California Free Press

Off the Top of My Head

Bernie Sanders, Budget Reconciliation and Modern Monetary Theory

by John Lawrence, January 18, 2021

Joe Biden will have no trouble from Congress in passing his $1.9 trillion relief bill. That's because Democrats control all 3 branches, and the filibuster is neutered due to "budget reconciliation." This allows a spending bill to be fast tracked through Congress without the possibility of a filibuster. According to the Center on Budget and Policy Priorities: "The Senate can consider and pass reconciliation bills relatively quickly and with only a simple majority, rather than the three-fifths majority often needed for controversial legislation. That’s because reconciliation legislation isn’t subject to filibuster. Under general Senate rules, legislation can be stalled by virtually unlimited debate and the offering of numerous amendments, with a three-fifths majority vote required to invoke “cloture,” thereby limiting debate and blocking non-germane amendments. For a reconciliation bill, however, the Congressional Budget Act limits Senate debate on the bill to 20 hours and limits debate on the subsequent compromise between the two houses to ten hours."

Modern Monetary Theory (MMT) has shown that deficits don't matter. At least George W Bush didn't think so when he used the budget reconciliation process to give huge tax breaks to the rich which significantly increased the deficit and reduced income to the Federal government from taxes. The use of budget reconciliation did an end run around PAYGO which requires the Federal government to balance its budget and the debt limit which also constrains Federal spending. Both conservatives and liberals will be enthused over the fact that MMT proclaims that either tax reduction or government spending is good for American society (up to a point) even though the debt limit or PAYGO may be violated. This is because government is effectively adding money to the private sector which drives economic activity.

Bernie Sanders and Alexandria Ocasio-Cortez are very familiar with not only budget reconciliation but also MMT because one of its chief adherents, Stephanie Kelton who wrote the book, The Deficit Myth, previously was a Senate advisor to Bernie on the Senate Budget Committee. On December 26, 2014, Kelton was designated as Chief Economist for the Democratic Minority Staff of the Senate Budget Committee, a post that she held in 2015 and early 2016, when she left that position to become an economic advisor to the Bernie Sanders campaign. So the American economy is about to get a shot in the arm that will mostly benefit poor and middle class people (whereas the Bush tax cuts primarily benefited the rich) much to the chagrin of conservatives that hold to the idea that government deficit spending should only benefit the rich through tax cuts.

MMT contends that, since the Federal Reserve creates money by keystokes on a computer and the US dollar is a sovereign currency, the US government can never run out of money. Treasury bonds can always be sold to cover deficits, and, if they can't be sold to the general public, they will end up on the Fed's balance sheet where they may remain forever as an accounting entry. Even the interest paid on Treasury bonds, which is now approximately zero, is not a consideration. Interest on Treasuries owned by the Fed is remitted to the Federal government anyway. So now is the time for massive spending by the US Federal government to 1) expedite recovery from COVID; 2) jump start the economy; and 3) expedite a global response to global warming by converting to renewable energy on all levels including:

"replacing fossil-fuel engines with electric in all public and private transport, super-insulating buildings and replacing inefficient HVAC systems, establishing regional photo-voltaic micro-grid electric networks, replacing gas cooking ranges with electric induction units, buying regenerative-produced farm products and 'meatless meats', replacing all small engine appliances and tools with battery electric power"

And this is not to mention that solar, wind and other forms of renewable energy need to replace fossil fuel electric generating plants.

There is no time to lose. The incoming administration has a lot on its plate. In addition to that they have to run an impeachment trial in the Senate. Let's hope it doesn't slow down any of Joe Biden's initiatives. With Bernie as the Chairman of the Senate Budget Committee, armed with a knowledge of MMT, we can look forward to restoring the US' standing in the world community as well as restoring an economy that works for the poor and not just the well heeled, getting the pandemic under control and mitigating climate change. Thank you Bernie and Alexandria Ocasio-Cortez.

More on the Purpose of the Universe

by Frank Thomas

I am one with you on your ideal definition of the purpose of the Universe. I share your conclusion that we have modern-day predators that are a constant source of division and unrest in our US universe. They just take on more advanced, arrogant means of deception and tools to oppress the willing and the passive. That's why our Founding Fathers were unanimous on insisting that  "a government of, by, and for the people shall not perish from this earth." The wise men recognized that those governing as well as those governed are not angels and must be "checked and balanced" against their worst instincts. For they understood how power corrupts and narrows the areas of man's concern for the collective. And true to expectations, over the last 230 years we have witnessed how one political ideology becomes the predator of the other and vice-versa to the sacrifice of balanced, creative government policies and programs nourishing the whole body politic.

