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RohanGreySecondPaper 9 - 28 May 2012 - Main.RohanGrey
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| META TOPICPARENT | name="Main.RohanGrey" |
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Money and Unemployment | | |
The term “Functional Finance” was first coined by Abba Lerner during World War II to describe a macroeconomic policy whereby a state would use its complementary privileges of money creation and taxation to control the flow of money into the economy and achieve full employment, price stability, and socially desirable goals. He likened this to the driver of a car using the gas and brake pedals to keep a constant speed while changing direction with the steering wheel. For Lerner, the idea of being unable to secure “financing” (gas) for the government was a non-issue, since it could always spend new dollars as necessary. The real macroeconomic concerns, in his view, were price stability (the speed of the car) and the productivity of jobs and investments created through money creation (the direction). The numerical size of the government’s deficit or surplus was considered a mere accounting afterthought, reflecting rather than dictating the conditions of the real economy. | |
<
< | Lerner’s approach heavily influenced macroeconomic policy in the post-war era before losing popularity in the wake of the oil-driven stagflation of the 1970’s. Since then, mainstream economic discourse has mostly abandoned the lofty goal of true full employment amidst irrational fears of budget deficits and deceptive household budget analogies that ignore the fundamental difference between a currency issuer and a currency user. Gone is any sense of deep outrage at the irredeemable social waste, human suffering and death caused by unemployment. In its place is a fear of “running out of money,” which implies that the defining economic issue of the present era is the risk of running out of electricity to power the computer at the Federal Reserve that purchases treasuries with reserves using keystrokes. In response to our alleged "budget crisis," politicians across the political spectrum have pushed for “shared sacrifice” in order for us to return to “living within our means.” Anyone familiar with the paradox of thrift would and did find this idea laughable even before the rank hypocrisy that was “Too Big To Fail.” Together, these policies of austerity and banking subsidy are, to borrow Lerner’s analogy, akin to the driver of the car taking his or her foot off the gas, stepping on the brake, and handing the steering wheel over to the person who had caused the car to stall only moments ago. | >
> | Lerner’s approach heavily influenced macroeconomic policy in the post-war era before losing popularity in the wake of the oil-driven stagflation of the 1970’s. Since then, mainstream economic discourse has mostly abandoned the lofty goal of true full employment amidst irrational fears of budget deficits and deceptive household budget analogies that ignore the fundamental difference between a currency issuer and a currency user. Gone is any sense of deep outrage at the irredeemable social waste, human suffering and death caused by unemployment. In its place is a fear of “running out of money,” which implies that the defining economic issue of the present era is the risk of running out of electricity to power the computer at the Federal Reserve that purchases treasuries with reserves using keystrokes. In response to our alleged "budget crisis," politicians across the political spectrum have pushed for “shared sacrifice” in order for us to return to “living within our means.” Anyone familiar with the paradox of thrift would and did find this approach laughable even before the rank hypocrisy that was “Too Big To Fail.” Together, these policies of austerity and banking subsidy are, to borrow Lerner’s analogy, akin to the driver of the car taking his or her foot off the gas, stepping on the brake, and handing the steering wheel over to the person who had caused the car to stall only moments ago. | | | There are some pockets of mainstream resistance advocating for greater government intervention, but even they tend to cast such action as extraordinary, and recommend rolling back stimulus as the economy returns to an allegedly “natural” rate of unemployment. Overall, with a few refreshing exceptions, supporters of capitalism appear resigned to the inevitability of involuntary unemployment. |
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RohanGreySecondPaper 8 - 27 May 2012 - Main.RohanGrey
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| META TOPICPARENT | name="Main.RohanGrey" |
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Money and Unemployment | | |
The term “Functional Finance” was first coined by Abba Lerner during World War II to describe a macroeconomic policy whereby a state would use its complementary privileges of money creation and taxation to control the flow of money into the economy and achieve full employment, price stability, and socially desirable goals. He likened this to the driver of a car using the gas and brake pedals to keep a constant speed while changing direction with the steering wheel. For Lerner, the idea of being unable to secure “financing” (gas) for the government was a non-issue, since it could always spend new dollars as necessary. The real macroeconomic concerns, in his view, were price stability (the speed of the car) and the productivity of jobs and investments created through money creation (the direction). The numerical size of the government’s deficit or surplus was considered a mere accounting afterthought, reflecting rather than dictating the conditions of the real economy. | |
