Thursday, October 31, 2013

Clint Ballinger — Help on MMT related dialogue

This is a VERY rough draft of a dialogue/narrated animation aimed at regular folks highlighting important misconceptions about the economy. I have to travel for a bit and rather than going back and researching every term and point made, I am throwing it on the web for help.
Clint Ballinger
Help on MMT related dialogue

Pimco's Gross urges 'privileged 1 percent' to pay more tax

Story at Reuters.

Bill Gross, manager of the world's largest bond fund, urged fellow members of the "privileged 1 percent," earning the highest incomes, to support higher U.S. taxes on carried interest and capital gains to help the economy. 
Gross, who acknowledged he was among the 1 percent, noted he is writing investment letters that "'dis' the success that provided me the soapbox in the first place." He said that increasing taxes could improve the U.S. competitive position compared with Germany and Canada.

Hey Gross, I'll make it easier for you guys to directly "help the economy" via your idea that somehow, increased transfers of USD balances from the non-government to the government is going to help.

You and your friends can just go to this link and make a direct voluntary contribution to the U.S. Treasury, they even take credit cards.

Suggest donate as much as you can you dope.

Joshua Holland — Can Science Explain Tea Partiers’ Rage?

Can Science Explain Tea Partiers’ Rage? (via Moyers & Company)
A growing body of research suggests that we are a nation divided not only by partisanship or how we view various issues, but also by dramatically different cognitive styles. Sociologists and psychologists are getting a better understanding about the…

Travis Gettys — Ted Cruz’s father wants to send Obama ‘back to Kenya’ and install son as ‘political savior’ (via Raw Story )

Ted Cruz’s father wants to send Obama ‘back to Kenya’ and install son as ‘political savior’ (via Raw Story )
When conservative activists compared Sen. Ted Cruz (R-TX) last week to Jesus Christ, it wasn’t the first time the first-term Republican senator was described in religious terms. The tea party favorite’s father, the Cuban-born evangelical minister…

It's Official. US Politicians Are As Dumb (Or Corrupt) As Any Worldwide. USA POTUS Begging For Foreign Fiat

   (Commentary posted by Roger Erickson.)

Either that, or they believe PT Barnum's maxim, that they can never go broke underestimating the intelligence of the US electorate. How's that make YOU feel?

Either way, there are two discussions going on here. First, there are the literal words being presented, repeated, and heard, by many distinct audiences. Second, there's the single, underlying situation that ALL audiences are part of. Let's just hold ourselves to a higher standard, ignore the semantic inanities, and focus on real, Situational Awareness, and any Desired Outcomes which the USA can get to, from here.

Barack Obama to announce aggressive strategy to attract [foreign] investment

For Pete's sake!!! What does ANY nation need foreign fiat for? Alexander Hamilton & the rest of the Founders must be spinning in their graves, wondering how we could stoop to endorsing, and topping, the very stupidity which they rebelled against! Being railroaded into using foreign fiat, as opposed to organizing their own, collective fiat.  Why? Pray tell? What's the consensus, Desired Outcome? What makes Obama's preferred path more attractive than the other ones? Are there any attractions which are more equal (to him) than outcomes that seem attractive to the rest of us? What about any remaining attraction to what's left of a resilient Middle Class in the USA?

Faced with this level of imbecility - or fraud - it really would be far smarter for every community to just organize their own, Public Bank - IF this current electorate could keep the Control Frauds from owning all Public Banks too, within 5 years. Yet if we could do that, why not just have a citizens revolt, and take back control of our own, national public bank? Make the Fed a Public Fed? We couldn't possibly do any worse than the existing pit of Control Fraud vipers that rules the Fed for the gain of orthodox economists, not the nation.

Hell, while we're at it, why not have democracy seize control of all lobbying organizations, and their little Treasury and Congress too? Who OWNS this supposed democracy, anyway? Whomever is willing to act like owners? Non-gangsters can act like owners too you know, in theory, if there's any domestic fiat left, that is, distributed throughout our former Middle Class. Anyone else willing to step up and voluntarily alter their acting career? New roles beckon in an ongoing, epic feature reality play. The outcome depends entirely on the efforts of the current cast of characters.

We need to have an honest discussion about methods for achieving that conensus, Desired Outcome. NOT a discussion that keeps us conquered, divided, confused and distracted from even acknowledging the consensus Desired Outcome that we used to accept.

Meanwhile, is this ongoing move by mega-merchants a formal coup by the wealthy 1% everywhere, to rule the 99% everywhere? Or are they just dumber'n a sack of hammers? It's not just a class war going on. Shipping and finance merchants are also perverting our entire government to wage guild-war against all manufacturers AND labor. And they are winning, so far. Free trade just means that mega-merchants are in control of tax and trade policy, and now fiscal policy as well.

What are we? Citizen owners of our own democracy, or just mega-merchant-fodder? Better answer that quick, or else the mega-merchants will run off with the royal-we response, supposedly on our behalf. (Did you notice that there's a 99% discount sale on democracy going on? Beneath our feet?)

This makes no sense, and is just another, unbalanced descent into yet another version of Central Planning by a cabal too small to wield the full-group intelligence we need just in order to survive. It's the parasites "winning" by killing their host. Once again, like in 1933, we need to save these idiots from themselves, as part of saving ourselves.

The merchant lobby logic is also inconsistent. MICC & other Corporate Welfare operates by fiat currency logic, while we're told that gold-std logic applies to the serfs. 

Huh? When do double-standards EVER scale efficiently? When wielded by supposedly genius-level Central Planners? In their dreams, and in our nightmares, that's when.

And we're also instructed to not ask questions? WTF is going on?

Why aren't more citizens asking WTF is going on?

ps: Forget 666. We're dealing with 444 - Foreign Fiat For. It's officially dumber than Cain's "999" formula, and more evil to boot.

Informed Electorate Bans Half Of Itself ... Including It's Own Moderators

   (Commentary posted by Roger Erickson.)

Have currency operations ever shown up on Reddit? It may already be too late.

Juvenile journalism commits teen suicide. How typical.

The last lines, revealing the moderators had accidentally banned themselves, is priceless.

With junior censors, er ... moderators like these, who needs an informed electorate?

Every species, including modern nation-states, is in a race to be selectively informed. Yet the race is to make those selections adaptive. If Reddit works by efficiently & democratically up/down-voting articles, questions remain.

How to up/down-vote informed vs naive feedback?

How to up/down-vote adaptive vs maladaptive moderators?

How to do both of those steps faster/better/leaner, i.e., more adaptively?

We as a people continue to live or die by our collective, adaptive tempo, not just our academic selections.

Some thoughts on the fillibuster and the "nuclear option"

With Senate Republicans again threatening to block several of President Obama's nominees, in this case 3 for the US Court of Appeals for the District of Columbia Circuit, and Chairwoman of the Federal Reserve, pressure is once again building on Harry Reid to push through some procedural reforms.

