Philip Pilkington — Krugman Uses ISLM to Proclaim Looming Fiscal Crisis, Denounces Those Who Don’t Use ISLM

Phil takes down Paul Krugman as a faux-liberal and an economist with a poor record at prediction.

Fixing the Economists
Krugman Uses ISLM to Proclaim Looming Fiscal Crisis, Denounces Those Who Don’t Use ISLM
Philip Pilkington

Atif Mian and Amir Sufi — Why the Income Distribution Matters for Macroeconomics

Obvious to everyone but conventional economists. (See Manfred's comment on March 27, 2014 at 11:01)

House of Debt
Why the Income Distribution Matters for Macroeconomics
Atif Mian and Amir Sufi

Steve Roth comments:

STEVE ROTH ON MARCH 27, 2014 AT 12:10 PMI

Thanks for these great links to the empirical literature. Got my reading cut out for me.

On the theory: the arithmetic of this is inexorable — roughed out in a simple model here:

http://www.asymptosis.com/does-upward-redistribution-cause-secular-stagnation.html

As the post says, this is only one economic effect being illustrated. But the potential power of this effect seems massive — especially over decades — and it seems to be almost universally ignored and even pooh-poohed by economists, even liberal economists.

http://www.asymptosis.com/a-liberal-is-someone-who-doesnt-know-how-to-take-his-own-side-in-an-argument.html

http://www.asymptosis.com/underconsumption-income-wealth-and-capital-gains.html

Tony Atkinson and Salvatore Morelli — The chartbook of economic inequality

Inequality – long ignored – is now centre stage in debate about economic policy around the globe. This column introduces the Chartbook of Economic Inequality, a summary of long-run changes in economic inequality for 25 countries over more than 100 years.

VOX
The chartbook of economic inequality
Tony Atkinson, Professor of Economics at the University of Oxford and Fellow of Nuffield College, and Salvatore Morelli, Post-doctoral fellow at CSEF, University of Naples Federico II

Izabella Kaminska — There can be only one

Facebook’s acquisition of Oculus provides an excellent opportunity to expand on my ongoing thesis that what we’re witnessing in the tech sector is a Highlander-style fight to the death in which only one name can survive and in so doing inherit THE WORLD.

The battle consequently isn’t just another rendition of the standard game of monopoly. This time, the stakes are much, much, greater because the technology involved opens the door to potential godhood itself. Consider what’s being played for: robot armies, artificial intelligence, control of all the data, all the electric power, all of space and probably the ability to manage matter if not biology itself — and on a totally borderless basis. Sovereigns don’t stand a chance against the power that could emerge.

Conventional economics won’t matter either when that day comes because we will all be serfs to the one guy who knows all the crypto command codes.

This is Bond villain megalomaniac territory....

It's about dominance.

Dizzynomics
There can be only one
Izabella Kaminska

Merijn Knibbe — Using the IS-LM model by adding institutional ‘detail’ (1 graph)

If you are into IS-LM, another view.

Real-World Economics Review Blog
Using the IS-LM model by adding institutional ‘detail’ (1 graph)
Merijn Knibbe

Gregory Beyer — Why Business Leaders Are Obsessed With Sun Tzu's Ancient Military Guide, "The Art of War"

Is business competition well-modeled on warfare? Apparently a lot of leaders think so.

Rick Wartzman, executive director of The Drucker Institute, wrote last year in Forbes, “Ask businesspeople to peg the writer whose thinking is most clearly reflected in both military and corporate circles, and odds are that you’ll hear the name Sun Tzu.” CEO.com includes the book on its list of Leadership Books To Read Before You Die.
For business leaders, reading The Art of War is a rite of passage; quoting from it is de rigueur. The publishing industry routinely markets the book as a military/business text, with blurbs from CEOs and testimonials from trade publications. Sun Tzu’s principles have been applied to every conceivable agenda....

Game theory, too.

Does anyone else find it odd that business leaders routinely structure the game as zero-sum and not win-win? And therefore often adopt the principle of "doing whatever it takes," i.e., "the end justifies the means"aka "nice guys finish last."

