Monday, September 30, 2013

Finding the Fewest Adjustments to National Culture That Trigger the Most Improvement in National Adaptive Rate

Commentary by Roger Erickson

Actually, make that the "Leanest/Fastest/Cheapest" adjustments.

The Strange Path From Joshua Chamberlain to WWI to Smedley Butler, Back to and Off the Gold Std, and on to FDR, Carroll Quigley, Shewhart, Deming, John Boyd ... and to sane currency and other operations.

Dear readers,

I admit never learning about any of these names back in public school in Oregon - except WWI and FDR of course. The other names I heard of ONLY long after earning a PhD, and only because of my own curiosity about the absolutely FUBAR, general welfare of the people, despite our nation's staggering rate of stockpiling insights that remain largely academic to the very citizens who could potentially wield them all!

Joshua Chamberlain, of course, enunciated the responsibility of preparing ourselves to meet unpredictable challenges (don't know if he ever knew about Darwin). Walter Shewhart conceptualized scalable network process control by 1926, just as much of the following history was starting to unfold. Shewhart named his "network adjustment" overview the "take-responsibility" PDSA cycle, which Deming endlessly promoted to a clueless electorate, and John Boyd later still renamed as the reactive OODA Loop, thereby allowing military officers everywhere to dig deep into the HOW of "network adjustment" without ever having to ask the essential question, "WHY" - which of course allows them to safely leave policy to the, very, sob!, bought-&-paid-for politicians which Smedley Butler had long ago lamented as the missing piece in a broken OODA LOOP. Boyd learned his own lesson, as he systematically left behind various strategy levels and developed increasing frustration with the process of policy development and formation of national intent. You have to wonder whether Boyd ended up agreeing with Smedley, that perfecting war is only perfecting a racket, for others.

Astoundingly, ALL these adventures in scalable, adaptive network operations occurred in near complete isolation from completely parallel national policy events literally screaming for sentient intervention! If war is too important to be left to the generals, isn't EVERY process too important to be left to the presumed local-process Central Planners?

While the legacy of Chamberlain/Smedley/Shewhart/Deming/Boyd were evolving, a parallel but isolated line of drivers was simultaneously beating the public mule with a different set of 2x4s. From FDR to Obama, a succession of "prominent lobbyists" were comprised of a remarkably small cast of characters involved in leading countries cyclically on/off the royalty/gold/fiat/TBTJ currency and ideology standards! And, they did it all in the name of anti-Central-Planning Central Planning!

You would NOT think a sentient electorate could even make up such a tale, as a way to divert it's members from forming group-intelligence from the mere sum of gang intellects! Nevertheless, here we are, and too few are listening to too many. As usual, that leaves far too many listening to too few.

Today, we as a people have again achieved contact with something we were seemingly absolutely dedicated to ignoring ... CONTEXT. A context which is inevitably slapping the entire electorate upside the head, with both a hard right and a stiff left jab to the mirror. Cuts have been opened, flowing blood is blurring views, and the public eye is nearly swollen shut from all the self-inflicted mayhem. How long can we go on pummeling ourselves, and stay on our feet? Who says shadows can't box back, and pin ourselves in a corner? And it's not even the 5th round! Does anyone still think the USA can last 12 rounds of cultural adjustment?

Now for the coup de graceless. A reminder that all these ignored events and processes were always linked, by a collective will to ignore - if nothing else -  thereby keeping the quality of our distributed decision-making from taking more responsibility for our own group outcomes.

In response to a recent post, reader John Hemington wrote the following, that puts the final, linking touches on issues that persisted in existing, in parallel, maddeningly un-linked.


"I had not seen this particular set of information, but this was an effort which had been waged since the mid-to-late 1800s by Cecil Rhodes and subsequently by Lord Milner and his “Kindergarten” which grew into the Round Table groups in England, the US, Canada, Australia, New Zealand and South Africa. It was this group which originally established the Council on Foreign Relations in New York to further this idea of unifying (at that time) all of the English speaking nations of the world in one big union. This effort ultimately failed, but the impetus behind it never really left the room.

A great source for this, by the way, is Carroll Quigley’s amazing 1,378-page history lecture, Tragedy and Hope: A History of the World in Our Time, published in 1966, as well as his earlier written but posthumously published The Anglo-American Establishment. As far as I am aware, Quigley is the only major historian to have focused his studies on the operations of the ruling elite, something he did more out of admiration and a sense that no one had adequately documented their efforts. Most elites would, of course, never sponsor and pay for such research into their operations. Quigley was the real deal. He taught at Harvard, Princeton and Georgetown; and was, in fact, Bill Clinton’s history professor at Georgetown. Here is a quote from Tragedy and Hope which explains what our rulers were planning for us in 1919, but hadn't been able to accomplish until recently:

Page 323-325: Modifications of productive and commercial organization and of financial practices made it almost impossible after 1919 to restore the financial system of 1914. Yet this is what was attempted. Instead of seeking to set up a new financial organization adapted to the modified economic organization, bankers and politicians insisted that the old prewar system should be restored. These efforts were concentrated in a determination to restore the gold standard as it had existed in 1914.

In addition to these pragmatic goals, the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank of International Settlements (BIS) in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations. Each central bank, in the hands of men like Montagu Norman of the Bank of England, Benjamin Strong of the New York Federal Reserve Bank, Charles Rist of the Bank of France, and Hjalmar Schacht of the Reichsbank sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.

In each country the power of the central bank rested largely on its control of credit and money supply. In the world as a whole the power of the central bankers rested very largely on their control of loans and of gold flows. In the final days of the system, these central bankers were able to mobilize resources to assist each other through the BIS, where payments between central banks could be made by bookkeeping adjustments between the accounts which the central banks of the world kept there. The BIS as a private institution was owned by the seven chief central banks and was operated by the heads of these, who together formed its governing board. Each of these kept a substantial deposit at the BIS and periodically settled payments among themselves (and thus between major countries of the world) by bookkeeping in order to avoid shipments of gold. They made agreements on all the major financial problems, especially in reference to loans, payments, and the economic future of the chief areas of the globe.

The BIS is generally regarded as the apex of the structure of financial capitalism whose remote origins go back to the creation of the Bank of England in 1694 and the Bank of France in 1803. As a matter of fact its establishment in 1929 was rather an indication that the centralized world financial system of 1914 was in decline. It was set up rather to remedy the decline of London as the world’s financial center by providing a mechanism by which a world with three chief financial centers in London, New York, and Paris could all operate as one   . . .

And also this about fiat money:

Page 534-535 “All this served to create more highly organized and more self-conscious interest blocs in American life, especially among farmers and labor, but it did not represent any victory for unorthodox financing, the real key to either monopoly capitalism or to a managed pluralist economy. The reason for this was that the New Deal, because of President Roosevelt, was fundamentally orthodox in its ideas on the nature of money. Roosevelt was quite willing to unbalance the budget and to spend in a depression in an unorthodox fashion because he had grasped the idea that lack of purchasing power was the cause of the lack of demand which made unsold goods and unemployment, but he had no idea of the causes of the depression and had quite orthodox ideas on the nature of money. As a result, his administration treated the symptoms rather than the causes of the depression and, while spending unorthodoxly to treat these symptoms, did so with money borrowed from the banks in the accepted fashion. The New Deal allowed the bankers to create the money, borrowed it from the banks, and spent it. This meant that the New Deal ran up the national debt to the credit of the banks, and spent money in such limited fashion that no drastic reemployment of idle resources was possible.

One of the most significant facts about the New Deal was its orthodoxy on money. For the whole twelve years he was in the White House, Roosevelt had statutory power to issue fiat money in the form of greenbacks printed by the government without recourse to the banks. This authority was never used. As a result of such orthodoxy, the depression’s symptoms of idle resources were overcome only when the emergency of war in 1942 made it possible to justify a limitless increase in the national debt by limitless borrowing from private persons and the banks. But the whole episode showed a failure to grasp the nature of money and the function of the monetary system, of which considerable traces remained in the postwar period.