For example, modern predator forces have escalated the financialization of our society to recurring bubbles, now imprisoning millions in financial misery and even penury. Yet there is every indication that the same predator forces are now reinstituting the financialization speculative process with a new generation of exotic, casino products .... legitimized by current modest reform regulations and comforting illusions of more transaction transparency. Our government's mild regulatory reforms will only lay the conditions for another "too big to fail" finance-led economic expansion. Similarly, other formidable threats receive mild attention including a mushrooming cultural cancer -- the rising exploitation, joblessness, and under-education of workers.

The "predator state" indirectly still seems to favor financial capital as the main economic "fix" through big capital bailouts, socializing oligopolic financial institution losses, investing billions in stimulus packages to counter a deep, prolonged economic stagnation .... all, of course, ballooning the Federal Deficit and National Debt while strong deleveraging/job outsourcing/automation forces and resultant stagnant wage forces continue to restrain GDP and job growth. The speculative momentum paradigm of financial capital may well soon be converging on us again. Business Week recently focused on new bubble/inducing financial instruments that financial predators are prepäring for the privileged few. For example, Business Week reports:

"In recent months, such banks as Bank of America, Citigroup, and JPMorgan Chase have introduced new-fangled corporate credit lines tied to complicated and volatile derivatives .... Some of Wall Street's latest innovations give reason to pause .... Lenders typically tie corporate credit lines to short-term interest rates. But now, JPMorgan Chase and Bank of America, among others, are linking credit lines both to short-term rates and credit default swaps (CDSs). The latter are the volatile and complicated derivatives that are supposed to operate as 'insurance' by paying off the owners if a company defaults on its debt. In these new arrangements, when the price of the CD rises  -- generally a sign the market thinks the company's health is deteriorating -- the cost of the loan increases, too. The result:  the weaker the company, the higher the interest rates it must pay, which hurts the company further. Managers must now deal with two layers of volatility -- both short-term rates and the credit default swaps, whose prices can spike for reasons outside their control."

Business Week mentions other new speculative instruments being introduced, such as "structured notes" or a form of derivative aimed at small investors, offering "teaser rates" -- virtually guaranteeing high returns for small investors for a few years followed by "huge potential losses" after that. (see "Old Banks, New Tricks," Business Week, August 17, 2009).

So now we have the familiar tragic comedy (strangling our political system) of the Right accusing the "predator" Democrats of Tax and Spend and Deficit/Debt mortgaging our children's future at a time when a do nothing approach by the federal government as a last resort  -- while states cut teacher/police/firemen/social-worker jobs by the thousands -- would skyrocket our Tax and Spend/Deficit/Debt/Jobless situation much more than now is happening.  At the same time, we have the Left accusing the "predator" Republicans as being solely responsible for the last eight year mini-depression financial crisis when Democrats said or did little while it was occuring .... while Clinton's Administration actually participated in the deregulation process in the 90s. This, combined with Bush Jr.'s deregulation euphoria, also helped to explode the financial industry fiascos now crippling our economy.

The result is that objective, common sense reasoning over governmental policy making has been bushwhacked for the last 30 years by political conservative/liberal predator dog- fighting strengthened by an unmobilized Left .... all leading to minimal, crisis-reactive attention to deeper underlying breakdowns/obsolescence in our social-economic model. This has all made the middle-class  (bottom 80% of households) easy prey of the upper class (top 10% of households) as the social/stratification between the Haves and Have Nots inexorably reaches destabilizing proportions. As you have said, stock prices rise again as corporate profits go up by predatory slashing of jobs .... compare this to Japan's 5% unemployment because everyone takes a big 20/30% wage cut to maximize employment levels. Their economy is now recovering. Ours is still suffering from a serious lack of job generation.

This unbalanced, inequitable situation has been cemented by the ultimate political-economic system predator .... the lobbyist and corporate funding industry, successfully corrupting and blackmailing our political representatives as well as many of our prime news networks. Sadly, our democracy has long been bought by special interests. As I've said before, in the Netherlands (and in most advanced European countries) company and individual contributions to political elections are strictly limited to very small sums to political parties only and no funds allowed directly to political candidates by firms. Lobbyists cannot provide one cent to a politician in Holland and are prohibited from lobbying politicians directly.