The Huffington Post
Why Business Leaders Are Obsessed With Sun Tzu's Ancient Military Guide, "The Art of War"
Gregory Beyer

Robert Kaplan — The End Of A Stable Pacific

The WorldPost: "China's efforts to enhance its influence as a rising power in an assertive way will backfire and result in an unintended encirclement of China by her neighbors. The irony is that this 'security dilemma' was exactly what happened in Europe when Kaiser Wilhelm II, confident of rising power of Germany, began to practice a muscular diplomacy in 1890."

This is a quote from former South Korean foreign minister Yoon Young-kwan in a recent WorldPost article. Like many others, including Japanese Prime Minister Shinzo Abe, he suggests that the situation today in East Asia in 2014 is analogous to 1914 in Europe.

Do you see it that way? In what ways yes, in what ways no?

Robert Kaplan: The better comparison is not with the Kaiser's Germany or World War I, but with American policy in the 19th and early 20th century for the Greater Caribbean.
China sees the South China and East China seas as blue water extensions of its continental land mass, just as a younger America saw the Greater Caribbean that way. Domination of the Greater Caribbean gave the United States strategic control of the Western Hemisphere, allowing it to affect the balance of power in the Eastern Hemisphere throughout the 20th century....

Sphere of influence, like the US with the Monroe Doctrine claiming the entire Western Hemisphere.

The center of military power in the world is moving to Asia. Since the 1990s, Asia’s share of military imports has risen from 15 percent to 41 percent. The reason: sustained capitalist expansion leads to military acquisitions, as states consolidate their institutions at home and do more trade and business abroad, they seek militaries in order to defend their new interests. Asian states like China, Japan and Vietnam are no longer internally focused, but projecting power out -- and thus their territorial claims clash and overlap. So we have a great military build-up.

...

Capitalism leads to militarism.

The United States can preserve the peace by seeking not domination, but a favorable balance of power with China. It must at some level allow China its rightful place in the Western Pacific.

The Asia pivot shows that this is not going to happen, just as the Ukraine crisis shows that it is not going to happen with Russia either. The process of encirclement is underway, and Russia and China will respond predictably by building up their militaries. This is a collision course.

The World Post
Robert Kaplan: The End Of A Stable Pacific

Nathan Gardels

AFP — Putin eyes Russia’s own credit card system after Western sanctions

President Vladimir Putin on Thursday said Russia should create its own national payment settlement system, in a bid to reduce economic dependence on the West amid the controversy over Moscow’s seizure of Crimea.

“In countries such as Japan and China these systems work, and work very well,” Putin told lawmakers in televised remarks.
“Initially, they started out solely as national systems limited to their own markets, their own territory, their own population but they are becoming more popular right now.”

“Why should we not do it? We should definitely do it and we will do it,” he said, noting that Russia’s Central Bank and the government have been looking into the matter.

The Raw Story

Putin eyes Russia’s own credit card system after Western sanctions
Agence France-Presse

Chuck Spinney — Ukraine: Manna From Heaven for the Green Line and Beyond Crowd

Strategist Chuck Spinney weighs in.

Most Americans know very little about the immediate origins of the crisis in the Ukraine and their government’s involvement in it. They know even less about its deeper roots, that reach back into Russian view of American duplicity in breaking its verbal promises not to expand NATO and the European Union eastward (useful summaries can be found here and here). These promises were interpreted quite reasonably by the Russians as a quid pro quo for Mikhail Gorbachev’s agreement to (1) the unification of Germany, (2) the dissolution of the Warsaw Pact, and (3) the withdrawal of Soviet forces from eastern Europe. Gorbachev’s dream of a common European Home was always fanciful, but today, Ukraine proves it is in tatters.

If one is to believe the reportage in the mainstream media, the duly elected but decidedly corrupt government of the Ukraine was overthrown by a spontaneous revolt of the freedom-seeking Ukrainian people. But it is also clear from leaked recordings of phone conversations and the bloviations of U.S. “pro-defense” legislators that members of the U.S. government were at least tangentially involved, as were Ukrainian neo-fascists.

There is much more, however. This article by investigative reporter Steve Weissman is Part 1 in a series of reports detailing the nature of that involvement in the current crisis. It should be read carefully, because Weissman reveals a mind-boggling maze of tentacles reaching deeply into the Ukrainian regime change gambit.

