Lost Generation in Europe Deliberately Created by [Existing] Elites.
The stupidity of this is scarcely to be believed. Appropriately selected economists have advised and guided these policy steps. How did their outlook take over the field? Can an entire, supposed research profession be "bought" simply by funding faculty positions & think tank fellowships? Sure. Orthodox economists will apparently say anything for a piece of gold, or 30 pieces of silver.
Creating lost generations de novo is "living within your means?" Families have NEVER raised kids just to be abandoned. That perverts the fundamentals of biology. Economics has become deranged and has nearly unhinged our brand of capitalism. There's no way a lost generation represents productivity. Something stinks in orthodoxy, and now it has tenure.
The NeoCon/NeoLiberal/WashingtonCons are fighting a losing battle, of course, and are eventually dragged, kicking & screaming, to logical "sensus," despite the dedicated con jobs. In the end it's either progress or national suicide. Arthur Kitson specifically mentioned US university professors being fired in the 1890s for the sin of discussing fiat currency in economics courses (despite Ben Franklin & Abe Lincoln as champions of the concept). Dismissal of diverse innovators was demanded by bankers threatening to pull their contributions to the universities if their demands weren't heeded. Is national suicide considered an asset in orthodox economics? If so, the NeoLiberal method requires a lost generation of economists.
Must we go through this costly cycle yet again, instead of simply putting our heads together and doing the obvious, sooner?
49 comments:
Check out these video interviews with econommist Yannis Varoufakis:
Interesting insight into how we got here.
http://ineteconomics.org/conference/berlin/yanis-varoufakis-global-minotaur-14
not sure Varoufakis fully gets currency operations either!
"After refusing a multilateral, more democratic exchange regime post-WW II, the US eventually became the world's buyer of last resort. But how to finance America's growing trade deficits?"
??
How have evolving species always "financed" evolution?
Just explore ways to feed their own demand, distributed AND aggregate. If YV views evolution as a monster, that's his problem.
Ever watched birds feverishly working to feed their voracious chicks? Or any parents? The glory really does go to those who find a leaner/faster/better way. Ditto for nation states.
ps: any stock of Fx reserves can be credible, as long as people are still chasing the expanding capabilities of the country whose reserves they hold.
Roger,
You may find the reliance on logic to be a bug, not a feature. Sometimes even logic and arithmetic can be suspect and prone to exceptions. Not to me. If one believes exceptions exist show me one. I challenge you to do so. "What some think" doesn't cut it.
Otherwise, no argument can ever be really be settled, there is always a circular component, some loophole, some way out, some exception. They just never present it. It's just "out there".
I admit that I/we may improperly apply a principle to an argument. Attack that, not the principle.
"Well, we just can't say this or that because there are always exceptions, nothing is absolute." or something along those lines.
I reject that kind of thinking wrt certain disciplines. Those that reject or attack arguments on that basis are free to do so but their point will be falling on deaf ears. I will hear it but it won't alter my thinking.
I guess this says more about me than it does others.
/end rant.
Right Roger,
"But how to finance America's growing trade deficits?" = "How can we find a computer account that can keep track of all the balances?"
And to find out who is REALLY driving the trade imbalances, it may be a tip-off to look at which jurisdiction is actually building the ships....
rsp,
"What some think"
That is an entry to the slippery slope of sectarianism imo Paul, this should be avoided... it can corrupt/blind.
rsp,
Roger -- There are increasing numbers of people who are beginning to see that the neoliberal economic theories that have been foisted on us over the past 30 or so years are an abject failure. Most of them, however, don't know what to do next.
I came across this book excerpt this morning. Another takedown of economic mythology.
http://www.alternet.org/economy/learn-everything-you-need-know-about-economy-south-park-episode?page=0%2C1&paging=off
I don't know if the writer understands modern money or currency ops, but she seems to have a good grasp of some of what's wrong with how people talk about the economy. Once again, it's about framing and semantics.
By the way, the different language and framing that you have contributed to this blog from your background in biology and systems has been very useful to me and to others. (I noticed that Tom has adopted some of that language.)
