Al Jazeera
The Secret of the Seven Sisters
Tuesday, April 30, 2013
Al Jazeera on the global oil cartel
A four-part series that reveals how a secret pact formed a cartel that controls the world's oil.
Al Jazeera
The Secret of the Seven Sisters
Al Jazeera
The Secret of the Seven Sisters
Guest post: And here's how the debt gets paid off!
Guest post by MNE reader, Ben Strubel.
“Perhaps the issue that causes the most confusion is the mechanism by which deficit spending now is “paid for” in the future.
Most people assume you “pay for” deficit spending the same way you do in your personal life. For instance when I go to the gas station and fill up my vehicle I always pay by credit card. The bank that issues the credit card effectively loans me money which I then use to pay the owner of the gas station.
So I just deficit spent $60. When the end of the month comes around I always pay off my bill in full so I’ll need to pay back the $60 the bank loaned to me via the credit card. If I go in debt now by $60 I will eventually need to pay it off and I will be using either money I have saved up or taking money from my future income.
There are People Who Literally Don't Care if the World is Round or Flat. They Just Don't Want to Fall Off the Edge! (??)
Commentary by Roger Erickson
That is, they literally see any & all operations as simply alternative details irrelevant to their ideological aims. For them, they don't care whether the pet is a cat or a guinea pig ... as long as it catches mice. :(
Retired Congressional Staffer Mike Lofgren talks about such people in this article.
Is War Good for the Economy?
The central issue is NOT whether there are or aren't such people in the world. The key question is why we are concentrating such people in supposed "leadership" positions. We NEED to change our selection criteria ... or we'll keep getting what we deserve.
That is, they literally see any & all operations as simply alternative details irrelevant to their ideological aims. For them, they don't care whether the pet is a cat or a guinea pig ... as long as it catches mice. :(
Retired Congressional Staffer Mike Lofgren talks about such people in this article.
Is War Good for the Economy?
The central issue is NOT whether there are or aren't such people in the world. The key question is why we are concentrating such people in supposed "leadership" positions. We NEED to change our selection criteria ... or we'll keep getting what we deserve.
Drew Little — Producism: Is This Capitalism 4.0?
With the urgent need for alternative economic systems, a tech social entrepreneur steps up to the challenge.Shareable
Producism: Is This Capitalism 4.0?
Drew Little
Many anti-capitalists proclaim Socialism as the answer. Unfortunately, many people don't understand that in our current economic system and in Socialism, there is onlyone monopolized currency that can be accepted for taxes, which is created out of compound interest debt, and is the root cause of our unsustainable economic system; currently, the private sector has a monopoly on legal tender like the government does with Socialism. So, by instituting Socialism, we might change the "driver" of the "car," but the root problem still exists so constant "repairs" or corporate bailouts are always going to be needed.
Many anti-capitalists also feel a bloody revolution is needed. But let's get real, the U.S. government has too many resources at its disposal; spending more on the military than all other developed nations combined. So that's not an intelligent decision. Many well meaning citizens feel change can be made within Washington. Unfortunately, as history shows that isn't going to happen either. What is there left to do? What if we agreed to play a new game instead? One that doesn't break any laws, is opt-in, and fills in the gaps left by the old game. It wouldn't require a revolution that sheds blood, but the shedding of economic ignorance...Essentially, it requires a revolution of the mind.Little is out of paradigm, but I've read some the book, and he is a good example of what's going on with America's youth. Definitely high aspirations and high energy, willing to experiment in alternatives and aware that the world is digital. In addition, Little is non-white, and that adds another dimension to the story.
Recent Mosler Video - Crossroads Wealth Management Conference in Zurich
Comments by Roger Erickson
Warren Mosler, The Euro: Past, Present and Future. The Crossroads Workshop 1 in Zurich
Scroll down to see Warren's video - and others - from the 1st Zurich conference.
Warren Mosler, The Euro: Past, Present and Future. The Crossroads Workshop 1 in Zurich
Scroll down to see Warren's video - and others - from the 1st Zurich conference.
Gaius Publius — Did Obama deliberately lie in 2008 about his Social Security plans?
Yep. Neoliberal to the core.
John Aziz — A Visual Representation of the Zero Bound
Azizonomics
A Visual Representation of the Zero Bound
John Aziz
The monetarists hold that this is only because negative real rates are ruled out in the existing system. If it were possible to charge for reserves instead of paying interest on them, then you would see how they are right. Sure could fool me looking that that chart.
A Visual Representation of the Zero Bound
John Aziz
The monetarists hold that this is only because negative real rates are ruled out in the existing system. If it were possible to charge for reserves instead of paying interest on them, then you would see how they are right. Sure could fool me looking that that chart.
euro Currency - Looking Back on Arrival of The Child of Consensus
Commentary by Roger Erickson
The Child of Consensus
As usual, stellar advice and commentary was available. Also as usual, too few were listening, or adequately evaluating the context of the advice, or it's implications.
Why is it that we work so hard to invest in everything except our own democracy, the platform supporting all our trivial investments? We treat our own democracy like an illegitimate child, despite the brief consensus at the moment of conception.
The Child of Consensus
As usual, stellar advice and commentary was available. Also as usual, too few were listening, or adequately evaluating the context of the advice, or it's implications.
Why is it that we work so hard to invest in everything except our own democracy, the platform supporting all our trivial investments? We treat our own democracy like an illegitimate child, despite the brief consensus at the moment of conception.
Clint Balinger — Question for Mosler/Mitchell/MMT: Bank Reform, Assets or Liabilities?
Warren Mosler, in his excellent recommendations for bank reform (similar to Bill Mitchell’s proposals and others) focuses on the asset side of banks, and writes:
“The hard lesson of banking history is that the liability side of banking is not the place for market discipline.”
Mosler doesn’t discuss this history or reasoning any further though. Can anyone elaborate on this banking history? And how it shows that disciplining the liability side of banking is not a good idea?
The asset side of a bank's balance sheet records the loans. Banks loan using the five "C"s of credit: character (usually based on credit history), capacity (ability to service the obligation from income), capital (net worth), collateral (assets that secure the debt), and conditions (state of the economy and borrower's role in it). Generally, it is assumed that banks will act prudently overall in extending credit, since their capital is being placed at risk. However, with the moral hazard created by, e.g., deposit guarantees, banks may fail to follow best practices. Therefore, government acting through its agencies impose regulations designed to offset this hazard. Often such regulations are imposed on the liability side, e.g., reserves or capital requirements.
However, the problem arises with the quality of the loans that are extended, and these show up on the asset side. Thus, government can address the asset side by regulating how credit is extended, e.g., down payment, and quality of collateral.
For example, the housing crisis developed out of imprudent credit extension, and the financial crisis grew out of the overvaluation of collateral. So a lot of loans got extended at a much higher value than was proper under best practices.
Government could have intervened with rules regarding the valuation of collateral when it was clear that the run-up in valuation was exceeding the ability to recover based on the underling collateral. Regulators should also have been sharper-eyed about the collusion of mortgage brokers and appraisers, especially after the FBI warned of rampant irregularities in the mortgage business as early as 2004.
LIfted from the comments:
Scott Fullwiler points out: "There's certainly some rationale for regulating the liability side in MMT, though not necessarily the way most people think. See this by Randy: The Lender of Last Resort: A Critical Analysis of the Federal Reserve’s Unprecedented Intervention after 2007 (April 2013)
How to Discuss Fiat Currency Supply With Luddites, Small Children and Non-Initiates (like Politicians)
Commentary by Roger Erickson
Luddites (and/or petty crooks and sophisticated Control Frauds) are constantly heard discussing fiat currency supply in panicky tones and fearful terms.
It's as though they live in constant fear that we will run out of fiat. (Although I've never heard a definition of how such an abstract condition could ever actually occur. Maybe among the severely ill, depressed or lethargic? Perhaps in patients with advanced Parkinson's Disease - bereft of the neural ability to trigger even volitional thoughts, let alone motor actions?)
Even most of those trying to help Luddites understand fiat currency don't help. The "helpers" often complain that Luddites just won't listen.
Yet what is it that they won't listen to?
Semantics always seems to be a big part of the problem. Please stop sloppily calling net fiat currency creation a "debt," or even a deficit - at least with novices. Without defining terms, semantics lapses into useless sophistry - a perennial tool used by crooks to separate fools from their resources.
Nearly every word in every language has multiple meanings, based on context. That's the price we pay for having lean, dynamic linguistics. Don't argue over it. Just define your terms, and the context they're used in!
Imagine 50 people meeting at the Tower of Babel and discovering to their joy that they all use the same alphabet, script and words! Happy coincidence! They're problems are half over - but only half. Imagine their horror to discover that all 50 assign different meanings to the exact same spoken and written words. Worse, they all have multiple meanings for every shared word, based on the particular context discussed using their particular grammar and phraseology. To be exactly sure of the meaning of a given sentence, you could easily have a 50x50 matrix of possible meaning options to parse! Actually, this situation applies to everyone's daily experiences. So how do humans manage this nightmare scenario? Easily, it turns out. Everyone simply defines their terms whenever initiating a discussion - everyone except priests and economists! Those two professions are wont to chant long strings of incantations mixing in just enough familiar words to be mesmerizing, but perverting them with such a jumble of ambiguity and archaic expressions so as to render them unintelligible for pragmatic use.
Please. When discussing the topic of fiat currency supply with Luddites - or simply the uninitiated - respect your audience, and take care to talk about bonds, banking reserves, return on coordination, interest rates, inflation or deflation levels, currency supply, Output Gap, jobs, national capabilities ... anything but confusing sophistry.
You don't convince many people to be atheists ONLY by repeatedly telling them that there is no God, there is no devil, there is no hell and that they're NOT going to heaven. The ONLY thing they'll know is what you're telling them not to pay attention to. FAIL! Losing strategy.
So, remind novices entering every topic unfamiliar to them that there are these concepts called semantics, sophistry and linguistic redundancy. Then stick to talking about concepts that ARE adaptive for that particular conversation. Define terms and context, and then talk about desired outcomes. Nothing more & nothing less.
Luddites (and/or petty crooks and sophisticated Control Frauds) are constantly heard discussing fiat currency supply in panicky tones and fearful terms.
It's as though they live in constant fear that we will run out of fiat. (Although I've never heard a definition of how such an abstract condition could ever actually occur. Maybe among the severely ill, depressed or lethargic? Perhaps in patients with advanced Parkinson's Disease - bereft of the neural ability to trigger even volitional thoughts, let alone motor actions?)
