Mosler: Otherwise we lose the participation of millions in the private sector. The private sector gets punished by unemployment. Millions of workers ....

Mosler: No mention. Unemployment is always + necessarily the evidence the deficit is too small for financial conditions?

Mosler: No mention. Unemployment is the evidence the deficit is too small :(

Comment: Growth & jobs and why we’re where we are.

Mosler: Unemployment is the evidence the deficit is too small, by identity.

Mosler: Unemployment crowds out private investment.

Comment: So what's with the permanent depression predicted by the so called Keynesian wizards like Krugman and summers.

Mosler: We are in it. Only unemployment compensation and food stamps keeping people out of garbage cans. Per capita GDP near 0, etc. :(

Comment: Take another look at the decelerating german export and income growth.

Mosler: Unemployment is always and necessarily the evidence the budget deficit is too low with any trade balance.

Comment: If it is needed, it is a marketable job. If not, it is a non-job, and that is demeaning.

Mosler: Except unemployment is about taxation creating a need for dollars to pay taxes.

Comment: So dig holes and fill them in again, then. Non-jobs to create demand. Keynes.

Mosler: Why tax so much if gov doesnt want those unemployed by the tax?.

Comment: In our Annual Letter, Melinda and I debunk 3 myths that block progress for the poor.

Mosler: Unemployment is always and necessarily the evidence that the federal deficit is too small.

Mosler: 0 is the 'natural rate' of interest, inflation, and unemployment. Deviations are necessarily a consequence of government policy.

Mosler: Start with the fact that the currency is a public monopoly/ unemployment is evidence of restricted supply.

Comment: This not about JG vs BIG. Its about JG vs unemployment and BIG vs traditional welfare.

Mosler: Not to forget JG functions to facilitate the transition from unemployment to private sector employment.

Mosler: Unemployment is necessarily the evidence the deficit is too small.

Comment: NYT still can't get basic economics straight. Everything bad about deflation is also bad about low inflation.

Mosler: The bad thing is unemployment and that's because the deficit is too small. Get with the program Dean!.

Comment: Huh? Soft skills are tripe as explanation for joblessness or low wages.

Mosler: Unemployment as defined is necessarily a macro problem= insufficient deficit spending.

Comment: Greece's problem was that it kept a current account deficit, which generated large foreign debt.

Mosler: Unemployment is from unspent income.

Mosler: Taxation necessarily functions to create 'unemployment' as defined.

Comment: These two guys both need to read and get in touch with @MazzucatoM who knows where earlier innovation actually came from.

Mosler: But unemployment necessarily/only comes from unspent income/deficit too small.

Mosler: Unemployment and innovation/productivity etc. are entirely different matters. Read my book?.

Comment: But remember, balancing the federal budget is not a first principal.

Mosler: For any given size of govt, unemployment means you are grossly over taxed/taxed too much already.

Comment: You claimed the structure of the system demanded more deficit spending (cyclical). I argued structural as NY FED showed.

Mosler: Seeking paid work is the definition of unemployment, and the proof is accepting said offer, no?

Comment: Unemployment is correlated with high minimum wages, high long term govt unemployment benefits.

Mosler: If so, given that institutional structure, unemployment is the evidence the deficit is too small.

Mosler: Unemployment is a monetary deficiency, not a lack of things to do- labor is always scarce- there's always more to do than people to do it.

Mosler: Structural reforms and unemployment are entirely different matters.

Comment: I'll venture a guess. FX rate main driver of Brazil inflation with gvt deficits accounting for zig-zags

Mosler: The unemployment rate tells us it's not aggregate demand!

Comment: @MazzucatoM is super-sharp, reality-based re role of Gov in innovation; reqs a more nuanced take on fiat money Mazzucato: the green entrepreneurial state.

Mosler: Unemployment isn't her issue. She focuses on innovation/productivity/etc.

Mosler: Unemployment is necessarily the evidence the deficit is too small.

Comment: How do we fund the refugee crisis? With a Tobin tax.

Mosler: The CB's just credit the appropriate accounts- no tax needed while unemployment remains elevated ;)

Mosler: School and Unemployment.

Comment: But enforcement is not the same as coercion. Coercion punishes deviant behaviour.

Mosler: Rephrasing: enforced taxation obviates the main stream's neutrality of money arguments.

Comment: I still have to say that means nothing to me.

Mosler: The currency monopolist restricting supply (net fin assets) becomes the source of unemployment ;)

Comment: Blog: The paradoxes of central bankers - I wrote yesterday on what I will be calling a safe haven policy for the w...

Mosler: Unemployment is always an unspent income story only a fiscal adjustment can address. It's not a function of interest rates.

Comment: Can you weigh in on how a proper JG is a superior alternative to "raising the federal minimum wage"?

Mosler: JG facilitates the transition from unemployment to private sector employment.

Comment: How the Labor Cost Competitiveness Myth is Making the Eurozone Crisis Worse: A new article makes a devastating....

Mosler: Unemployment is always an unspent income story. Just hike the deficit limit to 8% of GDP and the crisis is over.

Comment: Steve Keen's Kingston Inaugural Professorial Lecture (with slides and models).

Mosler: It remains that a fiscal adjustment can always be used to eliminate unemployment.

