2012 Federal Issues 

Office of the President
    No Choice
Supreme Court
    DOJ
Congress
California "Top Two" primary
Electoral College
Others

The Democrats and Republicans have the same position about war, the economy, health care, justice, environment . . . .     Obama is a good case in point, he is out Bushing the prior president.

In the 2012 2nd district Congressional race there are a number of Democrats saying things that the people want to hear, and they may even believe it themselves, but once in office they must follow their party line.  Even if they got elected without much or any help from their party, if they don't follow the party line they will be replaced by their party at the next election.  Those candidates who have accumulated many times the salary of a Congressman are trying to be a career politician and want to be reelected over and over so will follow their party line even if that means NOT following what they said in the campaign.

It's clear the people want single payer health care (and it's the only viable solution), yet the two front running Democrats are already saying they will support Obama Care rather than saying they will support Single Payer Health Care.  Many of the candidates say they will support Democrat or Republican Values and then mention Right to Choose or Gay Rights, i.e. their only "values" are these issues.  But as the two front runners have demonstrated they have no values when it comes to the big issues, they are good party members and will follow the party line.  This reminds me of the U.S.S.R in the 1960s.

The two parties vote on party lines, not because of PAC or SuperPAC money, but because of the higher dollar value support they get from their respective national committees.  This shows up in Congressional votes that block bills and nothing gets done.

Note that virtually all the money spent lobbying goes to the campaign committee for that Congressman, it does not go into his or her personal pocket.  The money is then used for TV spots, mailings, yard signs, etc. for the next election.  This means it will take a real grass roots movement (not the astro turf tea party) to make a real change.

For an independent to make a change it's not necessary to have a majority.  Instead only a few votes are required to give a whole new complexion to Congress.  A very small number of independent votes can make all the difference in getting a bill passed or blocked.  This forces both parties to come up with good bills and court the independent votes.

Constructing Public Opinion: How Politicians and the Media Misrepresent the Public a documentary by Media Education Fund (6 min YouTube, small format full length preview)
based on the book: Constructing Public Opinion: How Political Elites Do What They Like and Why We Seem to go Along With It by Justin Lewis (2001)

They also produced: Hijacking Catastrophe: 9/11, Fear & the Selling of American Empire (Wiki) (2004 DVD)

This is a MUST watch video interview.
PBS - Bill Moyers Journal - WEB EXCLUSIVE: Glenn Greenwald - Transcript
Salon.com - Glenn Greenwald - With Liberty and Justice for Some (Book)

The Democrats and Republicans are now to the far right and so the party names no longer have meaning.

Lefties by Mark Foire	The Young Turks -  Bill Maher: Democrats Are the New Republicans
Rachel Maddow - Goofy gun conspiracy surfaces in Congressional action

21 May 2012 - there seems to be a rash of "Values" press releases.  For example: Obama coming out for Gay marriage.  This is an example of the Democrats and Republicans making an issue of the one thing they differ on.  The media is lapping it up and NOT reporting on how the agree on: the defense budget, the economy, health care, the environment, justice, etc.

It turns out that while the constitution does not setup the two party system, the electoral college (Wiki) system does.  Because of this it's virtually impossible for a third party candidate to become president.  This is why in the 2016 primary the two anti establishment candidates, Sanders & Trump, are running inside the two party system.  So the idea behind naming this web page End 2 Party Government is really not workable.  A more correct approach would be reform 2 parties.
FEC: The Electoral College by William C. Kimberling, Deputy Director FEC Office of Election Administration, May 1992 - a history explaining the concerns and their solution.  The idea of the winner not having a majority vote was done on purpose to result in a president more able to govern more states rather than a population center.

The Scam Wall Street Learned From the Mafia by Matt Taibbi June 21, 2012 - bid rigging for municipal bonds.
Note: the insurance business is exempt from the Sherman Antitrust Act (Wiki) and so it's legal for them to do this.

Over the past 30 years the Constitution has been subverted and is no longer operational on many levels.  This is the number one thing that needs to be fixed.  Without it all the rest will be meaningless.  I think a Constitutional amendment is needed to get away from the corruption that Lawrence Lessig talks about (see his talk: Congress), although there a chance that election finance reform can be done on a state by state basis.  A possible answer is if many states enact election finance reform that limits campaign contributions so that they can only come from voters registered to vote for them and with a dollar limit on each of those.  That would eliminate contributions for people who were not voters, i.e. eliminate a dependency that is not to the people who vote.

Irrationality

TEDxMileHighSalon - Michael Huemer - The Irrationality of Politics
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Office of the President

No Choice in elections

For a number of decades there really was not a president to vote FOR, rather there was the choice between the lesser of two evils.  It seems the party in power (not really the man who is president) does something to cause the country to change political parties.  The problem is that both parties agree on the big issues the economy & war) so changing parties does not bring about the change the voters want to see.
2016 - Both Democrats and Republicans are fed up with the establishment and there's strong popular support for Bernie and Donald.  Bernie is popular with college students (maybe because they have considered his positions) and Donald is popular with many Republicans that are also tired of the establishment politicians.

Year Wiki	Winner	Looser	Issue
1960	Kennedy (D)	Nixon (R)	Kennedy offered hope, poor prior (R) economy
1964	Johnson (D)	Goldwater (R)	Kennedy was popular, no party change, Goldwater was seen as a war monger
1968	Nixon (R)	Humphrey (D)	Johnson's Vietnam policies unpopular, change party & anti New Deal (Wiki), (R) Southern Strategy (Wiki)
1972	Nixon (R)	McGovern (D)	good economy, relations with China improved, no party change
1976	Carter (D)	Ford (R)	Watergate Nixon quits, change party
1980	Reagan (R)	Carter (D)	economy in big trouble, Reganomics (Wiki),stagflation (Wiki) change party
1984	Reagan (R)	Mondale (D)	economy OK, no party change
1988	GHW Bush (R)	Dukakis (D)	economy struggling, no party change, Willie Horton negative TV ad (Wiki) &start of tough on crime
1992	B Clinton (D)	GHW Bush (R)	problem economy & taxes, change party	Clinton adapted Republican Financial ideas because the Republicans got money from business and they got none.  So the Democrats now get money from Wall St. and Republicans from other businesses.
1996	B Clinton (D)	Dole (R)	economy doing well,  no party change	See Bad Laws above
2000	GW Bush (R)	Gore (D)	Clinton sex scandal (Wiki), Supreme Court decision on Florida vote count (Wiki)
2004	GW Bush (R)	Kerry (D)	Post 9/11 (Wiki) no change in party even though the 2003 invasion of Iraq (Wiki) had no basis
2008	Obama (D)	McCain (R)	Bush very unpopular, the (R) over reaction to 9/11 caused a change in party.  Obama offered "change", but did not deliver.
2012	Obama (D)	Romney (R)	hope continues, but Obama has not delivered on most of his promises. Obama & Romney agree on war in debate No. 3 (YouTube)
2016	Sanders or Clinton (D)?	Trump (R)?	Sanders & Trump are both anti establishment & neither is endorsed by their political party.

The Office of the President has much more power than the Constitution allows.  In some cases this has happened by presidential directive and in others (like war powers) was given away by the Congress.  The Department of Justice (Wiki: DOJ) has become a branch of the White House (index0811.html#SEC) and no longer enforces the law.

The 2012 National Defense Authorization Act (Wiki) is just the latest example of the office of the president taking on powers that are in violation of the Constitution and international law.
Wiki: Hedges v. Obama - Challenge to the NDDA - YouTube interview with Chris Hedges - repeals the protection of the Posse Comitatus Act (Wiki)

Supreme Court

The Supreme Court (Wiki) has lost sight of fairness and needs to be over-ruled by Congress.  Note the U.S. Constitution (Wiki) defines the powers of the federal government: Congress (A1), the President (A2), the Courts (A3) and all powers not so defined are left to the States (A4).

Corporate Personhood

Voter Photo ID

Commerce Clause

Right to Privacy (Liberty)
Griswold v. Connecticut (Wiki) - establishes a right to privacy based on self-incrimination clause of the Fifth Amendment, the due process clause of the Fourteenth Amendment.  It was cited in Roe v. Wade (Wiki).  Also see: Justice Stevens and the so-called right to privacy

Eugenics

Buck v. Bell (Wiki) - a state statute permitting compulsory sterilization of the unfit, including the intellectually disabled, "for the protection and health of the state" did not violate the Due Process clause of the Fourteenth Amendment to the United States Constitution. The decision was largely seen as an endorsement of negative eugenics—the attempt to improve the human race by eliminating "defectives" from the gene pool.
The Supreme Court has never expressly overturned Buck v. Bell.

The epistemology of science put forward by Karl Popper (Wiki) contains the idea that incremental improvements are the key to progress.  So there needs to be a mechanism to unambiguously renounce bad decisions such as the ones above.

DOJ

The Department of Justice (Wiki) and the U.S. Attorney General (Wiki) are supposed to prosecute criminals.  But this is not longer the case for the top 1% and businesses.
In 2007 Alberto Gonzales (Wiki) supported the Bush43 administration rather than the constitution and eventually resigned.
In 2007 (after two interim AGs) Michael Mukasey (Wiki) continues to support Bush43 instead of the constitution.
In 2009 under Obama Eric Holder (Wiki) not only supports the continuation of the Bush43 polices, but the "Holder Memo" (DOJ) is used as the basis of stopping prosecution of Wall St. criminals.

With Liberty and Justice for Some: How the Law Is Used to Destroy Equality and Protect the Powerful 2012 by Glenn Greenwald - how the holder memo was used to protect Wall St, while people using small amounts of pot were sent to prison (not jail) for many years.
YouTube: Modern Money & Public Purpose 7: Financial Reform - about the criminal actions taken by Wall St. and how the DOJ stopped prosecutions.

Congress

There are two branches of Congress. 

The Senate where the members serve six year terms.  There are two Senators from each state.  The idea is to give each state an equal vote at the federal level. An interesting observation is that whenever I have contacted my Senators neither of them ever responded, except a recent answer from D. Feinstien saying she backed giving the NSA more power to spy on U.S. citizens.  Although she's clearly in the pocket of the people feeding her money, at least she is now aware that she can't continue to totally ignore those who can vote her out of office.

The House of Representatives was supposed to have one member for each 30,000 people, but when it grew to 435 members the Constitution was changed locking the number at 435.  Note:  If the population of the U.S. is about 300 million then we should have 10,000 Representative.  But as it is each Representative has about 700,000 voters in their district.  There's no way that they can represent such a large group of people.  Note:  Every 10 years when a new census comes out the 435 districts get redrawn.  In most states this is a chance for that state's legislature to gerrymander (Wiki) the boundaries so that the political party in power will get the most votes.

@Google: Lawrence Lessig: Republic, Lost: How Money Corrupts Congress

The Problem of Authoritarian Followers

Making Sex Normal: Debby Herbenick at TEDxBloomington

In the talk starting at 05:38 are U.S. maps showing Gonorrhea and HIV.  Notice that the authoritarian states have a much higher infection rate than other states.
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TED Toni Mac -The laws that sex workers really want - decriminalization, like has been done in New Zealand, is the best solution (Wiki).  The next step would be to use the employer of last resort by a sovereign government idea from MMT to offer a job to anyone who wanted one.

