If the US Adopts Eurozone Policies, the Jobs Recovery Will Suffer

[unable to retrieve full-text content]In his great new book The Problem with Lincoln, Tom DiLorenzo brought back an old memory. As Tom points out, Walter Berns, who taught political science at Cornell and then worked for the American Enterprise Institute, was one of the main figures urging us to worship Honest Abe.

In representative democracies, voters ostensibly control the state through the politicians they vote for. However, most representative democracies fall far short of this goal. Three of the reasons for the trouble are the problems of scale, bundling, and omission.

According to the International Monetary Fund (IMF), global fiscal support in response to the crisis will be more than $9 trillion, approximately 12 percent of world GDP. This premature, clearly rushed, probably excessive, and often misguided chain of so-called stimulus plans will distort public finances in a way which we have not seen since World War II. The enormous increase in public spending and the fall in output will lead to a global government debt figure close to 105 percent of GDP.
If we add government and private debt, we are talking about $200 trillion of debt, a global increase of over 35 percent of GDP, well above the 20 percent seen after the 2008 crisis, and all in a single year.
This brutal increase in indebtedness is not going to prevent economies from falling rapidly. The

In The Communist Manifesto (1848) Karl Marx (1818–83) and Friedrich Engels (1820–95) predicted that capitalism would lead to the impoverishment of the laboring class. Why? Well, to raise profit on capital invested, Marx and Engels argued, entrepreneurs (the capitalists) would exploit the workers.

The Venezuelan government recently announced that its Administrative Service for Identification, Migration and Foreigners (SAIME) is now accepting bitcoin as a payment method for passports. The problem with that is that bitcoin is not anonymous but pseudonymous.

President Trump issued a new executive order on August 8 directing the Treasury Department to defer the 6.2 percent Social Security tax on wages for employees making less than about $100,000 a year. The suspension on collections will be in effect from September 1 through December 31. 

As a follow-up to his discussion on MMT with Rohan Grey (in ep. 130), Bob goes solo to explain the basic cash balance framework for thinking about money, inflation, and debt. Specifically, Bob will explain why he thinks it’s far more important to know how the government finances a deficit rather than knowing what it spends the money on.

There are many reasons we should be skeptical of the GDP statistic. But it is nonetheless important to understand how it is calculated.