Even most of those trying to help Luddites understand fiat currency don't help. The "helpers" often complain that Luddites just won't listen.
Yet what is it that they won't listen to?
Semantics always seems to be a big part of the problem. Please stop sloppily calling net fiat currency creation a "debt," or even a deficit - at least with novices. Without defining terms, semantics lapses into useless sophistry - a perennial tool used by crooks to separate fools from their resources.
Nearly every word in every language has multiple meanings, based on context. That's the price we pay for having lean, dynamic linguistics. Don't argue over it. Just define your terms, and the context they're used in!
Imagine 50 people meeting at the Tower of Babel and discovering to their joy that they all use the same alphabet, script and words! Happy coincidence! They're problems are half over - but only half. Imagine their horror to discover that all 50 assign different meanings to the exact same spoken and written words. Worse, they all have multiple meanings for every shared word, based on the particular context discussed using their particular grammar and phraseology. To be exactly sure of the meaning of a given sentence, you could easily have a 50x50 matrix of possible meaning options to parse! Actually, this situation applies to everyone's daily experiences. So how do humans manage this nightmare scenario? Easily, it turns out. Everyone simply defines their terms whenever initiating a discussion - everyone except priests and economists! Those two professions are wont to chant long strings of incantations mixing in just enough familiar words to be mesmerizing, but perverting them with such a jumble of ambiguity and archaic expressions so as to render them unintelligible for pragmatic use.
Please. When discussing the topic of fiat currency supply with Luddites - or simply the uninitiated - respect your audience, and take care to talk about bonds, banking reserves, return on coordination, interest rates, inflation or deflation levels, currency supply, Output Gap, jobs, national capabilities ... anything but confusing sophistry.
You don't convince many people to be atheists ONLY by repeatedly telling them that there is no God, there is no devil, there is no hell and that they're NOT going to heaven. The ONLY thing they'll know is what you're telling them not to pay attention to. FAIL! Losing strategy.
So, remind novices entering every topic unfamiliar to them that there are these concepts called semantics, sophistry and linguistic redundancy. Then stick to talking about concepts that ARE adaptive for that particular conversation. Define terms and context, and then talk about desired outcomes. Nothing more & nothing less.
Andrew Lilico — Can public sector austerity coincide with private sector austerity?
Andrew Lilico takes on Wynne Godley, based on his assumptions that all money is created by the private sector, so that the public sector is borrowing from the private sector, and therefore that all borrowing nets to zero in aggregate. He doesn't get consolidated non-govt net financial assets in aggregate with government providing the funding when the net is positive during a period — like some of the circuitists.
The Telegraph (UK)
Can public sector austerity coincide with private sector austerity?
Andrew Lilico | an economist with Europe Economics, and a member of the Shadow Monetary Policy Committee. He was formerly the Chief Economist of Policy Exchange.
(h/t Ash QB on FB)
Niall Ferguson to Paul Krugman: You’re Still Wrong About Government Spending
Looks like some editorial hypocrisy building up over at Yahoo Finance as now Lyster is promoting an assertion opposite Blodget who recently asserted that "Krugman won" over there.
Lyster tees it up for Ferguson here who asserts: "Krugman’s pro-government spending thesis not only fails to address the core problems facing the U.S. and Europe today but also has dire consequences for individuals living in these economies" .... “The headlines have done a disservice to Ken Rogoff and Carmen Reinhart,”.
Video and short write up at Yahoo Finance here.
Educating Bulgarian Citizens About Modern Currency Operations (MMT)
Commentary by Roger Erickson
Having mentioned a Lithuanian beachead for MMT, it's time to again call attention to a Bulgarian blog bringing the same message to it's citizens.
Bulgaria and Modern [Currency Operations] by Ryan Markov.
Please help Ryan by leaving comments and suggestions at his blog site.
Having mentioned a Lithuanian beachead for MMT, it's time to again call attention to a Bulgarian blog bringing the same message to it's citizens.
Bulgaria and Modern [Currency Operations] by Ryan Markov.
Please help Ryan by leaving comments and suggestions at his blog site.
Warren Mosler — So Why Should Banks be Allowed to be in the Wealth Management Business?
There is no public purpose served by allowing banks to be in the wealth management business
Here is a article I wrote for the Huffington Post in 2010 on how I would regulate banking. Feel free to distribute.Soft Currency Economics
So Why Should Banks be Allowed to be in the Wealth Management Business?
Warren Mosler
See also Frances Coppola, Turning back the clock? The future of retail banking
Weep for Lithuania - They're About To Be Owned!
Commentary by Roger Erickson
Their favorite politician doesn't see the truck coming around the same track - for the 11th year running! Worse, one of her employers is driving it!
Lithuanian President "Dalia Grybauskaite": [We Love the euro-zone, and cant Wait to Sell Out Our Country Altogether!]
Wow! Which "we" is she referring to? Her interview is simply chock full of over simplifications and outright misrepresentations.
With politicians like that, who needs Innocent Frauds, or even outright traitors?
Banksters don't even have to steal the country's resources and labor, or buy them on the cheap. Lithuania is actively giving their freedoms away - so long as the thiefs are not Russians. This is a sad end to 1000 years of history.
First they fought. Then they were finally forced - at the point of a sword - to cede their souls to the Catholic Church. Then they were subsequently conquered by Danes, Germans, Swedes and Russians, in various sequences. Then they finally regained their freedom .... and their "leaders" are now are desperately looking for someone else to give it to - ASAP? What's the hurry? Can the kickback for madame President and her cronies really be worth it? How do you say "Control Fraud" in Lithuanian? Valdymo Sukčiavimu? (Hope that translates.)
Not surprisingly, the trajectory of this particular politician, is entirely predictable.
She was reportedly European Commissioner for Financial Programming and the Budget from 2004 to 2009, and is in line to take an even higher EEU position after her first term as Lithuanian president. [Surely no one could have predicted THAT! :( Is her code name "Agent Smith?"]
At least there is some remaining resistance within Lithuania.* Will it be too little or too late for an electorate still digesting the threat of Vladimer Putin? Will the youth of Lithuania fight for what is theirs ... or calculate that it's easier to just emigrate, as they've been doing in record numbers? Seems a shame to let banksters export citizens like commandeered bread, exactly when the country is starving itself of talent and forgoing it's own options, just to pad the pockets of a few elites.
* Sane people worldwide who want to urge Lithuanians to NOT cede sovereignty to the ECB are free to add their names to this ongoing list. Surely many emigres might want to wade in?
Their favorite politician doesn't see the truck coming around the same track - for the 11th year running! Worse, one of her employers is driving it!
Lithuanian President "Dalia Grybauskaite": [We Love the euro-zone, and cant Wait to Sell Out Our Country Altogether!]
With politicians like that, who needs Innocent Frauds, or even outright traitors?
Banksters don't even have to steal the country's resources and labor, or buy them on the cheap. Lithuania is actively giving their freedoms away - so long as the thiefs are not Russians. This is a sad end to 1000 years of history.
First they fought. Then they were finally forced - at the point of a sword - to cede their souls to the Catholic Church. Then they were subsequently conquered by Danes, Germans, Swedes and Russians, in various sequences. Then they finally regained their freedom .... and their "leaders" are now are desperately looking for someone else to give it to - ASAP? What's the hurry? Can the kickback for madame President and her cronies really be worth it? How do you say "Control Fraud" in Lithuanian? Valdymo Sukčiavimu? (Hope that translates.)
Not surprisingly, the trajectory of this particular politician, is entirely predictable.
She was reportedly European Commissioner for Financial Programming and the Budget from 2004 to 2009, and is in line to take an even higher EEU position after her first term as Lithuanian president. [Surely no one could have predicted THAT! :( Is her code name "Agent Smith?"]
At least there is some remaining resistance within Lithuania.* Will it be too little or too late for an electorate still digesting the threat of Vladimer Putin? Will the youth of Lithuania fight for what is theirs ... or calculate that it's easier to just emigrate, as they've been doing in record numbers? Seems a shame to let banksters export citizens like commandeered bread, exactly when the country is starving itself of talent and forgoing it's own options, just to pad the pockets of a few elites.
* Sane people worldwide who want to urge Lithuanians to NOT cede sovereignty to the ECB are free to add their names to this ongoing list. Surely many emigres might want to wade in?
Vytautas Vakrina Launches an "MMT Search Engine"
Commentary by Roger Erickson
See the budding MMT Search Engine
If your MMT blog is not listed, see what's missing to make it "searchable" by a web crawler, and then send your suggestions re newly emerging MMT blogs directly to Vytautas, who lives in Vilnius, apparently as the sole MMT scholar in all of Lithuania - population 3 million.
Any MMT people traveling to Lithuania, please be sure to look up Vytautas, and help him educate his fellow citizens about expanding policy space for their country, and about increasing policy agility.
Du går Litauen!
See the budding MMT Search Engine
If your MMT blog is not listed, see what's missing to make it "searchable" by a web crawler, and then send your suggestions re newly emerging MMT blogs directly to Vytautas, who lives in Vilnius, apparently as the sole MMT scholar in all of Lithuania - population 3 million.
Any MMT people traveling to Lithuania, please be sure to look up Vytautas, and help him educate his fellow citizens about expanding policy space for their country, and about increasing policy agility.
Du går Litauen!
Why Does an Industry That Is More Trouble Than It's Worth, RUN All the Real Industries?
Commentary by Roger Erickson
We've become captives of our own guard dogs? Here's another example.
Fascinating conference. So why on earth is it hosted by the International Finance Corporation? Why, instead, isn't the IFC a cheap office in the basement of some farmhouse? Why are fiat currency financiers present on so many of the panels? The fiat counters are directing the sources of fiat? It makes my head spin. Isn't that perverting the very definition of fiat?
Ok, here's my question, again: Why does an industry that is more trouble than it's worth, have so much parasitic, constraining influence over all the real industries????
Just how backwards do we have EVERYTHING? 180 degrees?
Yes.
A retired GOP Senator recently let slip a remarkably simple truth, at a not-for-attribution DC meeting. When asked how we'd square national security needs with the need to balance the national budget he blurted out: "The [national] budget debate is a cop-out."
He then went on to say that we'd do things the way we'd always done things. "We [in Congress] listen, and then decide what needs to be done. Then we Appropriate the funding to do it. End of story."
Amazingly, there wasn't a word of response said in the conference. No one asked any further budget questions, and so the topic was just ignored ... waiting for the next Deficit Terrorist to bring it up again, at a personally profitable time.
