Thursday, July 31, 2014

Greg Hannsgen — Another Eccles at the Fed?

Nicholas Lemann profiles the new Fed chair in the July 21 issue of The New Yorker. One of the key themes of the newer article is that Yellen is “the most liberal [Fed chair] since Marriner Eccles,” and an “unrepentant Keynesian.” 
The article usefully contrasts Yellen’s policy views with those of orthodox macroeconomics. Yellen identifies as an adherent of the philosophy that government is capable of greatly improving on the outcomes of a modern capitalist system. (For many, this is the essence of what is known as the liberal view in the US political realm. Yellen’s liberalism will matter (1) in financial regulation, and (2) in macro policy, where the Fed is influential.)
Multiplier Effect
Another Eccles at the Fed?
Greg Hannsgen

Brian Romanchuk — Book Review - Money: The Unauthorized Biography

The book "Money: The Unauthorized Biography" by Felix Martin is a comprehensive popular history of money. Money and banking are topics of considerable interest since the end of the financial crisis, and they are also areas of great confusion. In this book, Felix Martin offers a clear history of the subject.
Bond Economics
Book Review - Money: The Unauthorized Biography
Brian Romanchuk

Dan Froomkin — It’s About the Lying

Figuring out how to right the constitutional imbalance between the branches of government, as exposed by this CIA assault on Congress, is very complicated. 
But doing something about lying isn’t. You need to hold people accountable for it.
The Intercept
It’s About the Lying
Dan Froomkin

David F. Ruccio — Maximum wage—or, even better, no wages

The time is ripe to open up the debate about proposals like establishing a maximum wage, guaranteeing a basic income, and prohibiting any and all forms of wage-labor. The only price of admission is to listen to the howling of mainstream economists.
Real-World Economics Review Blog
Maximum wage—or, even better, no wages
David F. Ruccio


Scientific American — Cause of Mysterious Siberian Holes Possibly Found


Global warming?

Scientific American
Cause of Mysterious Siberian Holes Possibly Found
Tanya Lewis and LiveScience

Neil Wilson — Don't bind your hands Argentina


Drop the peg and never, ever borrow in a foreign currency.

3spoken
Don't bind your hands Argentina
Neil Wilson

Sam Biddle — Why Does Google Employ a Pro-Slavery Lunatic?


I hope this  is satire.
In 2011, Justine Tunney was an anti-establishment organizer within Occupy Wall Street, exhorting class warfare on the sidewalk. Today, it appears that Tunney spends her time ranting against the poor, advocating for the overthrow of American democracy, and not least notably, working at Google's New York branch.
What exactly happened between now and then is unclear. Remnants of the Occupy movement have worked to distance themselves from Tunney, whose views are increasingly of the neo-techno-fascist variety, rather than inclusionary leftism. In February, Tunney seized control of the @OccupyWallStreet Twitter account, which she claims to have created, proclaiming herself the rightful founder of the entire movement. The resulting backlash wasn't the first she's faced from people of all political alignments.
ValleyWag
Why Does Google Employ a Pro-Slavery Lunatic?
Sam Biddle
(h/t Lambert Strether at Naked Capitalism)

WaPo Runs Review of Way-Out-Of-Paradigm Book

Charles Lane reviews Eugene Steuerle's new completely out of paradigm, deficit terrorism book. Lane is not stupid, he should know better than to write this garbage:

