"Lord Keynes" — Austrians Can’t Get their Story Straight on the Effects of Austerity

Here is something I have noticed of late in the ongoing debates on austerity: some Austrians argue that fiscal contraction can directly lead to GDP growth and recovery (a line taken by some neoclassical economists with their pro-growth austerity fables), and they argue that, if only governments would do nothing and pursue austerity, strong recoveries would ensue. In the process, these Austrians seem to deny that recession or depression is the result of fiscal contraction.

The idea is blatantly contradicted by their own business cycle theory, which holds that prolongation of a recession or depression to its “natural” end, and purging malinvestments in the process, is a necessary consequence of the “do nothing” response itself (called “liquidationism”). Therefore it is bizarre and stupid in the extreme for any Austrian adherent of the Hayekian business cycle theory to argue that austerity or a “do nothing” policy will lead directly to growth.

Before he renounced liquidationism, Hayek inPrices and Production explained exactly why nothing must be done during a credit-caused recession, and why the economy and society must suffer the consequences:

Read the rest at Social Democracy for the 21st Century
Austrians Can’t Get their Story Straight on the Effects of Austerity
by Lord Keynes

Edward Harrison — Why can’t people understand national accounting?

... At the end of any accounting period, then, the sum of the sectoral financial balances must net to zero. The government balance – the private balance – capital account balance = 0. The government balance = the private balance + the capital account balance. See my postEconomics 101 on government budget deficits for the full write-up. I credit British economist Wynne Godley for making this identity relevant to macro economics.

What does all this mean then? Put simply, the financial sector balances framework means that when the government sector runs a deficit, the non-government sector runs a surplus of equivalent size. So, to move any sector balance in an open economy, you need to move the other two balances exactly opposite in equivalent measure. To reduce the government deficit in any period, the private balance and the capital balance must increase by the exact same amount in that period.

Thinking about government deficits this way opens a whole new understanding of what cutting deficits means for the economy. What it should mean to you is that deficits are the effect and not the cause. Budget deficits are the result of the ex-post accounting identity between the sectoral balances and should not be a primary goal of public policy....

...the deficit is the result of an ex-post accounting identity between private savings, and capital account and government balances. It makes zero sense to target the effect (deficits) instead of the cause (excess credit growth and malinvestment). In plain English that means the policy prescriptions are the economic input and the deficit is the output. Focus on the policy and policy goals, not deficits.

Read it at Credit Writedowns
Why can’t people understand national accounting?

by Edward Harrison

Good summary overall.

 However, I disagree that the problem arose from central banks keeping interest rates too low for too long, thereby fueling massive malinvestment that eventually imploded. I think that folks like Bill Black, Michael Hudson, and Randy Wray, all of UMKC, Yves Smith of Naked Capitalism, and Janet Tavakoli of Tavakoli Structured Finance have documented that the problem arose from what Bill Black calls a criminogenic environment in the financial sector, both the mortgage market and the securitization process. It continues in the foreclosure debacle. 

While low rates may have played a role in fomenting the crisis, they were neither the proximate nor the principal cause of it. These crisis can be laid square at the feet of the financial sector, and the next crisis or the further devolution of this one, however one wishes to view it, is already baked in because the behavior hasn't changed, nor have the institutional arrangements.

FraudClock?

Is there a realtime FraudClock somewhere, for comparison to the PrivateSavingsClock?

I'd really like to have a sense of the magnitude of white-collar crime & fraud, and it's rate of change.

Not to mention the rates & patterns of :
reporting;
case referrals;
prosecutions;
plea-bargains;
convictions.


For example:
SEC charges northern California fund manager in $60 million scheme.
http://www.sec.gov/news/press/2012/2012-101.htm

If this is going on in half the counties of every state, then how much is going on in banking centers, and net, nationwide?

The message seems to be that since we're running out of "money," we can't afford to prevent the last of it from being stolen. What a pity!

Democrats Operate Under GOP Coercion?

Interesting observations from Bill Black at NEP today.

Professor Black brings attention to a recent interview of GOP candidate Romney by the WaPo where Romney exhibits what we often see in those outside of the MMT paradigm:  The inability to discern logical contradiction.

Romney at one point states in response to a question about the schedule of "budget balancing" policies under a hypothetical Romney administration:

"Well because, if you take a trillion dollars for instance, out of the first year of the federal budget, that would shrink GDP over 5%. That is by definition throwing us into recession or depression. So I’m not going to do that, of course.”