Comment: The belief that you can create jobs without creating new debt underscores a serious conceptual fault.

Mosler: And to your point the distinction between creating jobs and reducing unemployment is most often overlooked.

Comment: The unemployment rate in the St. Louis Zone was 5.0% in Q4, lowest since 2007.

Mosler: Largely due to a shrinking labor force, yet new hires coming from outside that labor force so higher 'functional' unemployment.

Comment: What's the argument for thinking of fiscal stimulus in terms of private balance sheets rather than income flows?

Mosler: Unemployment evidences fiscal restriction that can be immediately removed with a tax cut or spending increase.

Comment: Initial claims for unemployment benefits rose 10,000 in a week to 268,000.

Mosler: Initial claims for unemployment benefits may be low predominately because they have become so hard to get?

Comment: This is not consistent with recession: "72 consecutive weeks of initial claims below 300,000, the longest streak since 1973" - DOL.

Mosler: It's not consistent with anything except that unemployment claims are much harder to get than in prior cycles.

Mosler: If unemployment is elevated, the reported inflation is likely not an excess demand story.

Comment: "We Need Universal Income Because Robots Will Steal All the Jobs" the press finally notices the obvious.

Mosler: But wrong again. Unemployment is always an unspent income story and never a productivity story. And not related to basic income.

Comment: What Taxes are For.

Mosler: The purpose of taxes is to create unemployment (as defined) so govt. can hire those it unemployed to provision itself.

Comment: Read about immigrants’ impact on unemployment, wages in the new Regional Economist.

Mosler: In any case unemployment is best dealt with via fiscal adjustments, and not immigration policy.

Comment: I agree with this: we should be suspicious of the narrative: 'automation is going to steal all our jobs'..

Mosler: Unemployment (as defined as people seeking paid work) is always and necessarily a monetary phenomina.

Mosler: The cause of unemployment, by design, is taxation.

Mosler: Better to call it a guaranteed transition job to promote the transition from unemployment to private sector employment. ;)

Comment: With the convergence of AI, I don't believe full employment will be possible in the future, making universal income a necessity.

Mosler: That's an illogical statement. Unemployment is about unspent income, not productivity.

Mosler: The natural rate of unemployment (as defined) is 0%. It is after creating unemployment that govt. acts to undo the problem it created.

Mosler: Yes the Federal govt. can indeed fix many of our problems, such as unemployment, as it's the entity that has both created and sustained them.

Mosler: 0% is the natural rate of unemployment for any society. Only after taxation is introduced is there any of what we define as unemployment.

Comment: I don't think that time would have come. I think we'd have gone the way of France, Spain and Italy and ended up with high levels of unemployment and long-term recession.

Mosler: Unemployment is always an unspent income story.

Comment: A Job Guarantee is not about working for Tesco’s. It’s about working for Govt within your local community for a living wage on ur own schedule .It’s about workers security but also about social purpose & prosperity of the nation& no one could ever call it “money for nothing”.

Mosler: It's about promoting the transition from unemployment to private sector employment and at the same providing superior price stability.

Comment: Monetary union should contain some form of fiscal transfers between member states to fill this hole. Could create perverse incentives though.

Mosler: I've proposed that as a guideline, the production of public goods and services be located in areas with the highest unemployment. So the ECB, for example, might better have been located in Athens.

Comment: Yeah I see the point and agree. But if unemployment results only because currency is saved rather than used to pay taxes, there's an argument for saying the savers caused it.

Mosler: A tax liability with no gov spending = unemployment. That is "not spending" is the cause in either case. ;)

Comment: It's phenomenal how the left wants the #jobguarantee to meet some purity test of policy effectiveness, a standard never applied to any other progressive policy (tanf,snap,EITC, etc), ignoring the wholesale structural improvements the #JG makes to labor markets & people's lives.

Mosler: Try promoting it as a transition job designed to promote the transition from unemployment to private sector employment, and at the same time function as a superior price anchor... ;)

Comment: Does automation cause unemployment?

Mosler: People confuse productivity stories (automation) with unspent income stories (unemployment).

Comment: You would think that MMTers would be psyched that the US is getting BOTH huge tax cuts & massive spending increases, but the silence in the MMT 'academic' community has been deafening. Perhaps the FAKEMMT 'scholars' should have gotten their PhDs in politics instead of economics.

Mosler: The guaranteed transition job, as I've termed it, is to promote the transition from unemployment to private sector employment, as all studies show private sector employers prefer to hire people already working, and also to provide a superior price anchor.

Comment: A job guarantee is not antithetical to capitalism. A job guarantee is there to pick up those *left behind by free enterprise* FDR was not anti-capitalism. FDR wanted to secure employment as a basic human RIGHT.

Mosler: As taxation is by design the cause of unemployment for the further purpose of provisioning the state, it’s better said the unemployed have been left behind by that state?

Comment: A right to guaranteed public employment is a pro-free enterprise policy. Everyone who wishes can contribute to the labor market and can earn money to access market spending and saving.

Mosler: Yes, the imperative is to promote the transition from unemployment to private sector employment.

Comment: A pure “free market” system cannot generate full employment. One of the best features of the JG is that it creates a stock of employed people, rather than leaving a buffered stock of unemployed, where social capital depletes rapidly, & long-term social pathologies develop.

