Macro N Cheese

Robert Hockett is back to share his irrepressible optimism as he and Steve review Biden’s first 100 days. They both admit the administration has done more than they expected, but then again, they weren’t expecting much. When Pramila Jayapal awarded the president an A, she must have been grading on a curve.Bob isn’t confident predicting what the coming months will bring, but he expresses both his hopes and fears around a number of issues. How will Biden navigate the shoals of very shallow Democratic support in the Senate? What are his choices and what are their potential consequences? With two more big spending bills in the wings, there’s a lot riding on Congress. To some extent, Bob sees Biden’s fortunes aligned with our own: successful and popular domestic policies would translate into votes expanding the Democratic majority in the midterm elections.Perhaps it’s unfair to judge an administration on the achievements of the first 100 days. Just consider FDR:So one of the things that we tend to forget about the New Deal is that it wasn't really just one big enactment and it wasn't even like three or four big enactments. It was literally scores of distinct pieces of legislation rolled out sequentially over about a 13-year period . . . and the way it was sequenced, it was done in such a way as to ensure that FDR kept winning reelection and each time he won reelection, he could do even more.On the international front, we’re witnessing a revival of America as agonist. This administration has no qualms about amping up a new cold war against Russia and China. The US uses tariffs and sanctions as a means of wielding power over other countries. Steve asks about the use of the payment system to lock them out.Bob thinks China is playing a very smart game. As long as they remain an export-led growth economy, they benefit from the dollar's dominant position in the global monetary system. But China is moving towards a domestically generated demand-focused economy, at which point the dollar’s position as reserve currency will no longer serve their interests. In Bob’s view, they’re taking advantage of the current arrangements while wisely getting their ducks in a row. Meanwhile, they’re making advances towards becoming one of the most important global players in digital currency and finance.There’s much more to this episode, from elite control fraud in the financial industry to the effect of the pandemic on the powerless. Agree or disagree, an hour with Bob Hockett is sure to engage, inform, and probably amuse you.Robert Hockett is the Edward Cornell Professor of Law at Cornell Law School, Visiting Professor of Finance at Georgetown University’s McDonough School of Business, and Senior Counsel at Westwood Capital, LLC. He specializes in the law, economics, and philosophy of money, finance, and enterprise organization in their theoretical and practical, their positive and normative, and their local, national, and transnational dimensions.@rch371 on Twitterhttps://bookshop.org/books/financing-the-green-new-deal-a-plan-of-action-and-renewal/9783030484491https://realprogressives.org/books/money-from-nothing-or-why-we-should-stop-worrying-about-debt-and-learn-to-love-the-federal-reserve/https://www.forbes.com/sites/rhockett/?sh=d551a2fe54a0

This week our guest is the fearless Jen Perelman, host of JENerational Change and recent challenger to establishment sweetheart Debbie Wasserman-Schultz. Jen and Steve have a genial conversation about electoral politics, revolutionary action, and the path forward.Jen talks about her campaign against the notorious DWS, and how inherently flawed and exclusionary our current political framework is. We will never vote our way to revolution. Significant change will only be born of a huge labor movement willing to engage in a general strike.She refers to the Chris Hedges statement about fighting fascists not because we can win, but because they’re fascists.I don't know another way to do anything and I'm not going to just do nothing. Right? So this is the menu right now. How do you sleep better at night? Do you sleep better knowing that you're working on the side of justice, or do you want to just say we can't win, so forget it?They discuss some of the roadblocks to building a movement, especially when we live in an echo chamber. With electoral politics, we have people who are bought and paid for, standing in the way. Tribalism appeals to our need to be on a team, with an identifiable enemy. Jen feels this society is lacking some serious critical reasoning skills.Many talk of building bridges. Jen builds spiderwebs, each thread connecting people to herself and to each other, by taking on the issues that touch their lives. Her organization JENCorps, is one way she continues to serve her community. Check them out on the website jenerationalchange.com.Jen Perelman ran for election to the U.S. House to represent Florida's 23rd Congressional District, but lost to Debbie Wasserman Schultz in the 2020 Democratic primary. Her show, JENerational Change, is available on YouTube, Spotify, and iTunes.@JENFL23 on Twitter