OK, this makes sense (so far).  Reducing discretionary "G" by $1T would probably result in a 5%+ hit to US GDP.  But then Prof. Black points out:

Later in the interview, Romney claims that federal budgetary deficits are “immoral.” But he has just explained that using austerity for the purported purpose of ending a deficit would cause a recession or depression. A recession or depression would make the deficit far larger. That means that Romney should be denouncing austerity as “immoral” (as well as suicidal) because it will not simply increase the deficit (which he claims to find “immoral” because of its impact on children) but also dramatically increase unemployment, poverty, child poverty and hunger, and harm their education by causing more teachers to lose their jobs and more school programs to be cut.

Prof Black points out here how Romney is exhibiting the classic inability of those outside the MMT paradigm to discern the logical contradiction between their position on the one hand, to support higher government spending to support US GDP and the associated public purpose; and on the other hand, view fiscal deficits as "immoral" or something.

This behavioral phenomenon has become rather commonplace in those outside of the MMT paradigm.  We see it all the time.  It is behavioral exhibition of some sort of confused miasma of illogic and immorality, or in another way, a lack of mathematics and morality.  We continue to try to examine this phenomenon here at MNE.

Prof Black then opines:

I predict that he (Romney) will not act to protect our children or our economy from the suicidal and “immoral” austerity his Republican allies are trying to coerce the Democrats to inflict on our economy and our children.

Is Prof Black trying to assert that Democratic economic policy makers, who have established the Simpson-Bowles Deficit commission, foregone any prosecution of financial frauds, report to a President that claims the US government is "out of money", etc... only do this out of some sort of political "coercion" applied to them by Republicans?

Republicans who fail to exhibit basic logical cognition skills that would enable them to discern contradiction?  As if Democrats do not lack these same cognitive skills but instead only "choose" to pursue fiscal "conservative" policies due to so-called "political coercion"?

THAT WOULD BE ABSURD.

Professor Black, have you heard Gene Sperling or Tim Geithner talk lately?

You can't blame moron Republicans for the moron policies of Democrats;  both parties do quite nicely on their own.

How About FiscalPolicyFest?

Hacking Campaign Finance Data

This "hacking" approach sounds like a useful set of exercises to start PRACTICING.  However the application-  barring an initial StrategyFest - quickly looks like Divide&ConquerFest, or Distract&DeceiveFest.

Practice is necessary but not sufficient prelude to strategic implementation.

Head of risk at JP Morgan is a museum curator!

Just when you thought you’ve seen or heard everything, along comes this.

"The three directors who oversee risk at JPMorgan Chase & Co. (JPM) include a museum head who sat on American International Group Inc.’s governance committee in 2008, the grandson of a billionaire and the chief executive officer of a company that makes flight controls and work boots."

Proving once again that these guys (and gals), with their haughty, arrogant, attitudes, know nothing. It’s all just one, big, good ol’ boys network.

By the way, who did Dimon replace his risk unit head with? The guy who ran Long Term Capital Management, which…uh…also blew up.

Do I seem pissed?

Common Sense is now "Bold New Thinking!"

Why Building Community Wealth is a Key Challenge to Corporate Power

something new has exploded in America’s communities; “community wealth building”

So far so good.  Hope we can get over the surprise at such "boldness," and get back to viewing it as the obvious minimum?  The perennial springboard for exploring, not burying options?

Asking honeypots for grants of fiat currency?  Get real!  There's ALWAYS more where that came from.  Just grant some to ourselves.   Declare our own prizes.  Create our own jobs, and maybe even vote for our own representatives!!!  Why not just OpenSource everything, and re-distribute aggregate power?

In preparation, how about changing K-12 curricula, to incorporate 3 springboard themes?

1) Aggregate success tracks the quality and pace of distributed decision-making?

2) Aggregates generate pace simply by the act of distributing decision-making.

3) Highest aggregate return is always the return-on-coordination?

I mean, with those foundations in place, everything else - certainly macroeconomics & fiscal policy - are just incidental details.  In fact, politics itself would be just another Automatic Stabilizer, only reduced to a mobile app.

With that kind of effort in place, maybe we wouldn't churn out so many economists & bankers more interested in self & math than in welfare of the people and national capabilities.

ps:  Despite trying to sound politically correct, "exploding" might give DHS the idea that community wealth is dangerous, and even associated with terrorism.   Listen for the faint sounds of drones hovering.

With Truth Trickling Down, can MMT be Klept Off the Table?