This Court of Appeals is one of the most powerful and least understood courts in the country. It has primary jurisdiction over administrative rulemaking, and thus has the power to nullify years of careful and intensive rulewriting by agencies. Republicans, who have come to universally detest rulemaking in the public interest, fully recognize the value of this regulatory choke-point, and have done everything they can to maintain partisan control. Republican Senators have recently made the patently absurd claim that filling vacancies on this court constitutes "court packing." They have also claimed that additional judges are not necessary, since the current caseload is not very high, as if the reason for having 11 judges is to distribute caseload! Everybody knows that courts have a specific number of judges so they can be skewed in a political direction, not to satisfy workload demands.

We all know that the rules written under Dodd-Frank have already taken too long to be finalized, but this court has already struck down an SEC rule that would give investors more power to throw out corporate board members. A more recent SEC rule on disclosure of CEO/Worker pay ratios will also likely be presented in front of this court. The court's decision in the spring to invalidate President Obama's recess appointments put the leadership of Richard Cordray at the CFPB into question, until he was finally confirmed by the Senate in July when Reid came within hours of "going nuclear."

The power of this court should disturb any American who believes that their democratic government should be making laws to serve their interests. The process of judicial review of regulations basically boils down to unaccountable old white judges, and their law clerks who are often fresh out of law school, making judgements on incredibly complex regulations that they cannot possibly understand, and often overruling the expertise of dedicated and underpaid public servants. What people don't realize is that Congress can write whatever statutes they want, but none of that matters unless the executive agencies can effectively write and enforce regulations.The politically charged US Court of Appeals for DC stands in the way of this process, and effectively has the power to nullify the legislative decisions of our elected representatives. And since the circumstances of their nominations/confirmation are so bitterly partisan, no one can say with a straight face that these judges are apolitical.

The recent confirmation of President Obama's nominee Sri Srinivasan brings the court to a 4-4 political tie. Filling the remaining three seats would bring about a 7-4 Democratic advantage, which is what Senate Republicans are trying to prevent. Senator Rand Paul (R-TinFoilHatistan) has also threatened to put a hold on Janet Yellin. However it remains to be seen if enough of his Republican colleagues will join him to block a cloture motion on her confirmation, since enough Republicans understand the importance of the Fed and will probably follow the orders of their Wall Street owners who want certainty from their central bank.

So that brings us back to Majority Leader Reid and what his strategy will be for these nominations. While Reid and his staff are tight lipped and rarely make proclamations of policy, it is obvious that he remains reluctant to use the "nuclear option." I do not blame Reid or any of the more cautious Democrats for not wanting to go this far. The ability of Senators to filibuster motions that they do not approve of is one of the most important powers in all of US government, and thus one that should not be haphazardly relinquished. Changing this tradition would be a sea change in the operations of the US Senate and make it function more like second majoritarian chamber, like the House of Representatives.  Many older Dems worry that getting rid of the filibuster may screw them if they eventually become the minority, but in my opinion this argument ignores political reality. The Democrats are not, and never have been, nearly as unified of a party as the Republicans are. No Democratic minority leader will ever have as much power as Mitch McConnell, because Democrats are never as easy to whip around as Republicans are. If the shoe was on the other foot and Republicans were in the majority, I highly doubt that Democrats would have the party rigidity to mount as many filibusters as the Republicans have since 2007. Majority Republicans will always be able to peel off a few timid Democrats in the name of "bipartisanship" and whatnot; this case obviously does not work the other way.

The other thing is, the filibuster can be used fairly if a minority party has recently lost control, and has legitimate reasons to oppose some majority measure that is too extreme. A minority can sensibly use a filibuster to block such extreme measures, while they work to convince the public to hand them back control. But Republicans had a chance to take back the Senate in 2008. They lost. They had a chance to take back the Senate in 2010. They lost. They had a chance to take back the Presidency and Senate in 2012. They lost. At this point, the filibuster is just a desperate tool of unpopular, sore losers who are preventing the country from moving forward in direct opposition to the public's desires. This is a totally illegitimate, abuse of the filibuster that Harry Reid should dispense with as soon as possible. I say to hell with the potential consequences down the road- this Republican extremism has to be deal with, here, and now.

Wednesday, October 30, 2013

Getting the Chinese to raise their currency and bash ours down does not create manufacturing jobs

Illustrated very clearly in the chart below. The Chinese yuan appreciated 30% against the dollar since 2004 (when the Bush Administration started this China bashing policy). Since then, manufacturing jobs have fallen by 300,000.

Not only does this not work, it acts as a tax on the middle class and poor, who have to pay more for Chinese goods, when they were once a lot more affordable.

It's a really, really, stupid policy.

Robert Nielsen — What Is Modern Monetary Theory?

The crisis has given rise to a range of new ideas and theories to replace the discredited view of the economy. The newest and most imaginative of these is known as Modern Monetary Theory (MMT) and is one of the first theories to owe its growth to the internet. Without a doubt MMT is radical and completely turns established economic thinking on its head. If it is correct then it would change the way we think about the economy forever.

As surprising as it may seem to an ordinary person, economists rarely discuss money or banking, the two topics that most come to mind when one thinks of economics. This is because most of mainstream economics has its roots in the 19th century when the financial sector was tiny and money was not seen as important (to the extent that economists would imagine barter economies for simplicity). MMT is the first theory to recognise the importance of the massive growth in the financial sector and the fundamental role money plays in the economy (especially since it is no longer backed by gold). It addresses head on the idea that perplexes most ordinary people, how is that paper money with no intrinsic value of its own is so valuable and how are banks able to create money “out of thin air”?
What Is Modern Monetary Theory?
Robert Nielsen
(h/t Clonal in the comments)

Not a good explanation of MMT, but at least MMT is being recognized as a player.
Nor are higher interest rates a worry. This is because printing money increases the level of reserves in a bank which then has to offer a lower interest rate in order to lend out all this extra money. So contrary to a higher interest rate, MMT claims it would receive a lower interest rate and cites Japan as an example of a country with enormous levels of debt and low interest rates.
That a real howler.

Much of the posts is a summary of Nielsen's previous exposition of hyperinflation as unrelated to government spending or "money printing," with which MMT economists would agree, of course.

The closer is pretty good though. :)
Trying to understand Modern Monetary Theory is a bit like the first people trying to understand flying. No matter how many logical arguments are made, something in your gut tells you it can’t be true. How could an aeroplane possibly stay in the air despite weighing so much? How could it not crash despite going at such speed? Can we really trust the pilot not to make a mistake? How can the government print all the money it needs? Are taxes really that irrelevant in funding the government? Can we really trust the government not to mess up? In many ways MMT seems too good to be true. However, if it does work then it would be the miracle theory we have all been searching for. It’s so crazy, it might just work.

Dynamic Value As Capital - What's Missing From MacroEconomics, And GDP Too

   (Commentary posted by Roger Erickson.)

If any economist wants to hear a description of what's missing from macroeconomics, here's a great example.

... the concept of leadership [and group agility, AND policy agility, as real capital] is certainly more complicated than taking and receiving orders. As retired U.S. Navy Captain David Marquet explains in the following video, it’s about creating an environment that empowers the members of an organization to think creatively and take psychological ownership of the mission at hand, whatever it may be. [And, providing them with adequate venues to practice exactly that.]
It’s about “giving control and creating leaders, not taking control and attracting followers,”

Put that in your ISLM and, instead of smoking it, just blow it up? And toss ISLM in the garbage?