This week, Kirsten Mullen and Sandy Darity join Steve to talk about their book From Here to Equality: Reparations for Black Americans in the Twenty-First Century.In recent years the debate on reparations has gained some momentum, though not for the first time, as Mullen and Darity point out. “40 acres and a mule” was among the first promises made (and broken) to black Americans since the end of the Civil War. While white families benefited from the homestead act and have continued to receive aid and preferential treatment at every level, assistance to African Americans has always been portrayed as undeserved government handouts. The abolition of slavery created new opportunities for exploitation. Our listeners are well aware that private companies utilize prison labor for pennies on the dollar.Mullen and Darity provide examples of the racist discrimination and disenfranchisement that have poisoned the US since its founding. At every crossroad, every opportunity to do the right thing, this country has made the wrong choice, sometimes subtle, often brutal and vile.In making the case for reparations, they focus on the staggering wealth gap. At the top of that chasm sits the wealth of corporations built on the backs of slave labor. Mullen:You have Lehman Brothers, which began as a cotton brokerage in Alabama, for example. These were a family of brothers who initially were involved in retail trade, but they quickly realized that the real money was in buying and selling cotton. This leads to the cotton exchange in New York City. Tiffany, the iconic jeweler in New York City, was a slave owner. Most college and universities, the early ones, the elite ones, all of them benefited from donations of money from individuals who own and traded slaves or who donated land that they were able to acquire because of the slave trade.While some reparations proposals are systemic and encompass a broader demographic, Mullen and Darity target African Americans whose ancestors were enslaved in this country. They have calculated a dollar amount to rectify the loss of inter-generational wealth that could have been created had the early promise been kept.After you listen to this episode, we urge you to buy the book. From Here to Equality: Reparations for Black Americans in the 21st Century is the recipient of the inaugural 2021 Book Prize from the Association of African American Life and History and the 2020 Ragan Old North State Award for Non-fiction from the North Carolina Literary and Historical Association.A. Kirsten Mullen is a folklorist and the founder of Artefactual, an arts-consulting practice, and Carolina Circuit Writers, a literary consortium that brings expressive writers of color to the Carolinas.William A. (“Sandy”) Darity Jr. is the Samuel DuBois Cook Professor of Public Policy, African and African American Studies, and Economics and the director of the Samuel DuBois Cook Center on Social Equity at Duke University. Follow him on Twitter @SandyDarity

This week, Steve catches up with Brian Romanchuk to talk about his latest book, Modern Monetary Theory and the Recovery. Brian was last on in episode 16, two years ago. A lot has happened since then.From his blog, Bond Economics:This book discusses the causes of slow growth in the developed world after the early 1990s from a Modern Monetary Theory perspective. Policy proposals from MMT proponents that aim to rejuvenate the labor market without causing a resurgence of inflation will be examined.Brian says the book goes through the basics of MMT before addressing the sluggish recoveries since the Reagan-Thatcher years. Why were previous recoveries after recessions slow and how can we change it going forward? How do we prevent a long period of underemployment like we’ve seen in previous decades?The modern era has been a constant move away from state control in favor of letting market forces guide the economy. Throughout this interview the discussion frequently returns to labor. As Brian says, it’s really a labor market story.The present spending bill, while larger than expected, is still inadequate. Basically, the money is all flowing into rent, groceries, and settling debts, because it’s replacing a broken income flow resulting from the pandemic.Well, governments around the world threw a huge slug of spending as big deficits. And to be honest, not that much of a bounce. And the reason is all it did was allow people to continue their existing patterns, which is great, but it's also keeping landlords afloat. So that's one reason why it was relatively popular because it was basically the landlord bailout.Brian tells us his next book will be about inflation and takes some time to describe and compare various theories. Finally, he takes criticisms of MMT, finding very few to be in good faith.Brian Romanchuk was a fixed income quantitative analyst in Quebec. He is the author of a number of books, including Modern Monetary Theory and the Recovery, published in March of this year.His writings can be found on his blog: www.BondEconomics.com@RomanchukBrian on Twitter