"This near-total loss of “fiscal freedom” is the theme of “Dead Men Ruling,” a short, superb new book by C. Eugene Steuerle, from which the above statistics derive; the title nicely expresses the fact that today’s lawmakers are tightly constrained by the accumulated, and seemingly unalterable, decisions of their predecessors. Government is not just out of their control; it’s beyond their control. 
Steuerle persuasively argues that the nation’s budget challenge is not simply a matter of deficits and debt, important as they are. 
Rather, the point is to restore a long-term balance between spending and revenue so that the federal government can invest in new priorities without further indebting an already dangerously indebted country. 
 Steuerle’s book is an effective riposte to those who would argue that fiscal concerns are overblown in light of recent progress against the deficit or that “deficit hawks” are just rationalizing mean-spirited “austerity” to punish the poor and elderly.
To the contrary, what Steuerle shows is that the issue is long-term fiscal sustainability, which would provide flexibility.  
A government that lives within its means would be freer to stimulate the economy during recessions or to devote more resources to the needs of poor children — as opposed to maintaining the current consumption of older middle- and upper-middle-class voters, which is the unstated but actual purpose of the status quo."
Blah, blah, blah. Complete garbage. I know WaPo doesn't exactly have the highest standards for economics reporting (H/T Dean Baker!), but this is just pathetic.  I often seriously wonder how some men can go through their entire careers working in fiscal policy and still be so damn ignorant. It is a lack of intellectual curiosity, capacity, or mixture of both? Unfortunately, all we can be sure of is it will be the poor and vulnerable, not the pundits, that will pay for this ignorance.

Wednesday, July 30, 2014

Steve Keen — The revolt of (part of) the top 1% of the top 1%

What are your preconceptions about the author of a book with the title The Next Economic Disaster: Why It’s Coming and How to Avoid It? Academic? Leftist? Anti-capitalist? Anti-banker certainly?

Prepare to drop them all, because the author is none of the above. Taking the last first, the majority of his career has been in banking — and as a founder and CEO.…
So what is someone who established banks, initiated credit card companies, and is clearly in the top 1 per cent of the top 1 per cent of America doing writing a book that warns of the dangers of private debt?… 

When the poor and the dispossessed complain about inequality, it’s only to be expected. But when part of the top 1 per cent of the top 1 per cent complain about it, it is truly time to worry — and preferably to act.
Real-World Economics Review Blog
The revolt of (part of) the top 1% of the top 1%
Steve Keen

See also US median wealth is down by 20 percent since 1984

Kelly Evans — 'Outversions': They're the new corporate tax trick

Shares of Windstream Holdings surged more than 12 percent Tuesday when the Little Rock, Arkansas-based telecom company said it was going to spin out some of its fiber and copper cable and other real-estate assets into a real-estate investment trust, or REIT. The move will allow Windstream to cut down its debt load and save millions every year in taxes—and the company said it has the blessing in the form of a 'favorable private letter ruling' from the Internal Revenue Service.
You can see where this is going.

Pavlina Tcherneva — 16 Reasons Matt Yglesias is Wrong about the Job Guarantee vs. Basic Income

After straw manning the JG, Yglesias expresses his enthusiasm for a Basic Income Guarantee (BIG). He prefers simply handing out money to the jobless because it’s not as “messy” as the JG. (I’ve already argued why such objections should not be taken seriously). But more importantly, like many BIG advocates, he assumes that the BIG will magically solve the fundamental problem of economic insecurity.
Here are sixteen reasons why this assumption is wrong.
New Economic Perspectives

Timothy Taylor — Universal Basic Income: A Thought Experiment

Pretty much all current public programs to assist households with low incomes suffer from the same seemingly unavoidable problem: As the household's income rises, the amount of assistance provided by the public program is phased out. For example, a person who earns an extra $100 might find that eligibility for public assistance has been reduced by $50. Economists call this reduction in benefits as income rises a "negative income tax," and it is not unusual for studies to find that certain working poor families face negative income tax rates in the range of 50% of the marginal dollar earned, 60%, or even higher (for examples, see here and here). These high negative income tax rates diminish work incentives for those with low incomes.
There's a way out called "universal basic income." Ed Dolan explores "The Pragmatic Case for a Universal Basic Income" in the Third Quarter 2014 issue of the Milken Institute Review (free registration may be required for access).
The idea of a universal basic income is that every U.S. citizen would be entitled to a chunk of money each year. This amount would not vary based on income level, or employment, or disability, or age, or any other reason. Specifically, when a low-income person works and earns income, the universal basic income check would not be reduced in any way. The "negative income tax" rate is zero percent.
The idea of a universal basic income raises obvious questions. How much would it be per person? How would it be financed? Are the politics of such a program conceivable? Let's tackle these in turn.
Conversable Economist
Universal Basic Income: A Thought Experiment
Timothy Taylor

