Focusing on What We Should Be Doing

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I see it everywhere, despite best efforts to ignore. Endless rants about Donald Trump's latest Tweets or how much a crook the Clintons really are.  Or Russian meddling.  


Truth is we should be focusing on what can be done to rejuvenate the Middle Class, restore social mobility, rid ourselves of a financialized economy, and reign in an out of control foreign policy.


First, Russia and China have joined together to build a new 21st century economy through the Belt and Silk Road initiatives.  This is about increasing the economic strength of both countries.  More importantly, both China and Russia have invited the US into this arrangement given our country's vast technical and business skills.  This will be the wave of the future and we should be part of these projects.  Note this venture is being used to defeat the globalists that want to keep China, Russia and now the US in poverty for their own self gain.  This is the future to keep the globalist in check.  Putin and Xi Jingping are no dummies.  They understand the stability of their countries depend upon increasing economic activity for their masses.


Second, we need to rebuild our own infrastructure.  Our roads, rails and airports haven't been upgraded since the 1960s or before.  Yet look at the number of additional cars on the roads or planes in the sky over the past 60 years.  If not run like a typical government boondoggle (like Obama's stimulus) spending it can provide millions of good paying jobs from the trades to the professional ranks.  Think back to what the space program did for this country.


Third, we need to eliminate all of the money from elections.  Not only does it corrupt the process our leaders spend most of their time raising money from big money donors rather than do the job they were sent to Washington to do.  Maybe more time interacting with each other would get our politicians to again become friends, even from different sides of the aisle and hammer out workable agreements.


Four, we need to revamp the entire higher educational system.  We have a very high cost product delivering terrible results.  Our young people are not being taught how to think but simply answer test questions and arrange pieces of data.  It should come to no surprise that people under 35 while they may be gurus at certain software their ability to think critically, evaluate, communicate, debate and discuss and use experience and intelligence along with the data is abysmal.


Five, reinstall a 21st century version of Glass Steagall and put back speculation into the domain it belongs.  For too long banking deregulation has driven the industry into areas that while have enormous short term profits are deadly to the entire economy long term.  Such activities are responsible for the creation of debt and equities bubbles that we currently experience.  Banking should be about financially supporting a productive economy.  Those that desire to participate in speculative activities should receive no guarantee from the government, implied or not.  Also, the financial industry should not be driving the business cycle forcing corporate leaders to do stupid (albeit often very rewarding to them) things that eventually smash their firms.


Six, and probably the most far reaching and difficult is a jubilee.  Now I know the arguments of why should there be massive debt forgiveness to individuals, corporations and governments that took on too much debt.  However, lets be honest.  The trillions upon trillions of debt owed by individuals, corporations and governments cannot be repaid.  It clogs up our economic system, crowds out productive investment and spending and holds back economic potential.  Moreover, the next time around lenders will actually act in prudence (like they did 40 years ago) and vulture lending will be abolished. Investors won't be so quick to fund endless government spending or marginal loans.


Finally, in what has come to be called the "Deep State" needs to be exposed by those in the know, as far as names, dates, events, themes, and acts.  The Deep State by no means is monolithic. Different factions want different things from US military hegemony to an economy that highly benefits a sliver of the population while impoverishing most Americans.  We have a shadow government making Washington DC nothing more than a Banana Republic.  Greatness and change needs public support. Countries with weak and corrupt governments are notorious for being mired in poverty, abuse, crimes, and self dealing.  We are at a time when more and more Americans see these evil forces for what they are.


This list by no means is exhaustive but would be a starting point.  None of it will be simple to implement, all of it will cause side issues, which will be much easier to deal with than the original problems.  We will need both public and private leaders to support and implement these ideas, the hardest part of all.  Few have the cojones to do so or are themselves living off the mental and physical sweat and toil of so many others.  


