It was posited earlier that debating whether neoliberal or modern monetary theory really describes how money works was a waste of time because, even though banking officials know how things work, they trot out the deficit to cloud the need for stimulus when it is in their interest to do so.
This is why it is important to talk about the subject. If more people understood the very real differences between their own budget and the accounting for their sovereign currency, if their minds weren't filled with the myths they are taught or develop on their own, it might not be as easy for people in positions of power to pull the wool over the eyes of voters at will.
The book “This Time is Different” on which the article below is based seems to try the same thing. They are playing on a myth that somehow the ongoing meltdown of 2007 was somehow unique, unlike any other, and this tells us to favor austerity over the misery of the 30 million unemployed and underemployed people in this country. Compare that to, say, Nouriel Roubini's "Crisis Economics", wherein he gives example after example of how this financial crisis is similar in nature to many others, that it wasn't the "Black Swan" some claim. He points out that it was not only predictable but that warnings by many people were ignored. His analysis says its resolution will require not only a fundamental restructuring of our economy, but a stimulus much larger than we have attempted to date.
In every culture there are a set of myths that are used to bring up future generations. In the US parents tell their children that if they don’t behave the bogeyman will get them. In many other countries it is a “Sack man” who carries naughty children away in a big sack. The myths are numerous and differ from culture to culture but the purpose is to get children to conform to the parental authority. As children trust their parents this is usually fairly easily accomplished.
Although we would like to think that once we become adults we are not fed similar half-truths and outright lies, unfortunately it is not the case. One would think that as adults who have the capacity to reason and think critically we could spot those lies and myths. But what to do, if the people whose authority we trust, the so-called scientists and experts in the field are the ones feeding us the myths?
Major crises can be useful in helping people to rethink the way they once thought about the world. During the Great Depression, we abandoned the idea that free markets could work without government intervention. Gradually, as the postwar economy avoided major crises, precisely due to state intervention, people got comfortable thinking that the economy has become inherently stable and that state intervention is no longer necessary. Economists were at the forefront of propagating this myth. We were also led to believe that fiscal policy was neither useful nor necessary. But perhaps the biggest myth that we were all taught is that the government should balance its budget just like a household does, that persistent budget deficits are unsustainable and will lead to stagnant growth and even to sovereign defaults. Thanks to this myth, propagated by professional economists, with nearly 10% of the US labor force unemployed and another 7% underemployed, the public debate is now focused on the false issue of deficits and debt.
A case in point is a recent book by Carmen Reinhart and Kenneth Rogoff, “This Time is Different” that has become a bestseller, making them the ultimate authorities on the issues of debt, default and crises. It has been used by conservatives and progressives alike to argue for lowering government deficits and debt in the midst of the current Great Recession. The media as well as academia have fawned all over this book, to the point where one begs the question whether they have actually taken the pain (it is painful!) to read the book (see
here for more on this).
More
here
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
