Macro N Cheese

The mainstream media has created a pasteurized and homogenized version of Martin Luther King, Jr, befitting the neoliberal cultural bell jar. That being said, our friend Mathew Forstater reminds us that Dr King had a laser-like focus on economics and unemployment. The massively successful August 1963 march was called The March on Washington for Jobs and Freedom for a reason. Without economic security, the social and political advances of the civil rights movement cannot take hold. Steve kicks off the interview by asking Mat to speak about MLK in the context of today’s debate about a Universal Basic Income versus the Federal Job Guarantee. Dr King and other civil rights leaders promoted an economic bill of rights that was specifically and intentionally not a UBI. The three-part platform demanded a job for anyone willing to work, an income guarantee for those who cannot work, and a raise in the minimum wage sufficient to lift the working poor out of poverty. All three prongs are necessary -- a job guarantee a

In the midst of the chaos of the campaign season, it’s important to remember that there’s a whole world out there, where people are suffering in large part due to the actions of the US. Our guest Ajamu Baraka is never far from that reality and his global perspective is woven throughout this interview. He is an internationally recognized leader of the emerging human rights movement in the U.S. and has been at the forefront of efforts to apply the international human rights framework to social justice advocacy in the U.S. for more than 25 years. Ajamu is co-chair of the Embassy Protectors Defense Committee. The Washington, DC, trial will begin on February 11th, and he tells Steve the story of the events leading up to it. Many Americans are unaware of the extent of the international sanctions that have been put in place - by both parties - over the last decade or so. It’s not just Iraq and Iran; there are now around 33 nations under sanctions. Ajamu wants us to understand that US sanctions aren’t simply geared

The post-war years are widely trumpeted as the golden era for America’s middle class. This is when we became a nation of suburban homeowners. Most would agree that federal programs - like the GI Bill and the FHA - contributed to this prosperity. Where some will differ is the extent to which the government is responsible. Our guest, David Freund, sets us straight.    David pierces through the propaganda and exposes the reality behind the sunny fantasy of the post-war economy. His book, Colored Property: State Policy & White Racial Politics in Suburban America, reveals the mechanics of the federal programs and the institutional racism built into them.    The racial politics of redlining are known to many of us, but there were also significant changes in municipal politics during this era. Among these was the rise in municipal zoning, giving local governments the actual power to legislate those decisions.  There was simultaneous growth of the planning profession and real estate industry. Taken altogether, Davi

On a podcast that’s primarily about macro, today we’re compelled to talk about the cheese. The last time Bob Hockett was here, he told a skeptical Macro & Cheese audience that Elizabeth Warren was genuinely progressive and, he believed, deserving of our trust. We’ve seen him on Twitter, getting into testy exchanges about her motives. Now he sadly acknowledges that those motives are less than pure. Last week on the debate stage, Warren called into question Bernie’s truthfulness. In apparent collusion with CNN, her campaign released a story alleging a negative attitude about the possibility of a female US president. Nobody who has followed Senator Sander’s career would believe this story but it succeeded in muddying the waters, diluting his message, and hijacking the news cycle. Bob examines all possible hypotheticals of Warren’s motives, sincerity, and beliefs -- and she comes up short. As he puts it, nobody who is serious about helping the working class would employ such a movement-splitting gambit. Even if

If you thought you understood the urgency of climate change, our guest, Professor Steve Keen, will shatter those illusions. We’ll be straight with you, this is not an easy episode to hear - but you need to listen anyway. How can we deal with the effects of climate change if we don’t understand the urgency? Professor Keen won’t sugar coat it but he can back up every statement with facts, figures, and astute analysis. Throughout the interview, he refers to - and debunks - the work of William Nordhaus, who won the Nobel Prize for Economics in 2018 “for integrating climate change into long-run macroeconomic analysis.” From Left Foot Forward: "When future generations ask why humanity delayed taking action against climate change for so long, Nordhaus’s model will be one of the prime suspects. The model, known as DICE – Dynamic Integrated model of Climate and the Economy – is a dangerous gamble for humanity’s future.  "Nordhaus’s transgressions are immense. His ‘damage function’ which he uses to estimate global

