Monday, August 26, 2013

Dr. Stephanie Kelton

I want to introduce you to a person who, I believe, will be a leader in the transformation of public attitudes toward what we feel America can do to help create a truly Good Society. Her name is Stephanie Kelton. She is the Chair of the Economics Department at the University of Missouri, Kansas City (UMKC). She is one of the leaders of the rapidly ascending Modern Monetary Theory (MMT) school of macroeconomics. If the GOP leads us close to a debt ceiling cliff, or over it, she will be one of the go to people that the media will ask: "What is going on? Where do we go from here? Is catastrophe inevitable?"

Here is a picture of Stephanie when she appeared on Up With Chris Hayes, before Chris was promoted to MSNBC primetime:

Here is her new Twitter profile page, which I just love. Do you see the fabulous, well-flowered owls in the front? Stephanie's old Twitter handle was Deficit Owl, to distinguish herself clearly from any and all of the Deficit Hawks:

And here's a screen shot of her UMKC faculty profile:

Pay attention to this lady. Follow her on Twitter @stephaniekelton. Follow her blog New Economic Perspectives. And read her article this morning The Good Society: Lessons Not (Yet) Learned to engage her point of view that we (America) are far away from our goal of being a Good Society, the Bright City on a Hill, but that transformation is possible, and that all the resources we need are right here, right now.

I am predicting a GOP led debt ceiling crisis this Fall that will end in a stunning GOP defeat, in fact, a colossal humiliation. The trigger will probably be a combination of Obamacare (GOP wants to defund it) and Obama's refusal to consider more spending cuts without additional tax revenues. We will either get to the edge and the GOP will beat a hasty, unconditional retreat, or we will go over the edge, and the President will have to exercise his powers under the 14th Amendment to order the Fed to keep printing money and putting into the treasury General Account, so Treasury can pay the country's bills. An alternative, with a lower probability I believe, would be for Treasury to mint a Trillion Dollar Coin, deposit it in the TGA and require the Fed to fund it with a newly printed $1 Trillion.

Nothing like this has happened before. How does the media intelligently talk about how the Fed can print as much money as it needs, with no new taxes or debt needed to back it up? And what in the world will they say about a Trillion Dollar Coin? Macroeconomics, as currently understood by Very Serious People and taught in most of our universities (though not UMKC), is mostly speechless about the Fed's unlimited power to create new money, and what the true effects of this are.

MMT can explain it very simply. And my guess is that many of us will have a chance to hear Dr. Kelton explain all this well before Turkey Day in November.

Update: Treasury Secretary Jack Lew has just announced that we will hit the debt ceiling by mid-October, sooner than expected. Here's the Politico story.

No comments:

Post a Comment