It's as though the finance industry were photographers which we have assigned to document and assemble accurate records of our own, adaptive actions. They are there as messenger-boys, to carry feedback, not to own the people generating the feedback. We own our own feedback, and it must be visible to all, so that all can assist in directing increasingly distributed coordination.
When does a documentary crew transition into owners and directors of an unused movie set? When the real electorate followed by the cameras gets drunk and are found passed out on the curb? Forgetting to generate their own goals, the hapless real people are - temporarily? - "replaced" by "actors" who then act out fantasies - directed by the cameramen - unconnected to the real operations that used to unfold on the ground! The entire Finance Industry is all form, waiting for national function to wake out of it's stupor!
Left unchecked, photography crews in such settings eventually think that THEY dictate reality, instead of them dutifully documenting civic fiat. What's wrong with that kind of motion picture? It soon stops moving in any adaptive direction, since it is directed by random fantasy that is Unnatural rather than being grounded in Natural Selection.
It's your set, America. Start acting like an owner again. Impose your fiat on the financial guard dogs. Start with a muzzle. And downsize the dog house to be smaller than your house.
Better yet, automate the Automatic Fiat accounting functions to a mobile phone app. Then we won't need acting crooks reversing the causality of "God's work," only the occasional electronic bug. Can you imagine a day when a virtual text message is sent to Congress, warning that if unlimited amounts of fiat currency aren't ceded to a cell-phone app, that the entire edifice of human culture will come to an end? Where would the cellphones store all that fiat, and what would they do with it? Mock themselves with addictive, Angry Turds games? And why?
We've become captives of our own guard dogs? Here's another example.
April 29-30, 2013 | International Finance Corporation | Washington, D.C.
Fascinating conference. So why on earth is it hosted by the International Finance Corporation? Why, instead, isn't the IFC a cheap office in the basement of some farmhouse? Why are fiat currency financiers present on so many of the panels? The fiat counters are directing the sources of fiat? It makes my head spin. Isn't that perverting the very definition of fiat?
Ok, here's my question, again: Why does an industry that is more trouble than it's worth, have so much parasitic, constraining influence over all the real industries????
Just how backwards do we have EVERYTHING? 180 degrees?
Yes.
A retired GOP Senator recently let slip a remarkably simple truth, at a not-for-attribution DC meeting. When asked how we'd square national security needs with the need to balance the national budget he blurted out: "The [national] budget debate is a cop-out."
He then went on to say that we'd do things the way we'd always done things. "We [in Congress] listen, and then decide what needs to be done. Then we Appropriate the funding to do it. End of story."
Amazingly, there wasn't a word of response said in the conference. No one asked any further budget questions, and so the topic was just ignored ... waiting for the next Deficit Terrorist to bring it up again, at a personally profitable time.
You rarely hear this discussed in the press, but regardless of the BS spewed during political campaigns, the experienced Congresspeople sitting on Appropriations Committees know how things actually work. They just go on deciding what needs to be done, and generating national currency as an automatic consequence, where the currency is just one bit of the data thrown off by the real activities taking place. Try imagining fiat currency as the "heat signature" of reality. It's an incidental consequence, not the initiating causality.
Our electorate and press - and seemingly half our politicians - don't seem to bother defining the very words they themselves use. It's no wonder that so much non-sense comes out of their mouths. Let's go back to basics. A "fiat" currency is one that is automatically generated to denominate the outcomes of any and all group decisions, NOT the opposite.
Our electorate and press - and seemingly half our politicians - don't seem to bother defining the very words they themselves use. It's no wonder that so much non-sense comes out of their mouths. Let's go back to basics. A "fiat" currency is one that is automatically generated to denominate the outcomes of any and all group decisions, NOT the opposite.
The whole point of a fiat currency is to NEVER let economic tactics or policy be constrained by a lack of liquidity. If a given transaction type is allowed by consensus to occur, then liquidity is guaranteed by the full faith and will of the electorate. That's what a fiat currency does. Summarized, it vastly improves national agility. The simple reality is that every part and parcel of the "Finance Industry" is simply an ex post accounting service, that is created and constantly enlarged by our distributed and aggregate REAL activities.
It's as though the finance industry were photographers which we have assigned to document and assemble accurate records of our own, adaptive actions. They are there as messenger-boys, to carry feedback, not to own the people generating the feedback. We own our own feedback, and it must be visible to all, so that all can assist in directing increasingly distributed coordination.
When does a documentary crew transition into owners and directors of an unused movie set? When the real electorate followed by the cameras gets drunk and are found passed out on the curb? Forgetting to generate their own goals, the hapless real people are - temporarily? - "replaced" by "actors" who then act out fantasies - directed by the cameramen - unconnected to the real operations that used to unfold on the ground! The entire Finance Industry is all form, waiting for national function to wake out of it's stupor!
Left unchecked, photography crews in such settings eventually think that THEY dictate reality, instead of them dutifully documenting civic fiat. What's wrong with that kind of motion picture? It soon stops moving in any adaptive direction, since it is directed by random fantasy that is Unnatural rather than being grounded in Natural Selection.
It's your set, America. Start acting like an owner again. Impose your fiat on the financial guard dogs. Start with a muzzle. And downsize the dog house to be smaller than your house.
Better yet, automate the Automatic Fiat accounting functions to a mobile phone app. Then we won't need acting crooks reversing the causality of "God's work," only the occasional electronic bug. Can you imagine a day when a virtual text message is sent to Congress, warning that if unlimited amounts of fiat currency aren't ceded to a cell-phone app, that the entire edifice of human culture will come to an end? Where would the cellphones store all that fiat, and what would they do with it? Mock themselves with addictive, Angry Turds games? And why?
Hopefully, Congress in such an instance wouldn't even blink, and instead would respond to the irritation by simply uploading a replacement operating system for their phones, or maybe just an upgraded app. [Say, why haven't WE just replaced ALL of Wall St.?]
Seriously. The entire Federal Reserve - not to mention Wall St., can be reduced to a Fiat App - tomorrow - and no one but a few megalomaniacs in accounting offices would notice. The rest of us would stumble out of a depressing movie and feel free to direct our own imagination towards speedily solving real national challenges. Then, of course, we could also instantly have full-employment, and get on with our entire nation doing the real work that will make our dreams come true.
Reality. It's more appropriate than acting out random economic delusions.
Reality. It's more appropriate than acting out random economic delusions.
Brad DeLong — When Is Government Debt Risky?
Brad DeLong weighs in on Reinhart and Rogoff.
Project Syndicate
When Is Government Debt Risky?
J. Bradford DeLong | Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau for Economic Research
(h/t Ralph Musgrave via email)
Monday, April 29, 2013
Jeff Spross — Two-For-One: A New Solar Dish Delivers Low-Cost Electricity Along With Fresh Water
According to IBM, the HCPVT is built from unusually low-cost materials, meaning the per area price of setting it up is significantly lower than comparable solar systems, as is the cost per kilowatt hour....
Just one square meter of receiver area in the HCPVT system can provide 30 to 40 liters of drinkable water per day — about half the needed daily amount for the average person, according to the United Nations. The researchers think a large array of the dishes could produce enough fresh water to sustain a town. On top of that, the system can even provide air conditioning, using an absorption chiller rather than the standard compression chiller...
The long-term vision is to build arrays in areas of southern Europe, Africa, the Arabic Peninsula, South America, Australia, and the southwestern United States — places that are remote, dry, and in need of both affordable sustainable energy and greater supplies of drinking water.Climate Progress
Two-For-One: A New Solar Dish Delivers Low-Cost Electricity Along With Fresh Water
Jeff Spross
Modern Monetary Theory (Warren Mosler) Vs. The Austrian School (Robert Murphy) Macroeconomic Debates Among The Heterodox – June 3, Columbia Law School
Modern Money and Pubic Purpose
Modern Monetary Theory (Warren Mosler) Vs. The Austrian School (Robert Murphy) Macroeconomic Debates Among The Heterodoxy
Part of the 2012-2013 Modern Money and Public Purpose Series on Contemporary Issues in Law and Political Economics, organized by the Workers' Rights Student Coalition
When: 6.15pm June 3rd, 2013
Where: Room 103, Jerome Greene Hall, Columbia Law School
Moderated by John Carney, Senior Editor, CNBC.com
The debate will be livestreamed.
Randy Wray — The Absolutely Final and Definitive Destruction of Reinhart And Rogoff
Two UMKC students have provided what I think is the most destructive empirical work to date on the simply awful book and articles by Reinhart and Rogoff that purported to find a magical debt ratio beyond which economic growth plummets to negative territory. They are Matthew Berg and Brian Hartley and their piece is at New Economic Perspectives:Economonitor — Great Leap Forward
Before presenting a quick summary of their findings, let me make two preliminary notes. First they validate what Yeva Nersisyan and I first pointed out three years ago: the crappy empirical research of Reinhart and Rogoff was driven by a small number of outliers, and by confusion of causation and correlation. Yes, some countries–Japan most notably–have high debt ratios and slow growth. R&R aggregated in such a way as to give very high weights to those countries. And those countries had high deficits and thus high accumulated debts because growth was low. Hence, there was never any support for their claim that 90% marks a causal turning point.
The Absolutely Final and Definitive Destruction of Reinhart And Rogoff
L. Randall Wray | Professor of Economics, UMKC
Randy's definitive statement on MMT and the claim that MMT says deficits don't matter.
But note that no UMKC-affiliated faculty member (and probably no student) has ever said something as silly as “no deficit can be bad”. I do not even know what that could mean. Deficits can be bad. Very bad. Very very bad. A sovereign country that issues its own currency cannot be forced into involuntary default so long as it floats its currency. That is certainly a true statement–accepted by anyone who knows anything about sovereign currencies. Whether it is talmudic I have no idea. If you’ve got the magic porridge pot, you can provide the porridge.
Can too much porridge be bad? You betcha–just read the damned story. Inflation? Yes. Currency depreciation? Probably. Leave too few resources for the private purpose? No doubt. Create a nation of couch potatoes? You’ve got it. Bury everything under a thick layer of suffocating porridge? Read the story.
Where do people like Epstein get this stuff? I have no idea.
Italian PM Enrico Letta Urges Move From Austerity to Growth
Commentary by Roger Erickson
Hope it's not too late to revive the patient-electorate. If they recover, surely they'll sue for malpractice?
Italy's new Prime Minister Enrico Letta pledged to push for a change to the European Union's focus on austerity and pursue growth and jobs in an inaugural speech on Monday laying out the priorities for his coalition government.
