Recommended reading:
1. Michael Pollan talks about food policy:
...apparently the Obama administration is even more timid (if such a thing is possible) when it comes to big agriculture:
""What genetic modification of crops has given us is dramatic consolidation," he says. "Monsanto has used the huge profits from Roundup Ready seeds to buy up a sizable portion of the seed industry."
This is something, Pollan says, that you see again and again when you look at which food innovations get attention -- and funding. A close look often shows that the problem being solved wasn’t a problem in how we grow food, but in how companies grow profits."
There’s a "key fact" you need to know to understand the food industry, Pollan says: Wall Street wants these companies to grow by at least 5 percent each year. But America’s population only grows by about 1 percent each year. That is--or at least was--a problem.
"For a long time people in the industry thought it was impossible to get people to eat more," Pollan says. "They called it ‘the fixed stomach’ and they lamented that, unlike in the shoe business where you could get people to keep buying more kinds of shoes, you couldn’t get people to eat more. Well, they’re to be congratulated. They solved that problem. Capitalism is very powerful. It solves problems. But it solves its own problems, not always our problems.
Take Golden Rice, Pollan says. That’s a genetically modified rice meant to address vitamin A deficiencies in the developing word. "That’ll be terrific if they ever get it into a field," Pollan says. "But it’s important to ask whether you spend $300 million on Gold or encourage them to plant squash or greens in pots around their houses or around the edges of t fields."
"Sometimes there’s a really boring way to achieve the same thing. But we tend to love solutions that have intellectual property attached to them that someone could profit from.""
2. The Left's Unsung Success Story (Bolivia):
"[Evo Morales electoral] victory follows a 25% reduction in poverty, an 87% real-terms increase in the minimum wage, a lowering of the retirement age (1) and an annual growth rate of over 5% — all since 2006. Given how often we’re told we need to overcome our disenchantment with politics, why hasn’t this good news been more widely reported? Could it be because it stems from progressive reforms implemented by leftwing regimes?"
3. From the "Seven Deadly Innocent Frauds of Economic Policy" by Warren Mosler (available in its entirety free, online)
How the Federal Government Spends
pp 15-16
Imagine you are expecting your $2,000 Social Security payment to hit your bank account, which already has $3,000 in it. If you are watching your account on the computer screen, you can see how government spends without having anything to spend. Presto! Suddenly your account statement that read $3,000 now reads $5,000. What did the government do to give you that money? It simply changed the number in your bank account from 3,000 to 5,000. It didn’t take a gold coin and hammer it into a computer. All it did was change a number in your bank account by making data entries on its own spreadsheet, which is linked to other spreadsheets in the banking system. Government spending is all done by data entry on its own spreadsheet called “The U.S. dollar monetary system.”
"There is no such thing as having to "get" taxes (or borrow) to make a spreadsheet entry that we call "government spending." Computer data doesn’t come from anywhere. Everyone knows that!"
"The federal government isn’t going to “run out of money,” as our President has mistakenly repeated. There is no such thing. Nor is it dependent on "getting" dollars from China or anywhere else. All it takes for the government to spend is for it to change the numbers up in bank accounts at its own bank, the Federal Reserve Bank. There is no numerical limit to how much money our government can spend, whenever it wants to spend. (This includes making interest payments, as well as Social Security and Medicare payments.) It encompasses all government payments made in dollars to anyone.
This is not to say that excess government spending won’t possibly cause prices to go up (which is inflation). But it is to say that the government can’t go broke and can’t be bankrupt. There is simply no such thing."
p. 43 ff
So let’s demonstrate how deficits do ADD to savings, and not just shift savings:
1. Start with the government selling $100 billion in Treasury securities. (Note: this sale is voluntary, which means that the buyer buys the securities because he wants to. Presumably, he believes that he is better off buying them than not buying them. No one is ever forced to buy government securities. They get sold at auction to the highest bidder who is willing to accept the lowest yield.)
2. When the buyers of these securities pay for them, checking accounts at the Fed are reduced by $100 billion to make the payment. In other words, money in checking accounts at the Fed is exchanged for the new Treasury securities, which are savings accounts at the Fed. At this point, non-government savings is unchanged. The buyers now have their new Treasury securities as savings, rather than the money that was in their checking accounts before they bought the Treasury securities.
3. Now the Treasury spends $100 billion after the sale of the $100 billion of new Treasury securities, on the usual things government spends its money on.
4. This Treasury spending adds back $100 billion to someone’s checking accounts.
5. The non-government sector now has its $100 billion of checking accounts back AND it has the $100 billion of new Treasury securities.
Bottom line: the deficit spending of $100 billion directly added $100 billion of savings in the form of new Treasury securities to non-government savings (non-government means everyone but the government).
Treasury securities shifted from money in his checking account to his holdings of the Treasury securities (savings accounts). Then when the Treasury spent $100 billion after selling the Treasury securities, the savings of recipients of that $100 billion of spending saw their checking accounts increase by that amount.
So, to the original point, deficit spending doesn’t just shift financial assets (U.S. dollars and Treasury securities) outside of the government. Instead, deficit spending directly adds exactly that amount of savings of financial assets to the non-government sector. And likewise, a federal budget surplus directly subtracts exactly that much from our savings. And the media and politicians and even top economists all have it BACKWARDS!
....
There can’t be a budget surplus with private savings increasing (including non-resident savings of $U.S. financial assets). There is no such thing, yet not a single mainstream economist or government official had it right.
....
p. 47
Again, the only source of “net $U.S. monetary savings” (financial assets) for the non-government sectors combined (both residents and non-residents) is U.S. government deficit spending.