Isn't a construction firm a good analogy? If commodity providers from brickmakers to wire suppliers bring it supplies, the only way a construction firm can fail is if it doesn't pursue leaner/faster/better ways to build things with the provided supplies. Better builders will always continue to attract supplies.
I don't see how this alone makes all builders into monsters.
thanks for the SouthPark link, John. That's classic. Sorry I missed it.
"But how to finance America's growing trade deficits?"
Well, printing dollars obviously, as long as importers accept them. Blame the stupid who exchange real production for paper, no the other way around. At some point that may not happen as other nations demand goods with dollars and the dollar purchasing power abroad may fall off a climb if there is not enough stuff they can buy with these dollars. It may happen, someday lol.
Now, how is USA exploiting that is an other matter. How long do you guys think you can keep your "entitlements for the rich" going? That's the crux of the question. You can't keep going around destroying the majority of the american people while polarizing wealth to a reduced part of the population, at some point it will collapse.
"You can't keep going around destroying the majority of the american people while polarizing wealth to a reduced part of the population, at some point it will collapse."
Quoted for truth.
So, the question was, "HOW" & why do we repeatedly fall back into failed orthodoxy, immediately after having disproven it?
The same question was raised in the link to Kitson that I postes.
Every time we use slowly develop new methods to scale beyond a failed paradigm ... we first use the newly generated breathing room to get complacent, and try to reprove the old paradigm.
It's only when most vestiges of the old paradigm dies out, with passage of older generations, that youth are left with nothing else EXCEPT the new, now mundane paradigm?
That fits a paradigm well known in anthropology. Whenever a previously learned habit or rule fails, even by Chimpanzees using a twig to fish termites, the first thing any critter capable of associative learning will do is try doubly hard to re-test the old rule.
Habits - via pattern recognition - are laid down by repetitive reinforcement.
Despite what you may presume, complex systems NEVER un-make the machinery that recognizes & exploits recognized patterns. Instead, they add conditional circuits on top of the old machinery, that allows it to be diverted - on demand - to other uses.
The result is that any older reflexive habit can be dredged up for efficient, automatic execution ... given the right conditional flags, and minus any input activating additional circuits.
That's one reason why you see the curious array of obsessive, compulsive reflexes (OCRs) such as handwashing, Austrian Economics, NeoCons, etc, ... and even capitalism itself.
The same holds for culture. We build up a body of educational & training practices, that shape our group habits. We as a culture only change as our "training" methods drift.
When we hit the jackpot or stumble across a resource - like fiat currency or return-on-coordination - we feel lucky, and use our full tummies to vigorously re-test "known" rules.
Currency operations obvious to some will only be permanently captured when they've become rote habit and culture to the bulk of us who don't want to have to know how they really work.
Another South Park episode or two, and a few comic books, YouTube skits, and cell phone apps should do it.
One irony in all this is that the various cons who are so against assisted-suicide, are the very ones who - through all their thinktanks - have institutionalized a return to the already failed paradigms that constitute national suicide.
If their goal is to prove, once and for all, that the old paradigms won't scale ... then you can console yourself that we owe them a debt of gratitude. By sacrificing us, they're finally proving that they'll die without us.
The entire network of connic thinktanks should henceforth be collectively known as Kevorkiannic OCCRs (suicidal, obsessive compulsive cultural reflexes).
That's one sure way for a culture to evolve, alright. However, there is a better way.
"But how to finance America's growing trade deficits?
Well, printing dollars obviously, as long as importers accept them."
Duh. Getting your liabilities accepted is basically what 'finance' means to the person issuing the liabilities.
A culture is, of course, able to leverage emerging feedback sooner ... if it simply adopts methods for optimally sampling/analyzing/distributing emerging pockets of existing feedback sooner rather than later.
Why is it that we apply the concept of leaner/faster/better to everything EXCEPT how our own group intelligence works?
Success follows return-on-coordination, which follows the method called Outcomes-Based-Training&Education - OBTE.
http://www.ndu.edu/press/teach-the-basics.html
"That's one sure way for a culture to evolve, alright. However, there is a better way."