End War in all it's forms

Others

The Economy

The paragraph below on MMT came about after doing a lot of reading about the Global Minotaur which turns out to be a Greek myth (then and now).

Modern Monetary Theory (Wiki: MMT, Chartalism)

Prior to 1971 there was "classical economics" but after 1971 everything changed, but most people are still working on the old rules.  If you don't know how something works then it's hard to make predictions or fix a problem.  It's like a mechanic trained on a gas engine car trying to work on an electric car.  The economic policies of political parties are grounded in the old system and they can not "flip-flop" so have not adopted MMT yet.  But the time is coming when the failure of the old ideas to work as predicted will be clearly seen and a change will then occur.  For example the idea that the FED can influence "stability (aka: Inflation) or jobs is false, but a lot of people still think it's true.  Also the national debt is a good thing now, but is now seen as a bad thing.

Money based on gold and/or silver ended in 1971. Prior to 1968 they could be changed for silver, after than only into a Federal Reserve Note. "Silver Certificate (Wiki)  this certifies that there is on deposit in the treasury of the United States of America One Dollar" Note the Series (year) 1957 B on this case is not the year printed but rather related to the year the design was first introduced.  The newest $1 silver certificate is this one. The replacement Federal Reserve Notes now used are not redeemable for anything.  But they say "This note is legal tender for all debts public and private"

Scope
This is an idea that came about post 1971 (Wiki: Nixon Shock), so does not agree with prior economic theories that go back thousands of years.  The benefits of MMT apply only to sovereign governments where there are no constraints on the money (for example not on the gold standard) and the government is the issuer of the money (not a user like the members of the EMU) .  But MMT can also be used to get insight into economies where the benefits do not apply, such as the EU.  The U.S. federal government operates using MMT rules but elected officials don't understand that.  MMT does not apply to the EU (Wiki), states, cities or households.  The key concept is that when MMT applies the government can always pay for what it wants, i.e. it's checks never bounce.  There's never a solvency issue.

I see MMT as a new framework or point of view in understanding how the US (and other countries) economy works.  It is not a policy.  That's so say how someone uses the ideas of MMT depends on them.  For example the quantity (G-T) government spending minus government taxes can be changed many ways.  Bill Clinton (Wiki) made (G-T) negative, i.e. he paid down the national debt, which MMT teaches us means he sucked money out of the private sector, not a good thing in a healthy economy.  So how you raise or lower spending and/or taxes is a policy decision.  MMT allows you to predict the impact based on (G-T).

Recognizing that MMT is the correct way of seeing the US government financial situation does not mean that there will be more money to spend but rather it makes much more clear how fiscal and monetary policy work.

The mood of society today (2016) seems pessimistic.  For example the movie Requiem For The American Dream (IMDB, Netflix) reinforces the pessimism.  While American manufacturing output is at an all time high in terms of dollars, employment in the private sector is down about 30% from 20 years ago.  That's to say there are a lot (tens of millions) of people out of work.  It's clear that the private sector has traded jobs for profits and they will not be the source of new jobs any time soon.  None of the presidential candidates has presented a concrete program for job creation.  But MMT offers a lot of hope for job creation.

Reality vs. Policy

I've heard from some people that they "don't like MMT" because if the government "adopts" MMT they will end up just printing a huge amount of money.  This mistakes the reality of how our economy works with a policy decision.  It's not that the government should adopt MMT, but rather MMT explains how a policy will impact the economy.  MMT is a description of how the economy currently works.  For example the FED currently has: " three key objectives for monetary policy in the Federal Reserve Act: maximizing employment, stabilizing prices, and moderating long-term interest rates. (Wiki)".  But after 1971 monetary policy has no effect on jobs, hence after all the Quantitative Easing (Wiki: QE) there has been no impact on jobs because the rules have changed.  In fact the only thing the Fed can do is control the overnight interest rate.  It does not have any tools that will do anything else.  There is talk of just folding it into the Dept. of the Treasury since what it does now is an automatic function.

If you don't know how something works and you try to fix or modify it the results may not be what you expect.  For example if you believe that when your car is going down the freeway it makes a lot of exhaust, so if you pipe the exhaust back into the engine the car will run better, it will not work the way you expect.  A good understanding of how things really work is necessary in order to make changes that will work the way you expect.  The economic ideas prior to 1971 were sort of OK for their time, but now no longer describe how the system really works.

Key Years
1776 - There were two revolutions, one summarized in the Declaration of Independence (Wiki) and the other in the book Wealth of Nations by Adam Smith (Wiki), which is the basis of  capitalism.
1971 - Another major revolution happened, but very few people really understood the implications.  It wasn't until 1992 that Warren Mosler, the father of Modern Monetary Theory (MMT) had an epiphany in relation to the bond market in Italy where he understood better than the Italian government that they could never default on their bond payments because they were at that time a sovereign government with a floating currency.  That meant that they could always pay their bills.
1998 - Forecast of 2008 Global Financial Crisis (Wiki): Goldilocks and the Three Bears - the 3 bears are: Asian debt deflation, belief that economy was strong 1996 - 1997, Clinton budget surplus
1999 - Forecast of 2008 Global Financial Crisis: Can Goldilocks Survive? - "Goldilocks is doomed"  forecast the Global Financial Crisis and cites the Clinton budget surplus as the cause
2001 - Forecast 2009 European Union debt crisis (Wiki):Rites of Passage financial problems would happen in the European Monetary Union (see EU below) in the exact way that they transpired.
           YouTube talk: Warren Mosler, The Euro: past, present and future. The Crossroads Workshop 1 in Zurich  
2003 - Iraq War:  taxes were not raised to pay for the war, the government just wrote checks to pay for it
2003 - Convergence Going In, Divergence Coming Out Default Risk Premiums and the Prospects for Stabilization in the Eurozone - "Until something is done to enable member states to avert these financial constraints (e.g. political union and the establishment of a federal (EU) budget or the establishment of a new lending institution, designed to aid member states in pursuing a broad set of policy objectives), the prospects for stabilization in the Eurozone appear grim."
2007 The Long and Short of It at Goldman Sachs (Ben Stein was very wrong) - Jan Hatzius of Goldman Sacs forecasts trouble with home mortgages based on Wynne Godley's Sectoral balances.  This is some years after the 1998 & 1999 papers making the same case.  I'm looking for the paper by Jan Hatzius.
2008 - Alan Greenspan when asked if taxpayer money was used to bail out the banks he said not it was just keystrokes.

Key Idea
Governments operating under the MMT rules (see Scope above)  are the issuers of their currency.  They must spend money BEFORE then can collect it using taxes.  (see gold below for how it used to be) The current misconception that the federal government must tax in order to raise money so they can spend it on government programs was true prior to 1971, but that's no longer the case.  This is similar to a football stadium issuing tickets then collecting them, in both cases the issue comes before the collection.

Note that for a simple model of the economy where there is only the government sector and the private sector (i.e. assuming balanced imports and exports) any deficit in the government sector is balanced exactly to the penny with a private sector surplus.  This is an accounting identity, not a theory.  It's like looking at a transaction as if you are the government or the private sector.  So if the federal government balances the budget, or worse runs a surplus, the private sector is drained of money, that's not a good thing.  Since it's impossible for a government operating under the MMT scope to bounce a check there's no problem with a deficit.  In fact if the economy is healthy you would expect the federal deficit to grow.  That's to say the surplus in the private sector will grow.

Trade
After W.W.II the U.S. invested heavily in Germany and Japan rather than punishing them like Germany was punished after W.W.I.  Since W.W.II the US has imported many products from Germany and Japan, and more recently from China.  The countries whose products we import are getting paid in US dollars.  The reason we are importing these goods is because they appear to be a good deal to us and the sellers are happy to get US dollars in exchange.  There is some current worry about the amount of US bonds and Treasury bills held by China.  But China can not ask the US to cash in their bonds/bills in gold (see Scope above).  Their options are limited.  They can buy US products or exchange the US dollar denominated bonds/bills for some other currency at the existing exchange rate.  Note that a large currency exchange will have the effect of making the Chinese money stronger (which has been the desire of the US government for a long time) thus making Chinese imports more expensive and also making US exports to China, Germany and Japan more attractive to them.

Trade allows for world wide competition so a free market allows consumers to pay a lower price.  So economists say it's a good thing.  But, when US workers compete in a world wide market they loose their jobs.  So, while it's true that in an economic sense everyone is better off (in terms of being able to buy goods at lower prices) it comes at the expense of jobs that are permanently lost.

MMT offers a solution to the unemployment problem (see jobs below).  Classical economics offers no solution to unemployment.  That's to say classical economics has blood on it's hands in terms of human suffering.

I expect that in the future a larger percentage of the population will be permanently out of work.  The existing support structure for the unemployed is far from adequate and needs to be improved.

Tax Implications

Prior to 1971 the government did need to use federal taxes to fund their spending (see Gold below), but that's very different since 1971.

Since there is no need to collect taxes in order to spend, the policy of taxes can be seen in light of two ideas. 

First, if the federal government did not require anyone to pay them using US dollars then the currency probably would not have value.  So if somewhere the federal government requires a payment in US dollars then the US dollar has some value.  Because MMT is such a new idea no one has really determined what level of payments to the government are required, if any, to give the US dollar official value.  Prior to 1971 this was not an issue.

Second, taxes should be used for progressive purposes and to punish "evils" such as alcohol, tobacco or other things society wants to discourage.  So when the purpose of taxes is seen in this light, payroll taxes are a very bad idea.  They penalize employers, employees, drive jobs off shore and encourage replacing workers with automation.   So a very progressive income tax would stop the extreme compensation packages that C-suite executives now get.  Prior to 1980 the marginal rate was 80% now it's more like 15%.  In my opinion is should be 50.0%.  I choose half because if the rate goes over half then the taxpayer is encouraged to waste money on buying tax losses.  That's to say people do stupid things when they are dealing with losses rather than gains.

A really simple solution would be to eliminate all payroll taxes and provide all citizens Social Security (medical then retirement) benefits and eliminate all the current payroll taxes and record keeping and replace that with an annual W2 statement of taxable income that would determine the retirement benefit amount.  Note "medicare for all" greatly simplifies the current record keeping both for the government and for the vendor (doctor, hospital, employer...).  I expect this simple idea would save billions if not trillions of dollars in record keeping costs alone.  Currently every medical facility in the country has a staff of people whose only job is to match up the different insurance payment rules with the procedure the doctor recorded.  In a similar way employers have record keeping expenses that really are not needed if this simple idea was adopted.



National Debt
The interest on the national debt is seen as a problem, but again a government operating under the MMT Scope there's no need to raise money by borrowing (or taxing) in order to be able to spend it.  So no borrowing is needed "to fund the debt" the government just makes the payments it desires.

