Saturday, December 15, 2018

Chris Uhlmann & Angus Grigg — How the 'Five Eyes' cooked up the campaign to kill Huawei

All the evidence before the spy bosses at the dinner in Canada pointed to a rising superpower mounting the most comprehensive campaign of espionage and foreign interference that any had witnessed.
The Party was aggressively exporting a worldview that was hostile to democracy and actively sought to undermine it.
A new Great Game was afoot and the West had been slow to act. But it is acting now.Operation hang up on Huawei: how it happened:
  • February 24 - Malcolm Turnbull lobbied US spy agencies to ban Huawei and ZTE from Australian 5G network
  • August 19 - Turnbull rings US President Donald Trump and tells him of the Huawei, ZTE ban
  • August 23 - Australia announces Huawei, ZTE ban
  • August 24 - Turnbull dumped as Prime Minister
  • October 29 - Mike Burgess explains decision to ban “high risk vendors” from 5G, cites risks to critical infrastructure
  • November 21 - White House slams China for increasingly frequent cyber attacks
  • November 27 - New Zealand bans Huawei citing “significant network security risk”
  • December 1 - Huawei executive Meng Wanzhou arrested in Vancouver
  • December 7 - British Telecom says it will strip Huawei equipment out of its 3G and 4G networks and will not use in 5G
Chimerica is over.* The new policy is contain and isolate.

Sydney Morning Telegraph
How the 'Five Eyes' cooked up the campaign to kill Huawei
Chris Uhlmann & Angus Grigg

See also

*Oh, wait. 
The problem with the claim that Xi has been "forced" is that China's trade surplus with the United States is actually considerably larger in 2018 than it was in 2017. For the first ten months of this year its surplus in goods has been $344.5 billion.
Beat the Press
How Large Does the NYT Think China's Trade Surplus with the U.S. Should Be?
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

RT - Syrian Script Was Written In Forgotten War On Yugoslavia

May 04, 2018 - By now largely forgotten, the 1990s NATO intervention in Yugoslavia paved the way for US-led regime change wars and “humanitarian” bombings: first Iraq, then Libya, and now Syria. RT’s Yulia Shapovalova looks back at 1999, and Nebojsa Malic talks with RT America’s Anya Parampil about failing to learn from history.

Friday, December 14, 2018

Darius Shahtamasebi — The Real Reason Western Media & CIA Turned Against Saudi's MbS

Kashoggi? Human right? Forget about it. 

Wandering off the reservation.

Zero Hedge
The Real Reason Western Media & CIA Turned Against Saudi's MbS
Darius Shahtamasebi

Zero Hedge — Obamacare Gutted: Core Provisions Ruled Unconstitutional By Texas Judge

Core provisions of the Affordable Care Act, also known as Obamacare, were ruled unconstitutional by a Texas judge on Friday following a lawsuit brought by a group of Republican attorneys general from 20 states against Democratic attorneys general from 14 states led by California's Xavier Becerra.
Zero Hedge
Obamacare Gutted: Core Provisions Ruled Unconstitutional By Texas JudgeTyler Durden

See also

The Hill
Federal judge in Texas strikes down ObamaCare
Peter Sullivan

Michael Hudson — FT: Wiping the slate clean: is it time to reconsider debt forgiveness?

I don't link to FT since it is behind a paywall (although FT Alphaville is not, but free registration may be required). Michael Hudson provides access to a recent article by Gillian Tett on debt forgiveness.

Michael Hudson — On Finance, Real Estate And The Powers Of Neoliberalism
FT: Wiping the slate clean: is it time to reconsider debt forgiveness?
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

Links — 14 Dec 2008

Moon of Alabama
Newly Released 'Integrity Intitiative' Papers Include Proposal For Large Disinformation Campaigns

Lavrov: Russia's Maria Butina Under Harsh Conditions, Tortured by US Authorities
Caitlin Johnstone — Rogue Journalist
Imagine If Saudi Arabia Was Not A US Ally
Caitlin Johnstone

Tom Luongo
Revisiting Turkey’s Debt Problem

India Punchline
Russian deployment to Venezuela served the purpose
M. K. Bhadrakumar | retired diplomat with the Indian Foreign Service

Ukrainian Military Claims Its Troops Use Nazi Insignias Because They Think These Are 'Pirate Flags'

Sputnik International
US to Resort to Use of Force if Iran Blocks Strait of Hormuz – Ex-CIA Officer

Strategic Culture Foundation
US to Resort to Use of Force if Iran Blocks Strait of Hormuz – Ex-CIA Officer

Zero Hedge
Why The Collapsing Chinese Credit Impulse Is All That Matters
Tyler Durden

Zero Hedge
Smack In Middle Of Trade War, Boeing Opens Its First 737 Plant In China
Tyler Durden

Reminiscence of the Future
Facepalm Of The Week.
Andrei Martyanov

Open Culture
How the CIA Helped Shaped American Creative Writing through the Famous Iowa Writers’ Workshop
Josh Jones

Joaquin Flores — Russian Central Bank: Sanctions Do Not Have Decisive Impact on Economy

Sanctions do not have a decisive impact on economic growth in Russia, said Elvira Nabiullina. The head of the regulator spoke at a press conference with journalists today.
“With regard to sanctions risks, geopolitical, we, of course, take this into account as one of the significant factors in forecasting the development of the economy. But I want to say that, in general, the economy is adapting to these sanctions, and we see that the growth rates are now close to potential. This factor cannot be ignored, but it has a limited effect,” said Nabiullina....
Fort Russ

Peter Koenig - The Macron Implosion – Will It Spread to Other EU Members?

