In 2008, around the same time Lehman Brothers collapsed and the mortgage market began to melt down, I got a call telling me my student loans were in default. I remember trying to grasp the logic as I spoke to the collector. Because I didn’t have money, they were increasing my principal by 19 percent. My balance ballooned, as did my monthly payments, which meant I was even more broke than before. My credit score tanked, further compounding my financial woes. When I got involved in Occupy Wall Street a few years later, I realized my situation was hardly unique. Most people drawn to the encampments were also in the red.
One of the readers of this blog recently asked me my views on topics such as the call by some left economists for a general debt forgiveness (Debt Jubilee), on Modern Money Theory (MMT or sometimes referred to as ‘Magical Money Tree’), and the Federal Reserve bank (central bank) pre-emptive bail outs of banks and non-banks underway and whether the latter will succeed in generating an economic recovery from the current deep Coronaviral impacted US economy. What follows are some of my quick reflections and commentary on these topics. My views on monetary policy are somewhat summarized by the argument that in the current era of finance capitalism dominance, monetary policy has been the first and foremost choice of capitalist governments and policymakers.