Fallacy of the Money Multiplier
When a bank makes a loan thus creating money (see Money based on debt below), contrary to the current idea that they are somehow restricted by the reserve requirement, in fact the bank borrows whatever reserve it needs during the next week's bank clearing cycle.  The problem of the bank lending only the principal amount (they do not lend the money needed to pay the interest) is solved because the other source of money is US government spending.  The idea of a money multiplier (Wiki) is not valid because the reserve ratio (percent of loans covered by reserves) is a false concept if the bank does not restrict loans based on reserves.  That's to say changing the reserve requirement does not change the multiplier.

Introduction

April 2016 -  read The Seven Frauds book (Ref) and have a bunch of MMT books on order.
Here's an introduction to the idea:
YouTube: L. Randall Wray -- MODERN MONEY: the way a sovereign currency "works" & there are a number of others by The Modern Money Network (YouTube).
Here are the pop quiz questions asked in the beginning of the video:
1. Just like a household, the government has to finance its spending out of its income or through borrowing. [ ]True  [ ]False
2. The role of taxes is to provide finance for government spending. [ ]True  [ ]False
3. The National Government borrows money from the private sector to finance the budget deficit. [ ]True  [ ]False
4. By running budget surpluses the government takes pressure off interest rates because more funds are then available for private sector investment projects. [ ]True  [ ]False
5. Persistent budget deficits will burden future generations with inflation and higher taxes.  [ ]True  [ ]False
6. Running budget surpluses now will help build up the funds necessary to cope with the aging population in the future. [ ]True  [ ]False
See answers below.

When the US left the gold standard (see Goldbelow) a profound change occurred.  Maybe because of the way Nixon made the change most people did not recognize the HUGE  implications.

Keynes recommends deficit government spending (Wiki: Fiscal Policy) when there's a recession as does MMT.  But a faster way would be to reduce taxes, for example have the U.S. Treasury (Wiki) pay both employer and employee FICA (Wiki) taxes.  The idea is that if the FICA taxes were eliminated the determination of Social Security benefits would be difficult, but with the Treasury paying the records would be as they are now.  Note that there's no problem funding Social Security (Wiki) since the U.S. is a sovereign country and our money is not constrained to gold or the euro.  Note that employment taxes hurt the economy, not what you what any tax to do, by penalizing employers, employees and drives jobs off shore and encourage automation.

But the idea that lowering interest rates (Wiki: Monetary Policy, Quantitative easing) will stimulate the economy is wrong "you can not push a string" (Wiki).  If a business has no customers they don't care what the interest rate is.  Getting out of a depression or recession requires fiscal policy adjustments.

A sovereign government (U.S., Japan, Turkey, &Etc. but not EU) puts money into circulation by spending.  Banks can also generate money but that's a small fraction of the total money.  The money has value because it's what's needed to pay taxes and other government fees.

The purpose of taxation is not to raise money but rather to control the economy.  The government funds whatever it wants to do directly.  For example to pay for a war the government just writes checks to it's suppliers.  There was not a tax increase to pay for the recent wars.  The old idea that taxes are needed to pay for government programs is just flat out wrong.

The government buys some goods and services and what's left the private sector can buy.  In a hot economy, where the government competes with the private sector for goods and services inflation results.

The standard of living for U.S. citizens depends on the sum total of goods and services provided in the U.S. plus what is imported less what is exported.  Imports improve the standard of living for those getting them.  When China (or anyone) exports to the U.S. they are paid in U.S. denominated currency (dollars).  They can use those dollars to by treasury bonds which is many believe is funding the U.S. deficit, but that's not the case.  Suppose they get mad at us what can they do: buy stuff in the U.S., get U.S. paper money to take back to China, exchange U.S. dollars into some other currency.  If the later that would cause the exchange rate between China and the U.S. to change making the dollar weaker and Chinese goods more expensive.  But the U.S. has been trying to get China to increase the value of their money for many years and if they changed their dollars to something else it would have that effect, i.e. making Chinese imports more expensive and U.S. products less expensive.

EU

MMT predicted the problem with the EU in 2001, see Key Years above.
When the EU (Wiki) was setup the European Central Bank (Wiki) was setup to maintain price stability.  But in times of recession the central bank needs to pump money into the economy, but the ECB does not have this power (limited to 3% of GDP) and the member countries in the EU do not have that power.  The problems will continue until there's a way to deficit spend money into circulation.  The IMF (Wiki) was founded at the Bretton Woods conference and was intended to work along side a gold standard, the Marshall Plan and other economics of the 1945 time frame, not the post 1971 non gold standard times.  It appears that the IMF is causing much more harm than good and needs to be shut down or totally revamped to take into account MMT.

Note the ECB only has monetary policy tools (Wiki), it does not have fiscal policy tools.  MMT (or Keynes) tells us that fiscal policy is needed it time of a debt crisis (Wiki) but the EMU has no fiscal policy tools.

The Stability Growth Pacts (Wiki) limit the debt of an EU member government so they can not use fiscal policy to recover from a recession.  The 2005 reform still kept the ceilings of 3% for budget deficit and 60% for public debt were maintained.

MMT References

Warren Mosler (Wiki, Mosler Economics, YouTube: Modern Money Network, Amazon, Facebook)

Soft Currency Economics II: The Origin of Modern Monetary Theory (MMT - Modern Monetary Theory) (Volume 1) 2013 by Warren Mosler - on order

The 7 Deadly Innocent Frauds of Economic Policy 2010 by Warren Mosler (free pdf version, Video) He's the father of MMT.

Is the Ryan Budget the Next Bachmann Budget? 2012 by Warren Mosler -

The Certainty of Debt and Taxes - The Fiscal Cliff Burden of Proof 2012 by Warren Mosler -

Demand Leakages: The 800lb Economist in the Room 2012 by Warren Mosler -

YouTube: Warren Mosler, Issuers vs Users of a Currency 2012 by Warren Mosler (5:28) - with inserted video clips of Bernanke and Greenspan (Recommended short video)

Italy Then and Now.pdf 2012 by Warren Mosler - how joining the EMU caused a lot of problems for them. "The euro zone is in 'Ponzi' until the ECB writes the check"

Rites of Passage 2001 by Warren Mosler predicting the problems now facing the Euro - "The market’s arrows will inflict an initially narrow liquidity crisis, which will immediately infect and rapidly arrest the entire euro payments system."

Modern Monetary Theory.pdf - a Primer on the Operational Realities of the Monetary System by Scott Fullwiler (posted on Warren's web page) -

L. Randall Wray (Wiki, Amazon, UofKS, Levy Economics Institute of Bard College, Vimeo)

Understanding Modern Money:The Key to Full Employment and Price Stability 2006 by L. Randall Wray (free KindleUnlimited version)

MMT, The Euro and The Greatest Prediction of the Last 20 Years (free html) based on a 1992 article by L. Randall Wray - predictions of MMT

Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems 2^nd Ed - 2012, 2015, L. Randall Wray, Palgrave MacMillian, ISBN 978-1-137-53990-8  (see on line as MMT Primer, including responses to readers comments)

pg 131; "A government that operates with a nonsovereign currency, using a foreign currency or a domestic currency convertible to foreign currency (or to precious metal at a fixed exchange rate) faces solvency risk.  However, a government that spends using its own floating and nonconvertible currency cannot be forced into default. ...  This is why a country like Japan can run government debt-to-GDP ratios that are more than twice as high as the "high debt" Euro nations (the "PIIGS": Portugal, Ireland, Italy, Greece and Spain) while still enjoying extremely low interest rates on sovereign debt."

pg 141: "Ideally, it is best if tax revenue moves counter cyclically - increasing in expansion and falling in recession.  That helps to make government's net contribution to the economy counter-cyclical, which helps to stabilize demand."

Why Minsky Matters: An Introduction to the Work of a Maverick Economist – November 3, 2015, by L. Randall Wray - looks good on the free Amazon preview - goes into why classical economists did not see the GFC coming, but Minsky did. Cites The Financial Crisis Inquiry Report (Commission) listing the causes (see Commodity Futures Modernization Act of 2000 bad laws above).

"...Minsky argued that the internal dynamics of our modern economy are not equilibrium-seeking.  There's no invisible hand operating that way.  Furthermore, if we ever did achieve the mainstream's beloved "equilibrium," those internal dynamics would push us away - the system is not stable."

"...- offered an alternative to the Kennedy-Johnson orthodox Keynesian-based War on Poverty.  From the beginning, Minsky argued that this "war" would fail because it did not contain a job creation component.  For Minsky, the solution to most poverty is to eliminate involuntary unemployment. . . . Minsky believed that maintenance of full employment and reduction of poverty and inequality were essential to promoting financial and economic stability."

"The stagflation of the late 1970s ended the great debate between "Keynesians" and "monetarists" in favor of Milton Friedman's rules.  This is because the Keynesians had no answer to a problem of high inflation and high unemployment at the same time - policy should stimulate demand to fight unemployment but should slow demand to fight inflation.  They had no answer to stagflation (Wiki).  Policy adapted the monetarist recommendation of focusing on controlling money growth by sticking to a rule.

Yet, monetarism itself suffered a defeat in the early 1980s when the Fed under Charmian Volcker tried to hit money growth targets (in line with Friedman's prescription) but repeatedly failed to hit them.  So not only did "Keynesian" theory and policy fall out of favor, but monetarism also lost sway.

This then set the stage for the rise of a succession of increasingly radical theories rooted in the pre-Keynesian thought - most notably the rational expectations-new classical economics of Robert Lucas (Wiki) and the real business cycle theory of Charles Plosser (Wiki) and others."

Labor and the War Against Poverty by Hyman Minsky April 19-20, 1965 (before the Nixon Shock) - The Johnson-Kennedy plan will fail because there's no provision for job creation.  In the section titled "Cross of Gold" (pg 11) he points out the problem of the interest rate being set to maintain the fixed exchange rate translates into unemployment.

"There is nothing wrong with a 6 per cent interest rate, at a 1-1/2 per cent unemployment rate.  There is something wrong with high interest rates at a 5 per cent unemployment rate.  We want an economy with so much steam in it that you have to hold it back by tight money, but you don't want to hold back an economy with a lot of slack in it.  That is what we've been doing."

"The elimination of the barrier to expanding aggregate demand due to the international monetary system is simple: get rid of the gold standard."