When I first read this, I dismissed it as maybe being a bit of a conspiracy theory, but I have just come across another site which says something similar, that the CIA hasn't been happy with Macron, except it added that Israel wasn't happy with him either. I put this up for discussion, Peter Koenig is normally very good. He wonders if the powers that be wanted him removed.

Come to think of it – NATO. Wasn’t it Emmanuel Macron, who called a few weeks ago for an independent European army? That would make NATO obsolete – well, or would it? If taken by the letter, NATO has been obsolete for the last almost 30 years, but of course, nobody takes NATO by the letter. NATO is a killing force for the empire, and a huge trillion-dollar profit-making proposition for the US military industrial complex.
So, when Macron called for a European army, he may have upset some very violent interest groups, those who literally make a killing from killing. He may have gone a step too far in his imaginary role as King Macron. There are bigger kings than he is. A European army would most likely be armed by European weapon manufacturers, mostly from France and Germany – and – god forbid – perhaps even Russia? – This would be logical, since Russia is really no enemy of Europe, as every politician in Europe knows, even if they don’t dare to admit it. Also, Russia’s arms, especially long-range ballistic systems and Russia’s S-400 Air Defense System, are far superior to the US variety. Hence, partnering with Russia would not be rocket science, though certainly less than appreciated by Washington.

Global Research

Pepe Escobar — How the New Silk Roads are merging into Greater Eurasia

The concept of Greater Eurasia has been discussed at the highest levels of Russian academia and policy-making for some time. This week the policy was presented at the Council of Ministers and looks set to be enshrined, without fanfare, as the main guideline of Russian foreign policy for the foreseeable future.
President Putin is unconditionally engaged to make it a success. Already at the St Petersburg International Economic Forum in 2016, Putin referred to an emerging “Eurasian partnership”.
I was privileged over the past week to engage in excellent discussions in Moscow with some of the top Russian analysts and policymakers involved in advancing Greater Eurasia.…

Asia Times
How the New Silk Roads are merging into Greater Eurasia
Pepe Escobar

Bill Black — Trump Models His War on Bank Regulators on Bill Clinton and W’s Disastrous Wars

Tom Frank aptly characterized the Bush appointees that completed the destruction of effective financial regulation as “The Wrecking Crew.” It is important, however, to understand that Bush largely adopted and intensified Clinton’s war against effective regulation. Clinton and Bush led the unremitting bipartisan assault on regulation for 16 years. That produced the criminogenic environment that produced the three largest financial fraud epidemics in history that hyper-inflated the real estate bubble and drove the Great Financial Crisis (GFC). President Trump has renewed the Clinton/Bush war on regulation and he has appointed banking regulatory leaders that have consciously modeled their assault on regulation on Bush and Clinton’s ‘Wrecking Crews.’
New Economic Perspectives
Trump Models His War on Bank Regulators on Bill Clinton and W’s Disastrous Wars
William K. Black | Associate Professor of Economics and Law, UMKC

Matt Taibbi — The French Protests Do Not Fit a Tidy Narrative

American media seems to be confused by the protests. Few seem to understand what protesters want, or even who they are. Some outlets describe protesters as Trump-like nationalists aligned with Marine Le Pen, others as antifa-style leftists aligned with Jean-Luc Melenchon.
The marchers actually cut across all political lines, and if anything, both Le Pen and Melenchon are trying to attach themselves to something independent of them. Unifying factors seem to be hatred of Macron and a desire to express this in profane fashion (the New Yorker noted that many of the protest slogans are colorful variations on the theme of people being literally screwed by Macron).
The vest movement, a.k.a. gillets jaunes, began as a localized French grievance about a fuel tax and has spiraled into an international phenomenon.…
The common thread seems mostly to do with class. However, since we’re more comfortable covering left-versus-right than rich-versus-poor in America, the journalistic response here has been a jumble.…
The inability of pundits to make sense of the plummeting popularity of “centrism” is a long-developing story in the West.
Over and over, a daft political class paternalistically implements changes more to the benefit of donors than voters, then repeatedly is baffled when they prove unpopular....
I think that the elite have convinced themselves of the reality of meritocracy and trickle down, and that the people lower down on the ladder are doing better than they seem to believe. The elite concludes therefore that the reason is envy. It's the elite world view that determines their perception of reality. Of course, the people lower down see things through a different lens and narrative control is not working anymore regardless of how much they amp it up. All people have to do is look in their wallets and check books.

Rolling Stone
The French Protests Do Not Fit a Tidy Narrative
Matt Taibbi

See also

Workers' World
Towards a convergence of struggles in France?
Rémy Herrera | Marxist economist, researcher at the Centre national de la Recherche scientifique (CNRS), who also works at the Centre d’Économie de la Sorbonne, Paris. 
Translated by WW staff