PhysOrg — Worldwide water shortage by 2040


Corporations like CocaCola have been buying up available private water supplies for decades.
Two new reports that focus on the global electricity water nexus have just been published. Three years of research show that by the year 2040 there will not be enough water in the world to quench the thirst of the world population and keep the current energy and power solutions going if we continue doing what we are doing today. It is a clash of competing necessities, between drinking water and energy demand. Behind the research is a group of researchers from Aarhus University in Denmark, Vermont Law School and CNA Corporation in the US.
PhysOrg
Worldwide water shortage by 2040
(h/t David Dayan at Naked Capitalism)

Bill McBride — GDP: A Few Graphs

Overall this was a solid report. Private investment rebounded in Q2, and that is the key to more growth going forward.
Calculated Risk
GDP: A Few Graphs
Bill McBride

Tuesday, July 29, 2014

Dr Michael Hudson interview with RT International

"It's all about oil and gas."

Dr Michael Hudson interview with RT International

Jack Rasmus — On the Causes of Investment Decline in the US Economy

Sustained recovery requires direct investment, not just a rise in consumption income that hopefully might convince capitalists to again reinvest in the US (or not convince). So the problem is not merely a lack of income growth to stimulate investment. US capitalists are investing–just not in real asset investment and not in the US. They are investing in emerging markets, and even more so in financial asset markets globally (which are now more numerous, liquid, and available than ever before due to the creation of an unregulated global shadow banking system).… 
The more fundamental problem is that finance capital has changed. Raising incomes of workers and middle class Americans will help somewhat, but not all that much. It will not result in sustained economic recovery any longer. It is therefore not the main solution to the long term economic stagnation that the US has been experiencing since 2009. Capitalist profit opportunities are simply greater offshore in EMs, and in financial asset markets, than they are from making goods and services in the US, even if US workers were able to buy those real goods and services if they had more income.…

To argue simply for wage and income growth as the solution to a chronic stagnant US economic recovery—as Krugman and colleagues do for example—is to assume that capitalist enterprise will redirect itself from more lucrative profit opportunities from financial speculation and in offshore markets, back to less profitable real production of goods and services in the US. They won’t to any significant extent, since rates of return in the latter are significantly less than in the former.
 
The only real solution to a sustained US recovery is for massive public government investment, that then subsequently creates income. Investment precedes income creation, it does not necessarily follow it any longer in a world of 21sts century global finance capital. Just calling for income growth (via minimum wage hikes, more contingent job creation, tax cuts, or whatever) will not necessarily result in US-based investment if Capitalists continue to shift to more profitable financial speculation offshore; public investment must therefore occur prior to income growth in order to generate a sustained recovery.… 
In today’s world of 21st Century Global Finance Capital, don’t expect capitalists to invest in real production and thus jobs and income in the US economy as they did decades ago. They are too busy making greater profits offshore and in financial asset speculation, leveraging the trillions of dollars of free money and credit created for them by the Federal Reserve. If real investment in the US economy is ever to return, it will have to come via major public investment initiatives. And if not, expect chronic economic stagnation to continue, as has been the case since 2010.
Counterpunch
On the Causes of Investment Decline in the US Economy — A Reply to Thom Hartmann’s Interview of Richard Wolff
Jack Rasmus

Filip Spagnoli — Let’s Get Rid of Wage Labor


Post-capitalism.

Actually, as Daniel Ellerman addresses this in Does Classical Liberalism Imply Democracy? If life, liberty, and the pursuit of happiness are inalienable rights, ruling out selling oneself in to slavery, for example, how is it not a violation of an inalienable right to sell one's a portion of one's life for a wage since this is an alienation of one's liberty?

In other words, what the inalienable rights of life, liberty and pursuit of happiness means legally is that these are not property, which is a right that is alienable in that the right to exclusive or partial use of property can be exchanged, thereby alienating (excluding) the original owner from use and conferring exclusive or partial use to another through transfer of ownership.