(Hat tip Edward Harrison, @edwardnh )
Hope it's not too late to revive the patient-electorate. If they recover, surely they'll sue for malpractice?
Italy's new Prime Minister Enrico Letta pledged to push for a change to the European Union's focus on austerity and pursue growth and jobs in an inaugural speech on Monday laying out the priorities for his coalition government.
(Hat tip Edward Harrison, @edwardnh )
PRWatch Skewers Pete Peterson Foundation and the Deficit Terrorists ... as Frauds.
Commentary by Roger Erickson
Pete Peterson’s “Fix the Debt” Astroturf Supergroup Detailed in New Online Resource
at "PetersonPyramid"
This is great stuff. Helpful PR just when it's long past due. The article really does skewer Peterson, and the 2nd part (see below) lists the online resources PRWatch has now helped assemble, to fight the Deficit Terrorist traitors.
New Online Resource on Campaign to Fix the Debt
Today, CMD is pleased to unveil -- in partnership with The Nation -- a new resource on the Campaign to Fix the Debt for the public and the media, that exposes the leaders, the Peterson-funded partners, the phony state chapters, the lobbyists and the stunt men (who convinced Alan Simpson to dance Gangnam Style) behind this massive PR effort.
This package includes:
Lisa Graves, Pete Peterson's Long History of Deficit Scaremongering, The Nation.
John Nichols, The Austerity Agenda: An Electoral Loser, The Nation.
Dean Baker, Fix the Debt's Fuzzy Math, The Nation.
Mary Bottari, Pete Peterson's Puppet Populists, The Nation.
Fix the Debt Astroturf Supergroup Portal Page
Fix the Debt's Leadership
Fix the Debt Leaders' Conflicts of Interest
Fix the Debt's Partner Groups
Fix the Debt's Lobbyists
Fix the Debt's Parent Group
Fix the Debt's Corporations
Pete Peterson
Peter G. Peterson Foundation
Social Security
Medicare
and much more!
syzygysue — Like heterodox economists, Semmelweis was ignored…
Why MMT is being ignored by the profession.
Think Left
Like heterodox economists, Semmelweis was ignored…
syzygysue
(h/t Clonal via email)
William K. Black — What If George Akerlof Had Written About Lethal 'Lemons'?
If you have studied economics at the university level in the last 35 years, it is likely you were introduced to the concept of "asymmetrical information" and George Akerlof's famous 1970 article on markets for "lemons" (American slang for an automobile of terrible quality). The Nobel committee that awards the prize in economics singled out that article for special praise in deciding to make him a Nobel Laureate in 2001. The article discusses the implications of asymmetrical information in a number of contexts, but at least two of the contexts involved what criminologists call "control fraud" and a third involves the risk of fraud by borrowers.
Most of the examples Akerlof discussed involved fraud. The frauds he analyzes concern deceit about the quality of goods being sold or the borrowers' ability or willingness to repay a loan.
I have noted in many articles that the clan of economists has a primitive tribal taboo against saying the mystic "f" word out loud or even putting it in print, so Akerlof's article does not contain the word "fraud." His language, however, makes it clear that he is discussing fraud and how it can create what we now call a "Gresham's dynamic" in which bad ethics drives good ethics out of the market.
The theme of my article is to alert the reader to other variants of anti-purchaser control fraud in which the deception about the quality of the goods sold (or rented) affects safety, not simply the appropriate price of the bad quality goods. I use as my example the recent deaths of nearly 400, and over 1,000 injured, Bangladeshis when the building they were working in collapsed. I show that the same case is also an example of anti-employee control fraud.
The nature of the survivors' injuries is often horrific.The Huffington Post
What If George Akerlof Had Written About Lethal 'Lemons'?
William K. Black | Assoc. Professor, Univ. of Missouri, Kansas City; Sr. regulator during S&L debacle
Russ Huntley — Krugman Legitimizes Modern Monetary Theory (MMT) as a School of Economic Thought
Paul Krugman today in his The Conscience of a Liberal blog in the New York Times discussed whyMonetarism Falls Short mentions Modern Monetary Theory (MMT) as a school of economic thought along with the Keynesian and Austrian schools.
Brad Delong’s use of points made in Warren Mosler’s Soft Currency Economics (the book that started defining Modern Monetary Theory) to win an argument with Krugman was probably pivotal.Soft Currency Economics
Krugman Legitimizes Modern Monetary Theory (MMT) as a School of Economic Thought
Russ Huntley
Sunday, April 28, 2013
Jeremy Grantham — The Race of Our LIves
Jeremy Grantham continues to sound the alarm.
The bottom line is that if we put our minds to it we can overcome normal inertia and abnormally powerful vested interests that oppose necessary change. Our population is likely to start declining in a few decades, slowly but surely, and the fertility rate of 1.8% or less would allow global population to fall back more or less gracefully by 2200 to a probably sustainable level of 4 billion, particularly if we sensibly encourage its decline. Important progress in alternatives is certain. Other scientific progress, especially in computing power will also help. Whether we can move fast enough on these fronts and at the same time reduce the output of greenhouse gases to avoid going off the cliff is simply not knowable for certain, but every minute saved and improvement made, betters our odds. Let the race begin.GMO Quarterly Newsletter
The Race of Our Lives
Jeremy Grantham
Art Shipman on Reinhart-Rogoff. What about private debt?
More on Reinhart & Rogoff. What about private debt?
Read the first post below before the second. They go together.
Stephen Roach — Long Live China’s Slowdown
Is China rebalancing by growing its consumer economy with service jobs?
Project Syndicate
Long Live China’s Slowdown
Stephen S. Roach | formerly Chairman of Morgan Stanley Asia and the firm's Chief Economist, and currently is a senior fellow at Yale University’s Jackson Institute of Global Affairs
Recent Krugman Out of Paradigm Tidbits
Krugman still doesn't "get it".
Quote from a recent Bush-bash post of Krugman's:
From what I’ve read, most of the pushback against revisionism focuses on just how bad Bush’s policies were, from the disaster in Iraq to the way he destroyed FEMA, from the way he squandered a budget surplus to the way he drove up Medicare’s costs. And all of that is fair.Here is another one from a post where he was bashing the intolerable (and hence frequent CNBC guest) Ken Langone :
Now, I don’t know if Langone is really as dumb as he sounds [Ed: ???]; my guess is, probably not — the attempt to sound like a regular guy, while actually sounding like an actor in a 1950s B-movie, is a giveaway. Still, maybe this is an occasion to restate what is really going on in the economy, and why I advocate the things I do.
So, in order:
1. The economy isn’t like an individual family that earns a certain amount and spends some other amount, with no relationship between the two. My spending is your income and your spending is my income. If we both slash spending, both of our incomes fall.
2. We are now in a situation in which many people have cut spending, either because they chose to or because their creditors forced them to, while relatively few people are willing to spend more. The result is depressed incomes and a depressed economy, with millions of willing workers unable to find jobs.
3. Things aren’t always this way, but when they are, the government is not in competition with the private sector. Government purchases don’t use resources that would otherwise be producing private goods, they put unemployed resources to work. Government borrowing doesn’t crowd out private borrowing, it puts idle funds to work. As a result, now is a time when the government should be spending more, not less. If we ignore this insight and cut government spending instead, the economy will shrink and unemployment will rise. In fact, even private spending will shrink, because of falling incomes.
4. This view of our problems has made correct predictions over the past four years, while alternative views have gotten it all wrong. Budget deficits haven’t led to soaring interest rates (and the Fed’s “money-printing” hasn’t led to inflation); austerity policies have greatly deepened economic slumps almost everywhere they have been tried.
5. Yes, the government must pay its bills in the long run. But spending cuts and/or tax increases should wait until the economy is no longer depressed, and the private sector is willing to spend enough to produce full employment.This last one where he writes in his Point 5: "Yes, the government must pay its bills in the long run.." is reeeeeaaally bad.
Krugman in many ways still doesn't see how our current economic system operates, very similar at core to the basis of Reinhart and Rogoff's work itself; and hence apparently very much "at home" at the New York Times.
Saturday, April 27, 2013
'Silver Circle' Premieres in Chicago this Sunday!
Oh wow and I almost missed this!
Looks like the metal-lovers have produced a major motion picture.
From the Daily Paul, ( remember where the motto is "Peace-Gold-Love".... hey I believe them with the "Gold-Love" part..):
The first Midwest screening of Silver Circle will be hosted on the Northside of Chicago at Chicago Filmmakers on April 28th with TWO showtimes (5pm & 7pm)
About Silver Circle:
It's 2019. The dollar is dead. [Ed: LOL!!]
The Federal Reserve brutally clings to the power it has gathered for more than a hundred years.
Zoe Taylor stands in their way, with a cunning plan, a scrappy group of Rebels [Ed: No doubt...], an insider's help, and a competing currency made of pure silver. [Ed: Don't eat it you will turn silver!!!!!]
Do she and the Rebels have what it takes to destroy the tyrannical Fed?
This event is directly following the C2E2 event happening at the McCormick Center all weekend. THE premiere comic book convention of Chicago! Tickets are $10 and are ON SALE NOW! You can purchase tickets for the 5pm show here:
http://scchicago5pm.brownpapertickets.com/ 7pm show here: http://scchicago7pm.brownpapertickets.com/
Buy one for a friend and support our End the Fed film as it makes its way in to the Windy City!
Let us know if you'd like to reserve a group of seats in advance and we can make a special raffle or giveaway for your group!Not to be out done, or perhaps just ripping them off, looks like the metal-lovers have come up with their own fictitious female hero-character "Zoe Taylor" in a similar fashion to the Randian character "John Galt" in the Ayn Rand novels and movies.
This metal-lover fantasy flick premiers directly following Chigago's premiere comic book convention so perhaps it will be well attended.
Where do these idiots get the funding to do these things???
Barbara Garson — Down Is a Dangerous Direction — How the 40-Year "Long Recession" Led to the Great Recession
If you had to date the Great Recession, you might say it started in September 2008 when Lehman Brothers vaporized over a weekend and a massive mortgage-based Ponzi scheme began to go down. By 2008, however, the majority of American workers had already endured a 40-year decline in wages, security, and hope -- a Long Recession of their own.The Huffington Post
Down Is a Dangerous Direction — How the 40-Year "Long Recession" Led to the Great Recession
Barbara Garson | Author, 'Down the Up Escalator: How the 99% Live in the Great Recession'
(h/t Clonal in the comments)
Also KPFA Podcast: Barbara Garson with Richard D. Wolff
(download until May 10, 2013)
Izabella Kaminska — Corporate currencies are equity
Climateer linked to a post by Phil Pearlman here which pondered the merits of Google launching its own currency.