Saint George Added Jul 17, 2017 - 2:51pm
There's no way to "guarantee" a job. Had such a silly policy been implemented in 1900, we'd still be riding in horse-drawn carriages helmed by drivers whose employment was protected by decree.
Guaranteed jobs are silly and unproductive. Better: abolish all government policies that hinder change (and therefore progress): abolish license requirements, permit requirements, medallion requirements, merger and acquisition requirements, capital controls. That's just for starters. Abolish anything that hinders the free, voluntary movement of capital and labor.
The best "guarantee" of a job is the quick acquisition of another job. Government should be doing everything possible to let the private sector — the source of innovation and wealth — to expand.
The only places that have "guaranteed jobs" are economies that are stalled by communist governments: North Korea has a guaranteed jobs program, as did communist Russia and communist China. Any American who wants a guaranteed job should move to North Korea. I'm sure he'd feel right at home.
Saint George Added Jul 17, 2017 - 3:03pm
Capital can not and will not provide full employment. The business of capital involves eliminating jobs.
Thank God for that. The very purpose of an economy is to make as much useful stuff for consumption as possible by employing as few resources — including labor — as possible. We don't want the nightmare of "full employment": that's what the poorest villages in Africa and Asia have: full, inefficient, labor-intensive, back-breaking employment.
"Full employment" is a buzzword similar to "environmentally sustainable." Not only don't we want those nightmares, but on close, granular, inspection of the phrase, it has no meaning.
No wonder you like it. Since it's meaningless, you can blame its failure to appear on any scapegoat you happen to dislike at the moment.
George N Romey Added Jul 17, 2017 - 3:10pm
Donald one way or another Jubilee will occur.  That being said I don't see this happening without a threat of social revolution.
Dino Manalis Added Jul 17, 2017 - 3:47pm
We need bipartisanship to make significant healthy progress, because gridlock and divisiveness don't allow sweeping changes.
George N Romey Added Jul 17, 2017 - 4:45pm
Donald they will kick the can for as long as they can.  Just like they did in 2005 when the securitization process was clearly breaking down the Treasury and the Fed ignored it until the system fell apart.
Dave Volek Added Jul 17, 2017 - 7:16pm
George: Great goals. But I doubt if we can accomplish much of them with political parties. Maybe we should be building the TDG first!
wsucram15 Added Jul 18, 2017 - 12:03am
Good deal George, Lets move forward!
George N Romey Added Jul 18, 2017 - 7:30am
Dave I tend to doubt we will see any movement given the current climate.  Likely a total economic meltdown must be the catalyst. Thanks for the encouragement Jeanne, too bad we don't have more people like you.
Bill Kamps Added Jul 18, 2017 - 10:45am
Some of the idea are good ones, however defaulting on the debt is not necessary, and would cause more harm than good.
Posted elsewhere as well:
George, investors will not necessarily walk away from Treasuries. 
We will get a clue when concern starts, because there will be net sales of them, par values will drop, and interest rates will rise.  However, what is happening instead, is that people need a safe place to store value, and US Treasuries are the safest place.  Before you laugh, they are safe because the US government can create more money to pay the interest if necessary.  Companies, states, and cities cant do that.  So by  definition the interest will be paid.  It doesnt matter if the principal gets paid, as long as there are buyers for the Treasuries.
Paying off the principal is like saying a company must eventually buy back its stock and take the company  private.   As long as there are buyers for the  stock, a person can recover their investment.  Likewise, as long as there are buyers for the Treasuries, someone can recover their investment.  That is what matters, are they liquid, can you sell them if you need to.  Treasuries right now are the MOST liquid investment.  The fact that people prefer them to other investments, show how risky those other investments are.
Now, I would agree that we should slow the  growth of the debt, because some day, if there is too much  debt there will be a problem.  But  slowing the growth of the debt, is FAR different from declaring a default.  Why in the world should we declare a default when interest rates are low, bonds sell at par, and everyone is happy with our Treasuries?
wsucram15 Added Jul 18, 2017 - 12:33pm
Well if we exported as much as we imported and actually brought jobs back (real jobs) it might help.  But that will never happen because we are part of a global economy.   A.I can only be held off for so long, and this will cause another recession to our economy.
So lets see what happens to stocks and happiness then.  Slowing anything isnt going to help, its just hurting people already in poverty.
Richard Plank Added Jul 18, 2017 - 12:42pm
Interesting article George, well written and argued.  But I have a different set of assumptions so I think we disagree with some of it.
1.  It is not about short term economics, but long term survival.  While I think most of us would agree we are not completely responsible for all things, the root cause of our problems is too many people.  And that means we will need at some point to reduce the world's population and live in a negative growth economy.  The reason we and China and Russia and others have to get together is to enforce some level of depopulation.  The myth of continuous growth is just that and if we continue we eventually don't worry about it any longer we will become extinct.
2.  Yes but we can't possibly catch up to population growth you do realize that?  As we build more we have to maintain more and we all know what happens.  Reduce the population to match the infrastructure and improve what you got.  Take about 200 years, but our population issues have been going on longer than that.
3.  Agree with you in principle, but not eliminate, but minimize. 
4.  Gross oversimplification of reality; some good some bad, far more good than bad and what is bad has a multiple set of causes some internal to the people and the systems of higher education and some external.  I like to blame bad regulation as just opposed to regulation and that certainly has an impact, but so does tradition, inertial and a shareholder model to motivate faculty versus a very necessary stakeholder model that recognizes all the players who have a stake. 