<
< | Lerner’s approach heavily influenced macroeconomic policy in the post-war era before losing popularity in the wake of the oil-driven stagflation of the 1970’s. Since then, mainstream economic discourse has mostly abandoned the lofty goal of true full employment amidst irrational fears of budget deficits and deceptive household budget analogies that ignore the fundamental difference between a currency issuer and a currency user. Gone is any sense of deep outrage at the irredeemable social waste, human suffering and death caused by unemployment. In its place is a fear of “running out of money,” which implies that the defining economic issue of the present era is the risk of running out of electricity to power the computer at the Federal Reserve that purchases treasuries with reserves using keystrokes. In response to our alleged "budget crisis," politicians across the political spectrum have pushed for “shared sacrifice” in order for us to return to “living within our means.” Anyone familiar with the paradox of thrift would and did find this idea laughable even before the rank hypocrisy that was “Too Big To Fail.” Together, these policies of austerity and banking subsidy are, to borrow Lerner’s analogy, akin to the driver of the car taking their foot off the gas, stepping on the brake, and handing the steering wheel over to those who had caused the car to stall only moments ago. | >
> | Lerner’s approach heavily influenced macroeconomic policy in the post-war era before losing popularity in the wake of the oil-driven stagflation of the 1970’s. Since then, mainstream economic discourse has mostly abandoned the lofty goal of true full employment amidst irrational fears of budget deficits and deceptive household budget analogies that ignore the fundamental difference between a currency issuer and a currency user. Gone is any sense of deep outrage at the irredeemable social waste, human suffering and death caused by unemployment. In its place is a fear of “running out of money,” which implies that the defining economic issue of the present era is the risk of running out of electricity to power the computer at the Federal Reserve that purchases treasuries with reserves using keystrokes. In response to our alleged "budget crisis," politicians across the political spectrum have pushed for “shared sacrifice” in order for us to return to “living within our means.” Anyone familiar with the paradox of thrift would and did find this idea laughable even before the rank hypocrisy that was “Too Big To Fail.” Together, these policies of austerity and banking subsidy are, to borrow Lerner’s analogy, akin to the driver of the car taking his or her foot off the gas, stepping on the brake, and handing the steering wheel over to the person who had caused the car to stall only moments ago. | | | | |
<
< | There are some pockets of resistance advocating for greater government intervention, but even they tend to cast such action as extraordinary, and recommend rolling back stimulus as the economy returns to an allegedly “natural” rate of unemployment. Overall, with a few refreshing exceptions, supporters of capitalism appear resigned to the inevitability of involuntary unemployment. | >
> | There are some pockets of mainstream resistance advocating for greater government intervention, but even they tend to cast such action as extraordinary, and recommend rolling back stimulus as the economy returns to an allegedly “natural” rate of unemployment. Overall, with a few refreshing exceptions, supporters of capitalism appear resigned to the inevitability of involuntary unemployment. | | |
From “Law and Economics” to “Law of Economics”
But is this view correct? Did the millions of productive workers who stopped getting out of bed in 2007 all transform into socially repugnant, Kafkaesque beetles? Did we collectively exhaust our supply of that precious job-creating element, “employaminium”? Of course not. Unemployment is a legal creation arising from an accounting system that records claims on real value in nominal amounts. Nothing in the natural world prevents individuals from contributing to the betterment of society. | |
<
< | As prospective lawyers, it is our job to learn how to solve legal problems. To that effect, we might do better by spending less time considering the Econodwarf’s orthodox dogma as axiomatic truth and more learning about how creative lawyers devise out-of-the-box solutions to pressing economic problems. One example of such legal creativity is blogger-lawyer Carlos Mucha (a.k.a. Beowulf)’s brilliant proposal to take advantage of a little known but hugely important provision in the Coinage Act that completely eliminates the need for the government to issue treasury debt during the process of deficit spending. 31 U.S.C. 5112(k) authorizes the Secretary of the Treasury to mint platinum coins “with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe.” Under the clear wording of this statute, the Treasury tomorrow could create and deposit at the Federal Reserve a single $60 trillion coin to pay for the national debt, universal Medicare, universal education and a minimum wage job guarantee, while still leaving a very-publicly-visible $40 trillion in its checking account for a rainy day. Of course, such a move would not be a panacea for every social and economic problem. However, it would effectively eliminate the distracting question of government “funding” and allow us to focus on the truly political and messy issues of policy design and implementation. | >
