Hello everyone. Below is the introduction to a talk I was thrilled to give to a Federal Credit Union. You can find the rest as a premium post and take out a paid subscription in order to access it. Before I get to that introduction, I want to inform readers that I won’t be posting anything for the next week, meaning posting resumes Tuesday June 9th. It feels inappropriate to be putting out economics content during the ongoing aftermath of the murder of George Floyd by policemen. I wrote about the topic of Riots and economic policy on Friday here.
I write about a lot of technically complex things in this newsletter, and will continue to do so, but my overarching motivation is justice. I think economic policy can be a tool for justice, but it hasn’t been in the United States. I want to provide as detailed a roadmap as I can for an economic policy that leads to justice. But justice in the economic sphere will always be inhibited, no matter how far austerity is pulled back, when the funding of police departments dominates local budgets, police are militarized and there are far too many roaming the streets, looking for people to “police”. Funding of non-profit (and incidentally, non-violent) community organizations is far more effective at reducing community violence than the violence of the police and it is these sorts of organizations which we should be funding.
Whatever one’s opinion about protesters who damage property in the context of overwhelming and systematic police violence, the solution to the unrest can only be providing funds to deal with social problems (especially unemployment) and pulling back the police. When protesters say “no justice, no peace”, they are simply stating an obvious fact. Since many people who criticize the protesters are inclined to invoke Martin Luther King Jr., it is worth quoting his sermon “When Peace Becomes Obnoxious”:
I had a long talk the other day with a man about this bus situation. He discussed the peace being destroyed in the community, the destroying of good race relations. I agreed that it is more tension now. But peace is not merely to absence of this tension, but the presence of justice. And even if we didn’t have this tension, we still wouldn’t have positive peace. Yes it is true that if the Negro accept his place, accepts exploitation, and injustice, there will be peace. But it would be an obnoxious peace. It would be a peace that boiled down to stagnant complacity, deadening passivity and
If peace means this, I don't want peace:
- If peace means accepting second class citizen ship I don't want it
- If peace means keeping my mouth shut in the midst of injustice and evil, I don't want it
- If peace means being complacently adjusted to a deadening status quo, I don't want peace.
- If peace means a willingness to be exploited economically, dominated politically, humiliated and segregated, I don't want peace.
Focusing one’s energy on criticizing civilians who have damaged property rather than the necessary budget cuts and constraints which must be placed on police misses the point as regardless of one’s criticism of these individuals, we will still be lacking in a positive peace where justice is present. Keep focused on that positive peace and make it clear to politicians that it is the positive peace you’re looking for rather than more police and military oppression, and the question of protester tactics will be moot. Anyway, I feel compelled to say these things but this substack is not going to become primarily about these topics. I will use this week of no posts to do research for future posts and work on some backlogged projects so rest assured that this week off will contribute to bringing you more posts and commentary on the Coronavirus depression. With that, here’s the introduction to my talk for the Federal Credit Union which you can find as a premium post:
Hello everyone. Thank you very much for having me, I’m thrilled to be here. This is a unique opportunity for me to articulate my ideas to a type of audience I haven’t yet had a chance to dialogue with. Thank you Curt for thinking of me and recommending me to the board to give this talk. As Curt said, I’m the Research Director of the Modern Money Network and a Research Scholar with the Global Institute for Sustainable Prosperity. For a little over two months I’ve been writing a newsletter on the Coronavirus depression which has gotten me a lot of attention and coverage across the business press and outside of it. The reason is I’ve been covering what the Federal Reserve has done in painstaking detail but have also been able to provide readers with bigger picture takeaways and more basic operational explanations of how the Federal Reserve operates that reflect my theoretical framework. That theoretical framework is Modern Monetary Theory, an economic (but increasingly interdisciplinary) theory that focuses on how “modern” money functions and the policy options that understanding how modern money works opens up.
What MMT is in theory and what it isn’t
If you’ve been reading the news, it has become popular to say that the U.S. is resorting to “printing money” to get through this crisis. Some of you, if you’ve previously become interested in Modern Monetary Theory, may have even seen people in the press or in financial newsletters say that the U.S. government or the Federal Reserve is “resorting to MMT”. I don’t look at things that way and generally dislike beginning discussions of Modern Monetary Theory by referring to “money printing”. The problem with this phrase is it invokes a decontextualized physical action which innately feels irresponsible and doesn’t explain how our monetary system works. It just feels wrong to imagine that money printer whirr away! How can we understand what “printing money” may or may not mean without having a wider understanding of how the monetary system works?
Instead of starting with the idea of printing money, I prefer to start with the much wider concept of monetary sovereignty. There are a number of different ways I could define this concept but, for the purposes of this conversation, I’ll define monetary sovereignty as “the capacity of a legal system to mobilize physical resources and labor using financial instruments which retain value because of their acceptance in payments within that legal system”. That’s a wordy definition so I’m going to break it down step by step.
Read the rest here
Stay safe everyone.