Sunday, May 31, 2015

John Jansen — Fischer on the Rise

Fed Vice-Chair Stanley Fisher, that is.

Across the Curve
Fischer on the Rise
John Jansen

Econ Journal Watch Volume 12, Issue 2, May 2015

Econ Journal Watch
Volume 12, Issue 2, May 2015

In this issue (.pdf):
Evolution, moral sentiments, and the welfare state: Many now maintain that multilevel selection created a sympathetic species with yearnings for social solidarity. Several evolutionary authors on the political left suggest that collectivist politics is an appropriate way to meet that yearning. Harrison Searles agrees on evolution and human nature, but faults them for neglecting Hayek’s charge of atavism: The modern polity and the ancestral band are worlds apart, rendering collectivist politics inappropriate and misguided. David Sloan Wilson, Robert Kadar, and Steve Roth respond, suggesting that new evolutionary paradigms promise to transcend old ideological categories.
More articles but this looks most interesting to me.

ht Tyler Cowen at Marginal Revolution

Update on Russian Economy

The good news. The deficit is growing, although Gurdgiev interprets this as bad news.

True Economics
31/5/15: Russian Fiscal Performance: Red Alert in Jan-Apr 2015
Constantin Gurdgiev

Daily life becoming more difficult economically, but Russians are resilient.

Une parole franche
Letter from St Petersburg
Gilbert Doctorow, Ph.D.

Jared Bernstein — Why is it so hard to regulate the banks? It’s less the complexity than the political power.

Jared is hammering on power. Good for him. It's not about economics as a science (that excludes power). It's about power and the rents that power enables. Time to take the gloves off on this before it kill us all.
Generally speaking, businesses earn profits in one of two basic ways. The first is by providing goods and services more productively than others and selling them at a price people are willing to pay. The second is by seeking rents. “Rent,” in the economic sense, refers broadly to any excess benefits that people and businesses receive simply because they have power over something that others need. Patents are a form of rent, as are cable TV monopolies. 
For economists, rent­-seeking is everywhere, and is a common way that economies go awry. Crudely speaking, productivity enhancement is good, because it makes society richer over all. Equally crudely, rent­-seeking is bad, because it makes the people who are already rich even richer. Rent-­seeking tends to be a force against innovation and for stagnancy, in large part because its focus is on the past — on maintaining power and influence gained long ago, often at the expense of innovation. Businesses built around rent­-seeking don’t try to increase the size of the pie; they just want to make sure they get a bigger slice. (If a company doesn’t seem to care about your opinion of it as a customer, there’s a good chance that it is seeking rents.) — Adam Davidson

Live Journal — The Right Sector will follow Ukrainian command, sort of ...

Why the hostilities in Ukraine are out of control. The Ukrainian government doesn't have control the militias. It's not in the interest of the Right Sector for the Minsky agreement to succeed.

Fort Russ
The Right Sector will follow Ukrainian command, sort of ...
Translated by Kristina Rus

Original: Правый сектор останется незаконным вооруженным формированием

Правый сектор (Pravi sektor) = Right Sector.

IDEA — Consensus Falls Toward Keen's View

When IDEA published Steve Keen’s 2015 Global Economic Outlook in January, its predictions were well outside the consensus. Today, only five months later, the gap has substantially closed, without revising the outlook. Indeed, we witnessed a remarkable revision to the consensus Q1 US GDP forecasts, when they came down dramatically in April, after the quarter had closed, forecasting the past. 
Serious trouble in China, stagnation in Europe, weakening US data – none of it conclusive in terms of timing, but the pattern is ever more clear. Prof. Keen’s assessment is built on a model of the economy which recognizes the centrality of private debt and the change in private debt. The model integrates money, credit and banking and utilizes non-linear dynamics to simplify a complex system. In each of these ways it is unique among its peers.....
Consensus Falls Toward Keen's View

Saturday, May 30, 2015

Tony Wikrent — HAWB 1801 - Alexander Hamilton and Albert Gallatin - How America Was Built

Economics history of the US.

Real Economics
HAWB 1801 - Alexander Hamilton and Albert Gallatin - How America Was Built
Tony Wikrent

Silicon Valley Calls For The Usual Reforms .... Is This Enough To Matter?

   (Commentary posted by Roger Erickson)

Open Letter on the Digital Economy
Their set of basic public policy changes are the usual, necessary but not sufficient list of vague items.

What would Marriner Eccles have said?
(Perhaps: "Dammit, ya gotta be FAR more specific than that! Now listen up ..... [4 hour lecture, with specifics.]")

General Patton?
(Perhaps: "Hell yes, be far more specific about our Desired Outcomes, but keep our *#+%&! Wall St Central planners from trying to @#$%&! micro-manage HOW we reach 'em.")

Warren Mosler
(Perhaps: "What? No mention of fiscal transfers? Remember Mosler's Law? We can do this, in a month. Can we just get on with it? Now?")

What would YOU say?

  That reminds me.  We need to augment Silicon Valley's message with 
an Open Source Letter on the Fiat Economy.

Meanwhile, Silicon Valley's 2nd area of suggestions is a step in the right direction, if still vague.
Second, we call on business leaders to develop new organizational models and approaches that not only enhance productivity and generate wealth but also create broad-based opportunity.

Ya hear that, Greece? Dump "Old Europe" and ask to join the USA. :)

Well Duh! Didn't John Law Say This ~1715, And Beardsley Ruml In 1946? We Can PRACTICE Doing Better.

(Commentary posted by Roger Erickson)

Working Paper No. 529: Banks are not intermediaries of loanable funds – and why this matters

I thought Beardsley Ruml exploded that myth back in 1946, & that it was obvious even before John Law back in ~1715. It's been officially obvious in the USA since 1933, & since the invention of fiat currency (350 BC?). WHY it's ignored is a far more interesting question, involving the myth of elites being necessary intermediaries of scarce, loanable intelligence.

Tall Paul's Association says that part of the blame is fragmented policies, a balkanized regulatory system and barriers between bureaucratic silos. That's more like it, but both these articles (by BoE & Tall Paul) still consist of pointing out the obvious, year after austere year.

Hello! Anyone home? All those zealots occupying Wall Street but not the space between their ears may want to take notice here. Let's cut to the chase, and project patterns further than the ends of our noses.

WHY are our electorates taking 80+ years to recognize the obvious, EVEN after they boxed themselves into tripping over it, yet again? It was obvious to Greek city-states 2300 years ago, so what's wrong with our culture? What part of the Classics aren't studied? The parts that matter the most?