5.  I think you are I are on the same wavelength, but as I have noted before at a more abstract level we are talking about minimizing both abuse of power and  opportunistic behavior, in all our systems.  I usually pick on government, but the for profit business system is just as bad.  My view of the past election was a choice between two people one of whom as a pro at both abuse of power and opportunistic behavior in government, the other the same in business. Some choice??
6.  Interesting idea need to think about all the unintended consequences.
7.  Ditto with deep state;  if we do this unilaterally what happens in the rest of the world?
George N Romey Added Jul 18, 2017 - 4:35pm
Bill there is no way "to slow the debt", at least not if we still want entitlements and won't cut the military.  We will not see economic growth much above 2%, likely lower, and you can only slow the rate of debt with economic growth or inflation resulting from productive economic growth.  Economic growth which gets held back in part by huge levels of debt service both public and private.  It becomes one big flushing toilet bowl.  Think of it as telling an unemployed person living on the edge and foregoing items like health care that they must learn to live more frugal.
Jeanne unfortunately many of the jobs aren't coming back. Companies have invested billions in infrastructure in Asia and Mexico. Companies can do pretty much what they want in these regions.  I'm not sure what the answer is but I do know that low level service jobs are killing our economic future and destroying the Middle Class.  As I've said before its probably too late to fix this mess, only a forced reset could do so.  
wsucram15 Added Jul 18, 2017 - 5:52pm
George, I agree with you because I have listened to the future for Americans and it seems pretty bleak without the correct training.  I have spent years on investment in training for the future of employment, not sure what to say now, except you better have some technological engineering skills or be a medical professional (but they are talking about eliminating them with AI as well.
IT is what it is...
George N Romey Added Jul 18, 2017 - 5:55pm
Jeanne, jobs in finance, accounting, marketing, law, you name it will be going away between AI and the ability to have those jobs done in low wage countries.  We all can't be IT or medicine, and if we did, those fields would quickly become overcrowded.  
Now if we re-engineered the field of work there could be jobs for all. However, there is no movement either public or private and won't be until it hits a crisis stage.
Saint George Added Jul 18, 2017 - 7:17pm
Government spending is private sector income
Nominal income. So what. You can't eat paper.
The only real income is . . . real things: goods, services, etc.
Government Spending of Paper = Private Sector Income of Paper is nothing but an accounting tautology. Like all tautologies — for example, A = A — it ultimately means nothing, and is not very useful.
If you want to see the effect of massive government spending leading to massive private sector incomes, just look at Zimbabwe. Result? Hyperinflation.
That's the end-game and ultimate goal of John G. Then when hyperinflation occurs and the government-issued currency is found to be worthless no matter how much of it is issued (or, looked at from the private sector side, no matter how high one's personal income becomes as a result of government spending), John G and the other MMT nutters will find a convenient scapegoat on which to blame the failure of the policy: they will uniformly call the scapegoat "Supply-Side-Shock" but that's a shibboleth which means whatever they want it to mean: for example, a full moon; terrorism; tsunami; oil embargo; earthquake; sunspots; whatever. Supply-Side-Shock is a great buzzword because anything and everything can potentially be one, so there are potentially infinite rationalizations for why MMT doesn't work the way its religious zealots promise.
Just remember this:
Despite the fact that government can issue an infinite amount of paper and engrave any amount it wants to on it, you cannot eat paper: paper is exchanged by private sector consumers at some point for food. Since food is always limited in supply but paper is potentially unlimited in supply, the price of food must rise as paper is "spent" by government in the private sector.
George N Romey Added Jul 18, 2017 - 8:28pm
Following these six steps actually would collapse the current unsustainable system and allow for a rebuild.
wsucram15 Added Jul 18, 2017 - 8:56pm
you are right..exchanges..good and services, they might at some point be the only real currency.
I understand George, but we have discussed this, we could re-engineer the field of work, but to what?  Public has a hiring freeze on and private is waiting for the other shoe to drop (to coin a popular phrase).
Bill Kamps Added Jul 19, 2017 - 9:35am
George, you are correct, there is no way to slow the growth of debt if we dont want to spend less. 
While that may be unlikely, it is also unlikely that the government will just decide to default on its debt, so that it doesnt have to pay interest. 
If you think the people in power wont allow lower spending, why do you think they will allow a default on government debt ?  Which would damage their interests more?  You will say the implosion will force the debt to be defaulted, but where is  the  implosion  and when will it occur?  Right  now, everyone is pretty happy with our debt.  If you know as much about economics as you say, you must know  that when money can be borrowed at historically low interest rates, that means the lenders are comfortable the debt is secure.
People may  not be happy with our debt forever, so that is a concern.  But that doesnt mean that we need to default now. Defaults  are done as a last resort, not as a first option.
People have been predicting runaway inflation since the  1970s, people have been predicting imploding economies as long as I can remember.  It might happen some day, but it is not going to happen with the ten year  bond at 2%.
Bill Kamps Added Jul 19, 2017 - 3:03pm
Buying our bonds, is like returning our money, after we buy their goods.  If China buys our bonds with  the money we give them for buying stuff from China, it is like getting a refund on our purchase, without having to give back the stuff.  The government gets the money from the bond purchase, and spends it in the private sector.

