Rick Bookstaber — The Product is the Promise: Finance and Social Values

Rick Bookstaber waxes philosophical on finance. Good read and interesting historical account of parallel evolution of finance and morality. Quick read and worthwhile.

The Product is the Promise: Finance and Social Values
Rick Bookstaber

David Fields — Globalization: A Fetish of (Post) Modernity

Throughout the enormous literature on ‘globalization’ there is a common theme that worldwide social, political, and economic transformations have contributed to reconfigurations and re-articulations of the world-system. The contention is that due to to recent technological revolutions in communication, media, and transportation, a ‘new international division of labor' has ensued a unique 'global' sociological imagination; the national 'state' as a principle of structuration is unsatisfactory for the social scientist - the 'space of flows' has replaced the 'space of places' (Ruggie, 1993). Dynamic connective configurations beget 'transnational' corporations omnipresent vertically disintegrated and horizontally integrated in an irresistible Gramscian transnational historic bloc of 'neoliberalism'.

This approach downplays the primary force driving globalization, which is financialization - the international transformation of future streams of (profit, dividend, or interest) income into tradeable financial assets. The systemic power and importance of financial markets, financial motives, financial institutions, and financial élites manifestly delink the national state from perceived social, political, and economic processes....

Naked Keynesianism
Globalization: A Fetish of (Post) Modernity
David Fields

Kenzo Shibata — Disaster Capitalism in Chicago Schools

In public policy circles, crises are called “focusing events”—bringing to light a particular failing in government policy.  They require government agencies to switch rapidly into crisis mode to implement solutions. Creating the crisis itself is more novel.

The right-wing, free market vision of University of Chicago economist Milton Friedman informed the blueprint for the rapid privatization of municipal services throughout the world due in no small part to what author Naomi Klein calls “disaster capitalism.” Friedman wrote in his 1982 treatise Capitalism and Freedom, “When [a] crisis occurs, the actions that are taken depend on the ideas that are lying around”

In Klein’s book The Shock Doctrine, she explains how immediately after Hurricane Katrina, Friedman used the decimation of New Orleans’ infrastructure to push for charter schools, a market-based policy preference of Friedman acolytes. Secretary of Education Arne Duncan was the CEO of Chicago Public Schools at the time, and later described Hurricane Katrina as “the best thing that happened to the education system in New Orleans.” Duncan is of the liberal wing of the free market project and a major supporter of charter schools.

There aren’t any hurricanes in the Midwest, so how can proponents of privatization like Mayor Rahm Emanuel sell off schools to the highest bidder?They create a crisis.....

In These Times


Disaster Capitalism in Chicago Schools
by Kenzo Shibata

Ian Welsh — The Keys to Prosperity

I’ve mentioned before that I’m writing a book on how to create prosperity. Let’s run through the basics. 

First, you have to produce enough. Goods and services. Everything from food and shelter, to music and philosophy.
Second, because prosperity means widespread affluence, you have to take what you produce and get it to everyone or as many people as possible.

Third, you have to be sure you’re producing the right stuff – food that makes people healthy, philosophy that doesn’t turn people evil, housing that keeps people healthy and in good social contact with each other, and producing in a way which doesn’t destroy the bases of prosperity, whether that’s the soil, water and climate you need to grow food, or the ethics which make prosperity possible.

The principles behind this aren’t that difficult, really. Use the free market for what it’s good at (creating and distributing certain types of goods and services.) Discourage rent-seeking. Understand that how much money people get is largely unrelated to their contribution to society. Remove bottlenecks to growth. Don’t destroy your sinks (like carbon in the atmosphere), don’t overuse renewable resources, understand the obsolesence of non-renewable resources. Keep the rich poor, so they don’t buy the political system, keep influentials independent as much as possible, keep the interests of the powerful alligned with the mass of society. Don’t financialize.

Oh, to be sure, there are technical details, but the core is ethical. The people who make up society must want to do the right thing, must believe in a particular conception of kindness and fairness....

Ian Welsh
The Keys to Prosperity

Fabius Maximus — Realism about the prospects for reform in America

Telling it like it is. It's 1764.