Yanis Varoufakis on Progressive Internationalism

Building broad-based coalitions takes time, and for now, the Progressive International is just a website with some inspiring language and a video. Its membership is also very Eurocentric. But Varoufakis hopes it will blossom into a global movement that helps leftists create coherent platforms, policies, and parties to defeat the “nationalist international” masterminded by Donald Trump’s former chief strategist, Steve Bannon.
The logic is simple. Financiers have long had global networks; now, right-wing authoritarians do too, with coordinated social-media strategies and deep pools of dark money funding campaigns and disrupting elections around the globe. It’s time for the left to go on the offensive and reclaim its tradition of internationalism: in Varoufakis’s words, to “mobilize workers, women, and the disenfranchised around the world” to prevent outright fascism from taking hold. This means local action, but it also means dreaming big.
It’s a fuzzy plan, of course, and one that Varoufakis’s critics deem implausible. Aren’t ideas like “democratizing” the European Union and making global finance more “progressive” oxymorons? How will a ragtag group of leftists dream up a new monetary system and an ecological New Deal for the whole world when Goldman Sachs and ExxonMobil call the shots?Then again, pockets of the left—and even popular officials like potential 2020 presidential candidate Bernie Sanders—are starting to rally behind an internationalism that seeks to displace the right’s authoritarian nationalism with a more egalitarian vision of global politics. “In order to effectively combat the rise of the international authoritarian axis, we need an international progressive movement…that addresses the massive global inequality that exists, not only in wealth but in political power,” Sanders wrote in The Guardian in September….
Yanis Varoufakis proposes a progressive internationalism to oppose both neoliberal globalization as corporate totalitarianism and nationalist internationalization as incipient fascism as a new program for a united international Left that transcends the old Marxist-Leninist internationalism. Bold.

Yanis Varoufakis
Our progressive internationalism – The Nation


DiEM25’s European New Deal plan can succeed where Macron and Piketty failed – The Guardian


“Why we need a Progressive International”. With Christiane Amanpour on CNN Int

The Real News Network - Oliver Stone Remembers Anti-Imperialist Journalist William Blum, Chronicler of CIA Crimes

Jimmy Dore - RussiaGate Pusher Gets Owned By Google CEO

Jimmy Dore had me in stiches with this one. Austerity is everywhere and no one can escape, it seems, not even the Russians, despite 'Putin's billions '.

When the hearing into the so called Russian hacking asked Google's CEO what their investigation had uncovered, he said they had done extensive research into it and had found that Russian clients had spent a total $47,00 on advertising. He then looked a bit awkward, and said, 'yeah, we know, but anything is too much, isn't it?' I was surprised he could keep a straight face.

I should imagine that this investigation into the alleged Russian hacking has cost $millions. Look at the amount of people sitting on the committee? Jobs for the boys, hey?

RT - Ukraine admits officials meddled in US election

You won't get the real news in the corporate media, you have to rely on RT, Jimmy Dore, and others in the independent media.  But hey, these are all Americans reporting on the real news, right! Useful idiots the West will say.

BTW, even the Unz Review now features the Jimmy Dore show. The left and right are finding common ground.

During the Trump campaign, anti-corruption prosecutors in Ukraine revealed that a pro-Russian political party earmarked payments to Paul Manafort. Now a Ukrainian court has ruled that doing so was illegal and caused interference in the US election. Radio host and reporter Lee Stranahan joins Scottie Nell Hughes to discuss.

Monty Python - Repressed Citizen

The peasants are revolting! Long live the yellow vests!

Thursday, December 13, 2018

Frank Decker and Charles Goodhart — Credit mechanics: A precursor to the current money supply debate

The insights presented by Lautenbach and Stützel support the points made by one author of this column (Goodhart 2017), who noted that loans to the non-bank private sector are commonly negotiated in advance in the form of overdraft and stand-by, or credit, limits. The actual drawing of the loan is then left entirely in the hands of the borrower. Nor is the balance of power in the prior negotiation entirely in the hands of the bank. Competition and regulation constrain the power of each bank to fix loan terms, just as the availability of collateral security limits the ability of the borrower to obtain credit.
Nevertheless, recent publications on money creation – for instance, McLeay et al. (2014), Jakab and Kumhof (2015) and Werner (2014, 2016) – predominately focus on the money-creating capacity of the individual bank, not taking much, or any, notice of the developments in German monetary economics since Hahn (1920). The theoretical analysis of the determination of the money supply in the US and UK has for too long been based on misleading partial equilibrium approaches. Earlier it was based on the money multiplier, which implied that the money stock was driven primarily by changes to the central bank’s monetary base. This ignored the fact that, if the central bank wanted to fix a short-term interest rate – which it generally did – then the base had to adjust to commercial banks’ need for base money, rather than the reverse. Subsequently the divorce between the recent explosion in bank balances at the central bank and the sluggish growth in the broader money stock has scuppered the money multiplier approach. But this void is being filled by yet another partial equilibrium analysis, whereby the emphasis is focused entirely on the, supposedly unilateral, ability of the individual bank to create loans, and money, ex nihilo. In contrast, we argue that a more general approach to money supply theory involving credit mechanics and the influence of all those participating, bank debtors and creditors, both the non-bank private and the public sector, needs to be established.
Credit mechanics: A precursor to the current money supply debate
Frank Decker, Honorary Associate, The University of Sydney Law School and Charles Goodhart, Emeritus Professor in the Financial Markets Group, London School of Economics

Links — 13 Dec 2018

Moon of Alabama
British Spies Infiltrated Bernie Sanders' Campaign?

Integrity Initiative: Foreign Office Funded, Staffed by Spies, Housed by MI5?

Craig Murray Blog
British Security Service Infiltration, the Integrity Initiative and the Institute for Statecraft
Craig Murray, formerly British ambassador to Uzbekistan and Rector of the University of Dundee

Sputnik International
Ukraine Court Reveals Officials Interfered in US Election by Naming Manafort

Sputnik International
CIA Reportedly Dove Into 'Panic Mode' as Trump Chose Putin Over US Intelligence

Tony Kevin— Maria Butina Endgame

It seems she was not physically tortured in the strict sense of the word but her prolonged harsh and vindictive treatment waiting over five months for her repeatedly delayed trial amounted to ‘torture’. We do not know what interrogation techniques were used. We will be told one day.
She was and is a political prisoner and has been treated like a terrorist. Politically aware Russians will remember this case with particular rage. No American imprisoned in Russia on whatever charge has ever thus been treated by the Government of Russia.
This case has done great damage to prospects for improved Russia-US relations. What has been gained by the US ? Nothing.
I have to disagree. Of course, this was physical torture as well as psychological. This is not confined to Ms. Butina. It is standard US practice in the "criminal justice" system.

