Dr. Jack Rasmus, Ph.D Political Economy, teaches economics at St. Mary’s College in California. He is the author and producer of the various nonfiction and fictional workers, including the books The Scourge of Neoliberalism: US Economic Policy From Reagan to Bush, Clarity Press, October 2019; Alexander Hamilton & The Origins of the Fed, Lexington books, March 2019; Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression, Clarity Press, August 2018; Looting Greece: A New Financial Imperialism Emerges, Clarity Press, Sept. 2016; Systemic Fragility in the Global Economy, Clarity Press, January 2016; ‘Obama’s Economy: Recovery for the Few‘, Pluto Press, 2012, ‘Epic Recession: Prelude to Global Depression‘, Pluto Press, 2010, and ‘The War at Home: The Corporate Offensive from Ronald Reagan to George W. Bush‘, Kyklosproductions, 2006. He has written and produced several stage plays, including ‘Fire on Pier 32‘ and ‘1934‘. Jack is the host of the weekly radio show, Alternative Visions, on the Progressive Radio Network, and a journalist writing on economic, political and labor issues for various magazines, including European Financial Review, World Financial Review, World Review of Political Economy, ‘Z‘ magazine, and others. Before his current roles as author, journalist and radio host, Jack was an economist and market analyst for several global companies for 18 years and, for more than a decade, a local union president, vice-president, contract negotiator, and organizer for several labor unions, including the UAW, CWA, SEIU, and HERE. Jack’s website is www.kyklosproductions.com where his published articles, radio-tv interviews, plays and book reviews are available for download. He blogs at jackrasmus.com, where weekly commentaries on US and global economic matters are available. His twitter handle is @drjackrasmus.
Jack is the owner and principal of Kyklos Productions LLC, which produces stage plays, books, and public presentations. Jack is also available for keynote and other speaking events on various economic and political topics. Jack may be contacted at his business email, rasmus@kyklos.com, or by calling the Kyklos Productions business line at 925-999-9789 or 925-209-3933.
Very happy i found your site! Well documented and very interesting!
Good luck from Belgium!
Bernard
SOCIAL SECURITY
What’s it all about?
PREFACE: Before one is able to solve a problem, one must recognize, understand, and analyze the problem until one has the requisite information and facts to make the best conclusion to mitigate or resolve the problem.
PROBLEM: Regarding Social Security (SS), it appears that, given the current structure of the program, funds necessary to support the program will be insufficient within a given number of years.
WHAT CAUSED THE PROBLEM? The SS program was never actuarially sound due to its original structure (1% of first $3,000 wages) as a Ponzi scheme (FDR may have thought that over time, adjustments would be made to fix the program). Over the years, changes have been made, but only to enable a delay in the inevitable. The problem has been exacerbated by such phenomena as being entitled to receive SS after only being in the workforce for 40 quarters, not all workers paying into the program, et cetera.
SHOULD THIS PROBLEM BE RESOLVED BY ENDING IT? The question is whether or not this program is appropriate. Does it seem rational that the workers who have participated in the workforce for 40-45 years should be entitled to retirement benefits?
Congress, over many years, has issued its many stamps of approval of stimulating retirement funding, e.g., defined benefit and contribution programs, Individual Retirement Act, 401k program, et cetera.
Obviously, Congress is not perfect and may have been wrong in issuing these “stamps of approval”, but the probability is about 99.9% that our legislators were correct, thus a logical conclusion should be that the SS program should not be eliminated.
SHOULD THE SS PROGRAM BE MODIFIED? Although less so now than 40 years ago, the SS program remains a quasi-Ponzi-like situation, thus it must be modified.
HOW SHOULD THE SS PROGRAM BE MODIFIED?
The program includes revenue and obligations.
Presently, the revenue is generated by charging workers 6.2% of his or her wages, up to a maximum of $106,800 per year plus a matched amount by the employer. http://www.ssa.gov/planners/maxtax.htm#maxEarnings
Had the maximum limits, per the hyperlink, been $106,800 since inception, there would be trillions of additional funds within the SS trust fund. Further, if there had been no maximum, the fund would have benefited by additional trillions. Lastly, had all income been subjected to this “tax on income”, there would be even more trillions.