TPTB & their SDIs would be, ... o ... cracy not to allow some operational improvement?

Yet there are some obvious warning signs.

Sadly Barack Obama, like Mitt Romney, is an apologist for the 1%

Well, they're called called "Bud" & "Bud Worse" for a reason, but they ARE easily marketed & efficiently distributed.

Rather than our Gov taking over GM, I suspect it's the inverse that may have occurred.  Politics today seems eerily reminiscent of GM's old marketing plan, i.e., offer a politician for every consumer segment, all based on the same, underlying platform.  What if you mismanage it so badly that there are only 2 segments left?  No problem!  Just downsize the whole operation.  Above all else, never change anything!  It's not like the consumer electorate has any choice.  Right?  Why, we OWN 'em.  No chance of being unseated!  That's the beauty of MKT (modern kleptocratic theory).  Oh, to have such parasites in the middle of our markets!

Our current duo even have oppositely audacious, meaningless slogans.

"Hope's faint."  ...........................................  "Less fulfilling."

It's a play right out of that famous book on the "Mythical Man Vote" ...

In politocracy, every available option has an intractable impediment, and that impediment will always involve another layer of operational obfuscation.  

So, put Ralph Nader & the Onion in charge of peeling back some layers?   The keys to 99% of our lost Output must be hiding SOMEWHERE.  But where?   

If you feel a trickle, down in the small of your Swiss bank account, no matter how small, be sure to tell someone, before it's too late.   A few political Novas can stall even the most carefully-engineered auto-obsolescence program.  Once that occurs, even the compadres won't support you.  Never let your own political vehicle go up in flames.  It's bad PR.

And remember, bold is not to die for, no matter whom you think you're voting for.

"Americans don't let Americans die bold."

Can sink no lower. Congress becoming worse than a joke?

"Rep. Joe Pitts (R-Pa.) is seeing his foreign policy credentials come under fire after calling for Middle East peace negotiations between deceased Palestinian leader Yasser Arafat and former Israeli Prime Minister Ariel Sharon, who has been in a coma since 2006."

Let's think this through.  Maybe Congress would be ok, if no mouth was opened? Heck, why not call for direct talks between Buddha & Confucius?  Send a polite letter through an appropriate medium, then patiently wait for a reply from beyond a distant shore?

On the other hand, sending a brain-dead guy to a peace negotiation has become rather standard, after all.  (If a peace ever DID break out, would Cheney fume in defense to his followers that "no one could have predicted this" - then shoot another lawyer, just to send a stronger message?)

[I can imagine a whole Onion show based on that discussion.  "In a House/Senate negotiating committee, Rep. Joe Pitts, (R-Pa.) suggests re-introducing Dick Cheney to his former heart.  16 GOP Senators swallow own feet in outrage, call for 24-Hr Heimlich coverage for all Congresspeople, as a national security measure.  Secret Service says they can meld it into their existing escort service."]

Just send our mental ward to talk with your mental ward? With help from the Traveling Nurse's Association?

Perhaps anything would be a break from the current rhetorical exchanges of foots & mouths.

Is an epidemic breaking out in Congress? Better hoof it down there & examine some gum lines for leather burns, before this gets any worse.

Or, blame it on the Chinese, and the shoe polish they send us.

Seriously folks, it's not fiat currency we're running out of.  Can we just arrange a negotiated compromise between Ben Franklin & Marriner Eccles?  Abe Lincoln too, so the GOP couldn't possibly complain.

Adam Gabbatt — Canada student protests erupt into political crisis with mass arrests

Protests that began in opposition to tuition fees in Canada have exploded into a political crisis with the mass arrest of hundreds of demonstrators amid a backlash against draconian emergency laws.

More than 500 people were arrested in a demonstration in Montreal on Wednesday night as protesters defied a controversial new law – Bill 78 – that places restrictions on the right to demonstrate. In Quebec City, police arrested 176 people under the provisions of the new law.

Demonstrators have been gathering in Montreal for just over 100 days to oppose tuition increases by the Quebec provincial government. On Tuesday, about 100 people were arrested after organisers say 300,000 people took the streets.

But what began as a protest against university fee increases has expanded to a wider movement to oppose Bill 78, which was rushed through by legislators in Quebec in response to the demonstrations. The bill imposes severe restrictions on protests, making it illegal for protesters to gather without having given police eight hours’ notice and securing a permit.

