Happy New Year from MNE!

It's Official: Standard & Poors Downgrades Fiat

   (Commentary posted by Roger Erickson)



The European Union was stripped of its AAA credit rating by the Standard & Poor’s agency on Friday [Dec 20] as the 28-state block struggles to deal with the debt problems afflicting a number of its members and internal conflict over its budget.

Maybe some of them still think Fiat is a car?

Or are they actually downgrading public initiative? If so, how can one pretend to apply a long-term metric to something that's as fickle as mood, propaganda or the act of recognizing context?

Hopefully S&P's New Years resolution is to recognize common sense, forgo innocent fraud, and seek situational awareness?

Tim Johnson on ethics and finance

This research question addresses an issue moral philosophy: what is the relationship between ethics and the structure of the polis and is motivated by themes in Pragmatic philosophy, in particular the hypothesis reciprocity emerges as a social norm to enable resilient and effective communities were exchange is important. The different commercial cultures can be seen as representing points on a spectrum of commercial attitudes and in cultures where there are low interest rates the hypothesis is that there will be greater homophily between the agents in the network, and this will create more resilient and effective financial networks. The research will aim to inform regulators of any intrinsic merits with emerging financial mechanisms, particularly crowdfunding and peer-to-peer lending, particularly as there is concern that the regulators will stifle the democratisation of finance.

Magic, Maths, and Money — The Relationship between Science and Finance
New Year's Resolutions
Tim Johnson | Lecturer in Financial Mathematics at Heriot-Watt University, Edinburgh

Pope's sharp words make a wealthy donor hesitate

Caruso-Cabrerra with a report about a big anonymous "donor" who doesn't cotton to the Pope's recent public observations and opining about economic inequalities,  report here, excerpts:

At issue is an effort to raise $180 million for the restoration of St. Patrick's Cathedral in New York being spearheaded by billionaire Ken Langone, the investor known for founding Home Depot, among other things. [Ed: "hey Ken, can you pass me the Phillips head?" ... "Is that the pointy one?"]

Langone told CNBC that one potential seven-figure donor is concerned about statements from the pope criticizing market economies as "exclusionary," urging the rich to give more to the poor and criticizing a "culture of prosperity" that leads some to become "incapable of feeling compassion for the poor."  

Langone said he's raised the issue more than once with Cardinal Timothy Dolan, archbishop of New York, most recently at a breakfast in early December at which he updated him on fundraising progress.

"I've told the cardinal, 'Your Eminence, this is one more hurdle I hope we don't have to deal with. You want to be careful about generalities. Rich people in one country don't act the same as rich people in another country,' " he said. 

Dolan told CNBC that he had heard from Langone and said, " 'Well, Ken, that would be a misunderstanding of the Holy Father's message. The pope loves poor people. He also loves rich people.' ... So I said, 'Ken, thanks for bringing it to my attention. We've gotta correct to make sure this gentleman understands the Holy Father's message properly.' And then I think he's gonna say, 'Oh, OK. If that's the case, count me in for St. Patrick's Cathedral.' "

Sounds like the bishop is going to try to spin the Pope's message to appease "the donor" and get the dollars for the construction project.

This is a soft corruption we can see at work here within the financial operations of "the church".

Joel Kotkin — Neither Party Dealing With More-Rigid Class Structure

Diminished prospects – what some describe as the “new normal” – now confront a vast proportion of the population, with wages falling not only for noncollege graduates but also for those with four-year degrees. Overall, median incomes for Americans fell 7 percent in the decade following 2000 and are not expected to recover, according to some economic models, until 2021.

This decline has infected the national mood. Today, more middle- and working-class Americans predict that their children will not do better than they have done.Overall, almost one-third of the public, according to Pew, consider themselves “lower” class, as opposed the middle class, up from barely one-quarter who thought so in 2008.

It’s not surprising, then, that the vast majority of Americans believe the president’s economic policy has been a dismal failure, at least for the middle and working classes. Federal Reserve monetary policy, in particular, appeared to favor the interests of the wealthy over those of the middle, yeoman class. “Quantitative easing,” notes one former high-level official, essentially constituted a “too big to fail” windfall for the largest Wall Street firms, and did little for anyone else. Faith in the economy, despite the soaring stock market and increased price of assets, has remained weak. Americans by a 2-1 margin rate the economy negatively.

These realities helped spark both the Tea Party and the Occupy movements and underpin the support for such disparate figures as Sarah Palin and Elizabeth Warren. At the same time, outrage at our current economy has undermined public esteem for almost every institution of power – from government and large corporations to banks and Wall Street – to the lowest point ever recorded.

New Geography

Neither Party Dealing With More-Rigid Class Structure

Joel Kotkin | Executive Editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register

The Land of Sacrifice

Stunning cartoon below (H/T Nebris) that really nails it.

They only have images of GOP bigs Boehner and McConnell on there but you have to add all of the Democrat fiscal morons to make it more complete.

But look this guy has the big 3 gods of these morons nailed:  the Austrian's "Inflation Goblins", the Free Market moron's "Bond Vigilantes", and the Fix the Debt idiot's "Deficit gods"; that covers just about all of it.

Wow good cartoon, exposes a lot of falsehoods in a small space. As they say a picture is worth a thousand words.

Really good job M. Wuerker.

Its STILL 'The Economy'... stupid!

Saw this chart from Turd Way, er... I mean Third Way which shows how the topic of "The Economy" is STILL the #1 issue with U.S. voters today and over the years:

Its a clean sweep at #1 issue.

And this is interesting that this issue has remained of the most importance throughout what imo were at least generally perceived as "good times and bad", this chart goes back to 2004.

"The Economy" is manifestly the long term #1 issue with voters and somehow Ducks Dynasty becomes the #1 cable show and nobody wants to watch the cable shows that focus on "The Economy" why is this?

Perhaps because ALL of the cable shows that focus on the economy are run by crews that don't even know what the heck is even going on in the economy much less how to fix it, or even who the people are who have knowledge of actual solutions who they can invite on as guests.

So all we are left with is un-watchable moron fests on Fox/FoxBus/CNBC/MSNBC/Bloomberg, etc...and the US viewing public is more content to watch the Ducks Dynasty people do mundane personal things as they go about their days on the cable.

Pretty sad. But I don't blame the US people, they manifestly know what the most important issue is.

I blame the pathetic current crop of network people who obviously don't know how to "give the people what they want" to focus on.

And their ratings continue to circle the toilet bowl.