Fabius Maximus
Realism about the prospects for reform in America

Guest post: Jeremy Mills: Stock – Flow Consistent Economics (Post Keynesian Economics)

Great article and great diagram by Jeremy Mills. Definitely worth the read!

Every transaction has both a seller and a buyer, or more generally, there are at least two sides to every market transaction. This indisputable fact, although extremely general and abstract, is one of the only true economic laws but one which is often forgotten. One reason why this fact is often overlooked is that its ramifications are most easily seen in the world of accounting – transactions are measured via income statements which lead to changes in balance sheets. Every transaction creates at least 4 accounting entries (two for each party). Accounting relations, in themselves, say little about what caused things to happen or reveal much about key economic variables like relative scarcity or utility, but they quantify a true constraint that exists in our market economy and provide a pseudo scientific framework with which to study economies. This methodology, stock-flow consistent macroeconomic modeling, has been developed by multiple Post-Keynesian economists such as Wynne Godley and Mark Lavoie1. Read on.

Jeff Spross — Solar Report Stunner: Unsubsidized ‘Grid Parity Has Been Reached In India’, Italy–With More Countries Coming in 2014

Deutsche Bank just released new analyses concluding that global solar market will become sustainable on its own terms by the end of 2014, no longer needing subsidies to continue performing.The German-based bank said that rooftop solar is looking especially robust, and sees strong demand in solar markets in India, China, Britain, Germany, India, and the United States. As a result, Deutsche Bank actually increased its forecast for solar demand in 2013 to 30 gigawatts — a 20 percent increase over 2012.

Climate Progress

Solar Report Stunner: Unsubsidized ‘Grid Parity Has Been Reached In India’, Italy–With More Countries Coming in 2014

Jeff Spross

Bill McBride — Housing: The Two Bottoms

Now it appears activity bottomed in 2009 through 2011 (depending on the measure) and house prices bottomed in early 2012.

Calculated Risk
Housing: The Two Bottoms
by Bill McBride

Stephanie Kelton and the Sequestration on UP with Chris Hayes

If you missed Stephanie on UP with with Chris Hayes Saturday, here it is.

New Economic Perspectives
Stephanie Kelton and the Sequestration on UP with Chris Hayes

Clint Balinger — Towards A Pure State Theory Of Money, Prologue: A Note On Knapp & Innes

...although a great deal of the suboptimal performance (sustained unemployment, lack of investment in infrastructure, education, and healthcare) has been due to a failure to understand and apply readily implementable state money & functional finance insights, there has also been another major source of economic suffering, resulting from the non-state-money side of the economy. The worldwide private credit money system has caused untold suffering and misery for millions. This side of the equation must be integrated into any functional finance insights that arose from Knapp, Innes, and others....

Clint Balinger
Towards A Pure State Theory Of Money, Prologue: A Note On Knapp & Innes

historical analysis — What happened in the 1970s? A Macro-Historical Perspective

We can better understand the political-economic transformations of the 1970s if we approach these transformations from a macro-historical perspective. We can benefit from developing a framework for understanding the significance of war, debt, and liquidity relative to the cyclical transformations and recurrent crises that have characterized global capitalism from the nineteenth century to the present. By identifying and evaluating macro- level cycles, we can shed light on non-cyclical developments that make the political economics of the 1970s unique.

I want to focus on the state and state-backed finance, specifically on the expansion and transformation of internationally hegemonic governments in their price-stabilizing and employment-stabilizing capacities as lenders, borrowers, spenders, and, most recently, dealers of last resort1. Highly significant developments in the means of hegemonic price stabilization occurred in the 1970s and 1980s. Rejecting some standard interpretations, I argue that the 1970s is not a failure, but a great success, perhaps the greatest to date, of Keynesian policy in maintaining status quo hegemony.

historical analysis — social, economic and ideological Inquiry
What happened in the 1970s? A Macro-Historical Perspective

Mark Joffe — Moody's, S&P and other credit rating agencies deserve a failing grade

The traditional credit rating business is broken. Perhaps there is a way to use open source models to fix it.