What's missing from GDP? It tracks only static assets. Not dynamic assets. As Steve Hansen points out, GDP became increasingly less useful as we transitioned further from a product to more of a service economy.


Leadership, leadership everywhere, but nary a drop applied to enlarging our policy space. Or to increasing our policy agility.

Stephen Rosenfeld — Libertarians in 2013: The Even Whiter, Wealthier, WASPier Bastion of Republican Party

They are not the same as Tea Partiers or the religious right; this is a different crowd.

Not a very in depth post, but useful in distinguishing the different GOP factions and their agendas. What is interesting is the demographics.

Breaking: U.S. tells China their currency is not rising fast enough

Jack Lew at Treasury has apparently been given orders from the White House to do something to create "manufacturing jobs," so now he's telling China that their currency is not rising fast enough.

This policy is not only incredibly ignorant, as it reduces America's real terms of trade, but it is spiteful, vindictive and shows the Obama Administration's utter contempt for working class and poor Americans.

The reason being, it is functionally a tax that hits middle and low income people the worst as it makes the cost of Chinese made goods--which were once highly affordable--more expensive.

And the cruel lie behind this policy is that it will not create any jobs.

Obama Administration = DUMB!!!

Philip Pilkington — Peter Schiff, the Austrians and Their Mission to Increase US Debt Held by Foreigners Together With the Budget Deficit

Today I’m going to do something that I usually refrain from doing; that is, I’m going to engage with some of the crank arguments that come from the so-called ‘Austrian economists’.
Phil swings his pen — well, keyboard — like a sword.

Fixing the Economists
Peter Schiff, the Austrians and Their Mission to Increase US Debt Held by Foreigners Together With the Budget Deficit
Philip Pilkington

Janet Tavakoli — Alan Greenspan Played Daily Show's Jon Stewart

Takes Greenspan apart. Cites Bill Black.

The Huffington Post
Alan Greenspan Played Daily Show's Jon Stewart
Janet Tavakoli | President, Tavakoli Structured Finance

Randy Wray — Mazzucato: The Entrepreneurial State

I’ve been meaning to write a blog on a book by my friend, Mariana Mazzucato, titled The E State. It is essential reading for anyone who wants to understand the role played by government in encouraging innovation. For so many years we’ve been sold the notion that our nation’s Undertakers (also called Entrepreneurs or Capitalists) are the lions who drive growth through innovation. Actually, according to her well-documented book, Mariana shows they are nothing but domesticated pussycats, who have to be dragged along by the entrepreneurial State. The State innovates, doing the hard stuff and even guaranteeing markets; the pussycats merely make profits off the State’s initiatives.
Economonitor — Great Leap Forward
Mazzucato: The Entrepreneurial State
L. Randall Wray | Professor of Economics and Research Director of the Center for Full Employment and Price Stability, University of Missouri–Kansas City

Smacking down one of the chief myths of neoliberal "capitalism." 

The downside of that too much government-led innovation is military-related. For example, Ike even justified the interstate highway system based on logistical support needed for national security.

Stephanie Kelton — Former Dept. Secretary of the U.S. Treasury Says Critics of MMT are “Reaching”

A few weeks ago, I had a lengthy e-mail exchange with Frank N. Newman, former Deputy Secretary of the U.S. Treasury. Frank’s books (here and here) are so closely aligned with MMT thinking about deficits, debt, monetary operations, etc. that I wanted to get his thoughts on one of the most common criticisms of MMT. MMT recognizes that the currency itself is a simple public monopoly and that the issuer of the currency must spend (or lend) it into existence, before it can be used to pay taxes or buy bonds. The implication? Governments that issue sovereign money are not revenue constrained. Critics have argued that MMT has this all wrong because the system requires the government to have numbers on its balance sheet before it can spend — i.e. the government is not allowed to run an overdraft and is, therefore, constrained by cash on hand. Here’s what Frank Newman thinks of that critique:
New Economic Perspectives
Former Dept. Secretary of the U.S. Treasury Says Critics of MMT are “Reaching”
Stephanie Kelton| Associate Professor of Economics, UMKC

Let's bury that one.

Economics is a Dirty Job, but Mike Rowe Shouldn't Do it, Parte Dos

*Sigh* its looks like Mike Rowe's Promoting Stupid Tour 2013 continued last week on, of all places Glenn Beck's online exclusive TV show (link, if you dare)

It was bad enough when Rowe went on Bill Maher and was able to spew his nonsense unchallenged. But appearing on the show of wild, raving neofascist lunatic Glenn Beck is a new low for Mr. Dirty Jobs. Rowe continues on his campaign to discredit four year liberal arts degrees with his folksy, visceral "wee dont need no edju-kay-shun BS. He brings up the widely discredited "skills gap" theory that "if only lazy, spoiled Americans would just take the high stress, low wage jobs the the High Holy Private Sector Job Creators(tm) are offering them" then we would fix the economy. He goes on to say "we are borrowing money we dont have" to fund higher ed. Yes Mike....we are going to run out of fiat! I always wonder how these geniuses think we paid for WWII and all the GI bill programs.

Thing is, I want to like Rowe. He does go on to say that he "isnt against college education, just against debt", which is a perfectly reasonable argument. However he doesnt make the next logical step, which is to say that the monetarily sovereign government could just as easily fund higher ed with interest-free grants instead of loans. There is no reason that higher education needs to come with enormous debt, but Rowe skips over this point and continues flattering Beck, who of course hates the idea of national populace that knows history and can think critically. Could it be that having a college education makes Beck's foaming-at-the-mouth chalkboard "lessons" seem almost ridiculous?

Rowe's comments get even more confused from there, when he says:

“This whole topic always boils down to management vs. workers…the blue, the white collar. Enough with the color of collars,” he declared. “The way to talk about work is through the context of, what are you addicted to? Are you addicted to smooth roads? …Cheap electricity? Indoor plumbing? I am. So if you share my addiction to the fruits of skilled labor, you’ve got skin in this game.  So I think if you start to engage a bigger hunk of people, not just management and not just labor, if you really start to have a conversation about work and education, about affordability, everybody can take a micro-macro look at this thing.”

Um, What?!?! Rowe's intentions are probably honest enough, but he shows no humility when making his ass-backwards arguments. He may not realize it, but he is effectively shilling for the corporatist distopian worldview where an informed electorate is an unaffordable triviality but wage slavery is "good for ya." And its not that I even have a problem with Rowe promoting blue-collar jobs, its just that he doesn't mention the reason for the deterioration of such jobs is due to the bipartisan attack on unions, not because "kids today" dont want to work hard. If we got back to 40% private sector unionization levels then maybe, just maybe, these blue collar jobs would be plentiful and lucrative. But you can't blame today's kids for looking at how their parents worked hard in blue collars jobs only to be betrayed by management, and not wanting to follow that same path.

So Mike, please stop with the glorified s**t kicking. You're a good guy, but ya don't understand econ. From now on, please just stick to cleaning out urban sewer tunnels and leave the policy to the pros. After all, we have to make our fancy pants college degrees pay off somehow!