Even a very dysfunctional system is beneficial to somebody. And that's the reason why changing course is difficult.Economist Marco Cattaneo joins us this week to talk about “fiscal currency” and how it could provide a partial solution to the economies that haven’t fared so well from the adoption of the euro, the currency being used by 19 of the 27 countries of the European Union.The shared single currency has proven to be too strong for some and too weak for others, making it difficult to set up interest rates and trade relationships that work well for all of them. But more consequential are the restrictions placed on fiscal policy, forbidding EU nations to generate deficits beyond established thresholds. Thus, they are deprived of a valuable governing tool. Each country has been forced to reduce public investments, including public health expenditures, causing a deterioration in the quality of health systems throughout the European Union. This has been reflected in the handling of the COVID crisis.Fiscal money is basically a financial instrument or security, which can be used by citizens to offset their tax obligations. In explaining it, Marco reminds us of one of the basic principles of Modern Monetary Theory -- that money is a tax credit. An EU nation, like a US state, is a currency user. Italy cannot issue euros....but nothing prevents us from issuing tax credit certificates, which can be used in order to support income, to support expenditures, to fund public investments, and to basically recover the amount of economic policy flexibility which will be needed not just in order to recover the political impact of COVID, but to recover all the damages that neoliberal policies taken under the euro created in the countries such as Italy.While Marco believes it was a mistake to create a single currency for the EU, he recognizes that discarding it is a political improbability. It will be easier to garner support for fiscal money.For a deeper dive, we recommend the articles linked below. Both are in English. You’ll find another example of a parallel currency in our episode Unis for All with Scott Ferguson and Ben WilsonMarco Cattaneo is an Italian economist and co-author of La Soluzione per L'Euro. His blog is Basta con L’Eurocrisi.Follow his blog  http://bastaconleurocrisi.blogspot.com/@CCFCattaneo on Twitter

Steve Grumbine welcomes the uncompromising and incorruptible Richard Bowen to the studio to discuss the intricate web of deception and fraud more commonly known as our private banking system. Having been at Citigroup during the mortgage crisis, he had an insider’s eye view of the stranglehold the large banks have on our country. The financial services industry is one of the largest contributors to political campaigns and there’s a revolving door between the regulatory agencies and the institutions they’re supposed to be regulating. He can only conclude that the banking lobby controls the government.In early 2006, when Citigroup consolidated its diverse mortgage operations, Richard was given a huge promotion to the position of chief underwriter. Citigroup was purchasing $90 billion worth of mortgages a year - mortgages they did not originate but purchased from other banks and mortgage companies. He was responsible for making sure  these mortgages met Citi’s  policy guidelines.And that basically was the overall job. Now Citigroup, when they purchased these mortgages, immediately turned around and sold most of them. And when they sold them, they gave their representations and warranties. They basically gave their guarantees that these met our policy guidelines ... And, yet I was finding that 60 percent were defective. They did not meet our guidelines. So, silly me, I started issuing warnings. I thought it was my job.Being a whistleblower is neither a glamorous nor rewarding position to be in, and as Richard tells his students at the University of Texas, one will pay a dear price for “blowing the whistle.” It takes a real toll professionally, personally, and physically. The most heroic acts are often thankless, and as demonstrated by our recent history regarding the treatment of whistleblowers, no good deed goes unpunished. But it must be done.Citigroup’s handling of Richard Bowen was a story in itself. He came under surveillance and was frankly terrified, afraid to start his car without looking under the hood first. You’ll have to listen to the episode for the story. He was led a merry dance by the SEC enforcement division, who feigned interest in his reports, and the Financial Crisis Inquiry Commission, charged by Congress to investigate the financial crisis. If they find evidence of criminal wrongdoing, they are to send a criminal prosecution to the US Attorney General. This sounds like a slam dunk, given the treasure trove of documents he had submitted to the SEC.But if you go down that list of all the witnesses, Steve, you won't find the name Bowen. That is because the congressional commission decided that all of my testimony, everything I told them behind closed doors, everything I gave them, everything they got from the SEC, everything including my original written testimony, it all needed to stay confidential. So it was sent to the National Archives with instructions that it could not be read for five years.Why five years? Funny you should ask. Could it have anything to do with the fact that the statute of limitations for fraud is five years?Richard Bowen was a senior vice president at Citigroup who blew the whistle on the mortgage fraud that helped trigger the subprime mortgage crisis. He is currently a professor of accounting at the University of Texas at Dallas. His story has been featured in the docuseries, The Con, the podcast, The New Untouchables: The Pecora Files, and the 60 Minutes story, “Prosecuting Wall Street.”www.richardmbowen.comOn Twitter: @RichardMBowen

