The Conversation

The Conversation

conversationThe Conversation US arose out of deep-seated concerns for the fading quality of our public discourse – and recognition of the vital role that academic experts can play in the public arena.

Independent and not-for-profit, it is part of a global network of newsrooms first launched in Australia in 2011. The Conversation began its US operations in 2014, and now also publishes in Canada, the UK, France, Indonesia, Africa, Spain as well as Australia.

The Conversation’s mission is particularly resonant in the U.S., where people universally sense that the country’s social fabric is strained and the common ground people share is shrinking.

Information always has been essential to democracy – a societal good, like clean water. But many now find it difficult to put their trust in the media. And with little consensus about what to believe, it only becomes harder to reach agreement with fellow citizens regarding what’s truthful.

The Conversation US seeks to be part of the solution to this problem.

The Conversation’s editorial process is deliberate and collaborative. Editors pay close attention to the news environment to identify the issues citizens are concerned about. They reach out to leading scholars across academia and work with them to unlock their knowledge for the broad public.

Through a Creative Commons license, we share Conversation US articles – at no charge to news organizations – across the geographic and ideological spectrum. We pay particular attention to strengthening news organizations that are severely under-resourced. The Associated Press distributes The Conversation US articles daily to thousands of newsrooms.read more>

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How DC Mayor Bowser used graffiti to protect public space

 

Rebekah Modrak, University of Michigan

When President Donald Trump sent heavily armed federal law enforcement officers and unidentified officers in riot gear into Washington, D.C. during the height of protests recently, Mayor Muriel E. Bowser responded by painting “BLACK LIVES MATTER” directly on the street leading to the White House.

While many spoke of it as a daring political act, for artists like me, it was also an act of urban intervention, an artistic act intended to transform an existing structure or institution, that reclaimed public space back for the public. And she accomplished this with little physical matter at all.

Her action – expressing dissent by marking an oppressive environment – references graffiti, which has been called the “language of the ignored.”

Art scholars note that most types of graffiti are meant to claim or reclaim territory by those who are systematically excluded. “Writers” often work quickly and at night, when they are less likely to be seen and arrested for painting on others’ property without consent.

Bowser’s action would likely be considered vandalism if not for the fact that it was carried out by the city’s Department of Public Works, using city funds. She wielded municipal services as artistic tools to condemn another state-sanctioned action, the violence perpetrated against Black people.

How the Federal Reserve literally makes money

The Fed is ‘making’ a lot of money. Alex Wong/Getty Images

William J. Luther, Florida Atlantic University

The Federal Reserve has vowed to provide up to US$2.3 trillion in lending to support households, employers, financial markets and state and local governments struggling as a result of the coronavirus and corresponding stay-at-home orders.

Let that number sink in: $2,300,000,000,000.

I have a Ph.D. in economics, direct the Sound Money Project at the American Institute for Economic Research and write regularly on Federal Reserve policy. And, yet, it is difficult for me to wrap my head around a number that large. If you were to stack 2.3 trillion $1 bills, it would reach over halfway to the Moon.

Put simply, it is a lot of money. Where does it all come from?

Unlike the trillions of dollars the Treasury is spending to save the economy by bailing out companies or beefing up unemployment checks, very little of the Fed’s money actually comes from taxpayers or sales of government bonds. Most of it, in fact, emerges right out of thin air. And that has costs.

Printing green

It is common to hear people say the Fed prints money.

That’s not technically correct. The Bureau of Engraving and Printing, an agency of the U.S. Treasury, does the printing. The Fed, for its part, purchases cash from the bureau at cost and then puts it in circulation.

Although you may have heard some economists talk about the Fed figuratively dropping cash from helicopters, its method of distribution isn’t quite as colorful. Instead, it gives banks cash in exchange for old, worn-out notes or digital balances held by the banks at the Fed. In this way, the Fed can help banks accommodate changes in demand for banknotes, like those in advance of major holidays or after natural disasters.

These exchanges are dollar-for-dollar swaps. The Fed does not typically increase the monetary base – the total amount of currency in circulation and reserves held by banks at the central bank – when it distributes new banknotes.

Magicking green

To put more money into circulation, the Fed typically purchases financial assets – in much the same way that it plans to spend that $2.3 trillion.

