I'm trying to think of the most charitable analogy for the wages of ignorance. Perhaps a blind bull in a fine-China shop, "trying" to do good? (That's still innocent fraud, since other feedback channels would soon inform even the blind of their circumstances & ongoing outcomes.)
Erskine Bowles illustrates the outcome of pursuing static assets, while ignoring dynamic assets - for whatever reason, innocent or purposeful. However the inevitable outcome remains net looting, either directly or indirectly. No matter how many, purely static assets investors hoard, if static assets are hoarded in isolation from dynamic assets, they cause 100x more loss, by constraining group options. Static assets are eventually useless unless leveraged, and "put to work." The economics of any social entity is a 2-stage optimization of static as well as dynamic assets, not of either in isolation. What part of that do we educate OUT of our citizens today? The results of not knowing that simple fact are people like Erskine Bowles - and the fractured paradigms he promotes - simplistically alluring, but fatally fractured. If only we could get Erskine to just stop talking too. Or better yet, achieve a nation where people just stopped listening?
Until then, does something seem surreal about Erskine Bowle's resume?
Mr. Bowles served as the director of the Small Business Administration, deputy chief of staff (1994-95) and chief of staff (1996-98) under the Clinton Administration. He served as president of the University of North Carolina system from 2006 until 2010. Most recently, he was appointed by President Barack Obama to serve as co-chair of the National Commission on Fiscal Responsibility and Reform with fellow CRFB board member Senator Alan Simpson. Mr. Bowles is a graduate of the University of North Carolina at Chapel Hill and Columbia University’s Graduate School of Business and began his business career at Morgan Stanley & Co. in New York. He later returned home to North Carolina, where he founded and served as chairman and CEO of a Charlotte-based investment banking firm.
ps: There are signs of hope. Erskine & Bowles achieved a "consensus" of only 11 out of 18 members of their own, staged National Commission on Fiscal Responsibility and Reform. That's not much of a consensus! That result actually implies that there's still hope for the USA.
7 comments:
I thought it was "Bowels"...
Roger:
"outcome of pursuing static assets, while ignoring dynamic assets"
"Static Assets": Stock
"Dynamic Assets": Flow
The key metrics are flows...just noticed this analogy (might take me a while but I can get it eventually ;)... good stuff here.
rsp,
No matter how many, purely static assets investors hoard, ... Rodger Erickson
The solution to private money hoarding is to allow anyone to create private money and to grant no one government privileges with respect thereto.
The solution to government money hoarding is simply more deficit spending by the monetary sovereign.
Real resource hoarding is another matter.
I wish Erskine Bowles would review WM's recent NYC presentation. It would be priceless to observe Erskine's reaction & analysis.
Fantastically useful summary of fiat currency operations, from Warren Mosler.
http://www.moslereconomics.com/wp-content/graphs/2013/07/July-18-Presentation.pdf
http://moslereconomics.com/wp-content/graphs/2013/07/BNP-Macro-School.pdf
@ F. Beard,
Yes, well said! Exactly the problems I was trying to illustrate. However our respective views on solutions seem to differ.
"The solution to private money hoarding is to allow anyone to create private money and to grant no one government privileges with respect thereto."
Well, yes, that's exactly what fiat currency means. However, the practical operational issues remain the same: input/outcome evaluation. Are the creditees reliable, and the creditor's stated currency requirement socially adaptive? In short, groups have to regulate inter-party fraud, since the guaranteed financialization of private transactions involve distributed risks.
Licensed institutions that channel distributed feedback in order to regulate the systemic utility of local liquidity transactions - that's exactly what banks were designed to be. The problem then just reduces to regulating the regulators. We need all citizens to learn, early on, that serious fraud moved from currency manipulation to policy manipulation, i.e., what Bill Black calls "Control Fraud."
"The solution to government money hoarding is simply more deficit spending by the monetary sovereign."
That's overly simplistic. The solution to PRIVATE hoarding of public currency is also simply more public initiative spending. (see http://seekingalpha.com/article/1050011-fiscal-cliff-and-deficit-conversation-misses-the-point#comment-12560061 ) That step inflates away the private incentive to hoard fiat instead of investing it.
"Real resource hoarding is another matter."
Indeed. There's always a thin line between private or public resource hoarding and self-assisted group suicide. It's an odd conundrum, that we practice systemically that which we outlaw locally.
However our respective views on solutions seem to differ. Rodger Erickson
Yes. I maintain that NO ONE is worthy of his neighbor's purchasing power since that is theft. So that rules out any government support for credit creation. But what absolute need is there for private money created as Liabilities (with all the attendant problems of ill-liquidity and usury) when private money can be created as Equity, which requires neither usury nor Liability redemption?
Of course truly private credit creation should be allowed too.
ANother way to look at Static vs dynamic assets and maybe more descriptive and with an economic language: Storage value of money vs. exchange value.
Storage use of money destroys its value as exchange mean.
WHile all value as storage value money gets only from exchange use but using money as storage value (out of circulation) destroys its use as exchange value.
Erskine Bowles knows full well what he up to. He's a Morgan Stanley grad.
There has always been sort of the whiff of the "made man" about that guy. When he became Clinton's COS he didn't seem to have much of a resume, but nobody questioned it. It was like a call came from upstairs (from Bob Rubin?) saying this is the guy. He seems a lot like Tim Geithner. Someone very high up really loves him.
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