There must be a substantial reason why only earned income has been subjected to this “tax upon income” and why there has been and remains a limit upon the amount subject to this “tax upon income”.
Another “interesting” factor is that not all wage earners are subject to this “income tax”.
If the above had been done, every retiree would have an account that was fully funded to the extent his or choices could be: rollover into a self-directed IRA, an annuity, etc.. This “asset” would not disappear upon death, i.e., it would be included in one’s estate.
The bulk of the obligations are paid to retirees who have reached the applicable ages.
In December 2009, 64% were retired workers, while 15% were disabled workers, 8% were children, 8% were widows, widowers, and parents, and 5% were spouses.
There could be an excellent argument that only payments to retired workers should be paid from the fund, while these other payments should come from the general fund.
NOTE: If it were appropriate for a company to fund retirement obligations for its employees, why would a nation not fund the retirement of its workers?
The obligations would be no less valid than those for defense, education, et cetera.
As a competitive benefit, if the funds were an obligation of the federal government, the cost of producing goods and services would be reduced, which would enable companies to be more competitive regarding Japan, Inc., China, Inc., Brazil, Inc., et cetera. This would, also, be valid regarding the delivery of health care, i.e., any costs, which can be shifted from above the line to below the line would enable companies to be more competitive.
CONCLUSION: By far, the best modification would be for a change from charging workers and employers to single-payer government funding.
Until the change can be effected, legislation should be passed, which would assess this taxation on all income, earned and unearned, without limitation.
The answer to the above question regarding the reason why only earned income has been subjected to this “income tax” and why there has been and remains a limit upon the amount subject to this “income tax” should be apparent and intuitive, i.e., the upper income earners would pay more. This, in essence, is why politicians, both Democrats and Republicans, and “talking heads” have been “tenderizing” the People.
I ask everyone to contact his or her Representative and both Senators to inquire as to how much of our massive current federal deficit of approximately $1.6 trillion is attributable to Social Security. The answers will astound most.
HINT: The answer is ZERO!
mz
April 12, 2011
Modified June 15, 2011
mikiesmoky@aol.com
Re: Medicare
Medicare is funded by collecting 1.45% from wages of employees and another 1.45% from the employees’ employers.
No taxation is charged against passive income such as rents, dividends, interest income, capital gains, et cetera. It doesn’t appear equitable that only earned income is assessed this tax.
I recommend that Congress legislate that 2.9% will be assessed to all income.
Further, I recommend that your office contact the CBO to ascertain what effect this would have upon the financial condition of the Medicare Trust Fund.
Thank you,
Michael Z
Sherman Oaks, Ca.
mikiesmoky@aol.com
June 5, 2011
KABUKI THEATRE: GOOD COP, BAD COP
The Democrats (“playing” the “role” of the good cops, but are just a different degree of bad) and the Republicans are starring in a playful farce designed to tenderize the People by inundating them with poorly designed scripts, but sadly these poorly designed scripts should be sufficient to accomplish the “immorality” of the play.
Sometime, prior to August 2, 2011 (the date that our esteemed Treasury Secretary has suggested will be the Armageddon date regarding the extension of the federal debt ceiling), our “leaders” will present a plan to mesmerize the People into a numbing acceptance as a coup de grace.
This presentation will include “adjustments” to Social Security, which has nothing to do with our federal deficit, dramatic reductions in Medicare and Medicaid, and more layoffs.
If this immorality and poor economics is accepted and ensconced into legislation, our economic woes, which I characterize as “economic erosion”, will worsen.
There are simple solutions to our economic malaise, but unbridled greed is blocking rational solutions from even being discussed.
My own Congressman, Brad Sherman (D), appears to be complicit in this Kabuki Theatre.
mz
mikiesmoky@aol.com
I think youve made some actually interesting points. Not as well many people would really think about this the way you just did. Im definitely impressed that theres so very much about this topic thats been uncovered and you did it so well, with so very much class. Great 1 you, man! Really good stuff here.
Good day! This is my first comment here so I just wanted to give a quick shout out and say I really enjoy reading your posts. Can you suggest any other blogs/websites/forums that cover the same subjects? Thank you!
About Jack Rasmus Jack Rasmus Pretty nice post. I just stumbled upon your blog and wished to say that I’ve truly enjoyed browsing your blog posts. In any case I’ll be subscribing to your feed and I hope you write again soon!