Mosler: Except a pure free market economy has no state currency or taxation and therefore no unemployment. Not that I’m proposing this! ;)

Comment: As @wbmosler says “it’s like that joke: 2 hikers r startled by a bear, 1 hiker tightens the laces of her running shoes, the other says: ‘U can’t outrun a bear!’ ...‘I don’t need to outrun the bear, I just need to outrun you’”. The JG is the 1st hiker. It’s better than what we have.

Mosler: Yes, as a point of logic, the JG only needs to be not worse or marginally better than any aspect of unemployment- which it is- to immediately implement it.

Comment: Does that imply that without taxation (assuming money continued to work) that there would be full employment?... Because that seems unlikely.

Mosler: Yes there is no unemployment as we define it in non monetary societies.

Comment: To argue that the JG would be the "single largest government intervention in US economic history" betrays the author's poor understanding of history.

Mosler: Taxation is the intervention that creates unemployment by design for the further purpose of the state being able to hire those it's tax caused to be unemployed. The JG works to transition the unemployed back to private sector employment and optimize output.

Comment: We have a system which does not have enough money to repay credit issued with interest. The system can only operate with defaults and asset transfers. Is this the best we can do?

Mosler: If all income (including interest income) is spent, there is no problem. Unemployment is an unspent income story.

Comment: Italy was paying 10% of GDP in interest on public debt, with real interest rates of 4% (nominal rates of 9-10%) and was having inflation above 5%.

Mosler: Yes, I met with CB officials back then suggesting that as rates came down, the annual deficit would fall, inflation would come down, the currency stabilize, the economy decelerate and unemployment go up and they would converge with the rest of the EU.

Comment: David Ricardo was in 1821 talking about effect of mechanization on jobs and wages. But as long as profits were reinvested in economy, new jobs appeared. That stopped with maximisation of shareholder value. Blame financialization & bad governance not robots! I’ll say this.

Mosler: Unemployment is an unspent income story, not to be confused with robots which are a productivity story.

Mosler: And over time the rate of currency depreciation isn't that much different from the policy rate of interest, so it doesn't look 'out of control' to me?

Mosler: Real GDP growth is still over 5% annually and has generally been higher than that, even with their high unemployment. Way better than the UK, Greece, Italy, Japan, US, etc?

Mosler: The state sets the policy rate at 0 and offers a state funded transition job to all takers to both facilitate the transition from unemployment to private sector employment and enhance price stability, and adjusts fiscal balance to minimize the # of transition workers.

Comment: Should be stated much more radically, as sovereign gov. debt in the current neoliberal depression is absolutely necessary = investment in the economy, society and future for our children and grandch. Read "The Seven Deadly innocent frauds of Econ Policy" by @wbmosler & stay calm.

Mosler: Unemployment and the public debt are unspent income stories.

Comment: Here you'll find more economic wisdom & reality than in the past four decades of research by the economic profession. Pls notice that West. national banks confirm their analysis. They are @wbmosler @billy_blog.

Mosler: Note also that MMT alone recognizes the state's currency is a public monopoly, and so the price level is necessarily a function of prices paid by government and NOT about excess demand, as evidenced continuously in states with both high unemployment and high inflation.

Comment: Why Job Guarantees Are Better Than Universal Basic Income.

Mosler: And the JG provides for a superior price anchor than today's unemployment policies. That is, the JG is an anti inflation policy that at the same time supports output.

Comment: I get the problem with borrowing in a foreign currency, but how much capital equipment can you buy with Turkish lira?

Mosler: 1. A lot 2. Any nation can sustain domestic full employment without imports of capital goods, and Turkey has very high reported unemployment.

Comment: Black Panther Party - Ten-Point Platform and Program What We Want - What We Believe 2. We want full employment for our people. We believe that the federal government is responsible and obligated to give every person employment or a guaranteed income.

Mosler: We know that in fact (and beyond dispute), unemployment is a consequence of proactive federal policy that deliberately creates it, and that this policy can be easily and immediately reversed.

Mosler: Do Economic Booms Die of Old Age? Recessions aren’t inevitable, and economists don’t agree on what causes them.

Mosler: Unemployment is always an unspent income story.

Comment: Debt? What debt? At $22 trillion, here's the argument the national debt doesn't matter - CNN....

Mosler: How about "Yes, and MMT is the only analysis that understands the source of the price level and recognizes the JG as a superior price anchor to unemployment."

Comment: Nothing has been more exciting than the last week. It's unbelievably riveting to watch MMT and AOC come together to defend a Green New Deal and a Job Guarantee.

Mosler: Yes, because the Job Guarantee is a superior price anchor to unemployment, the economy can be run that much 'hotter' to get the GND done.

Comment: MMT puts price stability at the core of its approach. It guards against inflation *ex ante* by insisting that the budgeting process itself evaluate inflation risks *before* appropriating any new spending without offsets.

Mosler: And opens the door for superior price stability vs current policy, by replacing unemployment with an employed labor buffer stock policy popularized as the Job Guarantee.

Comment: Again, price stability of what? Because if you're not counting everything that money can be spent on, then you're not quantifying the real consequences of money creation.