I believe that, like the frog that will leave the pot of boiling water before it is boiled, people will
"leave" the deadly environment created for them by their "betters".
It's in our nature to survive, thankfully.
It just may be bloody.
"Duh. Getting your liabilities accepted is basically what 'finance' means to the person issuing the liabilities."
y, do you see any signs that our import partners are concerned about our liabilities. All I see is superstition and "the sky is falling" thinking.
In other news, the Sun is expected to "burn out" in a billion years or so. Cue someone asking, "did you say a billion years?"
Reply: Yes.
Response: "Whew, I thought you said a million".
Roger,
Those chimpanzees: is using the twig learned behavior?
How do they revert after they are introduced to the twig technique? Still try sticking their finger down the hole? (perhaps getting bit by the termites)
This is interesting...
rsp,
y,
Why are the Chinese a priori expanding the capabilities of the Panama Canal in order to accommodate the new Panamax ships (which they are also building a priori) and then constructing the new offloading crane systems over there a priori and sending them ahead to the US east coast (only Norfolk and now Baltimore have this system) if they do not have their minds made up 100% to receive USD balances in exchange for all of the goods they intend to send over here via this infrastructure they are building?
No one in the US is going around seeking "Getting your liabilities accepted" in this scenario... the east is on a mission to acquire "darling copious amounts" of western financial assets.
rsp,
@Matt Franko
yes, twigging for termites by chimps is a not uncommon but learned behavior;
reverting?
if not using a twig, they wait?
if the termites run out, they keep trying the twig more times than you'd expect; and go back repeatedly
like us, their personal behaviors display tremendous diversity across a group
ever watched a predatory wasp trying to bury a captured bug?
some of 'em they have a pre-programmed routine; they set the prey down just outside the hole, double-check the hole, then come out, drag the prey in, lay eggs, seal it, & depart
I saw one once personally, and did the following at least a dozen times. When the wasp sets their prey down & goes in to inspect the hole, you move the dead bug just an inch. The wasp comes out, has to search but quickly finds the bug, drags it over near the hole, sets it down, and goes back to re-inspect the hole.
Repeat ad infinitum.
It's a pre-programmed reflexive behavior. Once interrupted, it always resets to the beginning of the preceding loop trigger. Truly amazing to watch.
You can see some of the same in all people. Especially so in some with more fixed habits. Ever met people who have to over-describe everything, and if you interrupt them, they have to start the story at the beginning?
If you're in a hurry, never bother interrupting a NeoCon. They'll have to restart their creation myth at the beginning, and repeat. On the other hand, you can literally get 'em to talk themselves to death ... if you have a month to spare. :)
"you can literally get 'em to talk themselves to death ..."
This is a strategy I could buy into whole-heartedly. :-)
BTW great story about the wasps behaviour.
re: Chinese & the Panama Canal
Yes. That's roundabout way of manipulating & organizing the huge native population they have.
Rather like the wasp story, you can keep moving their cheese (colonize, war, drought, earthquake, invention) and their "elites" will just reset to finding someone else to have the peasants send products to.
Our Koch Bros do the same thing, as do all supposed "elites."
It's a currently programmed, cultural habit. Cultural habit change only by attrition, if OBTE doesn't itself become a habit.
Great comment Roger.
Earth has always been a battleground. Still is. That doesn't figure much in MMT, or am I wrong?
MMT points out many of the options & methods available to a fiat currency user. It's still up to us to actually use those methods.
Ever seen what happens when you distribute plenty of hammers to chimpanzees? Nothing much.
"Once interrupted, it always resets to the beginning of the preceding loop trigger. Truly amazing to watch."
sounds like professional athletes: tennis serve, golf shot, baseball batter, baseball pitcher, basketball free throw, etc... ritualistic...
rsp,
paul Otherwise, no argument can ever be really be settled, there is always a circular component, some loophole, some way out, some exception. They just never present it. It's just "out there".