The Guardian (UK)
Moody's, S&P and other credit rating agencies deserve a failing grade
Mark Joffe

Apek Mulay — A Failure Analysis of the US Economy

Common Sense Macroeconomics 

Producers and Consumers are like two wings of a bird. If either of the wings gets hurt, the bird will no longer be able to fly. If that bird is not nursed quickly and properly, it would be disabled and either die from hunger or fall prey to a predator. With the same analogy, both producers and consumers have to prosper for a robust economy.

Before we get into more details of macro-economics, let us see where the economic profession stands at this juncture. In a recent article in The New York Times, Professor Robert J. Shiller of Yale University and a best-selling author argues that even now we don’t understand what really causes a recession and layoffs [2]. But another best-selling economist, Professor Ravi Batra, seems to have solved the puzzle of recessions by offering a new theory of unemployment. His theory relies on common sense as he argues that recessions and depressions occur when worker productivity keeps rising faster than the economy’s average real wage. He demonstrates that this happened in the 1920s, which were followed by a depression. The same thing also occurred during the 2000s and the world has been in The Great Recession since 2007.

Batra argues that worker productivity is the main source of supply while wages are the main source of demand. If productivity rises faster than wages, then supply rises faster than demand. This results in overproduction and forces the manufacturer to fire workers. Producers are the suppliers of goods, and consumers generate the demand for these goods. Consumer demand, being dependent on wages, is sustainable only if the consumers as workers earn higher salaries. If the wages of consumers do not catch up with increased supply of goods, the supplier of goods is unable to sell all that he/she has manufactured.

truthout
A Failure Analysis of the US Economy
Apek Mulay | PROUT Globe – News Analysis

Download free articles at ROKE

ROKE — Review of Keynesian Economics
DOWNLOAD FREE ARTICLES
(h/t Matias Vernengo at Naked Keyesianism)

Oceana Study Reveals Seafood Fraud Nationwide

Not just the banks. This seems to be another instance of control fraud. Is this an epidemic?

Oceana
Oceana Study Reveals Seafood Fraud Nationwide
Kimberly Warner, Ph.D., Walker Timme, Beth Lowell and Michael Hirshfield, Ph.D.

Joseph M. Firestone — Fixing the Debt without Breaking America: Austerity, the Trillion Dollar Coin, and Ending Debt Ceiling, Sequester, and Budgetary Crises [Kindle Edition]

Now available at Amazon on Kindle.


Fixing the Debt without Breaking America: Austerity, the Trillion Dollar Coin, and Ending Debt Ceiling, Sequester, and Budgetary Crises [Kindle Edition]
Joseph M. Firestone


Book Description
Publication Date: March 1, 2013

This book is about a counter-narrative to austerity politics. It exposes its fallacies, and, I hope, its closed-mindedness and futility. It also offers a way out of austerity politics. 

That way out, is through the perspectives and truths developed by the approach to economics called variously Modern Money Theory (MMT), Modern Monetary Theory, or Neo-Chartalism. And it is also through using the method of High Value Platinum Coin Seigniorage (HVPCS).

In this book, I relate neoliberalism, the Washington Consensus, and austerity politics to the perspectives and truths of MMT, including MMT ideas about fiscal sustainability and responsibility, and to HVPCS and its promising application to ending austerity by providing the Treasury Department with the capability to harness the Federal Reserve's power to create Bank Reserves out of thin air. Treasury can use to this capabiliity to repay the national debt, and to deficit spend Congressional appropriations.

If used, HVPCS would end the possibility of repeated and further debt ceiling crises; and would also remove any reasonable justifications referring to the current national debt/deficit situation for the sequester, or for the upcoming budgetary crisis, which the Republicans intend to create at the end of March and then repeat periodically throughout this year and probably next.

In brief, this book offers a solution to the damaging deadlock we see in Congress, and between Congress and the Executive, that periodically hurts our economy and harms our recovery from the crash of 2008. The solution proposed here, $60 Trillion Dollar HVPCS, would be entirely game-changing for Washington politics. It would put the advocates of austerity politics literally out of business, and force them to create a whole new rationale for opposing measures that the economy and the American people need.