Until we address effectively this toxic, systemic dysfunction in our political system, I see the no real change in the advantaged playing field for predators to undermine the interests of the common man in our democracy.

The Purpose of the Universe

First, I want to make it clear, I only speculate about the purpose of the universe. I don't in fact know what the purpose is or if there in fact is one, but I have as much right as anyone to use my intelligence to speculate or guess what that purpose is. Who knows, I might even be right, although I don't think there is a way to prove anyone is right, but it's an interesting exercise to think about what that purpose might be, and maybe being right is not all that important.

So here is my guess. The purpose of the universe is to see if it's possible to organize individuated life forms is such a way as to maximize collective and individual happiness. This might not even be possible. War and conflict seem to be the history of the human race. Would it even be possible for human cultures and societies to live in peace and abundance without conflict and war? I think it is possible, and, if so, that outcome may be why the universe was created. This presupposes that there was a Creator of the universe, and that Creator had a purpose in mind when He created the universe. It seems that an individuated universe, a universe that produces individuals whether animate or inanimate, would be the necessary baseline for this purpose to be carried out or not over time.

There are a number of reasons to believe that my speculated purpose is not really the case or could not really be the case. If the purpose of evolution is the survival of the fittest, this has nothing to do with creating a society which maximizes happiness. The happiest society might not be the fittest to survive society, and, therefore, my purpose conflicts with the purpose of evolution. But this might be explained away as follows. In the early days of life on earth, millions of years ago, evolution was directed by a survival of the fittest ethic. This was the situation due to the fact that no life forms had yet evolved with large enough brains to restrain predation. There was in essence anarchy among existing life forms. Great predators roamed the earth devouring everything in their path. After some cataclysmic events which caused the extinction of some of these predators, human beings evolved. One might ask 'why did predators evolve in the first place if the purpose of life is to end up with a society in which there was maximum happiness?'. Predators are only interested in providing happiness for themselves which is produced partly at least by preying on their victims.

Here I have a qualm with the current theory of evolution which assumes random genetic mutations followed by natural selection. I speculate that the course of evolution can be driven by the subconscious minds of the individuals involved. For instance, when humans split off from chimps some 6 million years ago because their pelvis tilted so that humans could walk upright better, I assume that the subconscious mind or minds of the chimps figured out that there was some advantages to walking upright. Of course, the same would have to be true for predators. Their subconscious minds could have had something to do with evolving sharper teeth and more powerful jaws. In the days before creatures with large enough brains to have some kind of organization of society, the law of the jungle or survival of the fittest would prevail. If several large brained species evolved contemporaneously, it would be hard to visualize how they would not be in conflict. However, once one of them had attained dominance as homo sapiens has today, it is hard to visualize how a smaller brained predator could ever dominate since humans have developed weapons that could seek out and destroy the dinosaurs, for example, or any other smaller brained predatory species.

So the problem becomes how can human beings get along without descending into conflict, war and predation upon each other. It is easy to imagine how this might work. Sharing of natural and man made resources could lead to the elimination of wars and conflicts over resources. Court systems can separate out from society the most egregious predators. Democratic voting can lead to equality in decision making which might eliminate conflicts over arbitrary decisions imposed by others. Cultural evolution could solve most of the problems and dilemmas humans face including organizing human society in a fair and just way that could tend to maximize happiness. At least at this point in history an argument could be made that the stage has been set for the final stage which would be to harmonize human society within itself and with the planet in general. Predators of other species no longer exist, and predation within the human species, although it still exists, has been circumscribed to a considerable extent. Biological evolution within the human species could lead to more empathetic and less selfish humans or cultural evolution could lead to further restraints on predatory behavior and more elegant social structures.

For whatever reason the survival of the fittest ethic did not lead to the dominance of earth's historic greatest predators whether reptilian or mammalian. What did happen was that a less fit being was allowed to evolve to the point that its large brain gave it dominance over all smaller brained creatures whether predatory or not. Humans at least have the chance to evolve more harmonious social structures which might lead to peace on earth and sharing of resources. Such a society might then represent the accomplishment of the purpose of the universe which might be living in a harmonious balance among all earth's creatures and resources. This process might well be occurring in other parts of the universe simultaneously and not just here on earth. In any case the problem of many identical life forms living harmoniously without major conflicts seems to be the major problem confronting us today.