And why is THAT a perennial truth, pray tell?

Military veterans say that every army in the world is inept at the start of a war, highly organized by the end, and once again inept by the start of the next war. 

Ergo, short of maintaining practice tilting at various windmills, we can't stay good at dressing ourselves. In short, only scalable practice makes scalable perfect (... perfect pursuit that is, of an infinite future).

For a growing aggregate, only aggressive exploration of our emerging options (a bias to exploration) lines up enough windmills worth tilting at. It's up to us to keep up enough practice to be fairly good at SELECTING which challenges are worthy of our growing cultural skills.

No aggregate practice (full & challenging employment) ..... no aggregate gain. No matter how many equations too few people write (and still don't practice).

Finally getting everyone to admit what some have always known is a necessary but not sufficient step. No amount of financial theorizing will by itself be adequate, only full & challenging citizen employment. The evolving moment of group-intelligence in any network or human culture is held in its emerging body of discourse, NOT in its components, its individuals, in silos of copyrighted information OR in the theories that sum our past knowledge. By definition, no theory predicts novel findings. No theory has been final and enduring, only practice has been. Call it evolution if you like, but it's still practice.

Can we move on from the myth of Loanable Intelligence, and instead start generating far more of it, de novo, by aggregate fiat? :)

That'll happen only when citizens glorify General "Next!" more than Captain Obvious.

Fiat Group Intelligence is real, and a product of persistent aggregate practice. 

Zoltan Jakab and Michael Kumhof — Banks are not intermediaries of loanable funds - and why this matters

In the intermediation of loanable funds model of banking, banks accept deposits of pre-existing real resources from savers and then lend them to borrowers. In the real world, banks provide financing through money creation. That is they create deposits of new money through lending, and in doing so are mainly constrained by profitability and solvency considerations. This paper contrasts simple intermediation and financing models of banking. Compared to otherwise identical intermediation models, and following identical shocks, financing models predict changes in bank lending that are far larger, happen much faster, and have much greater effects on the real economy.
Putting another myth to rest.

Bank of England
Working Paper No. 529: Banks are not intermediaries of loanable funds - and why this matters
ht Stephanie Kelton

Friday, May 29, 2015

Jehu — Deficit reduction is not austerity; it kills capitalism

Nothing I have presented here should be a surprise since it is the conclusion of both labor theory and Keynesian theory together. For instance, according to the bourgeois simpleton economist, Hyman Minsky, aggregate profits of capital must equal aggregate investment of capital plus the deficit spending of the fascist state:...


Peter Jones, a Marxist writer, has come to a similar conclusion regarding how fascist state deficit spending increases the wealth of the capitalists:....


Thus, both labor theory of value and Keynesian theory suggest capitalism cannot survive without the deficit spending of the fascist state, although each school employs this conclusion for their own ends.
You have to understand what a complete scam the federal deficit is: First, the rich are given a tax cut by fascist state politicians; then, the tax cuts is borrowed back by the fascist state; Finally, the fascist state issues a bond that entitles the rich to claim a portion of future fascist state tax revenues. And then, to top it all off, MMT comes along and dresses this scam up as “the cumulative financial assets” of the private sector....
It was Keynes's project after all to save capitalism from socialism. Keynes believed that capitalism would transform itself into a benign liberalism and distributed prosperity. See Economic Possibilities for our Grandchildren (1930).

 But unfortunately the transformation has been in the opposite direction toward neoliberal globalism, a euphemism for transnational corporatism and oligarchic "democracy."

The Real Movement
Deficit reduction is not austerity; it kills capitalism


MMT and the heresy of the self-financing fascist state

More MMT boilerplate on how to fix capitalism without really trying

Fuck MMT: The Left had better start looking for an exit from capitalism

Jason Smith — The political method

Isn't politics the scientific method grand?

I bet you didn't think you'd be laughing when you read an economics paper ... laughing so hard you couldn't breathe ...
Be sure to click through the links in the post.

Information Transfer Economics

Andrew Black — Exchange Rate Regimes & Modern Monetary Theory

There have been heated discussions concerning the advantages and disadvantages of what is known as “Modern Monetary Theory”. This theory makes a number of claims, some of which appear unreasonable and impractical to Keynesian economists and others with an economic policy focus. The aim of this discussion paper is to throw more light on the nature of exchange rate relationships internationally. The reason for doing this is that MMT protagonists claim that many economic ills would be resolved if a country has its own currency, which can move freely against other currencies. To take a somewhat extreme proposition, MMT protagonists have argued that in the interests of securing full employment, deficit funding can be safely embarked upon through the government simply printing more money.[i] While this may be technically true for domestic savers and consumers, it overlooks the importance of foreign holders of domestic assets and bonds. If a high government deficit then causes difficulties for foreign owners of national assets, this is entirely manageable, they say, through a devaluation of the currency. As Palley put it, 
“All countries face inflation and financial sector stability constraints, but the US is essentially free of a foreign exchange market constraint. However, that constraint is very visible in many other countries, which explains their greater intuitive scepticism about MMT.” (Palley, 2015, p. 20.) 
The main aim of this short discussion paper is to clarify just what the predominate forms of exchange rate regimes are across the world. If the advantages claimed by proponents of MMT are/were so manifest, then it would be reasonable to expect that a free floating exchange rate regime would be the preferred option internationally. As shall be seen, this turns out not to be the case, and the number of countries with their own free floating currencies is a minority, and one that appears to be shrinking....
London Metropolitan Institute — Global Policy Institute
Exchange Rate Regimes & Modern Monetary Theory
Dr Andrew Black, GPI Opinion
ht Kristjan in the comments

What On Earth Happened To All Our Ancient Tribal Methods? We Don't Practice Enough To Find What Scales.

   (Commentary posted by Roger Erickson)
Humans have been coordinating on a truly massive scale, for tens of thousands of years ..... without computers, without convertible currency systems, without pencil and paper, and even without agriculture.

How? By constant practice.

And along the way, incredibly useful methods were invented, and practiced, including methods for conflict mediation, among many other applications. Those many tribal methods don't all scale, unadjusted, to fit our current, supra-tribal population densities & mixing rates, but most are necessary but not sufficient steps to practice, while constantly discovering how to organize on an ever greater scale.
Yet here we are today, with nearly everyone acting as though all those finely tuned tribal coordination methods never existed, and that coordinating is a totally new invention. :(
The Theology of Consensus

For Pete's sake! Have we thrown out our cultural methods with the bathwater, not just the baby? Most neighbors today don't even know how to co-run a neighborhood meeting anymore, let alone scale up a supra-tribal democracy. They never get enough practice.