The logic is basically that Google, being an experimental tech company is in a better position to launch a private currency than a bunch of anonymous coders.
But the piece misses a fundamental point. Google already has a currency in issuance. That currency is Google equity.
When you swap national currency for an investment in a particular corporate stock you are effectively swapping an investment in the general wealth of the country, which is taxable by the state, for concentrated exposure to a particular corporate (i.e one very small segment of that economy). You are doing that because you think that stock will outperform the general performance of the country.
That corporate then ends up holding your dollars like central banks of foreign countries hold foreign reserves. The corporate — just like foreign central banks — can choose to invest those reserves in dollar denominated securities and basically receive dollar interest (aka Paypal) in which case its currency is effectively pegged to the dollar, or it can spend (invest) those reserves on tools, infrastructure, know-how and resources that allow it to deliver ever more value/output/return to holders of its equity....
Dizzynomics
Corporate currencies are equity
Izabella Kaminska
David Graeber — A Practical Utopian’s Guide to the Coming Collapse
In most of the world, the last thirty years has come to be known as the age of neoliberalism—one dominated by a revival of the long-since-abandoned nineteenth-century creed that held that free markets and human freedom in general were ultimately the same thing. Neoliberalism has always been wracked by a central paradox. It declares that economic imperatives are to take priority over all others. Politics itself is just a matter of creating the conditions for growing the economy by allowing the magic of the marketplace to do its work. All other hopes and dreams—of equality, of security—are to be sacrificed for the primary goal of economic productivity. But global economic performance over the last thirty years has been decidedly mediocre. With one or two spectacular exceptions (notably China, which significantly ignored most neoliberal prescriptions), growth rates have been far below what they were in the days of the old-fashioned, state-directed, welfare-state-oriented capitalism of the fifties, sixties, and even seventies. By its own standards, then, the project was already a colossal failure even before the 2008 collapse.
If, on the other hand, we stop taking world leaders at their word and instead think of neoliberalism as a political project, it suddenly looks spectacularly effective. The politicians, CEOs, trade bureaucrats, and so forth who regularly meet at summits like Davos or the G20 may have done a miserable job in creating a world capitalist economy that meets the needs of a majority of the world’s inhabitants (let alone produces hope, happiness, security, or meaning), but they have succeeded magnificently in convincing the world that capitalism—and not just capitalism, but exactly the financialized, semifeudal capitalism we happen to have right now—is the only viable economic system. If you think about it, this is a remarkable accomplishment.
How did they pull it off? The preemptive attitude toward social movements is clearly a part of it; under no conditions can alternatives, or anyone proposing alternatives, be seen to experience success. This helps explain the almost unimaginable investment in “security systems” of one sort or another: the fact that the United States, which lacks any major rival, spends more on its military and intelligence than it did during the Cold War, along with the almost dazzling accumulation of private security agencies, intelligence agencies, militarized police, guards, and mercenaries. Then there are the propaganda organs, including a massive media industry that did not even exist before the sixties, celebrating police. Mostly these systems do not so much attack dissidents directly as contribute to a pervasive climate of fear, jingoistic conformity, life insecurity, and simple despair that makes any thought of changing the world seem an idle fantasy. Yet these security systems are also extremely expensive. Some economists estimate that a quarter of the American population is now engaged in “guard labor” of one sort or another—defending property, supervising work, or otherwise keeping their fellow Americans in line. Economically, most of this disciplinary apparatus is pure deadweight.
In fact, most of the economic innovations of the last thirty years make more sense politically than economically.....
It does often seem that, whenever there is a choice between one option that makes capitalism seem the only possible economic system, and another that would actually make capitalism a more viable economic system, neoliberalism means always choosing the former. The combined result is a relentless campaign against the human imagination. Or, to be more precise: imagination, desire, individual creativity, all those things that were to be liberated in the last great world revolution, were to be contained strictly in the domain of consumerism, or perhaps in the virtual realities of the Internet. In all other realms they were to be strictly banished. We are talking about the murdering of dreams, the imposition of an apparatus of hopelessness, designed to squelch any sense of an alternative future. Yet as a result of putting virtually all their efforts in one political basket, we are left in the bizarre situation of watching the capitalist system crumbling before our very eyes, at just the moment everyone had finally concluded no other system would be possible.The Baffler
A Practical Utopian’s Guide to the Coming Collapse
David Graeber
Chris Dillow — Quantifying The Evil Of Unemployment
While it is impossible to quantify human suffering in terms of costs, Chris Dillow puts some economic numbers on unemployment.
Stumbling and Mumbling
Chris Dillow | Investors Chronicle (UK)
Economic Collapse — Unprecedented Shortages Of Ammo, Physical Gold And Physical Silver
All over the United States we are witnessing unprecedented shortages of ammunition, physical gold and physical silver. Recent events have helped fuel a "buying frenzy" that threatens to spiral out of control. Gun shops all over the nation are reporting that they have never seen it this bad, and in many cases any ammo that they are able to get is being sold even before it hits the shelves. The ammo shortage has already become so severe that police departments all over America are saying that they are being told that it is going to take six months to a year to get their orders. In fact, many police departments have begun to trade and barter with one another to get the ammo that they need. Meanwhile, the takedown of paper gold and paper silver has unleashed an avalanche of "panic buying" of physical gold and physical silver all over the planet. In the United States, some dealers are charging premiums of more than 25 percent over the spot price for gold and silver and they are getting it. People are paying these prices even though they are being told that delivery will not happen for a month or two in many cases. Some dealers are feverishly taking as many orders as they can, and they are just hoping that they will be able to get the physical gold and silver to eventually fill those orders. Personally, I have never seen anything like this. If things are this tight now, what is going to happen when the next major financial crisis strikes and people really begin to panic?The Economic Collapse
Unprecedented Shortages Of Ammo, Physical Gold And Physical Silver
Michael
Matias Vernengo — When were we Keynesians?
Turns out, not so much.
...while Keynesian ideas and Keynesian economists became dominant for short periods, for the most part political elites remained firmly conventional and remained wedded to sound finance ideas.Naked Keynesianism
When were we Keynesians?
Matias Vernengo | Associate Professor of Economics, University of Utah
James Allworth — Explainer: How Corruption Is Strangling U.S. Innovation
Tesla. Uber. Netflix. Most economies would kill to have a set of innovators such as these. And yet at every turn, these companies are running headlong into regulation (or lack thereof) that seems designed to benefit incumbents. The reason? The devastating impact of money in politics and how it discourages disruptive innovation among new businesses. Click through this explainer to learn more about legal bribery and U.S. competitiveness:Harvard Business Review — HBR Blog Network
Explainer: How Corruption Is Strangling U.S. Innovation
James Allworth
Brad DeLong — Abba Lerner (1943): "Functional Finance"
Abba Lerner quoted on functional finance.
Grasping Reality with Both Invisible Hands
Abba Lerner (1943): "Functional Finance"
J. Bradford DeLong | Professor of Economics, UCAL Berkeley
Paul Krugman: The 1 Percent’s Solution
Has Paul Krugman been reading Rodger Malcolm Mitchell and getting that the problem is class warfare perpetrated by the 1%? Sounds like it.
Economist's View
Paul Krugman: The 1 Percent’s Solution
posted by Mark Thoma | Professor of Economics, University of Oregon
Andrew Lainton — Optimum Taxation Policy and the Impact of Public Debt Under Modern Monetary Theory
This post was prompted by Tim Wortsall, of all peoples, post on whether progressive taxation makes sense a MMT world. In a sense he was right, and perhaps Randall Wray in response was not, the principles of taxation radically change in an MMT world as the overiding princple is how taxation can create inducements to restore full employment not how taxation can fairly fund public spending.Decisions, Decisions, Decisions
Optimum Taxation Policy and the Impact of Public Debt Under Modern Monetary Theory
Andrew Lainton
Friday, April 26, 2013
Lars P. Syll — What makes a good explanation in economics?
Philosophy of economics and social science, or do you know what you are doing? Economists especially attempt to emulate or even mimic physics, but the social sciences are inherently different from the natural sciences because the subject matter is inherently different. Therefore, explanation will be different in the social sciences, including economics, than it is in the natural sciences.
Lars puts forth a realist theory in opposition to positivist and subjectivist theories. These are the dominant theories at present, but they are not the only possible ones, such as semiotic, pragmatist and idealist. All of these views have something to contribute, and none of them has proved itself to be so compelling as to exclude the others. History shows that different approaches exchange dominance. This is as a result of changing context, and it also shapes context.
Lars asserts that only one approach is to be preferred as optimal, otherwise relativism results, and that approach is "realism." In the absence of an absolute criterion, I don't see "relativism" as a problem. Lars would say that "reality" is that criterion, but what "reality" may be is one of the perennial questions on which there is no universal agreement, and some (Ludwig Wittgenstein) hold that the question is not answerable at all in that this lies beyond the limits of language to capture.
Then there is the idealist view expressed by Max Plack based on his view of quantum mechanics as foundational:
I regard consciousness as fundamental. I regard matter as derivative from consciousness. We cannot get behind consciousness. Everything that we talk about, everything that we regard as existing, postulates consciousness. • As quoted in The Observer (25 January 1931)
"As a man who has devoted his whole life to the most clear headed science, to the study of matter, I can tell you as a result of my research about atoms this much: There is no matter as such. All matter originates and exists only by virtue of a force which brings the particle of an atom to vibration and holds this most minute solar system of the atom together. We must assume behind this force the existence of a conscious and intelligent mind. This mind is the matrix of all matter." • Das Wesen der Materie [The Nature of Matter], speech at Florence, Italy (1944) (from Archiv zur Geschichte der Max-Planck-Gesellschaft, Abt. Va, Rep. 11 Planck, Nr. 1797)
"Science cannot solve the ultimate mystery of nature. And that is because, in the last analysis, we ourselves are part of nature and therefore part of the mystery that we are trying to solve." • Where is Science Going? (1932)From Wikiquote.
Lars P. Syll's Blog
What makes a good explanation in economics?
Lars P. Syll | Professor of Social Studies and Associate professor of Economic History at Malmö University
Cross-post: Warren Mosler — Rogoff and Reinhart NYT response
Rogoff and Reinhart NYT response
by Warren Mosler
The intellectual dishonesty continues.