Another completely bogus poll on the national debt

Nice article at the LA Times by Michael Hiltzik exposing more hijinks of the Peterson morons this time with their bogus public polling on the fiscal issues. 

Hat tip @DeficitHacks.

What happens when people are asked about the national debt in an objectively structured poll, rather than one designed to ride Pete Peterson's personal hobby horse?
Interestingly, the national debt doesn't rank high as a concern at all. Americans' consistent No. 1 concern is job growth, which means policies that, for the near term at least, require higher federal debt.

When Gallup asked people to rank their concerns in May, 86% listed "creating more jobs" as a top or high priority, tied with "helping the economy grow." Reducing the federal deficit, the closest Gallup came to asking about the debt, ranked seventh of the 12 choices, picked as a top or high priority by 69%.
The "job situation" has been the top economic concern of the American public at least since 2010, according to the Pew Research Center. The budget deficit hasn't ranked higher than second in all that time. The national debt doesn't make the list.

It would be interesting to see the results if instead of the Peterson morons asking: "Reducing the federal deficit?" they would instead ask the mathematical corollary: "Reducing the citizen's savings?" 

Chasing the Ignoble Prize of Economic Form Over Real Function

   (Commentary posted by Roger Erickson.)

Nominal has been promoted as equal to real, all along, in orthodox economics. Yet reality is re-discovered daily, while supposedly accurate, nominal form insists on "stable prices." Therefore, the two constantly diverge. That's the original sin pursued by the non-science of economics. It just doesn't work to formally presume, and insist, that nominal and real are equally relevant, equally stable, and equally predictive - even though we have zero net predictive power, and only adaptive power.

Take Iowa's world food prize. Please!

First created, then quickly perverted.

What's next?
  World air prize?
  World water prize?
  World SuperfundSite prize?

Or just roll 'em all into a World Functionally OutOfControl Capitalism Prize?

How did the function of evolution get taken over by the form of capital-ism?

Same way democracy got taken over by international "free" trade among merchants?

The excessive practices of our own merchants abroad, which we let build to significant momentum, soon come to constrain us domestically, through the claims of precedence.
   (Commentary posted by Roger Erickson.)

It started with the Church of Capitalism, with it's high priests, the Eco-Gnomists hired by aristocrats to further their class-based aims. The Eco-Gnomist name was later shortened? Like all formal religions, they came to argue that church & state should always remain objectively separated, except for THEIR church, which should become a state religion, guarded over by bevies of ideological lobbyists. Isn't it ironic, that formal religious bureaucracies always exist paired to a narrow class of those who benefit more than others in seeing that particular bureaucracy expand?

Capitalism, as now over-promoted by the rich, has become a Secular State Religion, promoted by the high-priests of mercantilism, er .. hyper-capitalism?

Perhaps we now need to enshrine a new doctrine. Separation of Capitalism and State?

The meaning of life proposed by our current orthodox economists, mumbling their incantations, is to sequester financial capital from your neighbors and sit on it, to make sure it isn't used for group evolution? The purpose of the secular religion of capitalism is to glorify the nominal over the functional? What happened to the old form of community capitalism?

Even the word sequester has now been perverted. In politics, it is now defined as a process for depriving your co-citizens of a minimum threshold for group resource distribution, similar to the one "successfully" practiced in the European Monetary Union, against formerly free & dynamic nations from Greece to Ireland. If this had caught on in our military, our generals would have hoarded all the weapons, and sent soldiers out to do battle with no shoes, let alone functional weapons. Our MICC has always been treading close to that state as it is.

If we can't discriminate nominal from real, we'll wake up one morning and wonder "Who stole our fiat?"

If someone claims nominal control of your quite real fiat, individual or group, just exercise your prior claim of ownership (by usufruct, or ownership by use), and thereby reset the relationship between nominal and real to it's natural relationship, of tool to toolmaker.

In his day, it was revolutionary for Tom Jefferson to say: "I do not find in orthodox Christianity one redeeming feature." Yet his outlook was terribly needed, due to the excessive intolerance practiced by European state religions of the day.

Today, it is no less needed to say: "I do not find in orthodox Economics one redeeming feature."

That outlook today is necessary precisely because of the excesses practiced by our merchant-state-religion, foisted on us by uber-capitalists running amok, proselytizing form over function. Can we just get back to setting Desired Outcomes for our nation, and being pragmatic about achieving them? Instead of telling ourselves that we've run out of fiat?

Tuesday, October 29, 2013


6. Conclusions
Fear of a Greek-style fiscal and financial crisis has loomed over much of our policy discourse over the past four years, and has played a significant role in shaping actual policy, constituting the principal argument for austerity in countries that don't face any current difficulties in borrowing. However, despite repeated warnings that crises of confidence are imminent in floating-rate debtors – mainly the  United States, the UK, and Japan – these crises keep not happening. 

Part of the explanation for the failure of disaster to strike on schedule lies in the DeGrauwe point:  countries that borrow in their own currencies are simply not vulnerable to the kind of self-fulfilling liquidity crises that have afflicted euro debtors. What I have pointed out in this lecture is that the difficulties with crisis warnings don't stop there. Rather remarkably, nobody seems to have laid out an explicit story about how the predicted crisis would play out. The claim is that interest rates would rise, causing a severe economic slump, but how is this to be reconciled with the ability of the central bank to set short-term rates?

My answer is that claims about the vulnerability of floating-rate debtors to crisis haven't been given any specificity because they do not, in fact, make sense. Simple macroeconomic models suggest that a loss of confidence in a country like the United States, taking place at a time when interest rates are at the zero lower bound, should, if anything, have an expansionary effect. Nor can one appeal to the lessons of history: cases resembling the hypothesized crisis scenario are rare, and those that exist don't support the notion that Greek-style crises can take place under a very different currency regime. You may find it implausible that conventional wisdom, backed by so many influential people, could be wrong on so basic a point. But it's not the first time that has happened, and it surely won't be the last.
Paul Krugman
Draft of Mundell-Fleming lecture, 27 October 2013
(h/t y in the comments)

Bob Veres — Why Deficits Don't Matter

Stephanie Kelton, Associate Professor of Economics at the University of Missouri/Kansas City, believes that the root of all these problems can be found in a fundamental misunderstanding – shared by Democrats, Republicans and mainstream voters alike – about the government's balance sheet. She argues, plausibly, that the whole idea that we should control the deficit at all is costing our nation trillions of dollars in lost output. The result is lost income, savings, wealth and prosperity.
"As a society, we don't understand government finance," says Kelton. "Most people – including most economists, think that it operates by the familiar rules of household finance. Therefore, we find it plausible when we hear politicians and government watchdogs urging us to balance the budget, control the urge to spend and pay down the debt."
The mantra on the right: the federal government has to stop spending money it doesn't have. The mantra on the left: we need higher taxes on "the rich" in order to balance the budget and pay down the federal deficit. Moderates call for a little bit of each.
"We act like there is some limited amount of money available," says Kelton, "and that government competes for savings with the rest of the economy, and that too much competition for savings drives up interest rates, and higher interest rates crowd out all productive private investment. We act like the federal government is walking a fine line between solvency and insolvency – that if the debt gets too big, our creditors may begin to get nervous, downgrade our debt, our interest rates go up, and suddenly we end up like Greece."
Yes. So? "That picture has no economic meaning whatsoever," says Kelton. "None."