Spagnoli's post may seem far-fetched but read in terms of Ellerman, who is a proponent of social democracy, it makes a lot more sense. No surprise there, since Ellerman is one of the smartest guys around. If you haven't yet read that article, I strongly suggest doing so as a counter to neoliberalism.

Incidentally, the irony of the phrase. "inalienable right to life, liberty, and the pursuit of happiness," as a partial enumeration of human rights, and which are also asserted as divinely endowed, is the hypocrisy of its author, a slave holder.

P.A.P.-BLOG // HUMAN RIGHTS ETC.
Let’s Get Rid of Wage Labor
Filip Spagnoli
(h/t Mark Thoma at Economist's View)

Mike the Mad Biologist — Republican Rep. Paul Ryan Wants to Create Massive Government Bureaucracy

Essentially, what Paul Ryan wants to do is create a government bureaucracy to monitor these ‘contracts’ (or, maybe monitor the Social Contract?). Conservatives have spent the last forty years railing against this very thing. Of course, people will disagree about whether they hit these ‘benchmarks’, so we’ll need to hire people to adjudicate that process. More ‘big government.’ It also opens people up to the predations and whims of ‘petty government bureaucrats.’
Republican Rep. Paul Ryan Wants to Create Massive Government Bureaucracy
Mike the Mad Biologist
(h/t Mark Thoma at Economist's View)

What Mike the Mad Biologist overlooks is what's in the back of Paul Ryan's mind. He clearly has no intention of creating a new government bureaucracy, which is against everything he stands for. What he wants would be a quasi-judicial system, privatized and run by business to discipline workers and teach them how to work.

Bill Mitchell — No fundamental shift of policy at the Bundesbank

Last week, the Chief economist at the Deutsche Bundesbank, Dr. Jens Ulbrich gave a rather extraordinary interview to the German magazine Der Spiegel. The interview was recorded in the article – Breaking a German Taboo: Bundesbank Prepared to Accept Higher Inflation. The sub-heading said that this marks a “major shift away from the Bundesbank’s hardline approach on price stability” and my profession apparently “hailed the decision as a ‘breakthrough’”. I wouldn’t be so sure. The Bank has a long track record of ignoring the plight of German workers and the workers elsewhere in Europe. The imposition of its ‘culture’ with its disdainful disregard for responsible economic policy on Eurozone political elites has created so much slack in Europe that even it cannot deny the mounting evidence that there is a deflationary problem. But this support for workers’ wage rises won’t last. As soon as the inflation rate exhibits the first uptick – the Bundesbank will be out there berating all and sundry about the dangers of profligacy! Leopards don’t change their spots. 
The Bundesbank has a long history of being willing to sacrifice economic growth and live with persistent mass unemployment in return for low inflation.
Bill Mitchell – billy blog
No fundamental shift of policy at the Bundesbank
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia

Marshall Auerback — Central Banks Are Trying To Do Too Much, Not Too Little

As the Fed winds down its asset buying program in the form of QE, it is worth considering this recent comment by economist Michael Woodford at the St Louis Fed:
“It’s obviously a very complex situation. In general, I wish the Fed were speaking more about the need for fiscal policy to take on more of the burden of trying to get the economy moving. 
I’m afraid that, to some extent, the Fed’s desire to stress the fact that we still have tools, we haven’t used all of our ammunition, has had unfortunate effects. Of course, the intention of that is to reassure the public. The feeling is that letting people be scared that maybe we’re out of ideas would itself create uncertainty about the future that would be undesirable for the economy. And that’s understandable. 
But I worry that it’s had the undesirable effect of letting Congress off the hook a little too easily by letting them say, “The Fed still has lots of things they can do to take care of the situation, so we can play other games.” 
And I think maybe the Fed would have helped the public debate if it had pushed back a little more on the view that everybody should be assuming the Fed will save everything.”
Classic case of using the wrong tool for the job.