As before, it’s the lie of omission.
R and R are familiar with my book ‘The 7 Deadly Innocent Frauds of Economic Policy’ and, when pressed, agree with the dynamics.
They know there is a more than material difference between floating and fixed exchange rate regimes that they continue to exclude from their analysis.
They know that one agents ‘deficit’ is another’s ‘surplus’ to the penny, a critical understanding they continue to exclude.
They know that ‘demand leakages’ mean some other agent must spend more than its income to sustain output and employment.
They know federal spending is via the Fed crediting a member bank reserve account, a process that is not operationally constrained by revenues. That is, there is no dollar solvency issue for the US government.
They know that ‘debt management’, operationally, is a matter of the Fed simply debiting and crediting securities accounts and reserve accounts, both at the Fed.
They know that if there is no problem of excess demand, there is no ‘deficit problem’ regardless of the magnitudes, short term or long term.
They know unemployment is the evidence deficit spending is too low and a tax cut and/or spending increase is in order, and that a fiscal adjustment will restore output and employment, regardless of the magnitude of deficits or debt.
Carmen’s husband Vince was the head of monetary affairs at the Fed for many years, serving both Alan Greenspan and Ben Bernanke. He knows implicitly how the accounts clear and how the accounting works, to the penny. He knows the currency itself is a case of monopoly. He knows the Fed, not ‘the market’ necessarily sets rates. He knows that, operationally, US Treasury securities function as interest rate support, and not to fund expenditures. He knows it all!
Carmen, Vince, please come home! I hereby offer my personal amnesty- come clean NOW and all is forgiven! As you well know, coming clean NOW will profoundly change the world. As you well know, coming clean NOW will profoundly alter the course of our civilization!
Carmen, Vince, either you believe in an informed electorate or you don’t!?
(feel free to distribute)
R and R are familiar with my book ‘The 7 Deadly Innocent Frauds of Economic Policy’ and, when pressed, agree with the dynamics.
They know there is a more than material difference between floating and fixed exchange rate regimes that they continue to exclude from their analysis.
They know that one agents ‘deficit’ is another’s ‘surplus’ to the penny, a critical understanding they continue to exclude.
They know that ‘demand leakages’ mean some other agent must spend more than its income to sustain output and employment.
They know federal spending is via the Fed crediting a member bank reserve account, a process that is not operationally constrained by revenues. That is, there is no dollar solvency issue for the US government.
They know that ‘debt management’, operationally, is a matter of the Fed simply debiting and crediting securities accounts and reserve accounts, both at the Fed.
They know that if there is no problem of excess demand, there is no ‘deficit problem’ regardless of the magnitudes, short term or long term.
They know unemployment is the evidence deficit spending is too low and a tax cut and/or spending increase is in order, and that a fiscal adjustment will restore output and employment, regardless of the magnitude of deficits or debt.
Carmen’s husband Vince was the head of monetary affairs at the Fed for many years, serving both Alan Greenspan and Ben Bernanke. He knows implicitly how the accounts clear and how the accounting works, to the penny. He knows the currency itself is a case of monopoly. He knows the Fed, not ‘the market’ necessarily sets rates. He knows that, operationally, US Treasury securities function as interest rate support, and not to fund expenditures. He knows it all!
Carmen, Vince, please come home! I hereby offer my personal amnesty- come clean NOW and all is forgiven! As you well know, coming clean NOW will profoundly change the world. As you well know, coming clean NOW will profoundly alter the course of our civilization!
Carmen, Vince, either you believe in an informed electorate or you don’t!?
(feel free to distribute)
New York Times
Debt, Growth and the Austerity Debate
By: Carmen Reinhart and Kenneth Rogoff
Mike Konczal — Are Student Loans Becoming a Macroeconomic Issue?
If you asked economists looking at the data if student loans could be having a macroeconomic effect, especially through a financial burden on those that have them, they'd say that the actual percent of monthly income paying student loans hasn't changed all that much since the 1990s. They may be making larger lifetime payments, since they'll carry the debts longer, but that's a choice they are making, which could reflect positive or negative developments. Certaintly there's no short-term strain. So there aren't any economic consequences worth mentioning when it comes to student loans.
I always thought this approach had problems....Truthout | News Analysis
Are Student Loans Becoming a Macroeconomic Issue?
Mike Konczal, Next New Deal
Salvatore Babones — Exploding the Debt Threshold Myth
"Lies, damned lies and statistics.''
Truthout | Op-Ed
Exploding the Debt Threshold Myth
Salvatore Babones | senior lecturer in sociology and social policy at the University of Sydney in Australia and an associate fellow at the Institute for Policy Studies (IPS) in Washington, DC
Salvatore Babones | senior lecturer in sociology and social policy at the University of Sydney in Australia and an associate fellow at the Institute for Policy Studies (IPS) in Washington, DC
Bill Mitchell — Buffer stocks and price stability – Part 1
I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to complete the text during 2013 (to be ready in draft form for second semester teaching). Comments are always welcome. Remember this is a textbook aimed at undergraduate students and so the writing will be different from my usual blog free-for-all. Note also that the text I post is just the work I am doing by way of the first draft so the material posted will not represent the complete text. Further it will change once the two of us have edited it.
This material was going to be in Chapter 12 on unemployment and inflation but I suspect we will put it into a separate Chapter given its centrality to understanding key aspects of the approach by Modern Monetary Theory (MMT) to price stability.
Chapter 13 – Buffer Stocks and Price Stability
13.1 IntroductionBill Mitchell – billy blog
Buffer stocks and price stability – Part 1
Bill Mitchell
Culture War in Israel Targets Ultra-Orthodox Jews
Turns out it is not some ex nihilo "culture war", but in reality our old friend austerity that is fomenting a war of sorts now currently in Israel.
A cultural war has erupted between Israel's rising political star and his ultra-Orthodox rivals. Newly minted Finance Minister Yair Lapid, hugely popular for opposing the long-standing preferential treatment enjoyed by the religious minority, is moving swiftly to slash state handouts to large families, compel lifelong seminary students to work and join the army, and remove funding for schools that don't teach math, science and English.
The religious - labeled "parasites" [Ed: WOW. Sieg heil! ] by one Lapid emissary this week - are crying foul. But they appear helpless, at least in the short run, to stop Lapid from pressing his agenda.
For most of the last three decades, the country's small ultra-Orthodox minority sat in governing coalitions, securing vast budgets for religious schools and automatic exemptions from mandatory military service for tens of thousands of young men in full-time religious studies.
Tapping into widespread resentment over these expensive perks, Lapid made a strong showing in January elections. His new Yesh Atid, or There is a Future, party finished second in the voting, turning him into the newest star of Israeli politics and propelling him to a senior position in the governing coalition.
The religious parties, meanwhile, were pushed into the opposition. Lapid, facing a yawning deficit, has moved quickly to drastically slash budgets favoring the ultra-Orthodox. "I say, let there be war," Lapid said in a speech Wednesday.
According to a draft of planned reforms viewed by The Associated Press, the Finance Ministry has proposed cutting in half government subsidies to religious schools that do not teach a core curriculum including math, science and English, and boosting funding for schools that do. It also seeks to allow subsidies for child day care only if both parents work - an effort to entice ultra-Orthodox men who study religious texts full time to join the job market.
A parliamentary committee headed by Yesh Atid Cabinet Minister Yaakov Peri also proposes cutting 30 percent of funding to ultra-Orthodox religious seminaries and introducing legislation to end most military draft exemptions, Israeli media reported this week.Looks like now Israel is caught up in this deranged austerity ideology and moron laborer/warrior class representatives within the Israeli government, perhaps acting under some sort of covetousness or jealous resentment, are threatening the means of subsistence of the religious intelligentsia there.
Can there really exist an "Israel" without this religious intelligentsia cohort within? Perhaps not.
This austerity may be a more serious threat to the true "Israel" than their aggressive human neighbors.
Al Jazeera — Spain protesters clash with police
Protesters hurl bottles at police in latest demonstrations triggered by anger at country's economic crisis.Al Jazeera
Spain protesters clash with police
Al Jazeera — Home-schooled students gain edge in US
Surveys show university students taught at home perform better than peers from conventional schools.Al Jazeera
Home-schooled students gain edge in US
Been tellin' ya school sucks. And it's a lot more than an "edge."
Thursday, April 25, 2013
IMF — back off fiscal tightening if it is cramping growth, and focus on medium term debt reduction
Major advanced economies need to balance supporting activity and grappling with old risks from structural weaknesses that weigh on growth. A slow but fairly steady private sector led recovery is in the making in the U.S., while recovery remains elusive in the euro area and Japan.
- While sentiment has improved, the top priority for the U.S. is to raise the debt ceiling in a timely manner and agree on a credible medium-term fiscal roadmap to bring down debt.
- In the euro area, monetary policy should remain accommodative and fiscal consolidation be properly paced. The foundations of monetary union should be made more secure. National authorities should fix frayed banking systems and rebuild competitiveness as required. Japan needs to balance upfront stimulus with more ambitious plans to bring down debt and structural reforms to put growth on a permanently higher plane.
- In its advice and analysis, the Fund will seek the right balance between supporting growth (including through monetary easing) and removing the millstone of high private and public debt.
IMF
Managing Director’s Global Policy Agenda – April 2013
Contradictory messaging. Read anything you want into it.
Managing Director’s Global Policy Agenda – April 2013
Contradictory messaging. Read anything you want into it.
Mario Queiroz — Portugal’s Carnation Revolution under the Shadow of the Troika
Political unrest rising in Portugal over the consequences of austerity.
Inter Press Service
Portugal’s Carnation Revolution under the Shadow of the Troika
By Mario Queiroz
Politics as an Automatic Stabilizer App?
Commentary by Roger Erickson
News Reporter = Worst Job in 2013?
News Reporter = Worst Job in 2013?
Time to Outsource, Then Automate? :(
So, the Koch bros are buying newspapers?
Their assumed arbitrage op is that labor will get tight enough that starving journalists will soon PAY to have their articles published.
(News as an automated lottery? with "winners" rewarded by elites?)
(Does that sound vaguely familiar?)
Once labor rates follow interest rates into negative territory ... cannibalism could soon follow? That can be automated too. By drones, no less.
Note Michael Frayn’s 1965 comic The Tin Men:
It is set at an Institute for the Automation of Human Life and the characters are constantly conjecturing the possibilities
“When you come to think about it, you could programme a computer to appreciate the cricket results for you — or even to appreciate the actual automated game as the playing computer played it. … . So far as I can see, appreciation is a finite activity, which means it’s a programmable one. The spectator is eminently replaceable.”