Mosler: In a market economy, you only need to set one price and let the rest reflect relative value. That's what the JG wage does and my point is that it does it better than unemployment.

Comment: Exactly! I wrote about this regarding IP from Job Guarantee labor, but logic also applies more broadly. If research in science and useful arts is financed by public money, the fruits of that research should be made available to the public.

Mosler: The JG serves public purpose as a superior ("anti inflation") price anchor vs unemployment while removing most of the negative externalities of unemployment.

Comment: To clarify - I think we all agree JG politics are inseparable from the financing framework. We all want to avoid the problems Kalecki highlighted. If we make the JG dependent on taxes, aren't we...giving the rich back-door capital strike leverage over the transitional demand?

Mosler: From a pure monetary perspective, the purpose of JG is to provide a superior anti inflation price anchor when compared to unemployment, by facilitating the transition from unemployment to private sector employment. Who is against that???

Comment: Yes. And would just emphasize Nathan's point: there is more to MMT's inflation-fighting toolkit than solely raising taxes. The emerging consensus, following Mason/Jayadev and then Barro, to reduce MMT to Lernerism is pernicious and false. MMT was talking Minsky before most.

Mosler: And the MMT 'inflation-fighting tool kit' begins with the Job Guarantee which immediately provides the monetary system with a superior price anchor than today's unemployment, as it facilitates the transition from unemployment to private sector employment.

Comment: No one has produced a careful analysis to work out how much of the net, new spending might need to be offset.

Mosler: Too much net spending = only a one time increase in prices that can readily be reversed, without a drop in employment or output. It does not 'trigger hyperinflation' or anything of the sort. But too little = unemployment and lost output. So what are we waiting for??? ;)

Comment: I'm not against a JG, although I do think it's possible it could lead to "make-work" jobs, although these jobs might still be better than the supposedly necessary jobs that are destroying the climate and ecosphere.

Mosler: The 'monetary purpose' of JG is to 'fight inflation' by facilitating the transition from unemployment to private sector employment. It is effective because employers don't like to hire the unemployed, and prefer to hire people already working.

Comment: Stop sharing FAKE GRAPH kid, here is the real and correct depiction of US employment situation. Your so called PhDs will never be able to explain why employment took so much time to get back to pre crisis level! And your reply clearly shows that you too have solution for these 16mn.

Mosler: Unemployment, as defined as people seeking paid work who can't find it, is necessarily the evidence that state spending is insufficient to cover the need to pay taxes and the desire to save. And all as a simple point of logic... ;)

Comment: MMT is a perspective, a job guarantee is a policy proposal. MMT doesn't force people into anything apart from changing the way they view and describe the monetary system.

Mosler: Unemployment and the jg are Govs policy responses to those that its tax has shifted from the private sector.

Comment: You can't use employment as a buffer stock for price stability b/c employment is only a very rough approximation of the output gap given the advance of technology. B/c tech has marginalized both L and K in the production function, interest rates are neither. MMT needs an alternative.

Mosler: Just saying that if an employed buffer stock works no worse than unemployment that alone compels immediate implementation.

Comment: Random white person to me a sociologist of race: If racism didn't exist you wouldn't have job. Me: Naw, if racism didn't exist ya'll mediocre white people wouldn't have a job.

Mosler: The natural rate of unemployment is 0. It's created by proactive Gov policy and can immediately be eliminated by same.

Comment: Let's try this: Borrower borrows 200k @ 6%, in a 30 year amortized loan. The bank lends $200k & expects $431,700 in return over 30 years. Where does the additional 231k come from, Professor Mosler?

Mosler: Simplel!! Whatever agents that earn the interest spends it. It's always assumed as a base case that all income is spent. That's why unemployment and recession are always unspent income stories. Can't believe you didn't know that???

Comment: The first candidate to recognize Medicare for All is a deflationary event that not only doesn't beg a tax increase, but, to the contrary, is what 'pays for' the rest of the progressive laundry list, leapfrogs to the head of the class.

Mosler: Likewise, for the first candidate to recognize that the Job Guarantee in the first instance provides for superior price stability vs unemployment, thereby adding to fiscal space crucial to 'paying for' the GND, free higher education, etc. etc.

Comment: In place of, or in addition to, a property tax? In general, it is not a bad thing to tax land, but you do run into the problem that many people (mostly older) cannot afford to buy the place they live in.

Mosler: That's why I link it to a job guarantee so no one is 'in the streets' from unemployment.

Comment: I find no compelling economic, political, moral arguments for using the unemployed to stabilize prices. Guaranteeing the right to decent work to all is long overdue. Fed's key responsibilities are regulatory/supervisory, not hitting the 'right' # of jobless people.

Mosler: And because an employed labor buffer stock provides superior price stability vs unemployment... ;)

Comment: OK with us. We took that *on board* years ago. But can you please use car metaphors if you're going to enter this thread?

Mosler: Ok, how about: going from unemployment as a buffer stock to an employed buffer stock (JG) is like upgrading the engine oil to reduce friction, reduce heat, and increase fuel efficiency. ;)

Comment: Sticking with the car metaphors (which is up @wbmosler alley)...how long before they realize the steering wheel was never connected to the pinion gear and the automatic stabilizers have been steering all along.

