Personally, I believe this discussion has been highly educational in many, many respects. It's also the deepest discussion on the subject on LinkedIn, which does have a number of members (which will also likely increase) who may use this discussion as a source to at least see where the points of departure are (or were after they have been further narrowed and resolved; I'm an optimist).
The format is difficult; and it is also difficult to retain every member's train of thought in one's mind at once, especially since people come from different backgrounds on these issues (different first and following exposures to the various schools and to different degrees and use different jargon). Patience is a virtue, and by saying that, I certainly do not mean to cast aspersions.
I see some validity in everyone's position but do need to focus in on Ellen's double-jeopardy concern before I move on from this particular thread/discussion. I will attempt to do that without posing new questions or even necessarily posting here again (I don't preclude it).
Also as time permits, I intend to spend some time on Yamaguchi's modeling. My eyes glossed over when I first looked at it (months? ago) not because I thought I'd be unable to follow it all but because I realized how much time would be required to perhaps "see" the issues there that have been expressed in this discussion. I'm anticipating (hoping) they are there and that they may be pulled out and set in isolation for the benefit of all.
As to Ellen's main point (aside from her objections to the money-multiplier in general), I hope this will help:
SEC. 402. REPLACING FRACTIONAL RESERVE BANKING WITH THE LENDING OF UNITED STATES MONEY.
(a) Conversion Process-
(A) IN GENERAL- All deposits at any depository institution shall be designated as and treated as United States Money (either cash or an electronic equivalent) and as transaction accounts.
(2) OUTSTANDING CREDIT- Any asset of a depository institution that results from credit extended against, is attributable to, or has been accounted for with respect to, amounts described in paragraph (1)(A) shall, as of the effective date--
(A) be a liability of the depository institution to the Federal Government; and
(B) as the outstanding balance is repaid pursuant to its terms, shall be paid over to the Federal Government.
SEC. 402. REPLACING FRACTIONAL RESERVE BANKING WITH THE LENDING OF UNITED STATES MONEY.
(d) Transaction Accounts-
(1) FRACTIONAL RESERVE BANKING ENDED- The regulations prescribed under subsection (c) shall provide that--
(B) a dollar of United States Money shall be on hand or in a Federal Government account for each dollar in a transaction account; and
Regardless of the degree to which MMT sees deficiencies in the money-multiplier model, it is clear that there is a national debt and that there is interest on that debt and that there is great difficulty in the world over the issue of government bondholders (the tyranny of the bondholders) taking hits versus the general population taking hits via austerity. There are also very real possibilities for major inflation and/or deflation if the system itself is its own "bad bank," which I believe the Fed is being while trying to "kick the can down the road" forever while the people are forced into any and all austerity to payoff/work off the debts of those who crashed the system greedily, recklessly, and in some clear cases, intentionally since they would be bailed out as being "too big to fail" and then able to consolidate (the big fish have swallowed many better smaller fish using Fed loans) and not face prosecution for all of the very clear fraud Bill Black has pointed out.
On top of all of that, we have the Republicans in general, with the aid of many Democrats, obfuscating the causes and turning the whole cause and effect reality on its head blaming regulation when Glass Steagall would have prevented what happened. We have libertarian capitalists saying the Fed itself is a regulatory nightmare, which in many respects, it is; but the answer is not laissez-faire but rather public money and public banking, which are both socialism whether people are too squeamish or rather cowardly and cowed to say so.
Frank Luntz is warning Republicans not to say "capitalism" but rather economic liberty. So, now we can't say socialism, and we won't be seeing capitalism in the mainstream corporate media if Frank has his way. There's nothing but fear, cognitive dissonance, and word-gaming going on with all of that. It's still socialism v. capitalism, and we live in a mixed, coercive economy. Let's avoid being immature about it.
Whether or not MMT sees the people's labor as the first source of wealth and coming from the "land" or the elements as the common inheritance of all in the first sense, we do have a privatized banking and privatized money system. I see no justification for either. I only see short-sighted selfishness in both as they stand today.
I have come particularly to appreciate Scott's approach to thinking about much of all of this. While I'm not in Henry George's or any secular camp, per se, on top of all that's been said, I even want to mention that I am definitely in favor of land reform and redistribution. I want it voluntary, but I'm not in charge of that here and now. We only proselytize.
For practical purposes, how do we get from point A to B?
Clearly, the NEED Act is not written to suggest that the spirit of it is to hit the banks. If we are to make money public, which I say is a must, while avoiding creating unnecessary, even unfair, banker liabilities, then the following:
The Conversion Process should establish a date after which no fractional-reserve lending may occur or be rolled over (automatically or otherwise to be re-upped) as such and shall require that "as the outstanding balance is repaid pursuant to its terms, shall rather than be "paid over to the Federal Government" shall be deposited into the Federal Government Revolving Fund to be used for, among other things stated in the Act, clearing legitimate, applicable checks such that the banks will not be liable for same as a result of the said Conversion Process.
With tweaks, that's doable.
Of course, that doesn't address the issue of making public the banking system and regardless of governmental jurisdictional levels: federal, state, county, city, town. As I've said, I would like to see both processes combined into one bill.
Look, these details must be worked out and must be explainable to the people. It brings to mind the AGW issue and Climategate and the Hockey Stick. The AGW-denying libertarians reading this might not like what I'm about to say, but that can't be helped.
The huge mistake that was made regarding the Hockey Stick was that the scientists didn't think they could educate the public about the tree-ring data that became an outlier in the mid 1960's. They didn't take the time and extra care simply to say that all data sets jibe with our understanding of CO2 build-up and warming with the exception that tree-ring data started to diverge in the 1960's, for reasons yet to be determined, without negating the preponderance of evidence represented by the other data sets.
My feeling is that it's likely that warming and other pollution itself started hitting the trees more in the 1960's. That's a common-sense hypothesis that is being researched. We'll see, but the lesson stands for monetary and banking reform.
We must hammer out the issues via transparent processes, make things as clear and plain as possible, and not fall back on the "it's too complicated to explain" excuse. Falling back on that will simply create a field day for those who will seek to say that there's a hidden, evil agenda against whatever. The laissez-faire crowd will say it's a conspiracy against liberty, but there are issues of freedom from want, etc., that can be and should be addressed by monetary and banking reforms.
The laissez-faire crowd needs to be forced to confront the concept of decentralized socialism. Afterall, each household is primarily a socialist organization. We don't charge our children to come to the table, at least the anti-capitalists of us don't. Ayn Rand may have approved of such training but at the same time collect government benefits under an assumed name.
Well, the first rule to getting rich in the current system is cheat. The second one is don't get caught or make sure you done so well at it that when you do get caught, you own everything and everybody. Some people's economic liberty is other people's enslavement. Choose your poison. I'll take public banking and public money over the Koch Brothers' model and whether they are against crony capitalism or not. I like cooperation better than competition. Banking and money should be viewed as natural monopolies, public utilities, to promote the General Welfare. Then austerity can go to Hell where it belongs, back where it came from.
At this point, I went over and watched Joe's video, the URL/link to which he supplied just a bit ago. I like it and will be blogging it, in fact.
Here you go:
Thank you, Joe, for braving all of this for the sake of the many.