Trump is just as acquiescent as Obama to the power of the deep state (including military). It recalls, Sen Schumer's remark at the outset of the Trump presidency to Rachel Maddow on MSNBC.
"Let me tell you: You take on the intelligence community — they have six ways from Sunday at getting back at you."
Butina is pawn in a plan to effect a soft coup in the US by weakening and if possible, removing, the elected president. I am not a fan the president and certainly did not vote for him (or HRC either). However, this attack by the deep state on the democratic process is not only un-American, it won't end well either. It's another step toward fascism.

Maria Butina Endgame
Alex Henderson

Rémy Herrera — Cops in France brutalize high school students who join Yellow Vest protests

I would be skeptical of this if I had not witnessed it in France and the United States in the past.

In fact sort of behavior has a name in law enforcement and criminal justice. It's called "punitive" enforcement. On the one hand, it is mindset of some that join law enforcement, and it is also a result of a punitive culture in some departments that is at least condoned by superiors and supervisors.

So, there are two factors operative. One is sadistic disposition, and the other is control through fear and intimidation.

In liberal society, these are generally considered signs of fascism.

Justin Podur — Why It’s So Hard for Most Countries to be Economically Independent from the West

The structures of the global economy present challenges to any country or political party that wants to try to break out of U.S. hegemony. Even for countries as big and with as much potential as Brazil or Egypt, countries that have experienced waves of relative independence, the inertia of these economic structures helps send them back into old patterns of extraction and debt. In this moment of right-wing resurgence it is hard to imagine political movements arising with plans to push off the weight of the economic past. But that weight cannot be ignored.
Colonialism and path dependence. I would say that this is one of a number of factors. Whether they can be reduced to a single factor or even a few factors remains to be seen. However, this seems to be one of the key factors.

The post focuses on Brazil.

Naked Capitalism
Why It’s So Hard for Most Countries to be Economically Independent from the West
Justin Podur | Associate Professor of Environmental Studies at York University, Canada

Bill Mitchell — When two original MMT developers get together to discuss their work

Last week, Warren Mosler and I had one of our regular catchups and we discussed at length the state of play in Modern Monetary Theory (MMT). We are quite protective of it. We mused about how we started out on this Project and where it has gone. As old stagers do when they get together. We also reflected and compared notes on what the state of MMT is now, given the increasing visibility of the ideas in the mainstream media all around the world and the proliferation of social media activists who have chosen to identify and promote our ideas. There were aspects of that development that we identified as being of concern for us and other aspects which we considered to be a cause for optimism (celebration is too strong a word). We thought it would be a good idea to take a breath and document what we considered to be the essence of MMT – as a sort of checklist for people who want a fairly precise account of the body of work. I agreed to write this document after input from Warren. So, this is what we mean by MMT. What follows is my account of our conversation expanded to add meaning where required.…
Probably as close to an MMT manifesto as we'll get.

Bill Mitchell – billy blog
When two original MMT developers get together to discuss their work
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Why this stray dog stays on the rocky shore despite the crashing waves..

Something nice!

What makes Noorung, the stray dog, so scared that he doesn't leave the water's edge?

I read this story in British newspaper once, which I think was in all the newspapers.

In a quiet little rural village an old man would take his dog for a walk everyday after which he would catch a bus to his favourite pub. In the pub the old man would have a couple of pints of ale and the landlord would break open a packet of crisps and put them on the floor for the dog to eat.

Sadly, the old man died, but every day at the same time the dog would ask the old man's wife to let him out the front door. The dog would then go to the bus stop and wait for the bus. When the bus arrived the bus driver would let him on and then at the bus stop where the pub was he would let him off again. The dog would then go into the pub and the landlord would break open a packet of crisps for him. After he had eaten them the dog would get the bus back home.

The article had pictures of the old man, his wife, the dog getting on the bus, the dog sitting on the bus, and the landlord giving him some crisps. It was hilarious!

Israeli Settlers in the Occupied West Bank

It speaks for itself.

That’s the question that motivates writer Wajahat Ali to travel to Israel in a new documentary from The Atlantic. Ali, who has been critical of Israel, embarks on a personal quest to understand the perspectives of some of the 400,000 Israeli Jews who live in the occupied territory in defiance of international law—and to hear from the Palestinians who oppose them. In his travels through the West Bank, Ali visits the family of a Palestinian terrorist, ventures into the heart of one of the most radical settlements, and speaks to the leader of an NGO focused on creating a dialogue between Israelis and Palestinians.

Wednesday, December 12, 2018

Dean Baker — Trade: It’s Still About Class, Not Country

It is truly incredible that most of the advocates of this trade policy do not even seem to understand the class nature of their agenda, equating the interests of a tiny group at the top with the interests of the whole country....
Trade: It’s Still About Class, Not Country
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

See also

Robert Reich
China Tariffs are a Regressive Tax on Americans, and Risk a Recession

Matias Vernengo — Middle Income Trap or the Return of US Hegemony

Short essay in Spanish for the special (40 year anniversary of the journal Coyuntura y Desarrollo, published by the Fundación de Investigaciones para el Desarrollo, FIDE). It is essentially a critique of the concept of middle-income trap and the idea of how the demographic transitions (discussed herebefore) affect the process of development. It suggests that the deindustrialization of the Latin American periphery results as much from the decisions in the hegemonic country to open up China, as from the decisions of the local elites to adopt neoliberal policies to punish its labor class. It is also noted that the deindustrialization of the central countries (particularly the US) should be taken with a certain degree of skepticism (see this old post), since manufacturing output went up (even if manufacturing employment has gone down, at least since the entry of China in the WTO), and the US maintains a significant leadership in key industrial sectors (let alone the military; see also this more recent post).
Naked Keynesianism
Middle Income Trap or the Return of US Hegemony
Matias Vernengo | Associate Professor of Economics, Bucknell University

Aleksandr Neukropny — Why Russia Has No Right to Surrender to the West

Oh, my. The Fourth Reich? And not Germany this time?