Even if half his facts are wrong, Weissman proves a lot of hidden agendas are in play....

When it comes to power politics, there is always the agenda and the hidden agenda — what the public is fed by way of propaganda and what is really going on behind the curtain.

Counterpunch

Ukraine: Manna From Heaven for the Green Line and Beyond Crowd
Franklin C. Spinney, former military analyst for the Pentagon

Ha-Joon Chang And Ilene Grabel — Beginning of the End of the Neoliberal Approach to Development?

We should take note of what we see as the beginning of the end of the neoliberal approach to development. The process of discrediting that development model begins in the aftermath of the east Asian financial crisis of 1997–98.

At the time there appeared to be nothing new in the nature of the east Asian crisis or in the crisis response. But, in fact, the east Asian crisis marked the gradual beginning of the end of the neoliberal consensus in the development community.

The severe constraints on policy space that followed the east Asian crisis created momentum behind a new vision – that developing countries had to put in place new strategies and institutions to prevent a repeat of the events of the late 1990s.

Policymakers in a number of Asian countries and in other successful developing countries sought to insulate themselves from the hardships and humiliations suffered by east Asian policymakers at the hands of the IMF. Indeed, as a consequence of the crisis, the IMF suffered a loss of purpose, standing and relevance....

It is notable that even recent reports of institutions like the World Bank have acknowledged the trend towards “economic multipolarity”.

Just as the Asian crisis laid the groundwork for institutional developments that have deepened only in the current crisis, so do we expect the current crisis to catalyse further innovation along the lines already in place, and in directions not yet imagined, when the next period of instability emerges. 

Said as Ukraine falls into the clutches of the IMF with predictable strings attached involving "reforms" like hiking the price of energy 50%, when they had a much better deal with Russia.

Counterpunch
Beginning of the End of the Neoliberal Approach to Development?
Ha-Joon Chang And Ilene Grabel

John Cassidy — Piketty’s Inequality Story In Six Charts

The charts aren’t merely illustrative: they are an essential part of Piketty’s contribution. Fifteen or twenty years ago, debates about inequality tended to be cast in terms of clever but complicated statistics, such as the Gini coefficient and the Theil entropy index, which attempted to reduce the entire income distribution to a single number. One thing that Piketty and his colleagues Emmanuel Saez and Anthony Atkinson have done is to popularize the use of simple charts that are easier to understand. In particular, they present pictures showing the shares of over-all income and wealth taken by various groups over time, including the top decile of the income distribution and the top percentile (respectively, the top ten per cent and those we call “the one per cent”).

The Piketty group didn’t invent this way of looking at things. Other economists, such as Ed Wolff, of New York University, and Jared Bernstein and Larry Mishel, the creators of the invaluable State of Working America series, have long used similar charts and tables in their publications. But partly by using new sources of data, such as individual tax records, and partly by expanding the research to other countries, Piketty and his colleagues have deployed their charts to reshape the entire inequality debate.

For a long time, that debate was almost entirely focussed on what was happening to median incomes. That inevitably led to discussions of globalization, skill-biased technical change, and policies focussed on education and retraining. Now, thanks to Piketty et al., the remarkable gains of those at the very top can’t be avoided. And this means that the issues of politics and redistribution can’t be avoided either....

Even in terms of income generated by work, Piketty notes, the level of inequality in the United States is “probably higher than in any other society at any time in the past, anywhere in the world.”

Framing.

The New Yorker — Rational Irrationality
Piketty’s Inequality Story In Six Charts
John Cassidy

(h/t Mark Thoma at Economist's View)

Bloomberg — Obama Says Putin’s Challenging the World Order in Ukraine

President Barack Obama said indifference to Russia’s attempt to unilaterally redraw the boundaries of Ukraine would ignore the lessons that are written in the cemeteries for the dead in two world wars.

The U.S. and Europe are at “a moment of testing,” as Russia challenges the ideals of democracy, free markets and international law that have spread peace and prosperity....

He cast the most tense confrontation for NATO since the collapse of the Soviet Union as a battle between 21st Century ideals and “the old way of doing things.”...

“We must meet the challenge to our ideals -- to our very international order -- with strength and conviction,” Obama said in the speech.