Buffett blasts gold lovers

No, not Warren....Jimmy. It seems like none other than musician Jimmy Buffett understands the silliness of the gold lovers. Recently I was listening through his latest album, when the song "Useless but Important Information" came on. Admittedly, its not a terrific song, but Buffett had some interesting ideas about gold: 

"...Gold all starts out in the ground

 Till very clever men dig it up 

Then wait, then they bury it again  

Most comes from Africa and ends up in Fort Knox

Only gets its value from the guards and chains and locks...pretty rocks..."

Seems like this 67 year old singer/songwriter understands commodity price manipulation pretty well! If a guy with just a bachelors degree like Jimmy Buffett can understand this, why cant the gold bugs/Von Mises/Peter Schiffs/Ron Paul types of the world get it? Perhaps professional economics often does more harm than good? 

Maybe its time to make "Margaritaville" the official MMT anthem ;)

Here we go exactly as I predicted: NYC Mayor Bill De Blasio's sellout has begun.

Just as I predicted, Bill De Blasio, NYC's newly elected mayor, the same guy who is branded a Socialist, Coummunist and "Super Progressive" by Conservatives, is already selling out.

First he installs Rudy Giuliani's top cop, Bill Bratton, as police commissioner. So, don't expect any change in NYPD's heavy handed and highly racist approach to policing.

And guess who he just appointed as the new Deputy Mayor? Yep...a Goldman Sachs executive.

If anyone other than the 1% thinks that the system works for them this should be the final, last, proof they need that it absolutely does not. It's a sham. These guys will say anything, do anything, to get elected. Then, once they're in, that's it, it's the status quo or worse.

One week left to sign up for my next Forex course!

Make your 2014 New Year's resolution be...to make more money!

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New classes starting in January. For more information go here.

My conversation with David Walker today exposed a lot. Like, he really, really, doesn't have a clue.

My Twitter conversation today with David Walker exposed a lot, like, he's very confused. First he tried to say that I "grossly misrepresented" him with my sound clip of our interview, where he said that the Social Security checks would not bounce, thus contradicting himself and all of his efforts in trying to make people believe that the program was insolvent.

Today he clarified in his tweet that he was referring to the short term health of SS, but not long term. Then I said to him that it didn't matter, short term or long term; the U.S. can't run out of dollars. I sent him the clip of Alan Greenspan smacking down Paul Ryan on this very subject.

The effort apparently went right over Walker's head because his response to me was that I didn't understand government finance. He said--get this--that it was a question of fiscal policy and not monetary policy. (As if I didn't understand that.) I never even mentioned monetary policy to this guy!!!

All at once it made me realize that Walker didn't grasp what Greenspan and I were saying. I guess he thought that we must have been referring to monetary policy because we said something about the government not running out of dollars and he believes those dollars can only come from one place and one place only and that is the Fed. (He's obviously hooked on the Fed "money printing" thing.)

Walker went on to say there were "legal issues" that I didn't understand as well. What legal issues? My guess is that he was trying to make a point that the Fed could not "pay into" Social Security. No kidding, but that was never anything that I ever mentioned.

He continued by trying to impress me with the fact that he was a Social Security Trustee for five years. This was intended to mean that he, not I, was the expert on the matter. (And we all know that government bureacrats and even high level policy "experts" ALL know what they're talking about when it comes to the monetary system right? !@#$%)

Anyway, the whole conversation left me very depressed. This guy really, really, has no clue.

Mike Konczal — Colleges are teaching economics backwards

Good post by Mike Konczal on teaching economics and how it is taught matters a whole lot. But it's just the tip of the iceberg. Even so it would be step forward, actually a step back to the way it used to be done, as he points out.

It used to be different. The preeminent economist Paul Samuelson once said "I don't care who writes a nation's laws, or crafts its treatises, if I can write its economics textbooks." And he was the one writing its textbooks for a long while. In the first version of his blockbuster textbook Economics (1948), the study of macroeconomics came first. And institutions were emphasized before the more abstract microeconomics that start off the education now. One of the central ideas was the “fallacy of composition,” or how things true of individual people or markets were not true of the aggregate behavior of the economic system.

Now, however, the newest editions of this textbook follow the normal curriculum. When did it change? Between the 13th and 14th editions, which came out in 1989 and 1992. In the 13th edition macroeconomics come first, while in the 14th edition there was a massive the whole ordering has been flipped.

The preface to the 14th edition is very clear on why it changed. The 14th edition says it has a new “leitmotif” in the “rediscovery of the market.” Celebrating the end of the Soviet Union, countries in Eastern Europe were rushing to introduce capitalism, while Western countries were deregulating and privatizing industries. Samuelson describes these political events marking the End of History as “parallel to placing microeconomics first in the sequence.” Microeconomics was seen as intellectually prior to and necessary for macroeconomics, tossing the concept of the fallacy of composition overboard. Not only that, but the new emphasis on an abstract and decontextualized microeconomics meant that the authors “deleted a great deal of institutional material that is less important for an understanding of modern economics.”

The Washington Post — Wonkblog
Colleges are teaching economics backwards
Mike Konczal | The Roosevelt Institute

David Walker responds to my tweet

He calls himself "Deficit Ranger." Oh brother.

@mikenorman - Your clip is a gross misrepresentation of my interview via selective editing. My comment was on current not L/T solvency. DW

— Dave Walker (@DeficitRanger) December 29, 2013

Says I "misrepresented" him and he was referring to the "long-term" deficit. So, we're going to run out of dollars in the long term, David?

Here's Greenspan.

Gavin Mendel-Gleason — Econophysics and Socialism: An Interview with Paul Cockshott

Paul Cockshott is a Scottish computer scientist and a reader at the University of Glasgow. His major areas of work includearray compilers, econophysics and thephysical foundations of computability.

He has written a number of books including Towards a New Socialism and more recently Classical Econophysics.

The North Star
Econophysics and Socialism: An Interview with Paul Cockshott

Gavin Mendel-Gleason

Randy Wray — Bop A Mole #1: Does Modern Money Theory Need A Job Guarantee?

OK for the next few weeks we are going to play a game called Bop a Mole.

Here’s the deal. For more than two decades a small group of scholars hashed out what became Modern Money Theory. We’ve written many books, a hundred chapters for edited volumes, hundreds of published articles, and thousands of blogs presenting the theory and defending it against critics.

Yet practically every day a Mole pops up to ask: “Why doesn’t MMT ever talk about XXX?” You’ve seen the claims:

Mole 1: MMT never deals with inflation.

Mole 2: MMT never talks about exchange rate effects.

Mole 3: MMT cannot relax the consolidation assumption.

Mole 4: MMT ignores the private banks.

Mole 5: MMT is just like slavery; it forces people to work for welfare.

Mole 6: MMT promotes unbridled growth, ignoring environmental sustainability.

We Bop one Mole and another jumps up. In fact, every possible critique of MMT has been addressed in at least a dozen different academic papers and probably a hundred blogs.