The book's contents include: austerity, neoliberalism, and “fiscal responsibility”; a fix the debt narrative and counter-narrative; modern money theory truths; real meaning of “deficit”, “surplus”, "the national debt", and "national savings"; two ways of fixing the debt without breaking america, origin and early history of Platinum Coin Seignorage (PCS); the trillion dollar coin and the debt ceiling crisis: the coin hits the mainstream; incremental vs. small ball vs. game-changing PCS; the $60 trillion plan, policy space, and the end of austerity, is PCS inflationary?; legal, political, economic, and institutional objections, high value coins and MMT, the promise of high value platinum coin seigniorage for america: no more debt ceiling, sequester, or budgetary crises and more . .

New York Fed: In ancient Rome, Silver was "Money"

Hat tip Clonal via a post at The New Arthurian.

Let's take a look at the logical consistency within an article published at the New York Fed that makes the typical conflation between metals and "money" in an article supportive of banking relationships that allegedly existed in ancient Rome.  Probably self-serving and revealing:

What if you had to transfer money to somebody in a different part of the globe? As the Roman dominions expanded into Greece, Spain, North Africa, and Asia, Roman finance actually faced this logistical problem. If you’re in Rome and want to, say, finance Caius’ mines in Thapsus, North Africa, how do you get him the money? He needs the silver to buy material, slaves, and other things, but you’re naturally very reluctant to see your money sail away for Africa, as the chances of it getting there aren’t that high (see pirates, shipwrecks, etc.). “Permutatio, the transfer of funds from place to place through paper transactions, was Rome’s great contribution to ancient banking” (Barlow, p. 168). It worked as follows: The publicani were private companies in charge of tax collection in the provinces (as well as many other tasks; see “Publicani,” by U. Malmendier). They had a branch in Rome and one in Thapsus. So, you’d give them the silver in Rome (or transfer them some nomina) and they’d divert some of their tax collection in North Africa to Caius. This is also how the Republic would finance its public spending overseas. Since taxes were collected throughout the provinces, by trading claims on taxes Romans could transfer funds across the globe–or at least to the part of the globe they had conquered.

So these two authors conflate "silver" with "money" in a very typical contemporary fashion that misses the distinction between "money" based on nature and "money" based on law.  To these two FRBNY authors, in a sophomoric way, which has become typical, "it's all the same thing...".

It is not all the same thing at all.

They also of course imply that in ancient Rome, taxes were required to facilitate public spending, this is in no way supported by this contemporaneous account.  To these authors, government has no absolute fiscal authority.

Roman state currency was termed "nomisma" in the Greek and silver was termed "argurion" in the Greek which we know from other contemporaneous accounts.

Ask these two FRBNY authors what a 'free floating, non-convertible currency", ie a currency "driven" by taxes is.  Ask them what this is, I would assume they would not know what you are even talking about.

If you cannot tell the difference between these systems in our present time, you are going to miss this distinction when you are trying to analyze history.

This calls into question their entire analysis here as to whether there was "securitization" in ancient Rome as they do not even apparently understand how monetary systems operate, past or present.

Notice how there is no mention of interest in any of the historic accounts that these authors cite.

These "nomina" that they identify just seem like interest free accounts receivable rather than "bank checks", the individuals just signed for product as a promise to pay later or perhaps alternatively return the item:

But when she has her purchase in her eye,

She hugs thee close, and kisses thee to buy;

“Tis what I want, and ‘tis a pen’orth too;

In many years I will not trouble you.”

If you complain you have no ready coin,

No matter, ‘tis but writing of a line;

A little bill, not to be paid at sight:

(Now curse the time when thou wert taught to write.)

So the guy would just have to return sometime and pay later... so what?

This means that the Romans had a sophisticated banking system with "securitization?

C'mon.... I'm not convinced.

Natasha Lennard — Student Debt Tripled in Eight Years

A new report from the New York Federal Reserve further confirms what many commentators have been long saying — student debt is the bubble that just keeps expanding. Total student debt has nearly tripled in the past three years.