What are the mental roadblocks to achieving a system that creates prosperity for all? We often talk about the neoliberal narrative on this podcast, but this week’s guest, Lua Yuille, peels the onion a few more layers to reveal the structure beneath the story-telling -- what some may call brain-washing -- showing us how our minds have been colonized and need to be untrained. Our entire legal system is framed and structured to convince people that they are achieving or failing on their own. We frame certain types of support as supporting their initiatives. It’s deeper than storytelling; it’s a structure that exists to make invisible all of the ways the government props you up. If someone buys a house there are tax breaks for the homeowner. Estate laws allow you to inherit a house you didn’t pay for. In these ways you’re rewarded for being an autonomous individual (or being born to one). On the other hand, if you need housing assistance, you’re in public housing. It’s seen as largesse for losers. You can look

The UK’s MMT Podcast has been an inspiration to us since well before we launched Macro n Cheese. As fellow MMT promoters from outside the academy, we consider the co-hosts, Patricia Pino and Christian Reilly, to be kindred spirits. So it’s always a treat to have them as guests on our show. This week, it’s Patricia’s turn to explain the behavior of our UK cousins as we seek to learn lessons from their most recent electoral debacle. When Steve spoke with Patricia, she was still feeling intense disappointment and frustration in the wake of the Tory victory. Many in the Labour Party were in shock, trying to make sense of it all. Unfortunately, the most dominant voices are the least likely to admit fault. Attempting to understand Labour’s loss requires considering a multitude of layers -- economic, cultural and political -- historic issues of democracy which have been ignored for a long time. Patricia believes that the issues of sovereignty and perhaps even national identity, may play a stronger role in the UK th

In April of 2018, Jacobin Magazine published “Why the Left Should Embrace Brexit,” which made the case for this radical break from neoliberalism. To gain perspective on Labour’s trouncing in the recent elections, we called upon our friend, Bill Mitchell, one of the co-authors. Bill has been writing and speaking about the UK’s entry into the Eurozone since the 1990s. As an outside economist, his warnings about the dangers of ceding fiscal control fell upon deaf ears. He addressed these issues in two books, Reclaiming the State -- co-authored with Thomas Fazi -- and Eurozone Dystopia. He recalls that as a young academic he was puzzled by the fact that social democratic political parties in the UK, Europe, and the US were supporting anti-labor policies and enabling the advance of the neoliberal agenda. Reclaiming the State traces the turning points -- those historical moments in the 1970s and 90s when Labour adopted monetarism, threw their support behind austerity politics and became apologists for globalizati

We admit that Macro n Cheese can be quite wonky. We interview an impressive array of scholars and a typical episode looks at functional finance on a granular level. This episode is a treat for the rest of us, with a guest who makes a point of speaking in plain English. Clint Ballinger’s book, 1,000 Castaways: Fundamentals of Economics, is meant to be a primer, bringing macroeconomics to those with no special background in the subject. Its title - and dominant model - is a reaction to the Austrian school’s hypothetical society consisting of 10 people or Paul Krugman’s “babysitters co-operative.” Clint expanded his model to more accurately reflect reality. Let’s face it: 10 people is reductionism, not simplification. “A renegade band of Modern Monetary Theorists has overturned mainstream economics in part by emphasizing that there is not one, but two systems of modern money, the ‘vertical’ and the ‘horizontal.’ They conclusively demonstrate how unifying our understanding of these is crucial for grasping moder

Steve’s guest, Emma Caterine, is a consumer rights attorney with special interest in predatory lenders like loan sharks and payday loan companies. She begins by talking about credit as a social construct, To fully grasp the causes of Great Recession we must understand the difference between consumer debt, with a high risk of default, and federal spending, which is new money and can never default. When our economy grows through private debt, it’s unsustainable and leads to crises like the Great Recession. MMT economists, including Wynn Godley, Stephanie Kelton, and L. Randall Wray, have shown that the idea that public “debt” and the deficit are inherently evil and to be avoided at all costs, or that financial crises are caused by “imbalance in the economy” are all myths. What we see then is that cutting public spending -- austerity -- is a political choice. Emma asserts that private household debt and private corporate debt have similar consequences on different scales, though the households bear more of th