Advisor Perpsectives
Why Deficits Don't Matter
Bob Veres
(h/t Stephanie Kelton on FB)

JW Mason — Functional Finance and Sound Finance

Anyone who who has been following debates on fiscal policy over the past few years will have noticed that, among those who think fiscal policy can be effective, there are two distinct camps. There is a minority who think that fiscal policy is not subject to a budget constraint; that is, that as long as a government borrows in its own currency, its existing liabilities never limit its ability to adjust taxes and spending to bring the economy to full employment. And there are the majority who think that governments are subject to a binding budget constraint; that is, that while adjusting spending and taxes can in principle be used to bring about full employment, it may be impossible or undesirable to do so when the level of government debt is already high. In this view, maintaining full employment should be left to monetary policy. Following Abba Lerner, I call the first position "functional finance" and the second position "sound finance."
I believe there are important differences between these two positions. But I also believe that these differences have not been clearly articulated, and as a result these debates between them been unproductive. It is my view that there are no important differences in terms of economic theory between the two positions. A perfect application of a functional finance policy rule and of a sound finance policy rule are indistinguishable. The difference between the camps is with respect to policy errors -- which errors are most likely, and which are most costly.
The Slack Wire
Functional Finance and Sound Finance
JW Mason

Mark Gongloff — Krugman Trolls Deficit Hawks With One Amazing Chart

The Huffington Post
Krugman Trolls Deficit Hawks With One Amazing Chart
Mark Gongloff

Maxwell Strachan, Alissa Schelle, and Jan Diehm — 15 Ways The United States Is The Best (At Being The Worst) Maxwell Strachan, Alissa Schelle, and Jan Diehm


The Huffington Post
15 Ways The United States Is The Best (At Being The Worst)
Maxwell Strachan, Alissa Schelle, and Jan Diehm

AFP — Watchdog: ‘Toxic’ corporate culture remains unchanged five years after U.S. financial meltdown

Five years after the U.S. financial crisis forced the massive government TARP bailout, the U.S. corporate culture remains toxic and breeding crime, the watchdog for the bailout program said Tuesday.
More than 300 people in the banking, housing and securities industries are in the hands of the criminal system, whether it is a charge, a conviction or a sentencing, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) said in a quarterly report to Congress.
“The financial system has stabilized, but the toxic corporate culture that led up to the crisis and TARP has not sufficiently changed,” said Christy Romero, the special inspector general.
“At the core of the crisis was a pervasive culture at institutions of rampant risk-taking and greed combined with significant unchecked power,” she said.
The Raw Story
Watchdog: ‘Toxic’ corporate culture remains unchanged five years after U.S. financial meltdown
Agence France-Presse

Little accountability. Problem worse than previously due to more consolidation. Rampant cronyism. Recipe for disaster.

Systems Based Electoral Technology for Countering Merchants of Death

   (Commentary posted by Roger Erickson)

So systemic logic quickly says it's not wise for a whole culture to travel widely for the purpose of kicking people with our bare feet, since our cultural toes (i.e., Middle/Lower Class citizen recruits) are damaged so often (never mind who we kick, or how hard, or why).

The 1st step in logic - for the feeble minded - is to suggest we wear steel-toed boots. Ok, it's a start. We don't have to stop there of course, even if some of us can get a huge contract for producing steel-toed boots.

In an Effort to Cure U.S. Military Mental Illness Issues DARPA Launches $70 Million Project

The project? It's called "Systems Based Neurotechnology for Emerging Therapies."

Since we've already moved on from individual brains to national cultures, isn't it far more important for us to understand how a culture's group brain works?

Kick back and reconsider the situation for the boots on the ground. If we're capable of the initial example of reason - protecting toes as they kick - you'd think we could also supply ourselves with some doubt & uncertainty about the utility of kicking people at all. Ya think?

The 2nd step in logic is to vote some repair funds, to fix broken cultural "toes" and other social components?

Can we get a third step? Isn't a once of prevention still worth a pound of cure? Surely applying GROUP REASON to policy space and policy agility is also a national therapy?

Someday. The sooner, the better. Do we really have to wait that long? Why not right now? For Pete's Sake! Why Not Just Apply Systemic Logic To Policy Development And Politics?

Meanwhile, a few merchants are getting rich, while a lot of Middle Class toes are getting stepped on, and irreparably damaged. It's a net loss, for all, until we as a people start thinking for ourselves, beforehand, not after the fact, not just for merchants, after we & many others have already been kicked around. Best way to sell more boots? Hold a kicking contest and invite teams from all sides to participate in a round-robbing tournement. That'll fix it!

There is a better way.

Systems Based Electoral Technology for Countering Merchants of Death? Just call it "Democracy" for short?

Now We've Heard Everything - Some Think That The Fed Needs A Bailout

   (Commentary posted by Roger Erickson.)

OMG! Yes, Maude, it's true. This raises the most dire spectre of all!!! The USA itself could run out of fiat! If that were to happen, who would be left to bail us out? Who and what would they have to defraud next, to make it look real? The US Constitution? Please, let's not take the idiocy that far.

As stimulus tab rises for Fed, worries grow it may require a bailout

Just when you thought the level of discussion could not sink further.

LA Times: "The Fed's bond-buying binge could put the central bank's finances at risk if interest rates were to rise sharply, critics warn."

Seriously? In a prominent US newspaper? With a straight face?

You couldn't make this stuff up! What's next? Bail needs an out? In case systemic fraud were to rise sharply? Coupled with an increase in ignorance about fiat currency operations? It could happen, you know.

So who are the geniuses espousing this view?

James D. Hamilton, an economics professor at UC San Diego."It's really pretty cut-and-dried as far as the arithmetic goes: If you buy bonds and interest rates go up, you're going to take a capital loss on those bonds. The more they buy, the bigger their balance sheet, the bigger the loss they're going to face."

Sounds like the organ responsible for generating his logic DID dry up! No intellectual capital left.

Rep. Mick Mulvaney, R-SC. "The Fed stands to lose a lot of money, and by a lot of money, I mean hundreds of billions of dollars. It is not hyperbole to suggest the next big bailout could be of the Federal Reserve."

Ooh! He means it. There's a lot of fiat involved in denominating Public Initiative. Somebody get his train of thought a track to run on. It's chugging, but obviously derailed.

Et tu, Ben Bernanke? "The bottom line is that for any reasonable interest rate path, this is going to end up being a profitable policy for the taxpayer" says spineless, pandering Ben, as he sinks further into the political quicksand.

Sounds like Ben Bernanke is the one bailing out! Seems he pines for his cushy job at Princeton, where he can just go back to writing his little papers, not responsible for even pretending to counter the Erble Logic that is leading his nation astray. Ben prefers to sit in a comfortable deck chair and play his violin, as the ship goes down? With a stiff drink? Anyone noticed if he's been drinking more lately? Maybe he's planning to move to Switzerland too, or the Cayman Islands.