Total student debt stands at $966 billion as of the end of 2012, with a 70 percent increase in both the number of borrowers and the average balance per person. The overall number of borrowers past due on their student loan payments has also grown, from under 10 percent in 2004 to 17 percent in 2012.

Being debt to the government, student loans cannot be discharged in bankruptcy. Moreover, student debt is already having knock on effects as the new mortgage, cutting into home ownership.

AlterNet
Student Debt Tripled in Eight Years
Natasha Lennard | Salon

Ethan Watters — There's Such a Thing as "Human Nature," Right?

Joe Henrich and his colleagues are shaking the foundations of psychology and economics—and hoping to change the way human behavior and culture is understood.

AlterNet
There's Such a Thing as "Human Nature," Right?
Ethan Watters | Pacific Standard

Here's a comment I made at FB on a similar matter.

As Ludwig Wittgenstein attempted to elucidate in his later philosophical works on on the logic of ordinary language, in particular Philosophical Investigations, language use is embedded in context. Human beings are part of that context and therefore cannot stand outside it and observe it. We have to observe it from inside and attempt to see to the best our ability now language operates in expression.

When we look at ordinary language use, we find a lot of things going on at once, which technical uses seek to simplify, in that while rich, ordinary language is not always precise. But technical languages are not rich enough to convey emotion, either. So there is a trade off between "matter and manner," logic and rhetoric, reason and emotion, for instance.

One of the most striking aspects of investigating language is that logic analysis reveals many things that are not usually noticed but which are extremely relevant. E.g., the way one uses ordinary language reveals that certain expressions that appear to be descriptive are actually playing a foundational role as norms, such as basic criteria, often ontological, epistemological, ethical and even esthetic.

In this way, one's use of language reveals a "worldview" or "world picture (Weltbild) that characterizes a "form of life" (Lebensform) as shared context. Thus, we could say that ordinary language has hidden assumptions embedded in it and just because they are shared even by large numbers doesn't guarantee their ontological or epistemological status.

Historically, many of these norms and criteria have been disproved or replaced for other reasons. Very often the scientific understanding of the time contributes significantly to a world view that later changes, as when the earth-centric view was switched for a heliocentric view, and the predominantly religious world view gave way to the chiefly scientific one. Historically the popular world view of a large number of fairly well educated members of a group also lags the state of the art scientific opinion, although there there may be significant disagreement among experts, e.g., the interpretation of QM is hardly a settled matter because it is not scientific but metaphysical.

Wittgenstein regarded the proper role of philosophy to be logical critique. Thus, philosophy becomes properly a logical exercise in determining the assumptions underlying a world view by examining the type of role they play in the "language games" in which they figure as rules. One could compare this to the institutional approach in economics and the cultural approach in sociology v. the "natural" approach that assumes.

In this sense Phil is correct about being wary of the use of science, e.g., in the case of evolutionary theory to justify eugenics, or social Darwinism in political economy. But that is a different issue from a theory as an explanatory and predictive instrument.

What Phil is really more concerned with is how the scientific community functions as a social and political institution and on what basis. To presume it is just science may not be true to the facts. The ability to use knowledge yields power, and there are many ways to use knowledge. Neoclassical economics is used to justify neoliberalism in political economy, for instance, but neoclassical economics is based on neoliberal assumptions that economics as a "science" does not justify, modeling assumptions not being treated as theoretical hypotheses. So the reasoning is circular.

February Fiscal Wrap up

Numbers are in for February.

Lets review the financial record of what we did last month.

Net withdrawals for the month were $443B while we took in net deposits of $215B, resulting in an ex post deficit of $228B for the month.

Both this monthly 443B net withdrawal number and the monthly fiscal delta of  -228B are quite large on a relative basis and should result in adequate short term provision of our monetary system and avoidance of any short term economic system instability and malfunction/failure.

A seasonal feature for February was the refunding of Personal Income Taxes of $107B which accounted for 24% of net withdrawals for the month and should be supportive of demand over at least the next few weeks as these refunds will also now continue into March although projected to be accomplished at a reduced rate.

We are looking ahead with caution towards the effect upon these flows of the so-called fiscal "sequestration" which allegedly may reduce these critical flows within the monetary system in March; and will monitor these flows MOM to see if there is any detectable change in them.