Theologists of all stripes (including the economic theologists) mean well, but they have no prior experience, and near zero practice. Heck, even car salesmen have a personal theology, made up on the spot. That doesn't mean their theology works for their aggregate. Only feedback from group practice determines what does & doesn't work.

Many biologists & anthropologists & ecologists (& other natural scientists) lament the lack of effort to select more critically from our endless list of theologies (and other aggregate habits). Natural selection is eventually coming, of course. We're just not practicing how best to respond, once the hour strikes, or at least not paying much attention to how things are going.

Would we be instantly far better off if we swapped all banksters and orthodox economists for anthropologists and "primitive" tribal leaders? I'd sure vote to give it a try. At least the latter 2 groups have lots of practice and experience at something other than looting and bamboozling.

Thursday, May 28, 2015

F. William Engdahl — China’s New Roads to Russia

Some idea of the scope and scale of the New Silk Road project.

Engdahl is a decent geopolitical analyst, but he is way out of paradigm with MMT in his understanding of the monetary system.

New Eastern Outlook
China’s New Roads to Russia
F. William Engdahl

When completed, like the ancient Silk Road, it will connect three continents: Asia, Europe, and Africa. The chain of infrastructure projects will create the world's largest economic corridor, covering a population of 4.4 billion and an economic output of $21 trillion.
New Silk Road Could Change Global Economics Forever

Could The New Silk Road End Old Geopolitical Tensions?
Robert Berke, energy financial analyst with experience as a government consultant to the State of Alaska

Fort Russ — Head of French military intelligence on the real trouble with NATO

Did US intelligence get it wrong, or was it fixed as in the case of Iraq? You decide.
Here is a brief, but significant, extract from General Christophe Gomart's report to the Assemblée Nationale. General Gomart is head of French Military Intelligence. His complete report, given March 25, 2015, is here.  
Gen. Gomart: “The real difficulty with NATO is that the American intel is in preponderance there, while the French intel is more or less taken for granted, hence the importance for us to supply the NATO commanders with enough information of French origin.

"NATO announced that the Russians were going to invade Ukraine, the while that according to our information at the DRM (Direction du Renseignement Militaire), there was nothing to support this hypothesis — we had in fact stated that the Russians had not deployed either command nor the logistics, that would permit envisaging a military invasion, notably field hospitals, and that the second-line units had been exhibiting no movement.
"The outcome demonstrated that we got it right, since, if any Russian soldiers had been sighted in Ukraine, it would have been a matter of a pressuring maneouvre on Ukrainian president Poroshenko than of any prelude to an invasion."
Translated from French by Tom Winter

Yves Smith — The Fed’s Dereliction of Duty and False Capital Flows Morality

On both the military and financial front, America seems to be making things up as it goes along, driven by a toxic mix of bad ideology and domestic priorities. No wonder the rest of the world is so keen to join the Chinese-sponsored Asian Infrastructure Investment Ban. Any means of providing a nexus of power outside the US looks like a step in a better direction.
Shooting yourself in the foot.

Naked Capitalism
The Fed’s Dereliction of Duty and False Capital Flows Morality
Yves Smith

TPP — Sovereignty Challenge Sharmini Peries interviews Michael Hudson

Video and transcript

Michael Hudson
TPP Sovereignty Challenge
Sharmini Peries interviews Michael Hudson

Michael Hudson — Ukraine’s “Operation Vulture” and Labor Protests

Operation Vulture 
The Pinochet coup in Chile was a dress rehearsal for all this.
Naked Capitalism
Michael Hudson: Ukraine’s “Operation Vulture” and Labor Protests

Crossposted at Vineyard of the Saker with this note:
Foreword by the Saker: I am absolutely delighted to submit to you today an article by Michael Hudson whom I consider to be the best and most visionary economic out there, bar none. Michael has kindly agree to allow me to post this article and, even better, he also agreed for a Q&A interview with me. To say that I am honored would be an understatement.
The Saker

Paul Romer — Mathiness and Academic Identity

Paul Romer clarifies his position on mathiness.
I see a marked deterioration in the progress that economics is making as a scientific discipline. I point to objective evidence that economics is not functioning as a scientific discipline should. The problem seems to be getting worse. 
Science is about establishing what is true. Scientists say what they believe. They support their claims with evidence and logic. They evaluate seriously the claims that other scientists make. They admit when they are wrong.
Science is not like an inter-faith congress, where everyone is supposed to listen, in tolerant and respectful silence, to recitations of dogma that maintain sub-group cohesion.
I could be wrong. I’ll listen and admit it if I am persuaded that I am wrong. But until logic and evidence show that some other position is closer to being right, I will say what I think because I care about more about protecting science in general and economics in particular than about avoiding hurt feelings.
Paul Romer
Mathiness and Academic Identity

Btw, in the post Romer makes clear that the issue is about economic power and economic rent, although he does not use those words.
For example, one of the things that the people I criticize are campaigning for is a methodological restriction to models with price-taking. For them, price-taking is dogma. To make the case for this restriction, they are not presenting scientific arguments grounded in logic and evidence.
I do not think that the outcome of this campaign over methodological dogma will have any effect on national politics or actual policy decisions. Nor do I think that the proponents of price-taking are fooling themselves into thinking that the outcome of this campaign will have any affect on national politics or actual policy decisions. They are fighting to preserve a sense of academic group identity grounded in a common defense of this dogmatic position.
I have written that Stigler and Friedman opposed Chamberlin’s theory of monopolistic competition because they did think that letting this deviation from Marshallian price-taking into mainstream economics could influence national politics and actual policy decisions. But that was then. This is now.
I suspect that path dependence explains why economists at the University of Chicago still make hostility to monopolistic competition central to their sense of academic identity, but if so, it is a vestigial holdover from battles about national politics from the 1950s to the 1980s, not part of an ongoing battle over national politics.
Many of us don't view this argument as "vestigial" and about academic politics. It is very much an article of faith of neoliberal dogma that the Chicago School largely initiated, promoted and continues to maintain as an ideological political lever.

John Helmer — Anne Applebaum Loses War Against Russia – Her Income Plummets Faster Than Ukraine’s GDP

Good news, but someone else will likely step up to fund her propagandizing. She's a sore loser, too.

Dances with Bears
John Helmer

Oleg Komlik — Emile Durkheim’s definition of Economic Sociology

Institutional analysis.

