I decided to write an extended blog post today (Wednesday) because events in Italy are so interesting. My usual short post on a Wednesday will resume next week. George Soros is now saying that “everything that could go wrong has gone wrong” in Europe and a financial collapse is in the wind (Source). I doubt the latter but agree with the former assessment. All the flaws in the original neoliberal design of the Eurozone have been revealed and all the reasons why those flaws were created in the first place remain in place. Nothing has changed since 1977 when the MacDougall Report concluded that the cultural and national differences between the (then) Member States of the European Communities were too great to allow an effective monetary union to be created. That assessment and the earlier work of Pierre Werner in his 1970 Report were ignored as the neoliberals in France and Germany rushed headlong to Maastricht. France thought it would have a chance to dominate and Germany was distracted by unification but still firmly in charge of what would be allowed in the new monetary system and what would not. Now, one of the biggest nations – Italy – is is turmoil as the damage of being part of the Eurozone slowly but surely erodes its capacity to deliver anything remotely like prosperity and its social and political system starts to collapse. Italy must leave the Eurozone – the sooner the better. And, that will bring a reality check for the whole disaster and encourage other nations to push for an orderly dissolution.Stein's Law — "If something cannot go on forever, it will stop." — Herbert Stein
Bill Mitchell – billy blog
The assault on democracy in Italy
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW,
See also
Lars P. Syll’s Blog
Italy — shows why the euro has to be abandoned if Europe is to be saved
The assault on democracy in Italy
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW,
See also
Lars P. Syll’s Blog
Italy — shows why the euro has to be abandoned if Europe is to be saved
Lars P. Syll | Professor, Malmo University
See also
Digressions&Impressions
Politics and Renewal within the Euro: A Thought on the Unfolding Italian Crisis (and remarks on Greece)
Eric Schliesser | Professor of Political Science, University of Amsterdam’s (UvA) Faculty of Social and Behavioural Sciences
See also
Digressions&Impressions
Politics and Renewal within the Euro: A Thought on the Unfolding Italian Crisis (and remarks on Greece)
Eric Schliesser | Professor of Political Science, University of Amsterdam’s (UvA) Faculty of Social and Behavioural Sciences
Tom Hickey writes:”Nothing has changed since 1977 when the MacDougall Report concluded that the cultural and national differences between the (then) Member States of the European Communities were too great to allow an effective monetary union to be created.
ReplyDelete“Effective monetary union”? For widening the gap between the rich and the reset, the euro has been very effective. Likewise, austerity has been a spectacular success for the rich.
The criminal bankers who designed the euro-scam created a monetary union, but not a fiscal union. This did this intentionally. With a fiscal union, countries that are struggling financially can ask the European Commission to give them money. With a monetary union alone, countries that are struggling financially must beg bankers to lend them money.
The result is that nations with trade deficits suffer from ever-increasing debt, austerity, privatization, and inequality. Each “bailout” from the Troika is another debt bomb.
As I said, this was all intentional. It was planned. The Troika ignored its own rules whenever a country asked to use the euro, and be enslaved. The three most recent nations who begged to be slaves were Estonia (2010) Latvia (2013) and Lithuania (2014).
Tom Hickey writes: “Italy must leave the Eurozone – the sooner the better. And, that will bring a reality check for the whole disaster and encourage other nations to push for an orderly dissolution.”
Yes, and this is why the Troika is using its puppet president Sergio Mattarella, and its puppet prime minister Carlo Cottarelli (who is himself a member of the Troika) to arrange for new elections in July. The new elections will be rigged so that this time the Italian people vote “correctly” (i.e. the results will be pro-Troika).
The instability arises from the fact that all Italians know this.
The euro scam will inevitably end. We just don’t know when, and we don’t know how much more suffering and destruction it will cause.
Lars P. Syll says that austerity policies are “misguided.”
No. Austerity is deliberate and intentional. Moreover it is unavoidable. If your nation uses the euro, and if your nation has a trade deficit, then your nation will keep falling further into debt no matter what. Debt makes austerity unavoidable. Greece could not avoid austerity even if the Troika wanted Greece to.