We are also looking ahead with caution to April when this situation will be reversed and any liabilities for income taxes NOT withheld throughout CY 2012 will then be payable by April 15th.  

The Positive Money system – in Plain English

This proposal for reform of the banking system explains, in plain English, how we can prevent commercial banks from being able to create money, and move this power to create money into the hands of a transparent and accountable body.

It is based on the proposals outlined in Modernising Money (2013) by Andrew Jackson and Ben Dyson, which in turn builds on the work of Irving Fisher in the 1930s, James Robertson and Joseph Huber in Creating New Money (2000), and a submission made to the Independent Commission on Banking by Positive Money, New Economics Foundation and Professor Richard Werner (2010).

Positive Money
The Positive Money system – in Plain English

Download paper

See also How can we escape from our current dysfunctional money system?

These folks are pushing this hard.

Tarun Khanna — 100 Million People, One Massive Experiment: The Maha Kumbh Mela

Researching the Maha Kumbh Mela — the religious festival that takes place every 12 years near Allahabad in north India, at which over 100 million Hindus gather — has more than its fair share of challenges. (And I'm not talking here about a tragic railway footbridge collapse or the incessant rain that flooded the tent city last week.) Setting up a live experiment is never easy and always exciting. Our goal: to trace ground-up the emergence of a market, and figure out the structures and mechanisms that will allow it to work more efficiently.

Harvard Business Review — HBR Blog Network / HBS Faculty
100 Million People, One Massive Experiment: The Maha Kumbh Mela
Tarun Khanna | Jorge Paulo Lemann Professor at Harvard Business School, Director of Harvard University's South Asia Institute, and co-author of Winning in Emerging Markets: A Roadmap for Strategy and Execution (Harvard Business Press, 2010)

Awesome. 

Here's an interesting tidbit.

BBC News

Beatles song muse ['Dear Prudence"] visits India's Kumbh Mela

By Amitava Sanyal

Prudence Farrow, about whom John Lennon wrote the song Dear Prudence, is also sister of Hollywood actor Mia Farrow....

"India has changed so much since I first came here," says Ms Farrow, 65, sitting in the brightly-painted porch of her rented flat in Allahabad...

Ms Farrow, who has a doctoral degree in South Asian studies and runs foundations to promote meditation, says she was in search of "an inner silence".

But, ironically, the blare of three loudspeakers every morning at the festival grounds shattered her peace and she shifted into the city.

This was, she says, in sharp contrast to the peaceful times she spent with her sister Mia at her guru's retreat in Rishikesh in 1968.At the retreat, the Farrow sisters met the Beatles.

"Because of Mia there were too many people coming in and out of our block," says Ms Farrow.

"And then in the evenings George Harrison would jam with John Lennon and others would join in. I wasn't getting the silence.

"People said: 'You are being too fanatical, you should come out.'

Yes, I was extreme because I thought it was a privileged time. I still think it was the most important time in my life."

So while the rest of the students partied, Ms Farrow says she locked herself up in her room and practised meditation. 

That is when, she says, Lennon, wrote the song Dear Prudence, which appears on the band's White Album.

Bill Mitchell — Unemployment and inflation – Part 6

I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to complete the text during 2013 (to be ready in draft form for second semester teaching). Comments are always welcome. Remember this is a textbook aimed at undergraduate students and so the writing will be different from my usual blog free-for-all. Note also that the text I post is just the work I am doing by way of the first draft so the material posted will not represent the complete text. Further it will change once the two of us have edited it.

This is the continuation of the Chapter on unemployment and inflation – the series so far is:

▪ Unemployment and inflation – Part 1
▪ Unemployment and inflation – Part 2
▪ Unemployment and inflation – Part 3
▪ Unemployment and inflation – Part 4
▪ Unemployment and inflation – Part 5

I am now continuing Section 12.6 on the Phillips Curve …

Chapter 12 – Unemployment and Inflation 

Advanced material: The Phillips curve algebra

The instability of the Phillips curve

Bill Mitchell — billy blog
Unemployment and inflation – Part 6
Bill Mitchell

Bruce Bartlett — Mismeasurement of Federal Spending, Investment and Saving

One solution to this problem [of cutting government investment in deficit reduction] would be to have a capital budget that segregates government investment spending from consumption spending. Virtually all the states do this already. Conservatives who routinely defend a balanced-budget amendment to the Constitution, on the grounds that the states must balance their budgets annually, appear to be unaware that such requirements apply only to operating budgets, excluding capital outlays. 

