Thursday, September 27, 2012

SocSec taxes, medicare taxes, student loans ... how much of US economic initiative is left?

commentary by Roger Erickson

Student debt hits record 1 in 5 US households
"With college enrollment growing, student debt has stretched to a record number of US households -- nearly 1 in 5 -- with the biggest burdens falling on the young and poor."

Why not just be honest, and rename this pattern as indentured servitude, serfdom & hereditary slavery?

We can spend unlimited amounts of currency into existence for programs that the wealthy hire lobbyists to promote - from NASA to the DoD to agriculture and corporate and bank subsidies .... but we can't find any fiat currency to spend on mandatory education, mandatory public health measures, or mandatory minimum care for our own elderly? Rubbish!

It's not just that our electorate doesn't understand how a fiat currency works, they simply don't understand their situation. That's a recipe for disaster.

A foolish population & their future are soon parted.

We're already deep into a civil war.

"Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their [personal] gains."
Thomas Jefferson

That's what I was trying to get at in an earlier post, pointing out that we're duped into fighting a civil war against ourselves, by proxy.  Apparently this crowd doesn't know what a prion is anyway.  Anyone have the imagination to write out contingency tables for what's next, i.e., what lies beyond even social variants of the prion phenomenon?  It really doesn't matter how exactly we describe & document the escalating crimes in an evolving class war.  All that matters is what we do about them, and how quickly.  An ounce of prevention is still better than a pound of cure.

Until then, we're once again manipulated into pitting ourselves against ourselves, this time for the twisted principle of merchant's rights, not even states rights. Same real stakes, however.


Dan Lynch said...

The class war is deliberate and not solely due to failing to understand fiat money.

In 1943, Polish economist Kalecki predicted that eventually there would be a backlash against the full employment created by Keynesian economics, and the ruling elites would use deficit reduction as an excuse to create unemployment to disempower the working class.

Kalecki predicted that the Keynesian economy would eventually be replaced with either socialism or fascism, depending on which class won the struggle.

Kalecki's article is about 3 pages long, well worth the time to read.

Roger Erickson said...

Thanks for the link, Dan.

Michal Kalecki anticipated ongoing class warfare between highly dissociated social classes.

Trivially obvious, and expected. Especially from a European. Yet, 70 years on, we still have to invent what goes beyond our extremely superficial, current habits.

We're better than this, and it is equally obvious that there is a better way. There are many better ways. We need to get on with exploring them and selecting from them. Otherwise, we won't be selected to continue on the world's stage.

Roger Erickson said...

ps: I can't easily tell you how ridiculous "full employment" doubts sound to a biologist. If you have any familiarity whatsoever with all the model species we've studied - or the organized systems we've modeled - you couldn't have any doubt whether any ant in any colony remains unemployed, or whether any cell within your own body is unemployed. Why should any citizen in a nation-state be any different? This topic is one that cannot even be appreciated from the perspective of only one of our many professions. To drive acceptable group outcomes, we need policy formation to rely on feedback from all professions. It's obscenely incompetent even to restrict the unemployment debated to the economics field alone.

The unemployed debate is one of stupidity, ignorance & lack of imagination, NOTHING MORE! It's not even an interesting topic to those not suffering from those limitations. It's a very bad sign that we're even having this discussion this often.

Adam2 said...

It is cowardice. That is for sure. The pro-austerity elites are uncreative cowards.

Matt Franko said...


Kalecki: " This suggests that there is a political background in the opposition to the full employment doctrine, even though the arguments advanced are economic. That is not to say that people who advance them do not believe in their economics, poor though this is. But obstinate ignorance is usually a manifestation of underlying political motives."

I don't see how one could come to this conclusion... if they believe in nonsense economics, all bets are off imo... these morons all believe "money" is exogenous and scarce and we all have to "fight it out" to get any of it... in such a world view there are "winners and losers"...

I also do not understand the phrase "innocent fraud".

If it is fraud, it is NOT innocent; and if the persons are innocent, then they CANNOT be committing fraud....


Roger Erickson said...

Legal codes consider ignorance as no excuse from the law.

If people are ignorant, then it's their duty to be better informed.

And, in a social species, it's their compatriots duty to establish the tolerance limits that requires a given awareness for a specific job.

The actual methods for achieving those tolerance limits change & scale up as some exponential factor of both population size and rate of environmental change.

If it weren't so tough to survive, more social species would excel at it.

As our population & economy get bigger & more complex, we as a group always get more clumsy before we can regain - let alone improve - net group agility.

Dan Lynch said...

Matt, studies show that people believe what they want to believe, that the facts don't matter because people pick and choose which facts they choose to believe, in a way that conforms to their tribe's worldview.

As for the politicians and CEO's, many of them are psychopaths and there is nothing sincere about them except their lust for power. They'll say anything to get their way, and they're very skilled at manipulating people to go along with them.

Don't you think Milt Friedman sincerely believed in his flavor of economics ?

Milt's work just happened to be funded by elites like the Rockerfeller Foundation, who not coincidentally had a self-serving interest in Friedman-omics. That's surely what Kalecki meant when he said that the capitalists would always be able to find economists who supported the capitalist's positions.

Matt Franko said...

" ignorance is no excuse from the law."