Macrobits by Marshall Auerback
Central Banks Are Trying To Do Too Much, Not Too Little
Marshall Auerback

Is another generational "silly season" reaching its peak? The two contestants are the GOP & DEM parties. That's the bad part.

   (Commentary posted by Roger Erickson)

The good part? There's another generation coming, which grew up watching this one self destruct. Let me know if you find evidence that our next crop will be less silly.

In the meantime, here's some commentary by Chuck Spinney, and an opinion piece by Pat Buchanan - who finally sounds more pragmatic and less knee-jerk conservative.

Which of the following would logic dictate you employ, in different contexts? Say, Domestic Politics vs International Relations? The only thing riding on this is how our electorate will spend the fiat it's told we're low on and running out of.  Of course there are other options to explore, but few seem to be able to see them, and certainly not fast enough.



(Note that feedback significance includes tempo!)


From: Chuck Spinney (by permission)

"A nation’s foreign policy is a reflection of its domestic politics.

Today, it is an undeniable fact that US foreign policy is now, like its domestic politics, a shambles of non-cooperative centers of gravity.

One need only consider Afghanistan, Iraq, Iran, Syria, Palestine, Egypt, Libya, Africa, Yeman, spying on our closest allies (esp. Germany), the perpetual drone war, Ukraine, etc. US leaders flit from one crisis to another in what has become a Whack-a-Mole game. The chaos abroad mirrors the chaos and reactiveness in our broken domestic politics at home, where special interests are running amok.
 
Lest you think the chaos cannot get worse, think again. Patrick Buchanan's powerfully argued essay will get you started in this direction. Among other things, Pat shows how the foreign policy shambles is directly linked to 2014 election politics via fueling the rise of anti-Russian right-wing militarism (and, while unstated, the 'requirement' to protect the MICC from the mild budgetary implications of the now forgotten Sequester).

Lest you think this desire to protect the MICC during an election is a right-wing Republican phenomenon, President Obama is fighting back in a last minute effort to buy off the defense contractor wing of the MICC with a doubling down of foreign sales of high tech US weapons, as part of a larger Clintonesqe triangulation strategy that includes privatizing infrastructure to keep the senate from going Republican. (H/T Pierre Sprey for this observation).

And of course, looming in the offing, is the inevitable ‘bipartisan' competition to see who can take the most political credit for increasing the weapons and aid flowing to the Israel’s to compensate Israelis using up US-provided weapons to massacre Palestinians in Gaza — an operation that is clearly inimical to the long-term national interest and security, not to mention what little is left of our moral stature in the world."


A GOP Ultimatum to Vlad



Mark Gongloff — 'Patriotic' Big Banks Profit Helping U.S. Companies Dodge Taxes


Goldman in the lead doing more of God's work.

The Huffington Post
'Patriotic' Big Banks Profit Helping U.S. Companies Dodge Taxes
Mark Gongloff

AP — Iran's Ayatollah Khamenei Calls For Arming Gaza To Fight Israel


Ominous. John Kerry is calling for disarmament of Hamas as necessary condition for a negotiated settlement. Is this a clash of civilizations in the making?
Iran's supreme leader on Tuesday called on Muslims from around the world to help arm Gaza Palestinians in their fight against Israel. 
The call by Ayatollah Ali Khamenei was his latest such message during the ongoing war between Gaza's Hamas rulers and Israel.
Khamenei claims that while Israel and America seek to disarm Hamas, Iran says "the opposite ... the Muslim World has a duty to arm the Palestinian nation by all means."
This puts US vassal states in the region at odds with popular sentiment. It's an indirect attack on the Saudi rulership, and it represents a further division of Sunnis and Shi'ites as to who is representative of Islam.

The World Post
Iran's Ayatollah Khamenei Calls For Arming Gaza To Fight Israel
AP

See also Sabrina Siddiqul, Americans' Attitudes Toward Muslims And Arabs Are Getting Worse, Poll Finds

Josh Boak — Americans In Debt: 35 Percent Have Unpaid Bills Reported To Collection Agencies


Over a third of US adults are "deadbeats."