The Great Recession was a maelstrom that hit many Americans hard - lost jobs, lost homes, for some everything but the clothes on one’s back. Despite the stock market, real recovery has been glacial at best. Yet many don’t know just how deep the crisis' roots go when it comes to the Black community. Keeanga Yamahtta-Taylor explains the origins of the systemic discrimination behind the housing policies that skipped over, then exploited, Black families trying to find a safe, sound, and affordable place to raise their families.   Keeanga's newest book, Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership, evolved from her organizing and activist work as a tenant advocate to protect tenants from eviction. The Great Recession hit while she was in grad school and she saw the parallels between her research on the origins of segregation and the subprime lending market as she studied the relationship between the federal government and housing programs over the decades.   Steve notes th

“How do you pay for The Green New Deal?” is a serious question in today’s political environs -- though as Nathan Tankus clarifies, not for the reasons you might think. In Part 3 of his interview with Steve Grumbine, he recognizes that MMT and the US Bond market don’t finance spending in financial terms but shows us how non-fiscal “pay-fors” can give the US economy resource room to reallocate workers and energy through financial and environmental regulation. This can be accomplished without interest rate management and raising taxes to appease those who still believe the US is constrained by debt.   The Green New Deal and a Job Guarantee will make it possible to identify which areas in the US need more resources allocated to them simply by analyzing how many citizens sign up for the program. While the state of the US economy is oft described as a whole, the number of people entering the job guarantee program can show what counties are affected more by poverty and unemployment and allow them to remain in their

Public banking is a hot topic in progressive circles. We at Macro n Cheese support it as long as it serves the public purpose, but not all visions of public banking are equal. Luckily, we have Nathan Tankus to help us navigate the shoals. In this second episode of a three-part series, Nathan begins by addressing the overall question of banks as public institutions. All banks, whether private, public, or democratic cooperatives, are given government charters and must abide by regulations. There may be similarities in the structure of governance, but when it comes to incentives, they are very different creatures. Nathan compares the different kinds of banks, including China’s state-owned banking system and looks at possibilities for regulations and services. Steve brings up proposals for infrastructure banks and the concept of financing public spending through a network of public banks. Some of these ideas don’t necessarily jibe with the MMT perspective; Nathan, Raul Carrillo and Andres Bernal recently wrote

If you follow the financial press you’ve probably noticed some recent hysteria about the “repo market.” Since this involves the dealings of the Federal Reserve, it falls under our purview here at Macro ‘n Cheese. Because unraveling the strands of this dense subject requires someone more knowledgeable than we are, we called upon friend-of-the-podcast Nathan Tankus to help us out. Nathan is Research Director at Modern Money Network and can often be found on Twitter, educating the world about MMT. “Repo” simply refers to the repurchase of bonds. Banks and bond traders sell Treasury bonds back to the Federal Reserve with the understanding that they (the banks) will buy them back the following day. As Nathan points out, this is always spoken of from the point of view of the central bank as buyer; it could just as well be called the resale market. Why does this matter? Why do the banks sell back their Treasurys for such a brief period of time? When banks buy them back the price is higher due to the interest charg

This 2017 interview features a younger Steve Grumbine speaking with a younger-still Brad Voracek. Brad was in the first graduating class of the masters’ program at the Levy Economics Institute of Bard College. His real-world experience as a teacher and mentor in Arizona is vastly different from Steve’s, a father of nine in Pennsylvania, who has had to cope with the medical challenges and expenses faced by his late father -- and now, his own.   It’s refreshing to hear a young person explain how MMT makes sense based on his own observations and point of view. Rather than engaging in arguments about politics and economics, Brad tells us that he approaches each issue with simple questions: what is our purpose/what do we want? In his view, rather than battling over a basic income, let’s determine how to meet people’s basic needs -- after all, we already know how to pay for it.   Steve and Brad take the discussion of a job guarantee away from the usual talk of a transitional buffer stock of labor and delve instea