Neoliberalism and neoconservatism wrapping itself in slogans and putting themselves forward as "ideals." More blather like "government of the people, by the people, and for the people" when the world is controlled by competing power and economic elites.

Bloomberg
Obama Says Putin’s Challenging the World Order in Ukraine
Julianna Goldman and Mike Dorning

(h/t Yves Smith at Naked Capitalism)

James K. Galbraith — Kapital for the Twenty-First Century?

Jamie Galbraith's review of Piketty. Professor Galbraith can be credited with kindling the debate on inequality and bringing the subject to the fore of media attention.

What is “capital”? To Karl Marx, it was a social, political, and legal category—the means of control of the means of production by the dominant class. Capital could be money, it could be machines; it could be fixed and it could be variable. But the essence of capital was neither physical nor financial. It was the power that capital gave to capitalists, namely the authority to make decisions and to extract surplus from the worker.

Dissent
Kapital for the Twenty-First Century?
James K. Galbraith | Lloyd M. Bentsen Jr. Chair in Government/Business Relations and Professor of Government at the Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin

Next Forex trading class, Mar 31 - Apr 4

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Brendan DeMelle — Study Confirms Tea Party Was Created by Big Tobacco and Billionaire Koch Brothers

A new academic study confirms that front groups with longstanding ties to the tobacco industry and the billionaire Koch brothers planned the formation of the Tea Party movement more than a decade before it exploded onto the U.S. political scene.

Far from a genuine grassroots uprising, this astroturf effort was curated by wealthy industrialists years in advance. Many of the anti-science operatives who defended cigarettes are currently deploying their tobacco-inspired playbook internationally to evade accountability for the fossil fuel industry's role in driving climate disruption.

The study, funded by the National Cancer Institute of the National Institute of Health, traces the roots of the Tea Party's anti-tax movement back to the early 1980s when tobacco companies began to invest in third party groups to fight excise taxes on cigarettes, as well as health studies finding a link between cancer and secondhand cigarette smoke.

Published in the peer-reviewed academic journal, Tobacco Control, the study titled, 'To quarterback behind the scenes, third party efforts': the tobacco industry and the Tea Party, is not just an historical account of activities in a bygone era....

Mind-bloggling article. This is not being orchestrated just in the US but globally.

Finally, this report might serve as a wake-up call to some people in the Tea Party itself, who would find it a little disturbing that the "grassroots" movement they are so emotionally attached to, is in fact a pawn created by billionaires and large corporations with little interest in fighting for the rights of the common person, but instead using the common person to fight for their own unfettered profits.

Nah, they aren't that smart.

The Huffington Post
Study Confirms Tea Party Was Created by Big Tobacco and Billionaire Koch Brothers
Brendan DeMelle | Executive Director, DeSmogBlog.com

Stephanie Kelton — MMT

"MMT is the body of scholarship that developed around @wbmosler's Soft Currency Economics."

— Stephanie Kelton at Twitter, Facebook

Paul Craig Roberts — How Much War Does Washington Want?

Paul Craig Roberts on another tear.

The government of China, having read Washington’s war plans for war against China and being fully away of Washington’s “pivot to Asia,” in which the “indispensable nation” announced its “safe-guarding of peace” by surrounding China with naval and air bases, understands that it has the same Washington enemy as does Russia.
What the entire world faces, every country, every individual regardless of their political orientation, is a Washington-engineered confrontation with Russia and China. This confrontation is enabled by Washington’s bought-and-paid-for European and UK puppet states. Without the cover provided by Europe, Washington’s acts of aggression would result in war crimes charges against the government in Washington. The world would not be able to enforce these charges without war, but Washington would be isolated.

It's about encirclement of Russia and China to secure The Heartland as the global pivot.

Who rules East Europe commands the Heartland;

who rules the Heartland commands the World-Island;

who rules the World-Island controls the world."