Mosler: And how about carrying on this debate in the context of an employed buffer stock ,which we know is a superior price anchor vs unemployment, because employers don't like to hire unemployed workers, etc. etc.

Comment: Attempting to manage inflation on the backs of the unemployed is insane and unjust. This is why we need a federal jobs guarantee.

Mosler: And worse, the JG is a superior price anchor vs unemployment. There is no logical reason to not implement a JG asap!

Comment: The Case for a Guaranteed Job by Robert Skidelsky - Project Syndicate.

Mosler: ??? The govt. created unemployment, by design, by imposing tax liabilities, for the further purpose of provisioning itself by spending it's otherwise worthless currency. Residual unemployment is the evidence that the tax liabilities created more unemployed than the Gov hired.

Mosler: Assuming Gov is fully provisioned, it can 'correct its mistake' by lowering the tax until they return to the private sector. The JG promotes that transition from unemployment to private sector employment because employers don't like to hire the unemployed, etc. etc.

Mosler: There is no unemployment as we define it in non monetary societies ….

Comment: Well if you listened to them for hours, you should understand why a FJG is superior to a UBI. There are lots of jobs that could be created to serve the public purpose.

Mosler: FJG better promotes the transition from unemployment to private sector employment than UBI.

Comment: I have never felt comfortable with the Paul Davidson line about there being no unemployment in a school of fish? I know some people find it useful, like my friend @wbmosler? But labor-displacing technical change can create unemployment? Great thing about JG is it cures any kind!

Mosler: Be mindful of confusing a productivity story with an unemployment story... ;) Unemployment is an unspent income story, by identity.

Comment: And we need a Job Guarantee why exactly?3.7% unemployment $1 trillion deficits7.2 million Jobs with only 6 million looking for work. JOLTS Wages rising in Real Terms most at the bottom end. And still importing $600 billion annually. Reality check!.

Mosler: To have a mechanism in place that promotes the transition from unemployment to private sector employment. Please read my 7DIF book thanks.

Comment: Time for all governments to establish permanent #JobGuarantee programmes as a way providing workers with local, stable, and living wage employment. A humane and flexible answer to the massive negative externalities of unemployment.

Mosler: And a superior 'price anchor' vs unemployment for promoting price stability, of course! ;)

Comment: A thread on what #MMT has to say re: small, non-hegemonic or so-called "developing" countries, a vital topic for any truly global & decolonial political economy. @FadhelKaboub has been working on this for decades. But recently many MMTers & fellow-travelers r now taking it on 1/x.

Mosler: In 25 years we've started 3 currencies that have continuously provisioned their universities with student labor- the UMKC Buckaroo, the Denison Dollar and the Franklin Franc with 0 rate policies, 0 inflation, 0 unemployment and in economies that couldn't be smaller or more open.

Comment: This is quite incredible. So, if localities are granted the ability to tax their citizens [in a new local currency] they can utilize their unused resources (perhaps even do their own JG) without interfering with federal currency? Why can’t euro countries do this?

Mosler: They can, but it doesn't end the unemployment caused by euro fiscal policy, as the euro shortage doesn't get alleviated. Just like if it doesn't rain, you can put everyone to work, but they are still thirsty for water.

Comment: Warren when you say labor market is not a fair game according to game theory & that even last worker without a job still needs to feed a family (which sounds like a solid point), how do you reconcile that with empirical evidence of real term salary growth in specific sectors?

Mosler: Supply/demand for specialties? Monopoly power? Etc?

Comment: The Government of India must run a deficit and accumulate debt so that private sector desire for secure and risk-free savings can be met.

Mosler: And we define the evidence that deficit spending is insufficient to meet the need to pay taxes and the desire to net save as unemployment.

Comment: How does one interpret a desire to save without a gov deficit to point to? Say the gov spends 5 and taxes 5, but the PS wants to save - how is that manifested? It can't be.. except by reducing its spending, thus generating a deficit. My brain is now melting!

Mosler: The evidence would be unemployment, all in my 7dif book thanks.

Comment: Okay. Thanks. So, if I'm understanding you, it's one in the same. The issuer choking off currency users is forcing users to save the pittance the issuer gives them. That money is therefore not buying products (which would result in more hires) and also not directly hiring labor.

Mosler: How about any discussion of unemployment is a discussion about unspent income, whether those in the discussion know it or not... ;)

Comment: idk, the way I see it is, unspent income is the cause of unemployment and the solution is the issuer increasing spending\reducing taxes.

Mosler: Hire as needed for 'normal' public sector employment, and fund a transition job for anyone willing and able to work to facilitate the transition from unemployment to private sector employment, as the private sector prefers to hire those already working.

Comment: An explanation that Milton Friedman understood well in 1978: In the international trade area, the language is almost always about how we must export, and what's really good is an industry that produces exports. And if we buy from abroad and import, that's bad. But surely that's upside-down. What we send abroad we can't eat, we can't wear, we can't use for our houses. The goods and services we send abroad, are goods and services not available to us. On the other hand, the goods and services we import, they provide us with TV sets we can watch, automobiles we can drive, with all sorts of nice things for us to use. The gain from foreign trade is what we import. What we export is the cost of getting those imports. And the proper objective for a nation as Adam Smith put it, is to arrange things, so we get as large a volume of imports as possible, for as small a volume of exports as possible. This carries over to the terminology we use. When people talk about a favorable balance of trade, what is that term taken to mean? It's taken to mean that we export more than we import. But from the point of view of our well-being, that's an unfavorable balance. That means we're sending out more goods and getting fewer in. Each of you in your private household would know better than that. You don't regard it as a favorable balance when you have to send out more goods to get less coming in. It's favorable when you can get more by sending out less.