Read it at Raw Story
 Canada student protests erupt into political crisis with mass arrests
Adam Gabbatt | The Guardian (UK)

Tomgram: Hellman and Kramer, How Much Does Washington Spend on "Defense"?

...That brings our grand total to an astonishing $931 billion.

And this will turn out to be a conservative figure. We won’t spend less than that, but among other things, it doesn’t include the interest we’re paying on money we borrowed to fund past military operations; nor does it include portions of the National Aeronautics and Space Administration that are dedicated to national security. And we don’t know if this number captures the entire intelligence budget or not, because parts of intelligence funding are classified.

For now, however, that whopping $931 billion for fiscal year 2013 will have to do. If our national security budget were its own economy, it would be the 19th largest in the world, roughly the size of Australia’s. Meanwhile, the country with the next largest military budget, China, spends a mere pittance by comparison. The most recent estimate puts China’s military funding at around $136 billion.

Read it at Tom Dispatch
War Pay — The Nearly $1 Trillion National Security Budget 
By Chris Hellman and Mattea Kramer

That's not only a hefty chunk of the budget but also of GDP going to military Keynesianism, not counting all the weaponry that is exported around the world.

What's up with that? Ludo De Brabander and Georges Spriet explain how we got here beginning right after WWII. Recall President Eisenhower warning about the expanding military-industrial complex at the time he left office?

GLOBAL NATO: A Geostrategic Instrument of Worldwide Military Conquest — A Historical Review and Analysis (1949-2012)
by Ludo De Brabander and Georges Spriet

Chris Dillow — The Weak Demand For Equal Opportunity

It's commonly thought that people are more likely to accept income inequalities if they believe these arise from equality of opportunity.For example, some attribute the relative weakness of the US welfare state to the fact that Americans believe (wrongly) that the poor have plenty of chances (pdf) to get ahead.

 But what exactly is the link between perceptions of fair opportunity and demand for fair outcomes? Some experiments by Eugenio Proto and colleagues at Warwick University shed some worrying light... 

In other words, what people value most is having some chance - 1% versus nothing. Having greater opportunity - moving from a 20% to 50% chance isn't so valuable, in the sense that it doesn't so much affect bargaining behaviour. 

This has (at least) two implications. 

One is that it shows that people value procedural utility; having some chance to affect the outcome is what matters to them, rather than having a big chance. 

The other is that, once some small chance exists, people don't greatly care about equalizing chances. They care more about having a small chance than about increasing their chances. 

These laboratory experiments confirm what we see in public opinion - that, like it or not, there is little demand for policies that would greatly equalize opportunity, such as abolishing private education or steep inheritance taxes. 

I don't know why this is; I suspect it's related to the certainty effect. But surely lefties should be disquieted by the fact that egalitarian impulses can be bought off so cheaply even in laboratory conditions.

Read it at Stumbling and Munmbling
The Weak Demand For Equal Opportunity
by Chris Dillow | Investors Chronicle (UK)

Seems to be borne out in the US. As long people believe that there is chance for upward mobility, apparently even if it's only by hitting the lottery, most are OK with pretty extreme distributional inequality. Not promising for political or institutional reform.

Randall Wray on MMT and the US Economic Crisis (video)

SESSION III: KEYNOTE ADDRESSES, Bob Jessop & Randall Wray, Forum on Capital as Power 2011 (Randy begins at 1:28 and ends just before the 28 minute mark

Recommended by Lord Keynes at Social Democracy for the 21st Century
Randall Wray on MMT and the US Economic Crisis

Dirk Ehnts — Euro in Danger (Walters Critique revisited)

The euro is now in clear and present danger, as the Euro-Europeans cannot agree on how to proceed. The analysis of how the troubles started, I think, has been clear for more than two decades now. Basically, the Walters Critique was right. Sir Alan Walters, deceased in 2009, was an adviser to Margaret Thatcher. The Guardian wrote in his obituary:

Read the rest (short) at econoblog101
Euro in Danger (Walters Critique revisited)

by Dirk Ehnts | research assistant at the chair for international economic relations at University of Oldenburg, Germany

I will be on "The Kudlow Report" on CNBC at 7:50pm ET this evening

Tune in, if you can!

Structural unemployment in Iowa

The Cedar Rapids Gazette had a front page article today on Iowa's need for middle-skilled workers, defined as post high school education less than a bachelor's degree, i.e., an associate degree, technical certification, apprenticeship, or previous employer-provided training.

