Thread by @doctorow

I've been thinking a lot about what a covid stimulus package could and should look like, and what the possible failure modes and transformative changes could be.

1/

Obviously, there's real risk of inflation if handled wrong, because production has halted, so more money could end up chasing fewer goods. That gets ugly quick.

pluralistic.net/2020/03/18/diy…

2/

Then there's the risk that we just infuse trillions of no-strings-attached dollars into the finance sector, who use it to make our society even more brittle and unstable by hollowing out reeling companies and grinding down brutalized workers.

pluralistic.net/2020/03/19/gb-…

3/

Writing about this stuff in public makes a lot of Twitter people with "investor" in their bios very, very angry. They want giant bailouts for the companies they own stocks in, not transformative change.

4/

They use the neolib tactic of throwing out a lot of jargon to instil a sense of your technical illiteracy. Complexity is a con-artist's go-to tactic, after all - it's why proposition bets are so complicated, so you can't do the odds in your head (see also: craps tables).

5/

But not every economist believes that sociopathy is pareto optimal. Leading lights like @StephanieKelton, the mother of #ModernMonetaryTheory, who can go toe-to-toe with oligarch-apologists from the Chicago School, explaining how public debt REALLY works.

6/

Kelton and @AOC appeared on this week's @deconstruct_pod with @mehdirhasan to discuss the true scale of the bailout that will be needed (far more than $1T) to get the economy working again.

7/

That number can come down (by lowering working peoples' outgoings through rent/mortgage/student loan holidays, etc). But the lesson of 2008 is that to be credible, stimulus must be transparent and aimed at the public good, not the donor-class.

8/

Otherwise, Congress risks having its hands tied: it might inject an inadequate and corrupt stimulus that benefits its cronies, then be unable to follow that on with a people's bailout that would help us all.

9/

AOC: "Look at this kind of trash pile of legislation the Republicans have just introduced. I’ve never seen such a thing in my life of, we’re going to give the neediest people less. And we’re going to give people who are you know, need help but don’t need as much help more."

10/

Kelton: "What people mean when they say, you know, oh, Senator Sanders, you want Medicare for All or you want to make public colleges and universities tuition free, you want to cancel student debt, how are you going to pay for it? Where is the money going to come from?"

11/

"What that means in beltway speak is how are you going to offset all of that spending with new revenue from somewhere else, or by spending less in defense or some other category, the budget?"

12/

"When you do a piece of legislation that’s 'paid for,' it means you’re putting the 50 billion in and it goes to some parts of the economy, and you’re taking 50 billion out of some other parts of the economy so that you’re not deficit spending."

13/

"We’ve been so badly educated to respond to deficits as something that’s fiscally irresponsible, reckless. It isn’t. The government is committing to dropping dollars into the economy without ripping them right back out again. It’s exactly what we want them to do right now."

14/

Kelton's work on Modern Monetary Theory is transformative. Her lectures present both a powerful descriptive account of how money works in the economy and a prescriptive account of how we can use that knowledge to make a better, more prosperous world.



15/

She has a new book about this coming in June, The Deficit Myth. This would be a good time to pre-order it. These are scary times for writers with books about to come out (signed, I have three new books out in 2020).

stephaniekelton.com/book/

/eof

ETA: Here's the link to the podcast, derp.

theintercept.com/2020/03/20/dec…