“But ... the spectator enjoys watching.”
“He may I suppose, but that’s rather beside the point. The hydraulic press operator who is replaced by a computer when his factory is automated may enjoy operating a hydraulic press. But that doesn’t save him from being replaced. A human being, my dear Rowe, is far too complex and expensive an instrument to be wasted on simple finite tasks like operating presses, filling up football pools and watching cricket. The whole world of sport, I believe, will gradually become an entirely enclosed one, unvisited by any human being except the maintenance engineers. Computers will play. Computers will watch. Computers will comment. Computers will store results, and pit their memories against other computers in sports quiz programmes on the television organised by computers and watched by computers.”
Why not turn Politics into an Automatic Stabilizer App? Now THAT would make sense. The lobbyists too. Then we complex & expensive humans could get back to exploring our options and SELECTING from them 100% of the time.
So, the Koch bros are buying newspapers?
Their assumed arbitrage op is that labor will get tight enough that starving journalists will soon PAY to have their articles published.
(News as an automated lottery? with "winners" rewarded by elites?)
(Does that sound vaguely familiar?)
Once labor rates follow interest rates into negative territory ... cannibalism could soon follow? That can be automated too. By drones, no less.
Note Michael Frayn’s 1965 comic The Tin Men:
It is set at an Institute for the Automation of Human Life and the characters are constantly conjecturing the possibilities
“When you come to think about it, you could programme a computer to appreciate the cricket results for you — or even to appreciate the actual automated game as the playing computer played it. … . So far as I can see, appreciation is a finite activity, which means it’s a programmable one. The spectator is eminently replaceable.”
“But ... the spectator enjoys watching.”
“He may I suppose, but that’s rather beside the point. The hydraulic press operator who is replaced by a computer when his factory is automated may enjoy operating a hydraulic press. But that doesn’t save him from being replaced. A human being, my dear Rowe, is far too complex and expensive an instrument to be wasted on simple finite tasks like operating presses, filling up football pools and watching cricket. The whole world of sport, I believe, will gradually become an entirely enclosed one, unvisited by any human being except the maintenance engineers. Computers will play. Computers will watch. Computers will comment. Computers will store results, and pit their memories against other computers in sports quiz programmes on the television organised by computers and watched by computers.”
Why not turn Politics into an Automatic Stabilizer App? Now THAT would make sense. The lobbyists too. Then we complex & expensive humans could get back to exploring our options and SELECTING from them 100% of the time.
Matt Taibbi — Everything Is Rigged: The Biggest Price-Fixing Scandal Ever
Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything.
You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."
That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps....Rolling Stone
Moreover, it's increasingly clear that both the criminal justice system and the civil courts may be impotent to stop them, even when they do get caught working together to game the system.
If true, that would leave us living in an era of undisguised, real-world conspiracy, in which the prices of currencies, commodities like gold and silver, even interest rates and the value of money itself, can be and may already have been dictated from above. And those who are doing it can get away with it. Forget the Illuminati – this is the real thing, and it's no secret. You can stare right at it, anytime you want....
The only reason this problem has not received the attention it deserves is because the scale of it is so enormous that ordinary people simply cannot see it. It's not just stealing by reaching a hand into your pocket and taking out money, but stealing in which banks can hit a few keystrokes and magically make whatever's in your pocket worth less. This is corruption at the molecular level of the economy, Space Age stealing – and it's only just coming into view.
Everything Is Rigged: The Biggest Price-Fixing Scandal Ever
Matt Taibbi
Talk about price-fixing. Delegating a democratic country's monetary policy to politically independent central banks is bad enough, but allowing a few bankers to fix prices with impunity is beyond the pale, especially when the AG tells them that they won't be prosecuted. Same in UK. All investigations have to be approved by George Osborne: Revealed: George Osborne’s secret veto on fraud inquiries. Wall Street and the City are
Monopoly capitalism is about price setting rather than price taking. When externalities, transaction costs, and economic rent are ignored in economic models, it's GIGO and transparently just a ploy to dupe the rubes and separate them from their money and labor.
Blindly Downsizing, Or Optimally Re-Directing Continuous National Growth? What's It Gonna Be?
Commentary by Roger Erickson
Business Board: DOD Should Establish Downsizing Team To Cut Costs
Oversimplistic, and missing the bigger point?
"To deal with tough economic times, the Pentagon should establish a new semi-independent team to develop a detailed downsizing plan for how to aggressively cut costs, according to a Defense Business Board task force."
Should? Did they say SHOULD?
Why not go for NOT-BROKE? Form a public-initiative group to focus on expanding and optimally directing fiat, not on arbitrarily shrinking both net cultural goals AND net public-initiative?
Business Board: DOD Should Establish Downsizing Team To Cut Costs
Oversimplistic, and missing the bigger point?
"To deal with tough economic times, the Pentagon should establish a new semi-independent team to develop a detailed downsizing plan for how to aggressively cut costs, according to a Defense Business Board task force."
Should? Did they say SHOULD?
Why not go for NOT-BROKE? Form a public-initiative group to focus on expanding and optimally directing fiat, not on arbitrarily shrinking both net cultural goals AND net public-initiative?
Wait ... There's An Even BIGGER Fraud?
Commentary by Roger Erickson
Everything Is Rigged: The Biggest Price-Fixing Scandal Ever
Biggest? Latest? Last? You'll have to excuse an increasingly jaded public for their fading interest. Back on the farm, once the service animals were consuming more than they were worth ... they were just taken out behind the shed and eliminated. Seriously, for most people, the details are something they actively do NOT want to know. Only whether a service sector is serving ... or not.
Meanwhile, since this has been going on for years - if not decades - and generations of pols & financial regulators & lobbyists (not just the many employees at the perp institutions) obviously knew about it .... it also makes you wonder, what FINALLY prompted the outing? Some initial musings.
1) They've gone on to an even better scam?
Everything Is Rigged: The Biggest Price-Fixing Scandal Ever
Biggest? Latest? Last? You'll have to excuse an increasingly jaded public for their fading interest. Back on the farm, once the service animals were consuming more than they were worth ... they were just taken out behind the shed and eliminated. Seriously, for most people, the details are something they actively do NOT want to know. Only whether a service sector is serving ... or not.
Meanwhile, since this has been going on for years - if not decades - and generations of pols & financial regulators & lobbyists (not just the many employees at the perp institutions) obviously knew about it .... it also makes you wonder, what FINALLY prompted the outing? Some initial musings.
1) They've gone on to an even better scam?
(& we're underfunding the Control Fraud Harriers)
2) Or, if we're in luck, they've collectively decided they'd gone too far, and sawn half-through the branch they're sitting on?
(Seems doubtful. Why wouldn't they just slow down & keep quiet?)
3) The greed has won, and now they're fighting - IN PUBLIC - over the last crumbs?
(Consensus of cynics.)
2) Or, if we're in luck, they've collectively decided they'd gone too far, and sawn half-through the branch they're sitting on?
(Seems doubtful. Why wouldn't they just slow down & keep quiet?)
3) The greed has won, and now they're fighting - IN PUBLIC - over the last crumbs?
(Consensus of cynics.)
Michel Bauwens — Four Scenarios for the Future of Capitalism
"The Great Rebirth: The Future of Capitalism, Economy, and Exchange." Christopher Manfredi. Journal of Futures Studies, March 2013, 17(3): 127-130
P2P Foundation's Blog
Four Scenarios for the Future of Capitalism
posted by Michel Bauwens
Umair Haque — Let's Save Great Ideas from the Ideas Industry
What was your favorite TED talk this year? I found both Amanda Palmer's and Nilofer'sspectacular. Yet, this year, TED made me wonder about Great Ideas, and our relationship with them. And I began to ask myself: even if we enjoy a great TED talk, should the rise of "TED thinking" concern us just a tiny bit?
Let me be very clear: I use that phrase not to refer to the extravaganza that is TED, and though I use TED as an example, this post isn't really just about TED — but let the phrase "TED thinking" serve as a shorthand for the way we've come to think about ideas and how we share them, whether it's through an 18-minute talk, an 800-word blog post, or the latest business "best-seller." Hence, this post isn't really about TED (so please don't leave me raging comments saying "But my favorite TED talk!!!"). "TED thinking" is just a symptom: and the underlying syndrome is our broken relationship with Great Ideas. Herewith, my tiny argument:
TED thinking assumes complex social problems are essentially engineering challenges, and that short nuggets of Technology, Edutainment, and Design can fix everything, fast and cheap. TED thinking's got a hard determinism to it; a kind of technological hyperrationalism. It ignores institutions and society almost completely. We've come to look at these quick, easy "solutions" as the very point of "ideas worth spreading."
But this seems to me to miss the point and power of ideas entirely. Einstein's great equation is not a "solution"; it is a theory — whose explanations unravel only greater mysteries and questions. It offers no immediate easy, quick "application" in the "real world," but challenges us to reimagine what the "real world" is; it is a Great Idea because it offers us something bigger, more lasting, and more vital than a painless, disposable "solution."
Yet in the eyes of TED thinking, it is of limited, perhaps little, value....The Harvard Business Review — HBR Blog Network
Let's Save Great Ideas from the Ideas Industry
by Umair Haque | Director of Havas Media Labs
(ht Michel Bauwens at P2P Foundation)
Stephen Reid — Mythbusters: “The private sector is more efficient than the public sector”
The myth
“The private sector is efficient and dynamic; public sector is costly and slow. The more we can get the private sector to run things the better.”NEF — New Economics Foundation
Mythbusters: “The private sector is more efficient than the public sector”
Stephen Reid | Organiser, New Economy Organisers Network
Privatizing economic areas that are essentially monopolies or at best oligopolies does not increase efficiency or "save taxpayers money."
Lacking an actually competitive environment without exorbitant entry costs, the more efficient solution is more often government than private enterprise. Otherwise, monopoly rent is extracted and needless subsidies provided.
circuit — A kind word for Paul [Krugman]
This is why I continue to think that the ones who are really to blame are the politicians. The economic studies provided cover for their set of policy actions.
Anyway, there's no matching Prof. Krugman's performance these last few months. Not only has his forecasts been right on, but his retrospective look at why things unfolded the way they did has been downright flawless.Fictional Reserve Barking
A kind word for Paul
circuit
Credit where credit is due.