If households were required to balance their budgets the way balanced-budget amendment supporters want the federal government to operate, they would almost never be able to buy homes or cars. Such outlays almost always exceed their annual incomes over and above consumption and would thus constitute deficit spending.

Of course, families could draw down savings to buy homes and cars. But that’s an option not available to the government because it has no savings, only a large debt. Treating it and private individuals the same way, as balanced-budget supporters propose, would require the entire national debt to be paid off and a surplus accumulated before it would be permitted to make new investments in roads, bridges, buildings and other long-lived assets.

The New York Times — Economix
Mismeasurement of Federal Spending, Investment and Saving
Bruce Bartlett

Another silly thing about the government as big household or firm analogy is debt to GDP (national income) ratio compared with corporate debt to firm income ratio, which is often much higher.

While the analogy fails on the currency issuer v. user basis, it also fails on the basis of actual operations and financial ratios.

Bill McBride — Bernanke: How are long-term rates likely to evolve over coming years?

Bernanke: "...it is useful to decompose longer-term yields into three components: one reflecting expected inflation over the term of the security; another capturing the expected path of short-term real, or inflation-adjusted, interest rates; and a residual component known as the term premium. Of course, none of these three components is observed directly, but there are standard ways of estimating them....

"If, as the FOMC anticipates, the economic recovery continues at a moderate pace, with unemployment slowly declining and inflation expectations remaining near 2 percent, then long-term interest rates would be expected to rise gradually toward more normal levels over the next several years."

Calculated Risk
Bernanke: How are long-term rates likely to evolve over coming years?
Bill McBride

Ray Wolf: Does the Military Protect Our Freedom?

Came across this old blog from 2002 written by a veteran, when looking into this issue in my reaction to a comment Dan made downthread that (I'm paraphrasing) support of the U.S. military, our warriors, was not always a "libertarian" characteristic.

Dan got me thinking about our typical modern day warrior's relationship with "freedom" and "liberty".

"I’d like to thank our military personnel for defending our country and protecting our freedoms." In the wake of September 11, this is a common public acknowledgment from celebrities, politicians, myriad TV and radio commentaries, and many people on the streets of the United States.

As a Navy veteran, whenever I hear statements like these, I think, "What are they talking about? Since when does the military have anything to do with freedom?"

One veteran's perspective at the link. Perhaps interesting.

My view is that our warriors are not much different than our non-warriors when it comes to their perceptions of "freedom" and "liberty".  This author seems to take exception to the view that our warriors are "protecting  our freedoms".  Of course, I have witnessed many warriors who apparently look at "freedom protection" as an important role for our military institutions.

I do not look at the role of our warriors as one of primarily "freedom protection", rather, I look at our warrior's primary role as one of protecting our lives and nation.

When Are We Gonna Bite the Bullet and Publish “Pervasive” Fraud by our “Most Reputable” Politicians' ?

commentary by Roger Erickson

“Pervasive” Fraud by our “Most Reputable” Banks - by Bill Black.

This is great. We know for sure that this is necessary but not suffiencient. What must we do next?

Consider The Winds of Reform of 1983, that were subsequently snuffed out, just as the subsequent S&L-triggered reforms were a decade later. The entire New Deal of 1933 is also being systematically snuffed out, with a significant, damping touch added just today with our "across the board cuts" that equate Social Security with runaway MICC spending - thereby finally providing the plausible excuse to start cutting both SocSec, Medicare and other minimal Automatic Stabilizer that happen to stabilize the middle class, not just the 1%.  

Corporate Wefare for the 1% has gotten so out of hand that they don't mind trimming a toe-nail in order to "equalize" lopping off the last head of our declining middle class.  Gutting the CFTC and Glass-Steagall were only a step in a mindless trail of - LARGELY UNOPPOSED - tactics by the 1%, bereft of any sustainable national strategy. 