1. Michael Pollan talks about food policy:
...apparently the Obama administration is even more timid (if such a thing is possible) when it comes to big agriculture:
""What genetic modification of crops has given us is dramatic consolidation," he says. "Monsanto has used the huge profits from Roundup Ready seeds to buy up a sizable portion of the seed industry."
This is something, Pollan says, that you see again and again when you look at which food innovations get attention -- and funding. A close look often shows that the problem being solved wasn’t a problem in how we grow food, but in how companies grow profits."
There’s a "key fact" you need to know to understand the food industry, Pollan says: Wall Street wants these companies to grow by at least 5 percent each year. But America’s population only grows by about 1 percent each year. That is--or at least was--a problem.
"For a long time people in the industry thought it was impossible to get people to eat more," Pollan says. "They called it ‘the fixed stomach’ and they lamented that, unlike in the shoe business where you could get people to keep buying more kinds of shoes, you couldn’t get people to eat more. Well, they’re to be congratulated. They solved that problem. Capitalism is very powerful. It solves problems. But it solves its own problems, not always our problems.
Take Golden Rice, Pollan says. That’s a genetically modified rice meant to address vitamin A deficiencies in the developing word. "That’ll be terrific if they ever get it into a field," Pollan says. "But it’s important to ask whether you spend $300 million on Gold or encourage them to plant squash or greens in pots around their houses or around the edges of t fields."
"Sometimes there’s a really boring way to achieve the same thing. But we tend to love solutions that have intellectual property attached to them that someone could profit from.""
2. The Left's Unsung Success Story (Bolivia):
"[Evo Morales electoral] victory follows a 25% reduction in poverty, an 87% real-terms increase in the minimum wage, a lowering of the retirement age (1) and an annual growth rate of over 5% — all since 2006. Given how often we’re told we need to overcome our disenchantment with politics, why hasn’t this good news been more widely reported? Could it be because it stems from progressive reforms implemented by leftwing regimes?"
3. From the "Seven Deadly Innocent Frauds of Economic Policy" by Warren Mosler (available in its entirety free, online)
How the Federal Government Spends
pp 15-16
Imagine you are expecting your $2,000 Social Security payment to hit your bank account, which already has $3,000 in it. If you are watching your account on the computer screen, you can see how government spends without having anything to spend. Presto! Suddenly your account statement that read $3,000 now reads $5,000. What did the government do to give you that money? It simply changed the number in your bank account from 3,000 to 5,000. It didn’t take a gold coin and hammer it into a computer. All it did was change a number in your bank account by making data entries on its own spreadsheet, which is linked to other spreadsheets in the banking system. Government spending is all done by data entry on its own spreadsheet called “The U.S. dollar monetary system.”
"There is no such thing as having to "get" taxes (or borrow) to make a spreadsheet entry that we call "government spending." Computer data doesn’t come from anywhere. Everyone knows that!"
"The federal government isn’t going to “run out of money,” as our President has mistakenly repeated. There is no such thing. Nor is it dependent on "getting" dollars from China or anywhere else. All it takes for the government to spend is for it to change the numbers up in bank accounts at its own bank, the Federal Reserve Bank. There is no numerical limit to how much money our government can spend, whenever it wants to spend. (This includes making interest payments, as well as Social Security and Medicare payments.) It encompasses all government payments made in dollars to anyone.
This is not to say that excess government spending won’t possibly cause prices to go up (which is inflation). But it is to say that the government can’t go broke and can’t be bankrupt. There is simply no such thing."
p. 43 ff
So let’s demonstrate how deficits do ADD to savings, and not just shift savings:
1. Start with the government selling $100 billion in Treasury securities. (Note: this sale is voluntary, which means that the buyer buys the securities because he wants to. Presumably, he believes that he is better off buying them than not buying them. No one is ever forced to buy government securities. They get sold at auction to the highest bidder who is willing to accept the lowest yield.)
2. When the buyers of these securities pay for them, checking accounts at the Fed are reduced by $100 billion to make the payment. In other words, money in checking accounts at the Fed is exchanged for the new Treasury securities, which are savings accounts at the Fed. At this point, non-government savings is unchanged. The buyers now have their new Treasury securities as savings, rather than the money that was in their checking accounts before they bought the Treasury securities.
3. Now the Treasury spends $100 billion after the sale of the $100 billion of new Treasury securities, on the usual things government spends its money on.
4. This Treasury spending adds back $100 billion to someone’s checking accounts.
5. The non-government sector now has its $100 billion of checking accounts back AND it has the $100 billion of new Treasury securities.
Bottom line: the deficit spending of $100 billion directly added $100 billion of savings in the form of new Treasury securities to non-government savings (non-government means everyone but the government).
Treasury securities shifted from money in his checking account to his holdings of the Treasury securities (savings accounts). Then when the Treasury spent $100 billion after selling the Treasury securities, the savings of recipients of that $100 billion of spending saw their checking accounts increase by that amount.
So, to the original point, deficit spending doesn’t just shift financial assets (U.S. dollars and Treasury securities) outside of the government. Instead, deficit spending directly adds exactly that amount of savings of financial assets to the non-government sector. And likewise, a federal budget surplus directly subtracts exactly that much from our savings. And the media and politicians and even top economists all have it BACKWARDS!
....
There can’t be a budget surplus with private savings increasing (including non-resident savings of $U.S. financial assets). There is no such thing, yet not a single mainstream economist or government official had it right.
....
p. 47
Again, the only source of “net $U.S. monetary savings” (financial assets) for the non-government sectors combined (both residents and non-residents) is U.S. government deficit spending.
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