This is a reason there is great disagreement in economics, where a lot of arguments are over where models apply and the debate goes, "Applies" — "Does not" — "Does so" — ....
"But how to finance America's growing trade deficits?"
What most people don't get that as the issuer of the global reserve currency the US has to run a CAD to accomodate demand for the reserve currency in order to provide liquidity for global trade. In this regard, the US functions as the "lender of last resort" for the world similar to a cb. Should there be less demand for global liquidity, then the US CAD will decrease.
There is a lot of talk of some replacement for the USD as the global reserve currency or a return to gold as the reserve. I would not hold my breath waiting for it, of take a financial position based on it, either.
"This is a reason there is great disagreement in economics, where a lot of arguments are over where models apply and the debate goes, "Applies" — "Does not" — "Does so" — ...."
True. And then the argument morphs for a while, as the debate over whether the example applies or doesn't ensues, and that should eventually lead to a conclusion on that issue that allows discussion on the main issue to continue.
What tends to happen a lot is critics pile on additional criticisms in another direction because they don't like where the one they were hashing out is going. The goalposts get moved.
Or they deny objective reality, and argue something like "2+2 doesn't necessarily equal 4". Maybe in some realm it doesn't, but I've never seen an exception and I'm going with the percentages.
After enough of that I get frustrated and have to decide whether there is a point in going on.
When reasonable people have a discussion there is an attempt to find agreement, or truth or whatever.
Some people are unreachable, largely because they are invested in some worldview. Nothing will get them to change their view. You gotta know when to hold 'em and know when to fold 'em.
If someone shows me something that will make me a better problem-solver, I'm all over it. If it won't be helpful immediately, I file it away for possible use another day, and solve the problem using what I know now.
That's how I succeeded in the construction business knowing nothing starting out. I watched how others did things and learned the basics. Then when confident with the basics I became creative in my approach.
As my tennis buddy always says, the secret is moving forward.
Earth has always been a battleground. Still is. That doesn't figure much in MMT, or am I wrong?
Oh, I think that MMT economists as other het economists know this very well, since they are assiduously excluded from the prevailing universe of discourse and isolated in as much as possible. See the recent exile of het econ at Notre Dame, one of the few places there was any het presence to speak of.
"Blame the stupid who exchange real production for paper"
Hmmm .... I make my living exchanging real goods and services for little pieces of paper. You probably do, too. That makes us all stupid ?
IMHO MMT has free trade all wrong and needs to go back to the drawing board on that subject. MMT will never become popular with the masses as long as it supports free trade.
http://www.dailykos.com/story/2011/09/04/1013409/-What-the-polls-say-about-free-trade
Right Dan,
I think if what these external entities are doing was mathematically explained to them, they may change their policies, maybe not... but at least they would be proceeding with better information... we need to provide them "counsel" imo....
Then on our side, imo we have to determine if we want to continue to let them "use" or "borrow" our monetary system, and if we collectively come to an agreement that we want to also proceed with these imbalances, then we have to make sure we make the appropriate fiscal adjustments on our side so that none of our citizens suffer one iota for our following this mercantilist policy....
rsp,
Matt and Dan, the multinationals and finance folks are making a huge amount from "free trade." The serfs are supposed to get used to the "readjustment" to global competition that results in wage repression. The trade-off is that the serfs get cheap stuff at Wal-Mart and the dollar stores.
But the US is coming out way ahead in this game or it would not be happening. It's just that "What's good for America" is not necessarily good for all or even most Americans.
Trade liberalization is good generally speaking. It's just being executed for the benefit of the privilege for the most part.
The problem is not trade liberalization as such but the way it is being conducted.
Hate to bring up Plato again, but our ancestors knew this area of economic policy was challenging and hard work for the legislators to GET RIGHT.