Economic Sociology and Political Economy
Emile Durkheim’s definition of Economic Sociology
Oleg Komlik | founder and editor-in-chief of the ES/PE, Chairman of the Junior Sociologists Network at the International Sociological Association, a PhD Candidate in Economic Sociology in the Department of Sociology and Anthropology at Ben-Gurion University, and a Lecturer in the School of Behavioral Sciences at the College of Management Academic Studies

Brad DeLong — Why Is the U.S. Economy Still Depressed?: DeLong FAQ

And even though exports are up, net exports are not.

Grasping Reality
Why Is the U.S. Economy Still Depressed?: DeLong FAQ
Brad DeLong | Professor of Economics, UCAL Berkeley

How fucking dumb do the Feds think we really are?

The last few days have been hilarious. First the FIFA arrests yesterday and now the indictment of former Speaker of the House Denny Hastert. (Wow...he avoided declaring a $952k cash withdrawal). He'll probably go to prison for the rest of his life.

Meanwhile the bankers steal trillions, manipulate and rig markets, commit wild, brazen, out of control fraud--ADMIT TO IT--then do it, over and over and over and nothing happens. Not a single bank executive is arrested or charged, never mind go to prison.

The Feds must think we are so fucking dumb. They arrest a bunch of two-bit soccer execs and now they take down a long-retired politician and that's supposed to make up for their total indifference when it comes to the massive crimes of finance? Nobody should give a fuck until lots and lots and lots of bankers go to jail.

Osmosis in Plant Cells Revisited

I have to post this article again as I believe some here would argue that the amount (quantity) of rainfall a plant receives would somehow effect the regulatory turgor pressure P exerted by the cellulose walls of the plant.

Similar to how some may assert that the amount (quantity) of forex transactions can somehow effect the exchange rate of currencies.

I would say the amount (quantity) of rainfall cannot affect the plant's turgor pressure P, that regulatory pressure is fixed and defined in the genetic code of the plant species.

Here is the post again for background:

Below a diagram depicting the process of osmosis in a plant cell. Article here.

Some explanation here about how regulated plant systems respond to environmental variation or environmental imbalances... variations and imbalances in bold, as are the indicated responses in exchange rates across the cell wall membranes.

The significance of osmosis to plant function is best appreciated by describing its role in the regulation of guard cells. 
Guard cells are specialized cells scattered across the surface of plant leaves. Each pair of guard cells surround a special pore, termed a stoma (plural stomata), and control its opening. Guard cells have a special arrangement of microfibrils in their walls, so that when the guard cells swell the stomata open. When the stomata of a plant leaf are open, this increases photosynthetic gas exchange and movement of water out of the plant by transpiration. 
In many plants, certain environmental stimuli, such as sunlight, stimulate the guard cells to take up potassium from surrounding cells. This causes their osmotic potential (π) to decrease and water moves in by osmosis. Thus, the guard cells swell, the stomata open, and the rate of gas exchange through the stomata increases. This increases the rate of photosynthesis and plant growth. 
Other environmental cues, such as water shortage, cause plants to transmit chemical signals to the guard cells, causing them to release potassium, which increases their osmotic potential, and to lose water by osmosis. This causes the guard cells to shrink, so closing the stomata, and decreasing the rate of water transpiration through the stomata. This reduces water loss and prevents wilting of the plant. 
Plants rely upon other environmental signals to regulate the osmotic movement of water into their guard cells and the opening of the stomata, so that the advantage of increased photosynthesis is balanced against the disadvantage of increased water loss.

I would analogize the current state of the EUR/USD relationship as isotonic/flaccid from the diagram above; stabilized or in near equilibrium in/around the 1.07 area.

On second thought I'll change my mind the situation is slightly non-isotonic (hyper or hypo tonic depending on which side of the membrane is your pov I guess) the current situation is slightly "favorable" to the US and we should see some continuation of increasing real terms of trade in the US vs. the EZ under present "environmental" conditions... the "environment" can of course change at some point.

For once Bloomberg posts something on their website that makes sense.

I thought I was seeing things just now when I came across an article on that was entitled, "Here's how to add 2.4 million jobs to the economy." I figured since it was Bloomberg there'd be a bunch of dumb suggestions like get the government out of the way, reduce regulation, cut corporate taxes and that sort of stuff.

To be honest I don't even know why I started reading it because I hardly ever read what's on that site as it's always the same, incessantly wrong, out-of-paradigm neoliberal cheerleading that we hear everywhere.

However, this article was different. So different in fact that I don't know how Bloomberg let this slip through the cracks. It was written by some guy named Peter Gosselin and I have no idea who the dude is, but he seems to get it.

Check it out:
"The U.S. is paying a big price in growth, jobs and wages by practicing the kind of fiscal austerity that it criticizes European nations for pursuing." Read on
In the article Gosselin talks about how government spending cuts are weighing heavily on the economy. He  points out what we have been saying here on MNE and what every MMT person knows: that government consumption  and investment is the second biggest component in GDP and the most easily varied (save for the politics, anyway, and I know that's not easy).

The article states pretty emphatically that government  spending has to be increased; that's the only way to boost GDP and job growth. It also says we "gave up on fiscal stimulus too soon." (We said that here on MNE back in 2009!)

Gosselin also rightly shames clueless Conservative lawmakers and doesn't give the Democrats a pass either. Read below:
Opponents of using fiscal tools, especially higher government spending, focus on what they regard as a greater threat than tepid growth: federal deficits and debt. “Government can’t spend its way back to a strong economy,” said Representative Kevin Brady, a Texas Republican and member of the House Ways and Means Committee.
"The nation’s retreat from tax cuts and spending increases to promote the recovery has been a bipartisan affair. Democratic President Barack Obama and Republican House Speaker John Boehner agreed in 2011 to apply the fiscal brakes by negotiating $1 trillion in spending cutbacks over 10 years and a process to impose more."
Anyway, kudos to Bloomberg--THIS ONE TIME.

I'm sure they'll go right back to doing what they usually do, which is posting up the same ignorant and inapplicable shit that has become a mainstay of their opinion writers. (Cue Caroline Baum right about now.)

The Reoccurring Financial Woes of Greece — Sharmini Peres interviews Michael Hudson

Video and transcript.