Times are getting rude.

The Vineyard of the Saker
Why Russia Has No Right to Surrender to the West
Aleksandr Neukropny
Translated by Ollie Richardson & Angelina Siard

See also

The Ghion Hournal
Destroying The Laws
Rainer Shea

See also

The National Interest
Don't Let Ukraine Drag America into War
Ted Galen Carpenter, a senior fellow in security studies at the Cato Institute and a contributing editor at the National Interest

Steve Roth — Actually, Only Banks Print Money

Actually, not really. Only governments have "printing presses" and other attempts to "print money" are called counterfeiting. Steve Roth knows this, of course, so he must being using "printing money" in another sense. Banks don't have printing presses in the basement, literally or figuratively. Governments that issue their currencies as government liabilities do.

Banks increase M1 money supply by adding assets as receivables to their balance sheets as receivables  and booking corresponding liabilities as payables. The reverse shows up on the borrower's balance sheet. Both sets of books are in balance, with net zero on the respective balance sheet. Credit and debit entires match. Now the bank has an asset on its balance sheet and the customer has a credit in a deposit account. So even though the net is zero in the financial system, purchasing power increases in nongovernment owing to the increase in M1 money supply as a result of the deposit in the customer's deposit account.

Why is this not a form of "printing money" then, as Steve Roth claims?

When a central bank issues the government's currency it creates liabilities on its balance sheet and assets on the balance sheets of banks as deposits at the central bank. Assets increase in nongovernment as a whole without a corresponding liability in nongovernment. There is a change in aggregate nongovernment financial assets.

When banks create a deposit by extending a loan, there is no change in aggregate net financial assets in nongovernment. The net is zero. When central banks deficit spend, there is. The net is the amount of the deficit.

A currency is the unit of account that which the government sets and which it accepts as payment of obligations it imposes on nongovernment, chiefly taxes but also tariffs, fees and fines. When banks settle accounts with the government as proxies for customers, they have to settle in the government's liabilities, either cash or bank reserves in the central bank payments system. This is what "printing money" implies. 

All currency users including banks have to obtain the currency as government liabilities, and the only source is government issuance of the currency through spending or lending, since only government can create government liabilities. In modern monetary production economies, governments delegate this power to their central bank as the government's financial agent. 

The currency sovereign's ability to create its own liabilities is unlimited. The constraint is the availability of real resources for sale in the currency, since over-issuance risks inflation. Correspondingly, under-issuance risks contraction and ultimately deflation.

For example, when a taxpayer pays taxes to the government that issues the currency, one of two things happen. Either the taxpayer pays in cash at a government office, or tenders payment through a bank, e.g., a paper check or electronic check. If cash, that cash is deducted from currency in circulation, reducing M1. 

If by check, the check has to clear in the government's payment system. In this case, the government charges the bank's account in the payments system and the bank corresponding charges the customer's account at the bank. If there are insufficient funds in the customer's account, then the bank bounces the check and the funds are not deducted from the banks' account at the central bank. This illustrates the huge difference in kind between the "money" banks generate through credit issuance in M1, and the "money" that the government issues through its financial agent, the central bank.

What happens if the bank doesn't have enough funds in its account at the central banks to cover its obligations? Either the bank borrows in the interbank market at the policy rate set the central banks sets, or the central bank just lends the funds to the bank so the payment system to clear. But the bank is charged a penalty rate set above the policy rate to discourage this, and a bank that abuses the "discount window" risks its standing and ultimately its position in the payments system.

Again, a pseudo-problem arises from using "money" without a proper technical definition, or else not paying attention to the existing definitions. Similar problems arise with other key financial and economic terms, such "the interest rate," "capital," and "saving."

SteveRoth is correct that loans creating deposits adds to the M1 money supply, but this is not currency issuance in the customary meaning of the phrase. Government's issuance of liabilities in the government's unit of account is not the same as banks creation of its own liabilities in the government's unit of account, which the bank cannot issue, being currency users and not issuers. 

If banks could "print money" in the sense of issue currency as the government creates its own liabilities by marking up accounts on its spreadsheet, banks' risking would not risk insolvency owing to default on loans they extend. This is not the case. Conversely, government bonds are default-risk free since the government can always issue currency to cover its obligations to security holders.

However, because bank credit increases M1, which adds to purchasing power in nongovernment, bank lending can affect the price level and spur inflation. Similarly, contraction in bank lending that is not offset is deflationary.

Steve Roth also thinks that issuance of government securities to offset deficits, which is mandatory in the US, sterilizes those funds so that they don’t add to money in the sense of M1. This is not the case. The funds that government injects increase M1 since currency is issued by crediting deposit account, which adds to M1. 

Taxes subtract from both M1and also aggregate nongovernment financial assets. Payment for purchase of newly issued government securities decreases M1, but those government liabilities are simply switched from deposit accounts in the payments system to time deposits at the central bank. The amount of nongovernment net financial assets remain the same in aggregate.