"For most of the Hellenes obtain their food from sea and land, but our citizens from land only.And this makes the task of the legislator less difficult-half as many laws will be enough, and much less than half; and they will be of a kind better suited to free men. For he has nothing to do with laws about shipowners and merchants and retailers and innkeepers and tax collectors and mines and moneylending and compound interest and innumerable other things-bidding good-bye to these, he gives laws to husbandmen and shepherds and bee-keepers, and to the guardians and superintendents of their implements; and he has already legislated for greater matters, as for example, respecting marriage and the procreation and nurture of children, and for education, and the establishment of offices-and now he must direct his laws to those who provide food and labour in preparing it. "
They were up for the task of legislating to get this right...
Our current morons represent some type of devolution of humans.... not evolution.
We have "gone backwards".... "the chimp has lost the twig" ...
rsp,
"Ever seen what happens when you distribute plenty of hammers to chimpanzees?"
They eventually hammer out the entire works of Shakespeare in the form of morse code whilst other chimps perform an interpretive piece of contemporary dance?
Iran' currency is under attack:
http://www.npr.org/blogs/thetwo-way/2012/10/02/162165257/currency-in-crisis-collapse-of-irans-rial-continues
y,
"Now I witness our national money has turned to the cheapest currency in the world. How is that possible? Why did it not happen at the time of the Shah? Now I have to pay for my yoghurt, butter and milk in dollars, I can't spend rials!"
Dont they have goats or cows over there??? I find that hard to believe....
rsp,
Are you saying that's propaganda or something?
y,
Perhaps the CIA has covert teams or Navy Seals are in Iran going all around secretly pleading with Iranians to accept our US liabilities... must be true according to some....
rsp,
that's not what I was saying
y,
I'm saying that the Iranians who own the cows or goats or camels or whatever kind of milk they drink over there are obviously demanding to be paid in USDs rather than Iranian currency.... sad.
rsp,
I'm thinking US military hegemony, financial power, rent extraction, current account deficit as 'tribute'...
Or maybe foreigners are just stupid.
What do you think of Hudson's comments from 1:34:50 in this video?:
http://www.youtube.com/watch?v=0zEbo8PIPSc#t=01h34m50s/
I dont believe it.
And Hudson is out of paradigm when he says that US representatives told the oil sellers that they had to "send the money back to the US".. where else can it go? Are we paying in wheelbarrows full of FR notes????
The leadership in these eastern jurisdictions is somehow attracted to the west... this has been going on for 1000s of years... here is Augustus Caesar on this phenom:
"32. To me were sent supplications by kings: of the Parthians, Tiridates and later Phrates son of king Phrates, of the Medes, Artavasdes, of the Adiabeni, Artaxares, of the Britons, Dumnobellaunus and Tincommius, of the Sugambri, Maelo, of the Marcomanian Suebi (...) (-)rus. King Phrates of the Parthians, son of Orodes, sent all his sons and grandsons into Italy to me, though defeated in no war, but seeking our friendship through the pledges of his children. And in my principate many other peoples experienced the faith of the Roman people, of whom nothing had previously existed of embassies or interchange of friendship with the Roman people."
http://classics.mit.edu/Augustus/deeds.html
Think of all of the foreign students from the east who are sent by their elders today to study at western universities... nobody is forcing these people to do anything.
Nobody is forcing these Iranian yogurt sellers to price their yogurt in USDs...
Did we blackmail the Prince of Saudi Arabia into building a $32M ski chalet in Aspen, Colorado? etc...
These people are obsessed with acquiring our western financial assets. They will do anything including screwing over their own people to get them...
rsp,
"These people are obsessed with acquiring our western financial assets. They will do anything including screwing over their own people to get them..."
…but any day now they will decide they won't want them. Count on it.
Rrrright.
"Hmmm .... I make my living exchanging real goods and services for little pieces of paper. You probably do, too. That makes us all stupid ?"
No I don't. I make my living exchanging these paper for real good and services again, as I can't feed on pieces of paper (maybe you can? maybe the uberwealthy can? maybe the Chinese can? idk).
I try to keep an amount of these papers as an insurance against a certain type of future uncertainty (because it surely won't insure you about other risks, like regime collapse), I would like to reduce that quantity to the minimum if possible.