Huffington Post
Americans In Debt: 35 Percent Have Unpaid Bills Reported To Collection Agencies
Josh Boak | AP

Monday, July 28, 2014

Why Isn't There A Committee Reporting That Our "Corporate Welfare Trust Fund" Is Insolvent?

   (Commentary posted by Roger Erickson - in memory of the writings of Robert Eisner.)





[Committee for Frozen Fiat] REPORT:
ANALYSIS OF THE 2014 SOCIAL SECURITY TRUSTEES' REPORT
According to these geniuses, the Trustees show that The Social Security Disability Insurance (DI) trust fund is (as they already pre-decided):
* on the brink of insolvency (it wouldn't have mattered WHAT the report said)  
* projected to be exhausted in 2033 (assuming borrowing of more fiat - don't ask how, or why, that occurs either). 
* "Imbalanced" over 75 years -  to the tune of 2.88 percent of taxable payroll, or 1.02 percent of GDP.  (Heck - it's probably out of balance with Ayn Rand and the cosmic background radiation too, and a great many other anomalies, but who's counting?)
* facing a gap between Social Security spending and revenues that will grow from 1.3 percent of payroll (0.45 percent of GDP) this year to 3.9 percent of payroll (1.4 percent of GDP) by 2035 and 4.9 percent of payroll (1.7 percent of GDP) by the end of the 75-year window.
Oh ... my ... gosh! Liars & Innocent Frauds and Perma-DTs, Oh My! Can you visualize these dweebs trying to generate some fiat, and then imagine the semantic difficulties they're saddling future generations with?

They just drone on & on, with endless, invented data irrelevant to context.

How can fiat be exhausted? Don't ask. They have no answer, so they conveniently avoid asking themselves to face reality. They're lost in a crusade to balance what must evolve.

What does an "imbalance" in the fiat mean? Maybe only yodeling political Yoda's can sense that particular disturbance, since a politician's strength flows from the Farce? Curiously, there is no mention of what % of GDP goes to Corporate Welfare, aka "Policy."

Riddle me this Blather Man: why is Social Security the ONLY component of fiat that is [supposedly] funded by a tax on fiat?

So why AREN'T there formal Committees:
a) reporting that Our Corporate Welfare Trust Fund is insolvent?

b) reporting something equally implausible - that our nation's trusty Public Initiative Fund is insolvent?

c) reporting on the mythical gap between fiat "revenue" and fiat itself? [If you have to ask where fiat comes from ... you can't afford it? :( ]
d) explaining how, exactly, a nation generates the fiat revenue that fuels fiat? [Public Initiative?]
You'll never hear the Committee for Frozen Fiat (CFF) commenting on any of those basic sanity checks. Actual thinking does not seem to be in their repertoire, so it's no surprise that they display no sign of Logic-101 either. They have one campaign, and a one-track mind.

At this point any reasonable human should be wondering: "Why don't we just send clowns to Congress, and to staff all federal agencies too?" [Don't answer that unless you're ready to face the answer - it may not reflect well on the voters.]

Meanwhile, this CFF choir seems to have unstoppable momentum - irregardless of reality, or desired outcomes.

An old saying holds that "People will do anything in their power to avoid thinking."

Apparently, shameless politicians will do even more than that, and invoke negative-thinking or straw-concepts, not just lack of thinking. Worse, our foolish electorate will let them! The outcome? If we don't do anything about the real FUDeral Deficit, we might scare ourselves to death with complete nonsense.







Warren Mosler — Pending home sales and why housing matters

So why does housing matter? 
Can’t spending simply go elsewhere? 
The problem is the oldest of all macro constraints- 
If any agent spends less than his income, another must spend more than his income for all of the output to get sold. 
It’s also been expressed as ‘the paradox of thrift’- decisions to not spend income and to instead ‘save’ cause sales and income to fall with no increase in net savings.… 
So housing matters a lot as it looks to be the only available avenue for the economy to spend more than its income in sufficient quantities to overcome the demand leakages [with no one else stepping up].
The elegant simplicity of the sectoral balance approach to macro.