To understand how, one must first recognize that the Fed is a bankers’ bank. That is, banks hold deposits at the Fed much like you or I might hold deposits in a checking account at Chase or Bank of America. That means when the Fed purchases a government bond from a bank or makes a loan to a bank, it does not have to – and usually doesn’t – pay with cash. Instead, the Fed just credits the selling or borrowing bank’s account.

The Fed does not print money to buy assets because it does not have to. It can create money with a mere keystroke.

So as the Fed buys Treasuries, mortgage-backed securities, corporate debt and other assets over the coming weeks and months, money will rarely change hands. It will just move from one account to another.

Costs of magical money

While the Fed can create money out of thin air, that does not mean it does so without cost. Indeed, there are two potential costs of creating money that one should keep in mind.

The first results from inflation, which denotes a general increase in prices and, correspondingly, a fall in the purchasing power of money. Money is a highly liquid – easily exchangeable – asset we use to make purchases. When the Fed creates more money than we want to hold on to, we exchange the excess money for less liquid assets, including goods and services. Prices are driven up in the process. When the Fed does this routinely, expected inflation gets built into long-term contracts, like mortgages and employment agreements. Businesses incur costs from having to change prices more frequently, while consumers have to make more frequent trips to the bank or ATM.

The other cost is a consequence of reallocating credit.

Suppose the Fed makes a loan to the “Bank of Fast and Loose Lending.” If the bank wasn’t able to secure alternative funding, this suggests that other private financial institutions deemed its lending practices too risky. In making the loan, the Fed has only created more money. It has not created more real resources that can be bought with money. And so, by giving the Bank of Fast and Loose Lending a lifeline, the Fed enables it to take scarce real resources away from other productive ventures in the economy.

The cost to society is the difference between the value of those real resources as employed by the Bank of Fast and Loose Lending and the value of those real resources as employed in the productive ventures forgone.

Uncharted waters

In recent years, the Fed has shown itself to be quite adept at keeping inflation low, even when making large-scale asset purchases.

The central bank purchased nearly $3.6 trillion worth of assets from September 2008 to January 2015, yet annual inflation averaged roughly 1.5% over the period – well below its 2% target.

I’m less sanguine about the Fed’s ability to keep the costs of reallocating credit low. Congress has traditionally limited the Fed to making loans to banks and other financial market institutions. But now it is tasking the Fed with providing direct assistance to nonbank businesses and municipalities – areas where the Fed lacks experience.

It is difficult to predict how well the Fed will manage its new lending facilities. But its limited experience making loans to small businesses – in the 1930s, for example – does little to alleviate the concerns of myself and others.

Congress gave the Fed the ability to create money from thin air. The Fed should wield this enormous power wisely.

[Insight, in your inbox each day. You can get it with The Conversation’s email newsletter.]The Conversation

William J. Luther, Assistant Professor of Economics, Florida Atlantic University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Uprisings after pandemics have happened before – just look at the English Peasant Revolt of 1381

In this 1470 illustration, the radical priest John Ball galvanizes the rebels. The British Library

Susan Wade, Keene State College

As a professor of medieval Europe, I’ve taught the bubonic plague, and how it contributed to the English Peasant Revolt of 1381. Now that America is experiencing widespread unrest in the midst of its own pandemic, I see some interesting similarities to the 14th-century uprising.

The death of George Floyd has sparked protests fueled by a combination of brutal policing, a pandemic that has led to the loss of millions of jobs and centuries of racial discrimination and economic inequality.

“Where people are broke, and there doesn’t appear to be any assistance, there’s no leadership, there’s no clarity about what is going to happen, this creates the conditions for anger, rage, desperation and hopelessness,” African American studies scholar Keeanga-Yamahtta Taylor told The New York Times.

Medieval England may seem far removed from modern America. And sure, American workers aren’t tied to employers by feudal bonds, which meant that peasants were forced to work for their landowners. Yet the Peasant Revolt was also a reaction brought on by centuries of oppression of society’s lowest tiers.

And like today, the majority of wealth was held by an elite class that comprised about 1% of the population. When a deadly disease started to spread, the most vulnerable and powerless were asked the pick up the most slack, while continuing to face economic hardship. The country’s leaders refused to listen.

Eventually, the peasants decided to fight back.

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