Mosler: Yes, it's best understood as a productivity story- not to be confused with an unemployment story, which is an unspent income story. ;).

Comment: That assumption is in my models. Not sure what you think falls in place though. It's just standard monetary theory.

Mosler: Monopoly restricting supply=excess capacity, so currency monopoly restricting supply of funds needed to pay tax/desired as net savings is evidenced by unemployment. Multiple equilibriums come from multiple fiscal stances by currency monopoly? Also monopoly obviates market clearing. Micro 101?.

Mosler: Ex poste, unspent income = public + private deficit spending. So when private deficit spending slows (=savings rate increase), total spending falls short (unemployment increases) unless public deficit spending increases and fills the gap= unemployment is an unspent income story.

Comment: A model can retrieve the same results as Keynes but still that was not what Keynes had in mind. He is pretty clear that the unemployment problem is not to be found in frictions in the labor market.

Comment: It’s not clear to me that Keynes knew what Keynes had in mind. Here is a quote from his 1937 QJE article: "There are other criticisms also which I should be ready to debate. But tho I might be able to justify my own language, I am anxious not to be led, through doing so in too much detail, to overlook the substantial points which may, nevertheless, underlie the reactions which my treatment has produced in the minds of my critics. I am more attached to the comparatively simple fundamental ideas which underlie my theory than to the particular forms in which I have embodied them, and I have no desire that the latter should be crystal [p.212] lized at the present stage of the debate. If the simple basic ideas can become familiar and acceptable, time and experience and the collaboration of a number of minds will discover the best way of expressing them. I would, therefore, prefer to occupy such further space, as the Editor of this Journal can allow me, in trying to reëxpress some of these ideas, than in detailed controversy which might prove barren. And I believe that I shall effect this best, even tho this may seem to some as plunging straight off into the controversial mood from which I purport to seek escape, if I put what I have to say in the shape of a discussion as to certain definite points where I seem to myself to be most clearly departing from previous theories."

Mosler: Yes there can be persistent unemployment without monop (and other frictions)/labor market won't clear due to issues in the monetary system he described but failed to label as a govt monop where the gov and its agents are the sole supplier of funds to pay taxes and net save.

Mosler: Also empirical, but it means, for openers, that inflation expectations aren't the cause of inflation, and that it's Gov spending policy+institutional structure that turns relative value stories into inflation stories (not that it isn't necessarily 'good policy' to do just that).

Mosler: Assuming a market economy, it follows the Gov need to only set one price and let market forces work such that prices reflect relative value. That's what fixed fx policy is about. With today's floating fx policy, the de facto 'price anchor' is unemployment (rather than gold), etc.

Comment: By writings, Vickrey was close to MMT.

Mosler: Will and I were on the same page, particularly with unemployment being an unspent income story, after meeting with him at a couple of conferences shortly before he died.

Comment: MMTed Q&A - Episode 7 - featuring Dr Pavlina Tcherneva discussing the Job Guarantee with me.

Mosler: My comments: 1. Unemployment defines minimum 'fiscal space'. 2. Job Guarantee does not reduce the ability to import. 3. Currency depreciation does not reduce the ability to import or reduce real wealth; however it does alter internal distribution.

Comment: Seen it, thanks. Animal spirits is about private sector def spending/changes in savings desires. Asset support attempts to support private def spending but the (unlimited) option of public def spending can always eliminate unemployment for example by offering a job to anyone.

Mosler: Demand for the $US comes from tax liabilities+(residual) 'savings desires.' Increased savings desires/lower animal spirits=more unspent income=higher unemployment that requires more public deficit spending or higher animal spirits/higher private sector def spending/lower savings desires.

Mosler: Therefore unemployment as defined always comes down to $US monopolist restricting supply. Once the currency is 'correctly' modelled as a public monopoly utilizing coercive taxation to create demand, it all comes together.

Comment: Warren, you're missing a whole class of models where markets do not clear in the conventional sense. See work of @farmerrf in particular.

Mosler: Seen it, thanks. Animal spirits is about private sector deficit spending/changes in savings desires. Asset support attempts to support private deficit spending but the (unlimited) option of public deficit spending can always eliminate unemployment for example by offering a job to anyone.

Comment: Many great points here, though personally am not ready to abandon "monetarism" as my provisional theory of (trend) inflation.

Mosler: It's never too late... ;) Models say competitive mkts clear and imperfect competition causes unemployment. NK's say its sticky wages, etc. Keynes and I agree it's the Gov/monopoly restricting supply/deficit spending to offset unspent income. Therefore price level= f (prices paid by monopolist).

Comment: My main objection of a job guarantee is that work sucks.

Mosler: It's meant to promote the transition from unemployment to private sector employment because employers prefer to hire people already working.

