Zero Hedge does Steve Keen — & Mish Update

Following his somewhat epic blog debate with Paul Krugman, Steve Keen appears on Capital Account with Lauren Lyster to debunk more Keynesian propaganda and the kleptocratic status quo 'debt doesn't matter' arguments.

I guess they haven't figure out that Steve is Keynesian yet.

The post is of interest to see what "the other side" is making of it.

Anyway, it good that Steve and Monetary Circuit Theory (MCT) is showing up there and at Mish's, especially since MMT and MCT are getting more closely in agreement.

Read it at Zero Hedge (with RT video of Keen)
Steve Keen On Why Debt Matters "All The Time" And The Need For "Quantitative Easing For The Public"Submitted by Tyler Durden

UPDATE: Mish predictably hates the debt jubilee.
Steve Keen Goes Off the Deep End With a "Debt Jubilee" (Free Money to Consumers) Proposal

But the good news is that Mish is on board with important monetary analysis that MCT and MMT share.

I am in general agreement with Keen on numerous things.

For example, I agree 100% with Keen that lending comes first and reserves later. I also agree with Keen that the notion of excess reserves is fatally flawed, and so is the notion of money multipliers.

I scoff, along with Keen, with the idea that excess reserves are going to come pouring back into the economy causing hyperinflation or massive inflation.

For a discussion, please see my December 21, 2009 article Fictional Reserve Lending And The Myth Of Excess Reserves in which I rebut the idea espoused by Robert Murphy that the Inflation Genie is About to Get Out of the Bottle.

The idea was silly then and it is still silly now. I believe events have proven as such.

However, start giving money away as Keen proposes and I would change my tune about inflation in a hurry. Note that QE is essentially a loan but Keen's proposal is an outright gift....

Bear in mind that I am a big admirer of Steve Keen. Steve has taught me a lot. I like his debt model. I just do not like his solution. It cannot and will not work, for reasons that quite frankly should be obvious.

Mish thinks a debt jubilee would be inflationary and says he doesn't mind some deflation.

Mind you there is absolutely nothing wrong with price deflation.

Who out there does not want the price of oil to drop or the price of food to drop? Who does not want more for their money at the department store? Who does not want the price of a college education to drop?

The problem with deflation is that once prices start falling then self-interest dictates waiting to buy until prices are lower, and lower.... Which increases saving. Which if not offset results in economic contraction due to lagging demand. The old paradox of thrift. What's good for an individual is bad for the economy as a whole and thus ends up being bad for all the individuals that make it up.

Zero Hedge — Financial Instability For (Keynesian) Dummies

Zero Hedge figures it out. Keen and Bezemer mentioned.

Read it at Zero Hedge (short, on INET Berlin)
Financial Instability For (Keynesian) Dummies
Submitted by Tyler Durden

Zero Hedge — Sean Corrigan Crucifies MMT

While hardly needing a full-on onslaught by an Austrian thinker, when even some fairly simplistic reductio ad abusrdum thought experiments should suffice (boosting global GDP by a few million percent simply by building adeath star comes to mind), Diapason's Sean Corrigan has decided to take MMT, also known as "Modern Monetary Theory", to the woodshed in his latest missive in a grammatical, syntaxic (replete with the usual 200+ word multi-clause sentences) and stylistic juggernaut, that only Corrigan is capable of. So sit back in that easy chair, grab your favorite bottle of rehypothecated Ouzo, and let the monetary hate wash through you.

Money, Macro and Marketsby Sean Corrigan of Diapason Commodities Management, and author of the excellent Santayana's Curse

Read it at Zero Hedge
Sean Corrigan Crucifies MMT

posted by Tyler Durden

Either Zero Hedge or MMT is wrong. They are both on record.

For the record.

ZH thinks it won't be long before we see who is right. Meanwhile, place your bets.