Securitization by Hyman P. Minsky 1987 with Preface & afterword by L. Randall Wray -

Vimeo - 2016 - The Radical Imagination: Imagining Economics in an Age of Stein, Clinton, Trump or Johnson -
              2015 Lyons Lecture: What is Wrong With the Euro? - MMT has long argued that the EMU was designed to fail.  This is not a Greek problem.  It is not an Irish problem.  It is not an Italian problem.  It is a Euro problem - and the inevitable crisis could have been foreseen (indeed was foreseen) even before the launch of the new currency.  
Barter story (no evidence)- Goldsmith-Bank story (no evidence).  Alternate idea historical artifacts that appear to be stones, bones,  with scratches, then tokens that can be pressed into clay tablets (invention of writing) used for monetary contracts. Money came before writing.  Money invented to keep accounts not for exchange.  Crown spending and tax collection used up to 1830, it was not gold coins.  Because of the existence of writing for the past 4,000 years we know that the barter story is not true.  "Can not have a European Fiscal Union, only a Monetary Union because of mistrust, but both are needed, like in the U.S." (about 1:10:00)

YouTube: L. Randall Wray - Modern Money Theory: Intellectual Origins and Policy Implications - summary below:

Theoretical basis of MMT:
Georg Friedrich Knapp (Wiki) - The State Theory of Money 1905 - money must have no intrinsic value and strictly be used as governmentally-issued token, i.e., fiat money.
Abba P. Lerner (Wiki) - Functional Finance 1943 (Wiki) - government should finance itself to meet explicit goals, such as taming the business cycle, achieving full employment, ensuring growth, and low inflation.
Beardsley Ruml (Wiki) - Taxes for revenue are obsolete (free pdf)  1946 - We learned from W.W. II that taxes do not fund spending.
Hyman Minsky (Wiki) - Financial Instability Hypothesis (Wiki) - "Stability is destabilizing". 3 types of borrowers: hedge borrowers, speculative borrowers & Ponzi borrowers.  People are momentum investors by nature, not value investors.
Alan Greenspan (Wiki) - the Greenspan put (Wiki):supposedly eliminated risk in the financial markets, but, according to Minsky, that increased risk.  "Matt Taibbi described the Greenspan put and its bad consequences saying: "every time the banks blew up a speculative bubble, they could go back to the Fed and borrow money at zero or one or two percent, and then start the game all over", thereby making it "almost impossible" for the banks to lose money. He also called Greenspan a "classic con man" who, through political savvy, "flattered and bullshitted his way up the Matterhorn of American power and...jacked himself off to the attention of Wall Street for 20 consecutive years".
Ben Bernanke (Wiki) - The Great Moderation (Wiki) aided by the Taylor Principle (Wiki) - The pronouncement of a new stability caused instability.
Employer of last resort (Wiki) - the government offers jobs to anyone who wants one

On Taxes (goal is to drive the money, change behavior and be progressive):
Duping Dopes will not work - BitCoin will not succeed since that's their model
Taxing work is bad idea (Wiki: Payroll Tax, FICA) - regressive, discourages work, discourages employing people, favors moving jobs outside America, favors replacing people with robots
Taxing corporations is a bad tax: drives them out of America, encourages cutting deals
The Income tax: he's neutral
Likes taxing bads: alcohol, tobacco, pollution, financial transactions,
A Hut tax based on cubic feet of your house (eco friendly).
Inheritance tax to stop family fortunes he likes.

Movie: Boom Bust Boom (IMDB, Netflix, Trailer) - Randall Wray is one of the people interviewed & and some attention to Hyman Minsky (Wiki).

Levy Institute

The War On Poverty after 40 years, A Minskyuan Assessment, No. 78, 2004 (pdf) - "the real flaw in the WOP was that it lacked job-creation initiatives of the type developed by President Roosevelt during the Great Depression."..."Instead of providing th impoverished with an opportunity to work, it provided them with the opportunity to learn how to work."...“policy weapons which are sufficient to move aneconomy from slack to full employment are not sufficient to sustain full employment” ...
"Minsky’s fundamental argument is simple:
(1) poverty is largely an employment problem;
(2) tight full employment improves income at the bottom of the wage spectrum; and
(3) a program of direct job creation is necessary to sustain tight full employment. Thus, he argued that a program of direct job creation was “a necessary ingredient of any war against poverty” (Minsky 1965, p. 175).
As Minsky put it: “The New Deal, with its WPA, NYA, and CCC, took workers as they were and generated jobs for them....The resurrection ofWPA and allied projects should be a major weapon of the War on Poverty” (1965, p. 195).


Improving Governance of the Government Safety Net in Financial Crisis, 2012(pdf)  -

Chapter 2. Summary of the Causes of the Global Financial Crisis: A Minskyan View - ZZZZZ

Frank Newman (Wiki, Amazon, )

Six Myths that Hold Back America: And What America Can Learn from the Growth of China's Economy 2011 by Frank Newman - on order

Freedom from National Debt – May 2, 2013 by Frank Newman - on order

 Vimeo (2012, Suny Global Center): “Six Myths That Hold Back America- and What America Can Learn From the Growth of China’s Economy” - (1:20:26) Frank Newman (Title is book title)
The six myths:
1. Asian nations are bankrolling the U.S.
2. Treasuries "crowd out" financing for the private sector.
3. If everyone tries to save more, the nation will save more, and Investment, GDP, and employment will increase.
4. If the deficit is reduced, then national Saving and Investment will increase.
5. Deficits create great burdens of repayment and taxes for our children.
6. If the U.S. does not get its fiscal deficit reduced soon, U.S. Treasuries will face the same problems as bonds of Greece and Ireland.

Mathew Forstater (Wiki, UMKC Pubs)

Little Book of Big Ideas: Economics 2007 by Mathew Forstater - 2 pages for each about 5 dozen economists

Wynne Godley  (Wiki, Amazon, ) - WIki: Sectoral balances - Federal Reserve Economic Database (Wiki: FRED: MBST, ) -

The Observer Aug 31, 1997: Curried Emu - the meal that fails to nourish by Wynne Goodley -

London Review: Maastricht and All That Oct 1992 by Wynne Godley - "The central idea of the Maastricht Treaty (1991 Wiki) is that the EC countries should move towards an economic and monetary union, with a single currency managed by an independent central bank. But how is the rest of economic policy to be run?"

Michael Hudson (Wiki, Amazon, YouTube,

  Super Imperialism: The Economic Strategy of American Empire by Michael Hudson 1972 - may be the first book to describe American Dollar Hegemony (Wiki: Dollar hegemony)

Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy by Michael Hudson (Wiki: )2015 - looks very interesting
Episode #91.2 // Michael Hudson on Killing the Host - 1 hour audio interview based on the book
Government Debt and Deficits Are Not the Problem. Private Debt Is. - 2013 paper
The Economic Crisis & Crisis Theory II 2014 - includes a video Alan Freeman Consumption, Profit and Finance: why can't the left get it right? (0:00 to 21:45), Andrew Kliman Were Corporations--or Corporate Executives--Really Hogging a Bigger Share of the Income Workers Produce? No. (23:00 to 45:35), Michael Hudson The New Austerity: Feeding the FIRE sector overhead (46:45 to 1:50:00), Q&A (1:50:30 to end)
Banks through out history, even when Marx was writing, only lent money to already existing products, not to industry or business.
Michael Hudson, Financial Parasites, Left Forum 2014 Excerpts- Parasite different than Vampire Squid - an excellent 30 minute explanation of his idea
Michael Hudson: Money & Debt 2012 - historical overview and how canceling debts makes sense.
MMT vs. Austrian School Debate 2013 - Warren Mosler (Wiki, Amazon, home page) for MMT (Wiki) - The Austrian ideas work with fixed exchange rates, but not when rates float, so after 1971 no longer works.  In today's floating rate world MMT describes how things work.

Bill Mitchell (Wiki, Amazon, YouTube, Web Page, Newcastle, blog)

Excellent Intro to MMT: YouTube - Bill Mitchell: Demystifying Modern Monetary Theory - Bill coined the name MMT.  Weimar Republic (Wiki) and Zimbabwe (Wiki) inflation explained, employer of last resort background

YouTube: Reframing the Debate: Economics for a Progressive Politics Q&A, London - Merge central bank with treasury, (0:17:59) do away with debt management agencies "Public debt is just corporate welfare".

There's a problem with merging the central bank into Treasury in that the treasury is controlled by politicians and without a well functioning government (which we don't have in the US) there will be runaway spending.

YouTube - Professor Bill Mitchell - The Government Chooses the Unemployment Rate -
YouTube - Professor Bill Mitchell - The need for full employment -
YouTube - Professor William Mitchell - Fiscal Myths -
Billy Blog: Modern monetary theory and inflation – Part 1 -
Billy Blog: The dreaded NAIRU is still about! - Non-Accelerating Inflation Rate of Unemployment (Wiki) is a false idea.
Billy Blog: The Great Moderation myth - (Wiki) - Bernanke should quit or be sacked -

Scott Fullwiler (Wiki, Wartburg College, YouTube, Amazon)

New Economic Perspectives - papers - Modern Money Theory: A Response to Critics - 

Stephanie Kelton (her home page, New Economic Perspectives, Wiki, Levy Economics Institute of Bard College, YouTube)

Forbes: Watch Out, MMT's About, As Bernie Sanders Hires Stephanie Kelton - Jan 2015: Bernie Sanders has appointed Stephanie as chief economic adviser for the Senate Budget committee's Democratic minority (Wiki).

YouTube: Stephanie Kelton -The Angry Birds Approach to Understanding Deficits in the Modern Economy - 2014 - video clips saying the national debt is a problem (including Cenk and Bernie).
"Capitalism Runs on Sales - Spending creates Income - income creates sales - sales create jobs"
Republicans say, We have a spending problem!"; Democrats say, "We have a revenue problem!" - both lead to fewer jobs
Calming Fact: "As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government cannever become insolvent, i.e. unable to pay its bills.  In this sense, the government is not dependent of credit markets to remain operational.  Moreover, there will always be a market for U.S. government debt at home because the U.S. government has the only means of creating risk-free dollar-denominated assets." St. Louis Federal Reserve.
"[A] government cannot become insolvent with respect to obligations in its own currency.  A fiat money system, like the ones we have today, can produce such claims without limit". Alan Greenspan 1997 congressional testimony

(50:33) "Every single time that the federal government's deficit gets too small, which here gets to be below it's average of 3.1%, we've had a recession.  Every single time."


Bernie Sanders & reform of the Federal Reserve
October 20, 2011: Top Economists to Advise Sanders on Fed Reform - Joseph Stiglitz (Wiki, Amazon), Jeffrey Sachs (Wiki, Amazon), Robert Reich (Wiki, Amazon, TPP), James K. Galbraith (Wiki, Amazon), Lawrence Mishel (Wiki, Amazon),  William K. Black (Wiki, Amazon), Nomi Prins (Wiki, Amazon), William Greider (Wiki, Amazon), Jane D'Arista (Wiki, Amazon), Tim Canova (Wiki, Amazon), Robert Johnson (Wiki, Amazon), Dean Baker (Wiki, Amazon, TPP@13:25), Gerald Epstein (Wiki, Amazon), Robert D. Auerbach (Wiki, Amazon), Roger Hickey (Wiki, Amazon), Robert L. Borosage (Wiki, Amazon), Robert Pollin (Wiki, Amazon), L. Randall Wray (see above), Stephanie Kelton (see above).

YouTube: Minsky, Inequality, and the Monetary:Fiscal Policy Outlook, S4, April 2016 (Slides as pdf, Scott's slides.pdf) - about her time in Washington DC, CBO,

Wynne Godley (Wiki,

 Sectoral balances (Wiki) simplified version:  [Public/Government] + [Private] + [Foreign] = 0
This means when the US government runs a deficit then there is a surplus in the private and foreign sectors.
"According to the sectoral balances approach, austerity can be counterproductive in a downturn due to a significant private-sector financial surplus, in which consumer savings is not fully invested by businesses."

