The Dimwits Among Capitalists See "Deficits In Fiat" As Public Investment In The "Wrong Types Of Citizens"

(Commentary posted by Roger Erickson)

I've got news for capitalists. People like spawning recombinant diversity, including sexual and psychological AND cultural diversity.

And, they naturally cherish the outcomes ... if not perverted by ideology to sociopathic behavior which inevitably triggers tragic outcomes, leaving bewildered perps to claim "nobody could have predicted that!"

Can't Every Aggregate Afford To Generate Their Needed Diversity ... And Have It Too?

Of course they can. In fact, they can't survive if they don't!

As one example, take current Russian culture, PLEASE! :)

"The good news. The deficit is growing, although Gurdgiev interprets this as bad news."

Why? Who convinced Gurdgiev that a "deficit in fiat" is bad news? Does he even know what that means? Did any social democrat ever care about a nominal "deficit in fiat" ... until they came out of the closet as a confused, capitalist gangster?

This brings us back to the recent spate of reconsideration breaking out in yet another generation, and of course in the politicians who pander to any and every forming crowd.

If we're an evolving culture, what is it that we aren't teaching to our students, to prepare them for unstoppable evolution, instead of fitful emergency changes? Does cultural evolution HAVE to involve Boom/Bust/Boom/Bust cycles, aka repression/escape/repression/escape?

Of course not. So what would YOU suggest as ways to smooth out our tortuous paths? Here are a couple of items now on my short list of "stupid educator tricks" that aren't at all funny.

1) teach all students, by age 10, the simple reality of fiat currency operations
(actually, that was done, over 100 years ago, in a game called "Monopoly" .. but then the key lessons were mysteriously removed from the game's directions; go figure! It's not like reality is difficult to absorb. A surprising number of key bits of knowledge are active taboos. Ya gotta wonder why. Gang competition?)

2) teach all students, also by age 10, the simple reality of aggregate biology, culture & teamwork
(It's still amazing how many PhD's one meets who know seemingly everything about a narrow discipline, but NOT what it's for. It's not like reality is difficult to absorb. For whatever reason, it's actively deprecated. It's as though some don't want citizens asking too many questions.)

3) teach all students, also by age 10, the simple rudiments of scalable project coordination
(These rudiments are published periodically in the news, and promptly ignored yet again. Here's yet another example of 2 simple messages I now wonder why they never taught us in what was supposed to be a "graduate" school. It's not like they're difficult to absorb. [Are you getting the sense that there's a LOT of misguided repression floating around? No surprise. Anthropologists find that every culture is chock-full of arbitrary taboos.*])

“The key to the success in any business is strong controls in two areas. Administrative and finance.
a) You have to enforce [aggregate] discipline. . . . You've got to make the numbers work.
b) On the administrative side, it’s controlling people once you hire them.”

Pity capitalists can't extrapolate that - through indirection - to making the RIGHT numbers work, and letting aggregates control themselves. Understanding the art of extrapolation via indirection requires understanding the Fallacy of Scale, another simple thing every student should learn by age 10.

Isn't it odd that the biggest critics of Central Planning are themselves obsessed with controlling others? 

Dominance seems to go hand-in-glove with a wide stance.

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* ps: The half-life of taboos in a culture are a good indicator of that culture's Adaptive Rate. Why? Because there's a solution to every novel cultural challenge, and that solution involves yet another layer of indirection ... to circumvent our own, bureaucratic taboos.

Novel Variation on Corporate Welfare - Racketeering, Renamed Upper Looting Class Tax Forbearance

(commentary posted by Roger Erickson)

The Top 1% Mostly Gives to the Other 1% ... and Calls it Charity

Collusion?

Fine. Here's a scheme to suggest to your Congress Critter. Since the taxes the Middle Class pay don't go anywhere, or get used for anything ... why not claim that you're effectively giving buying pwoer to the 1% too, and request ... NAY DEMAND! ... a similar tax write off.

In fact, until enough Aggregate Demand materializes to resuscitate the Middle Class, why not just request a holiday altogether, from your currently mandatory donation of Aggregated Demand to the IRS black hole?

If the IRS screams about the apparent deficit in nominal fiat, say "Let them eat 1% demand!"

And if 1% of the population pours into the Country Clubs, and tries to hire enough poor people to shoot other poor people?