Marvin Goodfriend, an economics professor at Carnegie Mellon University's Tepper School of Business. [Finally! Surely we can expect a bit more from people grounded in business, not just nominal economics?]

"In the short term, it's a money-maker. The borrowing cost is cheap right now. Those borrowing costs are going to rise."

Ok, guess not. Another hope dashed. Move along folks, no situational awareness to see here.

The last word goes to the venerable LA Times. "When interest rates begin rising, the Fed will have to pay a higher rate on bank excess reserves. That will eat into the Fed's bottom line."

Let me get this straight. The Federal Reserve, accountant to the Treasury of the USA, denominator of a growing nation's purely nominal records of Public Initiative ... has a bottom line of nominal? Perhaps in nom only? Where'd this come from? How do we turn out citizens like this with no remaining connection to reality? Is our education system now completely nominal as well? Real situational awareness is considered purely nominal?

The article goes on to quote the least authority of recent times, Peter Schiff. I won't bother dipping into his meandering path, as his skiff sails further beyond the bounds of reason. Maybe he'll drop off his imagined horizon someday.

Too bad the US electorate doesn't set a bottom line in situational awareness. We could use a threshold defining a minimal, survivable level for an informed electorate right about now. Our economists are advising us to tighten the nominal noose we've placed around our own economy's real neck. Even if this is just some eco-erotic game for economists, please stop now, before it's too late for everyone?

Since assisted suicide is illegal, surely citizens could plausibly arrest all orthodox economists, for promoting and abetting economist_assisted_national_suicide?

Monday, October 28, 2013

Warren Mosler & Thomas E. Nugent — Debtor Nation, Without The Rhetoric

Oldie but goodie from Warren. Hat tip to Charles Haydn on FaceBook.

Debtor Nation, Without The Rhetoric 
When it comes to trade deficits, choose fact over myth. 

Coolidge and Hayek on conservatism

The Calvin Coolindge test to determine whether one is conservative (like Cal) or liberal.

An Ideological Test
Gerard N. Magliocca

Hayek's take on it by Corey Robin

From Coolidge to Hayek
Frank Pasquale

There's a simpler test. Does one think, feel and behave in accordance with the principle, Some are better than others and deserve privilege, or the principle that all are created equal and deserve to be treated as equals. 

Hedgeye CEO says Yellen appointment makes him "want to puke"

Yahoo!Finance had a chance to be something different, to stand out in the useless, banal, brain dead Wall Street apologist world of CNBC and Fox Business. Instead they went in the same direction. No, worse, they doubled down by hiring Jeff Macke, the dude who was even too bizarre for CNBC and Lauren Lyster, the Ludwig Von Mises, goldbug, Peter-Schiff-loving former RT Capital Account host who thinks our money comes from mother nature.

If you watch you know that the Yahoo!Finance shows all come off as the same, big bad government, poor abused banks, market is the all-knowing omniscient self-regulating entity bullshit straight out of some bad Ayn Rand novel with a plotline so tired that the only people who watch are probably the clueless guests themselves who keep getting the same smoke blown up their asses by these clown hosts. The rest of the world could give a shit.

I only mention it because they appeared to hit a new low on a segment today where the apparently medicated Macke decides to go after soon to be Fed Chairman Janet Yellen, intimating that we ought to be wary of a woman having "power rivaling Obama." (Clueless statement. One of many.)

Now if I were a woman and I heard this I would unleash a shit storm of protest all the way up to Yahoo's WOMAN CEO, Marissa Mayer and try to get her to realize that a) the show sucks and b) there's no fucking way a loser like Macke and the show's producers should be framing a segment with such a disprespectful and obviously sexist/chauvanist lead in.

But gets better.

Cue the moron music.

Up on the screen pops some dude named Keith McCullough who, when asked about the Yellen appointment (Yellen being a woman) says, "I don't know whether to smile or puke." (I kid you not. Listen ot the clip.)

Puke! The guy says he wants to puke!

Then this simpleton moron, who runs an outfit called "Hedgeye" goes into some unitelligable rant about how "We Lost touch with the Constitutional principals of the country" (how so?) and how the Fed is "unelected and unaccountable." I guess he feels its okay to ignore the fact that Fed governors are all noninated by POTUS and confirmed by Congress and the Fed itself was established by an Act of Congress and that they Fed has to give all its earnings over to the U.S. Treasury every year and so on and so on.

Finally the dude finishes it all off with this lovely cherry on it comes..."The Fed is keeping rates artificially low and devaluing the dollar." Ba dum bum.

Right off the Peter Schiff talking points memo!

A little bit more whining ensues about some other stuff--all wrong and out of paradigm, of course--then a moment where he scolds the Fed for "not agreeing with the market," and there you have all the evidence you need to see that this bumpkin got the monetary intelligence of a jellyfish .

Anyway, here's the clip. Watch it for yourself.

By the way, you women out there, Marissa Mayer is on Twitter. Maybe she'd like to hear from you. (That goes for you, too, guys.)

Laura Clawson — Cruz Caucus plots next Republican hostage taking ... of its own party

More on the GOP civil war from the trenches. High stakes game played by newbies to Congress and the political process. They think they are smashing success so far, and apparently so does their constituency. How this will play outside the base remains to be seen. Previously, candidates would through red meat to the base well in advance of the election and then with a wink-wink, run to the center. Seem that is ruled out by these purists. Previously, this would get you smacked down by the leadership. But these are different times.

Daily Kos
Cruz Caucus plots next Republican hostage taking ... of its own party
Laura Clawson

Mike Lofgren — The Revolt of the Lower Middle Class and the Stupidity of the Elites

 Mike Lofgren takes on Michael LInd's thesis that the Tea Party revolt is characterized by the regional (chiefly Southern) "local notable who are locally successful and have accumulated modest wealth — millions, but not billions. Lofgren sees it differently and rather alarmingly so:
In periods of political crisis or threatening social change, the lower middle class[ii]often has been the demographic segment most susceptible to militant authoritarian movements - such as the Klan or the Coughlinites in earlier times in American history. In other countries as well, the lower middle class has been the basis of fascist movements. As Richard J. Evans documents in The Coming of the Third Reich, the original electoral backbone of the National Socialists was the lower middle class, exemplified by petty shopkeepers, the lower rungs of the white-collar professions and land-poor farmers. As the great economic calamity of 1929 intensified, these groups feared, above all, sinking into the despised proletariat. It was this emotion that caused them to identify the source of their problems less in the banks, corporations and cartels that were the proximate cause of the crash than in the contaminating presence of foreigners and the underclass. France has had periodic bouts of thisphenomenon, with movements like Action Francaise, the post-World War II Poujadists (the definitive small shopkeepers movement) and, more recently, the anti-immigrant party of Jean-Marie Le Pen, whose psychologically penetrating political catchphrase was "I say what you are thinking." Capitalists are of course more than willing to fund such parties if they are on the brink of success and can be useful to capital, just as the German cartels began to fund the Nazis after their breakthrough election in September 1930. Nothing succeeds like success: University professors and intellectuals flocked to the Nazi Party once it gained power. But the motivating energy of the movement sprang, above all, from the fear and resentment of those tenuously situated a couple of rungs above the actual poor....
Lofgren then looks at what is happening in the US. He sees a disturbing ascendence of authoritarianism in this iteration of the Tea Party, obscuring its Libertarian roots:
[In What's the Matter with Kansas Thomas] Frank identified the culture wars as trumping economics, but the fascinating question he never sufficiently answered is how this mechanism works at the granular level.
In 1933, psychologist Wilhelm Reich attempted to answer that question in The Mass Psychology of Fascism. His answer: The virus is all around us, because it is latent within ourselves. But it flourishes in rigid, punitive and authoritarian upbringings, whereby a person's early domestic circumstances foreshadow his future relationship with state and society. In a home life filled with punishments, taboos and guilt, Reich saw the kernel of the future fascist: repressed, conformist and outwardly submitting but filled with a rage over his humiliation whose source could never be admitted. This dilemma accounts for the curiously contradictory psychology of the adherents of authoritarian movements. They are highly suggestible followers of some strong leader whom they can masochistically adore, yet at intervals they become anarchic and rebellious. And as they cannot admit the roots of their rage, they displace it onto others: Hence the xenophobia, the militancy, the endless search for scapegoats. It is no coincidence that this kind of personality finds an outlet on the Tea Party - which overlaps so heavily with followers of the Religious Right, whose lives are often a catalogue of commandments, taboos and shibboleths.
All this unhealthy energy usually does not find a unified political objective unless coaxed along by money and organizational skill from outside....
...there are always not a few businessmen willing to finance an ostensibly populist movement so as better to manipulate it, and who then get an unpleasant surprise....
Definitely an analysis worth reading all of. This is a defining movement of our time and not only in the US.