Most countries cant do this, because the currency  of most countries isnt convertable outside the issuing country.
As long as countries are willing to loan us money at very low interest rates, we should be happy. 
Mike Haluska Added Jul 19, 2017 - 4:53pm
John G - your wish:
"A government jobs guarantee would be the first order of business."
is nonsensical to anyone who understands human nature.  Just how, exactly, does the "government guarantee jobs"?  By taxing the crap out of productive industries so that they become bankrupt?  By adding more "government jobs" that have to be paid for by further burdening the taxpayer?
opher goodwin Added Jul 19, 2017 - 4:53pm
A good starting point!!
Bill Kamps Added Jul 19, 2017 - 4:59pm
Mike H, dont you know, corporations are making scads of money by out sourcing jobs to robots, instead of hiring people.  If we highly tax them, then we can guarantee jobs to those that they have laid off.  This will be easier if we forbid the corporations to make things overseas, so all their stuff has  to be made in the USA. 
The owners of corporations are making obscene profits.  You know, those people who have pension plans, and 401K plans. 
George N Romey Added Jul 19, 2017 - 6:33pm
When I say "our debt" Bill I also include personal debt.  Personal debt more than government debt is holding back the economy.  Part of the reason for slower growth is the amount of money being spent on housing, student loans, auto loans and credit card debt. 
Saint George Added Jul 19, 2017 - 7:57pm
MMT is an accurate description of the monetary system as it exists now.
I hear that often — but only from MMT zealots. No one else accepts it.
MMT-nuts would like their theory to be an accurate model of current financial reality, but they're wrong. The only interesting thing about those nutters is the zealotry of their faith.
Saint George Added Jul 20, 2017 - 4:08am
MMT-nuts would like their theory to be an accurate model of current financial reality, but they're wrong. The only interesting thing about those nutters is the zealotry of their faith.
Saint George Added Jul 20, 2017 - 4:39am
refute the accounting
<chortle!> The accounting is nothing but a tautology, no different from saying "A = A" or "2 = 2" or even "1+1=2". Those kinds of statements are true by definition — tautologically true — but irrelevant in answering real questions about economics and monetary theory. Tautologies cannot be "refuted" anymore than "A=A" can be refuted. So you clearly don't know what you're talking about. Obviously, in all that time you claimed to be "looking at monetary theory" you learned nothing.
Of course, if you want me to demonstrate how irrelevant accounting tautologies are to economics, and how they prove nothing that the MMT-nutters claim they prove, that's quite easily done. All you have to do is beg me in a nice way.
Bill Kamps Added Jul 20, 2017 - 9:28am
George, yes there is a big difference between city, state, personal and national debt.  One the personal side, the problem is slowly being fixed, whether it is good enough or fast enough is unclear.  Some states have serious problems because they have politicians worse than the ones in Washington.
Fortunately that is not the case in Texas, but we take the extra precaution  of only allowing our politicians to meet for 90 days every other year.  So there is  a limit to what they can do :)
Mini debt forgiveness's are happening. Credit card companies are allowing people to pay 30 cents on the dollar to get rid of a credit card.  People are finally waking up that student loans have risk to them and wont necessarily be easy to pay off, so more caution should be used in getting them.  We may well need government to step in, to help in that area, unclear if it will fix itself, but it is getting better.
I know the economy is not functioning evenly around the country.  However, I can say, that  in places I have been recently, Texas, Colorado, N&S Carolina, NYC, LA, I dont see a lot of signs of stress, in fact I see very pronounced signs of prosperity.  That doesnt mean we dont have practices that should be fixed.  But it does mean that we aren't on the  brink of disaster.
The world  economy, just like the world politics, always has the possibility to veer off into some danger zone, especially if no corrections are applied.  If we project dangerous practices linearly, they usually spell disaster.  Over the  years I have seen people come to their senses and do enough to prevent disaster when things get grim, but unfortunately they wait longer than I would like.   There is always  the risk they will wait too long, but so far the better bet is that we will avoid disaster someone.
That doesn't mean as individuals we shouldnt try to steer clear of the ever changing winds in the economy, we should, because we  dont know what Washington will do, and how it will affect us.