Real Progressives recently created a series on fraud and the great financial crisis. To further understand the economic underpinnings of 2008 and other financial crises, Steve turned to Eric Tymoigne, inviting him on to talk about the book he co-authored with Randall Wray, The Rise and Fall of Money Manager Capitalism: Minsky's Half-Century from World War Two to the Great Recession.Alan Greenspan called the financial crisis a “once in a century tsunami,” a huge shock that occurred to the system that had been very unlikely, but, Oops, it happened! And we were not prepared. The Minsky narrative is the opposite. It's a very tiny shock that blew up the entire system. And why? Because over time, the system becomes more fragile, weaker, less able to buffer against even small adverse shocks on the system.Minsky's theoretical framework is really not about the crisis, it's about the process that leads to the crisis. That's where financial fragility comes into play. As Tymoigne explains, the financial crisis wasn’t caused by irrational behaviors, but by the very mechanics of capitalism itself. Milton Friedman said, basically, if you want to understand capitalism, you don't need to understand money. You don't need to understand corporations. You can simply visualize a small peasant economy based on barter in order to grasp the mechanics of exchange within the economic system. You’ll have a decent understanding of capitalism.  Not so, according to Minsky. You have to put finance immediately in the analysis and recognize that capitalism is a monetary economy that has long-lived capital equipment. And so that means that you have to have views about the future regarding the ability of this capital equipment to perform over time and to generate high enough monetary return.Tymoigne talks of the different degrees of financial fragility: hedge finance, speculative finance, and Ponzi finance. These different states relate to expectations of future monetary outcomes. According to Minsky we must consider the role of money, linking it to the future to see how a capitalist economy moves progressively from periods of relative stability with hedge finance, when people are able to pay their debts, to periods of Ponzi finance, with no expectation for the debts to be serviced without forcing a sale of the assets. This brings us back to the mortgage crisis.After listening to this episode, be sure to check out The New Untouchables: The Pecora Files. It’s like a case study of what you’ve heard here.Eric Tymoigne is an Associate Professor of Economics at Lewis & Clark College, Portland, Oregon; and Research Associate at the Levy Economics Institute of Bard College. His areas of teaching and research include macroeconomics, money and banking, and monetary economics.On Twitter: @tymoignee

At the start of the pandemic, Thomas Fazi wrote an article entitled “Could COVID-19 Vanquish Neoliberalism?”  It was in response to the optimistic analysis, especially coming from the left who saw in the state’s reaction a deep crisis of neoliberalism.In fact, some were predicting the death of neoliberalism and the rise of a new regime, one characterized by greater state intervention and greater state regulation of markets, more active fiscal policies and greater attention to the needs of societies, mostly brought on by the emergency, not due to sudden change of heart on behalf of elites...In this episode, Fazi explains that neoliberalism is often misconstrued as a political strategy of curtailing the state and empowering the market, but in reality, neoliberalism has been and continues to be characterized by an extremely active state intervention in the economy.  He asserts that neoliberalism isn't about getting rid of the state, it’s about elites - and especially big capital - taking control and using the state to favor its own interests, where the needs of society are subordinated to the functioning of the market. The most obvious examples are the privatized energy and water systems.Part of the facade of neoliberalism is convincing the people that the state doesn't have any power, because what better way to stop people from demanding their basic necessities - like healthcare, jobs, and housing - than convincing them that these aren't things that aren’t technically achievable.The pandemic has proven, among other things, that the argument in favor of the euro, and the European Union in general, is without merit. There was supposed to be strength in numbers when in practice we’ve seen smaller countries like the UK handle the pandemic much more efficiently than the hulking bureaucracy of the EU.After loosening the purse strings, most countries are now reverting to type.Our leaders continue to say, yeah, well, but we can't spend too much to save people's lives because Italy has a very big public debt. So the European Union has told us that we have to go easy on spending. And so that's really the situation we're in. And again, this crisis has really proven to an even greater degree, just how tragic it is for a country, especially an advanced country such as Italy - that would have huge scope for maneuver if it had its own currency - just how tragic it is for a country to renounce its monetary sovereignty.Steve asks Fazi to speak about the so-called “great reset,” the latest boogeyman lurking under our beds. Rather than entertain the more outrageous predictions, he talks about crisis capitalism. Anyone who has read “The Shock Doctrine” by Naomi Klein, knows it is not a paranoid fantasy. In Italy, the vast number of small restaurants that suffered from the pandemic and are now in danger of being gobbled up by huge corporate firms. Neoliberalism, business as usual.Thomas Fazi is a journalist, writer, and translator. He’s co-director of Standing Army, an award-winning feature-length documentary on US military bases featuring Gore Vidal and Noam Chomsky, and author of The Battle for Europe: How an Elite Hijacked a Continent – and How We Can Take It Back. His latest book, Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World, is co-authored with Bill Mitchell.@battleforeuropehttps://thomasfazi.net/https://unherd.com/2020/04/could-covid-19-vanquish-neoliberalism/