The problem is that the Mole Bopping is sometimes buried deep in the paper, perhaps in an argument that is too academic. Or it is too hard to find the exact blogs where we’ve dealt with the issue. Heck, I cannot remember 95% of the stuff I’ve written, much less find it.

So I thought we’d play a game, Bopping Moles, and try to keep these Mole Boppings organized for future reference. When Mole 1 Pops up again, we can just pull out Mole Bopping #1. No reason to re-Bop if you’ve Bopped ‘em once.

We’ll Bop a Mole today. I’ll open up the comments section to your suggestions for the next Mole Bopping.

Economonitor — Great Leap Forward

Bop A Mole #1: Does Modern Money Theory Need A Job Guarantee?

L. Randall Wray | Professor of Economics, University of Missouri at Kansas City

Lord Keynes — The Nature, Origin and History of Money 101

...my posts on the nature, origin and history of money.

Social Democracy For The 21St Century: A Post Keynesian Perspective
The Nature, Origin and History of Money 101
Lord Keynes

Camille Paglia: A Feminist Defense of Masculine Virtues

Paglia has been banging this drum for a few weeks now, Drudge has been linking to her on this theme I think is interesting and I see a lot of truth in what she says here.

Write up by Weiss at WSJ here, excerpts:

'What you're seeing is how a civilization commits suicide," says Camille Paglia. This self-described "notorious Amazon feminist" isn't telling anyone to Lean In or asking Why Women Still Can't Have It All. No, her indictment may be as surprising as it is wide-ranging: The military is out of fashion, Americans undervalue manual labor, schools neuter male students, opinion makers deny the biological differences between men and women, and sexiness is dead. And that's just 20 minutes of our three-hour conversation.

Politically correct, inadequate education, along with the decline of America's brawny industrial base, leaves many men with "no models of manhood," she says. "Masculinity is just becoming something that is imitated from the movies. There's nothing left. There's no room for anything manly right now." The only place you can hear what men really feel these days, she claims, is on sports radio.

To judo this thing from Paglia here, I think females are often natural managers and fearless; and if economics is sometimes literally translated as "house-management" I often wish there was more female presence in economics which (not to denigrate the female economists I admire) is mostly imo an "All Male Review" (and reeeaallllly screwed up!)

Where are the females in economics?  Maybe a large part of the problem we face is due to the fact that imo females are at least under-represented in leading economic policy positions and in the academe.

Salon: Paul Ryan lectures the pope

More on this emerging confused economic back and forth between nominal Christians who exhibit strongly neo-liberal characteristics and the newly installed Pope Francis who continues to observe and report on a failing ersatz "capitalism" for what he sees is this type of system's shortcomings as a system capable of delivering economic justice.  From Salon here.

Here is a revealing line from Ryan:

“What I love about the pope is he is triggering the exact kind of dialogue we ought to be having,” Ryan told the Milwaukee Journal-Sentinel. “People need to get involved in their communities to make a difference, to fix problems soul to soul.”

"The exact kind of dialogue we ought to be having" is between the blind guides on both sides of this issue who don't even know what the heck is even going on?  Bibel-babbling back and forth?  Conflating the superior authority of government with that of a subject household?

What the hell is this idiot even talking about with this pagan sounding "soul to soul" here?  Don't tell me, more "charity" or something?

Well, I guess if your goal is to never get anywhere towards justice, and/or to seek to justify yourself through works of the flesh, a time-wasting, never ending human "dialogue" or "reasonings" while we never get to an actual revelation of truth would sound like a good idea.

Memo to Ryan (and the Pope):  Our 'souls' have no authority to fix ANY of these economic problems; any such authority is in our institution of civil government.  And for Ryan an institution which your stupid and blind self continues to pollute in your present condition.

"he who is resisting an authority has withstood God's mandate."   Romans 13:2

Not the best position in which to be standing Ryan; or any in the rest of Christendom for that matter.

Kevin Gosztola — Interview with NSA Whistleblower Bill Binney: Afraid We’re Spreading Secret Government Around World

The FBI, Drug Enforcement Agency, and law enforcement, along with the NSA, are collecting information on Americans and then using that information to arrest people. “Parallel construction” is then used to “fabricate evidence” that is substituted with evidence that is subsequently collected legally and through mechanisms that have traditionally been an accepted part of criminal investigations.

In former senior NSA employee and whistleblower William Binney’s view, this is the “real problem.” It is occurring without a warrant and they can bring this information into court. He calls it the “planned program perjury policy right out of the Department of Justice.”

“They’re lying to the courts,” Binney explains. The government knows that they are lying when they say here is the evidence used to arrest these people. The information is also being shared with “foreign counterparts.” They’re telling “foreign counterparts” this is the evidence used to arrest people but the “counterparts” do not get to see the data because it is from NSA collection.

Essentially, this is the United States subverting not only its own justice system but justice systems around the world.

Binney served as a director of the NSA’s World Geopolitical and Military Analysis Reporting Group and was a senior NSA crypto-mathematician when he worked for the agency. He left the agency after the NSA began to collect data on Americans they should not have been collecting. The agency had also rejected a program called ThinThread, which would have enabled targeted information acquisition. ThinThread would have been employed by the NSA instead of the bulk data collection that occurs in violation of the privacy of citizens in America and around the world….

He also clarified his thoughts about how journalists had handled information from Snowden so far. He doesn’t see anything wrong with what they are doing and how they are exposing the information in stories.

“What they have been exposing should be public knowledge,” he declared. “Collecting all this information on individuals is what totalitarian states have done down through the centuries. That’s been their business.”

It is why German Chancellor Angela Merkel, whose phone was tapped by the NSA, was upset. It is like what the Stasi did, what the KGB did, what the Gestapo and SS did and what Mao Zedong’s people did in China. It is a “totalitarian procedure.”

Binney argued, “If we accept this, then we’re accepting totalitarianism. We have to speak up against it.”

Firedoglake
Interview with NSA Whistleblower Bill Binney: Afraid We’re Spreading Secret Government Around World
Kevin Gosztola

Edwin Lyngar — Why I fled libertarianism — and became a liberal

I was a Ron Paul delegate back in 2008 -- now I'm a Democrat. Here's my personal tale of disgust and self-discovery….

Libertarianism is unnatural, and the size of the federal government is almost irrelevant. The real question is: what does society need and how do we pay for it?

Salon

Why I fled libertarianism — and became a liberal

Edwin Lyngar

(h/t Charles Hayden on FB)

I sent him a tweet:

@Edwin_Lyngar Nice Salon post. How to pay for it? See Warren Mosler @wbmosler 7 Deadly Innocent Frauds. #MMT http://moslereconomics.com/2009/12/10/7-deadly-innocent-frauds/ …

Department of Huh?