Moreover, government securities are the most liquid form of financial asset after cash, short term bills are essentially cash equivalents, and government securities are the best form of collateral, spending is not affected by draining the monetary base as deposit accounts at the central bank to time deposits at the central bank. 

Issuance of government securities does not sterilize deficit spending. There are other reasons to issue government securities, but this is not one of them. Chiefly, government securities issuance drains the monetary base, facilitating the central bank hitting its target when not paying interest on excess reserves and not choosing to set the policy rate to zero. Government securities also provide interest-bearing default-free risk instruments for the financial community and nongovernment savers. Issuance of government securities is not necessary operationally. It is a policy choice, hence political.

Ok, this looks like semantics and logic-chopping. But it is not. It’s just as important to create conceptual models that are correct as it is formal models. This means weeding out the weasel words, clarifying concepts and getting description right. Some formalism in needed in this regard, but it is not econometric but double-entry accounting. This requires thinking in terms of T-accounts, and that needs to be check by writing it out.

Actually, Only Banks Print Money
Steve Roth

Zero Hedge — Fed Net Worth Turns Negative Following Record $66BN In Paper Losses Tyler Durden

What immediately caught the attention of financial analysts is that the gaping Q3 loss of over $66 billion, dwarfed the Fed's $39.1 billion in capital, leaving the US central bank with a negative net worth, which would suggest insolvency for any ordinary company, but since the Fed gets to print its own money, it is of course anything but an ordinary company as Bloomberg quips.
Commenting on the Fed's paper losses, former Fed Governor Kevin Warsh told Bloomberg that "a central bank with a negative net worth matters not in theory. But in practice, it runs the risk of chipping away at Fed credibility, its most powerful asset.’’
...a negative net worth is sure to raise eyebrows especially after Janet Yellen said in December 2015 that "capital is something that I believe enhances the credibility and confidence in the central bank."…
This is also a reason central banks still hold gold, which Keynes called "the barbarous relic." Makes no sense in a modern monetary system for currency sovereigns, but whatever — perception is reality.
While a central bank can operate with negative net worth, such a condition could have political consequences, Tobias Adrian, financial markets chief at the IMF said. “An institution with negative equity is not confidence-instilling,’’ he told a Washington conference on Nov. 15. "The perception might be quite destabilizing at some point."

Links — 12 December 2018

Fort Russ News
MAJOR: Ukraine’s President Describes WAR Against Russia
Paul Antonopoulos


Beijing warns against ‘bullying’ its citizens amid ongoing US-Huawei saga
The U.S. vs. China: A Great Experiment vs. A Great Civilization!
Frank Li | Chinese ex-pat, Founder and President of W.E.I. (West-East International), a Chicago-based import & export company, B.E. from Zhejiang University (China) in 1982, M.E. from the University of Tokyo in 1985, and Ph.D. from Vanderbilt University in 1988, all in Electrical Engineering
Paul Street


Sputnik International
Moscow: US House's Resolution on Nord Stream 2 Shows Dishonest Competition

The Natonal Interest
Is Russia a U.S. 'Adversary' or Just a 'Competitor'?
Nikolas K. Gvosdev, a contributing editor at the National Interest and professor of national-security studies at the U.S. Naval War College

Zero Hedge
"Stronghold Of Evil" - Russia Slams America's Illegal Syrian Occupation
Tyler Durden

Yuan internationalization making steady progress

China issues white paper on human rights progress over 40 years of reform, opening up

China slams use of bringing up human rights issues with political motives as 'immoral'

China needs 216 new airports by 2035: report

The Conversation
Canada needs its own Green New Deal
D.T. Cochrane | Lecturer in Business and Society, York University, Canada

Sputnik International
Venezuela's Maduro Accuses John Bolton of Plotting to Assassinate Him

Russia Insider
Blockchain Technology Revolutionizing Russian Banking and Securities
bne IntelliNews

AFRICOM: A Neocolonial Occupation Force?
Eric Draitser

Mike Pompeo gets grilled on Fox News, undercuts CIA intelligence on Khashoggi murder

Popular Resistance
For The First Time Social Media Outpaces Print Newspapers As News Source
Elisa Shearer,

Asia Times
China said to rethink ‘Made in China 2025’ under US pressure

One America News Network
Exclusive: China makes first major buy of U.S. soybeans since Trump-Xi meet
Karl Plume

Joe McGooch - The Great Smart Meter Swindle

  • More ways in which the corporations can spy on you and collect data, would you believe? And they sell the data on. They say it's free fitment, but the £11 billion cost is being added to our bills.  The radiation emissions can also affect your health. 

Smart' Meters are the biggest scam, scandal, and swindle ever perpetrated on the general public. This video explains why that is the case, what to do if you are told you need to have a smart meter installed, and what to do if you already have a smart meter.

Josh Ryan-Collins - Looking forward: housing should be more than a financial asset

It looks like the British Conservative Party is beginning to realize that there are no votes to be had in high house prices anymore.

The over 50's vote predominantly Tory believing that high house prices had made them rich. Yes, on paper, but can they ever realize the money because where are they to live when they sell their home. And every time they moved to the housing ladder they became clobbered with a huge mortgage again making them poor causing them to go without and work excessive hours. What a life?

Well, I absolutely hated the high house price game because it caused new to spend too much time at work when I loved my leisure time. 

There are reasons for optimism when it comes to affordable housing in the UK, despite the state of crisis that currently engulfs the sector. For the first time in decades, both major political parties seem to have realised that the housing market is fundamentally broken and that it is a domestic political priority.

The Conservative Party has finally accepted that not everyone can own a home, and that the provision of decent-quality rental and public housing is a necessity. The decision to finally lift the cap on local authorities’ ability to borrow to invest in new development is perhaps the biggest sign of this change, of course, although much more investment from central government is likely to be needed.