Comment: I don’t support the job guarantee on the basis of how it might benefit the private sector. So I prefer placing the benefit on people at the forefront of my priorities.

Mosler: Agreed! Taxation causes unemployment, so Gov can then hire them to fully provision itself as mandated to serve public purpose. If unemployment remains after said Gov hiring, they need to transition back to the private sector, which doesn't like hiring unemployed. Enter the JG! :)

Comment: Am I the only MMT aficionado who refuses to concede this?: You're the only MMT aficionado who refuses to concede that if inflation is on target then ceteris paribus increased government spending means increased taxation.

Mosler: For another thing, inflation can be 'on target' with elevated unemployment and excess capacity utilization with that inflation being caused by something other than excess demand, etc. etc

Comment: The point of the job guarantee is not about efficiency. It’s about guaranteeing people economic participation that provides them with an income. There’s much to do that we are neglecting. But Even if that job was digging holes and filling them up again. You’d still see a benefit.

Mosler: And it would still promote the transition from unemployment to private sector employment, thereby providing a superior price anchor/more price stability than unemployment.

Comment: Balance of Payments issues also have economic causes though, as continuing build up of (private) debt can cause financial crises, default, & reversal of capital flows leading to lower growth. So a country running a constantly expanding CAD will not have a sustainable growth rate.

Mosler: Rising unemployment is always a matter of domestic policy response, and full employment policy per se doesn't work against productivity increases.

Comment: The MMT insight - which is literally what created it as a body of theory - is that a JG can be used as a buffer stock approach to stabilise wages. Saying the JG is not part of the theory just says that you don’t understand the theory.

Mosler: The MMT insight (and a contribution to the economic history of thought) is that tax liabilities are the cause of unemployment as defined=unemployment is a monetary phenomena caused by Gov by design to hire the unemployed to provision the gov with its otherwise worthless currency.

Mosler: Because employers don't like to hire the unemployed, but prefer instead to hire people already working, the JG promotes the transition from unemployment to private sector employment, thereby establishing a superior price anchor/buffer stock vs unemployment

Comment: Pandemic Labour and the Politics of Job Guarantees | Novara Media.

Mosler: As per the links I tweeted, the JG functions to promote the transition from unemployment to private sector employment, as the private sector prefers to hire people already working, etc. a process that- to your points- sustains 'loose' full employment.

Comment: Modern Monetary Theory logically proposes national Job Guarantee Schemes to address everyone’s normal needs and protect the environment.

Mosler: To facilitate the transition from unemployment to private sector employment, and not to hire people to do things that the government can hire in the 'normal' way.

Comment: True, but we also need a job guarantee so those who want work can be employed. The salary paid will set the effective minimum wage and will be the price anchor required to maintain stability.

Mosler: Gov in any case can hire anyone it wants to. We need a JG to transition those Gov doesn't want to hire from unemployment to private sector employment.

Comment: Lack of Food Sovereignty, Lack of Energy Sovereignty, Dependence on low value-added manufacturing. We should aspire to be free from these shackles.

Mosler: The first order shackles are high unemployment policy, low productivity institutional structure, exporters in control, and self enrichment of insiders via the banking system and other high level corruption, just to name a few... :(

Comment: There's a difference between a core theoretical tenet, and a core proposal. JG is a proposal in the context of core tenet, eg, a nominal price anchor set by fiscal policy where no solvency constraint exists. But I'm done here.

Mosler: My base case for analysis/clean sheet of paper model includes/begins with a permanent 0 rate policy, no Treasury securities, and a JG to provision the state, and from there subsequent modifications are considered.

Mosler: From there, you could consider replacing the JG with unemployment like we do today. Personally I don't see how that might serve public purpose so i don't recommend it.

Comment: Let's ask the man himself. @wbmosler , does MMT say we should use minimum wage to decide which businesses get to exist? Obviously, setting a reasonable minimum wage is important b/c of the power imbalance between employers and workers, but that's a completely separate issue.

Mosler: What I can do is 1st tell you what happens with my base case which includes JG policy where the JG wage functions as a minimum wage. Then I can tell you what happens if you switch policy from JG to unemployment and a legislated minimum wage.

Comment: Any government that was facing mass unemployment would, surely, want to invest in long term work creation? So why is it that the best we’ve heard of is a £100 billion fantasy moon-shot creating zero hours contracts with Serco?

Mosler: Unemployment as we define it is everywhere and always a monetary phenomena.

Comment: We have designed one and would be discussing it intensively for 2021 implementation in Medan city, Indonesia. Description and infographic coming up. Requesting your and all other mmt experts' inputs. :)

Mosler: I would suggest measuring success by how many people it transitions from unemployment to private sector employment.

Comment: The purpose of tax is primarily to destroy money in the economy to allow the government essential spending without creating inflation. Secondarily to redistribute wealth. Thirdly to deter social actions, smoking say. What it does NOT do is raise money for government spending.

Mosler: First, to create unemployment- people looking for paid work- for the further purpose of provisioning the state via the spending of its otherwise worthless currency.

Comment: Rather than say “create unemployment”, can we say “create demand for employment”? If you concur, It’s easier for us commoners to wrap our heads around this purpose of a tax liability.