Bill Black — Economics could be a Science if More Economists were Scientists

Another "ouch" post by Bill Black smacking down Raj Chetty op-3ed about economics as science. The title sums it up perfectly.

New Economics Perspectives
Economics could be a Science if More Economists were Scientists
William K. Black | Associate Professor of Economics and Law at the University of Missouri-Kansas City in the Department of Economics and the School of Law

Sallie Krawcheck on JPM fines: "A real cost of doing business"

The culture of fraud and criminality on Wall Street has become so ingrained that execs like Sallie Krawcheck don't even think twice about it. Instead, they whine about the fines they have to pay. In an interview here she calls it "a real cost of doing business.

What about the millions of people that these banks are illegally ripping off to the tune of billions and what about the very criminal rackets that they run, which perpetrate things like fraud, money laundering, market manipulation, etc?

These activities are a REAL COST TO US, CITIZENS, SALLIE. Did you ever think of that?

Wall Street has been legally allowed to brazenly operate in this fashion for so long that they literally show contempt for us even questioning what they are doing.

It's really time to stop all this. We NEED some kind of revolution.

Bill Mitchell — If you can have full employment killing Germans …

Bill has an important post up today that is about the fundamental issue in modern economies, the relationship of the key human factors of production, namely, capital or ownership of the means of production and represented by investment, management or the organizational capacity of firms, and labor or the productive capacity of firms, since it is workers that produce both capital and consumption goods. Bill's analysis is sociological and political, as well as economic, or to combine them, institutional.

I have been thinking about this for some time and my conclusion is that capitalism is highly inefficient overall because it pretends to be highly efficient. In being highly efficient it treats labor — workers as human beings — as commodities that are bid for in 'the labor market," on the same level of other resources. There is some lip service to "human capital" but that refers mostly to knowledge workers and not "the lower classes" into which the former middle class is now slipping in developed countries under neoliberal regimes.

I do not think that there is any way to fix this and retain the fundamental principles of capitalism. However, capitalism is embedded culturally and institutionally now and it will be the work of ages to change with unless there are emergent circumstances that result in more sudden change as the world adapts to changing conditions — which is a distinct possibility.

In the meantime, the issue is how to make capitalism work better for all factors, especially labor, since labor is at a particular disadvantage, as Bill's analysis reveals. The MMT answer is largely through the introduction of the MMT job guarantee as price anchor with government playing the role of last resort.

I think that this may be an improvement over the current situation by relieving the conflation of work necessary for subsistence and work that produces a surplus over necessity. But I don't see it as addressing the actual issue, which is the issue of distribution of the surplus, which is fundamentally an issue of fairness and justice.

The issue cannot be solved without addressing fair return on capital, profit share and management share versus labor share, hoarding and the relation of wealth and status to institutional power and political power. These are the very issues that capital and management demand be taken off the table and they are in a position to do it,

Moreover, when forces into a compromise that increases the welfare state, TPTB immediately set about undoing it or at least diluting it in their advantage. Therefore, as long as the system remains in place positive change is temporary.

What his means economically is that there is always a demand deficiency, debt servitude, or unsustainably rising private debt that leads periodically to debt deflation and the scooping of resources for pennies on the dollar by those with deep pockets. And, as we saw in the recent crisis and aftermath, the outsized deficits went to rescuing the financial sector that caused the crisis, with no attached accountability, and the fiscal injection went largely to corporate profits without increasing the welfare of the middle and lower classes. "Trickle down," not withstanding.
William F. (Bill) Mitchell |Professor of Economics at Charles Darwin University, Professor of Economics at the University of Newcastle, and inaugural director of CofFEE

Dear Mr. President

Dear Mr. President,

I understand you've had a rough couple of weeks. First you had to deal with an insane government shutdown and near debt-default. And now the rollout of your signature achievement- Healthcare reform- has been a total disaster. Here's the thing- I like you, and I voted for you. But I don't feel sorry for you. You deserve every ounce of the misery and failure that you are now immersed in. I feel just as obligated to defend your botched healthcare roll out as you felt obligated to listen to our pleadings for a public option/single payer. You sewed the seeds of your own destruction, because you didn't want to make the difficult, just, policy choices when the opportunity was presented to you. You, and your supporters, are now paying dearly for your prior lack of conviction. To make matters worse, this train wreck is severely undermining the American people's already low confidence in the ability of government to 
properly serve the public interest. While you may be able to dye over all the gray hairs and wrinkles that these days have caused you, you will never be able to undo the trauma that this nation has endured since November 2010.

The failure of the website is entirely due to the policy choices you made back in 2009. Instead of adopting a fair, cheap, and simple Medicare-for-All like the majority of your supporters wanted, you opted for an expensive, hideously complicated, pro-corporate Rube-Goldberg machine because you opened the White House doors to industry lobbyists and didn't want to scare the Big Money. When it came to criminally prosecuting the perpetual fraud machine of Wall Street that cost the global economy tens of trillions, you urge us not to be so vindictive and "look forward, not back". Instead of focusing like a laser on the depressed economy, you passed through a weak stimulus, wiped your hands of responsibility for the macro-economy, and proceed to push through your status-quo healthcare bill that no one wanted, and few could understand. Your website is now a disaster, precisely because you lacked the courage to do what was right for the nation. Just as the ACA's drafters stretched and strained to make marginal improvements to an archaic and hopelessly broken healthcare system,'s computer coders are stretching and straining to fulfill the nearly impossible bureaucratic tasks that your "reforms" have demanded of them. 