Surprising to find this biased conclusion reported on Alternet.

The legitimacy of acupuncture has been widely debated over the past several decades. While many swear by its healing powers, others, most notably medical researchers, say it does not work for anything, period.

A new study published in the journal Cancer confirms the latter view, suggesting that any relief acupuncture may bring, is the result of a placebo effect and no better than ‘sham version’ used in a breast cancer drug study, Health Finder reported.

Conversely see for example Acupuncture: Review and Analysis of Reports on Controlled Clinical Trials (2003; 87 pages)  at Essential Medicines and Health Products Information Portal — A World Health Organization resource, listing:

1) diseases, symptoms or conditions for which acupuncture has been proved-through controlled trials-to be an effective treatment;

2) diseases, symptoms or conditions for which the therapeutic effect of acupuncture has been shown but for which further proof is needed;

3) diseases, symptoms or conditions for which there are only individual controlled trials reporting some therapeutic effects, but for which acupuncture is worth trying because treatment by conventional and other therapies is difficult, and

4) diseases, symptoms or conditions for which acupuncture may be tried provided the practitioner has special modern medical knowledge and adequate monitoring equipment.

Moreover, there are many more listings under categories 1 and 2 than 3 and 4.

Seems to be another instance of orthodoxy marginalizing heterodoxy in the media?

Alternet
New Study Concludes Acupuncture Is Bogus—Sorry

Jodie Gummow

Janet Allon — Real Life 'Wolf of Wall Street' Victim Pens Scathing Letter to Scorsese and DiCaprio

'Your film is a reckless attempt to pretend that these sorts of schemes are entertaining.'

Stark.

AlterNet
Real Life 'Wolf of Wall Street' Victim Pens Scathing Letter to Scorsese and DiCaprio
Janet Allon

Scott Keyes — 'Occupy' Group Houses Homeless Couple for Christmas—Plans to House More in 'Tiny Houses'

Innovative group builds tiny homes that cost just $3,000, paid for by donations.

AlterNet
'Occupy' Group Houses Homeless Couple for Christmas—Plans to House More in 'Tiny Houses'
Scott Keyes | Think Progress

See also Tiny House Communities: a Solution to Homelessness, Here's What Austin's Newest Housing For the Chronically Homeless Looks Like, Tiny House Community, Tiny House Living, and The Tiny House Blog.

Zachary Mider — Moguls Rent South Dakota Addresses to Dodge Taxes Forever

No longer necessary to go offshore to find a tax haven.

Bloomberg
Moguls Rent South Dakota Addresses to Dodge Taxes Forever

Zachary R. Mider

Doesn't make much difference economically, since tax applies when the trust is drawn on, and the federal government as currency issuer is not funded by revenue. The amount that remains undrawn on is neutralized as permanent savings.

On the other hand, it thwarts the objective of progressive taxation to counter economic inequality and promotes increasing plutocracy.

Joe Weisenthal — Goldman's Top Economists Just Answered The Most Important Questions For 2014 — And Boy Are His Answers Bullish

Jan Hatzius. 

Business Insider
Goldman's Top Economists Just Answered The Most Important Questions For 2014 — And Boy Are His Answers Bullish

Joe Weisenthal

Rosemary Joyce — 'Tis Better to Give Than to Receive

What economists don't know about gifts and anthropologists do.

Psychology Today | What Makes Us Human
'Tis Better to Give Than to Receive
Rosemary Joyce, Ph.D. | Professor of Anthropology at UC Berkeley

The gift economy is still alive and well.

Travis Gettys — Noam Chomsky: We’re no longer a functioning democracy, we’re really a plutocracy (via Raw Story )

Noam Chomsky: We’re no longer a functioning democracy, we’re really a plutocracy (via Raw Story )

The world faces two potentially existential threats, according to the linguist and political philosopher Noam Chomsky. “There are two major dark shadows that hover over everything, and they’re getting more and more serious,” Chomsky said. “The…

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Ramanan — Description Of Cryptocurrencies Using SNA

The cryptocurrencies are thus a more sophisticated version of stocks of companies trading in markets with no income and no office.

The Case For Concerted Action
Description Of Cryptocurrencies Using SNA
Ramanan

Upcoming Forex trading courses for 2014

Millionaire mogul Peter Schiff makes an ass of himself in Walmart parkin...

We Need A MiddleClass Industrial, Congressional Complex

(Commentary by Roger Erickson)

:(

Take this example.

From MRAP to scrap: U.S. military chops up $1million vehicles in AfghanistanThe giant mine-resistant trucks have saved countless lives in Afghanistan, but the Pentagon says keeping them is too expensive.
By David Zucchino, LA Times, December 27, 2013

Imagine if we could have diverted all that effort to complexes other than just the MICC?

Like a MiddleClass ICC. It'd be almost like having a democracy!

Like the one we used to have? Even better? One making all citizens components of an Entrepreneurial Social Complex.

MIC-ESC. A MiddleClass Industrial, Congressional, Entrepreneurial Social Complex. May have to work on a catchy name.

Steve Taylor — Does Your Self Exist?

Why is this important, one may ask? Economics and political science presuppose issues that form the subject matter of social and political philosophy, which is a subset of ethics. Ethics is a branch of philosophy informed by ontology/metaphysics and epistemology. Different fundamental assumptions lead to different ideologies as cognitive constructs of world views. This further involves psychology and biological science as inputs to action theory as an aspect of ethics.

Differences in theories of human nature lead to different ideologies as cognitive constructs and world views based on them  Stevenson investigates twelve and this list is not exhaustive. The dominant contemporary Anglo-American view is based on Hume's empiricism, which holds that the phenomenal self is constructed and that no substantial self can be located through empirical observation. This view has been compared with the no-self (Pali anatta and Sanskrit anatma) position of Buddhism, however, the Humean and Buddhist conceptions of human nature are completely different in fundamental assumptions and import for living.

The empirical view of self lead to behaviorism in psychology and its stimulus-response model. "Rationality" based on individual actors pursuing utility maximization, with utility defined as material satisfaction, is an implication of this model. Socially and politically, it implies a market society that is driven by consumption ("shopping") and in which wants are not distinguished from needs. The purpose of the representative agent is to consume all that can be produced profitably, and nothing else is produced.

Aristotle rejected this assumption and model based on it millennia ago in Nichomachean Ethics, Book One, where he considers the various theory of human nature with respect to the overall purpose of life as the dominant motivating factor. Aristotle would have been thinking of Epicurus and perhaps Democritus, but hedonism has a much older and more persistent history.