One reason for the New Deal’s readiness to continue with an orthodox theory of the nature of money, along with an unorthodox practice in its use, arose from the failure of the Roosevelt administration to recognize the nature of the economic crisis itself. This failure can be seen in Roosevelt’s theory of “pump priming.” He sincerely believed, as did his secretary of the Treasury, that there was nothing structurally wrong with the economy, that it was simply temporarily stalled, and would keep going of its own powers if it could be restarted. In order to restart it, all that was needed, in New Deal theory, was a relatively moderate amount of government spending on a temporary basis. This would create purchasing power (demand) for consumer goods which, in turn, would increase the confidence of investors who would begin to release large unused savings into investment. This would, again, create additional purchasing power and demand, and the economic system would take off of its own power. The curtailment of the powers of finance and heavy would then prevent any repetition of the collapse of 1929.”

The inadequacy of this theory of the depression was shown in 1937 when the New Deal, after four years of pump priming and a victorious election in 1936, stopped its spending. Instead of taking off, the economy collapsed in the steepest recession in history. The New Deal had to resume its treatment of symptoms but now without hope that the spending program could ever be ended, a hopeless prospect since the administration lacked the knowledge of how to reform the system or even how to escape from borrowing bank credit with its mounting public debt, and the administration lacked the courage to adopt the really large-scale spending necessary to give full employment of resources. The administration was saved from this impasse by the need for the rearmament program followed by the war. Since 1947 the Cold War and the space program have allowed the same situation to continue, so that even today prosperity is not the result of a properly organized economic system but of government spending, and any drastic reduction in such spending would give rise to an acute depression.

Sorry to make this so long, but it is very interesting given today’s stream of events." John Hemington


"Interesting given today’s stream of events?"

I'll say. I'd discovered Roosevelt's "currency orthodoxy" by other means, and had read many Quigley excerpts over the years. Yet I am increasingly astounded that Quigley wrote about aspects of it so clearly, so long ago ... AND THAT ALMOST NO ONE CARED!

How many times can a whole electorate walk back and forth past the very context awareness it's so desperately seeking ... before that context reaches out and smacks us, out of pure frustration and resentment? Maybe we don't deserve the truth? Even IF it could eventually be forced upon us?

There are many, other, failures to keep a national PDSA/OODA LOOP chasing evolving context with adequate form or tempo. All those examples, however, only foster the core feeling that WE can't survive these challenges with THIS outfit, as is! That nagging fear OUGHT to focus our minds on systematically finding insanely better ways to train our own citizens ... to master our own context, regardless of how it changes.  Yet it hasn't yet. 

Historically, of course, humans used to do nothing but adapt to new contexts. Today, though, we seem to be in our own way, everywhere. We need either new frontiers to expand to, or we need to make our own organizational state the newest frontier, and expand our operational dimensions inward rather than just geographically outward.

Minimally, we need a steady stream of national conferences dedicated to finding the fewest adjustments to national culture that trigger the most improvement in national adaptive rate. Until then, the quality of our distributed decision-making will continue to decline. We're being shockingly complacent about this. The only thing we can't be complacent about is complacency itself? Until we act with more collective tempo, our national PDSA/OODA loop is just something we talk about, without practicing. Nations that pursue that approach just fall off the bike when finally forced to ride!

Meanwhile, the issues constraining our national mood and group intelligence go far deeper than a misunderstanding of currency operations alone. We face even more fundamental limitations related to how we as a supposedly sentient species:

* address and perceive diverse, simultaneously degenerate contexts (individual-to-group),
* build and KEEP group alignment to changing, common cause,
* orient to group and personal options, and
* explore them one and all.

If nothing else, the increasingly linked discussions above repeatedly remind me of a dark joke. "The best evidence for intelligent life in the universe is that it HASN'T tried to contact us."

It's quite obvious that there is a far better, far easier way for citizens. How do we reconsider key steps, and then recruit people to FOCUS on that option? That is the only question that really matters anymore. We're literally starving even while our table is piling up with excess beyond our imagination, and we're even killing one another over scraps, and just for position at the very table where everything but the scraps are being ignored!

Options, options everywhere, and nary a group-brain to think.

Randy Wray — Yes We Can Afford Prosperity! Guest Post

I just received a copy of the recent newsletter of the Health Services Employees, Local 768, District Council 37, AFSCME, AFL-CIO. It contains three articles by Michael Merrill, Dean of The Harry Van Arsdale Jr Center for Labor Studies, SUNY. Michael presents a good application of MMT to support his argument that our sovereign government can, and should, do more to promote shared prosperity.
While there are a couple of things I might have stated somewhat differently, there is so much in the newsletter that is worth reading that I thought it would be good to post each of Michael’s articles as guest blogs. In the first blog he counters the nonsense that Uncle Sam is too poor to do much to dig our country out of the deep hole in which it finds itself. In the second he presents the principles of MMT, with his own twists. In the final piece, he provides a brilliant defense of public sector workers.
So with Michael’s permission, here is part 1. I also encourage everyone to take a look at the newsletter: It is a nice antidote to the hysteria in Washington that threatens to shut down our government.
Economonitor — Great Leap Forward
Yes We Can Afford Prosperity! Guest Post
L. Randall Wray | Professor of Economics, UMKC

Bill Black — Why do Conservatives Oppose Prosecuting Elite Corporate Frauds?

There are at least four principles that virtually all conservatives purport to support – except when the potential defendant is socially elite. I have written previously about two of these principles on several occasions – the need for accountability and “broken windows” theory that calls for the prosecutors to make the prosecution of even minor street crimes a high priority if they have, even indirectly, a material effect on the community.
The third principle is that it is vital to punish in order to deter crime.....

The fourth principle, the one this column addresses, is the conservative love of “creative destruction” – a concept made famous by the economist Joseph Schumpeter. I have a simple proposition – there is no more creative destruction than putting a control fraud out of business through a prosecution, receivership, or enforcement action....
New Economic Perspectives
Why do Conservatives Oppose Prosecuting Elite Corporate Frauds?
William K Black | Associate Professor of Economics and Law at the University of Missouri – Kansas City

Double standard of justice. Why? Because the fundamental principle of conservatism is that some people are better than others, whereas the fundamental principle of liberalism is that all are created equal. As a result, there is no reforming conservatism. It is a pernicious doctrine that underlies and justified exploitation by an authoritarian elite, often in the name of "freedom."

Where I would disagree with Bill is where he asserts, "Control frauds are the ultimate betrayal of capitalism." I would say that they are the logical outcome of capitalism, which leads to elite capture of the state and exploitation of the people. Only by restraining and ultimately putting an end to capitalism can the situation be addressed in a lasting way. Otherwise, they'll be baaack, zombie-like. Cyclicality is part and parcel of capitalism.
Conservative scholars love (purported) “private market discipline.”  This is the theory that creditors will promptly destroy any control fraud.  The problem is that creditors actually fund the massive growth of control frauds rather than “disciplining” them.  Control frauds report extreme profits.  In the case of accounting control frauds these reported profits are fictional, but the creditors love to fund their growth.  In the case of other forms of control fraud the supra-normal profits produced by the fraud are real, so private market “discipline” is a complete oxymoron.  The creditors eagerly fund these other forms of control fraud because of their highly profitable frauds.

James Narron and David Skeie — Crisis Chronicles: The “Not So Great” Re-Coinage of 1696

In the late 1600s, England operated a bi-metallic monetary system of high-value gold coins and lower-value silver coins. In the early 1690s, however, the market price of silver began to rise at a time when the mint price of gold was higher than the market price. Thus, gold bullion was flowing to the mint while silver coins were flowing to the commodity markets. By 1695, nearly half of the silver specie was missing from coin in circulation in England as coins were “clipped” (shaved) with the result that their face value no longer reflected the metal content. Ironically, low-weight coin was still accepted for tax payments. In this post, we recount England’s efforts to remedy the “ill state of the coin of the kingdom” during the re-coinage of 1696.