32% of jobs are high-skilled for which there are 29% qualified. 50% require middle skilled workers while the number of such workers is only 33%, and 18% of the jobs are low-skilled with 38% low-skilled workers. So there is a need to convert 17% of the low-skilled workers to mid-skilled, or else import workers from out of state.

Read it at The Gazette | Business 380
Iowa targeting ‘middle skills’ work force weakness in new report
by Dave DeWitte

Anonymous: The Fable of “Moral Arithmetic”

Fun read. Excellent example of framing through metaphor. Definitely take a look if you are interested in a popularized and simplified presentation of a rather abstruse MMT point that works.

Read it at Naked Capitalism
Anonymous: The Fable of “Moral Arithmetic”
By Anonymous
Originally published at Global Economic Intersections
(h/t paul in the comments)

Interestingly, and predictably, many of the comments to this post at NC are about how the problem really, really is moral. Really.

I don't think that moral arguments can be dismissed out of hand. They are powerful arguments that influence the views of a whole lot of people in that they are norms that define the boundary conditions of a world view by providing criteria for evaluation.

George Lakoff makes the point that conservatives, especially, are driven by morality, and they often either ignore, deny, or misrepresent facts that contradict their moral principles. This is also true of radicals at the left extreme of the political spectrum. It is a sign of an ideologically driven mindset, along with the rejection of reasoning as decisive. Ultra-conservative rejection of the scientific enterprise is a case in point, as it the ultra-radical rejection of capitalism as having any value at all, which even Marx saw as extreme, admitting that the capitalism of his day was responsible for many people living a better life than previously in history.

According to Lakoff the center is constituted of people who are "bi-conceptual," their moral allegiance divided between left and right, holding some positions that are liberal and others conservative. People scoring toward the center of the political compass test are bi-conceptual. These are people that can be persuaded by moral arguments coupled with factual premises that argue for a moral position that fits the facts.

This is the challenge that popularizing MMT solutions presents. Many of these solutions, like a job guarantee, are deeply distastefully morally to many people, often because of conceptual biases. The challenge is to show how the solution is not only economically efficient and effective, which MMT does in terms of an operational description and the macro theory, but also the moral solution as well.

It should not be too difficult to argue against blaming people for their own unemployment for moral reasons when there are ten dogs and only nine bones, or blaming homeowners faced with default when 105 marbles are owed and there are only 100 marbles in the game. How can people be held morally responsible for circumstances beyond their control?

Santelli: "Blame the cops, not the criminals"

Santelli, again, on the most idiotic rant I ever heard. Basically saying that bankers are going to cheat and steal; it's just their nature, so don't blame them. (He used the analogy of his dog stealing food from the barbeque. It's their nature.)

So the real blame according to Santelli lies with the regulators, who don't understand the real, criminogenic, "natural state" of bankers.

Listen, I don't think that regulators are doing a great job--not at all. However, to state the problem as Santelli has, is assinine. But then what do you expect from Santelli.

Fed's Dudley: "It seems like market participants are expecting rates to stay low"

Gee...maybe that's because THE FED HAS STATED IT WILL KEEP RATES LOW. DUH!!!!

Believe it or not just heard NY Fed Chairman, Bill Dudley, say this on an interview with Steve Liesman on CNBC.

Fighting Multiple Levels of Social Security Control Fraud

Every wage earner in the USA should feel very, very angry, and in fact, enraged, once they understand the depth & duration of the Big Lie behind Social Security and FICA taxes.

That anger, however, is something to both acknowledge, worry about, and productively manage. Don’t get angry, get even, by getting free. Reflect on the bitter fact that you, your family, your parents, and your grandparents never even needed to pay FICA taxes the last 70-some years. That will really cause some resentment.  Revolutions are always justified, but rebellions are always betrayed.  So please use your head and consider how to right this perpetuated wrong, not just be angry about it.  Let's go back to FDR's concluding statement some time after enactment of the Social Security pact.

 In the course of ... discussion [Luther Gulick] raised the question of the ultimate abandonment [of] the pay roll taxes in connection with old age security and unemployment relief in the event of another period of depression. 

   ...

  [Gulick] suggested that it had been a mistake to levy these taxes in the 1930’s when the social security program was originally adopted. 

   ...

FDR said, “I guess you’re right on the economics. They are politics all the way through. We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.”


Please re-read that several times, and let it sink in for a moment.  Justice, fairness and logic were all sacrificed to politics, right from the start.  Like with many political processes, later remedies were pre-conceived, but never fulfilled.  In fact, the baked in wrongs only became more entrenched with time, through the filter of intense lobbying & propaganda.