> | As prospective lawyers, it is our job to learn how to solve legal problems. To that effect, we might do better by spending less time considering the Econodwarf’s orthodox dogma as axiomatic truth and more learning about how creative lawyers devise out-of-the-box solutions to pressing economic problems. One example of such legal creativity is blogger-lawyer Carlos Mucha (a.k.a. Beowulf)’s brilliant proposal to take advantage of a little known but hugely important provision in the Coinage Act that completely eliminates the need for the government to issue interest-bearing treasury debt during the presently convoluted process of deficit spending. 31 U.S.C. 5112(k) authorizes the Secretary of the Treasury to mint platinum coins “with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe.” Under the clear wording of this statute, the Treasury tomorrow could create and deposit at the Federal Reserve a single $60 trillion coin to pay for the national debt, universal Medicare, universal education and a minimum wage job guarantee, while still leaving a very-publicly-visible $40+ trillion in its checking account for a rainy day. Of course, such a move would not be a panacea for every social and economic problem. However, it would effectively eliminate the distracting question of government “funding” and allow us to focus on the truly political and messy issues of policy design and implementation. | | | Conclusion |
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RohanGreySecondPaper 7 - 25 May 2012 - Main.RohanGrey
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| META TOPICPARENT | name="Main.RohanGrey" |
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Money and Unemployment | | |
The term “Functional Finance” was first coined by Abba Lerner during World War II to describe a macroeconomic policy whereby a state would use its complementary privileges of money creation and taxation to control the flow of money into the economy and achieve full employment, price stability, and socially desirable goals. He likened this to the driver of a car using the gas and brake pedals to keep a constant speed while changing direction with the steering wheel. For Lerner, the idea of being unable to secure “financing” (gas) for the government was a non-issue, since it could always spend new dollars as necessary. The real macroeconomic concerns, in his view, were price stability (the speed of the car) and the productivity of jobs and investments created through money creation (the direction). The numerical size of the government’s deficit or surplus was considered a mere accounting afterthought, reflecting rather than dictating the conditions of the real economy. | |
<
< | Lerner’s approach heavily influenced macroeconomic policy in the post-war era before losing popularity in the wake of the oil-driven stagflation of the 1970’s. Since then, mainstream economic discourse has mostly abandoned the lofty goal of true full employment amidst irrational fears of budget deficits and deceptive household budget analogies that ignore the fundamental difference between a currency issuer and a currency user. Gone is any sense of deep outrage at the irredeemable social waste, human suffering and death caused by unemployment. In its place is a fear of “running out of money,” which implies that the defining economic issue of the present era is the risk of running out of electricity to power the computer at the Federal Reserve that purchases treasuries with reserves using keystrokes. In response to our alleged "budget crisis," politicians across the political spectrum have pushed for “shared sacrifice” in order for us to return to “living within our means.” Anyone familiar with the paradox of thrift would and did find this idea laughable even before “Too Big To Fail.” Together, these policies of austerity and banking subsidy are, to borrow Lerner’s analogy, akin to the driver of the car taking their foot off the gas, stepping on the brake, and handing the steering wheel over to those who had caused the car to stall only moments ago. | >
> | Lerner’s approach heavily influenced macroeconomic policy in the post-war era before losing popularity in the wake of the oil-driven stagflation of the 1970’s. Since then, mainstream economic discourse has mostly abandoned the lofty goal of true full employment amidst irrational fears of budget deficits and deceptive household budget analogies that ignore the fundamental difference between a currency issuer and a currency user. Gone is any sense of deep outrage at the irredeemable social waste, human suffering and death caused by unemployment. In its place is a fear of “running out of money,” which implies that the defining economic issue of the present era is the risk of running out of electricity to power the computer at the Federal Reserve that purchases treasuries with reserves using keystrokes. In response to our alleged "budget crisis," politicians across the political spectrum have pushed for “shared sacrifice” in order for us to return to “living within our means.” Anyone familiar with the paradox of thrift would and did find this idea laughable even before the rank hypocrisy that was “Too Big To Fail.” Together, these policies of austerity and banking subsidy are, to borrow Lerner’s analogy, akin to the driver of the car taking their foot off the gas, stepping on the brake, and handing the steering wheel over to those who had caused the car to stall only moments ago. | | | There are some pockets of resistance advocating for greater government intervention, but even they tend to cast such action as extraordinary, and recommend rolling back stimulus as the economy returns to an allegedly “natural” rate of unemployment. Overall, with a few refreshing exceptions, supporters of capitalism appear resigned to the inevitability of involuntary unemployment.