Read it at Zero Hedge
As US Debt To GDP Passes 101%, The Global Debt Ponzi Enters Its Final Stages

posted by Tyler Durden

ZH — New York Fed Is Back To Transacting Opaquely, Sells AIG Holdings To Goldman

The last time the Fed tried to dump Maiden Lane 2 assets via a public auction in a BWIC manner, it nearly crashed the credit market. This time, the FRBNY, headed by one ex-Goldman Sachs alum Bill Dudley, has decided to go back to its shady, opaque ways, and transact in private, with no clear indication of the actual bidding process or transaction terms, and sell $6.2 billion in Maiden Lane 2 "assets" to, wait for it, Goldman Sachs, the same firm that would benefit in the first place if AIG's assets imploded (remember all those CDS it held on AIG which supposedly prevented it from losing money if AIG went bankrupt?). One wonders: does Goldman have a put option on the ML2 portfolio if the market experiences a sudden and totally impossible downtick some day? But all is well - we have assurance from the Fed that the sale happened in a "competitive process." Luckily, that takes care of any appearance of impropriety.

Read it at Zero Hedge
New York Fed Is Back To Transacting Opaquely, Sells AIG Holdings To Goldman
by Tyler Durden

ZH — Should You Be Subsidizing Executive Compensation In The Name Of Job Creation?

On Friday every main stream media organization was hyperventilating over the amazing NFP number and the Unemployment rate. Three years after the great recession ended JOBS were created. Hallelujah - end of story. But has anyone really thought about what kinds of jobs are being created (other than Zerohedge). [As a matter of fact, yes.] Has anyone thought about how their tax dollars are being used to support the very generous compensation packages of Executives (higher stock prices are always good for executives who are compensated in stock) while the “newly employed” are compensated with barely sustenance level wages and NO benefits. [Again, yes.] Has anyone raised the notion in this election cycle about how the “soft landing” in American living standards, is going to affect GDP growth going forward, considering that the US is an economy based 70% on consumption. [Yep, again. Why do these ZH people think that they are only ones who have a clue? I guess they don't get out much.]

On Friday Caterpillar announced they were closing a factory in Canada. They had wanted the workers to take a 50% pay-cut plus a substantial cut to benefits. The workers understandably were not excited at the prospect of going from earning $67,000 a year to $28,000. One might think that Caterpillar was a struggling company, asking workers to accept a 50% pay-cut, one couldn’t be more wrong. Profit was up 36% in 2011 vs 2012. Oddly the CEO’s (also Chairman of the Board) pay package in 2010 (latest available numbers) was quadrupled from 2009, to a total of $22.5 million including a $16 million stock grant.

Read it at Zero Hedge

Should You Be Subsidizing Executive Compensation In The Name Of Job Creation?
Submitted by lizzy36

This is reverse socialism. It is the redistribution of wealth from the lower to the upper class with explicit State support. It is the sort of wealth redistribution that if allowed to go unchecked leads to social instability.

Is Zero Hedge sounding like Mother Jones, or is Mother Jones sounding like Zero Hedge? Either way, I like it.

BTW, someone tell lizzy that this is Mussolini's definition of "fascism" rather than "reverse socialism." "Reverse socialism" is capitalism. Capitalism is private ownership of means of production, while socialism is public ownership of means of production.

The real story on employment is — underemployment

... contrary to simplistic headline charts, the number one data series that pundits should be focusing on, is the subset of persons "who currently want a job." Indicatively, as we showed on Friday, this just hit an all time high... even according to the BLS:

Read it at Zero Hedge

Gallup Finds Recent Job Boost Due To "Temp And Part-Time" Hiring; Underemployment Greater Than Prior Year

by Tyler Durden

Change in composition of Fed board coming

 ...the Fed's balance of power is about to shift substantially. With under 30 days left in 2011, the current roster of 4 rotating voting Fed governors is about to be swept out, only to be replaced with 4 new ones. Yet as the chart below from SocGen shows, the rotation will probably be the most dramatic in Fed history as 3 die hard Hawks (and 1 dove) are eliminated only to be replaced with a panel which is almost exclusively Dovish. In fact, at the end of the day the only modest Hawk on the Fed's voting committee will be Richmond Fed's Jeffrey Lacker (the only member to vote against the drop in FX swap line rates), and even he in the past has shown his dovish wings....