I wonder how my grandparents stood for it at the time.

Someone tell Simpson & Bowles that we have millions of sub-contractors clamoring to suckle at the national "tit" they're so fond of alluding to, all in the name of serving the electorate they mindlessly want to suck initiative from in the form of fiat currency.  The core mission & policy given Congress in the US Constitution is to direct policies & public contracting so as to care for the welfare of the people.  Simpson & Bowles have it so squarely backwards that one is embarrassed for them, and for those whom they're misleading.

Jumping to the present, how would YOU tell 150 million salaried adults that their wages needn’t ever have BEEN taxed their entire, working life?

And furthermore, that they were taxed ONLY to keep one class of people over-taxed and under-funded relative to another class of people? Worse, that the same was true of the FICA taxes levied on their parents, AND their grandparents! Them’s fightin’ words!

There could and should be hell to pay for all that have contributed to that truly disgusting crime, through silence, fear or complicity. If that’s not treason of the highest order, then we may as well all emigrate to some country where honesty, courage, morality & national ambition still reign.

The scale of the Social Security fraud leaves one nauseous. It’s not what one wants to think of one’s own country.

To realize that there are whole foundations dedicated solely to maintaining a regressive tax on labor, only exacerbates the shame. For instance, staff at the supposed Social Security Works campaign still actively promote the self-deceiving myth that FDR desperately resorted to.  A main plank of SSW is that the regressive FICA taxes do not regressively tax labor, but actually protect the rights of working people to an adequate pension by providing them with a unique, tax-based citizen's right.   Whew!   Talk about Control Frauds perverting our own thinking, and then expecting us to thank them for the benefit of sharing unequally in national output!

Following adoption of a fully-fiat currency system in 1933, taxing labor cannot be accepted as the prerequisite for any public policy whatsoever.  If we can  - as simple policy - vote subsidies for highways, space exploration, worldwide military capabilities, corporate farming, and endless corporate supports - from agriculture to research - then we can also support our own elderly citizens as a simple policy.  Over-taxing working citizens throughout their productive years is an incomprehensible burden on national Output.   What were we thinking?   Why have we let this proceed so long?   Do we WANT the USA to be far, far less than it could be, not merely less?

For any person who perpetuates a fraud after being advised of operational reality, the fraud is no longer innocent. It is self-defeating for their own family, children & country. It is treason.

Innocent Fraud As a Business Model = saying regulation must NOT be n-dimensional … and succeeding with that propaganda.

We have burdened lower-income classes with huge penalties relative to the wealthy & frauds - since 1934 - by taxing the poor through FICA taxes, to pre-charge for the pittance an increasingly richer aggregate “may” give them “if” they live long enough.

That’s essentially just a way for one class or clan to over-tax & under-fund a perceived competitor class; instead of working together productively. It’s a tragic travesty, the bitterness of which should bring any thinking person to tears!

By doing this we’ve drastically curtailed the return-on-coordination that would have been possible the last 70+ years. Why are we working hard to be less, rather than more, than the sum of our parts?

Of course professional jargons and semantic diversity are problems, and of course public policy can’t be guided by accounting alone. Understanding the reserve-accounting underlying a fiat currency system is a necessary but not sufficient step in aggregate agility. So is recruiting people from the 2000 & growing NAICS fields so that they can openly discuss & explore our constantly growing options.   To realize even a pittance of our insanely great public options, we need to be acknowledging & using & fusing distinct jargons, and above all else COORDINATING graciously & gracefully!

Hey Kyle Bass...how's that gold position doing?

Hey Kyle Bas...how's your gold position doing? Jimmy Rogers...how's that short Treasury position doing? Peter Schiff...how's that dollar collapse coming along?

"The only ones who got everything right were the MMT guys." -John Carney, Sr. Editor CNBC

That's us!!

And this was all predicted in my 2012 Yearly Outlook.

Congressional Committee-Placement Strategy Shows Just How Totally Broken Our Democracy Is

Some very revealing information comes up in the middle of Bill Black's testimony in this RT video interview

The House Finance Committee is gargantuan (05.40 in video) .. because it's members receive the most campaign contributions from finance lobbies - the dominant contributors to BOTH parties, by far. Therefore, both parties place on the HFC those members currently most in need of extra campaign funds, as a re-election strategy, NOT to best serve the US electorate.