Bentham's hedonism as a conception of human nature underlies his utilitarianism. Along with Hume's empiricism that denies the existence of a substantial self, Bentham's utilitarianism is the philosophical antecedent of rationality as utility maximization, which is paralleled in psychology as Skinner's stimulus-response model of behavior. Bentham proposed the possibility of a calculus of utility, and neoclassical economic models assume such a calculus through the operation of self-interest in free markets.

It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest. — Adam Smith, Wealth of Nations, Book 1, Chapter 2

As every individual, therefore, endeavors as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. — Smith, Book 4, Chapter 2

On the other hand, most of Eastern and Western intellectual history has rejected the empiricist reductionism and materialistic hedonism as inadequate to account for the complexity of human nature, holding that it overemphasized the embodied aspect of human nature, disregarding aspects of human nature that make humans distinctly human.

In today's terms Aristotle would say that humans are optimizing agents rather than maximizing ones. Abraham Maslow analyzes this in terms of a hierarchy of needs, from the most basic survival needs to the pursuit of self-actualization. Human don't attempt to maximize a lower need before embarking on a higher one. They approach needs as a constellation of needs to be optimized, although more basic needs may require postponement of less basic needs owing to conditions.

Psychology Today?
Does Your Self Exist?
Steve Taylor PhD | Senior Lecturer in Psychology at Leeds Metropolitan University, UK

One problem with the conventional assumptions is that they are simplistic, being based on a simplistic theory of human nature that leads to an inadequate picture of life purpose. Another issue is being based on an egocentric view of human nature and human action, it leads to behavior that mistakes the trivial as important and the important as trivial. Living a good life in a good society is not considered to impact economics. Some would consider such notions quaint.

The following quote from Meher Baba's Discourses presents the perennial view. The term "soul" is used in the sense of what one is — consciousness — rather than something that one "has" in addition to mind and body. Consciousness manifests in the world through embodied mind and is not reducible to phenomenal mind or physical body. As Taylor's article suggests, consciousness can be known in itself.

Ego arises to fulfill need
The ego emerges as an explicit and unfailing accompaniment to all the happenings of mental life in order to fulfill a certain need. The part played by the ego in human life may be compared to the function of ballast in a ship. The ballast in a ship keeps it from oscillating too much. Without it the ship is likely to be too light and unsteady and is in danger of being over- turned by the lawless winds and waves.

Thus mental energy would be caught up endlessly in the multitudinous mazes of dual experience and would all be wasted and dissipated if there were no provisional nucleus. The ego takes stock of all acquired experience and binds together the active tendencies born of the relatively independent and loose instincts inherited from animal consciousness. The formation of the ego serves the purpose of giving a certain amount of stability to conscious processes and also secures a working equilibrium, which makes for a planned and organized life.

Necessary evil

It would be a mistake, therefore, to imagine that the arising of the ego is without any purpose. Though it arises only to vanish in the end, it does temporarily fulfill a need that could not have been ignored in the long journey of the soul. The ego is not meant to be a permanent handicap, since it can be transcended and outgrown through spiritual endeavor. But the phase of ego formation must nevertheless be looked upon as a necessary evil, which has to come into existence for the time being.

Ego creates divisions and separation

The ego thus marks and fulfills a certain necessity in the further progress of consciousness. However, since the ego takes shelter in the false idea of being the body, it is a source of much illusion, which vitiates experience. It is of the essence of the ego that it should feel separate from the rest of life by contrasting itself with other forms of life. Thus, though inwardly trying to complete and integrate individual experience, the ego also creates an artificial division between external and internal life in the very attempt to feel and secure its own existence. This division in the totality of life cannot but have its reverberations in the inner individual life over which the ego presides as a guiding genius.

Ego becomes source of conflicts
While always striving to establish unity and integration in experience, the ego can never realize this objective. Though it establishes a certain kind of balance, this balance is only provisional and temporary. The incompleteness of its attainments is evident from the internal conflict that is never absent as long as experience is being faced from the point of view of the ego. From moment to moment the mind of man is passing through a series of conflicts. The minds of great and distinguished persons as well as the minds of common people are seen to be harassed by conflicting desires and tendencies. Sometimes the conflict the mind is faced with is so acute that the person concerned yields to the pressures, and there is either a partial or total derangement of the mind. There is really no vital difference between the normal and the so-called abnormal individual. Both have to face the same problems; but the one can more or less successfully solve his problems, and the other cannot solve them.

False valuation
The ego attempts to solve its inner conflicts through false valuations and wrong choices. It is characteristic of the ego that it takes all that is unimportant as important and all that is important as unimportant. Thus, although power, fame, wealth, ability, and other worldly attainments and accomplishments are really unimportant, the ego takes delight in these possessions and clings to them as "mine." On the other hand, true spirituality is all-important for the soul, but the ego looks upon it as unimportant.


For example, if a person experiences some bodily or mental discomfort while doing work of spiritual importance, the ego steps in to secure the unimportant bodily or mental comfort, even at the cost of giving up the really important spiritual work. Bodily and mental comfort, as well as other worldly attainments and accomplishments, are often necessary; but they are not therefore important. There is a world of difference between necessity and importance. Many things come to the ego as being necessary, but they are not in themselves important. Spirituality, which comes to the ego as being unnecessary, is really important for the soul. The ego thus represents a deep and fundamental principle of ignorance, which is exhibited in always preferring the unimportant to the important.

Conflicts solved through true valuations
The mind rarely functions harmoniously because it is mostly guided and governed by forces in the subconscious. Few persons take the trouble to attain mastery over these hidden forces that direct the course of mental life. The elimination of conflict is possible only through conscious control over the forces in the subconscious. This control can be permanently attained only through the repeated exercise of true valuation in all the cases of conflict presented to the mind.

Need for intelligent and firm choices

If the mind is to be freed from conflict, it must always make the right choice and must unfailingly prefer the truly important to the unimportant. The choice has to be both intelligent and firm in all cases of conflict-important as well as unimportant. It has to be intelligent because only through the pursuit of true and permanent values is it possible to attain a poise that is not detrimental to the dynamic and creative flow of mental life. An unintelligent choice, if it is firm, may temporarily overcome conflict; but it is bound in the long run to curtail the scope of life or to hamper the fulfillment of the whole personality.

Moreover, the conflict will surely reappear in some other form if it has not been intelligently solved. An intelligent solution, on the other hand, requires an insight into true values, which have to be disentangled from false values. The problem of the conflict of desires thus turns out to be the problem of conflicting values, and the solution of mental conflict therefore requires a deep search for the real meaning of life. It is only through wisdom that the mind can be freed from conflict.