For nations that do not use the euro, and whose currencies are widely accepted, austerity is totally unnecessary, and is 100% gratuitous.
Lars P. Syll says “During the 1930s our economies didn’t come out of the depression until the folly of that time — the gold standard — was thrown on the dustbin of history. The euro will hopefully soon join it.”
The “gold standard” gimmick was not abandoned until 1971. Politicians used this gimmick when they wanted to falsely claim that there was “no money” for social programs. Politicians ignored the “gold standard” gimmick whenever they needed to create mass amounts of money out of thin air for wars.
The euro scam is a straight-jacket. Unlike the “gold standard,” the euro really does limit a nation’s access to money if the nation has a trade deficit.
Greg Palast became a student under Milton Friedman but me was an imposter, he just wanted to learn how bad monetarism was. He wrote this interesting Guardian article. The Euro was designed by the Chicago School to destroy European social democracy, says Greg Palast.
ReplyDeleteQuote - Greg Palast
"The idea that the euro has "failed" is dangerously naive. The euro is doing exactly what its progenitor – and the wealthy 1%-ers who adopted it – predicted and planned for it to do.
That progenitor is former University of Chicago economist Robert Mundell. The architect of "supply-side economics" is now a professor at Columbia University, but I knew him through his connection to my Chicago professor, Milton Friedman, back before Mundell's research on currencies and exchange rates had produced the blueprint for European monetary union and a common European currency.
Mundell, then, was more concerned with his bathroom arrangements. Professor Mundell, who has both a Nobel Prize and an ancient villa in Tuscany, told me, incensed:
"They won't even let me have a toilet. They've got rules that tell me I can't have a toilet in this room! Can you imagine?"
As it happens, I can't. But I don't have an Italian villa, so I can't imagine the frustrations of bylaws governing commode placement.
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But Mundell, a can-do Canadian-American, intended to do something about it: come up with a weapon that would blow away government rules and labor regulations. (He really hated the union plumbers who charged a bundle to move his throne.)
"It's very hard to fire workers in Europe," he complained. His answer: the euro.
The euro would really do its work when crises hit, Mundell explained. Removing a government's control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession.
"It puts monetary policy out of the reach of politicians," he said. "[And] without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business."
He cited labor laws, environmental regulations and, of course, taxes. All would be flushed away by the euro. Democracy would not be allowed to interfere with the marketplace – or the plumbing."
https://www.theguardian.com/commentisfree/2012/jun/26/robert-mundell-evil-genius-euro
That’s an interesting article. I had never heard of Robert Mundell, but I can see why he was given the 1999 Nobel Prize in economics. Mundell’s euro scam is an oligarch’s dream, as is Mundell’s “supply side” economics with its “trickle down” lie. The claim is that if we give more to the rich, and we further impoverish the middle and lower classes, everyone will be prosperous.
ReplyDelete“But Mundell decided to do something about it: come up with a weapon that would blow away government rules and labor regulations. (He really hated the union plumbers who charged a bundle to move his throne.) ‘It's very hard to fire workers in Europe,’ he complained. His answer: the euro.”
The U.S. and U.K. governments have a simpler scam: Just tell the peasants that there is “no money” for social programs, and that things like Medicare and the National Health Service are “unsustainable.”
The peasants believe this lie every time.
“The euro puts monetary policy out of the reach of politicians,” Mundell added. “[And] without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business.”
Euro-enslaved nations can keep jobs if they have sizeable trade surpluses like Germany (which has the biggest trade surplus and the lowest unemployment in Europe). Of course, local politicians must be willing to allow society to create jobs. The U.K. government, for example, is not revenue constrained, and could therefore create jobs for everyone. However rich Britons don’t want that, since the farther that average Britons fall into poverty, the more rich Britons feel rich.
“The peasants believe this lie every time. ”
ReplyDeleteIt’s not s lie you have one cohort of wealthy libertarian moron scum telling another unwealthy libertarian moron scum that the govt doesn’t have any munnie and they both end up in agreement...
The whole “out of money!”!falsehood is borne of libertarianism not “class” or income bracket...
ReplyDeleteSo any libertarians rich or poor are in full agreement on this...
