Sunday, June 11, 2017

Paul Robinson — The Russians are here

Paul Robinson excoriates the New York Times — again.

They need to order up some meds for brain fever over there.

The Russians are here
Paul Robinson | Professor, Graduate School of Public and International Affairs at the University of Ottawa


Anonymous said... Hickey, we used to chat a lot at the old mosler economics board many years ago. I always liked your viewpoints. A few years ago mosler in a personal email chatted with me about how the fed gets 6% off the economy in interest no matter what. Currently I am only getting around 1% in my bank account. The video above talks about the BIS and how they are a government unto themselves. Can you shed any light on his concerns? I always value your input. Thanks.

Tom Hickey said...

The video is beyond my ability to comment on since it is an insider talking and I am on the periphery of the outside. But it seems like conspiracy theory from what I know about the BIS and the general tone. But who knows anymore in this gaslit world.

The undying idea that banking and finance and therefore bankers and financiers are at the top of the heap is correct though. Whether they are evil as some depict, I tend to doubt. But they are "interested men" and some at least believe that by serving their own interests they are "doing God's work." Synergy at work.

Capitalism is essentially about capital formation as the basis of economic growth in a modern liberal society. Banking and finance lie at the heart of capitalism, and so what's good for banking and finance is good for capital of all types in this view.

Thus the banking and financial systems stand at the top of the heap, because they are the foundation of progress. Therefor, they must be favored for capitalistic economies to perform optimally for the benefit of society. Since capital can flow freely under liberalism, banking and finance are the pinnacle of the international economic order that knows no boundaries. Thus the people at the top of banking and finance sits at the pinnacle of the international order.

The problem with central banking and "one bank to rule them all" (BIS) is that the international economy is largely controlled by bankers and financiers that are not elected and cannot be removed politically. That a price that liberal republics ("democracies") pay for the economic benefits of capitalism as it is presently organized.

Since these are some of the most powerful people in the world, there's isn't much that can be done about it short of changing the system. But these are the people that even survive revolutions because they know how to make the world go around and therefore are indispensable under capitalism. But even the communist countries had central banks. The question is how to get a leash on it without strangling it politically.

The 6% that the Fed extracts from the economy is the dividend paid to member banks on their capital. It comes from Fed operations, chiefly open markets operations, and return on Fed asses, mostly US Treasuries. What's left after paying operational expenses goes to the US Treasury.

As far as interest rates go, the rate set by the central bank pretty well reflects the state of the economy. Not only are savers affected adversely by the low rate regime of the past decade. People in banking finance would rather see higher rates, too, since they make money on interest charges.

On the other hand, borrowing costs and carry for acquiring assets are low. So it is either play the markets on margin, or invest in RE for return on rentals and also expected appreciation. This is a good time for these people.

MRW said...


The 6% that the Fed extracts from the economy is the dividend paid to member banks on their capital.

I thought it was much lower.

I remember in the Fed's 2010 Annual Report that total Federal Reserve expenses including dividends for all 12 districts and their member banks were around 1.8% of revenue.

I know that member banks have to buy stock in their regional District Federal Reserve Bank equal to 6% of the capital they are initially required to put up, and that dividends thereafter are paid on whatever that initial 6% amount was. The value of that stock doesn’t change even after decades because it’s not stock like a private corp.

Tom Hickey said...

Federal Reserve Act, Section 7. Division of Earnings

Stockholder Dividends.
1. Dividend Amount. After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders of the bank shall be entitled to receive an annual dividend on paid-in capital stock of--

i. in the case of a stockholder with total consolidated assets of more than $10,000,000,000, the smaller of--

I. the rate equal to the high yield of the 10-year Treasury note auctioned at the last auction held prior to the payment of such dividend; and
II. 6 percent; and

ii. in the case of a stockholder with total consolidated assets of $10,000,000,000 or less, 6 percent.


Salsabob said...
This comment has been removed by the author.
Salsabob said...

Those who poo-poo these Russian connections nearly always do so within the context of some 20th century geopolitical framework that sets their de minimis assumptions that allows their sanctimonious speak of how ridiculous the whole matter. Those in the know, however, actually understand that this is instead a 21st century oligarchy network where nation-states are just the tools of power and manipulation. There is a reason the richest man in the world, by far, is never listed in any such attempted listing. Do yourself a favor and check out some of the sanctioned individuals such as a Bornikov, or a Dzhabarov or the holding company Renaissance Capital or Rostec. Then read about a lawyer named Magnitsky, murdered in a Russian prison; read some pretty good pieces by Michael Weiss at the Daily Beast for rare coverage by anyone in the US of what's really going on. Maybe go back and take another look at what Tom Malinowski and other former career State Dept employees are telling us. By far, most Americans spouting off their views on this are really just plainly and willfully ignorant; a few, particularly those with financials-related megaphones, are actually in on the "matryoshka doll fun." Not all Americans are stupid or on-the-take - you don't have to be either.

Tom Hickey said...

Michale Weiss, "journalist." Ha ha. Weiss is one of the chief US russophobes and anti-Russian propagandists. He is known as a Zionist and "neocon's neocon."

Tom Malinowski. Speechwriter for Madeleine Albright, liberal interventionist extraordinaire.

In his capacity as an HRW [Human Rights Watch] advocacy director, Malinowski contended in 2009 that “under limited circumstances” there was “a legitimate place” for CIA renditions,the illegal practice of kidnapping and transferring terrorism suspects around the planet. Malinowski was quoted paraphrasing the U.S. government’s argument that designing an alternative to sending suspects to “foreign dungeons to be tortured” was “going to take some time.”The Corruption of Human Rights Watch

See also Human Rights Watch Is Not about Human Rights

MRW said...

Tom, re: “Federal Reserve Act, Section 7. Division of Earnings”

So, it’s a little of both.

If you’re a district member bank with total consolidated assets in excess of $10 Billion, you get either the last 10-year T-Note yield or 6 %, whichever is the smaller amount. (It must have made a difference during the high-interest 80s.)

Or, if you’re a district member bank with total consolidated assets of $10 Billion or less, like most community or state banks are, you get the 6%.

But what are you getting the 6% on? It’s certainly not 6% of $10 billion. That would be $600 million/yr.

It’s on that member bank’s capital stock subscription in its district Federal Reserve. And I think there are limits on how much they can buy or subscribe to.

MRW said...

On Michael Weiss: DITTO. The only worthwhile Russian analyst to me is Stephen Cohen. Thank god for his Tuesday night interviews on the John Batchelor Show on WABC AM Radio. (NYC)