From “Law and Economics” to “Law of Economics” | |
<
< | But is this view correct? Did the millions of productive workers who stopped getting out of bed in 2007 all transform into socially repugnant, Kafkaesque beetles? Did we collectively exhaust our supply of that precious job-creating element, “employaminium”? Of course not. Unemployment is a legal creation arising from an accounting system that records claims on real value in nominal amounts. Nothing in the natural world prevents individuals from contributing to the betterment of society. | >
> | But is this view correct? Did the millions of productive workers who stopped getting out of bed in 2007 all transform into socially repugnant, Kafkaesque beetles? Did we collectively exhaust our supply of that precious job-creating element, “employaminium”? Of course not. Unemployment is a legal creation arising from an accounting system that records claims on real value in nominal amounts. Nothing in the natural world prevents individuals from contributing to the betterment of society. | | | As prospective lawyers, it is our job to learn how to solve legal problems. To that effect, we might do better by spending less time considering the Econodwarf’s orthodox dogma as axiomatic truth and more learning about how creative lawyers devise out-of-the-box solutions to pressing economic problems. One example of such legal creativity is blogger-lawyer Carlos Mucha (a.k.a. Beowulf)’s brilliant proposal to take advantage of a little known but hugely important provision in the Coinage Act that completely eliminates the need for the government to issue treasury debt during the process of deficit spending. 31 U.S.C. 5112(k) authorizes the Secretary of the Treasury to mint platinum coins “with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe.” Under the clear wording of this statute, the Treasury tomorrow could create and deposit at the Federal Reserve a single $60 trillion coin to pay for the national debt, universal Medicare, universal education and a minimum wage job guarantee, while still leaving a very-publicly-visible $40 trillion in its checking account for a rainy day. Of course, such a move would not be a panacea for every social and economic problem. However, it would effectively eliminate the distracting question of government “funding” and allow us to focus on the truly political and messy issues of policy design and implementation. |
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RohanGreySecondPaper 6 - 24 May 2012 - Main.RohanGrey
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| META TOPICPARENT | name="Main.RohanGrey" |
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Money and Unemployment | | | Functional versus Transcendental Finance
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<
< | The term “Functional Finance” was first coined by Abba Lerner during World War II to describe a macroeconomic policy whereby a state would use its complementary privileges of money creation and taxation to control the flow of money into the economy and achieve full employment, price stability, and socially desirable goals. He likened this to the driver of a car using the gas and brake pedals to keep a constant speed while changing direction with the steering wheel. For Lerner, the idea of being unable to secure “financing” (gas) for the government was a non-issue, since it could always print money as necessary. The real macroeconomic concerns, in his view, were price stability (the speed of the car) and the productivity of jobs and investments created through money creation (the direction). The numerical size of the government’s deficit or surplus was considered a mere accounting afterthought, reflecting rather than dictating the conditions of the real economy. | >
> | The term “Functional Finance” was first coined by Abba Lerner during World War II to describe a macroeconomic policy whereby a state would use its complementary privileges of money creation and taxation to control the flow of money into the economy and achieve full employment, price stability, and socially desirable goals. He likened this to the driver of a car using the gas and brake pedals to keep a constant speed while changing direction with the steering wheel. For Lerner, the idea of being unable to secure “financing” (gas) for the government was a non-issue, since it could always spend new dollars as necessary. The real macroeconomic concerns, in his view, were price stability (the speed of the car) and the productivity of jobs and investments created through money creation (the direction). The numerical size of the government’s deficit or surplus was considered a mere accounting afterthought, reflecting rather than dictating the conditions of the real economy. | | | Lerner’s approach heavily influenced macroeconomic policy in the post-war era before losing popularity in the wake of the oil-driven stagflation