You guys are probably libertarians too so you have to cook up your whole “neoliberal conspiracy!” theories as a reaction due to your cognitive dissonance...
Matt, the Libertarians are just about the only people other than MMT folks that understand that the government can issue all the currency it pleases with a floating rate system where the currency is not it is not anchored through convertibility to a real assets like gold. They are concerned about the inflationary effects of "funny money."
ReplyDeleteBob Roddis understands this perfectly. He just doesn't think it is good policy for the reasons that he has provided.
It's the Democratic and Republican conservatives that think we are "out of money." Libertarians think that the US will inflate its way out of the growing mountain of debt — and that is not an unreasonable assumption based on history.
Bill’s use of “assault on democracy!” is another reaction due to his cognitive dissonance :
ReplyDelete“Public polling shows most Italians like Europe’s single currency. It also reveals that increasing numbers think it is good for the country, and even larger numbers think it is good for Europe.“
People there want to KEEP the EUR so how is this not democratic?
Tom I agree about Bob but he is not getting cognitive dissonance from it as he has no TWO dissonant beliefs in this regard...
ReplyDeleteBob is a libertarian and he doesn’t want govt to have monetary authority so there is no two dissonant beliefs there...
You guys are libertarians AND want govt to claim monetary authority ie two dissonant beliefs... ie can’t be both... so you guys have 3 choices:
“There are three ways to eliminate dissonance: (1) reduce the importance of the dissonant beliefs, (2) add more consonant beliefs that outweigh the dissonant beliefs, or (3) change the dissonant beliefs so that they are no longer inconsistent”
You guys are using option 2 by adding more consonant beliefs which is your “neoliberal conspiracy!” which is outweighing your 2 dissonant beliefs of 1 libertarianism and 2 govt monetary authority...
I’m not libertarian so I don’t have the problem with dissonant beliefs like bob doesn’t have it either...
ReplyDeleteI have explained my POV but I will repeat it.
ReplyDeleteI am a libertarian of the left. I think that the modern nation state is a historical phenomenon that will be superseded. The problem is not "government" but government controlled by elites and also democratic governance by population that is funding from a low level of collective consciousness.
Genuine democracy as governance — notice I did not say "government" — of, by and for the people requires consensual governance from the grassroots level rather than hierarchical imposition of rule.
To have consensus governance a relatively high level of collective consciousness is required and history is moving in that direction, albeit slowly. Until then, hierarchical rule will be required and the challenge will be for the people at large to control the rulers.
Libertarians of the right assume that everyone pursuing self-interest independently will result in spontaneous natural order regardless of the level of collective consciousness. I think that is naive. Then there is the challenge of getting from here to there. They would like to see that done though policy. Good luck with that.
What is needed is to focus on what it takes to life a good life as individual in a good society and to formulate policy based on that. This is actually what the ancient Greeks that founded the Western intellectual tradition initially proposed and it resulted in the 18th century Enlightenment, the outcome of which was bourgeois liberalism and the US Constitution.
That is getting long in the tooth. But recall that8th century Enlightenment led to the American Revolution, the French Revolution, Napoleon, many wars and the final transition to the present world order post-WWI and WWII.
I don't expect the next transition to be any less fraught with challenges, whenever it comes.
But the handwriting is on the wall. The West-Global North is losing its 500 years dominance as a result of globalization and the emerging nations of the East and Global South.
Whatever order emerges next will seemingly be a combination of many influences and the melding of many traditions.
"funding" - functioning.
ReplyDelete"8th century" = 18 c.
@ TOM HICKEY:
ReplyDelete[1] Anyone who uses the term “funny money” does not understand money. It’s like watching a football game and calling the points on a scoreboard “funny points.” Anyone who is worried about his dollars being “funny money” can give his dollars to me.
[2] Bob Roddis understands this perfectly.
Bob Roddis is obsessed with something he calls “violent intervention.” No one knows what that means, least of all him.
[3] “It's the Democratic and Republican conservatives that think we are ‘out of money’.”
