Friday, August 17, 2012
Webster Tarpley on Alex Jones on Austerity: So Close Yet So Far
Video below from youtube.
Alex Jones interviews Web Tarpley on the current global economic situation and some proposed remedies.
Jones perhaps knows something is basically wrong but is caught up in "metal-love" (many of his sponsors are 'precious metal' sellers) and this leads to his conspiratorial thinking and he can't get a grip on it. This is sad to watch.
Tarpley gets closer but is lacking a firm understanding of western monetary sytems so he is flying blind to a GREAT extent and is off on many things, also sad but at least it seems his heart is in the right place. Tarpley would benefit greatly from a grounding in the knowledge of MMT.
A bit LONG.
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24 comments:
Jones is nuckin' futs.
Alex Jones and Webster Tarpley are both clueless nutjobs
I love this guy, Tarpley!
My psychiatrist likes Tarpley....
Yeah Mike I like Tarpley's style and he has some practical ideas but of course without an understanding of MMT he is left flying blind a bit.
But it is interesting that he understands that the US states need revenue sharing and that a full employment policy should be pursued, you cannot cut govt at a time like this, and some other MMT policies. He is very close even on his own without MMT.
That said, I think they both (Tarpley and Jones) are basically 'conspiracy theorists' that think the 'global elite' are taking informed actions to foment all of this disaster of a global economy...
Although Tarpley perhaps is starting towards the position that the elite are too stupid to know what they are doing in this video looks like...
I would bet that if you asked both of them if the govt had to 'borrow money' to be able to spend they would both answer in the affirmative...
They both lack a true understanding of how our currency systems operate both here in the US and the crazy Euro system. Perhaps if they understood the operational details of these systems they would not be led into the conspiracy 'rabbit hole'...
btw about that "rabbit hole", even if you are in the MMT paradigm, you have to think that either the reason for all of these chaos policies is "lying"/fraud by those in policy positions who know better or that policy makers are morons. I often see the word "lie" or "lies" on MMT blogs which makes me think that those folks come down on the side of "conspiracy"...
It has to be one or the other. I personally think it is that they are stupid/morons.
If you think otherwise, that our current chaos policies are due to "lies" from policymakers who know better, then you should not look at Tarpley and Jones here with too much incredulity as you basically agree with them. You basically think it is a big "conspiracy" or something. These two just let their imaginations run a little further...
Rsp,
Matt, I think that there is a third alternative, at least. I think that some are ignorant, some disingenuous, and others a combination. Of the disingenuous, at least a few are sociopath willing to accept a lot of other people's suffering as necessary to get their way.
I don't think that most conspiracies are organized at the level the conspiracy theorists believe they are, but they are not just innocent happenings either.
Question for anyone knowledgeable enough to answer:
According to the MMT sectoral balances model, is a budget deficit necessary? Meaning, hypothetically, could the United States sustainably run a government sector surplus, and a domestic private sector deficit, so long as there was a sufficiently large trade surplus?
thanks
JK,
The SFB is a Mathematical Identity so the equation MUST balance always... no politics or policy choices involved...
Its like the '3,4,5' right triangle based on Pythagorean Theory:
http://en.wikipedia.org/wiki/Right_angle#Rule_of_3-4-5
You wouldnt perhaps ask: "Hey if you have a right triangle with one side of 3 and another with 4, is it possible that the hypotenuse can be 5?" (ie it ALWAYS is)
Our moron policymakers who seek to use the deficit as a control variable dont understand the math.... it's like they think they can change just one side of the triangle without affecting the others... ie morons...
rsp,
Matt,
Thanks for the analogy. I realize the esctors must add up. But Im still confused… did you answer my question?
Said another way: does MMT say that a sovereign country can sustainably grow in a situation where the government collects more in taxes than it spends back into the economy (therefore the the domestic private sector is not 'net savers'), so long as there is a sufficiently large trade surplus?
Or does my question not make any sense?