Equally promising are signs that the land problem is being better understood, with Labour investigating a serious property wealth tax, and Sir Oliver Letwin’s review of land value capture pulling no punches. Moreover, as the level of homeownership falls, it is likely there will soon be an electoral majority in favour of reducing house prices.

Social Housing

Dean Baker - Trade: It’s Still About Class, Not Country

Trump's new trade deals with China could turn out bad for American workers.

Let’s start with the issue of forced technology transfer. Boeing is upset, because under the current rules, if they set up shop in China, they are going to have to partner with a company that is likely to be a competitor a few years down the road.
Suppose tough-talking Trump forces China to accept rules that prohibit these mandated partnerships. Under his new deal, if Boeing wants to set up shop in China it just starts building a new facility, no partner needed.
Standard economics would tell us that this will make Boeing and other US companies more likely to set up operations in China. This is obviously good from the standpoint of Boeing’s profits, but why exactly should US workers be happy about a change that will facilitate the outsourcing of US jobs?


Janet Adamy and Paul Overberg - The Loneliest Generation: Americans, More Than Ever, Are Aging Alone

Loneliness undermines health and is linked to early mortality—and baby boomers are especially feeling the effects

Modern life can be lonely, but we didn't evolve to live like this. In our ancient tribes the elderly lived alongside their families and were never lonely. Elders were respected for their wisdom, and loved for their many stories where the dragons they had fought in the past had got bigger and more menacing by the year. 

Modern Life is Rubbish is the title of one of Blur's albums.

 In tribal societies if your house got burnt down everyone in the village would help help you build a new one. 

No one bartered or sold people stuff. If you needed a new pair of shoes one of the friends would probably give you a pair, but the next day you might help him in his field. People had great friendships.

Young inexperienced mothers were never left alone with young, difficult to manage children as the extended family and also the tribe would all help out. Grandmothers and Great grandmothers with a lot of experience would help the young mothers and so the offspring would get a very secure and more nurturing environment leading to them becoming far healthier and happy adults. 

Everyone had a job, and as long as you did your best to contribute the differences in output from people was tolerated. There was the perfect blend of conservatism and socialism. 

Of course modern life has many advantages and many of us wouldn't be here without modern technology and healthcare, but have we lost something in the process? Something vital?

Carl Jung asked how much more consciousness can mankind tolerate? The animals have no idea what death means, and they cannot see into the future and worry. WW3? And they have no idea of future horrible diseases. 

Many people in the West have no religious faith now. In Europe two thirds have no faith, but in the US two thirds do have a faith, but it is said that one of those thirds also have no faith even though they go to church. Faith helped people cope with life. 

Loneliness can lead to depression and chronic diseases.

This is one of the reasons that I think the Job Guarantee is such a good idea. Lots of people living on their own without work will be able to not only earn a bit of money but also be able to get out and meet people. And for those who are not well enough to get out they can have people who are  on the Job Guarantee come around to keep them company, or do some tidying up for them, maybe do the garden, or even cook them a meal. 

The  dialectic process: thesis (modern society), antithesis (loneliness, lack of social life), Synthesis (Social work, paid for by the Job Garantee, maybe?)

Okey, enough of my yacking, here's the article.

Danny Miner, a 66-year-old retired chemical plant supervisor, spends most days alone in his Tooele, Utah, apartment, with “Gunsmoke” reruns to keep him company and a phone that rarely rings.
Old age wasn’t supposed to feel this lonely. Mr. Miner married five times, each bride bringing the promise of lifelong companionship. Three unions ended in divorce. Two wives died. Now his legs ache and his balance is faulty, and he’s stopped going to church or meeting friends at the Marine Corps League, a group for former Marines. “I get a little depressed from time to time,” he says.
Baby boomers are aging alone more than any generation in U.S. history, and the resulting loneliness is a looming public health threat. About one in 11 Americans age 50 and older lacks a spousethrash, partner or living child, census figures and other research show. That amounts to about eight million people in the U.S. without close kin, the main source of companionship in old age, and their share of the population is projected to grow.
 The Wall Street Journal

Angelique Chrisafis - Macron’s appeal to French from behind gold desk leaves gilets jaunes unimpressed

Flaunting Élysée Palace’s gilded rooms does little to quell ‘president of the rich’ tag

Talk about backfiring? 
It was the most important TV appearance of Emmanuel Macron’s presidency: the 40-year-old former banker had to prove to an angry nation that he was not an arrogant “president of the rich” and that he understood ordinary French people’s struggle to make ends meet.
Yet Macron’s choice to deliver his prerecorded speech on social inequality from one of the most opulent and golden rooms in the luxurious, 365-room Élysée Palace was not lost on gilets jaunesprotesters who have been occupying protest barricades on rural roundabouts.
The Guardian

Tuesday, December 11, 2018

Links — 11 Dec 2018

On the Economy
Nick Hanauer’s Progressive Labor Standards: A bold idea to do more than just repair the damage.
Jared Bernstein | Senior Fellow at the Center on Budget and Policy Priorities and former Chief Economist and Economic Adviser to Vice President Joe Biden in the Obama Administration

How Where You're Born Influences The Person You Become
Samuel Putnam, Bowdoin College and Masha A. Gartstein, Washington State University

Valdai Discussion Club
Imperialism, Geopolitics and Religion: The Split Between Moscow and Constantinople
Dimitris Konstantakopoulos

Fort Russ News
DEFYING NATO: Greece and Russia Discuss Increased Cooperation in Defense Sector
Paul Antonopoulos