Real News Network
The Reoccurring Financial Woes of Greece
Sharmini Peres interviews Michael Hudson

Don Quijones — TISA: Yet Another Leaked Treaty You’ve Never Heard Of Makes Secret Rules for the Internet

Don Quijones calls this piece by Jeremy Malcolm of the Electronic Frontier Foundation, to our attention.
Although [Trade In Services Agreement (TISA)] is the least well-known of those agreements, it is the broadest in terms of membership. As far as we know, it presently includes 20 countries plus Europe (but notably excluding the major emerging world economies of the BRICS bloc), who, with disdainful levity, have adopted the mantle “the Really Good Friends of Services”. Like its sister agreements, TISA will enact global rules that impact the Internet, bypassing the transparency and accountability of national parliaments. The only difference is that its focus is on services, not goods....

Matias Vernengo — More on currency crises and the euro crisis

This currency crisis story might have some relation to the current debate between Marc Lavoie and Sergio Cesaratto on whether the European crisis should be seen as a a monetary sovereignty problem (Marc) or balance of payments crisis (Sergio). Both would agree that the crisis is not the result of fiscal problems, as described above.....
Naked Keynesianism
More on currency crises and the euro crisis
Matias Vernengo | Associate Professor of Economics, Bucknell University

It's Amazing How Close People Can Get To Simplicity, Before Irrationality Returns

   (Commentary posted by Roger Erickson)

Image result for ben franklin & the birth of a paper money economy images

For example, take our dimwit reporters ... please! In an otherwise incredibly useful article, this fateful comment was still found lurking.
"How would government pay for prolonged 'deficits?' It would get the money by selling securities to the central bank in exchange for cash."

BMHOTK! Whatever! [That dull throbbing you hear is the sound of logicians pounding their heads on tables in frustration.]

If we "get" money by selling securities, how do we pay off the securities? Let me guess. We "get" securities back by selling money? So why bother?

What do YOU do when you have a prolonged deficit in fiat? Nothing? :( 

(Does anyone bother speaking intelligible language anymore, or only sophism?)

As an alternative to "buying" fiat, a public could just track & monitor currency issuance, as north american colonies did, starting from ~1680 onwards. If not for our revolution, we might still be using someone else's currency, and in the same position as Greece today.

Today, issuing & tracking our own currency supply could be done with cell phone apps. As MRW notes, we don't need a semi-independent, supposedly private Central Bank to pretend to independently "own" or even administer our currency supply. We only need a Central Bank by any other name, without all the mystical baggage. As has been noted in past MMT discussions, all CB functions could easily be run out of a basement room in the Treasury Dept, maybe one called the "Ministry of Money."

Since we let Central Bankers simply mark up bank accounts by striking a key on a keypad, then we can also just get rid of our Central Bankers, and instead automate the process of denominating transactions between ALL debtors and creditors! Fiat by fiat. Wotta concept! Sovereign currency could be just another Automatic Stabilizer (instead of an Automatic Destabilizer).

That way we could bail out regulators instead of bailing out banksters. :( Ya think?

Wake me if this electorate ever wakes up (to logic-101).

However, until then, it's full head of steam towards convenient wall.

Izabella Kaminska — The perpetual gold debate

Izzy weighs in contra-gold.

The perpetual gold debate
Izabella Kaminska

David Ruccio — Capitalism—what’s in a word?

Quote from Richard Wolf.
According to Richard Wolff, critics of capitalism need to be clear about what they mean by capitalism. It’s not free markets or free enterprise, both of which have been present in various forms of slavery and feudalism (and, of course, both of which have been absent in various forms of capitalism). Instead, it’s how surplus labor is organized, in the form of surplus-value.
Note that in this view, political economy is about distribution. Distribution determines the type of economy and the economic infrastructure determines the type of society, that is, social structure in terms of institutional arrangements that order socio-economic relationships. Imposition of institutional arrangements is a matter of power and therefore politics.

Occasional Links & Commentary
Capitalism—what’s in a word?
David F. Ruccio | Professor of Economics University of Notre Dame Notre Dame

Bill Mitchell — Central bank politicians who evade democratic scrutiny and election

Last month, the Schweizerische Nationalbank (SNB), the nation’s central bank recorded some large ‘book’ losses after it had abandoned its attempt to stop the Swiss franc (CHF) from appreciating against the euro. It started trying … as a way of protecting its manufacturing sector but abandoned the strategy on January 15, 2015. It had been buying euro in large quantities with francs and on April 30, 2015 the SNB released the – Interim results of the Swiss National Bank as at 31 March 2015 – which showed that its first-quarter 2015 losses were 30 billion CHF or around 29 billion euros. They lost CHF 29.3 billion on its “foreign currency positions” and CHF 1 billion on its gold holdings. This has raised the question, once again, whether central bank losses matter. The answer is always that they do not matter at all given the central bank can never become illiquid as it issues the currency (under some arrangement or another). So the commentators who whip up a lather about impending doom arising from central bank bankruptcies are to be ignored. But central bank officials also publicly express concern about their capital holdings. Why would they introduce that concern into the public domain when they know full well that they cannot go broke. The answer is that they are politicians themselves except they evade democratic scrutiny and election.....
Bill Mitchell – billy blog
Central bank politicians who evade democratic scrutiny and election
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Lars P. Syll — What is this thing called ‘capital’?

Cambridge capital debate revisited.
Macroeconomics textbooks discuss ‘capital’ as if it were a well-defined concept — which it is not, except in a very special one-capital-good world (or under other unrealistically restrictive conditions). The problems of heterogeneous capital goods have also been ignored in the ‘rational expectations revolution’ and in virtually all econometric work.
Lars P. Syll’s Blog
What is this thing called ‘capital’?
Lars P. Syll | Professor, Malmo University

See also Joan Robinson, "The Meaning of Capital," in Contributions to Modern Economics, Basil Blackwell, Oxford, 1978, pp. 114-125.

George Selgin — Ten Things Every Economist Should Know about the Gold Standard

Seems this post has been taken down.
It's cached here.

George Selgin on the gold standard.
I close with a few words concerning why it matters that we get the facts straight about the gold standard. It isn't simply a matter of winning people over to that standard. Though I'm perhaps as ready as anyone to shed a tear for the old gold standard, I doubt that we can ever again create anything like it. But getting a proper grip on gold serves, not just to make the gold standard seem less unattractive than it is often portrayed to be, but to remove some of the sheen that has been applied to modern fiat-money arrangements using the same brush by which gold has been blackened. The point, in other words, isn't to make a pitch for gold. It's to make a pitch for something–anything–that's better than our present, lousy money.
Ten Things Every Economist Should Know about the Gold Standard
George Selgin | Senior Fellow and Director of the Center for Monetary and Financial Alternatives at the Cato Institute, Professor Emeritus of economics at the Terry College of Business at the University of Georgia, and an associate editor of Econ Journal Watch

Who said it when?