Federal Reserve Bank of New York — Liberty Street Economics
Crisis Chronicles: The “Not So Great” Re-Coinage of 1696
James Narron and David Skeie

Peter Cooper — More on Budget Deficits

The previous post, which emphasized a currency-issuing government's capacity to deficit spend, generated lots of positive feedback but also numerous questions that perhaps should be addressed in a new post rather than getting buried in the comments. Although for regular readers the general answers to these questions will already be evident from previous posts and comments, it may be helpful for newer readers to expand on these answers. In doing so, I'll end up touching on a few points that have not been discussed explicitly in previous posts (though sometimes in the comments), which may make it of interest to regular readers as well. The post is a modified version of one of my contributions to the comments.
The following questions are addressed:
1. If the government is not like a household, how come Greece, Spain and Detroit have got themselves into financial trouble?
2. In what sense does government spending create money and taxes destroy it?
3. How can money created out of thin air have any value?
There were a couple of other interesting issues raised in the comments, but I will leave discussion of those to future posts.
More on Budget Deficits
Peter Cooper

The "Obtuseness of Intelligent People" - i.e., So Caught Up In Subtle Patterns That They Never See The Context For The Details.

Commentary by Roger Erickson

The strange story of Atlantica - 1939
    (hat tip GEI)
Change a few words, and this plot could fit the history of orthodox economics ... or any other religion.

There We Have It! Just Declare That "Growth" Itself Is Nominal! Why Didn't "We" Think Of That Sooner?

Commentary by Roger Erickson

Someone forgot to tell us that "thought, growth & adaptation" were themselves actually nominal?

Where's JJ Cale when we need to understand nominally cool?

   Living on Bankster Farce.
     Living on 
Bankster Farce.
   Well you know we've all been through it,
     When we peg GDP to it.
   Living on Bankster Farce. (apologies to Don Williams)

So, now it's clear. The mercurial logic of Mad Hatter Economics can be taken to mean whatever we want it to mean. Nothing ... or or even nothing less? :(

That's our preference, right up until our way collides with this thing called objective reality. Then what happens, when our preference rate can't make it through a dangerous reality curve?

Warren Mosler: "miles driven looks a lot like the labor force participation rate graph. ;)
And, going to 'per capita' shaves about 1% off all the growth rates.
Then, adjusting for probable productivity increases takes many reported growth rates down another 1% [or more]."

Russ Huntley: "Here are two charts of the structural declines in miles driven and household income."

Vehicle Miles Driven: Population-Adjusted Fractionally Off Its Post-Crisis Low

Living in a Tulsa asylum? Sending it's graduates to Congress?

Social-hari-kiri. Is that ritually stabbing your country in the Middle Class?

Commentary by Roger Erickson

Let's hope that we're witnessing the height of idiocy, before it sinks humans even further. "Erble" illogic has jumped the pond, and infected feeble wits in the land of Keynes. Can it be contained, and quarantined? Is there a cognitive vaccine against this group-brain-eating disease?

Make operational sense of the following pairing, if you can.

Osborne Pledges Tories Would [Start Depleting Net Private Savings] by 2020
"Chancellor of the Exchequer George Osborne pledged to [have the UK fiat currency issuer shrink the UK population's currency supply, by taking back more currency than it issues. When? By] 2020 to help bring down U.K. government [nominal] debt if his Conservative Party is re-elected in 2015."

   [Wow! Better run out & vote for the robber's platform, right away.]

But wait! There's more!!!

UK to Spend Hundreds of Millions on Cyber Attack Capability
"The U.K. will spend hundreds of millions of pounds hiring hundreds of computer experts to allow the nation to launch cyber attacks if necessary."

No problem! Just keep beating Middle Classes into CyberWarShares?

Words fail me. 

What could one possibly say to Mr. Osborne, if one did get a chance to perform a Turing test on the bloke?

After detecting such a huge dysfunction in the farce, the ghost of Wynn Godley may be attempting quantum mechanics to tunnel to a more intelligent sector ... out of pure shame & frustration. It's as though millions of pea brain erble-intellects suddenly cried out in ignorance, and started committing default hari-kiri. Truly, the farce can have a self-destructive effect on the lame brained.

Perhaps these little erbles might do better investing a tad in upgrading their own operating paradigm - and specifically in their ability to adjust it sooner than 80 years after their context changes?

Ya think?

Before deciding, read this whole sequence, on the economic consequences of the Gold Std in the UK. It's more than rather reminiscent of today.  And yes, Winston Churchill was a clueless weasel. Osborne could aspire to a bit higher ambition, at least when it comes to Policy Space and Policy Agility.

Social-hari-kiri. It really does involve ritually stabbing your country in the Middle Class. It's a horrifying consequence of the erble-illogic social prion semantic infection. The only known social vaccine is mandatory education in logic.

Jed Lewison — 69 Percent Polled Think GOP Acting Like "Spoiled Children" in Looming Government Shutdown

The Democrats need to be insisting very loudly on an up or down vote in the House on a clean bill as a democratic right. An overwhelming number of voters don't want a shutdown, business doesn't want a shutdown, the GOP establishment doesn't want a shutdown and very likely a majority of the House would vote against a shutdown if given the chance. Time to pressure the leadership to quit caving to the Tea Party extremists. President Obama should be leading the way in this call for action which is all to obvious in a democracy. The Hastert rule is subverting democracy to prevent politicians from taking a vote that they don't want to have to explain to constituents later, or risk a primary fight. Cowardice.

69 Percent Polled Think GOP Acting Like "Spoiled Children" in Looming Government Shutdown
Jed Lewison | Daily Kos

Unlearning Economics — A Question for Economists

Sincerely: do you believe your discipline has earned a status as a decider of policy? Which successes would you point to in order to highlight this? And how have non-economists fared in the policy arena compared to you?
A look at the record.

Unlearning Economics
A Question for Economists
An interesting throw-off: "And, as Ha-Joon Chang has pointed out, recently industrialised/industrialising countries such as South Korea, Japan and China have largely relied on bureaucrats and lawyers to form policy (and my sources tell me that the economists in China are inclined towards Sraffian economics)."
Also of interest from Unlearning recently:


Unlearning Economics

George Osborne promises a surplus

Here’s our serious plan for a grown-up country. First, sound money. The bedrock of any sustained recovery and improved living standards is economic stability.
That is what the hard work and sacrifice of the last three years has all been about.
In that time we have brought the deficit down by a third. And the British public know that whoever is elected will face some very hard choices.
Let me tell you the principles I bring to that task. Our country’s problem is not that it taxes too little.
It is that its government spends too much. So while no responsible Chancellor ever rules out tax changes, I think it can be done by reducing spending and capping welfare, not by raising taxes.
That’s my plan. And surely the lesson of the last decade is that it’s not enough to clean up the mess after it’s happened?
You’ve got to take action before it happens. It should be obvious to anyone that in the years running up to the crash this country should have been running a budget surplus.
That’s what we mean when we say they didn’t fix the roof when the sun was shining. Let us never make that same mistake again.
Never again should anyone doing my job be so foolish, so deluded, as to believe that they have abolished the age-old cycle of boom and bust.
So I can tell you today that when we’ve dealt with Labour’s deficit, we will have a surplus in good times as insurance against difficult times ahead.
Provided the recovery is sustained, our goal is to achieve that surplus in the next Parliament. 
That will bear down on our debts and prepare us for the next rainy day. That is going to require discipline and spending control.
For if we want to protect those things we care about, like generous pensions and decent healthcare, and buy the best equipment for the brave men and women who fight in our armed forces, all of us are going to have confront the costs of modern government – and cap working age welfare bills.
And only if we properly control public expenditure will we be able to keep lowering taxes for hardworking people in a way that lasts.
I’ve never been for tax cuts that are borrowed. I want low taxes that are paid for.
We also want to go on investing in the essential infrastructure of our country - the roads and railways and science and communications that are the backbone of the future economy.
So we should commit, alongside running a surplus and capping welfare, to grow our capital spending at least in line with our national income.
 He doesn't see that this is contradictory.
These principles will form the foundation of our public finance policy and I will set out the details next year.
And for those who ask: Is this necessary?I say: What is the alternative? To run a deficit for ever? To leave our children with our debts? To leave Britain perilously exposed to the next storm that comes?
This crisis took us to the brink. If we don’t reduce our debts, the next could push us over.
Let us learn from the mistakes that got Britain into this mess. Let us vow: never again
This time we’re going to run a surplus. This time we’re going to fix the roof when the sun is shining.
Much more nonsense. Read the whole speech.