Roger, In fraud cases, I'm afraid it is:

In the United States, common law recognizes nine elements constituting fraud:[8][9]

a representation of an existing fact;

its materiality;

its falsity;

the speaker's knowledge of its falsity;

the speaker's intent that it shall be acted upon by the plaintiff;

the plaintiff's ignorance of its falsity;

the plaintiff's reliance on the truth of the representation;

the plaintiff's right to rely upon it;

and consequent damages suffered by the plaintiff.

To establish a claim of fraud, most jurisdictions in the United States require that each element be pled with particularity and be proved with clear, cogent, and convincing evidence (very probable evidence).

There is no evidence that these people know their statements to be false. Hearsay is inadmissible. These people are insane, irrational, morons, that can be proven. See Mike's latest video for the "evidence in the case".


Matt Franko said...


"Don't you think Milt Friedman sincerely believed in his flavor of economics ?"

Yes Dan I do but imo youre helping me make my point here.

See the definition of 'fraud' above; the perp must exhibit knowledge that his statements are false.

There is no evidence that Freidman ever thought that what he was saying was false.... without that evidence you cannot accuse him of 'fraud'.

A Rockefeller funded "mutual moron admiration society" or a sycophantic moron echo chamber is not 'conspiracy to commit fraud'.

We have to clearly define what we are up against... conspirators or morons, I say morons...


Roger Erickson said...

Then part of our national self-fraud is holding blue-collar and white-collar criminals to distinctly different standards!

Democracy? At what scale?

Anonymous said...

I think Dan is right. I don't think the main reason our corporate and economic elites oppose full employment is because they are deluded about the nature of money. Some might be, but that is a secondary consideration. They oppose full employment because they wish to preserve a labor market in which workers have very low bargaining power. The lower workers' bargaining power, the smaller the share of real, non-monetary assets workers are able to successfully claim in exchange for their labor. Money is just the tool used for the allocation of legal claims on real resources, goods and services. Decisions about those real assets and their distribution are the fundamental object of economic power relations. In a capitalist economy, the owners of most of a society's wealth, including the largest share of its means of production, act politically as a class to preserve a ready supply of needy and struggling workers, because needy people will work for peanuts, and the threat of unemployment makes workers malleable in the workplace.

This came through loud and clear during the debate on the job guarantee instigated by John Carney. Carney understands money reasonably well. But he wants an economy in which workers don't have too much power.

Tom Hickey said...

@ Dan K

Right. It's always about labor's share. In a competitive environment there are three vying constituencies that make up firms — workers, management, and owners. The present configuration of large corps is toward maximum power of top management at the expense of worker and equity holder share. Workers have to be satisfied with low bargaining power on the argument that increased worker bargaining power is "inflationary." Equity holders are convinced that it is in their interest to substitute the promise of market appreciation for dividend payouts. Top management awards itself the difference with meagre justification but de facto control of the board.

Matt Franko said...


Perhaps what you are thinking of is more along the lines of 'Criminal Negligence' with these people in positions of great authority.

To expand on Mike's latest video thought lines, at some point people in these positions have a responsibility to resign their positions if their ideas/policies continue to not work and as in this case, actually have the opposite effect.

They have to vacate their positions and if they dont, imo you could bring a case of criminal negligence if the law does not prohibit it..

I believe elected officials are immune from prosecution for "negligence" but as a hypo for instance, if the Obamacare people start to withhold med treatments because as Obama believes "we are out of money", you could bring a case showing how simply we are NOT "out of money" and then hold those in authority criminally negligent for the death of the person who had care withheld for that false purpose...


Matt Franko said...

Dan K.

"Carney understands money reasonably well. But he wants an economy in which workers don't have too much power."

I agree with your assessment of Carney here (and remember Cullen stated something like 'unemployment is good for you', not sure if he still stands by that)..

But in any case these two are an exception and have "made it through", they are no longer shall we say "misinformed" on monetary systems (like Draghi and Bernanke, Obama, Romney, Ryan, Peterson, etc..) and understand endogenous "money" (at least Cullen for sure).

To extend my point: If we get the 99% up to near their level of understanding, imo THEY LOSE in a landslide political contest.

They will be subject to permanent political minority status with these policies right where seemingly the neo-confederate infiltrated GOP is bordering on right now... but in this regard the Dems are NO BETTER as Obama has said and I quote: "We're out of money."

Get people right with their understanding of monetary systems and THEN each side take your policy proposals to the polls, they CANNOT win in that scenario...


Anonymous said...

Matt, I agree with that. I think the people who run our economy understand our monetary system reasonably well. But they use public ignorance of monetary operations as a way of bamboozling the public into thinking that we are faced with constraints that we don't actually have.

Matt Franko said...


I cant write for S...

I'm trying to say that for sure Cullen and I guess perhaps Carney (still Austrian tho so there is something not right about him) are at a point where they understand these systems BETTER than Draghi/Bernanke/Obama/Ryan, et al...

I think these govt/banker people listed here are still clueless in all of this... caught up in semantics that they memorized 40 years ago and cant change their thinking now... these people do NOT know better imo and are NOT trying to "suppress wages" or some sort of conspiracy against "labor", they are acting based on their beliefs which are mathematically provably false.

And they do not have the sense or perhaps honor to resign as their policies are failures... they are borderline insane and definitely irrational.

We need to reach the people in the world who have open minds still and once we get a large amount of these people up to speed, then we can have some REAL elections based on truth not some falsehoods that govt is "borrowing", "money is exogenous", etc...

With a better informed electorate, these people will NEVER win an election again. I fully trust an informed electorate.


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