The best short characterization of the current banking/foreclosure mess that now threatens us with another episode of “shock doctrine” capitalism is Randy Wray’s. Here it is:

Bob Herbert, in his column on June 7th said:

There is no plan that I can see to get us out of this fix. Drastic cuts in government spending would only compound the crisis. State and local governments, for example, are shedding workers as we speak.

And by July 26th he still hadn’t come up with a solution and began his column with:

The pain coursing through American families is all too real and no one seems to know what to do about it.

New Deal 2.0 (ND20) is, well, more New Dealish than other web sites, so instead of the usual conflict between deficit hawks and deficit doves, we might see at, say, the New York Times. Here things are shifted to the left, and we see a debate between the deficit doves and the deficit owls. The doves and owls have posted there for awhile without really engaging one another. But recently, the appointment of Jack Lew as OMB Director and the Statement/petition by Sir Harold Evans called “Stimulus Now,” has ended an uneasy truce between these groups. Paul Davidson, Sir Robert Skidelsky, and Jamie Galbraith replied to the Evans petition with a refusal to sign it and an explanation of the deficit owl position. At about the same time, there was an exchange at Paul Krugman’s blog between deficit doves sharing Paul’s position on the deficit and deficit owls, who don’t agree with the deficit dove prescription of short-term deficits until we get a strong recovery and then a “pivot” to deficit reduction eventually resulting in a surplus when times get really good. The deficit owl prescription is to increase Government spending on programs directed toward the public purpose, until all excess productive capacity in the US economy is used, and then cut back on less valuable spending, or raise taxes as necessary to avoid inflation. Deficit owls also believe that there is no need to worry about deficits as long as Government spending hasn’t helped to created enough aggregate demand to use excess productive capacity, and that thereafter, aggregate demand needs to be cut either by reducing spending, raising taxes or both, not in order to reach some arbitrary deficit or surplus number, but rather to achieve the specific goal of avoiding inflation. Now, at ND20, blog posts have begun to appear where deficit doves and owls have been exchanging points of view.

Congratulations to the folks at UMKC for giving us a new addition to the deficit aviary. Until now the media only had mind space for “deficit hawks” and “deficit doves.” Deficit hawks include folks like Mike Pence, and Judd Gregg, who insist that the Government run deficits only for wars, and tax cuts for rich Americans, but insist on paying for extensions of unemployment insurance, health care reforms, infrastructure, jobs programs, educational programs, transportation projects, and any Government spending for regular folks with taxes.

Deficit doves include folks like many, but not all, Democrats in Congress, Paul Krugman, Joe Stieglitz, Dean Baker, and all the signatories of this recent Sir Harold Evans, “Stimulus Now” petition, who want to run deficits to end the recession but who say:

“We recognize the necessity of a program to cut the mid-and long-term federal deficit…”

For everyone who wasn’t able to attend Wednesday’s Fiscal Sustainability Teach-In and Counter-Conference at GWU, with help from the volunteers who made the recordings, I’ve posted each session’s audio along with speaker slideshows for viewing (here). Hopefully transcripts will be added soon. And for anyone who is willing to make a contribution but has not yet done so, donations are still most welcome.

ND2.0 bloggers Marshall Auerback and L. Randall Wray prepare to confront neoliberal propaganda and deficit hysteria at this D.C. teach-in.

Warning: At the end of this diary, I’m going to be asking for your support. Your financial support. Please consider making a donation today.

I know that time is short between now and April 28th. But nevertheless, I propose that we organize a counter Fiscal Summit “Teach-in” Conference in Washington DC, on that day. Such a “teach-in,” depending on how many people we could get to attend, could steal media attention from the Peterson-sponsored event, and introduce an opposing narrative to the ones coming out of the deficit hawk events on the 27th and 28th. To have such a Conference would take money. Speaker expenses would have to paid, as would hotel expenses if it were possible to get a hotel site at this late date. On the other hand, it would not be hard to think of high-level speakers for such a Summit. Here’s my list of speakers who could do a really good job delivering a Modern Monetary Theory counter to the neo-liberal paradigm: L. Randall Wray, William K. Black, James K. Galbraith, Warren Mosler, Marshall Auerback, Bill Mitchell, Rob Parenteau, Yeva Nersisyan, Scott Fullwiler, and some other very good top-level participants who would question the neo-liberal paradigm to at least some degree are: Yves Smith, Simon Johnson, Joseph Stiglitz, Robert Johnson, Robert Reich, Robert Kuttner, and Dean Baker. Finally, someone who ought to be invited, since he’s expressed frequent and very explicit criticism of the neo-liberal paradigm is George Soros. It would be valuable to get him into direct discussions with others on the relationships between hedge fund traders and nations with unencumbered fiat monetary systems.

The Press continues to be full of opinions reflecting deficit: “mongering,” “hawkism,” “terrorism,” and “errorism,” all based on erroneous neo-liberal ideas about economics. There are a number of sites however that provide very good analysis and refuting of these very dangerously silly ideas, which our President, who claimed he understood economics during his campaign, both espouses and seems ready to implement at both his political and our material peril. So, I thought it would be useful to identify some of those here, especially for those progressives who still think it’s a good idea to balance budgets at all costs.

It looks like we’re approaching an inflection point of great danger in working through problems in creating Economic Recovery. The inflection point is coming because there has been little economic recovery both internationally and domestically, with some nations continuing to run large deficits, and a growing chorus from many, calling for austerity and Governmental budget balancing even though it’s well known that the consequences of these policies will be economic contraction and further hardship for all of us but the rich. The big question is: which way will nations that have debts held in their own sovereign currency like the United States, the United Kingdom, Japan, and Australia go? Will they listen to the domestic and international deficit hawks (e.g. the ratings agencies, the IMF, the European Commission (EC), and various currency traders and hedge fund managers) and cause further contraction and hardship for their citizens, or will they tell the deficit hawks to “take a hike,” create demand from the public sector, where private sector demand is falling short, full employment, and healthy economies?

I can’t answer this question, but what they ought to do is stated quite clearly in a recent blog post by L. Randall Wray and Yeva Nersisyan. Here’s an extensive sampling of their views along with some comments.