This plan is based on wage suppression and increasing exports to run a fiscal surplus by offsetting domestic consumption by growing the export industry in an attempt to emulate Germany, Japan, and China as surplus countries.  It's the same old mercantilist "beggar-thy-neighbor" stance that made Britain of old a colonial, imperialist power.
George Osborne's conference speech in full
(h/t Ralph Musgrave via email)

Monetary policy, "taper" have little effect on the economy

Ryan Grim and Sabrina Siddiqui — GOP Lawmakers: House Could End Standoff With Up-Or-Down Vote On Clean Bill

On Twitter, the Senate floor and in repeated interviews on Capitol Hill and on Fox News, Republicans have stressed their connection to the people and small-d democracy.
"I just think you saw members who said, 'Look, let’s just do what we all know needs to be done and frankly what the American people want to see done,'" said Rep. Jim Jordan (R-Ohio), a conservative wing leader, after this weekend's critical House GOP meeting.
"Sometimes I go back to basic civics: We're the House of Representatives. We're the body that's supposed to be closer to the people," Jordan said. "That's why the Founders gave a chance for the people to throw us out every two years."
But there is a critical flaw in Republicans' argument that they are just carrying out the will of the people: If the House of Representatives -- the "People's House" -- was allowed by GOP leaders to work its will by casting a straight up-or-down vote on the bill passed by the Senate to avert a government shutdown, that bill would become law.
And that, more likely than not, is how this will end. The only question is when.
The Huffington Post
GOP Lawmakers: House Could End Standoff With Up-Or-Down Vote On Clean Bill
Ryan Grim and Sabrina Siddiqui

Sunday, September 29, 2013

Our Struggles Start With Semantics. And Quickly Scale Up To "ParadigmAntics."

Commentary by Roger Erickson

At either scale, we just don't enjoy their antics. Here's yet another case in point.

A color-blind MICC clown school is accidentally* putting on a tragedy.

Invisible War - Depleted Uranium and the politics of radiation

This is worse than semantics. It's "paradigmantics" that are rather reminiscent of our ongoing lunacy over fiat currency operations, expressed by a Orthodox clown school attended by fiat-blind Luddites who can only see gold.

However, in this latest case of paradigmantics, yet another crop of idiot savants have THEIR heads up THEIR asses, obsessively fixating ONLY on distributed radiation from depleted uranium used in military arms.

Meanwhile, reality is trying to get their attention, and is literally screaming that it's the heavy-metal toxicity of uranium isotopes that's catastrophic, absolutely REGARDLESS of the radiation half-lives!

"Nonsense," the idiot savant replies. "There's too little radiation to be a threat!"

Cue distributed "BMHOTKs!"

A few experts are publishing in specialty journals, about the newly recognized phenomenon of "paradigmantics," but the bulk of the populous doesn't even grasp that the entire MICC clown school is metaphorically color-blind, and has a view cluttered by the confines of their own asses. That's paradigmantics in action! It runs by it's own peristalsis, so it literally doesn't matter what anyone says, because whole groups have cognitive momentum which traps their interpretation of literally any communication, sucks agility out of it, and molds it into pre-ordained ideological stools ... er .. talking points. No matter what goes in, what comes out is only their prior paradigm.

While the MICC clowns & some initial opposing activists are arguing about the impact of DU (depleted uranium), another phenomenon is slowly developing beneath everyone's noses. The bulk of the populous is starting - subconsciously at first - to define DU as "depleted unity," and nervously looking around for the exits.

So the clown tragedy show goes on, to it's toxic finale. The MICC clown sees ONLY weak radiation, and goes on with their act, oblivious to the red blood of other performers, slowly drying to black.

The audience is just beginning to be horrified, and a stampede for the exits could occur at any second.

* What if it's NOT unwitting?

ps: Clown, audience disconnect.
      Clown:     "If you think semantics is confusing, just ask yourself, what's a semaphore?"
      Audience: "Look, we're hungry. 1%, can you spare us our own paradigms?"

Scott Kaufman — Tea Party letter demanding repeal of medical device tax written by medical device lobbyist

Fang claims that metadata embedded in a letter ostensibly written by 75 Tea Party Republicans to House Speaker John Boehner reveals that it was, in fact, the work of an AdvaMed government affairs officer by the name of Ryan Strandlund....
As Fang points out, it’s not necessarily unusual to find lobbyists directly responsible for the language of letters that pass between members of Congress.
But it is suspicious that this letter was penned by one member of AdvaMed’s lobbying team, and would have been received by Speaker Boehner’s deputy chief of staff, Brett Loper, who had worked as AdvaMed’s chief lobbyist and, in fact, orchestrated the group’s first attempt to repeal the tax.
The Raw Story
Tea Party letter demanding repeal of medical device tax written by medical device lobbyist
Scott Kaufman

Modern Money Network Seminar 3 — Credit As Contract: 
Understanding Money Markets

With Joseph Sommer is legal counsel at the Federal Reserve Bank of New York; Zoltan Pozsar, a senior adviser at the U.S. Department of the Treasury, and Marshall Auerback, PineTree Capital and a Research Associate for the Levy Institute at Bard College, and a Research Fellow for the Economists for Peace and Security. Moderated by Jeffrey Gordon, Richard Paul Richman Professor of Law, Columbia Law School, Co-Director of the Richman Center for Business, Law & Public Policy, and Co-Director of the Ira M. Millstein Center for Global Markets and Corporate Ownership.

Modern Money Network

Monday, September 30th, 6.30pm

Room 103, Jerome Greene Hall, Columbia Law School

Free and open to all

A livestream will be available on this site during the event, and a recording will be uploaded after the seminar.