Fort Russ News
West is Concerned About Growing Cooperation Between Russia and Turkey
Paul Antonopoulos

Caitlin Johnstone — Rogue Journalist
Assorted Thoughts On Politics, Humanity, And The World
Caitlin Johnstone

Geopolitics Alert
Opinion: Six Reasons Behind Saudi Arabia’s War on Yemen
Damir Nazarov

Economic Policy INstitute
Aluminum tariffs have led to a strong recovery in employment, production, and investment in primary aluminum and downstream industries
Robert E. Scott, Senior Economist and Director of Trade and Manufacturing Policy Research

Trump says would intervene in arrest of Chinese executive
Tyler Durden

Goose-stepping in 2018: Chile’s military parade looks a lot like a Nazi one (VIDEO)

Putin pays last respects to human rights activist

Jeffrey D. Sachs — The War on Huawei

The Trump administration's conflict with China has little to do with US external imbalances, closed Chinese markets, or even China’s alleged theft of intellectual property. It has everything to do with containing China by limiting its access to foreign markets, advanced technologies, global banking services, and perhaps even US universities.…
The Trump administration, not Huawei or China, is today’s greatest threat to the international rule of law, and therefore to global peace.
Containing China (and Russia) to mantain and extend US global hegemony.

Project Syndicate
The War on Huawei
Jeffrey D. Sachs | Professor of Sustainable Development and Professor of Health Policy and Management at Columbia University, and Director of Columbia’s Center for Sustainable Development and of the UN Sustainable Development Solutions Network

See also at Project Syndicate

China’s Boldest Experiment
Dani Rodrik | Professor of International Political Economy at Harvard University’s John F. Kennedy School of Government

See also
Chinese experts have said that Beijing was trying to separate Meng's arrest from the trade negotiations, but also warned that public anger in China over Canada's move could compel officials there to take measures that would further sour U.S.-China ties and endanger talks.…
This is the most significant item in the report. The Chinese are very nationalistic and conservative, and they are extremely sensitive to humiliation. The Chinese government also has its ears to the ground regarding the public mood.

CBC (Canada)
Canadian ex-diplomat Michael Kovrig detained in China

Max Lawson — Is Meritocracy the new Aristocracy? And the 11 Tricks that Elites use to capture Politics.

In reading this, it is good to realize that feudalism was justified by the religious paradigm then prevalent in Europe. It was based on the great chain of being, with God (the Lord) at the top and the king as God's earthly simulacrum. This implied the divine right of kings, kings being temporal lords.

Today, the great chain of being has been replaced by naturalism as the overarching paradigm owing to science replacing religion as authoritative. The concept of person has been submerged in the concept of the individual. While individuals are unique, persons are identical in sharing the same human nature.

Human beings have two aspects, particular and universal. Individuals are particular, being unique in their accidental properties and relations. Persons are universal, sharing human nature and consequently human essential properties and relations.

When naturalism and individualism become foundation in the overarching paradigm, meritocracy as rule by the evolutionary winners seems as natural as nobility by birth, which at least contained the notion of noblesse oblige, even if it was not always honored.

What is the basis for equality of persons as the foundation for human rights when individualism eclipses personalism? Then, the matter becomes one of positive law that is arbitrary.

The complement of individualism, which only partially true, is personalism. Personalism was assumed by most of the Enlightenment thinkers upon whose works modern democracy and law and based. Personalism is also a key fundamental of social justice and Catholic social teaching in that is emphasizes the inherent dignity of persons that is inviolable morally. According to Kant, “Act so that you use humanity, as much in your own person as in the person of every other, always at the same time as end and never merely as means.”
This brilliant essay by Peter Adamson, who for many years’ wrote Unicef’s State of the World’s Children report, starts with a very similar story. His argument is a powerful and interesting one. What if meritocracy is simply another form of class oppression, and in some ways an even more dangerous one? It is an excellent, subtle yet powerfully argued paper, and I would really recommend reading the whole thing. He points out that the word meritocracy was originally conceived as negative. It was intended as a warning that the ‘re-stratification of society based on ‘intelligence + application = merit’ would produce a society of arrogant, insensitive winners, and angry desperate losers.
The philosopher john Rawls was very clear on this too: ‘meritocracy still permits the distribution of wealth and income to be determined by the natural distribution of abilities and talents. It is therefore arbitrary from a moral perspective’....
Firstly we know that a huge amount of what we call merit is based on our upbringing, our parents and our home background…
But secondly, we also know, although it remains contentious, that some intelligence is genetic. It remains contentious as it is used by defenders of inequality- people are rich because they are cleverer- that genetic differences in intelligence explain why certain people are in charge. But Adamson’s point is that even if this is true in some instances, it does not make it morally right.…
At least with class or feudalism, the injustice of the system was very clear and based on obviously flimsy foundations like inherited wealth that did not stand up to scrutiny. With meritocracy, the poor are devalued because they are less clever and less able....
This week our team in Latin America and the Caribbean published a great paper, which looks at 13 instances of pro-rich tax and spending policy and political action in the region and dissects the way in which the state has been ‘captured’ by elite interests.
They break down the process of state capture into 11 different methods deployed by elites, and then look at how many of the 13 cases employed these methods....
For me this final one tips over also into the capture of ideas rather than the capture of the state. The use of resources by elites to change the way people think is perhaps the most powerful tool at their disposal.
We all can see the undue power of elites in everyday life, but this level of analysis of methods and dissection of the levers of influence is rare, and very practical if we want to change things for the better....
Oxfam Blogs — From Poverty to Power
Is Meritocracy the new Aristocracy? And the 11 Tricks that Elites use to capture Politics.
Max Lawson, Oxfam GB