Other MMT References

American Affairs Jan 1946 V VIII, No. 1 - Taxes for Revenue Are Obsolete (pdf), Beardsley Ruml, Chairman of the Federal Reserve Bank of New York - The experience of W.W.II showed that the U.S. could pay for the war without raising the needed revenue from taxes.

"Taxation is one of the limitations placed by government on the power of business to do what it pleases.  There is nothing reprehensible about this procedure.  The business that is taxes is not a creature of flesh and blood , it is not a citizen."
"The necessity for a government to tax in order to maintain both its independence and its solvency is true for state and local governments, but it is not true for a national government.  Two changes of the greatest consequence have occurred in the last twenty -five years (since 1921) which have substantially altered the position of the national state with respect to the financing of its current requirements.  The first of these changes is the gaining of vast new experience n the management of central banks.  The second change is the elimination, for domestic purposes, of the convertibility of the currency into gold."
Purposes of taxation:
1. instrument of fiscal policy, i.e. price stability (goal: stable purchasing power)
2. public policy, i.e. progressive income and estate taxes (goal: wealth & income equality)
3. public policy, i.e. subsidizing or penalizing industries or economic groups
4. isolate and asses directly the costs of certain national benefits, such as highways ande social security
Taxing corporations is a Bad Tax.

Journal of Finance Aug 1946: Tax policies for Prosperity (pdf) by Beardsley Ruml - behind a pay wall

"Briefly the idea behind out tax policy should be this:  that our taxes should be high enough to protect the stability of our currency, and no higher...Now it follows from this principle that our tax rates can and should be lowered o the point where the federal budget will be balanced at what we would consider a satisfactory level of high employment."

Since countries differ in their export/import balance the above gets modified by MMT to be:
(from the MMT primer by Wray) "Tax rates should be set so that the government's budgetary outcome (whether in deficit, balanced, or in surplus) is consistent with full employment.

Reuters: Japan's government could run out of cash by October 2012 - can not happen according to MMT and did not happen.

Levy Economics Institute - MMT Papers - Working paper 778 Modern Money Theory 101: A Reply to Critics 2013 (free pdf)

High Powered Money (Wiki) is mentioned in the paper and I didn't recognize the term and the Wiki page was less than helpful.  Warren Mosler has this to say:
"That's just cash plus dollars held by member banks in the reserve accounts at the Fed.  It was called high powered money because it was convertible into gold before 1934.  Randy (Wray) still uses it because his professor's initials were HPM (Hyman P. Minsky)."

Regarding the large upturn in HPM since 2007 (Wiki plot) L. Randall Wray says:

In any case what happened was that the Fed got confused and thought that QE would stimulate something. Exactly what, we do not know.
Fed also started paying interest on reserves--which makes them equivalent to bills. So think of the $4T of reserves as bills paying low interest.
That was the kink in the curve you saw. You could just as well exchange the reserves for bills and then the kink goes away.

Three UMKC Professors Among The Nine Who Predicted Eurozone Crisis -  and confirm that there was no profit recycling mechanism as Yanis says.

New Economic Perspectives -

Center for Full Employment and Price Stability -

Centre of Full Employment and Equity -

email sent to Dan Kedmey 7/20/2016 about a TED ideas article related to Yanis and a Time magazine article about the possible US default and China.

Hi Dan Kedmey:: I saw your article http://ideas.ted.com/what-should-the-future-of-capitalism-look-like/ And want to point out that Yanis describes what happened to the economy after 1971 as "The Global Minotaur".   He is a very charismatic speaker and so I read his book, then a book on Volcker including communicating with the author and can not find any plan by Volcker for American hegemony.  My research into The Global Minotaur is at: http://www.end2partygovernment.com/2012Issues.html#Global_Minotaur I then discovered Modern Monetary Theory (MMT) which offers a good explanation of what happened after 1971.  I believe that Yanis used Greek mythology because he didn't really understand what happened. I see you have written a Time article: http://world.time.com/2013/10/09/china-to-united-states-dont-default-for-our-sake/?iid=sr-link8 That's about a possible default by the U.S.  According to MMT this can not happen because the U.S. is a sovereign country with a floating currency exchange rate so can never bounce a check.  See the books by Frank Newman for more on the  U.S. dollar and China. For me the fact that MMT predicted the problems with the Euro in exactly the way they have happened and also predicted the Global Financial Crisis (one of the key factors was the problem created by the Clinton budget surplus) makes me a believer in MMT.  Here's some research on MMT you may want to study: http://www.end2partygovernment.com/2012Issues.html#MMT Please let me know you received this. PS Most thinking on the economy is based on how it worked up until 1971.  So there's about 4,000 years of thought than no longer is applicable.  This may explain why so many people keep thinking the old way.  If  you don't know how something works it pretty much impossible to predict it's behavior or make make "improvements" to it's operation. Have Fun, Brooke Clarke brooke@..........

Gold Standard (Wiki)

Definitions

 "gold standard" means that you could turn in a dollar and get gold in return.  You can use gold in payment of debts.  Spanish gold coins could be used in payment or melted down and recast as U.S. gold coins.
"fixed exchange rate, or pegged" gold sells for a fixed dollar amount.  But gold is no longer legal tender for debts public or private.

Coinage Act of 1792 (Wiki) - An act establishing a mint, and regulating the Coins of the United States.  The coins contained either gold ($10, $5, $2.50) silver ($1, 50¢, 25¢, 10¢, 5¢) or copper (1¢, half¢) of a specified purity and weight (Wiki).
There were a number of following Coinage acts, but this one tied gold and silver to money.

The Gold Reserve Act of 1934 (Wiki) Took the US off the gold standard and fixed the price of gold at $35/oz.  "...outlawed most private possession of gold.  The act also changed the nominal price of gold from $20.67 (price paid to people turning in gold) per troy ounce to $35 (the dollar is pegged to gold, not floating). This price change incentivized foreign investors to export their gold to the United States, while simultaneously devaluing the U.S. dollar in an attempt to spark inflation. The increase in gold reserves due to the price change as well as the confiscation clause resulted in a large accumulation of gold in the Federal Reserve and U.S. Treasury. The increase in the money supply lowered real interest rates which increased investment in durable goods."  This removed the "gold standard" and left the value of gold at $35 per ounce which was maintained until 1971.

For about 200 years (1792 to 1971) U.S. currency was tied to gold and/or silver.  Before 1971 the folding money in my wallet said Silver Certificate (Wiki) on the front (see photo above).  I could take it to the mint in San Fransisco (or any other US Mint) and get either silver dollars or silver ingots in exchange.  Prior to 1971 the measures of the money supply like M0, M1, M2 &Etc (Wiki) were important because the amount of money was limited by the gold and/or silver reserves held by the US government.  If the government ran a large deficit while the dollar was pegged to gold/silver there might be a problem if everyone turned in their currency and asked for silver.  So, back then, the government needed to use taxes to raise money in order to fund government programs because they could not just print more money.  So governments at all levels (federal, state and local) used taxes to raise money to fund their programs.  Prior to 1971 this was the correct way to think about government funding of programs, but not after 1971.

[side bar:  in 1946 Beardsley Ruml, Chairman of the Federal Reserve Bank of New York wrote a couple of articles pointing out that the US had paid for W.W.II without raising the money by taxation, see link above).]

The Federal Reserve System (Wiki) was created by the Federal Reserve Act of 1913 (Wiki) (Public Law 63-43, 63^rd Congress, HR 7837) section 14(a). Open Market Operations: "To deal in gold coin and bullion at home or abroad, to make loans thereon, exchange Federal reserve notes for gold, gold coin, or gold certificates, and to contract for loans of gold coin or bullion, giving therefor, when necessary, acceptable security, including the hypothecation of United States bonds or other securities which Federal reserve banks are authorized to hold:  (b)..."  The current version of has the same paragraph 14a. BUT. . .  in 1971 gold was decoupled from our currency so the Fed no longer can do anything with gold (see Nixon's implemented policies below).

1971 (Wiki: Nixon Shock):  264 - Address to the Nation Outlining a New Economic Policy: "The Challenge of Peace." August 15, 1971 9 pm - Implemented:

1. repeal excise tax on automobiles,
2. speed up the personal income tax exemptions,
3. a $4.7 billion cut in Federal spending,
4. Tax cuts to stimulate employment must be matched by spending cuts to restrain inflation. To check the rise in the cost of Government, I have ordered a postponement of pay raises and a 5 percent cut in Government personnel,
5. a 10 percent cut in foreign economic aid,
6. Investment tax credit,
7. a freeze on all prices and wages throughout the United States
8. suspend temporarily the convertibility of the dollar into gold or other reserve assets (Doublespeak (Wiki):the word "temporarily" in this case means "forever")
   

I remember this.  The big thing was the freeze on wages and prices.  The company were I worked (Aertech) liked the investment tax credit.  The other things like the "temporary" suspension of convertibility of the dollar for gold was, as Nixon said, "very technical--what does it mean for you? " and had little impact on anyone except for Bob B. who panned gold on his vacations and prior to 1971 was not allowed to smelt  (Wiki) the gold dust into solid gold.

Note that neither Nixon nor his financial advisers understood the impact of decoupling the dollar from gold/silver and allowing the currency to float.  For example:
Item 3 & 4 he is cutting taxes (T) and cutting spending (G) so G and T both go down.  MMT tells us that to create jobs G-T needs to go up, so the tax cut was a good thing but the spending cut was wrong.  Note it would have been correct with a fixed price of gold because all levels of government needed to raise money for spending by collecting taxes.  Nixon used the pre 1971 rules for the period after 1971 because no one understood the implications of the change.

Note that everything about this announcement seems designed to obfuscate its true meaning.  By making the decoupling of the dollar and gold the last of a bunch of items and using the word "temporarily" he did about everything possible to not draw attention to this change that would have implications for the world and also to discourage economists from figuring out the implications.   What's the point of doing a lot of theoretical work when the suspension is "temporary"?

From the late 1800s on schools have been teaching economics based on a gold/silver backed dollar.  Even though that changed in 1971 they continue to teach the outdated ideas.  So even today the school economics curriculum pretty much everywhere is still teaching the same outdated ideas.

The Global Minotaur (This is the real problem instead it looks like not understanding MMT: see MMT above, i.e. the Minotaur is a myth.)

TED talk: Yanis Varoufakis capitalism will eat democracy unless we speak up - how the recycling systems used since W.W.II that used profits to reduce debts has now failed and currently we are accumulating both debt and cash with no mechanism for them to get together.

Feb 2016 - If, as Yanis Varoufakis (Wiki) says, Greece is the canary in the coal mine (Wiki) then we need to really understand what's going on.  He says there are two indications of the problem.
1. A growing mountain of debt caused by borrowing.
2. A growing mountain of cash caused by it not being used productively to reduce the mountain of debt.