Subhankar Banerjee — Destabilization of Arctic Sea Ice Would Be "Game Over" for Climate

Dr. James Hansen has repeatedly warned that if Canada’s tar sands were fully exploited it would be “game over” for the climate. A complete destabilization of the Arctic sea ice would also be—game over for the climate.
Destabilization of Arctic Sea Ice Would Be "Game Over" for Climate
Subhankar Banerjee, ClimateStoryTellers | Op-Ed

Ryan Grim and Sabrina Siddiqui — House Republicans Really Believe Democrats Will Cave On Obamacare To Avoid A Government Shutdown

House Republicans may appear to observers to be pushing the government toward a shutdown, but that's not even remotely how they see it.
The GOP rank-and-file still believe that the Senate might accept and the White House might sign a one-year delay of Obamacare in exchange for two months of sequester-level spending to briefly stave off a government shutdown.
"How dare you?" Rep. Darrell Issa (R-Calif.) said when reporters asked how the House would respond when the Senate rejected its offer. He grew angrier as he continued to question how one could assume the bill was dead on arrival in the Democratic-controlled Senate.
"I have never foreseen a government shutdown and I continue not to see a government shutdown," said Rep. Rob Woodall (R-Ga.), who was a senior Hill staffer before being elected to Congress in 2010. "The Senate has plenty of time to deal with this. This is good, common middle ground that is in this package. I think we're gonna get a big bipartisan vote in the House. I think we're gonna get a big vote in the Senate too."
Voters in survey after survey overwhelmingly say Republicans will be to blame for any shutdown. Senate Majority Leader Harry Reid (D-Nev.) has repeatedly said that all GOP attempts to attach Obamacare changes to a government funding bill will be rejected out of hand. President Barack Obama has consistently promised a veto.
Yet it hasn't penetrated. House Republicans' inability to recognize the same reality as voters and their opponents has made it virtually impossible to come to a deal.
Ryan Grim and Sabrina Siddiqui

Alexander Reed Kelly — Majority of Americans Have No Ability to Save

Roughly three-quarters of Americans are living paycheck-to-paycheck, with little to nothing in emergency savings, a survey released by shows.
Majority of Americans Have No Ability to Save
Alexander Reed Kelly

Zack Beauchamp And Scott Keyes — Top Conservative: There Will Be No Major Economic Consequences To Shutdown Or Default

Al Cardenas heads up the American Conservative Union (ACU), which hosts the annual Conservative Political Action Conference (CPAC) and produces an influential system for rating members of Congress’ ideological purity.
Cardenas expressed support for Sens. Mike Lee (R-UT) and Ted Cruz (R-TX)’scampaign to defund Obamacare, even at expense of shutting down the government or failing to raise the debt ceiling. ThinkProgress asked Cardenas what the costs of this strategy might be, and he suggested they’d be non-existent....
BEAUCHAMP: So you don’t believe there’d be any major economic consequences for a government shutdown or a default?
CARDENAS: I’m convinced there won’t be.
Think Progress
Top Conservative: There Will Be No Major Economic Consequences To Shutdown Or Default
Zack Beauchamp And Scott Keyes

Elaine Magliaro — President Obama Trying to “Fast Track” the Trans-Pacific Partnership—a Trade Pact That Could Be Worse Than NAFTA

[Lori] Wallach suggests we think of TPP “as a stealthy delivery mechanism for policies that could not survive public scrutiny.” She notes that just two of the twenty-six chapters of the pact cover traditional trade matters. She says the other chapters “embody the most florid dreams of the 1 percent—grandiose new rights and privileges for corporations and permanent constraints on government regulation.” She says TPP includes investor safeguards that would “ease job offshoring and assert control over natural resources”—and adds that it would “severely limit the regulation of financial services, land use, food safety, natural resources, energy, tobacco, healthcare and more.”,,,
President Obama is seeking Fast Track Trade Promotion Authority for TPP. This would permit Obama to sign the trade agreement “without Congressional approval.” The signed agreement would then be sent to Congress to be “voted on after the fact under a special restricted procedure that forces a vote in 90 days, limits debate, and prevents Congress from responding to public pressure to amend the agreement’s most egregious anti-public interest provisions.” Zoë Carpenter says that allowing “fast-track” authorization, would limit the ability of Congress “to address three major concerns with the TPP: the potentially harmful economic impacts of the deal, the very real prospect of the agreement superseding domestic policy in areas ranging from internet privacy to environmental and financial regulations and an unbalanced negotiating process and its likely outcome, both tipped towards corporate rather than public interest.” 
Jonathan Turley
President Obama Trying to “Fast Track” the Trans-Pacific Partnership—a Trade Pact That Could Be Worse Than NAFTA
Elaine Magliaro, Guest Blogger

More on the myth of free trade. TTP looks to be not a trade agreement but a neoliberal global coup d'etat, effectively setting up a world government by treaty based on corporate rule by a transnational capitalist class.

Janet Allon — From the Mean-Spirited to the Asinine: 7 Prime Examples of Right-Wing Lunacy This Week

1. Ken Blackwell: Cutting Food Stamps, Oh So Christian
2. Bill O’Reilly: Jesus Died For Our Taxes
3. AIG CEO: My Plight Is Similar to Lynch Mob Victims
4. Gohmert’s Pile (of Crap) – Obamacare and Immigration Are Plots to Deprive Real Americans of Full-time Jobs
5. NRA Lobbyist: Opposing Elephant Slaughter Is Hitlerian Animal Racism
6. Bryan Fischer Gets in on the Teenaged Bullying Action
7. Kansas Christian Group: Stop Oppressing Our Kids By Teaching Them Science
From the Mean-Spirited to the Asinine: 7 Prime Examples of Right-Wing Lunacy This Week
Janet Allon

The only thing that I could find on the left was, "The government is running out of money," but in the current context that's only because the House is holding the country hostage.

Kevin Zeese and Margaret Flowers — People Across America Are Waking Up to the Effects of 'Disaster Capitalism' -- a Much Better Way of Life Is Possible

In her book Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein explains how crises are used by governments to distract and frighten people so that unpopular and exploitative policies can be pushed through. 
It seems that now there is a different reaction disaster capitalism. Rather than disasters providing cover for the implementation of dangerous capitalist policies that lower wages and increase the wealth divide, the disasters being caused by these dangerous policies have woken the public and are leading to a more active and empowered people.
We face a triple threat of the “e”crises - in the economy, environment and energy - which are all connected, says journalist and academic Nafeez Ahmed, but rather than allowing them to overwhelm and weaken us, people are rising to the challenge of solving these crises through direct confrontation with the forces that created them and by building alternative solutions. People are taking initiative rather than waiting for leaders.

People Across America Are Waking Up to the Effects of 'Disaster Capitalism' -- a Much Better Way of Life Is Possible
Kevin Zeese and Margaret Flowers

David Sirota — It's Time to Finally Admit We're an Empire

Then we need to take the necessary steps to start shedding that label for good.
Short and to the point.

Saturday, September 28, 2013

Paromita Pain — India's New Food Security Bill Makes Right to Food a Law

It is for these people that the Indian government recently announced an ambitious $19.5 billion National Food Security Bill. Passed by the legislature in the first week of September, the bill promises heavily subsidized wheat and rice for those who live below the poverty line — about 67 percent of the population.
As reported in the legislation, a total of five kilograms of food grains per month will be provided at a fixed price of Rs 1-3 ($0.02 to $0.05) per kilogram through ration shops across the country. If the food security bill works as planned, it will become one of the world’s largest welfare schemes.
“This bill makes the right to food a law,” says Chintan Kalra, a food security activist from Mumbai. However, Kalra is aware of the many ways the bill can fail, which is why “implementation will play a huge role in what the bill really achieves.”
Truthout | Report
India's New Food Security Bill Makes Right to Food a Law
Paromita Pain,

Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism by Ha-Joon Chang: Reviewed by Thom Hartmann

Ha-Joon Chang debunks the neoliberal myth of free trade spread by Milton Friedman and Friedrich von Hayek. It turns out to be neo-colonialism and neo-imperialism. Alexander Hamilton was wise enough to adopt protectionism for US infant industries to counter the rich and powerful countries of Europe and grow the US economy. In the present case, so-called free trade helps US multinational firms but hemorrhages jobs, further undercutting labor bargaining power and pruning the middle class.