This week Steve talks with Dan Kovalik, a labor and human rights lawyer, who recently wrote a book aptly titled Cancel This Book. The episode is more conversation than interview; Dan and Steve both have a lot to say about cancel culture.Dan tells the story of Molly Rush, an 85-year-old peace activist who once served time in jail for participating in a protest at a nuclear bombsite with the Berrigan brothers. Molly went on to help found the Thomas Merton Center in Pittsburgh, one of the oldest peace and justice centers in America. During the BLM protests last summer, Molly reposted a meme of MLK, expressing the effectiveness of his nonviolence. The board of the Thomas Merton Center circulated a letter severing the 50-year relationship with her for posting a “racist meme.”Dan and Steve share their journeys from solid conservative Republicans and describe their radicalization. They talk about the perils of organizing without class-consciousness and the importance of reaching out to people who don’t necessarily agree with you. They recount the attacks against Jimmy Dore for agitating for Medicare for All and Stephanie Kelton for meeting with conservatives in Japan. They discuss the hawkishness of liberals who once were reliably antiwar. Dan introduces the term “the narcissism of small differences,” wherein people with much in common become polarized over the slightest areas of disagreement.This isn’t an episode about macroeconomics. It takes another path and looks at how we communicate with each other, and how we must do a better job of it.Dan Kovalik is a labor and human rights lawyer who served as in-house counsel for the United Steelworkers Union near Pittsburgh for 26 years. He teaches International Human Rights at the University of Pittsburgh School of Law.  He has contributed articles to CounterPunch, Huffington Post, and TeleSUR, and is the author of several books, including Cancel This Book: The Progressive Case Against Cancel Culture.@danielmkovalik on Twitterbookshop.org/books/cancel-this-book-the-progressive-case-against-cancel-culture/9781510764989

This week Steve talks with Arthur Wilmarth, fresh off his appearance in our current series, The New Untouchables: The Pecora Files, which dovetails neatly into the subject of Art’s latest book, Taming the Megabanks: Why We Need a New Glass-Steagall Act.Art takes us through the original Glass-Steagall, adopted at the start of the Roosevelt administration as an early part of the New Deal when it became clear that allowing banks to get into the securities business and sell high-risk securities to investors around the world played a very large role in creating the conditions for the Great Depression. Congress saw that banks won’t be objective lenders or impartial investment advisers if they're taking loans and packaging them up into securities and selling them. They become biased and inclined to take lots of risks, which is not what banks should be doing. The act also prevented non-banks or “shadow banks” from engaging in the banking business.And so there was a very strict wall of separation created between banks and the capital markets, which operated very effectively, and helped maintain a very stable financial system from 1933 at least into the 1980s. There were no major systemic financial crises during that period. There were problems, but the crises that happened tended to occur within particular sectors and they could be contained because you didn't have banks exposed to what was going on in the capital markets.Art points out that the stock market crash of 1987 didn't affect the banks because Glass-Steagall was in effect, preventing the banks from being involved in the stock market. After a series of liberalization from the late 1980s through ‘90s, Glass-Steagall was repealed in 1999, removing the firewall between banks and the capital markets. When the next boom and bust cycle brought global financial crisis, it started in the shadow banking area in the capital markets and spread very quickly to the banks.From the global financial crisis through the pandemic crisis, there’s been a continued expansion and explosion of all types of debt. We had a record amount of corporate debt by 2020, including an unprecedented amount of high-risk corporate debt. Much of that debt involved companies borrowing trillions of dollars to finance stock buybacks, serving only the interest of insiders by driving up their stock price. Meanwhile, we’ve had a continuing run-up of consumer debt, particularly in things like car loans, student debt, and credit card debt, all exacerbated by the pandemic.Art reminds us we’re doing the same thing over and over and expecting a different result - the very definition of insanity. We're continuing the system that churns out debt, protects Wall Street and then bails out Wall Street when the crisis comes. We keep giving them incentives to take on more risk. They think they won't fail.Art says they will fail. Eventually, they'll get to the point where the government can't bail them out.But I think the pandemic crisis, in my opinion, confirms everything that I argued in my book: that we're in this global doom loop, I say, where the central banks and the governments are backing up the universal banks and the shadow banks on Wall Street, and everybody is churning out more and more debt without any understanding of how we could make that sustainable over the long term.Art’s prescription is a new Glass-Steagall, ending bailouts for every hiccup in the capital markets. “Markets are supposed to be where you take risks - and if you lose, you lose. If you win, you win. If we keep bailing them out, they're not markets anymore. They're just one-way gambles on the federal government and as I say, they're crony capitalism.”Arthur E. Wilmarth, Jr. is Professor Emeritus of Law at the George Washington University Law School and author of Taming the Megabanks: Why We Need a New Glass-Steagall Act. He has testified before committees of the U.S. Congress and the California legislature on financial regulatory issues.