Is Finance Fit To Purpose? 14 April 2016 - A quick overview of Yanis idea.

Profit Recycling by Gold Standard
If a country maintained it's money supply based on it's gold reserves then the exchange rate between countries would change if either of them changed it's money supply.  Suppose that, like after W.W. II the U.S. starts to buy more from Japan than it exports to Japan (a negative trade balance).  The U.S. ships gold to Japan in exchange for cameras, cars, TVs &Etc.  Then the exchange rate will change making those things more expensive and making U.S. goods look cheaper to the Japanese.  This happened and Japan went on a buying spree in the U.S. acquiring a lot of real estate among other things.  This also happened with Europe and Germany in particular.  The U.S. bought a lot of Volkswagen and Merecedes Benz cars, Hasselblad cameras, machine tools, &Etc.  By 1971 Europe was expecting the U.S. to ship billions of dollars worth of gold to them and Nixon turned off the gold standard.

Marshal Plan
During (and for some time after) W.W.II the U.S. accumulated a lot of gold as a result of a trade surplus.  At the Bretton Woods Conference (Wiki) in April 1944 the Marshal Plan (Wiki) was a way that the U.S. recycled it's trade surplus to strengthen Japan and Germany (the offer made to the U.S.S.R. was rejected).  This essentially sent U.S. dollars to Germany and Japan and allowed them to buy U.S. products.  So from the end of W.W.II until 1971 when the U.S. left the gold standard (Wiki: Gold Standard, Nixon Shock) the U.S. sent it's excess trade balance to other countries.  This allowed them to buy U.S. products.  PS The CIA actions in South American politics (1944 to 1971) is related to the U.S. Global Plan for Japan in protecting it's raw material suppliers.

Paul Volcker (Wiki) & American hegemony i.e. the Global Minotaur
When the Gold Standard ended so did the Bretton Woods System (Wiki) since the gold standard was part of it's construction and the U.S. was no longer running a trade surplus (we were buying a lot of products from Germany and Japan), but those countries (and most other countries) sent their money to Wall Street (the U.S. dollar was the strongest currency in the world).  So between 1971 and 2008 what Yanis Varoufakis calls the Global Minotaur served the same purpose as the Marshal Plan except instead of recycling a U.S. trade surplus it recycled the trade surplus of other countries.  In an attempt to reign in Wall Street congress passed Dodd-Frank (see good laws above) which included the Volcker Rule, but as of 2016 Wall Street is fighting it tooth and nail and it's not yet been implemented.
YouTube - Ron Paul Questions Paul Volcker During Joint Economic Committee 02 26 200 - Since 1971 (the end of Bretton Woods the stability of fiat currency (Wiki) needs to be better
On order: Volcker: The Triumph of Persistence Hardcover – 2012 by William L. Silber 
Noam Chomsky portrays hegemony (Wiki) as a bad thing, but that was not always the U.S. goal.  Recently the U.S. has lost sight of the good it could do.
YouTube - Is the Human Species Doomed? Noam Chomsky on Hegemony or Survival  2004 talk promoting his book

But as the post 1929 financial crash laws were repealed between 1965 and 2007 (see: Bad Laws) the banks were allowed to gamble with depositors money.  For example the wide use of Collateralized debt obligations (Wiki: CDO) in association with liar home mortgage loans (Wiki) along with false AAA credit ratings (Wiki) resulted in the financial crash of 2008 (Wiki). This killed the Global Minotaur and has allowed a lot of debit to accumulate in some places and a lot of cash to accumulate in other places instead of allowing the cash to be invested in places where there's debt to allow both accumulations to get reduced.  The 4  handmaidens of the Global Minotaur - Chapter 5 (1.Wall Street, 2. Walmart, 3. the ideology and politics of 'trickle-down' and 4. toxic economic theory)  These are discussed in Chapter 5 The Beast's handmaidens. Note the 2008 crash has killed the Global Minotaur but the handmaidens are still around and out of control, sort of like the Sorcerer's Apprentice (Wiki)

Note: Walmart pays more than the minimum wage, but virtually all of it's employees are below the poverty line which means they qualify for food stamps and other government aid.  So the government is subsidizing Walmart, i.e. privatize the profits and socialize the losses.  Walmart is a socialist business.  I'm not saying it's a bad idea, rather I'm saying it's not fair to allow corporations to work in a socialized economy yet not allow people to do it.

A related idea is the "part time worker" (Wiki) and/or "independent contractor" (Wiki) - these are both ways that employers get around the requirement to provide benefits to their employees that they otherwise would be required by labor laws to provide.

What's needed is a way to recycle excess debt or cash so neither accumulates.

The Global Minotaur: America, Europe and the Future of the Global Economy by Yanis Varoufakis 2015 (with new Chapter 9 A world without the Minotaur) - highly recommended (free 2011 edition.pdf)
http://www.ted.com/talks/yanis_varoufakis_capitalism_will_eat_democracy_unless_we_speak_up (YouTube)
http://yanisvaroufakis.eu/
DiEM25.org - DiEM25 is in the air – a preliminary Q&A (31 Jan 2016) - it would be a mistake if the U.S. did not join this discussion.
 Vicious Disequilibrium by Yanis Varoufakis 2014 - easy to understand
A world without the Global Minotaur: Why is the world economy failing to recover? by Yanis Varoufakis 2012
The Global Minotaur: An Interview with Yanis Varoufakis 2012 - Q&A
Modern Political Economics: Making Sense of the Post-2008 World 2011 - expensive textbook, but a lot is free on Amazon in Look Inside!

In the first chapter there's reference to a Monthly Review Volume 55, Number 3 (July-August 2003) paper: The Global Minotaur by Joseph Halevi & Yanis Varoufakis (it's behind a pay wall but here's a free version pdf)
Here's a 2015 YouTube talk by Joseph Halevi:
Joseph Halevi - Farewell Lecture - the '29 crash was because of oligopoly (Wiki) not monopoly (Wiki). Also there are two distinct pricing structures one for raw goods (cost of extraction) and one for industrial goods (labor?).

Modern Political Economics: Making Sense of the Post-2008 World 2011 by Yanis Varoufakis, Joseph Halevi, Nicholas J. Theocarakis - pricey so haven't read the book, but have read the free Amazon part pg 338 Kissinger & Volcker's plan mentioned. 
Volcker - Quarterly Review of the Federal Reserve Bank of New York (The political Economy of the Dollar (FRBNY.pdf Quarterly Review winter 1-12) and the Fred Hirsch (Wiki) Lecture at Warwick University, Coventry November 1978:
"It is tempting to look at the market as an impartial arbiter ... but balancing the requirements of a stable international system against the desirability of retaining freedom of action for national policy, a number of countries, including the US opted for the latter...'
and quoting Fred Hirsh:
"[A] controlled disintegration in the world economy is a legitimate objective for the 1980s."

22 May 2013 - Jared Huffman has his first telephone Town Hall meeting.  I was No. 6 to ask a question "What was he doing to bring back Glass-Steagall?" but after over a dozen answers he didn't get to my question.  At the beginning he said he would answer everyone's questions off line if not on line, but as of 13 Oct 2014 he has not answered this one.  See the TED talk above Capitalism will eat democracy for an explanation of how politicians no longer can control the financial markets.

He also responded to a direct question where I was in disagreement with the idea of taxing internet transactions.  It turns he is a sponsor of "H.R. 684, the Marketplace Fairness Act".
So here's the federal government making a law about sales tax that will very substantially increase record keeping and customer disclosure requirements.  The idea that people will buy on line instead of locally to save paying the sales tax ignores the reality that the shipping costs are typically much higher than the sales tax.  The definition of a "small business" that's exempt from the proposed law is sales below one million dollars, but that's far different than the definition of a small business in other branches of government where it's 20 or 30 million dollars in annual sales.

5 May 2016 - Huffman has changed his position as a super delegate from supporting Hillary to supporting whoever gets the most votes nationwide.  He will not vote based on how the district 2 vote goes.  So, in my opinion, he's still an establishment politician, not part of Bernie's camp.

The book Keynes Hayek: The Clash That Defined Modern Economics by Nicholas Wapshott (Wiki) 2011 - Both Keynes and Hayek started by looking into the causes of the Great Depression (Wiki) from, two very different points of view.  Hayek (Wiki) based his Microeconomic (Wiki) ideas which looks at the actions of individuals whereas Keynes took a top down Macroeconomic (Wiki) view.  That had never been done before.  In my opinion Microeconomics is a failed idea because humans (and other primates) do not behave rationally (Wiki) when making decisions involving loss (Wiki). During depressions everyone throws out Hayek and adopts the Keynes idea that government should borrow and stimulate the economy.  From the end of W.W.II to the election of Ronald Reagan (Wiki) Keynesian economics (Wiki) were popular.  Reagan had a foot in both camps, he cut taxes in line with Hayek and he radically increased spending by borrowing in line with Keynes.  But beginning in the 1980 some the ideas of Hayek became popular.  From pg 219:

"Hayek's utopianism often spilled over into religiosity.  As his disciple Ralph Harris described it, "once . . . you understand there is no other way to preserve the substance of individual freedom except through dispersed property ownership, . . .  you can say it's almost like a religious belief . . . I have said - and it's offended some of my other Christian friends; they have said this is awful, sacrilege- . . .  that the market is almost god-ordained"²¹ In Hayek's vision, government would be left to manage only those elements of society that could be run by no one else, such as defense.  Among the services Hayek believed should be privatized were "all those from education to transport and communications, including post, telegraph, telephone and broadcasting services, all the so-called 'public utilities,' the various 'social' insurances and, above all, the issue of money."²² Tellingly, and perhaps surprisingly for those who subscribe to Hayek's general aims today, he advocated mandatory universal health care and unemployment insurance, enforced, if not directly provided, by the state, and he believed there should be free movement of labor across national borders."

21. Interview of Ralph Harris (Wiki), July 17, 2000 Commanding Heights, PBS
22. F.A. Hayek, Law, Legislation and Liberty, VOl 3: The Political Order of a Free People, Univ of Chicago Press 1979, pg. 147

This included steps to privatize the U.S. Postal Service, deregulation of the banking system &Etc.

The Open Society and Its Enemies by Karl Popper 2013 (First published in 1945 as 2 volumes, this book combines them and adds some new information) - on order


Social Change and Scientific Organization: The Royal Institution, 1799-1844, by Berman, Morris 1978 - on order

American Fascists: The Christian Right and the War on America by Chris Hedges 2007 (Wiki: Links, Amazon) - on order because of Donald Trump (Wiki)

Ancient Economic History

Mercantilism (Wiki) was the economic system from the 1500s to 1800s replaced by Adam Smith's Capitalism.  "Most of the European economists who wrote between 1500 and 1750 are today generally considered mercantilists."  "In modern economic theory, trade is not a zero-sum game of cutthroat competition because both sides can benefit."

The Wealth of Nations (Wiki) laid out what's called classical economics including the concept of the Invisible Hand (Wiki). I think the Invisible Hand sort of worked in Adam Smith's time (i.e. before the Industrial Revolution (Wiki) and large corporations), if there was a retail mom and pop store that was doing something underhanded you could easily open a shop that was fair and be successful, but that no longer is the case with large corporations.