Buzz Flash
Ha-Joon Chang's 'Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism'
Reviewed by Thom Hartmann

techdirt — Dianne Feinstein Accidentally Confirms That NSA Tapped The Internet Backbone

In short, "upstream" capabilities are tapping the backbone itself, via the willing assistance of the telcos (who still have remained mostly silent on all of this) as opposed to "downstream" collection, which requires going to the internet companies directly. The internet companies have been much more resistant to government attempts to get access to their accounts. And thus, it's a big question as to what exactly the NSA can collect via its taps on the internet backbone, and the NSA and its defenders have tried to remain silent on this point, as you can see from the redactions above.
However, as Kevin Bankston notes, during Thursday's Senate Intelligence Committee hearing, Dianne Feinstein more or less admitted that they get emails via "upstream" collection methods. As you can see in the following clip, Feinstein interrupts a discussion to read a prepared "rebuttal" to a point being made, and in doing so clearly says that the NSA can get emails via upstream collections:

Dianne Feinstein Accidentally Confirms That NSA Tapped The Internet Backbone
from the but-of-course dept

Leigh Phillips — Chile’s Early Cybernetics: How Allende Attempted a Socialist Internet to Organize the Economy

The story of Salvador Allende, president of the first ever democratically elected Marxist administration, who died when General Augusto Pinochet overthrew the young administration in a US-backed coup on 11 September, 1973, is well known amongst progressives.

But the human rights horrors and tales of desaparecidos have eclipsed – quite understandably – the pioneering cybernetic planning work of the Chilean leader, his ministers and a British left-wing operations research scientist and management consultant named Stafford Beer. It was an ambitious, economy-wide experiment that has since been described as the ‘socialist internet’, an effort decades ahead of its time.,,,
The 29-year-old head of the Chilean Production Development Corporation and later finance minister Fernando Flores - responsible for the management and coordination between nationalised companies and the state, and his advisor, Raul Espejo, had been impressed with Beer's prolific writings on management cybernetics, and, like Allende, wanted to construct a socialist economy that was not centralised as the variations on the Soviet theme had been....
Paul Cockshott, a University of Glasgow computer scientist who has written about the possibility of post-capitalist planning aided by computing, is a big admirer of Cybersyn as a practical example of the general type of regulation mechanism he advocates: ‘The big advance with Stafford Beer's experiments with Cybersyn was that it was designed to be a real-time system rather than a system which, as the Soviets had tried, was essentially a batch system in which you made decisions every five years.’...
When the government faced a CIA-backed strike from conservative small businessmen and a boycott by private lorry companies in 1972, food and fuel supplies ran dangerously low. The government faced its gravest existential threat ahead of the coup. It was then that Cybersyn came into its own, when Allende's government realised that the experimental system could be used to circumvent the opposition’s efforts. The network allowed its operators to secure immediate information on where scarcities were at their most extreme and where drivers not participating in the boycott were located and to mobilise or redirect its own transport assets in order to keep goods moving and take the edge of the worst of the shortages. As a result, the truck-owners' boycott was defeated.
Fascinating post. Ahead of its time. I have long thought that something this is eventually going to be the way distribution takes place. The market system is too inefficient since it is so subject to asymmetry.

Chile’s Early Cybernetics: How Allende Attempted a Socialist Internet to Organize the Economy
Leigh Phillips via Red Pepper UK

Fadhel Kaboub — Against Regressive Taxation

I was recently asked to testify before the Ohio House of Representative’s Tax Reform Legislative Study Committee. I urged the committee to carefully consider the long-term negative consequences of the regressive tax policy for the State of Ohio and its residents. What follows is the gist of my testimony along with some of the data that I presented to the committee.
Telling charts demonstrate the point: The poor are bearing greater tax burden than the rich on everything but income tax.

New Economic Perspectives
Against Regressive Taxation
Fadhel Kaboub | Assistant Professor of Economics at Denison University (OH) and a Research Associate at the Levy Economics Institute (NY) and the Center for Full Employment and Price Stability (MO)

Tyler Atkinson, David Luttrell and Harvey Rosenblum — How Bad Was It? The Costs and Consequences of the 2007 - 09 Financial Crisis

The 2007.09 .nancial crisis was associated with a huge loss of economic output and .nancial wealth, psychological consequences and skill atrophy from extended unemployment, an increase in government intervention, and other signi.cant costs. Assuming the .nancial crisis is to blame for these associated ills, an estimate of its cost is needed to weigh against the cost of policies intended to prevent similar episodes. We conservatively estimate that 40 to 90 percent of one year.s output ($6 trillion to $14 trillion, the equivalent of $50,000 to $120,000 for every U.S. household) was foregone due to the 2007.09 recession. We also provide several alternative measures of lost consumption, national trauma, and other negative consequences of the worst recession since the 1930s. This more comprehensive evaluation of factors suggests that what the U.S. gave up as a result of the crisis is likely greater than the value of one year's output.
The Second Great the U.S. was the result of a consequence of factors: bad loans made by banks, ratings agencies falling down on the job, lax regulatory policies, misguided government incentives that encouraged banks to be reckless in their lending, and even monetary policy that kept interest rates too low for too long.1

The Second Great Contraction, the worst economic downturn since the 1930s, was unusual because it stemmed from an easing of credit standards and an abundance of financing that had fueled the prior expansion. This fuel also helped create imbalances. an overextension of mortgage financing and capital market financial intermediation. A housing collapse and credit shocks, culminating in a financial crisis, hit the economy as these financial practices generated new losses. Home construction plunged, the stock market crashed, commodity prices tumbled, job losses mounted, credit standards tightened, and short-term funding markets seized up.

Despite extensive reviews of the causes and consequences of the 2007.09 financial crisis, we find few estimates of what it cost — the value of what society gave up. Such a figure would help assess the relative expense of policy proposals designed to avoid future episodes. Although any estimate of the toll exacted by the recession is bound to be incomplete. for example, there may well be future costs not yet recognized. this paper offers an analytical starting point.

It is not difficult to understand why such accounting exercises are rare: They require comparing a world in which no financial crisis occurred to what actually happened and what is likely to transpire. This paper attempts to measure what was lost or foregone as a consequence of the crisis, recognizing that not all costs have a dollar value associated with them. We define the cost in terms of how much worse of society is as a result of the financial crisis. We include consequences that were not directly caused by the crisis but would not have occurred in its absence. Many of these consequences are intangible or di¢ cult to measure. The cost is at least equal to the economic output that would have been produced but was not — 40 to 90 percent of one year's output. But in light of the less-tangible consequences, the total cost likely exceeds the value of one year's output.
Federal Reserve Bank Dallas — Staff Papers
How Bad Was It? The Costs and Consequences of the 2007 - 09 Financial Crisis
Tyler Atkinson, David Luttrell and Harvey Rosenblum
(h/t Naked Capitalism)

Winterspeak — A Bank is still not a financial intermediary: redux

Winterspeak responds to JKH's recent elaboration of a previous discussion of Paul Krugman's assertion that banks are not special based on his reading of Tobin-Brainard 1963. That reading is contested by some.It is significant in that it reveals how Krugman's idea of endogenous money compares to heterodox views that he contests. However, in the course of it a lot of information is coming out about bank operations that is of interest, especially in the discussion in the comments.

A Bank is still not a financial intermediary: redux

The question hangs on the interpretation of "intermediary." In the broad sense, an intermediary is an agent that facilitates a relationship between principles, usually for a professional fee, like a matchmaker. But this is not the only use of intermediary and banks are usually considered financial intermediaries even though they do not lend out deposit but rather fund their loans with a combination of capital and borrowing from various sources only part of which includes deposits.

The difference with banks is that their primary function is risk management rather than intermediation in the sense of savings and loan institutions and credit unions, for instance, that actually lend out deposits that they take in. The argument is not so much about this kind of intermediation, since banks are clearly special cases in that they have access to borrowing in the interbank payment system not only from other banks but also from the central bank.

Banks lend against capital and fund their assets resulting from loans by borrowing from a variety of sources, other banks, depositors and the money market. In extending credit, banks don't just receive interest as a fee for matching borrower and lender. Banks actively participate in the creation of flow, not only by arranging for existing funds to be lent, but also by adding to deposits, thereby generating a flow that increases the money stock through expansion of M1. As Neil Wilson notes in a comment at Winterspeak's, this necessitates dynamic analysis of flow rather than static analysis of stock. Other intermediaries free up existing funds to generate flow while banks create flow "out of thin air" by creating deposits and only afterward obtaining matching funding in order to balance accounts.