Fidelity to right choice
Having once known what the right choice is, the next step is to stick to it firmly. Although the competing tendencies in the mind may be quieted by choosing one particular course in preference to other alternatives, they still continue to act as obstacles in making the choice fully effective and operative. At times there is a danger of a decision being subverted through the intensification of those competing forces in the subconscious. To avoid defeat, the mind must stick tenaciously to the right values it has perceived. Thus the solution of mental conflict requires not only perception of right values but also an unswerving fidelity to them.

—  Meher Baba Discourses (7th rev. ed, pp. 161-164) 

Stephanie Kelton — A Year-In-Review for NEP and MMT

Summing up. Did Stephanie miss anything?

New Economic Perspectives
A Year-In-Review for NEP and MMT
Stephanie Kelton

Why Not New, Open Channels For Population-Wide, Citizen Discourse?

   (Commentary posted by Roger Erickson)




Montreal startup creates first-ever virtual smartphone for Android users

It all comes down to freedom from rentier constraints imposed by mobile telecom operators?

Seems clear that rentier behavior is drastically holding our citizens back.

Something's gotta give.

People, like data, want to be free? That requires more than virtual lipservice to freedom, from real rentier constraints on real citizens. What if all roads were private toll roads? What if rentiers claimed copyright on all the words we use? We'd soon invent new languages and new routes. Why not new, open channels for population-wide, citizen discourse?

The Snowden Saga Heralds A Radical Exposure Of Expanding National Options Worth Exploring, Not Just A Shift In Capitalism

   (Commentary posted by Roger Erickson)



Pandora's new, virtual box has been open for decades. People are just beginning to grasp a fraction of what that means.

Seems to me that capitalism is not the real point either. We have huge populations creating new methods for group discourse, the basis of Group Intelligence ... and yet national groupings are not yet selecting fittingly audacious Desired Outcomes to achieve, through use of our newly emerging methods.

Our Capabilities Gap is so large, we can't see it.

The Snowden saga heralds a radical shift in capitalism by Evgeny Morozov

Frances Coppola — Wynne Godley: Interest rates, growth and the primary balance

Godley further shows that under all scenarios, debt/gdp stabilises at some combination of interest rate, growth rate and primary deficit/surplus – provided there is full employment. So debt/gdp does not “spiral out of control” if government produces as much of it as people need in order to save. On the contrary, in my view government creating a plentiful supply of safe assets is essential for financial and economic stability. Deliberately restricting the supply of safe assets by, for example, running a primary surplus in combination with low interest rates (so debt/gdp falls) causes instability: when government doesn’t create enough safe assets, the private sector creates faux safe assets, which give the impression of being safe when they are not and are consequently mispriced. When the inadequacy of private sector “safe assets” is exposed, there is a violent crash and a flight to real safe assets, creating bubbles. The 2008 crash was not caused by investors seeking too much risk: it was caused by investors looking for safety, and the private sector attempting, and disastrously failing, to provide it.

But of course we don’t have full employment, so our ability to support even the safe assets we already have is curtailed, and lots of people are struggling to maintain essential consumption because their incomes aren’t high enough. For these people, saving is a distant dream. Maybe that’s what we should be concentrating on, really.

Credit Writedowns
Wynne Godley: Interest rates, growth and the primary balance
Frances Coppola

(h/t Lambert Stether at Naked Capitalism)

Lord Keynes — Post Keynesian Economics 101

The following is an index to my posts on Post Keynesian economics, and is divided into thirty-one topic headings.

Social Democracy For The 21St Century: A Post Keynesian Perspective

Post Keynesian Economics 101

Lord Keynes

Robert Vienneau — Steve Keen: Economists Are "Insufficiently Numerate"

More thoughts on teaching economics.

Economists should know something beyond mathematics [including that necessary for analyzing chaotic and complex systems, which many economists do not learn now]. For example, they should have some knowledge of the sort of history developed by, say, Fernand Braudel or Eric Hobsbawm. And they should have some understanding of contemporary institutions. How can they learn all of this necessary background and the needed mathematics5, as well? I do not have an answer, although I can think of three suggestions. First, much of what economists currently teach might be drastically streamlined. Second, one might not expect all economists to learn everything; a pluralist approach might recognize the need for a division of labor within economics. Third, perhaps the culture of economics should be such that economists are not expected to do great work until later in their lifetimes. I vaguely understand history is like this, while mathematics is stereotypically the opposite.

Thoughts On Economics
Steve Keen: Economists Are "Insufficiently Numerate"
Robert Vienneau

Systems, systems, systems. Start with modeling simple static closed systems that are highly stylized and build up to modeling chaotic and complex dynamic open systems that aims at being representational. The math and application have already been developed in other sciences.

Bill Mitchell — Growth and Inequality – Part 1

I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to publish the text sometime around mid-2014. Our (very incomplete) textbook home page – Modern Monetary Theory and Practice – has draft chapters and contents etc in varying states of completion. Comments are always welcome. Note also that the text I post here is not intended to be a blog-style narrative but constitutes the drafting work I am doing – that is, the material posted will not represent the complete text. Further it will change as the drafting process evolves.

Chapter X Growth and Inequality

X.1 Overview

Bill Mitchell – billy blog
Growth and Inequality – Part 1Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia

Travis Gettys — Pope’s ‘liberal’ views on capitalism freaking out conservative Catholics in Congress (via Raw Story )

Pope’s ‘liberal’ views on capitalism freaking out conservative Catholics in Congress (via Raw Story )

Catholic Republican lawmakers are rattled by Pope Francis, whose recent comments have shaken up assumptions about their church and its relationship to their political party. While church leaders have for years challenged the Republican Party on some…

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John Henley — Romania and Bulgaria: 'If people go to Britain, of course it's to contribute'

… a nervous coalition government has rushed out measures making new arrivals wait longer before they can claim benefits – and, more controversially, is calling for a wider debate on the principle of free movement within the European Union and perhaps even an EU migration cap.

Of course, immigration of labor is what is supposed to happen to make the euro work. Now that it is happening, political resistance is rising to immigration that will force wages in that country down. But employers will be happy with being able to offer lower wages and salaries. 

This is political issue especially in Britain since, while a member of the EU, the UK is not a member of the EZ. 

And, of course, emigration will further hurt the "contributing" countries since they will lose highly qualified workers to higher paying nations through this "brain drain."

But everyone knew this when they signed up for the EU and EZ, right?

