The horizon is not so far as we can see, but as far as we can imagine

Notes on the Fiscal Sustainability Conference

Mandos attended and took some notes. For those who couldn’t make it, worth reading.  Read in particular the section on the problems of the Euro—this is why Portugal, Ireland, Italy, Greece and Spain are looking to get their clocks cleaned, and maybe bring down the world economy with them.


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  1. Thanks for the link. I wrote a summary piece here, outlining in a now sleep-deprived way my understanding of the logic of the proposal, and some minor blanks I think needed to be filled in. It also contains links to the my entire set of notes.

  2. BDBlue

    Thanks for coming and taking notes, Mandos! I read your introductory piece (I’ll get to the rest of them after work). Very well done.

  3. marku

    Thanks for the most excellent summary, and the live blog as well. I read it all.

    I must say that while I’m in favor of anything that dethrones the naked neoliberal emperor, I have real questions about the idea that money can be completely decoupled from physical assets. I mean, we recently had a total derivatives exposure equal to, what was it?, 12X total world GDP?

    That didn’t seem to work out as a really rational thing to do.

    And the environmental economists like Daly basically argue that money is simply a way of accounting for energy, and that if energy production falls while money supply rises, you get inflation. (I hope I’m not mis-stating this, please correct me if I am)

    Tho I am fully on board with the idea that unemployment is an improper cure for inflation (the Phillips Curve has been debunked hasn’t it?). It seems a totally proper solution to deficit spend to cure the unemployment, and tax enough to control the inflation. Which I guess, is what MMT is all about.

    Maybe I’m less opposed than I thought.

  4. They’re not arguing that resources are infinite, merely that our allocation of them as they exist is political, not a “natural” fact. However, if you want to constrain resource use…Mitchell said you should constrain resource use. By rules, not by taxes or cap-and-trade or whatever, because we have very limited control over how these things actually pan out in the real world.

    The problem with all the 100X leveraging is that it was a way of pretending that you’ve spread risk thinly enough not to care about it, and divorced money creation from politics completely. Spreading risk? Well: consider a house of cards and its risk of falling. Then divide that risk by the number of cards. You’ll get Some Number. Some Number that’s smaller than the risk of the whole house falling. OK, great. But whatever that number is, if one card falls, so will the rest…

    In MMT, the risk is not artificially sliced up. In fact, we now have the worst of both worlds. Because we have a fiat currency and too few rules, there’s nothing stopping just anyone from inventing money. But government fiscal policy is too crippled to compensate for it… Unless we go all Ron Paul and tie ourselves to gold (a magical trick for permanent wealth concentration), the only alternative is to regulate AND unshackle government fiscal policy.

  5. marku

    that’s better, thanks.

    I like the overt statement that our division of resources is a political decision. I think a major attraction of neoliberalism to the elites is that it gives a fig leaf to their social darwism, and makes their hand-tamed economists merely apologists for the distribution of wealth and power.

  6. Here’s the live blog.

    Here’s the audio and slide shows.

    Thanks indeed to Mandos for the post.

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