The question is whether this makes a difference that makes the special case of banks special economically. The fact that banks lent imprudently to borrowers who were not creditworthy based on dodgy collateral would argue that banks are indeed specially economically in generating financial instability, as Minsky hypothesized. Yet, shadow banking was also heavily involved in the crisis, which would argue against banks alone being special in this sense. However, many of the shadow banking institutions were owned and controlled by banks and were used to by banks to increase leverage beyond that which regulation allowed.

Friday, September 27, 2013

Arturo Garcia — College student calls Ted Cruz out for lying about him in anti-Obamacare speech (via Raw Story )

College student calls Ted Cruz out for lying about him in anti-Obamacare speech (via Raw Story )
A Rutgers University student who found himself being cited by Sen. Ted Cruz (R-TX) as a cautionary tale told MSNBC host Ed Schultz on Friday that Cruz distorted his story for the purposes of arguing against the Affordable Care Act. “It’s kind of…

"Can't See The Wisdom For The Cleverage."

Commentary by Roger Erickson

This is so laughably clever (of savant insiders) that it's obviously dumb (to outsiders).

"Can't see the wisdom for the cleverage." That's my new mantra. I'm referring to group-wisdom vs individual-cleverness of course. Those two concepts work on entirely different levels. The first may not be either detectable or decipherable to the latter, no matter how heroic the intellect or work ethic combined in any given individual. No more so than one human neuron can perceive what a human CNS collectively can.

Multinationals beach tax bills in Spanish shells

"A rented office overlooking a dusty rail track near Madrid’s airport was until recently the workplace of what would appear to be the most productive worker in all of Spain.

From here a single employee presided over a company that from 2009 to 2011 made €9.9bn of net profits, all while earning an annual salary of only €55,000.

The person was working for ExxonMobil Spain SL, a holding company for the world’s largest oil group by value, which for several years used a relatively unknown part of Spanish tax law to transfer billions of euros from foreign subsidiaries to the US, helping to significantly reduce its tax bill."

Read more at the links please, or I'll be exiled or in jail as long as Ed Snowden and Bradley Manning, simply for sharing with all what some of us already know.

ps: Didn't Lew Platt of HP once say that “If HP knew what HP knows, we would be three times as profitable.” So why can't the human species know what the human species knows? Wouldn't WE be far more than just 3x better off for it? What part of social doesn't our supposedly advanced species yet understand?

If none of us are as smart as all of us, then it's surely also true that mistrusting any of us is never as dangerous as mistrusting all of us? To paraphrase, trusting only some of us is never as adaptive as trusting all of us simultaneously? There's safety in group transparency and group knowledge? Will I go to jail - or disappear - just for saying so?  If you really think so, then please copy this little text and distribute it, somewhere in posterity. :)

NSA staff don't yet look where the sun don't shine ... do they? :(

Eric Zuesse — U.S. Wealth Is Now the Most Concentrated at the Top Since 1916

A bit more than one twenty-fifth of all income in the U.S. is now being taken in by the top one-ten-thousandth of the U.S. population. That one rich statistical person is bringing in considerably more income than all of the poorest 2,000 people do in that same statistical 10,000 Americans.
We must go back nearly a hundred years to find a time when the top 0.01%, the top 1 in 10,000 people in the U.S., were making more than 4% of the nation’s total income, as they were in the latest calculated year, 2012. This figure of income-concentration among the top 0.01% was the all-time high 4.4% in 1916. In 1915, it was 4.36%. Before that, it was under 3%. And it has never again been anywhere near 4%, until 2012, when it broke through the 4% barrier yet again, for the first time in 97 years, at 4.08%. Other than in 2012, the highest it has been in recent decades was 3.53% in 2007, under Bush, at the peak right before the 2008 crash. This money-concentration is now more extreme than it was even then – even at Bush’s peak.
The details are being reported at the global academic database of income-distribution, which is called “The World Top Incomes Database,” and which is headed by the world’s four leading researchers on income-distribution: Tony Atkinson, Facundo Alvaredo, Thomas Piketty, and Emmanuel Saez.
AlterNet — Economy
U.S. Wealth Is Now the Most Concentrated at the Top Since 1916
Eric Zuesse

Elegant Fixes Desperately Needed, To Stem Our Increasing Flood of Critical Social Bugs

Commentary by Roger Erickson

One wag just wrote to say (paraphrased) that: [I just read an article by Warren Mosler on Demand Leakages, and of course I totally agree with the concept, but I can still see the objection that many will raise. If people "save" by buying bonds, their currency has gone to the government or to another bond seller, who is presumably planning to spend it. Meanwhile, investments in the stock market send currency to the stock sellers, who also spend it into the economy. No one has really saved currency. They've only bought bonds or stocks. The supposed savers have only purchased something. That's what the gold-bugs mean when they say we need more saving so that we can have more investment. I agree that the gold-bugs are wrong, but I don't know how to respond to their argument in a way that quickly gets more citizens to understand this important issue.]

This is a fascinating question, which shows how far we have to go to achieve adequate Situational Awareness or Context Awareness in this country, and how many levels of understanding there are between here and that Desired Outcome state.

First off, the key presumption about net "sellers" spending all or even most currency back into the economy is plain incorrect. One of our chief problems is that the net sellers are NOT spending the increasing amounts of currency which they accumulate.

That, by definition, is what happens when a financial income and wealth disparity develops.

[This raises the question, of course, of how a subgroup of any society becomes a net seller of any assets, year after year. Shady "acquisition" semantics are, of course, a pre-requisite - but that is a topic for the likes of Bill Black. It would make this post minimally 10x longer.]

There are many issues which cascade from this point made by Keynes, as well as many before him. It boils down to a Sectoral Imbalance, when the Middle Class or bulk of a population do not receive enough social credit to actually consume what they are capable of producing. Most skip over the links between produce/consume/grow.

The key presumption of most graduates of our current school system seems to be that all sellers of stock are equally likely to spend any received liquidity units back into the real economy. As noted, most people gloss over this point, no matter how often it's stated, and go blithely on their way.

Granted, it's a slightly subtle "system" point, so there's no one liner that exposes it for everyone. However, here's a sequence I've found to be pretty portable. It works on most audiences. It's all in the delivery. :)

Social Bug Fix #3000 (8 "lines" of social code)

1) What if some "honeypot" agents simply scavenge vast amounts of currency, and take it out of EFFECTIVE circulation? Could that happen? 
   # So far, all I've encountered agree that this is possible.

2) Do ANY such honeypots actually exist in our market. # Most will readily admit "Yes."
 # Even Warren Buffet constantly says he sits on huge piles of currency, and that it's getting harder to find things worth buying with it! He's been saying that for decades. He's not alone, by any stretch of the imagination.

3) What happens to our effective currency supply if growing proportions of national currency - supposedly in circulation - are actually not FUNCTIONALLY in circulation? Our theoretical assessment of adequate currency supply is therefore increasingly bigger than what's available in practice, right? 
 # It's Ye Olde problem: the difference between theory & practice is always bigger in practice than in theory. :( 

4) Do some of our existing "honeypots" use their unused currency hoards as a Sword of Damocles, held over policy deliberations? 
 # Many people already answer "Yes," hopefully more every day, until we have a majority catching on, and insisting upon campaign finance reform - plus other responses.
5) Thereby the accumulation of significant currency hoards becomes a differentiating and distorting tactic available only to a select few, right?
6) So how long can those honeypots resist the awful temptation to use their rare bargaining chips to circumvent the very democratic process that got us, and them, this far?
 # Only until one of them doesn't practice restraint? Then the others have to act too, or else cede the game, like the rest of us.
7) Do we have any choice except to act - or succumb? Whenever a bug appears in any system - honeypot or other - it MUST be fixed, or it WILL eventually be used.