(Mackinder, Democratic Ideals and Reality, p. 194)

Counterpunch
How Much War Does Washington Want?
Paul Craig Roberts

See also, Russia, Knuckle Under—Or Else! by Norman Pollack

Americans’ self-delusion that a post-Cold War era has been suddenly closed because of Russia annexing Crimea, is incorrect for several reasons. Chiefly, the continuity has never been broken. Each supposed thaw in relations has provided gathering space for primarily US cumulative arms-building, global market-penetration, emphasis on creating a national-security state, with Russia not bathed in innocence yet also hands-down outclassed by America in every department: a broad swath of military intervention, efforts at and success in regime change (implemented through the breadth of paramilitary operations), size of military expenditures (even as measured against gross domestic product), and the degree of ideological conditioning in support of war and the doctrine of permanent war. We speak of Russian totalitarianism, but say nothing about the substratum of ideological mind-bending in the West and especially America conditioning their peoples to equating freedom and democracy with the institutions and practices of advanced capitalism—no other standard on offer (in America the democracy-capitalism equation and consequent narrowing of permissible ideological BOUNDARIES since inception).

Today “Putinism” has become the term of choice for insinuating the combined Hitler-Stalin image as the nemesis of America reaching deeply into the national psyche. Exceptionalism has become all-consuming triumphalism, dulling moral sensibility and demanding conformity—since 1945 a progressive tightening of boundaries already set in place, now adding to capitalist absolutism the vigorous antisocialism which generates increased ethnocentrism and xenophobia. A combination of industrial-commercial-financial might, especially following a world war that devastated Europe and Russia, established the terms from the beginning of America’s claims to global hegemony. Today, from the US perspective, that context of arrogance and superiority has not changed, which makes the emergence of a multipolar power system then and now unthinkable, Russia no matter its policies—whether or not in response to US actions—the implacable foe, a paranoid currently directed as well to China.

There are always economic reasons behind power politics. Who profits from this?

Mike Whitney — The Economic Scam of the Century

This is such an outrageous, in-your-face ripoff, it shouldn’t even require a response. These jokers should be laughed out of the senate. All the same, the bill is moving forward, and President Twoface has thrown his weigh behind it. Is there sort of illicit, under-the-table, villainous activity this man won’t support?

Not when it comes to his big bank buddies, there isn’t.

Read the fine print. 

Incredible coming from the people that promised no more bailouts. Well, not really incredible at all considering who they are working for.

Counterpunch
The Economic Scam of the Century
Mike Whitney

New Forex account that I am managing up 40% in one month!

An investor (someone well known who I will reveal very soon) gave me $100k to manage one month ago. I am solely trading Forex using my *MMT + Market Composition + Mental Game* approach. It is what I uniquely teach in my Forex courses.

This account is now up 40% in one month. Not a single loss.

Meanwhile...the Forex account I use to teach students when I give my courses...that's up over 120% in 10 months and not a single loss.

And if that's not enough...a student of mine who completed the last course--total novice, never traded before in his life--is making money and has not had a single loss since taking the course.

This is what I can tell you: I have been trading for over 35 years and have been a member and floor trader on four exchanges. I have been through it all. I have seen it all. I have experienced it all.

But teaching these courses and applying MMT, while bringing in some other resources and most of all, refining the psychological aspect of trading, has been nothing short of transformational. It has not only brought  me, personally, to a level of understanding of market behavior that reduces the whole game down to total predictability, but it has allowed me to pass along these insights to others...literally train people to model what I do and achieve success as a trader right out of the box. I don't want to sound corny, but it's hypnotic.

A few weeks ago you may have read about a company call Virtu, which is a super successful high frequency trading shop that is planning on going public. The company is owned by a guy named Vincent Viola. I know Vincent. We were both traders on the NYMEX together back in the 1980s. By the way, not only does Viola own the most expensive house in NYC, he also just bought the Florida Panthers NHL hockey team from a guy named Cliff Viner and do you know who Cliff Viner is? He was Warren Mosler's partner in their III Hedge fund.

Anyway, I'm not here to talk about Viola. What I wanted to say was that when the Virtu IPO filinng went public a few weeks ago, people were talking about the fact that the company had not had a losing trade in five years. It made money ever single day for five years.

Now if this were prior to the market secrets that I have recently discovered, I would have been the first to cynically pooh-pooh Virtu's claim. I would have said they were full of crap. However, I am here to tell you it can be done. Absolutely, without a doubt, unquestionably, it can be done. I am living proof that it can be done.