Mathematics, the Universe and God

In ancient Egypt they worshiped the Sun God, Ra. Various religions have worshiped the sun. In ancient times they didn't know that the Milky Way galaxy, our home galaxy even existed. They didn't know that stars were actually suns like our sun, and they didn't know until recently that there were other galaxies in the universe, in fact billions of other galaxies each containing billions of stars or suns, assorted black holes, and other junk like asteroids, comets and dust. In addition they didn't know about the existence of sub-atomic particles like quarks until recently. If the ancients had known all this, the tremendous span of dimension from sub-atomic to the dimensions of the universe in space and time (a diameter of some 28 billion light years and 13.7 billion years, respectively), the ancients might well have worshiped the universe itself, the reality of which is beyond anything we possibly can even conceive of. Hence reality itself outstrips anything we possibly could conceive of in all its facets. When you add to this the fact that life exists within the universe, you have something pretty spectacular indeed, a complete miracle outstripping any miracles ever claimed to be such by anyone.

It's amazing how in one age people will claim that something is miraculous when, in a later age, the principles behind it are understood and the miraculous turns into the mundane. For instance, a hundred years ago people gazed into crystal balls and claimed to see things going on in some other locale. Well, today we can gaze into a modern day crystal ball otherwise know as a TV set and see instantaneously scenes that are happening on the other side of the world or even on the moon! The march of science guarantees that the miraculous will become the mundane. Religions have struggled to keep up with reality as the knowledge of it has unfolded. For instance, the Catholic Church did not admit until the 1950s that Galileo was in fact right. The earth does go around the sun. Other religions still haven't admitted that the earth is more than 5000 years old as it says in the Bible while in fact carbon dating has placed it at about 5 billion years old.

I start from the premise that no one really knows certain things like whether or not God really exists, what happens to us after we die, the meaning of life, the meaning of the universe etc. Religions have claimed to know these things, but in essence anything that any religion claims is merely a belief, and a belief can be right or wrong. Anyone, in my opinion, has the right to speculate about any of this stuff, but most people don't because they accept what their religion tells them without question. Why? Because they're afraid if they don't, bad things will happen to them either in this life or the next. However, most, if not all, human progress has been achieved by those who've had the guts to get beyond these fears and ask what might seem to some to be sacrilegious questions. Some like Galileo have been considered to be blasphemous. Organized religions have the power to invoke fear if you don't do what they tell you to do or don't believe what they tell you to believe.

I reserve the right to speculate about the "eternal" questions because I think I have about as much chance of being right about them as anyone else including those who claim to know everything since "God told them it was so." I start with the assumption that there is a God since, if nothing else, the miracle of the existence of the universe, in and of and by itself, would qualify as a God if God were nothing more than that. So I start with the assumption that, much like the ancients who worshiped the sun, the universe itself is worthy of worship if God is in fact nothing more than the sum total of everything that exists in the universe. However, I will in this forum speculate about the nature of God since, if God exists, we might ask what is his or her nature. It's a legitimate question. I will use the pronoun He to refer to God. Hope no one is offended by that.

Now there is speculation and there is speculation. One might ask is there such a thing as intelligent speculation and, if so, what are its parameters. When creative people do science or art or mathematics (here's where the mathematics come in), they always speculate according to their personal values. Einstein said "God does not play dice with men." That was a personal value. Of course, scientists have to subject their theories (or speculations) to experiment before they are proven true or false. Mathematicians just have to have a consistent theory because their work is completely abstract and not subject to experimentation. Scientific values have to do with elegance, simplicity (you can't get more elegant or simpler than E=MC[squared]), and symmetry. So if pre-eminent physicist Stephen Hawking can speculate about what happened before the universe began, why the big bang did or did not represent a singularity, certainly there are criteria that might allow one to speculate about the Nature of God.

The mathematician, Cantor, developed a whole theory about infinity. In fact he proved to the acceptance of other mathematicians that there are many different kinds of infinities. Now most people can't comprehend even one infinity let alone an infinite number of different kinds of infinities. Some of these same sorts of considerations might be able to be used in speculating about God. A lot of the religious ideas about God are anthropomorphic. That is they assume God has human attributes. The ancient Greeks and Romans had many Gods, and they all had human attributes like jealousy, sexual desires, seeking after power and dominance etc. What if God is not anthropomorphic? What if God is more akin to the laws of physics and chemistry than He is to human nature? And if Cantor can speculate and even prove things about something we can have no real grasp of, might we not be able to speculate and even prove some things about God?