The insane Republican right has a lot do with these problems, sure. But you must realize that you inflamed and empowered them. This loudly dying party is now angry, racist and vile, but there is nothing you can do about that.  The way your enemies behave is out of your control. When you took office in January of 2009, the Republican party was in shambles. They were at their weakest point in a generation, and you had a golden opportunity to make them permanently irrelevant. Instead of driving a stake through the Republican Party's cruel gray heart, you breathed new life into the elephant's corpse by taking your eye off the economic ball, and opting for the status quo option of a conservative and legally dubious individual mandate.

Thankfully though, it appears you have finally gotten over the inane naivete of your 2004 convention speech, where you pretended, in front of a crowd of fawning loser liberals, that the vast political differences of this country simply didn't exist. Only declaring "there are no red states or blue states" does not make it so. Words alone do not have that power. When Lincoln read his Emancipation Proclamation, he did not simply declare slavery to be over; instead he fought to make it so, by rallying his nation around the bloody but righteous cause of the civil war. You must realize that you are now facing the same political/economic forces, propaganda strategies, ingrained racial animus, and oligarchic genetic codes that Mr. Lincoln faced nearly 150 years ago. The United States is once again fighting a civil war, (thankfully without guns), and the stakes this time are also very grave.  In the face of unprecedented foreign competition, our union, divided, cannot much longer stand.

But because you abandoned your supporters and scared the moderates with this complicated bill, you stirred up this mad right wing in a year ending with a zero. The disastrous midterm loss that you brought upon yourself and your party has killed the progressive agenda until 2014 at least, and likely until 2020. Your website is not the only thing putting the American people on hold! Making the real reforms to save our economy and our planet have now been put on hold 
indefinitely.  Eventually, if you haven't already, you need to ask yourself if your complicated and inadequate health care bill was worth sacrificing 10 years of progress: 10 years that this fracturing nation probably cannot afford.

Mr. President, you are without a doubt an honest and upright family man. I hope, and predict, that this botched rollout will be a minor historical footnote in the broader effort of expanding health insurance coverage. You don't deserve half of the criticism leveled at you, but you have made some grave errors. My hope is that you can own up to these mistakes, and use the lessons learned to inform your decision making going forward.

As you would say in your native tongue: As-salam alaykum (kidding)

Randy Wray — Monetary and Fiscal Operations in China, An MMT Perspective

Here’s a piece I wrote with Yolanda Fernandez for the Asian Development Bank.
Monetary and Fiscal Operations in the People’s Republic of China: An Alternative View of the Options Available
You’ve no doubt read various analyses predicting the impending collapse of the Chinese financial sector, and arguments that China cannot continue to grow at a rapid pace. While we do think that China faces some challenges, we part company with the gloom and doom crowd. What most of them do not understand is that China is a sovereign country that issues its own currency. Affordability is not an issue. China has the fiscal capacity to resolve any financial crisis, and it can “afford” to grow fast if it chooses to do so....
Economonitor — Great Leap Forward
Monetary and Fiscal Operations in China, An MMT Perspective
L. Randall Wray | Professor of Economics and Research Director of the Center for Full Employment and Price Stability, University of Missouri–Kansas City

Shooting Ourselves In The Semantics

   (Commentary posted by Roger Erickson.)

I cringe every single time I hear people vehemently arguing over whether our public deficit is good or bad.

At the start of debate, wouldn't it help to at least jointly define the terms being used?

The present debate is useless for our 315 million citizens, precisely because there are too many examples of self-defeating Semantics displayed, in front of too many diverse audiences, all used to their local and discipline-specific jargons.

We can never catch up in the task of recruiting enough of our 315 million (and growing) people - in thousands of distinct and diverging sub-audiences - to adequate situational awareness ... until we AT LEAST cease, forever, calling self-investment a "deficit" in fiat.

What the hell does a deficit in fiat even mean? (And yes, policy arguments are full of other examples of broken semantics. This isn't the only one.) Best I can come up with is that it means a deficit in Public Initiative. We can digress from that point, but in doing so we may as well discuss how many pinheads can dance on an angel.

Meanwhile, this is rather like converting Priests to be atheists, by constantly telling them there is no God, there is no Devil, there is no Heaven, and that they won't go to Hell.

At the end of the day, all you've done is reinforce the exact, limiting concepts you want them to get past, and free themselves from.

Semantics and propaganda: Every word you utter INSTANTLY triggers an emotional impact in audience members, long BEFORE the concept delivered by the full sentence is even partially, let alone fully parsed, eventually, after some subsequent thought (aka, extended neural processing). There are diverse circuit latencies in the human brain. Their latencies range from fast, for ancient, underlying, hardwired circuits, to slow, for those conveying associative learning, including indirect pattern recognition - the kind it takes to traverse unpredictably changing contexts. Live with it, or see your group dynamics fail.

Broken semantics is like running in quicksand. It's self-defeating. Long before the neocortex engages to consider new concepts, you may have - by sloppy word selection - mobilized the brainstem emotional circuits to fully oppose the logical explorations you ostensibly desire.

That condition is the simple price we pay for having a lean vocabulary and language structure that lowers our adaptive burden by easily adjusting word meanings for altered contexts. Call it slang, jargon or whatever you want. The words we use ALWAYS have context-specific connotations that change as fast as local contexts do, and we ALWAYS have different people steeped in different, local contexts which dominate their instant perceived implications of words and phrases which are not yet logically interpreted as a complete sentence - or more. That's the basis of oratory, semantics, politics, sophistry and propaganda.

What part of shooting ourselves in the semantics don't we understand?

If you want people to explore new options sooner, quit referring to the old impediments in the very words you use for the new recommendation! Refer ONLY to the new, CONSENSUS Desired Options that embrace and extend all local contexts, so that people can engage their brains WITHOUT actively recruited prejudices in the form of past baggage.

If carefully practiced, appealing to some form of "a more perfect union" usually does the trick, since the return-on-coordination it triggers always swamps all other returns. Yet people appreciate that ONLY if your semantics and wording doesn't recruit their old gut reactions to oppose the purely local costs they'll think of. The difference between triggering a cooperative "win-win" versus a hyper-competitive "lose-lose" response in different audiences is entirely dependent upon how carefully you choose your words to entice them all WITHOUT triggering their social auto-immune responses.

If you're are NOT careful, you can easily end up triggering a Cultural_Auto_Immune_Social_Disease.

When herding cats ... or humans, it helps to know your audience. How difficult it is to entice a given audience depends on how much practice they've recently had at coordination, and at benefiting from it.

If you start talking to Russians right off the bat about the benefits of cooperating ... it's a lost cause. That is NOT in their recent, cultural DNA.

Similarly, if you start talking to Jane and Joe Sixpack in the USA, and open with something about increasing the deficit ... you've already shot the conversation in the semantics. You'd make faster progress by trashing moms, apple pie, pick-up trucks and country music before asking for cooperation. Don't expect a warm welcome with either approach.

How's this for a pick-up line?

Hey, Bay_bee, yer mom's apple pie stinks - & yer dad's truck too!
                    How 'bout a date? :(

Yeah, that might work for some rebels, but do you really want to limit your message to that audience alone?

Depends on whether you just want to be RIGHT, or actually make your country successful.