Raed the whole post at Zero Hedge
When Doves Laugh: 4 Weeks Until The Quiet Coup In The Fed Gives QE3 A Green Light

by Tyler Durden

Hyperinflation is just around the corner, right?

"Deflation is coming " at Zero Hedge

The inflationists getting nervous?

Read it at Zero Hedge
Deflation is coming

contributed by South of Wall Street

Michael Hudson makes Zero Hedge

Zero Hedge provides a link to Michael Hudson on YouTube, "The Super Committee and the Attack on Labor"


Zero Hedge: Systemic Deficit Strategy

Michael Hudson is really getting around these days.

Tyler outdoes himself

The explanation, for anyone whose brain just exploded, is that despite the marionette rotation at the top, the math of Europe is still not only absolutely hopeless, not to mention meaningless, but somehow just got even worse, because take away the magical powers of modern finance to be one with the ponzi, and Europe would have already imploded.

It also means that our earlier observation that the EFSF is an AA+ equivalent credit instrument has to be revised: pro formaing out the ponzi, means it is at best AA if not A, and most likely D if one takes away all the magic bells and Keynesian whistles, unicorns and other end of the western financial world loopholes that modern finance is forced to resort to every single day to mask the fact that every country in the developed world is now 100% bankrupt.

Read the whole post at Zero Hedge
European Ponzi Goes Full Retard As EFSF Found To Monetize... Itself

Tyler, our MMT heads are exploding here, but not for the reason you think.

I think we can expect to hear a lot more of this from all corners, just like we did about the Fed "monetizing the debt."

Tyler challenges MMT at Zero Hedge

ECB's Weidmann Spoils The Party: Says Leveraging EFSF Violation Of EU Treaty, Warns Of Hyperinflation

Here is my response:

From one of your MMT friends:
Weidmann is bonkers.
See Cullen Roche's history of MMT predictions about what would happen to the EMU at Pragmatic Capitalism, MMT, THE EURO & THE GREATEST PREDICTION OF THE LAST 20 YEARS?
Best regards,
Tom Hickey, contributor at Mike Norman Economics

Hoarding Humor

The funniest comic strip I know of is Zero Hedge. Here is a post that is particularly hilarious.

How To Hide Your Gold: A Bloomberg Primer

Zero Hedge: The Blame Game

WSJ — Not withstanding the euro zone's problems, Mr. Juncker said that both the deficit and overall debt in the U.S. and Japanese economy are substantially higher than in Europe.

"The debt level of the USA is disastrous," Mr. Juncker said. "The real problem is that no one can explain well why the euro zone is in the epicenter of a global financial challenge at a moment, at which the fundamental indicators of the euro zone are substantially better than those of the U.S. or Japanese economy."

Tyler — Translated: "why are you picking on us?" and "Have you looked at the US and Japan recently?" Translated even more: the Nash equilibrium of the mutually assured avoidance of the topic of global insolvency is now broken. Next up: the US and Japan bash Europe and confirm that Europe's PIIGS are actually far risky than the US and Japan, plus they can't print their money etc. Then Europe retaliates. And so forth.

The blame game avalanche has officially started.

Read all at Zero Hedge: The Unwind Begins: Eurogroup President Juncker Redirects From A Broke Europe By Throwing US And Japan Under The Insolvency Bus: "The Debt Level Of The USA Is Disastrous"

Stay tuned. This is going to get "interesting" as the wheels start to come off.

Notice that Tyler gets it that the members of the EZ are not currency issuers, whereas the US and Japan are.