Unless one realizes the fed is a criminal syndicate lending bogus bux to treasury for which citizens pay with incometaxbux..any discussion of economics is profoundly incomplete and therefore inaccurate. If treasury printed the dollars instead of the ngo fed, there would be no devastating national debt. Why does congres let this happen?
Believe it or not unlike the Brits in The ideal Exotic Marigold Hotel, who want to leave England I would adore to retire to England. I like that country!
Gosh, I enjoy your articles, I wished they were more accessible to less educated people. I am easy and a little dumb. So this is how I would explain the growing inequality. Bear with me, I simplified a lot, but I hope you can get the basic message.
In modern days money are a system that supports transactions, it is not wealth (or it shouldn’t be).
Now simplifying things a lot.
Imagine a system in which you have a house. A house that was paid 100, now is paid 140.
The transaction requires an increase in money supply of 40. After the transaction you have a money supply of 140 and the same house. The transaction didn’t create any increase in the real value of the system… one house before, and one house now.
That’s how it works in its basis. Now let’s open up that system:
After that you have different options:
• If the excess liquidity is used by the seller to buy land and to build a second house… that surplus was the seed for the growth of real value of the system, now you have one house and a second one being built, so the system is really growing, the money available and the value of the system tend to sync.
• if the excess is used to buy consumers goods, system might still grow, the difference between value created and money available is the origin of inflation. The real value of the system lags a little bit behind the growth of money supply.
• what happens however if the the buyer and the seller keeps buying and selling the same property? You and me. I buy your house for 140, then I resell it to you for 160, then I buy it back at 180.
I am afraid that the money supply satisfies the need for those transactions, thing is… the system real value is always the same. In a similar system where money seems easily made we are not creating value, monetary income is created by a bubble, and inflationary transactions on assets.
Now we are in a situation in which money supply is controlled by the same organizations and people that benefit the most in creating monetary income. Creating monetary income in a system that is not growing… is basically a transfer of wealth from the actors that operate in the real part of the economic system (mostly fixed income) to the actors that work with monetary income because the same real value is spread proportionally to the money available that are supporting its transaction system.
It is a little bit of a scam… money supply as it is. I hope you can read this, I am sure you are a very busy gentleman. One day we might also discuss how derivatives might contract or expand the monetary supply (real or perceived contraction or expansion) acting not only geographically but also moving money supply in time, very much like a time machine, I find it fascinating, but I am missing a way of describing it in a simple way…
Thankyou, professor, for a clear and important essay.
Keep writing and teaching.
what is your position on the Federal Reserve as a private issuer of the currency?
I am finding your insights about capitalism very interesting. Especially when you are writing about competition in ‘good and bad’ economic times. I would like to invite you to be interviewed on our internet radio station, bridges programming.com.
unless the fedbank and the other faux central banks can be nationalized , we will all suffer the currency collapse ; even the ruling elite who own the world’s faux central banks will suffer ..they don’t think it will hurt them
larry bought lanai
On your Counterpunch article today, a little perspective is in order.
If you entered the market 20 or even 5 years ago you are still ahead of the game:
http://www.tradingeconomics.com/china/stock-market
And only 8% of the population has stock market investments.
Time to stop parroting the Western (eg, NYT) doom and gloom about the world’s number one economy in PPP terms, according to IMF. And growth of GDP continues at ~ 7 % so far.
So China will pull way ahead of the US.
Additionally there are other better signs for the Chinse economy. 35% of its GDP is not financials as with the US. That is worthless to the real economy as even Paul Volkert had to acknowledge.
Some replies to your points:
First, what’s important is not 5 or 20 year comparisons. The structural changes in China and global capitalism are the consequence of the last 10-15 years. China had a temporary boom in 2010-2013, so its problems represent the unwinding of that temporary boom since 2014. What’s important to understand is what’s been happening since 2013-14, and the massive liquidity and debt acceleration in China, the financial bubbles that keep appearing and popping, and the financial instability that keeps growing as debt and liquidity keep growing.
Only 8% of the China stock market has stock investments? OK, that’s 50-70 million adults as retail investors in China. They’re the ‘herd’ and reflect a situation much like 1928-29 US speculation in equities.