Virtu may be a high frequency trading shop, but it doesn't matter. The same principles that Virtu uses, I use and I am not a high frequency trader. On the contrary, some of my trades take a week or more to work to fruition. The point is, it doesn't matter whether we're talking about the micro level such as the level that Virtu operates in or the macro level or levels in between. It's literally all the same. It's like like the physics in the subatomic world that scientists see at work in the vast reaches of the cosmos.

I know this sounds crazy, but it's not. It's real. I have crossed over into some new dimension. I have been lifted to a plane of understanding that is beyond anything you can imagine. At the same  time when I read or listen to other traders talk now or, hear their strategies it's like listening to something out of the stone age. I am even shocked that people would use these approaches. So crude. It's literally like throwing your money away.

Anyway, I just needed to say all this. It's been a while that I wanted to write this post. This is not a push for course attendance--I may even stop the courses because the trading has been so good and so engaging for me. But at the same time I wanted to tell you about my discovery and say that this is out there. It can be yours if you want it.

Good luck to you all and thank you for your readership.

-Mike Norman

College athletes can unionize, federal agency says

Uh oh NCAA and its sports media industry partners!

Looks like all the wealth being created around the conduct of inter-collegiate athletics may have to now be shared with the actual young people who play the sports.

Story here.

I've always thought that both the NFL and NBA took advantage of a form of government subsidy in that in effect the "minor leagues" of these two professional sports leagues are completely paid for by the schools that operate elite programs for NCAA football and basketball.

Not to mention that many university employees make large amounts working in the Athletic Departments at the elite schools and many local business people also profit greatly off the hard work of these select students.

Young students who (until perhaps now! LOL!) could not really receive any form of compensation or even some form of limited stipend while attending school on a sports scholarship playing for a program that brings in $bazillions for the universities and their broadcast partners and the local business communities in the college towns.

Major League Baseball at least operates their own Minor Leagues and invest their own funds in player development.  But MLB isn't off the hook completely either as most franchises enjoy the use of taxpayer subsidized facilities and other public subsidies.

This will be very interesting to see how this is going to work out; it may ignite a new look at labor unionization in other industry sectors as imo its going to play out like a constant soap opera in the sports media and will get a lot of attention.

Marshall Auerback — Negative Interest Rates Is Fiscal Austerity By Another Name

The European Central Bank has started to debate the idea of negative deposit rates, as a means of slowing inflows into the currency and curb the euro’s strength. Interestingly enough, after appearing to oppose the idea a few months ago, Bundesbank chief Jens Weidman now says that a negative deposit rate could be a way to address the impact of a strengthening currency....

The impact such a step would have to improve bank lending to companies and households was, however, “debatable”, he said.
Well it won’t improve bank lending for the simple reason that he’s got the causation wrong: loans create deposits, not the other way around....

More to the point, negative interest rates on deposits penalize savers. 

Macrobits

Negative Interest Rates Is Fiscal Austerity By Another Name
Marshall Auerback

Edward Lambert — Institutionalist Economics did not come up short

Krugman's back at it: "No model." Edward Lambert calls him out on it.

There are two fundamental types of conceptual model used to express theoretical assumptions: the first is mathematical and the second is conceptual. 

Conceptual models have generally fared better than the mathematical ones with respect to policy for a variety of reasons, the basic one being that they can handle more kinds and orders of variables that are relevant, both quantitative and qualitative. Evidence? Keynes and the New Deal.

Krugman is specifically throwing Keynes under the bus? Or does Krugman think that the IS-LM model captures the essence of the General Theory?

Of course, monetarists will say that Keynesianism broke down with stagflation and monetarism repaired the lacuna with its math-based analysis — that showed that what happened in the financial crisis was impossible, or at least highly unlikely. 

Those taking a broader view warned otherwise. Like those influenced by Minsky's analysis.

What amazes me is that monetarists think that the policy rate is the single lever that moves the entire economy, which is neatly depicted in the IS-LM model.

Effective Demand
Institutionalist Economics did not come up short
Edward Lambert

Randy Wray — Minsky on the BBC

I gave background to the reporter for this story, but the BBC chose to focus on the somewhat more conventional interpretation. Still, this is very worthwhile listening...