Ok MMT fans, lets play a game of "who said it, when". What follows is two paragraphs of text relating to government spending and the national 'debt'. As you read it, try to guess who the speaker is, and around what year it was said:

"As far as I can learn, this money, which belongs to the wage earners, is not earmarked but is used for the running expenses of the Federal Government.  It is a serious question whether these payments, made in good faith for a specific purpose – that is, for social security and old-age pensions, and so forth – should be used for any other purpose.  The whole question comes down to the credit of the Government.  If the credit of the Government is sound – and I do not question it at the present time, but none of us can anticipate what it may be in the years to come.  However, if the national debt is to increase a billion or two each year, if we are to pile deficit upon deficit, if we are to continue to issue tax-exempt securities by the billions, sooner or later the credit of the United States will be impaired.  Then the funds of these wage earners will also be impaired, when social-security benefits as well as old-age pensions and railroad retirement are to be paid from Government income.

As I said yesterday, I place the interest of my country and its welfare above all partisanship.  I do not want to see the Government’s credit impaired or broken down for any partisan advantage, but everyone knows if we continue the present financial program of borrowing billions upon billions of dollars, with an unbalanced Budget, piling up debt upon debt, sooner or later the day of reckoning will come. None of us are prophets.  We cannot predict when that time will be.  All we know is that is we continue on this road, with no financial policy and an unbalanced Budget we are going forward on the road to bankruptcy, repudiation, and financial chaos. "

So who do you think said this, and when? 

A) Alan Simpson in 2010

B) Peter Schiff in 2005

C) Pete Peterson in 1993

D) Ronald Reagan in 1987

If you guessed A,B,C, or D, guess what, you'd be WRONG! That's because this statement, which sounds exactly like what the debt doomsday crowd has been saying over the past few years, was actually spoken on the floor of the US House by Representative Hamilton Fish III, in November 1937! Thats right, nearly 80 years ago. As you may know, 1937 was the year the Roosevelt administration embraced austerity by raising taxes and cutting spending on New Deal programs, which resulted in the recession-within-depression of 1937. A few years later, spending on WWII would begin, adding several times more to the national 'debt', with no consequences. One can only hope Marriner Eccles gave this man a severe rhetorical beat-down soon afterwards. 

Goes to show- Same Shit, Different Millennium

Hoarded Fiat Currency Units Are Arbitrary Liens On Other People's Initiative. It's Financial Sharecropping, Pure & Simple.

   (Commentary posted by Roger Erickson)

Eric Tymoigne writes that "Half of surveyed U.S. individuals saved 5% or less of their income."

Saving large amounts of denomination units? Does that make any sense at all?

Why should a dynamic electorate try to "save" EXCESSIVE amounts of their fiat? Citizens can't save Aggregate Public Initiative any more than they can individually save personal initiative. Initiative can only be invested when it appears ... or it's lost forever.

The only alternative is sacrificing teamwork by trying to hoard units denominating the personal initiative of other people, including emerging citizens (grandchildren). In other words, slavery, indentured servitude or sharecropping.

Yet hoarded fiat currency units are unproductive liens on other people's initiative (and your grandchildren's options). Savings beyond basic liquidity needs inevitably undermines current & future teamwork. That's why it's CALLED a "demand leakage." It's financial sharecropping, pure & simple. Otherwise, we would have called off D-Day back in 1944 and "saved" all that munitions output ... and those human lives as well.

If NeoLiberals (those promoting every man for himself) were remotely honest (or intelligent), they'd urge us to save lives and teamwork and other things, not just fixate on saving excessive amounts of fiat denomination units (which is what they secretly crave). NeoLiberalism is merely a psychological disorder. One of endless flavors of obsessive-compulsive behavior.

Why do voters preferentially elect OCD patients who obsess over saving excessive amounts of fiat? Why not elect people obsessed with saving other things? Lives? Democracy? Real output? National capabilities? Cultural Adaptive Rate? Our grandchildren's options? What's so uniquely special about nominal accounting numerals?

Maybe only an association of sports coaches can save us. After all, there's no "i" in teamwork. Only in unregulated capitalism.

To pursue the absurdity, is there no "i" in teamwork ONLY because most "me, me, me" is hoarded in politics? If we reform politics, will all sports teams fall apart? What are we afraid of? Cross contamination, or cross training?

Do we have to amend Jefferson's maxim, and insert a clause into our Constitution requiring that we formally regulate the ratio of personal greed to teamwork, to keep that ratio within survival tolerance limits for our social species? Shouldn't that be obvious, after the last 100K years? Or is homo sapiens regressing into homo saps?

Preamble to a Constitutional Amendment banning financial Benedict Arnolds:
"[NeoLiberal capitalists] have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their [stolen, fiat liens]." Thomas Jefferson

Hell, I'd vote for that amendment.

Wednesday, May 27, 2015

Sure, Tom Paine Predicted Social Security ... but He Did NOT Predict FICA Taxes

   (Commentary posted by Roger Erickson)

Agrarian Justice: With a new Foreword, "Social Security, Thomas Paine, and the Spirit of America"

The "new" forward is by our favorite NeoLiberal Harvard Lawyer, Nancy Altman.

How misleading is Nancy's outlook? It's more insidiously wrong than you could possibly believe. I shudder to imagine what choice words Tom Paine  - if resurrected - would have for NeoLiberals of today, such as Nancy Altman.

Sure, Tom Paine Predicted Social Security ... but He Did NOT Predict FICA Taxes.  Social Security, after all, was practiced by every known tribal society worldwide, for the past 100,000 years. (Hint, FICA taxes weren't invented until ~1936.)

The tragic part is that SS-Works & Nancy Altman TRULY BELIEVE (or SAY they believe) that it is ONLY FICA taxes that make SocSec possible - while that is the exact opposite of the simple truth. What Nancy Altman is spewing is misguided bullshit, of course.

Have YOU ever seen another public policy paid for by a pre-emptive tax on citizens? What? No "CWICA" tax to pay for Corporate Welfare? How about for Air Force bombers? Bank bailouts? You may as well quit looking. Only the working class is taxed this way, and for no good reason whatsoever.

To understand why, please read this historical link all the way to the end.

Then remind yourself that FIAT TAXES FOR FIAT REVENUE ARE OBSOLETE ... and have been ever since 1933.

