Warren B. Mosler

Mid-Year Macroeconomic Review: History Repeating Itself

my first proposal for the financial crisis back in July/August was a full payroll tax holiday where the tsy makes all the soc sec and med payments for us.

once incomes are restored to the extent borrowers can afford their payments the toxic asset issues fades rapidly.

And car sales pick up as well, etc.

Mid-Year Macroeconomic Review: History Repeating Itself

The funds to pay taxes come (only) from govt spending and or govt lending

If the govt doesn't spend enough to cover the tax bill and any residual savings desires for financial assets the evidence is excess capacity/unemployment.

see 'Soft Currency Economics' at
moslereconomic.com

and mosler2012.com


On May 10 05:05 PM Market Sniper wrote:

> Same argument. That you can borrow your way to wealth and print your
> way to prosperity. These are recipes for disaster and will accomplish
> neither. Read some history. Old road, well traveled, ending in a
> bad place.

Mid-Year Macroeconomic Review: History Repeating Itself

The funds to pay taxes come (only) from govt spending and/or govt lending with a non convertible currency.

If govt doesn't spend enough to cover the tax liability and any residual 'savings desires' the evidence is excess capacity/unemployment.

see 'Soft Currency Economics' at
moslereconomics.com


On May 10 05:05 PM Market Sniper wrote:

> Same argument. That you can borrow your way to wealth and print your
> way to prosperity. These are recipes for disaster and will accomplish
> neither. Read some history. Old road, well traveled, ending in a
> bad place.

Mid-Year Macroeconomic Review: History Repeating Itself

On May 10 03:48 PM Cetin Hakimoglu wrote:

> Buying toxic financial assets improves investor & business confidence.
> The banking system was seizing, and the efforts of Bernanke, Geithner,
> Palson, Geroge W. bush, and Obama fixed it by bailing out the too
> big to fail.

They didn't fix it by doing that, as in any case the FDIC was there to support continued operations.

The performed an alternative 'fix' to the normal FDIC channel which could have done what functionally would have been nearly identical.

Now the stock market is surging and the economy is turning
> around. It seems the bailouts and stimulus accomplished their intended
> goals.

As per my article, the turn came after the deficit poked through 5% of gdp and got large enough to support income and 'savings' of financial assets.

>
> --------------------
> Rather than something like my 'bottom up' approach to restoring aggregate
> demand and restoring the ability to make mortgage and car payments,
> our government instead took a 'top down' approach, with both the
> Treasury and the Fed buying only financial assets - a policy that
> does nothing for aggregate demand, and only prolongs the agony of
> waiting for the automatic stabilizers work to restore aggregate demand
> through the most ugly process of rising unemployment and falling
> tax revenues.

Two Explanations for Surging Oil Prices

How about the obvious- the Saudis are acting as swing producer, posting price (aka setting price) and letting quantity pumped adjust.

It's a simple case of a monopolist (at the margin) setting price. They did this in the 70's and it didn't stop until opec production was cut by 15 million bdp in the early 80's in an attempt to support the price. But net supply was larger than that and the Saudis were forced to 'hit bids' rather than get their 'offer lifted.'

Today they are back in the driver's seat, getting their offer lifted at any price they wish to post. Operationally, they post prices with their refiners. They don't sell in the spot market.

Yes, they deny they are setting price, but as a point of logic they have no choice.