Economonitor — Great Leap Forward
Minsky on the BBC
L. Randall Wray | Professor of Economics, University of Missouri at Kansas City

Matthew Boesler — Richard Koo: I Can't Find Anyone To Refute My Argument That America Is In A 'QE Trap'

Anyone that understands MMT can. Excess reserves are irrelevant to bank lending, which is driven by demand for loans moderated by loan standards and terms including the rate. When the central bank is paying interest on reserves, the quantity of excess reserves is irrelevant not only to lending capacity but also to policy rate setting. And if the yield curves steepens too quickly in the judgment of the Fed, it can flatten it by announcing the yield it is willing to buy any necessary quantity at, thereby setting a floor on the price of the bond it targets.

The central bank of a currency sovereign that doesn't borrow in a currency it doesn't issue has the operational ability to control its policy rate and yield curve as it chooses.

Actually, Koo provides his own answer.

Koo says one way to avoid the "QE trap" is for the Fed to come out and argue that QE never worked to begin with, thereby downplaying concerns over its withdrawal, but it's unclear whether this would be effective, and he admits that it would be "difficult to implement."

Business Insider
Richard Koo: I Can't Find Anyone To Refute My Argument That America Is In A 'QE Trap'
Matthew Boesler

Ricardo Hausmann — Why Are Rich Countries Democratic?

Here's another Harvard professor that needs a refresher course in critical thinking.

Even the correlation he proposes between so-called democratic states and national wealth doesn't hold. Greece, the birthplace of the Western intellectual tradition and Athens, the birthplace of Western democracy, are basket cases, while the oil-rich despotic states of the Middle East are extraordinarily wealthy.

Nothing about distribution, nothing about the relationship of wealth and political power, nothing about what constitutes democracy.

Conflation of capitalism with democracy as propaganda for neoliberalism and neoconservatism. Propaganda.

The one thing he does get right but doesn't admit is the correspondence of market price and the price of politicians.

Project Syndicate
Why Are Rich Countries Democratic?
Ricardo Hausmann, a former minister of planning of Venezuela and former Chief Economist of the Inter-American Development Bank, is a professor of economics at Harvard University, where he is also Director of the Center for International Development

Robert Reich — The New Billionaire Political Bosses

Wealth = political power

The New Billionaire Political Bosses
Robert Reich

The only point I take issue with Reich over is his statement, "America is not yet an oligarchy...."

Of course it is. That's why it was structured as a republic rather than a popular democracy at its inception and was soon to be dominated by two-party politics controlled by bosses.

Reich says, "American democracy used to depend on political parties that more or less represented most of us. Political scientists of the 1950s and 1960s marveled at American “pluralism,” by which they meant the capacities of parties and other membership groups to reflect the preferences of the vast majority of citizens."

This is the same period that Thomas Piketty points out as an anomaly in the history of capitalism.

Otherwise, it is a good post.

Ryan Cooper — Why everyone is talking about Thomas Piketty's Capital in the Twenty-First Century

The French economist's magnum opus explains the history of income inequality — and represents a real threat to the reign of the 1 percent

The Week
Why everyone is talking about Thomas Piketty's Capital in the Twenty-First Century
Ryan Cooper

Watershed moment for neoliberalism?

The English translation of French economist Thomas Piketty's magnum opus Capital in the Twenty-First Century is finally out, and it's made an enormous splash (see reviews here, here, and here). It's a brilliant, surprisingly readable work that synthesizes a staggering amount of careful research to make the case that income inequality is no accident. Indeed, Piketty argues that it is a feature of capitalism itself — unless governments take action to rein in capitalism's excesses.

That may sound like an obvious point to you. But the value of Piketty's work is that it shows that capitalism's postwar heyday — in which incomes at the bottom and the top actually converged — was a historical anomaly. Piketty's analysis of the last two centuries makes the case that capital in its natural state does not tend to spread out or trickle down, but to concentrate in the hands of a few.

This is news to those on the right who have long championed capitalism's egalitarian benefits. Conservatives have been far too complacent in believing that capitalism is the only possible economic system, and far too aggressive in attempting to demolish the structures that mitigate capitalism's worst side effects. If Piketty is correct, he has laid the intellectual groundwork for a resurgence of American socialism — and conservatives are starting to feel distinctly uneasy about it.

