Dear Friends of the American Monetary Institute,
Beware the Economyths
The real questions on economics to ask the presidential contenders in
Wednesday's debate:
In a new York Times October 7, 2008 Op-Ed Contributors JOSEPH E. STIGLITZ, R.
GLENN HUBBARD and MYRON S. SCHOLES put forward economic questions for the
Presidential debate titled:
The Dismal Questions
Their points were dismal all right, and shed light on why in Chapter 24 of
The Lost Science of Money book, I warn that monetary reform must not be left in
the hands of economists.
Here is my response to their questions, which are below:
"Take a closer look at those questions and you can understand how economists
have represented a near total loss to society (yes we know there are a handful
of good ones in America).
All the questions deal with MICRO ECONOMICS, not with the big picture
MACRO questions. Here would be some basic macro monetary/economic questions
that illuminate the source of the current monetary debacle:
Do you understand the difference between MONEY and CREDIT? Would you
consider removing the special privilege financial institutions presently
have to create our money supply by lending their CREDIT; and instead
substitute government created MONEY in its place? Do you understand that
such CREDIT evaporates in periods of financial stress, but government
MONEY does not disappear?
Do you understand that the above bank accounting privilege is the
ultimate source of the ridiculous concentration of wealth, and has to be
addressed for moral reasons? Are you willing to seriously include
matters of justice, fairness and morality in monetary and economic
public policy decisions?
Will you admit/agree that the private financial sector regime has failed and
has to be rescued again(!) by the public sector and therefore it must be
replaced by a publicly controlled structure where money is issued by
government not private banks??
Nationalize MONEY, not banking.
See http://www.monetary.org for background, especially the article The
Need for Monetary Reform.
Sincerely,
Stephen Zarlenga
Director, American Monetary Institute
Here is the New York Times piece, with the questions the economists submitted:
October 7, 2008
Op-Ed Contributors
The Dismal Questions
By JOSEPH E. STIGLITZ, R. GLENN HUBBARD and MYRON S. SCHOLES
John McCain and Barack Obama will meet tonight in Nashville for the second
presidential debate. As Americans worry about a confusing federal rescue plan,
a falling stock market and a financial crisis that is spreading across the
globe, the editors of the Op-Ed page asked three economists to suggest the
questions they would most like to hear the candidates answer.
1. When the current bailout of Wall Street fails to turn around the economy and
reinvigorate credit markets, will you propose another one? How large should it
be? Henry Paulson and Ben Bernanke have said what is needed is a restoration of
confidence in the economy. But won't the failure of this bailout destroy
confidence, with disastrous consequences - as happened in Indonesia and other
East Asian countries when similar bailouts failed 10 years ago?
2. More than a million people have lost their homes in the past two years. A
million more are expected to lose their homes in the next 12 months or so. Do
you support a more direct program of relief for homeowners? The government pays
more of the mortgage costs of rich homeowners, through larger tax deductions,
than of poorer homeowners. What would you do to correct this injustice?
3. President Bush pushed tougher bankruptcy laws that were supposed to reduce
bankruptcy and lower lending costs. But the new laws made it more difficult for
ordinary Americans to discharge their debts, and encouraged reckless lending on
the part of lenders, who thought they could more easily force poor borrowers to
repay. Would you make any changes in the bankruptcy laws? Currently, it is more
difficult to restructure a mortgage on a primary residence than other debts. Do
you support bankruptcy reforms that would make it easier for people to stay in
their homes?
- JOSEPH E. STIGLITZ, a professor of economics at Columbia who shared the Nobel
prize in economics in 2001 and who has advised the Obama campaign
**** **
1. Does the financial crisis indicate that we need more regulation? Or is the
problem less one of too little regulation than of poorly focused regulation?
The crisis had its origins in part in international capital flows that led to
extraordinarily low interest rates. But high-risk mortgage lending drew some of
its breath from regulatory interventions. Some heavily regulated financial
institutions managed to get themselves in trouble. And it was
government-sponsored enterprises, no strangers to regulation, that stimulated
the demand for questionable mortgage products. Shouldn't the next president be
standing up to protect markets instead of sowing doubts about them?
2. The Federal Reserve has had to step into the political fray to an
uncomfortable degree. Are we asking too much of the Fed? Should we create a
strong financial regulator that would stand shoulder to shoulder with the Fed?
3. The existing capital standards for financial companies helped create the
illusion that risky assets were "safe." A reformed system could mandate more
capital, to support incremental risk-taking, during a boom and lower such
capital requirements in a bust. By changing capital cushions over credit
cycles, banks would be less likely to be forced into asset fire sales. Would
you support such a change?
4. Do you support the appointment of a presidential commission to report
quickly on the causes of the current crisis and present options for regulatory
reform?
- R. GLENN HUBBARD, the dean of Columbia Business School and the chairman of
the Council of Economic Advisers from 2001 to 2003
* *****
1. Discuss the tradeoffs for our economy, if any, between growth (so-called
trickle down) and redistribution (so-called sprinkle around) policies.
2. At this moment, there seems to be an overwhelming cry for retribution, in
the form of new regulations aimed at our financial services industry (so-called
Wall Street). To what extent do you believe that these measures are necessary?
How will you judge the benefits and costs of the choices to be made? How will
the new regulations take into account the evolution of the financial services
sector in trading securities or goods and services, financing businesses and
homes, saving for college or retirement, and reducing and transferring risk?
3. Individual innovation and creativity in our society are the cornerstones of
our economy. They create wealth and improve the nation's welfare. Through
innovations, the 20th century became the American Century. Will the 21st
century be so as well or will it become the Global Century? How, if at all,
would your administration foster innovation in the following areas: the
provision of health care for our citizens; an immigration policy that attracts
and retains the best; educational policies that increase the value of our human
capital, our most important resource; helping people accumulate enough
retirement savings; international trade and manufacturing; the evolution of
information technology, biotechnology, nanotechnology and neuroscience; the
allocation of water, food and energy and the development of alternative energy
sources; and, to some, the most important, the environment?
- MYRON S. SCHOLES, who shared the Nobel prize in economics in 1997
This message has been scanned for malware by SurfControl plc.
www.surfcontrol.com
_______________________________________________
Marxism-Thaxis mailing list
[email protected]
To change your options or unsubscribe go to:
http://lists.econ.utah.edu/mailman/listinfo/marxism-thaxis