8) The only question is how artful and elegant our social bug fix can be. Right? :)
That sequence usually gets people on board. However, even then, most people are unwilling to actually act. They'll go back to saying that all politicians, political parties and campaign finances are broken ... EXCEPT theirs, of course. :(

American Ingenuity not circulating.
Apparently, some other - unnamed - types of honeypots are also hoarding most of the American ingenuity and audacity that we used to have. We may or may not be issuing as much to our kids, but whatever ingenuity  we still have, less of it appears to be active circulation each year. Seems our Group Cognition Leakages are the enduring causality behind our Demand Leakages. :(

Please let me know if anyone comes up with a shorter or more elegant "fix" for this particular "social bug". This particular, 8-line, fix typically takes 2 beers, or a whole pot of tea, or one good glass of Port, etc, etc. It's portable (no pun intended), but nevertheless, few will take the time to sit through it. People seem too rushed to actually think about their unemployment. :(


The  of a aristocrat-spawned orthodox economic religion.

and the (missing)  .

The Fix, the Fraud & the Missing Bug Fixes ?

C. J. Polychroniou — The Surge of Neo-Nazism in Greece spite of all the controversy still surrounding Adorno's The Authoritarian Personality, and the study of political psychology in general, fascism is much more of a state of mind and a psychological predisposition than a political ideology based on concrete socio-economic analysis and rational assumptions and explanations, such as, say, Marxism. No economic or political theory can explain the actual behavior of those supporting fascism or Nazism as future social orders....
A combination of psychological, cultural, structural and historical factors is needed to explain the sudden rise of neo-Nazism in Greece. While the economic crisis in Greece has devastating effects for the majority of its people and has spurred the growth of a mass neo-Nazi organization, it would be a mistake to conclude that Golden Dawn is a product solely of the crisis. In the modern era, Greece has always had a strong authoritarian political tradition and a strong fascist element. Authoritarianism and fascism thrived in Greece from the 1940s through the mid-1970s. Censorship, political imprisonment, torture, concentration camps and killing political opponents run like a red thread through Greece's modern political history....
Big capital - and the notorious shipping tycoon business community - always backed the most reactionary political forces in Greece. So did, unfortunately, a sizable percentage of the Greek citizenry, especially among the rural population and the petty bourgeoisie....
After the re-establishment of parliamentary democracy, much of the extreme right and the "silent majority" that had backed the junta gravitated toward the conservative party of New Democracy. In the decades ahead, what remains of the fascist movement is a handful of die-hard fanatics, but this does not mean that the extreme right is extinct. It is still everywhere, with a particularly strong presence in the ranks of the police, which has always been an employment magnet for the most conservative and reactionary elements of Greek society....
The close ties between the Greek police and the neo-Nazis are beyond dispute. Polls seem to indicate that the majority of police officers voted in the previous elections for the Golden Dawn Party....
Equally appalling, behind the political violence orchestrated by the Greek neo-Nazis has been the position of the Greek Ministry of Public Order and Citizen Protection, which has launched its own pogroms against immigrants and has so far used double standards in the way it reacts to the violence of the left and to the crimes committed by Golden Dawn....
The surge of neo-Nazism in Greec certainly would not have been possible without the ongoing economic catastrophe and the social decay caused by the policies of fiscal sadism conceived by the EU and the IMF and enforced by the servile and thoroughly incompetent Greek political establishment in exchange for the bailout loans; but neither would it have materialized had it not been for the presence of a long historical tradition of authoritarianism and fascism in Greece....
Another point of clarification. Golden Dawn in Greece does not qualify as a political party of the extreme right. It is a neo-Nazi party, imitating all the habits and practices of Hitler's National Socialist German Workers' Party. It is an outright criminal organization, engaging, among other things, in protection rackets. And like Hitler's party early on, it is being used by others for various political purposes, including political destabilization....
A major question around Golden Dawn involves the funding of its activities, which lately include efforts to purchase mass media outlets. There is a widespread rumor that it receives substantial financial support from the Greek shipping community. This would come as no surprise to anyone familiar with Greek politics were it proven to be true. In past history, all reactionary political forces in Greece - including the monarchy and the junta - enjoyed the financial support of shipowners. This is a show of their gratitude to Greek democracy for being exempt from paying taxes to the state on their profits.
Truthout | Opinion
The Surge of Neo-Nazism in Greece
C. J. Polychroniou | Research Associate and Policy Fellow at the Levy Economics Institute of Bard College (USA) and an interviewer and columnist for the nationally distributed Greek newspaper The Sunday Eleftherotypia.

Collaboration of big capital, rightists in government, police, and extremists. Sound familiar to anyone?

Corey Robin — The History of Fear, Part 1

...with this post, I’m going to inaugurate a series on this blog, in which I post excerpts from each of my five chapters on the intellectual history of fear. Part 1, today’s post, will look at Hobbes’s account of rational fear; Part 2 will look at Montesquieu’s account of despotic terror; Part 3, at Tocqueville’s account of democratic anxiety; Part 4, at Arendt’s account of total terror; and Part 5, at the theories of fear we’ve seen since the end of Cold War, which I divide into two categories: the liberalism of anxiety (communitarianism) and the liberalism of terror (what is often called political liberalism).
The History of Fear, Part 1
Corey Robin

Breathtaking New Plans Draining Out of Congress & Political Parties

Commentary by Roger Erickson

DoD comptroller outlines shutdown plans for work, pay, travel.

Any plans to shut down sentient thought in Congress? Not needed you say? It stopped long ago? So where's the savings?

Don't tell me the plan is now to "save" fiat by shutting down sentient thought in the entire electorate? Wow! Just imagine the savings!

The show must go on, but the crowd's getting restless, waiting for someone to YANK this act off stage. For Pete's sake! How long until the next act? I'd pay extra just for an emergency intermission where everyone just got to go home and get on with their lives for awhile!

ps: It's the stench, not the audacity that is breathtaking. At this rate we'll need a political dump pump to drain all the stupid out of Congress. One rated for sewage-grade dump! I can understand if people don't want these idiots in their local communities anymore, but can you all send them somewhere else besides Congress? Please? Surely the overflow isn't THAT large? If it is, will the last sentient voter please shut out the lights, so that the asocial zombie overflow will stumble around & fall into their own Super_Unfunded_Dump_Sites faster, and rid us of their stupidity? Otherwise, the Zombie_CrowdingOut_Principle will push US into their Luddite sewage.

ps: ps: Just what denomination of "savings" are we talking about here? Can voters please explain their terms? I'm no longer sure we speaking the same language, let alone employing the same semantics.

Julia Berman — Youth Unemployment Is The Next Global Crisis

The next global financial crisis has already started, in the form of nearly 75 million unemployed young people around the world.
If this mass of jobless youth doesn't find work, the consequences will be dramatic, a group of politicians and economists at the Concordia Summit here Friday warned -- from increased violence in the Middle East to ever-higher rates of income inequality in the United States to increased political unrest in Europe.
"Youth unemployment is dramatic," said José María Aznar, the former prime minister of Spain, where the jobless rate for those aged 15 to 24 is 56 percent. "It's jeopardizing the opportunities for future prosperity and growth."
The youth unemployment rate hit 65 percent in Greece earlier this year and 39 percent in Egypt last year, when the country was still grappling with the fallout from the Arab Spring and just before a new bout of violent, political strife.
By comparison, unemployment for those aged 20 to 24 in the United States is low -- but still a whopping 36 percent.
This youth unemployment crisis is "a direct result" of the global economic downturn, political scientist and best-selling author Ian Bremmer said in an interview at the conference.
The Huffington Post
Youth Unemployment Is The Next Global Crisis
Julia Berman