What does this little observation reveal?  It shows that the two political parties have completely perverted the most fundamental operations of Congress, for managing re-election metrics, NOT to serve the mission given Congress by citizens of the USA!

It's not just the tail wagging the dog, it's the fleas managing the tail that wags the dog!

One has to also conclude with fair certainty that the identical campaign contributors who dominate contributions to both parties also game the same dynamic mentioned above, to choose two of their candidates every 4 years as alternate choices for President. We should have such options!

I'm still trying to best summarize for myself what this implies. 

Political parties have co-opted our very Congress, as a venal hedge against narrow re-election risks, and in the process have knowingly made a complete mockery of the Constitutional mission of Congress to serve the welfare of the American people.

And, it is likely worse, with the same gaming process filtering our options for who becomes President of our supposed democracy.  Congress itself - and each political candidate - is now simply another hedging strategy for the finance industry!  To add further insult to injury, the entire finance industry itself is more trouble than it's worth to the USA.

Remind me why we are running a national Congress?

When our institutions in an operating theater are this badly compromised, the only rational hope is to review & focus our hierarchy of strategies, because all resources thrown at distributed tactics will only produce Pyrrhic victories. The situational dynamics are stacked so heavily against National Public Purpose at this point, that only rigorous convergence to key strategies gives any hope of success.

Wandering, rambling Committee Testimony in the current Congress illustrates how effective Pyrrhic victories are as a strategic distraction.

Yet Bill Black's video testimony reveals that most of what's said in these committee meetings is a perverted, dog & pony show. One minor consequence of the perversion is that literally no member of Congress has any available talents, expertise, preparation, training or practice matched to their committee placements in Congress!

Our policy apparatus has come to resemble the old habit of landed gentry buying positions in the military officer corp, with complete disregard for any matching of talent to demands or responsibility of office. Disastrous failures revealed the fault in that placement policy for the military. Are we waiting for adequately national levels of failure to demonstrate that the same policy won't serve us any more usefully in Congress either?

We need people in Public Office who have talents in something other than getting themselves elected, by any means possible.

And we need that before tragic, complete failure visits the USA.

Sen. Bernard Sanders, I-Vt., recently mentioned JPMorgan's woes while introducing a bill prohibiting bank execs from serving on the boards of the 12 regional Federal Reserve Banks.

Jaime Dimon of JP Morgan currently sits on the New York Fed’s board, which is a conflict of interest.

“The people regulating the banks are the exact same people being regulated,” said Sanders at a press conference. “If this is not a clear example of the fox guarding the henhouse, I don’t know what is.”

Democrats Barbara Boxer of California and Mike Begich of Alaska are cosponsors of the bill, which seems unlikely to advance.

"If it seems shady though, don't blame the Fed. Congress intentionally set the central bank up that way in 1913."

Let's see.  Where have we heard that type of excuse before?  By the way, it's not true.  Fed boards were long dominated by regional business, not bank representatives or academic economists.

Warren Mosler — Issuers v. users of a currency

Issuers v. users of a currency

Interview with The Norwich Bulletin, Oct 6, 2010

U.K now looking to boost growth, abandon austerity

Another good sign coming out of Europe!

"Deputy PM Clegg has said the UK Coalition is preparing a massive increase in state-backed investment in housing and infrastructure, signalling a shift from stark warnings by ministers about the debt crisis to a fresh emphasis on growth."

It's looking more and more like the U.S. will go it alone with austerity come next year. So the whole world will be back on a growth track, except for us.

Chris Dillow — The State & Growth: What's The Mechanism?

Whenever he was faced with a blustering student - which was often - my old economics tutor, the late Andrew Glyn, would ask: "What's the mechanism?"

Read it at Stumbling and Mumbling
The State & Growth: What's The Mechanism?
by Chris Dillow | Investors Chronicle

Another reason why abstract models don't work and historical-institutional analysis does.

Steve Keen — Mountain of Debt: A Mountain of Stress on Economy

Mountain of Debt: A Mountain of Stress on Economy

by Steve Keen | Professor of Economics at the University of New South Wales

Interview with Wall Street Journal

Posted at Steve Keen's DebtWatch

Jomo Kwame Sundaram — A Global New Deal

Recent political developments, including the defeat of incumbent governments in France and Greece, suggest that the public’s tolerance for economic policies that do not reduce unemployment has collapsed. Indeed, given the alarming economic and employment situation in many countries today, with no prospect of recovery on the horizon, further political turmoil is likely unless policymakers change course accordingly.