Growth is not occurring in China at 7%. Only if you believe the GDP figures. Look, all economies are now manipulating GDP data to different degrees, not just China. If you look at other real indicators, with manufacturing declining throughout the year, with construction down 14%, electricity, freight shipments, etc., then China in the second half of the year 2015 has slowed dramatically, way below the official annual 7% rate.
China financial sector contribution to its GDP is still a significant 20%, which is actually an argument in support of my view that the real economy there is doing worse than reported. Overlay on that the instability in currency, which will continue to devalue and the unwinding of stock values, which have another 20%-30% at least to go. The global economy is slowing, already in an industrial production recession and close to stagnating in terms of global trade as well.
And, as i’ll argue shortly, the US economy will ‘surprise’ with a significant slowdown in 2016–much like the ‘relapses’ experienced in each of the last four years. With global oil going to $20, and all the above, can you really believe that China will grow at 7%?
gvt debt is the threat to the economies of the world …
Jack: Thanks for the very informative article about Clinton on Counterpunch today. He clearly failed most of America.
So important to hear this content on the roots of today’s economic collapse, re: Ronald Reagan and Bill Clinton. Thank you for the recent history lesson.
Two points, though: Ronald Ray-gun, not Ree-gun (Donald Regan/Ree-gun) was the Sec of Treasury.
And please get on a better phone.
This content is too important for people to hear for any small details to distract.
Also, better to list comments on your web site most recent to oldest so people can see this site is being updated regularly and that people ARE listening and responding. They see a comment from 2011 currently at the top.
Thank you again.
[…] this interview, Dr. Jack Rasmus, a professor of economics and politics at St. Mary’s College of California, analyzes these issues […]
[…] this interview, Dr. Jack Rasmus, a professor of economics and politics at St. Mary’s College of California, analyzes these issues […]
I guess Dr. Rasmus would agree with much of Donald Trump’s view on the US economy.
Not at all. I happen to disagree with his positions on taxes almost totally, his views on how to create jobs, protect social security, medicare, ACA-Obamacare reform, immigration, and just about everything else. And I don’t believe he will do anything in fact about free trade despite all his blustering (nor will Hillary). Just because I am equally critical about Clinton’s proposals doesn’t mean I agree with Trump. Readers and Americans in general have to get over this myopia in which they think there’s only one wing of the Corporate Party of America (Demos or Repubs) they have to choose and nothing else exists. Both are inveterate liars and when elected do what their wealthy campaign benefactors tell them to do. Remember Obama 2008, a good example. I agreed more with Sanders’ proposals, but he chickened out and abandoned his historical mission and threw in with Clinton in the end (or maybe he was always there in the beginning; we’ll never know). As an adviser to Jill Stein, I agree with more of her positions (which once were traditional Democratic Party positions decades ago). Hillary will get us into another war; billionaire Trump will take care of his own class; both will trample on democracy, civil liberties, and expand domestic surveillance. Nothing will change until Americans stop voting for either and both of the two wings of the Corporate Party of America and choose instead independent politics. That political rebellion has already begun. Next phase is for the disaffected and alienated to move beyond expressing their discontented and opposition through either wing of the CPA–Sanders or Trump. Next step is to oppose by moving outside the two-wing single party system.
Debt is immense.. 19 trillion and skyrocketing.. Unless you include the criminal debt in economics, you don’t have the picture
[…] this interview, Dr. Jack Rasmus, a professor of economics and politics at St. Mary’s College of California, analyzes these issues […]
[…] this interview, Dr. Jack Rasmus, a professor of economics and politics at St. Mary’s College of California, analyzes these issues […]
[…] About Jack Rasmus […]
Dr.Rasmus.On PRN You discussed if interest rates increase in the US .Then money will flow out of other countries into the US to seek a higher Return.BUT this is not always true . AS of today 6/15/2018 EUR/USD =1.1612+0.0039 (+0.34%)
.
NOW SINCE THE EURO IS 16% GREATER IN VALUE THAN THE US$ .WHY WOULD THE HOLDER OF the Euro .Convert to the US$ at an interest rate of 2.5%>When hanging on to the Euro he would earn interest PLUS the premium value of 16% against the US$ ??