Keeping Up With FULL Context: OpenSourced Hardware AND Software As One Key To Distributed OBT&E

   (Commentary posted by Roger Erickson)

NVIDIA Unveils First Mobile Supercomputer for Embedded Systems

I wonder if ARM licensees can keep up? Or other CPU mass producers. Maybe CPU will also soon become Open-Sourced commodities, rather like grass for cattle, or ants for insectivores. :)

Regardless of hardware vendors, cheaper data-intensive hardware will allow more distributed access to serious data-crunching and complex model simulations.

Full context simulations? We're nearly there with sophisticated gaming, even though developing gaming technology is still mostly applied to culturally trivial distractions.

Sophisticated, full-context modeling could nevertheless soon follow. Simply by using real-time, real data feeds, instead of only artificial-reality imaging engines.

This will slowly make it more feasible for more people in all settings and all disciplines to begin to model their entire supply chains or "eco-systems" - as well as the full context (the whole that grows as less/equal/more than the sum of all sub-eco-systems).

The "Singularity" is more likely to accelerate human coordination. Enslavement of humans by their smart-phones/watches/glasses still seems improbable. :)

Keeping up with context is how all organizations reduce internal frictions to low enough levels that all sub-members aren't simply fighting one another. That's what OBT&E is all about. Outcomes-Based-Training-&-Education, aka, cultural evolution.

Making it harder for citizens to work at cross-purposes is always a function of processing key data flow. Just running enough model simulations (i.e., thinking) to even keep recognizing minimal-data short-cuts for given contexts is itself a considerable task.

Distributed awareness of full context - aka, an informed public. It's not just the data that matters. Without context, any amount of data is still meaningless. So getting slowly improving, full-context models in front of more people is the name of the game.

Real-time, full-context awareness, across full groups? That requires:

streaming even far more data flows, in real-time, 

RAPID pattern recognition within and across more data flows, 

massively parallel testing of distributed tuning steps (local actions), 

and most of all ... an ongoing ASSESSMENT model ("Public Purpose" as the agile, floating Desired Outcome).

All inter-linked, through massively parallel feedback data flows, of course. No, corporate owned advertising & propaganda channels will NOT suffice. Don't even ask. It's already just in the way, and a significant paywall obstacle that is slowing the evolution of the USA.

How about personal "Citizen Dashboards" able to serve distributed citizens as well as the cockpit data displays serve airplane pilots? That should help +320 million people run a more agile culture and country. It might even save our collective butts. The aggregate return on coordinating REQUIRED distribution of nearly all available info to nearly all "tribal" or citizen members ... will be a far higher return than ANYTHING any individual can currently imagine. Even legendary King Midas - or anyone else from 2000 years ago - couldn't imagine the distributed wealth we argue over today. Why should we constrain even our own, following grandchildren, let alone the 7th generation yet unborn?

Why NOT OpenSource our survival ... the challenge is wide open, and not yet sourced. Supposedly, none of us is as smart as all of us, so lets just figure out ways to USE all of us?

As Ben Franklin (and every tribal member throughout history) said, it seems we still must all hang together, or we'll surely experience a common demise.

Zero Hedge — Russia Prepares Mega-Deal With India After Locking Up China With "Holy Grail" Gas Deal

Last week we reported that while the West was busy alienating Russia in every diplomatic way possible, without of course exposing its crushing overreliance on Russian energy exports to keep European industries alive, Russia was just as busy cementing its ties with China, in this case courtesy of Europe's most important company, Gazprom, which is preparing to announce the completion of a "holy grail" natural gas supply deal to Beijing. We also noted the following: "And as if pushing Russia into the warm embrace of the world's most populous nation was not enough, there is also the second most populated country in the world, India." Today we learn just how prescient this particular comment also was, when Reuters reported that Rosneft, the world's top listed oil producer by output, may join forces with Indian state-run Oil and Natural Gas Corp to supply oil to India over the long term, the Russian state-controlled company said on Tuesday.

Zero Hedge
Russia Prepares Mega-Deal With India After Locking Up China With "Holy Grail" Gas Deal
Submitted by Tyler Durden

Reuters — Oleksander Muzychko, Ukrainian Far-Right Leader, Shot Dead By Police

Conflicting reports.

The World Post
Oleksander Muzychko, Ukrainian Far-Right Leader, Shot Dead By Police
Reuters