Now it has been said that God is all loving, all knowing and all powerful. My personal feeling is that God cannot be both all loving and all powerful because, if he were, he would net let the slaughter of innocents take place, and, as we know from history and from present day news reports, innocents are being slaughtered every day. There are both man made and natural disasters. If God were all powerful, he could tweak things a bit so that disasters could be averted especially for those who are on his good side - those who are evidently very "religious." For instance, why did God let 9/11 happen? Surely, a lot of good people were led to their deaths by madmen. This caused tremendous suffering. Why did God let this happen? This is the question that, in the aftermath of 9/11, all clergymen backed away from because they didn't want to come face to face with the implications. Either God is not all powerful or God is not all loving. Other disasters like the tsunami, Hurricane Katrina, genocides in Darfor and Rwanda, earthquakes in Pakistan and elsewhere leaving thousands homeless etc could prompt the same observation.

My personal opinion is that God is not all powerful. God is not sitting up there manipulating reality, granting favors to those who pray, granting more favors to those who pray harder etc. Jesus said that "the rain falls on both the good and the evil." Nature is what it is and natural disasters can occur for a variety of reasons. It is up to man (pardon the expression) to act in such a way as to prevent or ameliorate natural and man made disasters including the slaughter of innocents. I believe that God has delegated this authority to us. For instance, early warning systems, devised by man, can alert people to earthquakes, tsunamis etc. Evacuations systems, disaster relief etc are man made devices to ameliorate disasters. Man made disasters such as 9/11 can be prevented by providing security systems to protect from such things ever happening again. We learn from disaster and we can take steps to prevent future disasters. The criminal justice system is supposed to provide justice and deterrents when criminals act in such a way as to deprive people of their rights, property or life.

So I think that God is not all powerful. I agree with the Deists to the extent that I think God set up the universe much as a watchmaker makes a watch, wound it up and let it go, subject to the provisions of the laws of nature supplemented by man made laws and subject to the constraints of the design aspects of the universe. What these design aspects are are not entirely clear. Einstein postulated a cosmic constant. The speed of light and other things could have been designed differently. What kind of universe we would be living in even if life were possible at all if some of these design parameters were different is the subject of more hopefully informed speculation by physicists.

In the Beginning, God...

Let us assume that God existed before the creation of the universe. I think most religions would agree with that because God is assumed to always have existed and to always exist. In the Bible in Genesis it says "In the beginning, God..."

By the same token, if we assume that the universe has a finite existence, we assume that God will still exist after the universe has ended. "In the beginning, God..." is balanced by "In the end, God..." We assume the general acceptance of the Big Bang theory of the universe: the universe started at a finite point in time. It is more argumentative whether or not the universe will end in a Big Crunch or will continue to expand forever ending in a heat death: matter will have become so spread out and the average temperature so cold that no life could exist. I happen to believe that the universe will end in a Big Crunch because of symmetry and the esthetic consideration that a neverending universe consisting of space junk is not pleasant to contemplate.

What Happens After the Universe Ends

From considerations of symmetry again, I assume that God will be in the same configuration after the universe ends as He was before the universe began. Looked at in this light, the universe is simply God's experiment. I assume that before the universe began, God was One or unified. After the universe ends God will be the same One. During the course of the universe, I think that God has changed form and actually become the universe, but this assumption is not necessary to my thesis that individuals will cease to be individuals by the end of the universe since, if God is all that there is, the existence of individuals in some form would be extraneous. I think that the universe is God's experiment with individuality. We have individal agglomerations of matter, individual life forms etc. In particular human beings take the form of individuals. So the question is do we survive as individuals in some form after we die and after the universe dies? I would say no since then God would have created something which is eternal the same as God is and I don't think that God needs to have anything that's eternal other than God Himself. Therefore, I think that when the universe ends or when an individual life ends, it gets reabsorbed back into God. If the universe and life within it represents God in a different form than the form He was in before the universe began and after the universe ends, then the universe and everything within it will simply change form and become God again in the form He was in before the universe began. Therefore, our life as individuals may end when we die, but our life in some sense may not end since we may be reabsorbed back into God.