Posts Tagged ‘money’

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Although Venezuela is not technically at war, it is suffering from foreign currency strains triggered by aggressive attacks by a foreign power. US economic sanctions have been going on for years, causing at least $20 billion in losses to the country. About $7 billion of its assets are now being held hostage by the US, which has waged an undeclared war against Venezuela ever since George W. Bush’s failed military coup against President Hugo Chavez in 2002.

Modern Monetary Theory (MMT) is getting significant media attention these days, after Alexandria Ocasio-Cortez said in an interview that it should “be a larger part of our conversation” when it comes to funding the Green New Deal. According to MMT, the government can spend what it needs without worrying about deficits. MMT expert and Bernie Sanders advisor Prof. Stephanie Kelton says the government actually creates money when it spends. The real limit on spending is not an artificially imposed debt ceiling but a lack of labor and materials to do the work, leading to generalized price inflation. Only when that real ceiling is hit does the money need to be taxed back, and then not to fund government spending but to shrink the money supply in an economy that has run out of resources to put the extra money to work.

Predictably, critics have been quick to rebut, calling the trend to endorse MMT “disturbing” and “a joke that’s not funny.” In a February 1st post on The Daily Reckoning,Brian Maher darkly envisioned Bernie Sanders getting elected in 2020 and implementing “Quantitative Easing for the People” based on MMT theories. To debunk the notion that governments can just “print the money” to solve their economic problems, he raise the specter of Venezuela, where “money” is everywhere but bare essentials are out of reach for many, the storefronts are empty, unemployment is at 33%, and inflation is predicted to hit 1,000,000% by the end of the year.

Blogger Arnold Kling also pointed to the Venezuelan hyperinflation. He described MMTas “the doctrine that because the government prints money, it can spend whatever it wants . . . until it can’t.” He said:

To me, the hyperinflation in Venezuela exemplifies what happens when a country reaches the “it can’t” point. The country is not at full employment. But the government can’t seem to spend its way out of difficulty. Somebody should ask these MMT rock stars about the Venezuela example.

I’m not an MMT rock star and won’t try to expound on its subtleties. (I would submit that under existing regulations, the government cannot actually create money when it spends, but that it should be able to. In fact MMTers have acknowledged that problem; but it’s a subject for another article.) What I want to address here is the hyperinflation issue, and why Venezuelan hyperinflation and “QE for the People” are completely different animals.

What Is Different About Venezuela

Venezuela’s problems are not the result of the government issuing money and using it to hire people to build infrastructure, provide essential services and expand economic development. If it were, unemployment would not be at 33 percent and climbing. Venezuela has a problem that the US does not have and will never have: it owes massive debts in a currency it cannot print itself, namely US dollars. When oil (its principal resource) was booming, Venezuela was able to meet its repayment schedule. But when oil plummeted, the government was reduced to printing Venezuelan Bolivars and selling them for US dollars on international currency exchanges. As speculators drove up the price of dollars, more and more printing was required by the government, massively deflating the national currency.

 
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HOW TO LEGALLY AVOID AN EVIL NET PROFITS DEFINITION IN A MOTION PICTURE CONTRACT

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Rand Paul, Who Once Called Universal Healthcare ‘Slavery,’ Goes to Canada for Surgery

The Courier-Journal reported that Sen. Paul can expect to pay between $5,000 and $8,000 for the surgery. That’s significantly cheaper than what Paul would pay in the U.S., in which an inpatient hernia procedure costs more than $11,000 on average.

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Help Abby Martin get Empire Files back on the air.

PATREON: Empire Files is creating radical investigative journalism

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Senator warns of ‘dark money’ behind Supreme Court process

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Here is what we will see in the upcoming Social Security Trustees Report:

  • Social Security has a large and growing surplus―$2.9 trillion today, and a projected $2.95 trillion next year;
  • Social Security is extremely affordable with less than one penny of every dollar spent on administrative costs;
  • It can pay out ALL benefits owed for approximately the next one-and-a-half decades―until 2034―and 77% of all benefits owed after that;
  • With modest legislative increases―asking the wealthy to pay their fair share―we can afford to expand benefits for millions of Americans.

That’s the real story about Social Security that Wall Street billionaires and their local news outlets are trying to bury.

Help us counter the unlimited resources of Wall Street who want nothing more than to get their greedy hands on our retirement security. Donate to Social Security Works today to fight back and defend Social Security!

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