What matters is the direction and rate of change expected for exchange rates and currencies. Yes, the Euro is 16% more but is headed lower. That means investors holding Euros will see their values decline if they hold onto euros. Simultaneously, they see the dollar rising. If they could convert to dollars, they will realize paper profits from dollar appreciation. Of course, what I’m referring to here are currency traders. But if the dollar keeps rising (due to Fed rate hikes) and the Euro doesn’t (as the ECB continues QE for another year, which it just announced) then the exchange rate trend of dollars-euros will continue to produce a growing gap (i.e. the Euro will continue to fall below 1.16 to the dollar). It’s a kind of capital flight, from Europe to US. The capital flight from emerging markets (Argentina, Brazil, and soon Mexico–not to mention Turkey, Indonesia and even India) is an even more extreme version of this process. By the way, the holder of Euros is not actually earning anything more by holding euros, even if the value of the euro is 16% more than the dollar. And the value of his euro based investments (on paper) will fall as the euro falls in relation to the dollar.
What’s your position on the danger of the national debt
The US federal government (national) debt is about $20 trillion now. Under Trump it will rise over the next decade to more than $30 trillion. (This does not count sdtate and local government debt, also high and rising. Nor does it count the central bank’s debt or more than $4 trillion. And there’s other government agency debt obligations, like mortgages at Fannie Mae, etc. The problem with such large government debt is that the interest charges on it also accelerate. We will be paying well in excess of $500 billion a year in interest charges on the debt, maybe even closer to $1 trillion a year than $500 billion, within the next decade. That’s a $1 trillion that must come out of the US budget (at the cost of other spending); or must be borrowed by issuing still more Treasury bonds. The problem compounds itself. As the debt rises, the central bank must issue and sell more bonds to cover the debt–making it worse in the longer run. We already see the central bank under Trump now raising rates to cover the rising debt under Trump, which is due to the $3 trillion net increase in Trump tax cuts and the continued escalation of defense spending. By the way, this is the real debt problem—escalating interest payments on the debt–not the rise in social security retirement as baby boomers retire.that obligation is paid from targeted payroll taxes, and the projected shortfalls can be easily offset by reforms that lift the ‘cap’ on the threshold of the tax and/or add capital incomes to the taxation.
Do you see the faux central bank as the reason for the debt ?
Certainly for the last 30 years at least, the central bank (starting with Greenspan) pumped excessive liquidity into the US and global economies that has been, and continues to be, the fundamental source of excessive debt creation. (Although new ‘forms’ of credit, not dependent on central bank fiat money, have been appearing increasingly, and banks now issue credit based on past credit (eg margin buying, derivatives, etc.). The excess debt causes financial crashes, in response to which the central banks issue more debt to temporarily stave off the crisis, leading to more crashes longer term. Governments also subsidize business with tax cuts, direct subsidies, etc. Central banks bail out private banks, in the process transferring the private debt to their own balance sheets. National government bail out everyone else, transferring their debt to themselves, while spending trillions on wars, defense and tax cuts, raising debt further. Why does it go on? Because the rich make so much money off of it and think the government can bail them out each time. They don’t believe there’s an ‘endgame’ to it all. So the central bank is just an institution, one of several, that acts as an intermediary to the debt creation.
Excessive liquidity? The FED is a counterfeiter… the Fed is a cancer… Indebting us unnecessarily..
die falscher lends.. government spends has IRS extract… pays loanshark back
You think we can borrow another 10 trillion without collapse ?
Hard to say or predict how much debt load the US economy can sustain. $10t more will be around 150% to 200% of US GDP. Japan and China both have debt to GDP loads higher even today. No one knows
The federal debt is wrecking us.. you can not believe this statement.. bankers are fucking your future .. you will defend them… you have the slogans… it can’t happen here.. this is America …’they’ wont let it happen…
‘They’ are The Gray State… The elite… The CFR… The Bilderberg Group… the Neo cons… Whatever you want to call them… The elite want you dead… Population reduction 95%… national federal debt is the weapon…
you think the debt will go to 30 trillion… Question why debt the first place … That is the weapon the elite will use to bring down the world… Insert the slogan of your choice… It can’t happen… We’ll just print more money…
News flash central banks are private organizations… They counterfeit their respective Nations currencies… Lend these false scrip currencies to governments as a debt plus interest… Does anybody see the folly of continuous borrowing to try to run a country… A collective state… a city… A corporation… A household???
