These days the chattering classes often converse about how the Democrats can get their base charged up and working for the fall elections. For example, Greg Sargent at the Plum Line blog says:

”As you know, over the weekend Robert Gibbs dropped a political bomb, saying that Republicans just may take back the House. His comments are being widely interpreted as an urgent warning designed to get rank and file Dems to grasp the stakes of the midterms once and for all.

”But here’s the question: Will rank and file Democrats care? The thinking among Dem strategists appears to be that once Dems realize the midterms are a “choice” election, rather than merely a referendum on Dems, they’ll go out and vote. But what if Dems do see this as a referendum on their party’s rule, and base their enthusiasm solely on whether they are energized by the Dem performance?”

Warren Mosler has an important forthcoming book called The Seven Deadly Innocent Frauds, which is, fortunately, available right now in a pre-publication version for reading and commenting from Warren’s site.

Jamie Galbraith, Warren’s friend and occasional co-author has recently written a Foreword to the book, which also can serve as a Foreword to the Modern Money (or Monetary) approach to economics. I think the foreword is important enough in itself that I decided to comment on it. That commentary is the subject of this blog post. I’ve arranged the post as a series of quotes and additional, hopefully, value-added, comments on what Jamie said.

In a heartfelt piece lamenting the jobs crisis and Washington’s Hooverite response to it, Bob Herbert of the New York Times 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.

I’m not entirely sure how to put this, so I guess I’ll just come right out and say it. During the last presidential campaign and in the context of John McCain’s admission that he didn’t understand economics very well, you let us know that you thought you had a very good understanding of it. Well, Mr. President, I’m here to let you know that you don’t understand it, don’t know what you’re doing, and are now preparing to do exactly the wrong things. And, I’ve got lots of evidence for thinking that. What’s my evidence?

The G20 has dropped its support for fiscal expansion. The deficit hawks are prevailing. But why is that? We all either know or should know that operationally Federal spending is not constrained by revenues, as Chairman Bernanke stated last year, when asked on ’60 Minutes’ by Scott Pelley where the funds given to the banks came from:

“…we simply use the computer to mark up the size of the account that they have with the Fed.”

We know that when the Fed spends on behalf of the Treasury it simply credits a member bank or foreign government’s reserve account at the Fed.

Warren Mosler, an international financial consultant, and Independent Party Candidate for the Senate in Connecticut has issued a challenge to his opponents. Here’s the nub of it.

“A 37 year ‘insider’ in monetary operations, Mosler knows as a fact of actual monetary operations that, operationally, there is no such thing as the US government running out of dollars, being dependent on foreign borrowing, or potentially facing a solvency crisis like Greece. Nor is there any financial reason to cut Social Security or Medicare benefits. To make the point, he’s offered to pay $1 million of his own money to any of his Senatorial opponents on the ballot who can prove him wrong. ‘Those fears come from pure fear mongering from supposed experts, with no factual basis, and those unwarranted fears are the true obstacles to the return of full employment and prosperity’ said Mosler.”

At the very end of the Seminal/FireDogLake discussion of my last post, “How Are You Going To Pay For It”, two commenters, ironymeter and konst, offered some comments about the idea in Modern Monetary Theory (MMT) that fiat currency is, to a great extent, accepted, because the Government mandates its status as sole legal tender which can be used for paying taxes imposed by the Government. Let’s begin with a reply to ironymeter

This is the third and last in a series of posts based on youtubes from a speech in Milford CT by Warren Mosler. Warren is running for the Senate in CT in the Independent Party primary. Unlike both the Democratic and Republican candidates Warren really understands economics and his forté is explaining it to people. Here’s a youtube following on the last one I blogged about. My earlier post covered Warren’s policy proposals. This one considers the question “How are you gonna pay for it?”

This is the second in a series of posts based on youtubes from a speech in Milford CT by Warren Mosler. Warren is running for the Senate in CT in the Independent Party primary. Unlike both the Democratic and Republican candidates Warren really understands economics and his forté is explaining it to people. Here’s a youtube on his proposals for restoring our economy to normal functioning and to full employment.

Warren Mosler is running for the Senate in Connecticut in the Independent Party primary. Unlike both the Democratic and Republican candidates Warren really understands economics and he’s really brilliant at explaining it to regular folks. Here’s a youtube on why we never have to worry about having enough money to repay the Chinese, or ant other nations that are holding US Dollars. The main point is that Government “borrowing” using debt instruments issued by the Government, is not like you and me borrowing money to fund something, because it carries no solvency risk for the Government.