I don't enjoy hoarding pieces of paper. So I only see two possible explanations, well three in fact, for massive hoarding of pieces of paper:
1) Irrational love for pieces of paper.
2) Expecting massive future uncertainty you want to insure for. (Like for example, a complete collapse of your own national social order if you are a Chinese elite.)
3) Being dumb.
You can also explain it as a conspiracy theory if you prefer, keeping most purchasing power to a minority, while suppressing it for the rest and keep people fighting for artificial scarcity of pieces of paper so you can buy them up cheap. etc. etc. etc.
Ignacio,
This is how I breakdown this scripture along the 3 types you have identified (Mat 13:18-23)
"18 "You, then, hear the parable of the sowing.
19 At everyone hearing the word of the kingdom and not understanding, coming is the wicked one and snatching what has been sown in his heart. This is he who is being sown beside the road.
[This is your #3, "made stupid/clueless"]
20 Yet he who is being sown on the rocky places, this is he who is hearing the word and straightway with joy is getting it,
21 yet has no root in himself, but is temporary. Now at the coming of affliction or persecution because of the word, straightway he is snared.
[This is your #2, they are scared of what the future might bring, hoard]
22 Now he who is being sown in the thorns, this is he who is hearing the word, and the worry of this eon and the seduction of riches are stifling the word, and it is becoming unfruitful.
[This is your #1, irrational "metal love/philarguria" or "greed/pleonexia"]
23 Now he who is being sown on the ideal earth, this is he who is hearing the word and understanding, who by all means is bearing fruit, and is producing; these indeed, a hundred, yet these sixty, yet these thirtyfold."
[This 4th type perhaps describes us in all of this friend... ;) we're lucky..]
rsp,
Ignacio,
I vote for #3 Being dumb; and/or being lazy and sociopathic. Seems to me it's always some combination of all 3, even in the same people at different times.
Anyone who's accumulated significant amounts of financial assets (paper) is introduced to 2 temptations:
a) enjoy the liquidity (you can BUY stuff, often cheap, from people starved for liquidity)
b) preserve the buying power;
you do NOT want to see the buying power of your paper decrease (no matter how well meaning you are in general ... it's a temptation to escape, by any means, the loss of your imagined buying power)
I agree, is usually a combination of the 3.
Beyond some 'paper wealth' levels, the cause specially dominant are #3 and 'liquidity enjoyment'. As if you can continually starve the 99% to acquire assets or labour at cheap prices.
Then when it does not work anymore, you can ask to revert policies when you have fulfilled your own greed appetite and demand from the government you previously have criticized for not 'depriving citizens fast enough of paper', LOL.
So by this greed you ended with both more real assets, and more paper assets. Good game! Apparently this phenomenon we have seen repeated over the last centuries over and over. Thankfully, when we get production rolling again we increase capacity so fast that we can revert this wealth accumulation effects very fast, as the real wealth increases very fast.
Unfortunately we have seen a project during the last decades based on the idea that society will just work if we impose some sort of social Darwinism, creating masses of people fighting for scarce jobs & money and living an unhappy live. Under such circumstances is impossible that economists end up looking at the right metrics.
@Ignacio
then it all collapses;
giving in to OLD temptations always leads to group suicide ...
the only hope is learning to transition - sooner rather than later - to hoarding coordination capabilities instead of static assets
that transition tempo - accelerating adaptive rate - is what defines surviving social species
everything else goes into the dustbin of history
"I agree, is usually a combination of the 3"
Let's look at Draghi or Bernanke: Civil Servants
Are they greedy? imo not as civil servants, granted they do ok but they are not on a mission to become uber-wealthy in their jobs... and they are caught up in greed...
Are they scared of something? They do not look scared/desperate to me, they seem somewhat self-assured about their futures... no need for hoarding as they probably have adequate/secure pensions to look forward to...
That leave ONLY the 3rd option: stupid.
These 2 for instance do not look like they possess a combination to me...
rsp,
let me restate something
"Why is it that we apply the concept of leaner/faster/better to everything EXCEPT how our own group intelligence evolves?" rge
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