The economic crisis has wiped out more than 50 million jobs after years of weak, job-poor growth and increasing inequality in the world’s rich countries. Since 2007, employment rates have risen in only six of the 36 advanced economies, while youth unemployment has increased in a large majority of both established and emerging markets.

In the near term, the global crisis is likely to become worse as many governments, especially in advanced economies, prioritize fiscal austerity and tough labor-market reforms, even as such measures undermine livelihoods, incomes, and the social fabric.

Read it at Project Syndicate
A Global New Deal
by Jomo Kwame Sundaram | UN Assistant Secretary-General for Economic Development and G-24 Research Coordinator

Robert Johnson — Finance for Real People and the Real Economy

Ironically, it is the false reassurance provided by our prevailing economic theories that has proven to be a significant destabilizing force. Based on the simplistic deterministic assumptions of equilibrium and stability these theories promised a golden future in the age of finance. Unfortunately, they also turned out to be absurd.

As Nobel Laureate and INET Advisory Board member Joseph Stiglitz recently noted, “Academic economists played a big role in causing the crisis. Their models were overly simplified, distorted, and left out the most important aspects. Those faulty models then encouraged policy-makers to believe that the markets would solve all the problems.” 

In other words, tired orthodox economic theories led to the creation of bad maps of financial behavior. And those maps led to excessive leverage, inadequate regulation, and toxic complex securities. So it was all but inevitable that our ship would eventually slam into the rocks, as it did in 2008.

Read it at LesEchos
Finance for Real People and the Real Economy

by Robert Johnson | Executive Director. Institute for New Economic Thinking

Perry G. Mehling — Maynard's Revenge: A Review

Lance Taylor, Maynard’s Revenge: The Collapse of Free Market Macroeconomics (Harvard 2010).

The central theme of the book is that Keynes and his fellow travelers or “OId Believers” (another pregnant image), were “correct about how to do macroeconomics”, which is to say they were methodologically on the right track. The biggest thing they were right about was the importance of blending both history and equilibrium or “thinking in historical and logical time” (as Joan Robinson put it). The reason this is so important is that the economy itself is a constantly changing and evolving entity, which means that individuals face epistemic problems of uncertainty, not just risk. In a world like that, historico-institutional methods provide a kind of knowledge that mathematico-statistical methods simply cannot, knowledge to inform individual decisions but also social policy.

Concretely, the way Keynes blended the two methodological approaches was by building his theoretical structure on the solid foundation of the National Income and Product Accounts, whose development he played some role in stimulating. The accounting framework gives us a picture of the economy as a whole, and macroeconomic theories are essentially about how various elements of that accounting framework fit together, in a system of mutual causation. Keynes little pamphlet “How to Pay for the War” is perhaps the epitome of this kind of approach.

Read the rest at The Money View
Maynard's Revenge: A Review
by Perry G. Mehling | Perry G. Mehrling, Professor of Economics at Barnard

Keynes did what used to be called "political economy" rather than economics formalized to look like a science, for which mainstream economists criticize both him and that approach, which has fallen into disfavor. However, Post Keynesians both predicted the impending crisis and have offered concrete plans for resolving it, while mainstream economists missed it and have been unable to meet the challenge of reversing the ensuing disaster. Go figure. Maybe something amiss with the mainstream approach that suggests revisiting political economy?

Clayton M. Christensen — How Will You Measure Your Life?

Editor’s Note: When the members of the class of 2010 entered business school, the economy was strong and their post-graduation ambitions could be limitless. Just a few weeks later, the economy went into a tailspin. They’ve spent the past two years recalibrating their worldview and their definition of success.
The students seem highly aware of how the world has changed (as the sampling of views in this article shows). In the spring, Harvard Business School’s graduating class asked HBS professor Clay Christensen to address them—but not on how to apply his principles and thinking to their post-HBS careers. The students wanted to know how to apply them to their personal lives. He shared with them a set of guidelines that have helped him find meaning in his own life. Though Christensen’s thinking comes from his deep religious faith, we believe that these are strategies anyone can use.

Read it at The Harvard Business Review
How Will You Measure Your Life?
by Clayton M. Christensen

Essential advice. The author is a devout Christian committed to living the principles of his faith as he appreciates them. Regardless of one's faith or affiliation, everyone needs to recognize the driving force behind one's life and follow it fully all the time in order to be successful as a human being, which is the only success that actually matters in the final analysis. Compromising one's principles is the sure road to ruin as a person.