of the 1970’s. Since then, mainstream economic discourse has mostly abandoned the lofty goal of true full employment amidst irrational fears of budget deficits and deceptive household budget analogies that ignore the fundamental difference between a currency issuer and a currency user. Gone is any sense of deep outrage at the irredeemable social waste, human suffering and death caused by unemployment. In its place is a fear of “running out of money,” which implies that the defining economic issue of the present era is the risk of running out of electricity to power the computer at the Federal Reserve that purchases treasuries with reserves using keystrokes. In response to our alleged "budget crisis," politicians across the political spectrum have pushed for “shared sacrifice” in order for us to return to “living within our means.” Anyone familiar with the paradox of thrift would and did find this idea laughable even before “Too Big To Fail.” Together, these policies of austerity and banking subsidy are, to borrow Lerner’s analogy, akin to the driver of the car taking their foot off the gas, stepping on the brake, and handing the steering wheel over to those who had caused the car to stall only moments ago. |
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RohanGreySecondPaper 5 - 24 May 2012 - Main.RohanGrey
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| META TOPICPARENT | name="Main.RohanGrey" |
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Money and Unemployment | | |
The term “Functional Finance” was first coined by Abba Lerner during World War II to describe a macroeconomic policy whereby a state would use its complementary privileges of money creation and taxation to control the flow of money into the economy and achieve full employment, price stability, and socially desirable goals. He likened this to the driver of a car using the gas and brake pedals to keep a constant speed while changing direction with the steering wheel. For Lerner, the idea of being unable to secure “financing” (gas) for the government was a non-issue, since it could always print money as necessary. The real macroeconomic concerns, in his view, were price stability (the speed of the car) and the productivity of jobs and investments created through money creation (the direction). The numerical size of the government’s deficit or surplus was considered a mere accounting afterthought, reflecting rather than dictating the conditions of the real economy. | |
<
< | Lerner’s approach heavily influenced macroeconomic policy in the post-war era before losing popularity in the wake of the oil-driven stagflation of the 1970’s. Since then, mainstream economic discourse has mostly abandoned the lofty goal of true full employment amidst irrational fears of budget deficits and deceptive household budget analogies that ignore the fundamental difference between a currency issuer and a currency user. Gone is any sense of deep outrage at the irredeemable social waste, human suffering and death caused by unemployment. In its place is a fear of “running out of money,” which implies that the defining economic issue of the present era is the risk of running out of electricity to power the computer at the Federal Reserve that purchases treasuries with reserves using keystrokes. In response to this alleged crisis, politicians across the political spectrum have pushed for “shared sacrifice” in order for us to return to “living within our means.” Anyone familiar with the paradox of thrift would and did find this idea laughable even before “Too Big To Fail.” Together, these policies of austerity and banking subsidy are, to borrow Lerner’s analogy, akin to the driver of the car taking their foot off the gas, stepping on the brake, and handing the steering wheel over to those who had caused the car to stall only moments ago. | >
> | Lerner’s approach heavily influenced macroeconomic policy in the post-war era before losing popularity in the wake of the oil-driven stagflation of the 1970’s. Since then, mainstream economic discourse has mostly abandoned the lofty goal of true full employment amidst irrational fears of budget deficits and deceptive household budget analogies that ignore the fundamental difference between a currency issuer and a currency user. Gone is any sense of deep outrage at the irredeemable social waste, human suffering and death caused by unemployment. In its place is a fear of “running out of money,” which implies that the defining economic issue of the present era is the risk of running out of electricity to power the computer at the Federal Reserve that purchases treasuries with reserves using keystrokes. In response to our alleged "budget crisis," politicians across the political spectrum have pushed for “shared sacrifice” in order for us to return to “living within our means.” Anyone familiar with the paradox of thrift would and did find this