Extending the analogy of the 3-4-5 triangle, if you pick a side that is not one of those to start with you are not going to end up with 3-4-5 if that is what you want. Same with sectoral balances, the the sectoral balances always sum to zero, so if you want a full employment budget, then the govt fiscal balance must offset the total of saving of the private and external sectors. On if the private sector is spending all its income in the period and the CAD is in balance too, can the budget be balanced at full employment. If either of the non-govt sectors save and it is not offset by the other non-govt sector, then the govt ifscal balance needs offset the total saving non-govt for there to be full employment.
I guess what I'm describing is saying can a domestic private sector be 'net savers; but not in their domestic currency, rather in a foreign currency (their sufficiently large trade surplus)?
Tom, to my question, you said "If either of the non-govt sectors save and it is not offset by the other non-govt sector, then the govt ifscal balance needs offset the total saving non-govt for there to be full employment."
So technically full employment is sustainable with a government collecting more in taxes than it spends back into the economy (a budget surplus), so long as their is a sufficiently large trade surplus to maintain the employment? Is that correct?
And so, like I said in my last comment, the domestic private sector 'could' be net savers, but in this situation it wouldn't be in their domestic currency. It would be in foreign currency.
Am I missing something?
JK, as a practical matter, most international trade is conducted in a reserve currency, dollars, pounds, or euro. US would likely invoice in dollars and require dollar payment, so the importing country needs to obtain USD. Same with the international oil market, which is conducted in USD.
A capital account surplus (KAS) is held in the currencies of the exporting countries unless converted into the home country's currency (or something else) by the exporters.
I got lost a bit there on the point of view between the exporting country and the "home" country. Does home refer to the importer?
geerussell, right
A capital account surplus (KAS) is held in the currencies of the IMPORTING countries not exporting.
My bad. I'll take down the original and fix it.
JK So technically full employment is sustainable with a government collecting more in taxes than it spends back into the economy (a budget surplus), so long as their is a sufficiently large trade surplus to maintain the employment? Is that correct?
Yes.
A capital account surplus (KAS) is held in the currencies of the importing countries unless converted into the exporting country's currency (or something else) by the exporters.
Doesn't the government sort of run a "budget deficit" by the back door when the country has a trade surplus?
i.e. the Chinese companies that get paid in dollars sell those dollars to the Chinese central bank in exchange for yuan, which they then spend in China to produce more goods, etc. The Chinese central bank prints up those yuan out of nothing in exchange for the dollars which it then uses to buy US government bonds. So the government is essentially running a "deficit" through the central bank, i.e. printing money to spend on dollar assets.
*So the Chinese government is essentially running a "deficit" through the central bank, i.e. printing money to spend on dollar assets.
The money printed by the central bank to buy dollars from Chinese companies is then spent in China, boosting output and employment.
So it's sort of Chinese government deficit spending "through the back door"...
As I understand it through Michael Pettis, the Chinese government controls exporters
conversion of dollars into yuan for use in the economy to prevent inflation. How it does this I am not sure, but it apparently forces savings in RMB. But many of the large exporting companies are govt owned. China also runs capital outflow controls to manage the peg.
Y,
very interesting point.
(I didn't mean to say the Chinese govt isn't alos running a "normal" budget deficit btw).
This site is pretty good for all sorts of stats and charts on different countries' economies, plus it's free to use:
www.tradingeconomics.com
Y,
Imagine the reverse.... ie if a US company took products over to China, sold their products to the Chinese for Yuan balances, and then THE FED would happily change out their Yuan balances for USD balances.
So the US company would end up with the USD balances on it's books and THE FED would end up with Yuan balances on it's books...
That will be the day when that happens!!!!
rsp,
Matt and Y:
The take-away is, all USD balances get created through the U.S. central bank…
USD Balances enter the non-government through direct spending either as government deficits or external surpluses.
Both begin with the Central Bank creating new dollars and bonds (dollars that pay interest).
MMT has this crystal-clear. No other framework does.
Every other framework looks at the monetary economy through muddied water.
Paul, Right...
I think Tom came up with a "Law" a while back (I called it "Hickey's Law" ;) went something like:
"a currency cannot leave it's currency zone" which I thought was good and Tom here is talking about a closed system analysis even now back a couple of years only we didnt call it "closed system" until you brought that in more recently....
rsp,
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