Narrow tactics masquerading as national goals is still assisted suicide for all. The bulk of the 1% are just too anal, OCD and sociopathic to even recognize it.  It's not in their repertoire to think more than one quarter ahead, otherwise they wouldn't be over-hoarding static assets in the 1st place!  Forget our static assets! Who's gonna hoard our capability to generate dynamic assets? It's up to us. You and me.

Ok. We know that. Get over it.  It's become a boring story. What do we do next? To move beyond necessary, and on to sufficient - what do we need to have every last, single member of the US electorate read, AND THEN ACT UPON?

How about: “Pervasive” Fraud (innocent or not) by our “Most Reputable” Politicians.

Followed by: "Pervasive Self-Delusion by our Most Reputable Electorate."

Followed by: "Pervasive Mis-Education by our Most Reputable Schools."

Followed by: "Pervasive Mis-Raising by our Most Reputable Parents (and villages)."

At that point, all we've done is get the mule's attention, with a few 2x4s.

The electoral mules will then be asking what to do.  We don't have to answer!  Seriously. How do we get to the bottom of this and define the inflection point we can all rally to as a clearly attainable turning point? Just tell all those mules to LISTEN to the suggestions and requests pouring out from their own young'n's - and help the young select more wisely than we did.  The goal is to improve the NET quality of distributed decision-making - meaning that no decision is ever made in isolation. Rather, there is a long-tail of interdependency repercussions for all decisions. That long tail spectrum can only be ordered using feedback widely enough & continuously enough pre-gathered.  Only the prepared can improve, through ongoing, culture-wide practice.

There are so many degrees of freedom, we need some global reference to orient all efforts to. Right now our economic engine is getting the equivalent of about 1 mile per gallon, and we're passing out from the fumes! Just when we could EASILY be building and enjoying an economic engine capable of things we can't yet even dream of.  Where do we start? Education? Making sure our electorate 20 years out isn't as ill-informed as our present one is? How would we ensure that?

Wouldn't an open discussion forum among people across the entire spectrum of our 2000 or so NAICS codes help with Situational Awareness? Instead of letting a success of narrow lobbies try this, then try that, then bring in another overly isolated administration to try too few of other unimaginative plans .... can't we compare notes and figure out a way to parse our exploding national options more productively?

We really do have to start doing things differently. Our entire methodology isn't keeping up any more.

Too Bad Hoover Didn't Look For and Hire Marriner Eccles, Whle FDR Did

commentary by Roger Erickson

People Who Made a Difference: Marriner S. Eccles

Or maybe Hoover wouldn't have liked Eccles pragmatic reversals, despite their shared strength of character?

It took a leftist democrat to listen to a pragmatic republican? :)

A bias to action often seems to come from unpredictable combinations!

Today, you'd think more of the many groups squabbling over irrelevant details could take FDR & Eccles as an example, and build amazing success from unpredictable permutations. We have lots of options worth exploring. Can we just allow ourselves to fall into some success that none of us has fully predicted? Or is eveyone too arrogant to allow ownership of progress to pass to their kids?

Arranged marriages between emerging situations and what we presume simply doesn't guarantee future success. Why not partner more with the people YOU'RE sure are wrong?

There is no point of stability in the natural world that is not a dynamic equilibrium between diverse, conflicting forces. Enough people pushing and sharing diverse mistakes is always what hems in success.

David Ruccio — US is suffering from government-imposed austerity before the effects of sequestration hit. (2 graphs)

...the United States is suffering from government-imposed austerity, even before the effects of sequestration hit.

Real-World Economics Review Blog
US is suffering from government-imposed austerity before the effects of sequestration hit. (2 graphs)
David Ruccio |Professor of Economics, University of Notre Dame

Randy Wray — The Fiscal Cliff (Video)

Links to the video of Randy's talk at Lewis and Clark last week and the slide presentation.

Economonitor
The Fiscal Cliff (Video)
L. Randall Wray | Professor of Economics, UMKC