The Center of the Universe
Warren Mosler

Lambert Strether — Money vs. Mission: How Generic MBAs vs. Physicians Think about Health Care

Lambert here: Many of us still think of the medical system as a source of health care enabled by MDs, much as many of us still think of the university system as a source of education enabled by professors. That is, both institutions have considerable “good will” on what we might call society’s balance sheet (were society to have such a thing). In health care, as in education, MBAs trained in the ways of neo-liberalism are busy transforming that good will into institutional power for themselves and profits for their masters. Of course, neither institution will be able to function well for long with a degraded product and without “good will” (we might also use the word “trust”) but by the time society comes to that realization “I’ll be gone; you’ll be gone.” This post explains how MBAs are crapifying health care in detail from a physician’s perspective. 
By Roy M. Poses, MD. Originally published at Health Care Renewal.
This has been in the works since the Eighties, concurrent with Reaganism. I wonder if there is some connection with neoliberalism? Again, another example of money and machines over people and the environment, and why neoliberal capitalism is antithetical to popular democracy.

Naked Capitalism

House markup of Regulation D (reserve requirements) Study Act set for tomorrow

The House Financial Services Committee will begin a markup of the Regulation D Study Act (H.R. 3240) Tuesday. Full disclosure, this bill is supported by my employer. 

If the bill passes, (imagine, something remotely sane coming out of the House!)  it would require the GAO, in consultation with credit unions and community banks, to study the Federal Reserve's Regulation D minimum reserve requirements.
  
The bill calls for the study to report: 

  • A review of how the Fed has used reserve requirements to conduct U.S. monetary policy;

  • The impact of the maintenance of reserves on depository institutions;

  • The impact upon consumers in managing their accounts; and

  • Alternatives available to the Federal Reserve Board to maintain reserves to effect monetary policy
It will be interesting to see what might come of this. It would be nice to have the Fed admit openly to what is has already implicitly admitted through establishment of the new Excess Balance Accounts (IOER) and Term Deposit Facility- namely, that reserve requirements are an old vestige of the gold standard era and should be eliminated. The current structure of Reg D prevents consumers from making savings account withdrawals more than 6 times a month, which in the era of "soft currency" is no longer a necessary protection to a bank and annoying/costly for consumers. If this happens, maybe we can finally catch up to what Canada, the UK, New Zealand, Australia and Sweden have already acknowledged

The markup is scheduled to begin at 10 a.m. (ET) Tuesday in the Rayburn House Office Building, and I'll try to attend. 

Sunday, July 27, 2014

Dylan Matthews — A guaranteed income for every American would eliminate poverty — and it wouldn't destroy the economy

…going from the federal government being 21.1 percent of GDP to 22.6 percent or thereabouts is hardly a sea change. And yet that's, roughly, all it would take to eliminate poverty in America. 
So here's my takeaway: a negative income tax or basic income of sufficient size would, by definition, eliminate poverty. We still don't know if there'd be much of a cost in terms of people working and earning less. If there is, the effect is almost certainly small enough that a negative income tax can offset the lost earnings and remain affordable. The worst case scenario is that we eliminate poverty but see a modest decline in employment. The best case scenario is we eliminate poverty at even lower cost and don't see much of an effect on employment. That's a gamble I'm willing to take.
VOX
A guaranteed income for every American would eliminate poverty — and it wouldn't destroy the economy
Dylan Matthews

Saturday, July 26, 2014

Matt Bruenig — How Reform Conservatives Like Reihan Salam and Paul Ryan Misunderstand Poverty

Oh boy. Reihan Salam has a piece riddled with confusions, some conceptual, some technical, and some just downright strange. It is so confused that I will eschew the normal narrative type reaction and just go line-by-line.
"Confusions" might not be the right word. Inexcusable ignorance or intentional lying?

Demos Policy Shop
How Reform Conservatives Like Reihan Salam and Paul Ryan Misunderstand Poverty
Matt Bruenig