If more citizens understood that 4 generations of US citizens have been held down ONLY for the exact purpose of holding them back ... there'd be blood in the streets tomorrow. You, your parents, your grandparents and your great grandparents have all been cheated like disenfranchised sharecroppers. There should be reparations for 80+ years of unnecessary FICA taxes.

It's a bitter pill to realize that your own country has a policy of purposefully over-taxing and under-funding the working classes.

And why? Pure stupidity and greed on the part of the "Upper" looting classes, and pure gullibility on the part of the working classes. Doesn't anyone in this country know what counts anymore?

Is it too late? Tens of millions of voters must look in their mirrors and ask themselves that question.

While you're at it, also ask whether you truly love your children, and/or all the future citizens of the USA. If you do (and aren't a moron) you'd cease - forever - urging fellow citizens to try to save public fiat instead of investing it. Conflating current fiat and future public options is suicidal for a growing population.

I have to ask Nancy Altman if she's ever asked herself the following question about our supposed deficit in fiat.

Decide for yourself. What happens when YOU run out of fiat? Does it help if you BALANCE your fiat? (Whatever THAT means.)

Dick Morris and Julian Assange agree on TPP

Bipartisanship!. Dick Morris and Julian Assange agree. The TPP is anti-democratic.
The Trans-Pacific Partnership (TPP) has nothing to do with trade.

While it officially embraces 11 countries plus the U.S., 76 percent of our trade with these nations is with Mexico and Canada, already covered by the North American Free Trade Agreement (NAFTA). Any export growth is likely to have been already covered by NAFTA, making the TPP irrelevant to our trade relations.
The TPP is nothing but an effort by the globalists to circumvent American sovereignty, transferring a host of issues from the control of the U.S. Congress and the various state legislatures to international trade courts....

The long-term goal of the globalists is an international rule of law unaccompanied by democracy. Because there is no global forum for the manifestation of worldwide popular will, this formula leads to rule by bureaucrats: those who know best. It is government by a new aristocracy of civil servants and technicians.

Why are they so eager to pre-empt the power of elected bodies? Steeped in the traditions of opposition to democracy, they regard the will of the people as unpredictable and subject to demagoguery. The French and the British have always used their civil service to insulate their countries from the ravages of ambitious populist politicians. Germany has a well-deserved suspicion of popular sovereignty, and Japan has always been ruled by its bureaucracy.
Multinational corporations find bureaucrats easy to control, subject as they are to the influences of the revolving door between regulators and those they regulate. Coming from industry or planning to return there, the supposedly disinterested bureaucrats are anything but impartial. 
What is incomprehensible is why normally trustworthy Republican senators and congressmen are falling in line behind Obama. Hasn’t this president stripped our nation of enough power? Has he not tipped the system of checks and balances all out of kilter? Are we to trust him with more power? Are the Republicans to vote him more power?

It is mostly not about trade. Only five of the 29 chapters are about traditional trade. The others are about regulating the Internet and what Internet—Internet service providers have to collect information. They have to hand it over to companies under certain circumstances. It’s about regulating labor, what labor conditions can be applied, regulating, whether you can favor local industry, regulating the hospital healthcare system, privatization of hospitals. So, essentially, every aspect of the modern economy, even banking services, are in the TPP.

And so, that is erecting and embedding new, ultramodern neoliberal structure in U.S. law and in the laws of the other countries that are participating, and is putting it in a treaty* form....
Democracy Now!
Julian Assange on the Trans-Pacific Partnership: Secretive Deal Isn’t About Trade, But Corporate Control
Amy Goodman interviews Julian Assange

h/t Lambert Strether at Naked Capitalism

• Congressional Institute, Trade or Treaty? Why Does the House Approve Free Trade Agreements? By Mark Strand and Dan Risko
Unlike treaties, trade agreements affect U.S. law regarding foreign commerce, which Congress regulates, thus requiring legislation to implement. Also, Article I states that bills concerning the generation of revenue must be introduced in the House of Representatives. Because free trade agreements deal with our nation’s revenue stream, the House has a Constitutional obligation to participate.
Remember, once signed, these free trade agreements are U.S. Law.... 
The expedited consideration of free trade agreements, known as Trade Promotion Authority (TPA), was formerly known as “fast track” legislative process because a bill avoids many of the timely legislative constraints, such as the filibuster or amending the bill to change the terms of the agreement. The president was able to utilize the “fast track” authority in Congress until it expired 1994. It was then reapproved under the Trade Promotion Authority Act of 2002, but once again expired in 2007....

Bill Gross needs "Mental Game"

I know what you are thinking: it's incredibly presumptuous and cocky of me to even suggest that I can offer something to Bill Gross, particularly something in the "trading skills/attributes" category. After all, Gross is a billionaire, I am not. He founded, built and then ran, for a long time, the largest bond mutual fund in the world. I did not.

Yet, in the past few years we have seen him falter. We saw the bizarre, "Who's gonna buy them now?" tweet back in 2011 where he fretted publicly, on Twitter, that there'd be no buyers for Treasuries when the Fed stopped it's QE program at the time. Matt Franko and I started to think he was losing it. We referenced Gross's comments many times here on MNE.

Then we watched his losses and client defections mount while at Pimco. FYI that, too, was predicted here before it ever happened. After that the messy breakup with Mohamed El-Erian (who is no particular trading prodigy himself--"new normal?" Seriously?) and finally, the move to Jeffries (of all places) where he got an account to manage, which was about 1/200th the size of the one he was managing at Pimco.

Personally, I think Gross should have retired; stepped out of the game while still on top, maybe not performance-wise, but reputationally.

So in the past month or two he's made some calls: "Short the dollar is the best trade all year" and "Short the German bund is the best trade of a lifetime."

On both of these his timing was pretty good. He could have made some money. On the bund trade it was excellent: the moment after he said it there was a meltdown.

Now it turns out he lost money. He got the calls right (at least for a trade), but lost money.

You know what that is? That's mental game that just is not there. How do I know? Because I used to do it all the time early on in my trading career. I was always a great analyst, but never really made any money. I got the market direction right, the timing right...everything right, then ended up making nothing or worse, losing.

That's where Gross is right now. He's burnt. His mental game is nowhere to be found. It sounds like the height of arrogance and cockiness when I say that if Gross wants to stay in the game he has to re-sharpen his mental game. Who am I? I'll tell you who I am; I am a guy who's been through it, only on a smaller scale.

If Gross does not get his mental game back he will lose, lose, lose and suffer a really ignominious end. Trust me when I say this.

