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1. Name the bomb throwing Harvard economist who wrote the following MMT consistent insights re WWII, after serving as an economic advisor to the State Department, the US Treasury, and the Federal Reserve Board (thread ahead): "The liquid assets of nonbank investors increased..."
2. "in 1940-1945 inclusive by 215 billion dollars...Of this vast expansion in liquid savings, totaling 215 billion dollars, 205 billion was due to the Federal budgetary deficit...Thus the increase in liquid savings sprang almost entirely from the Federal deficit-in other words...
3. "from the increase in the public debt. This fact constitutes for most people a great puzzle. They are very happy about the vast increase in liquid savings, but they are very unhappy about the public debt. Unfortunately, it is not possible to have your cake and eat it too.
4. "Currency, deposits, and securities are based on debt, public or private...It is the job of monetary and fiscal policy to control the quantity of liquid assets."
5. "It is no occasion for surprise that many citizens should not see clearly the connection between 1) the wartime increase in the Federal debt together with the expansion of Federal Reserve credit, on the one side, and 2)the rise of deposits and member bank reserves on the other
6. "Practical men, looking directly at their own operations, are likely to argue it was the growth in sales volumes which accounted for the general growth in deposits. The hog farmer in Iowa, for example, received a big check for a carload of hogs sold in Chicago. The check was"
7."drawn on a Chicago bank. The farmer deposited the check in his local bank. The local bank cleared the check through the Chicago Federal Reserve. Its cash reserves increased; and these reserves came to the bank via the farmer's deposit."
8."What, it is asked, do the United States Treasury and the Federal Reserve Banks have to do with that? It was through the process of a rising volume of...government purchases of farm products, minerals, munitions, airplanes, etc.-that the enlarged aggregate of bank reserves..."
9."was spread throughout the entire country...money is created by banks - in the United States by commercial banks (privately owned) and the Federal Reserve Banks. The commercial banks issue Deposit money, the Federal Reserve Banks, Reserve money..."
10. "Deposit money is created by 1) the monetization of private credit (loans and discounts) as in the case of private individuals and corporations borrowing from the banks, and 2) the monetization of securities, whether issued by private corporations or governments."
11. So here we have a Headline Keynesian, circa 1949, who understands sectoral financial balances, where fiscal deficits are accompanied by private net saving, endogenous bank money creation, where loans and security purchases by banks create deposits, the credit nature of money,
12. the absence of a financial constraint on fiscal expenditures, the crediting by the Fed of reserves to the banks of private sector recipients of fiscal expenditures, etc.None of which you will find in Krugman, Summers, or Rogoff textbook today. Macro went retrograde,4 decades!
13. And u know who this advisor to the State Dept, UST,&Fed had on his graduate course syllabus 4 his graduate course in Keynesian economics - which was all about Money & Banking? Abba Lerner. So yes, 5 Republicans with your resolution to ban MMT, Alvin Hansen was that dangerous!
14. Source:a 1949 book by dangerous Dr. Hansen called "Monetary Theory and Fiscal Policy", Chapter 2, The 'Creation' of Money, starting on p.33. Such books were simply forgotten after the Monetarist/Ratex counter revolt in the late '70s. Republicans would have these books burned.
Link to Hansen's syllabus from the Harvard graduate course. You could never get tenure there today trying to teach the ideas in most of these articles. Cuz we're just that much smarterer now. Ain't we, Larry? irwincollier.com/harvard-money-…