Mike Haluska Added Jul 20, 2017 - 10:57am
Bill K - please tell me your post dated  Jul 19, 2017 - 4:59pm  is satire.
Bill Kamps Added Jul 20, 2017 - 11:00am
Sarcasm at least :)
Saint George Added Jul 20, 2017 - 6:08pm
There's no one here named "Corey."
When Smith spends $2.00 on a candy bar from Jones, what Smith spent and what Jones received are necessarily equal in monetary value. There's nothing empirical about any of this; everyone's purchase is someone else's income, by definition.
And "by definition" means "it's a tautology."
Keynes's national income equation is nothing but one big tautology. He was a mathematics major in university (not an economics major) so I'm sure he understand that. If you don't understand it then you're not even in a position to argue your own case for MMT.
You're really just a religious zealot, in which the "Sovereign State" substitutes for "God", and "government spending / taxation" substitute for "religious services." The only difference is that traditional religions have tremendously enriched cultures, while MMTism (similar to old-fashioned "Chartalism") have debauched the currency and destroyed cultures.
Mike Haluska Added Jul 21, 2017 - 12:20pm
Keynes was offering a "least bad" solution for recovering from the Worldwide Depression - not an economic model for a healthy economy.
Saint George Added Jul 23, 2017 - 3:40am
Keynes believed in full employment and was anti-war.
Keynes had no Ph.D in economics and never held a tenured professorship in the field at any university. He was completely unqualified to state anything about the subject. That he "believed in full employment" and was "anti-war" might make him the world's first hippie, but it doesn't make him an economist.
Saint George Added Jul 23, 2017 - 9:50pm
Keynes believed in full employment and was anti-war.
Keynes had no Ph.D in economics and never held a tenured professorship in the field at any university. He was completely unqualified to state anything about the subject. That he "believed in full employment" and was "anti-war" might make him the world's first hippie, but it doesn't make him an economist.
Saint George Added Jul 23, 2017 - 11:30pm
Where did Keynes learn his economic theory?
He never really learned it at all.
He did, however, take one course at Cambridge while he was a student there, with Alfred Marshall.
George N Romey Added Jul 24, 2017 - 7:48am
Our situation today is very different from the 1930s although the results are the same-high unemployment and underemployment. The big difference is that today the government has found ways to misstate unemployment and underemployment is a much bigger problem.
Second, is the massive amount of debt not just in the US but worldwide.  What makes the debt so dangerous is that there is no real robust real economy.  Also all of the cheap money like before has led to asset bubbles.  Bubbles eventually pop.
Third, is the global interconnections of the financial system.  A failing of the already zombie Italian banks could spark a derivatives event in the US of more than $2 trillion.  Like AIG nearly ten years ago is the government going to come in on a white horse and again bail out the derivatives market?
We are well beyond anything that Kenyes, Friedman or Ryan could have ever imagined.  To those that think we are not near a global collapse you have not done your research.  At no time in mankind has the human population been standing on a pit of financial quicksand.  
Saint George Added Jul 25, 2017 - 3:20am
John Maynard Keynes never earned a Ph.D in economics; indeed, he had no Ph.D at all.
He secured no tenured professorship in economics at any university.
Therefore, he had no authority to opine on the subject at all.
The only impressive thing about him was his mustache. He had a fine, academically sound mustache.
Saint George Added Jul 26, 2017 - 9:07pm
John Maynard Keynes never earned a Ph.D in economics; indeed, he had no Ph.D at all.
He secured no tenured professorship in economics at any university.
Therefore, he had no authority to opine on the subject at all.
Keynes failed to predict the crash that led to the Great Depression (despite the fact that he himself had been heavily involved in the stock market) and those who followed in his footsteps — Paul Samuelson, for example — completely failed to predict the economic upturn immediately after WWII that led to full employment, high productivity, declining consumer prices, and a growing middle-class. Samuelson and other inflationist/Keynesians believed the U.S. needed another "New Deal" interventionist program in order to "absorb" all of those homecoming servicemen. Fortunately, they're crackpot advice was ignored.