Bribery is the answer… governments including our own have been bastardized 2 borrow money instead of printing it… Who benefits? The respective central banks… For example the Federal Reserve Bank Corporation is a private NGO… Chartered by Wilson to print United States notes… What an incredible f****** franchise…
Read my book, ‘Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression’, Clarity Press, August 2017, for an indepth historical analysis of the Federal Reserve (including its origins), what its functions are, why its ‘tools’ are failing, why its ‘targets’ are phony, and how it’s become today an institution whose role is the permanent subsidization of the banking system. (And how it must and can be radically changed)
Dr Rasmus,
In your latest podcast (quaking bond market) you referred several times to “negative interest rates.”
Please explain what it is, how it works and how does it motivate (apparently many) investors.
Thanks
On one show you said you might cover Modern Monetary Theory. Please do that.
mmt is horseshit..it ignores the parasite eating our guts.. the f****** Federal deficit… The national debt if you prefer… 22 f****** trillion dollars… 99% of your people ignore or deny this horrendous debt… 99% of you don’t understand the consequences of this debt…
Somebody once said you can ignore facts but you can’t ignore the consequences of ignoring facts… I agree… If we don’t stop these f****** Bankers from draining our economy by printing fake dollars, we will get the collapse that we deserve…
I’ll be posting more of my view on MMT in next couple of weeks.
mmt is horseshit the NGO fed in collusion with gvt has caused the taxpayer debt of $23 TRILLION…
mmt has no answer for that obscenity.. what happens when munchkin defaults ? ? ?
I will soon provide my critique of MMT (Modern MoneyTheory) that is the latest rage of some progressives in economics. Briefly here, its problem is that it’s a restatement of 18th-19th century classical economics, which focused almost solely on money supply and understood little about money demand and money velocity largely due to the fact it could estimate money supply and had no way to estimate money demand. MMT is a throwback theory, adapted to justify fiscal stimulus. It is Quantitative Easing, QE, turned on its head. It is an attempt to turn the ideology of QE (the purpose of which is to subsidize capital incomes) on its head, and use ‘inverted QE’ (i.e. MMT) to redirect liquidity (money) creation into government spending and household incomes–instead of traditional QE that directs liquidity into capital incomes. MMT is an ‘ideological adaptation of the ideology of QE’. Much more on this later. First I must finish the concluding chapters of my next forthcoming book, ‘The Scourge of Neoliberalism’ (of which QE is a monetary policy and ideological justification). I promise readers thereafter a thorough critique of MMT (as well as its related ideological creations, QE and public banking). Dr. Rasmus 4-7-19
[…] By Dr. Jack Rasmus […]
Interesting. You should invite Stephanie Kelton of UMKC to debate MMT with you.
bellsa@umkc.edu
mmt is alphabet soup…. word salad… the criminal syndicate AKA the Fed is responsible for the USA national debt of 23 trillion … for which the tax payers are responsible…
the ECB is the same criminal Enterprise run by the same criminals… Rockefeller and Roth schield….as are most central banks around the world …….
wake up sleeple
workers / works
Will the World Economic Forum’s “Great Reset” have an effect on our economy?
I came across your article about Gamestop on Counterpunch. It reinforces my prejudices regarding financieers being thought of as beneficial investors in a real economy (that is, providing material benefit to society.)
If they want to play their clever casino games, fine. But let them play with casino chips. And let their winnings (not earnings) entitle them to no more of a claim on the production of the real economy than if it were Monopoly money.
Thanks for your good work,
Dean Rao, Sidney, Nebraska
Well said!
Jack. I listen to you all the time on The Critical Hour and always enjoy your perspective. Frequently, you refer to the 120 billion per month that flows from the fed to banks and wall street. If possible, on a future appearance, can you give a complete layman’s breakdown of how that happens. Logistically, how does it happen. I just cannot grasp how exactly it is done and why.
Many thanks. Great work!
Joe Clifford
will do
Hi Prof Rasmus,
Hecter Mendez and Clayton Hagy (former students) would love to take you to lunch sometime.