The Guardian

Romania and Bulgaria: 'If people go to Britain, of course it's to contribute'

Jon Henley

Wolves of Wall Street: How a Network of Frat Boys Tilts the Field Against Women (via Moyers & Company)

Wolves of Wall Street: How a Network of Frat Boys Tilts the Field Against Women (via Moyers & Company)

Martin Scorcese’s new film, The Wolf of Wall Street, depicts a culture of hyper-masculinity and emotional immaturity, as Leonardo DiCaprio’s character, Jordan Belfort, parties hard and cuts shady deals in a drug-induced haze. A report by Max Abelson…

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Travis Gettys — Chamber of Commerce sets GOP goal for 2014: ‘No fools on our ticket’ (via Raw Story )

Chamber of Commerce sets GOP goal for 2014: ‘No fools on our ticket’ (via Raw Story )

The GOP’s corporate allies have set a New Year’s resolution they hope will lead to electoral victory in the 2014 midterms: “No fools on our ticket.” Republican House leaders are planning to impose discipline on unruly members to help avert the…

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Jed S. Rakoff — The Financial Crisis: Why Have No High-Level Executives Been Prosecuted?

Five years have passed since the onset of what is sometimes called the Great Recession. While the economy has slowly improved, there are still millions of Americans leading lives of quiet desperation: without jobs, without resources, without hope.

Who was to blame? Was it simply a result of negligence, of the kind of inordinate risk-taking commonly called a “bubble,” of an imprudent but innocent failure to maintain adequate reserves for a rainy day? Or was it the result, at least in part, of fraudulent practices, of dubious mortgages portrayed as sound risks and packaged into ever more esoteric financial instruments, the fundamental weaknesses of which were intentionally obscured?

The New York Review of Books (Jan 9, 2014)
The Financial Crisis: Why Have No High-Level Executives Been Prosecuted?
Jed S. Rakoff | U.S. District Judge for the Southern District of New York
(h/t Ryan Harris in the comments)

Judge Rakoff is not going to let this die.

Menzie Chinn — British Economic Triumphalism in Perspective

Econbrowser

British Economic Triumphalism in Perspective
Menzie Chinn

Dig a deep hole with "expansionary fiscal austerity" and then declare victory when you start to climb out of it with selected data to prove it.

Bill Mitchell — I fell off the left-right continuum today

Bill takes apart the Third Way as neoliberalism lite, comparable to "compassionate conservatism" on the right, as supposedly centrist.

Bill Mitchell – billy blog
I fell off the left-right continuum today
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia

Dow, Omerod on teaching economics

Sheila Dow and Paul Omerod's papers on reforming the economics curriculum to make learning more representationally realistic and practically useful, especially in policy formulation. Both take a systems approach that recognizes the place of formalism but put it in the context of the whole instead of either making it an end it itself or using advanced math as tour de force to mask ideological assumptions. Both articles are short.

Teaching Open-system Economics
Dow, Sheila

Notes on a Real World Economics Curriculum
Paul Omerod

See also Michael Hudson's The use and abuse of mathematical economics.

Essays on money and banking by Randy Wray's MA students at UMKC

For the next few weeks we will be running a series of articles on monetary theory and policy. These are final essays written by MA students in my class this past Fall semester. I was very happy with the results—students indicated that they had a firm grasp of both the orthodox approach as well as the heterodox approach to the subject. Most of them also included some Modern Money Theory in their answers. I asked about half of the students in the class if they would like to contribute their essay to this series. 

Sometimes students are the best teachers because they see things with a fresh eye and cut to what is important. They are usually less concerned with esoteric academic debates than are their professors. Note that these contributions are voluntary and are written by Masters students. I told students they could choose to use their own names, or they could choose an alias. Comments are welcome, but please be nice—remember these are students. 

For your reference, here were the topics for the paper. The paper had a maximum limit of 6000 words.

Choose one of the following. You must consider and address both the orthodox approach and the heterodox approach in your essay. Where relevant, include various strands of each.

A) What is the nature of money? Given the nature of money, what approach should be taken to policy-making?

B) What is the nature of banking? Given the nature of banking, what approach should be taken to policy-making?

C) According to John Smithin there are several main themes throughout controversies of monetary economics, each typically addressed by each of the various approaches to monetary theory and policy. In your essay, discuss how each of the approaches we covered this semester tackles these themes enumerated by Smithin. 

— L. Randall Wray | Professor of Economics, University of Missouri at Kansas City

Nature of Money

1. Essays in Monetary Theory and Policy: On the Nature of Money by Vincent Huang
2. Essays in Monetary Theory and Policy: On the Nature of Money (2) by Matthew Berg 
3. Essays in Monetary Theory and Policy: On the Nature of Money (3) by Jack Wendland 
4. Essays in Monetary Theory and Policy: On the Nature of Money (4) by Kian Lua 
5. Essays in Monetary Theory and Policy: On the Nature of Money (5) by Samuel Ellenbogen
6. Essays in Monetary Theory and Policy: On the Nature of Money (6) by Andreas Lückert
7. Essays in Monetary Theory and Policy: On the Nature of Money (7) by Marilynne Meikenhou
8. Essays in Monetary Theory and Policy: On the Nature of Money (8) by Ken Yamat
9. Essays in Monetary Theory and Policy: On the Nature of Money (9) by Lukas Kaluza

Nature of Banking

1. Essays in Monetary Theory and Policy: On the Nature of Banking by Ryan M. Pope 
2. Essays in Monetary Theory and Policy: On the Nature of Banking (2) by Darren Prince

John Carney — The economics of Christmas, a holiday satire

Merry Christmas and Happy Holidays!

This from John Carney will be old news tomorrow, so I am posting it today. Stephanie Kelton and Warren Mosler are cited. Be sure to read all three pages. It's short and fun.

CNBC NetNet
The economics of Christmas, a holiday satire
John Carney | Senior Editor

Happy Holidays from MNE!

Hollywood's Latest Garbage: "The Wolf of Wall Street"

I hope this movie bombs, it would be a good sign.  I wouldn't sit through 3 hours of this garbage if you paid me.

It is reported to have cost $100M to produce imagine what measure of public advocacy and education we could do with that kind of funding.

I hope the public rejects it and it goes bust, we'll see.

Matt Taibbi — Outrageous HSBC Settlement Proves the Drug War is a Joke

Matt is on the case.

If you've ever been arrested on a drug charge, if you've ever spent even a day in jail for having a stem of marijuana in your pocket or "drug paraphernalia" in your gym bag, Assistant Attorney General and longtime Bill Clinton pal Lanny Breuer has a message for you: Bite me.

Breuer this week signed off on a settlement deal with the British banking giant HSBC that is the ultimate insult to every ordinary person who's ever had his life altered by a narcotics charge. Despite the fact that HSBC admitted to laundering billions of dollars for Colombian and Mexican drug cartels (among others) and violating a host of important banking laws (from the Bank Secrecy Act to the Trading With the Enemy Act), Breuer and his Justice Department elected not to pursue criminal prosecutions of the bank, opting instead for a "record" financial settlement of $1.9 billion, which as one analyst noted is about five weeks of income for the bank.