They are liars and they know it. When they want to create more money out of thin air for war, weapons, and Wall Street bailouts, they never ask, “How will you pay for it?” They lie to the peasants by claiming that money is physical and limited. Politicians do this in order to keep the peasants impoverished, so that the peasants grovel to the politicians.
[4] “Libertarians think that the US will inflate its way out of the growing mountain of debt — and that is not an unreasonable assumption based on history.”
Libertarians have no clue about money. In the context of the USA, when we mention the word “debt,” we must always specify whether we are talking about public federal debt, or else every other kind of debt. Public federal debt is money sitting in Fed savings accounts. It is called a “debt” because it is on loan to the Fed. There is no need to “inflate” our way out of it, since the money already exists. It is an asset. Talking about “inflating” our way out of it is like claiming that banks must “inflate” their way out of their own deposits. That money on deposit at the Fed has nothing to do with the U.S. government’s ability to spend.
Regarding all other kinds of debt (such a private debt like mortgages or student loans, or state, county and municipal debt) there will be no “inflating” out of it, because the U.S. government will not pay that off. Instead, creditors demand that debtors pay it off, meaning you and me.
[5] Libertarians have no clue about money. (Repeated for emphasis.)
“libertarians have no clue about money”
ReplyDeleteTHEN Tom (and Bill) says:
“I am a libertarian “
Therefore (accordingly to you):
Tom and Bill have no clue about “money”
Which is patently more BS from you...
“Libertarians of the right assume that everyone pursuing self-interest independently will result in spontaneous natural order “
ReplyDeleteThat’s just textbook Darwin 101...
@Natt Phranko:
ReplyDeleteI was going by this statement...
“Libertarians think that the US will inflate its way out of the growing mountain of debt — and that is not an unreasonable assumption based on history.”
If that is true, then Libertarians have no clue about money, for reasons I described above.
I don't expect you to understand, just as I don't I don't expect you to understand how to blow your nose.
Seek help. There's no need to suffer in solitude.
“libertarians have no clue about money”
ReplyDeleteTHEN Tom (and Bill) says:
“I am a libertarian “
Therefore (accordingly to you):
Tom and Bill have no clue about “money”
Which is patently more BS from you.
Libertairians don't comprise a monolithic set. Libertarians generally assume that personal freedom is the highest priority in social organization. Subsets of libertarians have different rationales for this assumption.
Libertarians also generally assume that the imposition of hierarchical authority under the control of some group, however well meaning, even if imposed democratically, is not compatible with this first principle.
There are many subsets of libertarians along the political spectrum. On the political compass matrix of libertarian-authoritarian and left-right, they occupy the left and right quadrants under libertarianism. There are lot of points in those quadrants representing different sorts of libertarianism.
The claim that all libertarians are X is like the claim that all authoritarians are fascists, which authoritarians reject as absurd.
Many on one side of the spectrum portray the other side in terms of black and white thinking, but they reject the same approach applied to them.
Like most of life, it's nuanced.
Anyway, this debate has an enormous literature and long history behind it extending at least to ancient Greek. Anyone that doesn't have a grasp of it is just gassing about personal ideological assumptions and cognitive-affective bias.
ReplyDeleteBTW, libertarians of the right are known in the US as Libertarian (capital L) and they have a political party with that name. However, they are not a monolithic set. But most would like say that they agree that the non-aggression principle is the the chief boundary condition for them.
ReplyDeleteThose that identify as libertarians of the left don't have a monicker in the US. They get dumped into the categories of socialist, anarchist, or communists. However libertarians of the left are also not monolithic and there are many subgroups. The would probably agree that the basic assumption that distinguishes them is universal human rights as a priority to guarantee freedom and protect minorities from the tyranny of the majority.
Americans are split on this.
Generally speaking, libertarians differentiate themselves from authoritarians by rejecting hierarchical social organization that is under the control of a subset of the population as a whole, a society being a set comprised of many subsets.
ReplyDeleteLibertarians of the left are somewhat differentiate from libertarians of the right (in the US, Libertarians) in viewing society as a system comprised of elements, subsets and their complex relationships rather than an aggregate of members as "sovereign individuals."
Moreover, libertarians of the left view the sovereignty of the individual as limited by universal human rights.