Modern Monetary Theory is often accused of only being relevant to the US. While this is a ridiculous claim, some of us might be a bit guilty of lacking in-depth knowledge about Africa and developing nations. That ends today. We’re excited to introduce our listeners to Ndongo Samba Sylla, whom we met at the 3rd International MMT Conference where he delivered the keynote on “Money, Imperialism, and Development.” Fadhel, an old friend of this podcast, needs no introduction. Ndongo is an expert on the CFA Franc, a currency imposed on the former French colonies in Africa, who cannot achieve monetary sovereignty until they rid themselves of it. To provide context, he and Fadhel talk about the meaning of monetary sovereignty from an MMT perspective. It is important not to confuse it with political sovereignty. Political independence is limited without it. For full monetary sovereignty, a country must issue its own currency, tax the population in its own currency, be able to issue debt in the national currency (i

For non-economists to learn essentials such as the balance of payments, currency exchange, and trade between nations, presentation matters. The brilliant Bill Mitchell, as always, distills complex concepts in such a way that everyone comes away with valuable knowledge. He doesn’t simplify, but presents them as common sense. We recently came across this gem from Steve’s interview with him last year and immediately saw that it’s too valuable to gather dust in the library. Bill begins by addressing a criticism of MMT that has confronted him since the 1990s: "it only applies to the large, closed economy of the US." He explains MMT’s relevance to his home country of Australia - a small, open economy - as well as to developing nations. Material conditions and availability of resources will differ, affecting the balance of imports vs exports, and their respective standards of living reflect these realities. Regardless, the insights afforded by MMT are just as legitimate. MMT economists start with real-world beha

Regulatory agencies taking on Savings & Loan fraud may not be everyone’s idea of a swashbuckling tale, but for us nerdy types at Macro N Cheese it’s pure gold. It has villains like Charles Keating and the Keating 5. (No, that’s not an English rock group from the 70's.) It has unsung heroes whose names aren’t known to most Americans, including our special guest, Bill Black, and the cofounders of Bank Whistleblowers United. Had people like them been allowed to do their job, the Great Financial Crisis of 2008 might have been prevented, along with the economic devastation of millions of people. Financial fraud is somehow beyond the ken of neoclassical economists whose assumptions about the behavior of corporations render them blind to reality. They are left baffled and unable to explain the S&L debacle and the GFC. But, as Bill reminds us, seeking profit is risky; it’s a gamble. “Why would you think the CEOs are gambling when fraud is a sure thing?”   In the 1980s and 90s, regulators noticed that S&Ls were beh

Mitch Green joins host Steve Grumbine to talk about his work with Democratic Socialists of America in Portland, OR, and the role Modern Monetary Theory can play in DSA. As an eco-socialist, Mitch’s focus is on the climate crisis, and as an economist, he uses MMT to answer the ubiquitous question concerning solutions: “how will you pay for it?” Even when people are not open to accepting MMT, he finds it effective to simply ask them the price of continuing to live like this. The standard posture is to simply “tax the rich” but given the political climate, that probably won’t fly. So, what should we do? The clock is ticking. If we consider the costs of catastrophe, even standard cost-benefit analysis will tell us we must act and take what he refers to as a moon-shot approach, opening up the spigot of federal money creation. None of this is to say we shouldn’t tax the rich. But we need not rely on their money to implement the necessary policies. We can apply the levers of the state. People can be taught that th

In 1946, Beardsley Ruml, chairman of the NY Federal Reserve, published an article entitled “Taxes for Revenue are Obsolete.” According to Randall Wray this was consistent with the thinking of the time. In the 1930s and 40s, politicians and economists understood that taxes did not finance the federal budget. In fact, during World War II the government ran a deficit that was 25% of the GDP and a national debt equal to 100% of GDP.   This 2017 interview begins with Wray giving credit to Warren Mosler for the MMT insight that, in short, “taxes drive money.” We need only to look at colonial America for the basic facts. The colonies passed, simultaneously, the laws allowing for issuance of currency simultaneously and allowing the government to levy taxes in that currency. The purpose of that tax was to redeem those notes and burn them, a low-tech way of achieving the same effect as today’s keystrokes debiting our accounts when we pay taxes.   During the postwar years, the understanding that tax revenue does not fun