This is a pretty good entry on Lerner.  It is missing his important 
article, "The Economic Steering Wheel," which is where he first laid out 
the principles of functional finance, even if not by name.  One reason 
it is often left out is that it appeared in The University [of Kansas 
City] Review in 1941, before he left the University of Kansas City (now 
University of Missouri--Kansas City, UMKC) to go to the New School. 
Interestingly, scholars at the New School and UMKC began collaborating 
on the revival of the functional finance approach around 1997, resulting 
in a number of books and articles, e.g., Reinventing Functional Finance 
(Elgar, 2003), edited by Edward J. Nell of the New School and myself.   
 
  
 
Viewed through the logic of the functional finance approach, the entire 
Social Security debate going on currently is greatly confused.  More 
importantly, it shows that the Social Security program is fine, if we 
understand modern monetary and budgetary systems, but that we may 
destroy the program through self-imposed constraints and unnecessary and 
misguided 'reforms.' (see the relevant working papers, policy notes and 
special reports at www.cfeps.org <http://www.cfeps.org/>  ). 
 
  
 
Recently, Fed Chairman Greenspan revealed that he understood the real 
issues in an interview: 
 
RYAN... do you believe that personal retirement accounts can help us 
achieve solvency for the system and make those future retiree benefits 
more secure? 
 
GREENSPAN:  Well, I wouldn't say that the pay-as-you-go benefits are 
insecure, in the sense that there's nothing to prevent the federal 
government from creating as much money as it wants and paying it to 
somebody. The question is, how do you set up a system which assures that 
the real assets are created which those benefits are employed to 
purchase. 
 
So, the issue is definitely not the solvency of the system, as one would 
be led to believe by all the talk of "bankruptcy".  This is another 
great example of what John Kenneth Galbraith calls "innocent [or 
not-so-innocent] fraud" in his recent book. The real issue-will the 
employed population at some future date be capable of producing enough 
real goods and services for itself and those who are not working 
(retirees, children, etc.)-is not being addressed by the current 
proposals.   
 
Do economists understand Greenspan and Lerner?  Apparently not, if you 
look at something like the recent special issue of The Economists' Voice 
on social security (see http://www.bepress.com/ev/ ).   
 
  
 
Mat Forstater