There was a change in focus from the King's wealth to the wealth of the population. 
PS. I think neoclassical economics (Wiki) is a waste of time because humans do not make good decisions under negative conditions i.e. they do NOT act as rational persons.  There are a number of TED Talks on the topic of how humans and chimps make the wrong choice when loss is involved.

Last Week Tonight with John Oliver: Wealth Gap -

Monetary Theory

In all these pre 1971 monetary theories the money always was tied to gold in one way or another.

Homo economicus (Wiki)

Money based on debt (Wiki)

When a bank makes a loan they just make two entries in their books. One puts the principal amount into your checking account (as a bank liability) and the other puts the principal amount into their collection of assets.

Example:
You borrow $100,000 for 30 years at 6%.  The amount of money created is $100,000.  Your checking account entry is a liability for the bank and your loan is an asset for the bank.
But, you need to pay back close to $216,000.
This is a big problem because the money to pay back the interest was NOT created.  There is no provision to create money for the interest.  Where is it going to come from?
Either the economy keeps on growing putting new money in the system, some of which is used to pay off old loans or there are bankruptcies that cancel loans.
A possible way around this is to eliminate interest from the system.
Islamic banking and finance (Wiki) does not allow interest and while the religious components don't make sense, the basic idea seems valid.
One way of doing this would be to make banks a utility operated by government paid employees where no interest is charged and the bank partners with the borrower.

Standard & Poor's: Repeat After Me: Banks Cannot And Do Not "Lend Out" Reserves (pdf) Aug 2013 - since banks have never been constrained in making loans based on reserves (the reserve requirement is met AFTER the loan is made) there is no "money multiplier" (Wiki) effect caused by the excess reserves generated by QE.

2016 Update - See MMT above for how the government puts money into the economy in addition to the bank's creation of money out of thin air.

IMF (Wiki: IMF)

The International Monetary Fund was created as part of the Bretton Woods Conference in 1944 (Wiki). This was a time before MMT (see MMT above) when there were fixed exchange rates and a gold standard.  That changed in 1971 with the end of the gold standard, but the magnitude of the impact (the start of MMT) just started to be understood by a very few people in 1992.  The result is that the IMF is basing it's demands on no longer valid theories.

IMF groupthink and sociopaths by Bill Mitchell (See above) - The IMF report IMF Performance in the Run-Up to the Financial and Economic Crisis: IMF Surveillance in 2004-07 mentioned in the article can be found at (IEO part of the IMF).
re: Global Financial Crisis - "As the private debt was building up and the shonky (and criminal) bankers were increasingly defying responsible and ethical business practice, the IMF was part of the cheer squad – urging, no, bullying governments to deregulate further and undermine the working conditions further and to reduce the scope and quality of public services."

It's time to disband the IMF and probably the World Bank.

Capitalism- It's OK if Regulated but can be so much more -> Capitalism 2.0

The year 1776 is notable for (1) the Declaration of Independence and (2) the publication of the Wealth of Nations (Wiki) by Adam Smith, the basis of Capitalism.  Prior to this there was Feudalism (Wiki).  At the time products were made by craftsmen one at a time, and there was no manufacturing, electricity, plumbing, etc.  A high technology business was making cast iron cookware.  So the philosophy of doing what’s in your own self interest (greed) and an invisible hand (Wiki) will guide you for the good of society might have worked then.  But greed is no longer working and we need to move on to a better idea.

Note: in the book Why America Failed: The Roots of Imperial Decline (2012) Morris Berman makes the case that the United States was founded on the idea of the swindle.  He bases this on the group of people who founded the U.S. being driven by the idea of getting away with something.  Note the founding fathers were all: white men who owned slaves.

The Constitution was ratified over a dozen years after the Declaration of Independence was signed and so our economic system of greed and the "invisible hand" was built into it not only in terms of the economic system but things like the legal system.

Joseph Stiglitz: Smith's "Invisible Hand" a Myth? (00:02:35)

 
90 years later in 1867 Carl Marx published Das Kapital (Wiki) and said Capitalism could not work and socialism was the answer.  The U.S.S.R. tried socialism and it failed in 1989.

John F. Nash won the 1994 Nobel Prize in economics for his theory of Governing Dynamics.  In the movie A Beautiful Mind the bar scene is an example of his two part idea that starts with Adam Smith’s Capitalism and adds a second idea:  “doing what is in the best interest of the group”.
http://www.end2partygovernment.com/2012Issues.html#ASvJN <- the 3 minute bar scene
We need to move to Capitalism version 2.0.

Wiki: List of countries by income equality - The U.S. is in the group of third world countries.

Fractional Reserve Banking (Wiki, Criticism)

Has built in the idea of a growing economy and that's not sustainable.  This needs to be changed.
YouTube - Money As Debt-Full Length Documentary - the only item they may have wrong is the idea that spending on infrastructure promotes the economy.  I think R&D on sustainable projects would be a much better way for the government to spend money.
ContagionEx by by Mark Foire(00:01:32)

The Laffer Curve & Voodoo Economics

Nick Hanauer - 2012 TED Talk (pulled by TED) March Long Beach
Are the rich America's job creators?
at The Last Word, at YouTube1, Who are the job creators? by Nick Hanauer (Wiki, TED controversy)
A newer 2014 version: http://www.ted.com/talks/nick_hanauer_beware_fellow_plutocrats_the_pitchforks_are_coming - March 2016 he's got it correct.
"Saving American Capitalism" with Nick Hanauer -

When Reagan cut the marginal tax rate G.W. Bush used terms like "voodoo economics".  The reason was that what Reagan said was that by cutting the marginal tax rate the government would take in more money.  This is a counter intuitive idea, you would think that raising the marginal tax rate would increase income and the cutting it would lower government income.  But that simple thinking does not take into account what's called elasticity of tax rates or the Laffer Curve (Wiki).

The Laffer curve says that if the effective tax rate is zero then the government will collect a very small amount of money by means of charitable contributions.  If the effective tax rate is 100 percent then the government will collect a very small amount of money from those who volunteer to work for free.  Somewhere between 0 and 100 percent there's an optimal tax rate that will bring in the most money.  If the current effective tax rate is higher than the optimum rate then lowering the tax rate will result in bringing in more money.  And that's where we were in 1980.  So when the marginal rate was lowered there was a huge influx of money. The tax cut part of what Reagan did worked well.  The thing he did wrong was the massive increase in war spending.  Instead of a peace dividend (Wiki) we got massive military expansion at a time when the U.S.S.R. had disintegrated. (Wiki: Peace Through Strength).  Some critics of tax cuts cite the increased national debt when Reagan left office as proof of it's failure, but that ignores the military spending.


Today (2012) we are at the other end of the Laffer curve, i.e.the marginal tax rate is about 15% (Huffington Post: Marginal Tax Rate Chart).  So raising the marginal rate will bring in a lot more money into the government.

Note that the Laffer Curve is not Trickle-down economics (Wiki). This is a very false idea.
Modern Monetary Theory (see MMT) says that the purpose of taxes are to punish things we want to discourage, so studying the effect of marginal tax rates on tax income is only of secondary interest.  Much better to do a zero base study of the overall tax system.

Adam Smith vs. John Nash -> Capitalism 2.0

Adam Smith (Wiki) is commonly credited with formulating the idea of Capitalism or free markets.  He published The Wealth of Nations (Wiki) in 1776 this is at the start of mass production and before the problems caused by large corporations were known. Smith thought that when everyone works for their own best interest an "invisible hand" guides them to also do what's best for society.  There was no electric or phone service and plumbing was yet to come to homes.  All businesses were family run.   Free market "hands off" capitalism failed in the early 1900s with the advent of big business and big banking.  This led to government regulation of business and banking.

After W.W. I Russia was in a very bad way economically, and medically (Wiki) which allowed Lenin to stage the October Revolution (Wiki) and install the Communist party in Russia which used the ideas of Karl Marx for their economic system.  This economic system did not work and the U.S.S.R. fell apart in the late 1980s.

Capitalism can work when applied to a competitive market, for example things sold in grocery and hardware stores.  But it's not so good when applied to monopolistic cases like utilities.

John Nash (Wiki) won the Nobel prize for his idea that there are two factors that determine the best outcome (1) what's best for the individual and (2) what's best for the group he is in.     This has implications for both national and world wide economic theory.

See the bar scene from A Beautiful Mind (a bio on Nash) for a practical explanation of his idea.

Bar Scene from A Beautiful Mind: Governing Dynamics by John F. Nash  "Adam Smith was Wrong" (00:03:16)


This means that the Republican Party ideas about economics are based on a false idea "free market capitalism" and a false idea "voodoo economics" about tax cuts.

Using Nash's idea we will get the best outcome if we do what's best for the Earth and what's best for us individually.  It may be a good idea to call this Nashism rather than keep using the word Capitalism.  This has a profound impact on economic thinking.

Brooke on Capitalism 2.0

Alexis de Tocqueville
  (Wiki: Democracy in America) -  “self-interest properly understood.” looking out for the other guy isn’t just good for the soul—it’s good for business.

"Tocqueville warned that "modern democracy may be adept at inventing new forms of tyranny, because radical equality could lead to the materialism of an expanding bourgeoisie and to the selfishness of individualism. In such conditions "we lose interest in the future of our descendents...and meekly allow ourselves to be led in ignorance by a despotic force all the more powerful because it does not resemble one." Tocqueville worried that if despotism (Wiki) were to take root in a modern democracy, it would be a much more dangerous version than the oppression under the Roman emperors or tyrants of the past who could only exert a pernicious influence on a small group of people at a time. In contrast, a despotism under a democracy could see "a multitude of men," uniformly alike, equal, "constantly circling for petty pleasures," unaware of fellow citizens, and subject to the will of a powerful state which exerted an "immense protective power". Tocqueville compared a potentially despotic democratic government to a protective parent who wants to keep its citizens (children) as "perpetual children," and which doesn't break men's wills but rather guides it, and presides over people in the same way as a shepherd looking after a "flock of timid animals."

Privatization (Wiki)

It turns out that the Bush43 administration has put a poison pill into the Postal Accountability Act of 2006 (Wiki) (truth-out). This was part of a larger move to privatize everything. 
In Eat the Rich by O'Rourke (Wiki, Amazon) the chapter on Russia during the cold war has information on how poorly the factories worked.  The description fits most cases in the U.S. where a government monopoly is privtized.  What happens in both cases is that the business operates strictly to the letter of their contract and they find loopholes that allow them to optimize some other parameter (minimizing material requirements for the USSR and maximizing profits for the U.S.).

Jobs

Between 1980 and 2016 the population of the U.S. has grown from 227 million to 324 million (World Meters), a 42% increase.  At the same time the number of people working has declined from 17 million to 12.5 million (BLS), a decline of 30%, but if the change in population is factored in the number of people employed as a percentage of the overall population has declined from 7.48% (17/227) to 3.86% (12.5/324) or a decrease of about 50%.  This is a serious problem.