Mosler: Unemployment is defined as people looking for paid work who can't find it.

Comment: I enjoyed your essay very much @aaronwistar but strongly disagree w/ the claim that JG controls inflation via wage suppression. JG establishes a firm positive/living wage floor that's missing today. The status quo uses wage suppression based on mass unemployment for inflation control.

Mosler: For me it's about comparing JG to today's unemployment policies- It's the "I don't have to outrun the bear, I only have to outrun you" story.

Comment: I'm so sick of "jobs jobs jobs!" The stark reality is we live in a world where there are fewer & fewer jobs. There will never be enough for all unemployed. We need the rich to pay more tax and a universal basic income.

Comment: Wrong!!! There is always a lot more to do than there are people to do it. Unemployment is necessarily a monetary phenomena. It's the evidence that Gov spending is insufficient to cover the need to pay taxes and the desire to net save.

Comment: Wow, this is was great episode. Michael Hudson and Steve on point and on fire. Debt Deflation and the Neofeudal Empire with Michael Hudson.

Mosler: He's describing an 'unspent income' story that reduces aggregate demand which applies to any unspent income. Unemployment is always an unspent income story, which can only be offset by public or private deficit spending.

Comment: I agree. Every "job guarantee" that does not reduce to people being allowed (and able) to create their own "jobs", "jobs" they believe to be valuable for themselves and the community, will end up in creating duties to fill BS-jobs that are bureaucratically administered.

Mosler: It's about using today's unemployment policy as the price anchor or adding a (voluntary) JG as a price anchor, leaving current unemployment benefits as they currently are.

Comment: Not as I understand it. The goal is to give decent paying jobs to everybody who wants them. Except they don’t really have to be jobs as everybody understands that word. So why don’t we just give people money. And let them figure out what they want to do. Same thing, right?.

Mosler: No, the goal of a JG is to promote the transition from unemployment to private sector employment for those remaining unemployed after the public sector has fully provisioned itself. That is, if Gov wants more workers, it should hire them at current rates of pub sec pay/benefits.

Comment: Yet game theory is also in people’s heads & doesn’t exist anywhere in the universe except for where there is consciousness making mistakes about things. So saying what some people think contradicts what others think is surely meaningless? Action makes thought real, even if wrong.

Mosler: In that, regardless of the rate of unemployment, 'the labor market' isn't a 'fair game' as people have to work to eat, so to speak, while employers only hire if they like the return prospects. So without 'external support' real wages gravitate toward subsistence levels, no?

Comment: If AI and automation are going to take jobs at an accelerating pace as many say, is a declining labor force a negative or something that increases social stability?

Mosler: Confuses a productivity story with an unspent income story.(Unemployment is an unspent income story)

Comment: Keynes' own words here are good too ... not sure whether @tragicbios included that in his write-up:" The contention that the unemployment, which characterises a depression is due to a refusal by labour to accept a reduction in money-wages [nominal income] is not clearly supported by the facts. It is not very plausible to assert that unemployment in the United States in 1932 was due either to labor obstinately refusing to accept a reduction in money wages or to obstinately demanding a real wage beyond what the productivity of the economy was capable of furnishing."

Mosler: Unemployment is necessarily the consequence of the Gov- the currency monopolist- not spending enough to cover the tax liabilities it imposed + 'savings desires'.

Comment: A JG meets the call of the United Nation’s Universal Declaration of Human Rights and FDR’s Economic Bill of Rights by recognizing that the access to decent work is a basic human right and a precondition to social and economic justice.

Comment: Am I missing something? could this work?

Mosler: Said another way, why isn't it a violation when a Gov policy creates and sustains residual unemployment?

Comment: For openers, the Job Guarantee is meant to facilitate the transition from unemployment (workers not in the private sector) to private sector employment, which reduces the size of government and provides for a better price anchor than today's unemployment policy. Next question?

Mosler: (every dollar accepted for tax payment). ;)

Comment: The boss-less forces of the EU economy and politics will co-contribute to break the euro.

Mosler: Hence my proposal that whenever possible, public service provision should be directed to the highest unemployment regions. For example, the ECB HQ could have been built in Athens.

Comment: Remind me which sector public sector workers spend their money in again? Another example of how "my taxes pay for this" drives private sector workers to not only accept downward pressure on their own wages, but to sabotage the sector on the whole via lost income. Bizarre.

Mosler: Unemployed are also in the public sector, as tax liabilities/fiscal balance removed them from the private sector. So it's about both decent pay/full staffing and supportive unemployment benefits, and a JG to help transition unemployed back to private sector employment.

Comment: Well, if the Fed doesn't actually have a yield curve target, the effect of its bond purchases on the yield curve would be a wash. Are you saying there is no demonstrable effect of Fed bond purchases on the long rate since 2008?

Mosler: So if markets believe Fed bond buying increases demand/lowers unemployment, forwards rates would go up. So, ironically, QE leads to lower long rates only if markets believe QE doesn't work to increase demand/reduce unemployment? ;)

Comment: The answer is YES! Colossal fiscal support, much more generous than we are offering currently, is needed to support compliance with social distancing, and to compensate those affected as much as possible.

Mosler: Unemployment (as defined) is always an unspent income story.