I teach mental game in my course. I have said to students that you can be the best analyst in the world, have all the best information, indeed...even have inside information, but if your mental game is not right then you won't make any money at all. You will fail as a trader.

On the other hand if you have the right mental game you can throw money at a dartboard and make money. I am being absolutely serious.

I've had fun making jokes about Gross, but now I am really sad for him. The guy had stature and he really made it big. He's not going to listen to what I say, that's obvious, but I wish him the best. If he doesn't get his mental game back  he's really going to go down in flames.

Let it be a lesson to all. No matter how big or successful you are or once were, the big guys can fail, too. And it's not that the markets are great humblers. The markets couldn't give two shits about you; they're not alive, they have no feelings or soul.

In the end, success or failure, we make it ourselves.

I read the comments from the haters. It's awesome!

Great comments from the haters. I love doing this. It's a lot of fun.

Bill Mitchell — The incommensurate aims of the Greek people

I am continually amazed at the arrogance of the Eurozone leaders who in the face of palpable professional failure hold a straight face and continue to advocate the same disastrous policies as if nothing had happened over the last 7 years. I don’t believe they suffer from – cognitive dissonance. I think they know full well what they are doing and they personally do very well out of the chaos their policies are causing. But it is almost certain that the Greek people are suffering from a cognitive disorder brought on by historical experience and, more recently, by the media onslaught that has erroneously claimed that there would be catastrophic consequences if Greece dared to leave the Eurozone and restore currency sovereignty. The stated aims of the Greek people are incommensurate and there doesn’t appear to be a broad debate going on in Greece, which might make that inconsistency transparent....
Politics and economics. Bill analyzes the situation and provides answers to counter neoliberal propaganda.

Bill Mitchell – billy blog
The incommensurate aims of the Greek people
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Slightly Better Serfdom Terms For Greeks? Well Ok! That Makes All The Difference.

   (Commentary posted by "Saint" Roger :( )
Better serfdom terms was the only goal? Why didn't Tsipras just say so up front?

Slightly Better Serfdom Terms For Greeks? Ok. That Makes All The Difference

Sometimes it comes right out of your own mirror. Then you die ... maybe slowly, and maybe not all at once, but you start to die.

And all those who depend upon you are condemned to die too. Maybe some of them might escape someday ... but for now they're still sentenced.

Sometimes it really is liberty ... or death. And none of us has the right to choose the latter for our descendants.

FIFA execs arrested for corruption, but bankers free to steal billions (trillions) more!

Another one for the joke books.

The FBI announced a "big" arrest today of some FIFA officals who allegedly took $150 million in bribes (what bankers call, "pocket money") over a 24 year period. That's about $6 million per year or, about a quarter of Jamie Dimon's annual salary, but who's counting?

The Department of Justice indictment names 14 people on charges including racketeering, wire fraud and money laundering conspiracy. In addition to senior soccer officials, the indictment also named sports-marketing executives from the United States and South America who are accused of paying more than $150 million in bribes and kickbacks in exchange for media deals associated with major soccer tournaments. Read.

Thank God we have our vaunted, Department of Justice on this. We can all sleep easier now that these dangerous sports execs have been nabbed. Phew! Way to go, Attorney General Loretta Lynch!

Oh...wait...I forgot...

They got fines.

This is all part of the financial elites' plan, folks. Get the public addicted to these stupid games, make sure they're completely zombified and looted ($150 for a ticket to a baseball game?) by this industry, which really has only been created to serve as a major distraction so that the elites can rob us blind without us even knowing it or, caring about  it. (The elites own the teams, remember?)

But...if something "bad" happens in sports, like a bribe or, a player taking performance enhancing drugs (which the hypocritical fans love because it juices the players' performance to the max) or, God forbid, DEFLATED FOOTBALLS, then our "leaders" get real serious about these terrible "crimes" and throw the book at the "lawbreakers" hard. Destroy their careers or lock them up after media-frenzy raid that show them being led away in "perp walks."

Honestly, I don't know why the bankers and financial elites even want to steal: we throw trillions $$$ of taxpayer money at them for free. Maybe they rob just because they're bored and want something to do.

The joke's on us, folks. The joke's on us.

Toyota takes another $500 off Camry

Snip below from a Toyota offer on their Camry here in the US.

They have added an additional $500 bonus cash back to bring the total rebate now to $1250 cash back.  It was just the $750 the last time I was made aware of the deal this looks like a recently added price incentive.

This makes every Camry currently financed in the US worth less.

A JPY bearish vs. USD development imo; and at least correlated with the recent JPY weakness vs. USD.

A summer price war in the US market between the Japanese and European auto firms would be a factor for continued USD bullish.

Tuesday, May 26, 2015

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Mark Buchanan — In Economics, What Calculates Isn't Always Right

This mathematical-purist approach came from a rather odd place. As Roy Weintraub relates in his excellent book "How Economics Became a Mathematical Science," Debreu took his perspective from a secret group of French mathematicians who, starting in the 1930s, worked under the pseudonym “Nikolas Bourbaki.” The Bourbaki group thought mathematics should have an almost religious purity, refined and unsullied by contact with the practical. Educated in Paris, Debreu came under their influence, and then shifted from mathematics to economics. 
Weintraub argues that Debreu played a decisive role in transforming economics -- “not only the field's self-image, but its concept of inquiry itself.” Ever since, economic math has been Bourbakian, primarily concerned with formal structure. Practitioners downplay the need for realistic assumptions, as Paul Fleiderer noted in his brilliant essay on chameleons. They use highly dubious suppositions to generate a result, which they then use as a foundation for giving advice to policy makers. This is pretty much the opposite of good science. 
Scientists generally enlist mathematics only as a tool, and ultimately value practical understanding above theoretical rigor. They care deeply about the plausibility of the assumptions used in any model. Models, of course, are always oversimplified -- one might say “wrong” -- but it's what they get right that matters. A sphere is a good model for the Earth not because it lacks any geographical detail, such as mountains or valleys, but because it gets the rough shape right. 
The Bourbakian influence in pure mathematics actually caused a rift between physicists and mathematicians back in the 1980s. The formal and pure Bourbakian approach seemed useless to the physicists, whose more practical approach seemed suspect to the mathematicians. Since then, that rift has disappeared as math has moved on. Economics apparently hasn't recovered yet.
Good article on how conventional economics got where it is. 

It's all in the head.

Bloomberg View
In Economics, What Calculates Isn't Always Right
Mark Buchanan

See also

Lars P. Syll’s Blog
Lars P. Syll | Professor, Malmo University