I could not get back to the BLS data, so here's a different approach.  Start at this BLS web page: http://data.bls.gov/timeseries/CES0000000001
Then set the starting year to 1980 and press "GO".
The number of employees goes from 90 million to 140 million.  So the percent of the population goes from 90/227 = 40% to 140/324 = 43%.  So things are getting better.
The BLS data titled "Charting the labor market: Data from the Current Population Survey (CPS), Sep 2, 2016" is misleading.  For example "Chart 1. Civilian labor force, Seasonally adjusted, 1990-2016" on page 4 and "Civilian employment, Seasonally adjusted, 1990-2016" on page 6 are very different.  Chart 1 shows the people the BLS considers the "labor force" those who are either working or looking for work and so understates the unemployment.

Chart 4. Employment-Population ratio, Seasonally adjusted 1990-2016, page 7 shows that between 58 and 65% of the population work, i.e. a little over half the population is working.  This is an indication that social benefits like health care should not be tied to working since over a hundred million people do not work.

I think that manufacturing jobs are declining in the U.S. because of trade deals that permanently send those jobs overseas.  These jobs typically included benefits.  But most service sector jobs today are part time or "independent contractor" (Wiki) and have no benefits.

Note that the population includes everybody from newborns to retired people.

The US government could start a "jobs for all" program offering an entry level job to anyone who wants one based on MMT.  This would be in parallel with the existing safety net programs now in place.  People in this program would find it much easier to get a better job in the private sector since they would have a current track record of being a good worker.  In all probability most if not all of the current safety net programs would be reduced since these would be full time jobs.  Note the pay rate needs to be below Walmart or McDonald's so that it does not compete with the private sector.

The Philips curve (Wiki) has been shown to be wrong, so full employment does not automatically lead to inflation.  It may of had some value pre 1971.  So, under MMT, it's probable that a zero rate of unemployment is not inflationary.  One MMT adage is that the key indicator for limiting government spending is the length of the unemployment line.  When is at zero further spending will cause inflation.  This is because at that point the government is in competition with the private sector.

It appears that an Employer of Last Resort (Wiki)(CFEPS) or jobs guarantee (Wiki) can be done without an impact on inflation.  The idea of a  Non-Accelerating Inflation Rate of Unemployment (Wiki :NAIRU) is false.  According to MMT, government policy now sets the unemployment rate as a result of trying to control inflation.  Unemployment can be near zero if that's what the government wants without unacceptable inflation. 

As a general rule, mild inflation seems to be desirable.  "Economists generally believe that deflation (Wiki) is a problem in a modern economy because it increases the real value of debt, and may aggravate recessions and lead to a deflationary spiral".  Note:  all the Wiki deflation examples are post 1971, so this idea may be in line with MMT?

Note that the productivity of the job is not part of it's MMT economic value.  For a silly example if  you hire someone to dig a hole then fill it there's a tremendous benefit to the economy.  That's because the worker will spend pretty much all the money he earns and so will help create other jobs where he spends.  But the jobs can be much better for society such as when the job includes training for needed jobs to maintain infrastructure and to build new infrastructure such as a nation wide fiber optic network in a similar manner to the interstate highway system.  Infrastructure maintenance is an on going requirement and is not being done at any level of government.  So a key target for the jobs program would be to maintain it not only at the federal level, but also at the state and local levels.

The jobs went overseas because of trade agreements we made that allowed corporations to do that.
http://en.wikipedia.org/wiki/NAFTA#U.S._deindustrialization
http://en.wikipedia.org/wiki/NAFTA%27s_effect_on_United_States_employment 

Note: caution is needed when looking at exports and imports after NAFTA because we then started exporting a lot of sub assemblies to Mexico and Canada that came back to us a final products.

http://en.wikipedia.org/wiki/GATT
http://en.wikipedia.org/wiki/World_Trade_Organization 
http://en.wikipedia.org/wiki/Criticism_of_the_World_Trade_Organization
http://en.wikipedia.org/wiki/Labour_Standards_in_the_World_Trade_Organisation#Problems_with_the_Current_Approach

From what I've read the TPP (Wiki) is not in the best interests of U.S. people, but is going to be good for business profits. I expect, if passed, it would also result in taking away many more jobs.  Part of the population will be able to buy more imported goods at low prices, but at the same time there will be jobs permanently lost increasing the unemployment.

I can think of different types of programs:

• Helicopter Money (Wiki) - This is being tried out (2016) by Y Combiner (Moving Forward on Basic Income) giving 100 people in Oakland free money.  Note this is pretty much helicopter money, not a job.  This has a huge advantage over a jobs program in that there is a much lower administrative cost than a federal jobs program.
• Jobs through state, county or city governments where the wages are paid for by the federal government.  This would result in improvements in infrastructure, but also could help in other ways since there's a broad spectrum of job skills available.  Again this has the advantage of simpler federal administrative costs.
  
• The U.S. needs a fiber optic backbone system so everyone in the U.S. has "broadband" internet access. As is is now there's a large part of the U.S. without broadband internet, but it's now a requirement for everyone, especially students doing homework (at home not at school).  What good does it do to supply students with a laptop if when they get home they cannot connect it to broadband and that's required for them to do their homework?  The FCC decision to include the internet under Title II (as a utility) and the confirmation of that by the district court decision (FCC).  So a federal jobs program to install a fiber network in a way similar to the TVA project to electrify rural America is now needed.  This would be more costly from an administrative aspect, but is very much needed.
  

Infrastructure

The TED Talk: Yasheng Huang: Does democracy stifle economic growth? makes the case that infrastructure follows the economy, it does not lead it.  That's to say making a big investment in infrastructure in the hope of stimulating the economy may not be a good idea.

The reason to invest in infrastructure now (2012) is because in a poor economy you can get more done for each dollar spent.

But for the long term it's much better to spend on R&D.  But not for things like a Mach-20 replacement for the current Predator drone (TED: Regina Dugan: From mach-20 glider to humming bird drone) , but things to help society.

Wiki: LList of countries by number of broadband Internet subscriptions - the U.S. is No. 27 (28%) when ranked by percent of the population with broadband connections.  Liechtenstein has 64%.  This is an area were the U.S. government could do a lot of good, like when Eisenhower built the U.S. Interstate Highway system.  Getting a lot of our population connected by broadband internet would greatly increase our ability to communicate not only with each other but with the world.  2014 Google may be doing a lot to increase internet connectivity, but it may be just a way to sell advertizing space, i.e. they are doing it to make money.

Health Care

The PBS Frontline "Obama's Deal" goes into how he campaigned against the politicians who made the Medicare Part D midnight deal to prevent the SSA from negotiating prices of medicine, but when he wanted to pass his Obama Care medical package made a deal with the big pharmaceutical companies right after he made a deal with the insurance companies to take single payer (Medicare for all) off the bargaining table.  His health plan was written by the insurance and pharmaceutical companies.  The big problem it has is profiting from peoples medical problems and the government forces everyone to pay those profits.  It's way too expensive and if implemented the costs will go up astronomically. 

Jan 2014 - So far there has been a lack of enrollment by young people since they will be paying premiums that will be going to benefits for older people.  By April 2014 we'll know if the system will require a massive federal subsidy to the insurance companies.  That's to say taxpayer money going to the profits of the insurance business.

The PBS Frontline special Five Capitalist Democracies & How They Do It (Watch on line) looked at: United Kingdom, Japan, Germany, Taiwan and Switzerland.  In no country was there any business making profits on peoples first order medical problems and there were no people going into bankruptcy because of medical expenses.  When private insurance companies were providing medical insurance they were not allowed to make profits on that business.

I've personally seen the Taiwan system first hand and think it's great.  For many people it would make sense to buy a round trip first class plane ticket, go to Taiwan (or other county) and have the treatment done off shore and return to the U.S.  The savings will more than pay for the plane ticket and expenses.  For many procedures it makes sense to fly to Canada or Mexico and pay their going rate which are a tiny fraction of the U.S. rates for the same procedure.

An interesting fact is that Japan set the price for various imaging procedures (spiral CAT, MRI, etc.) at a very low level.  Japan is one of the key sources of high technology imaging equipment and the manufacturers developed newer lower cost machines to comply with the government low cost target.  It turns out that my hospital has the spiral CAT scanner that was developed because of the Japanese medical system.  So I'm seeing a benefit from their health care system.  The implication is that if the U.S. does a similar thing a benefit may show up in other places in the world.  This is consistent with John Nash's Governing Dynamics.

YouTube: Health Care: Cuba vs. U.S. - (0:01:15) Apr 8, 2016 -

Sustainability

This means the existing federal drug schedule is based on politics rather than on scientific facts and needs to reposition these drugs into their proper place in the
Controlled Substances Act (Wiki).

H.R. 689 Rescheduling Marijuana - introduced 14 Feb 2013 - Huffman is cosponser.

The Young Turks Jun 21, 2012 - DEA Head's Absurd Marijuana Testimony

A Cruel and Unusual Record By Jimmy Carter June 24, 2012 NYT Op Ed
UN - The Universal Declaration of Human Rights - has 30 articles and the U.S. is now (2012) breaking 10 of them.
Secret ‘Kill List’ Proves a Test of Obama’s Principles and Will By Jo Becker and Scott Shane NYT May 29, 2012

http://en.wikipedia.org - this is my starting place and highly recommended  Google is not good for political ideas because there's a lot of crack pots out there.

http://snopes.com/ - a good way to check up on forwarded emails.  Many, but not all, of these contain some type of misinformation that tries to paint someone or something in a bad light. 

http://www.rollingstone.com/politics -  an excellent source for political news and Matt Taibbi has excellent coverage of Wall Street.

http://politics.salon.com/ - Glenn Greenwald (See above)

Supreme Court Of The United States blog http://www.scotusblog.com/ - for anything related to the Supremes.

http://www.ted.com/ - Technology, Education & Design

In the book Why America Failed: The Roots of Imperial Decline (2012) Morris Berman makes the case that the United States has already failed and we're now, like Rome, in our decline.  He cites the failure of all branches of government, the economy, &etc.  He mentions that the U.S. has a strong soviet component, not for the people but rather the corporations, that's to say the socialist policy of the government protecting business from failure. Berman, a U.S. citizen has moved to Mexico permanently because he's given up on the U.S.  Other names mentioned on this page are also U.S. citizens who have moved out of the country.  It turns out upon reading the book that he thinks technology, like say the telescope, are bad for society and likes the culture of the South around the time of the Civil war (excepting the slavery), but it was the culture that saw slavery as a good thing and it was the culture that formed lynch mobs, i.e. high authoritarian behavior.

Movie: Ethos (IMDB, Netflix) - touches on many topics and they seem to have all of them correct (except maybe the hint of 9/11 domestic conspiracy).

U.S. House of Representatives Roll Call Votes, 112^th Congress - 2^nd Session (2012) - Prior years -

U.S. Senate Roll Call Votes 112^th Congress - 2^nd Session (2012) - Prior years -