idea laughable even before “Too Big To Fail.” Together, these policies of austerity and banking subsidy are, to borrow Lerner’s analogy, akin to the driver of the car taking their foot off the gas, stepping on the brake, and handing the steering wheel over to those who had caused the car to stall only moments ago. | | | There are some pockets of resistance advocating for greater government intervention, but even they tend to cast such action as extraordinary, and recommend rolling back stimulus as the economy returns to an allegedly “natural” rate of unemployment. Overall, with a few refreshing exceptions, supporters of capitalism appear resigned to the inevitability of involuntary unemployment. | | | But is this view correct? Did the millions of productive workers who stopped getting out of bed in 2007 all transform into socially repugnant, Kafkaesque beetles? Did we collectively exhaust our supply of that precious job-creating element, “employaminium”? Of course not. Unemployment is a legal creation arising from an accounting system that records claims on real value in nominal amounts. Nothing in the natural world prevents individuals from contributing to the betterment of society. | |
<
< | As prospective lawyers, it is our job to learn how to solve legal problems. To that effect, we might do better by spending less time considering the Econodwarf’s dogma as axiomatic truth and more learning about how creative lawyers devise out-of-the-box solutions to pressing economic problems. One example of such legal creativity is blogger-lawyer Carlos Mucha (a.k.a. Beowulf)’s brilliant proposal to take advantage of a little known but hugely important provision in the Coinage Act that completely eliminates the need for treasury debt and government borrowing. 31 U.S.C. 5112(k) authorizes the Secretary of the Treasury to mint platinum coins “with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe.” Under the clear wording of this statute, the Treasury tomorrow could create and deposit at the Federal Reserve a single $60 trillion coin to pay for the national debt, universal Medicare, universal education and a minimum wage job guarantee, while still leaving over $40 trillion for a rainy day. Of course, such a move would not be a panacea for every social and economic problem. However, it would effectively eliminate the distracting question of government “funding” and allow us to focus on the truly political and messy issues of policy design and implementation. | >
> | As prospective lawyers, it is our job to learn how to solve legal problems. To that effect, we might do better by spending less time considering the Econodwarf’s orthodox dogma as axiomatic truth and more learning about how creative lawyers devise out-of-the-box solutions to pressing economic problems. One example of such legal creativity is blogger-lawyer Carlos Mucha (a.k.a. Beowulf)’s brilliant proposal to take advantage of a little known but hugely important provision in the Coinage Act that completely eliminates the need for the government to issue treasury debt during the process of deficit spending. 31 U.S.C. 5112(k) authorizes the Secretary of the Treasury to mint platinum coins “with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe.” Under the clear wording of this statute, the Treasury tomorrow could create and deposit at the Federal Reserve a single $60 trillion coin to pay for the national debt, universal Medicare, universal education and a minimum wage job guarantee, while still leaving a very-publicly-visible $40 trillion in its checking account for a rainy day. Of course, such a move would not be a panacea for every social and economic problem. However, it would effectively eliminate the distracting question of government “funding” and allow us to focus on the truly political and messy issues of policy design and implementation. | | | Conclusion | |
<
< | The global crisis has put into stark relief the overwhelming failure of economic orthodoxy to maintain full employment. As emerging lawyers, we are positioned to play a significant role in shaping a new system built around principles of abundance and democracy rather than scarcity and aristocracy. Doing so requires creativity and courage, but perhaps above all, cooperation. As such, I stand ready to work with anyone interested in this issue to promote meaningful change. | >
> | The global crisis has put into stark relief the overwhelming failure of economic orthodoxy to maintain full employment. As emerging lawyers, we are positioned to play a significant role in shaping a new economic policy built around principles of abundance and democracy rather than scarcity and aristocracy. Doing so requires creativity and courage, but perhaps above all, cooperation. As such, I stand ready to work with anyone interested in this issue to promote meaningful change. | | | |
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