Give me Aggregate Demand, or give me fiat death?

"Outlays of off-budget Federal entities are excluded by law from budget totals."

(Commentary posted by Roger Erickson)

The following, extended discussion should drive home Robert Eisner's 1993 point that "Everyone talks about the federal debt, but few, literally, know what they are talking about."

Warren Mosler made an interesting observation, one that triggered questions about all our current confusion.

"So I see the reports of C and I loans going up about $20 billion but nothing on commercial paper dropping about $30 billion? I still don’t see the domestic credit driven ‘borrowing to spend’ stepping up to replace the proactive govt cuts."

Since finance is NOT my field, I'm trying to follow this. Please tell me if the following is on-track.

Corporate profits remain at record highs, and - anticipating a bottom - they're building space & inventory? Yet ongoing cash transactions (sales/salaries?) are NOT growing, so corporations are NOT factoring as much in this environment, of course. Does that still leave gross uncertainty? Yes. None of that says much about - with certainty - the state of Jane and Joe Sixpack, who are largely locked outside the current economic metrics used to assess and craft policy. The usual uncertainty abounds.

Soooo .... unless Congress is a whole lot smarter than we are, we have a problem with our net, policy assessment process? Recent events surely indicate that that's a true statement? :(

What's the worst that could be happening? Maybe most of the former Middle Class is sinking into a welfare class, increasingly living only on subsistence "Transfer Payments" that are officially considered as "off" the Treasury budget? This last issue is critical. Is the mis-match between Treasury-reported inflows/outflows of national fiat indicators solely due to lagging data, or because many transfer payments, especially SocialSecurity and Medicare, are considered off-budget?

If the above all true, then we have a looming glitch!

If we cut SS & Medicare at all, the real impact and aftermath will be far larger than the perceived, expected (and promised, "fiat") benefits from reducing our ongoing, purely fiat "deficit" and "debt." Sure, that might be the nail in the coffin for the GOP as we know it, but it also might be too late for the US Middle Class.

Who says knowing operational details isn't important?

Our current, Marie Antoinette economics may be producing a "Let them eat Transfer Payments" economy? Everyone will have bad (fast) food, iphones, cable tv & live in a ghetto ... with no motivation, poor education, no jobs & shrinking future prospects?

What could go wrong?

To follow all this, now I just want to know how many Transfer Payments are officially considered on-budget vs "Off-Budget", and how many people - including economists & policy staff - know those simple, operating details?

Is this important? It certainly could be. "Transfer receipts accounted for almost 15 percent of total personal income at the national level in 2007." How fast is that growing? Anyone know?

Does the avg economist know how much of this is on or off-budget? Take this summary as a random example. No mention of what's on-budget vs off-budget.

This orthodox expectation that all Transfer Payments are ON-BUDGET seems to be nearly universal?

What if some real portions of our nation's collective fiat are NOT officially ON-BUDGET?

That would throw a wrench in a lot of calculations about the dire consequences of our deficit in fiat?

So what is/isn't on-budget?

Here's the killer statement

"Outlays of off-budget Federal entities are excluded by law from budget totals. However, they are shown separately and combined with the on-budget outlays to display total Federal outlays."

Search for the last entry of "off-budget" in the document at that link.

This rings a bell. I'm now thinking that this dichotomy goes all the way back to Hoover"s & FDR'S shared view on "ordinary" and "extraordinary" budgets, and their emergency conclusions that one should be balanced, that the other allowed to float.

Subsequently, was that the key, politically expedient reason for moving more Automatic Stabilizer expenditures "Off-Fiat-Budget" over the decades since? Is that basically how an electorate now allows it's policymakers to invest it's dynamic fiat (aka, public initiative) in it's offspring, instead of getting paralyzed by static-asset budgets?

Where does that leave our politics? Now it's only a question of which fiat figures, net, on-budget or off-budget, various audience members are using as they argue .... instead of coordinate?

You really couldn't make this up. Policy staff at the highest levels of our policy apparatus aren't even defining the terms of the operations they are arguing over! Same for orthodox economists.

If they'd simply define their terms, they'd finally see through the fiat fog, and then perhaps, along the way, their entirely fiat argument would evaporate. Maybe THEN our electorate might go on to exploring our other, REAL options? Faster/bigger/better?