The banks' laundering transactions were so brazen that the NSA probably could have spotted them from space. Breuer admitted that drug dealers would sometimes come to HSBC's Mexican branches and "deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows."

This bears repeating: in order to more efficiently move as much illegal money as possible into the "legitimate" banking institution HSBC, drug dealers specifically designed boxes to fit through the bank's teller windows.

Rolling Stone
Outrageous HSBC Settlement Proves the Drug War is a Joke
Matt Taibbi

Federal and state authorities have chosen not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system.

It doesn't take a genius to see that the reasoning here is beyond flawed. When you decide not to prosecute bankers for billion-dollar crimes connected to drug-dealing and terrorism (some of HSBC's Saudi and Bangladeshi clients had terrorist ties, according to a Senate investigation), it doesn't protect the banking system, it does exactly the opposite. It terrifies investors and depositors everywhere, leaving them with the clear impression that even the most "reputable" banks may in fact be captured institutions whose senior executives are in the employ of (this can't be repeated often enough) murderers and terrorists. Even more shocking, the Justice Department's response to learning about all of this was to do exactly the same thing that the HSBC executives did in the first place to get themselves in trouble – they took money to look the other way.

And not only did they sell out to drug dealers, they sold out cheap. You'll hear bragging this week by the Obama administration that they wrested a record penalty from HSBC, but it's a joke. Some of the penalties involved will literally make you laugh out loud.

Via DailyKos: Peter Schiff pulls a John Stossel to denigrate the working poor

Looks like our old inflation-hawk, gold salesman friend had nothing better to do last week than stand in front of a local Wal-Mart and harass passers by: 

http://www.dailykos.com/story/2013/12/21/1264469/-Millionaire-Oligarch-Poses-as-Walmart-Protestor-Harrasses-Shoppers-to-Discredit-Mock-Employees

"His spiel was that he was a Walmart employee/protester and told everyone they should donate 15% of whatever they paid at Walmart directly to him.  He kept screaming "higher prices for higher wages" as the protester's "motto".  When people said they were broke, he mocked them and said they just bought "all this stuff" and they didn't care about the workers.  He kept yelling "We are counting on you to pay higher prices!"  When someone told him that they were poor workers who couldn't afford to pay, he actually said "But the Walmart workers are more important!"  Even when people tried to give what they could, he would get irate and demand 15% of their purchases!"

Seriously, what is with these wealthy white guys thinking its funny to denigrate the less fortunate? I'd like to see Stossel or Schiff do one day's work as a Wal-Mart employee or short order cook. I guess because Wal-Mart's low paid "associates" cant afford to buy any  !!GOLD!!, they are not worth much to Schiff. Do we have any other videos of these tools being smacked down?

Bill McBride — Ten Economic Questions for 2014

Here is a review of the Ten Economic Questions for 2013.

I'll follow up some thoughts on each of these questions. I'm sure there are other important questions, but these are the ones I'm thinking about now.

Calculated Risk

Ten Economic Questions for 2014
Bill McBride

Ramanan — Good Reference On Wage-Led Growth

An excellent discussion on wage-led economic growth is a paper by Marc Lavoie and Engelbert Stockhammer titled Wage-led Growth: Concept, Theories And Policies which appears in the recently released book Wage-Led Growth: An Equitable Strategy For Economic Recovery (Palgrave Macmillan)...

As Dray and Thirlwall (2011, p. 466) recall, ‘it makes little economic sense to think of growth as supply constrained if, within limits, demand can create its own supply’. This explains why we shall focus on the income distribution determinants of aggregate demand, paying less attention to the supply-side factors… 

The Case For Concerted Action

Good Reference On Wage-Led Growth
Ramanan

Ray McGovern — Truman's True Warning on the CIA

Intelligence services out of control?

Truthout
Truman's True Warning on the CIA
Ray McGovern, Consortium News | Op-Ed

Truman warned about the CIA. Ike warned about the military-idustrial complex. Anyone listening? Apparently not.

Scott Sumner — How many economists can answer this question?

What Scott sumner illustrates is that he cannot. This post makes absolutely clear how Prof. Sumner is clueless about about monetary economics and monetary operations, and how monetarism is bonkers.

The Money Illusion
How many economists can answer this question?
Scott Sumner | Professor of Economics, Bentley University

Zero Hedge — US Savings Rate Slides As Personal Incomes Below Expectations; Real Disposable Income Growth Tumbles

Charts.

Zero Hedge
US Savings Rate Slides As Personal Incomes Below Expectations; Real Disposable Income Growth Tumbles
Submitted by Tyler Durden

Paul Krugman — Bits and Barbarism

Back in 1936 ... Keynes argued that increased government spending was needed to restore full employment. But then, as now, there was strong political resistance... So Keynes whimsically suggested ... the government bury bottles full of cash in disused coal mines, and let the private sector spend its own money to dig the cash back up. ..

Keynes ... went on to point out that ... gold mining was a lot like his thought experiment. Gold miners were, after all, going to great lengths to dig cash out of the ground, even though unlimited amounts of cash could be created at essentially no cost with the printing press. ...

Talk to gold bugs and they’ll tell you that ... governments ... can’t be trusted not to debase their currencies. The odd thing, however, is that ... such debasement is getting very hard to find. …

...we are for some reason digging our way back to the 17th century.

Economist's View
Paul Krugman: Bits and Barbarism
Posted by Mark Thoma

Edging closer to being in paradigm.

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Noam Chomsky —Lecture from 1970

I think it is useful to setup as a framework for discussion four somewhat idealized positions with regard to the role of the state in an advanced industrial society. I want to call these positions 1) classical liberal, 2) libertarian socialist, 3) state socialist, 4) state capitalist and I want to consider each in turn. [00:43]

Also, I'd like to make clear my own point in advance, so that you can evaluate and judge what I am saying. I think that the libertarian socialist concepts, and by that I mean a range of thinking that extends from left-wing Marxism through anarchism, I think that these are fundamentally correct and that they are the proper and natural extension of classical liberalism into the era of advanced industrial society. In contrast, it seems to me that the ideology of state socialism, that is, what has become of Bolshevism, and of state capitalism, the modern welfare state, these of course are dominant in the industrial countries, in the industrial societies, but I believe that they are regressive and highly inadequate social theories, and that a large number of our really fundamental problems stem from a kind of incompatibility and inappropriateness of these social forms to a modern industrial society. [01:39]

Well then let me consider these four points of reference in sequence, beginning with the classical liberal point of view.

Noam Chomsky lecture from 1970 (!) -- full text transcript and link to audio lecture
(h/t JK in the comments)