europe’s crisis threatens to curtail export demand.
So he then argues that the tsunami reconstruction has led to great economic growth, while so-called “austerity” (which isn’t actually austerity at all, if Krugman had bothered to pay attention) has doomed Italy.
It makes perfect sense! Absolutely! Let’s hit Japan with another tsunami that will kill over 15,000 people, injure 27,000 citizens, and make 3,155 go missing! If only the 2011 tsunami had destroyed even more than that paltry 130,000 buildings—if only it had actually caused Fukushima to go critical and explode—it would have created so much potential for rebuilding! It would have shot the Japanese GDP right over the moon!
What all the GOP candidates are after, are so-called ‘delegates.’Elected officials that will broker the convention of either party this fall. Officials are parcelled by the amount of votes, the candidates receive in the primary.
During Michigan’s primary recently, for instance, there were 30 official delegates, state-wide. Two were ‘at-large’ candidates, which meant they could be assigned individually to any winning candidate. The other 28 were ‘proportional’ ones, alotted through 14 congressional districts. During the push for the nominations in Michigan last night, Mitt Romney and Rick Santorum spent millions of dollars to influence the voting population; with TV ads, pamphlets, media, interviews, rallies, stickers, and much more. Michigan’s grand sum of politcal expenditure was near six million bucks.
Delegates are what really counts at the GOP convention. What looks to be happening, is that no clear winner will come out victorious. There’s a righteous number: 1444 delegates will win any nominee the victory-nod of the Republican National Committee. Nationwide, 2169 delegates are extended for contestation, until the RNC celebration in Tampa, Florida. From the RN Committee, an additional 117 delegates are added into the mix, ostensibly to keep debate lively and clear-up dead locks. So what appears, on first looks, to be a rather hot-headed and fast paced Republican rocket-launch to the RNC, is more like a jammed or misfired pistol in a duel.
Momentarily, Mitt Romney is in the lead, with 167 total delegates. Rick Santorum is second with roughly half, at 87. Newt Gingrich won only one state and has 32, while Ron Paul has 19 carefully collected delegations. The count may reshuffle at any moment, since constitutionalism and populism together, ring alarm-bells in states such as Arkansas, Kentucky, Tennessee, Texas, Oklahoma and New Mexico.
Left-wing discontent with Obama is probably not as high as moderate, right-wing, or libertarian discontent with the man, but it’s getting there. In fact, some, including Matt Stoller of the Roosevelt Institute, are speculating about possibly taking Obama off the top of the Democratic ticket in 2012.
Not that it will ever happen, but hey, I only read Salon for entertainment anyways:
Democrats may soon have to confront an uncomfortable truth, and ask whether Obama is a suitable choice at the top of the ticket in 2012. They may then have to ask themselves if there’s any way they can push him off the top of the ticket.
That these questions have not yet been asked in any serious way shows how weak the Democratic Party is as a political organization. Yet this political weakness is not inevitable, it can be changed through courage and collective action by a few party insiders smart and principled enough to understand the value of a public debate, and by activists who are courageous enough to face the real legacy of the Obama years.
Obama has ruined the Democratic Party. The 2010 wipeout was an electoral catastrophe so bad you’d have to go back to 1894 to find comparable losses. From 2008 to 2010, according to Gallup, the fastest growing demographic party label was former Democrat. Obama took over the party in 2008 with 36 percent of Americans considering themselves Democrats. Within just two years, that number had dropped to 31 percent, which tied a 22-year low.
Man, I looove me some fireworks. The bright flashes, the intense color, the wave of energy expanding across the room—
Oh, you thought I meant that stuff they light off at the Fourth of July. No, I was referring to the fireworks that occur in a debate. And what a debate we’re going to have!
The sparks started flying when Matt Yglesias, poster boy for the Center for Authoritarian Propaganda American Progress tweeted “David Boaz is dumb.” (Hmm, I wonder what he had to say about naughty rhetoric back in January…) Boaz then retorted that Yglesias had completely missed the point, which I guess is not surprising. Yglesias then decided to tackle Daniel J. Mitchell’s take on Paul Krugman’s…well, I’m not really sure what you could call it. Lunacy? Let’s be nice and just call it “absurdity.” Anyways, Yglesias basically stated that “money doesn’t matter” and that the broken window fallacy itself is broken. A very succint summary of modern progressive thought, I would imagine.
So why do I bring this all up?
Because tomorrow, Cato On Campus is hosting (at the Cato Institute, natch) a debate titled: “US Debt and the Millennials: Is Washington Creating a Lost Generation?” Attending will be Megan McArdle of The Atlantic, Matt Mitchell of Mercatus, and Matt Yglesias of Center for American Progress. Three guesses as to who will be moderating. Yes, Dan Mitchell of Cato.
I have to disagree with Dave Weigel here. He wrote on Friday in Slate that the stimulus bill really didn’t fail, although everyone is saying it is:
Veterans of the stimulus wars talk about it that way—as a war. They lost. The implication of the loss is that Keynesian economics are, arguably, as discredited with voters as neoconservative theories were discredited when the invasion of Iraq failed to turn its neighbors into vibrant democracies, highways clogged with female drivers.
This week, we got a concrete example of what it meant to lose. The Weekly Standard published a back-of-the-cocktail-napkin analysis of the seventh quarterly report on the stimulus, stipulating that every job created by its spending has cost $278,000. Republicans, who’d previously said the stimulus created no jobs, immediately started repeating the $278,000 figure. They kept doing it even after the magazine followed up, suggesting that the cost-per-job could have been as low as $185,000. $278,000, $185,000. $0.00? It didn’t really matter, because the White House and liberal response was perfunctory. As the stimulus winds down, with most of the money spent, everyone knows that it failed.
The folks at EconStories released their latest video today, depicting a “Round Two” of their earlier Keynes vs. Hayek hip-hop battle, as the two economists battle over the amount of government spending that should occur to bring America out of tough economic times, what defines prosperity, and whether spending should be top-down or bottom-up.
You should see some other familiar faces portrayed, and the security guard at the beginning is played by Duke University economist, Michael Munger.
It’s the last day of 2009. We made it through a crazy year that saw liberty put at risk on an all to regular basis. We decided the best way to recap the year was to take ten of 2009’s biggest stories and write a blurb about each one of them (we tried to keep it short and to the point).
Before you continue on, each of us here at UL want to thank you for a great 2009. We appreciate you reading. We’re planning for world domination in 2010 and hope that you’ll join in the fun.
So, here they are in no particular order, United Liberty’s Top 10 Stories from 2009.
Tea Party Movement (Brett Bittner): The wave of “hope” and “change” that swept Barack Obama into the Presidency of the United States closed out 2008 and opened the door to a new movement in American politics, the Tea Party movement. I believe that his election was merely a catalyst for many groups of a conservative nature and strong views on limited government to unite to form one voice to stand up to the political status quo, calling out Democrats and Republicans alike for their affinity to grow the size of government to a breaking point.
In his commentary in today’s Financial Times about the economic policy of government stimulus of the economy, Robert Skidelsky, the noted British author and authority on John Maynard Keynes, declares: “What is fascinating is that it is an almost exact rerun of the debate between Keynes and the British Treasury in 1929-1930.”