Brian McConnell — Solar Energy : This Is What A Disruptive Technology Looks Like
Medium.com
Solar Energy : This Is What A Disruptive Technology Looks Like
Brian McConnell
(h/t Energy Bulletin)
(h/t Energy Bulletin)
Chris Dillow — On Wage-Led Growth
Interesting argument implying a need for either a job guarantee or basic income guarantee owing to the chronic inability of modern capitalism to provide full employment.
Perhaps the ability of capitalism to provide full employment requires freakish historical circumstances of a sort we saw only in the 50s and 60s. And perhaps it is only wishful thinking by both rightists and social democrats that stops them seeing this.Stumbling and Mumbling
On Wage-Led Growth
Chris Dillow | Investors Chronicle (UK)
Simon Johnson — Big Banks’ Tall Tales
As Bill Dudley, the president of the New York Federal Reserve Bank, put it recently, using the delicate language of central bankers, “The impediments to an orderly cross-border resolution still need to be fully identified and dismantled. This is necessary to eliminate the so-called ‘too big to fail’ problem.”
Translation: Orderly resolution of global megabanks is an illusion. As long as we allow cross-border banks at or close to their current scale, our political leaders will be unable to tolerate their failure. And, because these large financial institutions are by any meaningful definition “too big to fail,” they can borrow more cheaply than would otherwise be the case. Worse, they have both motive and opportunity to grow even larger.
This form of government support amounts to a large implicit subsidy for big banks. It is a bizarre form of subsidy, to be sure, but that does not make it any less damaging to the public interest. On the contrary, because implicit government support for “too big to fail” banks rises with the amount of risk that they assume, this support may be among the most dangerous subsidies that the world has ever seen. After all, more debt (relative to equity) means a higher payoff when things go well. And, when things go badly, it becomes the taxpayers’ problem (or the problem of some foreign government and their taxpayers).Project Syndicate
Simon Johnson, a former chief economist of the IMF, is a professor at MIT Sloan, a senior fellow at the Peterson Institute for International Economics
Out of paradigm about "taxpayers," but it shows that cross-border resolution is an issue with transnationals.
Out of paradigm about "taxpayers," but it shows that cross-border resolution is an issue with transnationals.
Paul Solman — Will We Ever Get to 'Full Employment'?
When we talk about "full employment" of 4 percent (or even 6 percent) these days, do we mean the same thing we used to back when?
The answer is no. The government has changed the way it measures unemployment and as a result, some Americans who used to be counted as officially unemployed no longer are -- because they haven't looked for work recently enough. That's why I devised our monthly U-7 statistic, which includes everyone who says they want to be working full-time, but aren't. Compared to the official unemployment number of 7.6 percent, U-7 is running at 16 percent.
There's another significant difference between official unemployment today, compared to that statistic years ago. As we explained in a story back in 2003, many more Americans are now on either disability or in prison than in previous years. Were they out on the street looking for work, today's official unemployment number, as well as our "Solman Scale" U-7, would be several percentage points higher than they are.PBS NewsHour — Business Desk
Will We Ever Get to 'Full Employment'?
Paul Solman
David Corn — Secret Tape: Top GOP Consultant Luntz Calls Limbaugh "Problematic"
Another "secret tape."
Mother Jones
Secret Tape: Top GOP Consultant Luntz Calls Limbaugh "Problematic"
David Corn
Peter Murray — Chinese Restaurant Owner Says Robot Noodle Maker Doing “A Good Job!”
Robots at the gate. Gives "worker productivity" new meaning.
SingularityHUB
Chinese Restaurant Owner Says Robot Noodle Maker Doing “A Good Job!”
Peter Murray
(h/t Mish at Mish's Global Economic Trend Analysis)
Beatrice Cherrier — The rise of economics as engineering, Parts I and II
The rise of the economist as engineer is, economists and historians say, an essential characteristic of the development of economics in the postwar period. In 2006, Greg Mankiw wrote a much commented paper in which he argued that one brand of macroeconomics (neokeynesian) is akin to engineering, by which he meant “solve practical problem,” and “help policmakers devise better policies to cope with the BC [budget constraint].” Another brand is rather done by (new classical) scientists, he explained, and is about “propos(ing) and test(ing) elegant theories.” He traced the first tradition to Keynes, its theoretical reformulation by Hicks and Modigliani, to the large-scale applied macromodels of Klein, Eckstein and Ando-Modigliani, and to the neo-keynesians. The second stream of course reflects the Lucas-Sragent-Wallace-Kydland-Prescott family tree.That's either BS or pretty bad engineering. While I am not an engineering, I know enough about engineering method to know that none of these MIT economists remotely resemble engineers other than as members of the MIT community. That's not enough. For one thing, engineers get that there is feedback.
But this is something that we should be looking at and debating. For example:
One element missing from dicussions of MIT-style policy making is how they handled values. Using sophisticated techniques doesn't shelter from the need to work with some ends/evaluation and decision criteria. And the nature, relevance and implementability of such criteria, whether Pareto optimality, surplus analysis, social welfare functions, social choice functions were hotly debated in the forties and fifties.Welfare economics was then looking for new foundations, if not disagregating, and Samuelson was a major player in these transformations. MIT policy-making style is therefore related to the applied tradition there, in particular the postwar development in development economics and public economics.INET — History of Economics Playground
The rise of economics as engineering I : setting the scene
The rise of economics as engineering II: a case study
Beatrice Cherrier
Jonathan Krajack — Guest Post: Austerity Is A Crime Against Humanity
Guest Post: Austerity Is A Crime Against Humanity
by Jonathan Krajack
In US criminal law, "means, motive, and opportunity" is a popular cultural summation of the three aspects of a crime that must be established before guilt can be determined in a criminal proceeding. Respectively, they refer to:
(1) the ability of the defendant to commit the crime (means)
(2) the reason the defendant felt the need to commit the crime (motive)
(3) whether or not the defendant had the chance to commit the crime (opportunity)
Wherever there is unemployment above and beyond Frictional Unemployment (people in the process of changing jobs) and Voluntary Unemployment (people who choose to not find work for various personal reasons), it is called Involuntary Unemployment (people who are unemployed, looking for work, but can’t find a job).
It’s important to note that just because there are a few minimum wage jobs at restaurants, Walmarts, gas stations, car washes, etc… those are not really appropriate substitutes for people that are Involuntarily Unemployed. If your particular skill set is framing homes, or handling the financial accounting of a business or organization, or teaching elementary education, and so on, then just because there are various minimum-wage jobs available does not mean “you’re just not looking hard enough for a job.”
When there are tens of millions of Involuntarily Unemployed people, as there are today in the United States, the problem is structural to the system: businesses simply are not busy enough to maintain the population near Full Employment and State/Local governments do not have sufficient tax revenue to hire enough public sector workers. There are many factors that contribute to Involuntary Unemployment, but the most important factor is the level of spending in the economy.
Spending = Sales = Jobs
And high unemployment naturally generates insufficient tax revenue for State/Local public sector. More people working = more tax revenue. Less people working = less tax revenue.
If there is insufficient spending in the economy, there will an insufficient amount of jobs being offered, both in the private sector and in the public sector, and the consequence will be Involuntary Unemployment.
In such a situation, a public policy of Austerity, i.e. increasing taxes and/or decreasing government spending, is a crime against humanity. It pulls money and spending out of the economy when the economy needs more money and spending. Austerity, i.e. pulling money out of the economy, makes Involuntary Unemployment worse. It's a policy option that specifically denies people a basic right to be able to find a reasonable paying job.
MEANS refers to the ability of the defendant to commit the crime. So, who has the ability to deny the economy sufficient money and spending to maintain near-Full Employment?
MOTIVE refers to the reason the defendant felt the need to commit the crime. So, who has a reason to deny the economy sufficient money and spending to maintain near-Full Employment?
OPPORTUNITY refers to whether or not the defendant had the chance to commit the crime. So, who has the opportunity to either directly increase taxes and/or cut spending, or influence those people that do directly have that opportunity?
Who is our Person of Interest?
Who is our Suspect?
Who has the means, motive, and opportunity?
by Jonathan Krajack
In US criminal law, "means, motive, and opportunity" is a popular cultural summation of the three aspects of a crime that must be established before guilt can be determined in a criminal proceeding. Respectively, they refer to:
(1) the ability of the defendant to commit the crime (means)
(2) the reason the defendant felt the need to commit the crime (motive)
(3) whether or not the defendant had the chance to commit the crime (opportunity)
Wherever there is unemployment above and beyond Frictional Unemployment (people in the process of changing jobs) and Voluntary Unemployment (people who choose to not find work for various personal reasons), it is called Involuntary Unemployment (people who are unemployed, looking for work, but can’t find a job).
It’s important to note that just because there are a few minimum wage jobs at restaurants, Walmarts, gas stations, car washes, etc… those are not really appropriate substitutes for people that are Involuntarily Unemployed. If your particular skill set is framing homes, or handling the financial accounting of a business or organization, or teaching elementary education, and so on, then just because there are various minimum-wage jobs available does not mean “you’re just not looking hard enough for a job.”
When there are tens of millions of Involuntarily Unemployed people, as there are today in the United States, the problem is structural to the system: businesses simply are not busy enough to maintain the population near Full Employment and State/Local governments do not have sufficient tax revenue to hire enough public sector workers. There are many factors that contribute to Involuntary Unemployment, but the most important factor is the level of spending in the economy.
Spending = Sales = Jobs
And high unemployment naturally generates insufficient tax revenue for State/Local public sector. More people working = more tax revenue. Less people working = less tax revenue.
If there is insufficient spending in the economy, there will an insufficient amount of jobs being offered, both in the private sector and in the public sector, and the consequence will be Involuntary Unemployment.
In such a situation, a public policy of Austerity, i.e. increasing taxes and/or decreasing government spending, is a crime against humanity. It pulls money and spending out of the economy when the economy needs more money and spending. Austerity, i.e. pulling money out of the economy, makes Involuntary Unemployment worse. It's a policy option that specifically denies people a basic right to be able to find a reasonable paying job.
MEANS refers to the ability of the defendant to commit the crime. So, who has the ability to deny the economy sufficient money and spending to maintain near-Full Employment?
MOTIVE refers to the reason the defendant felt the need to commit the crime. So, who has a reason to deny the economy sufficient money and spending to maintain near-Full Employment?
OPPORTUNITY refers to whether or not the defendant had the chance to commit the crime. So, who has the opportunity to either directly increase taxes and/or cut spending, or influence those people that do directly have that opportunity?
Who is our Person of Interest?
Who is our Suspect?
Who has the means, motive, and opportunity?
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