Cecchetti & Schoenholtz — China's Awkward Exchange Rate Regime

Float that sucker.

Perhaps the best way for China to counter President-elect Trump’s outdated claims of manipulation would be to let the currency float. In the short run, however, that would almost surely trigger a plunge versus the U.S. dollar. Given China’s strong penchant for market intervention—including its unfortunate role in the 2015-2016 stock market boom and bust—Chinese savers may simply rush for the exit, fearing that anxious policymakers will slam the gate quickly.

In the end, there is no way to make such a fixed exchange rate regime less awkward without risking a bout of instability. Over the long run, capital controls won’t solve the problem; instead, they will further diminish the efficiency with which the country’s savings are used. For a large economy like China that is integrated into the global trading system, the global norm is a floating currency. Absent a trade war (and perhaps even with one), that’s still probably where we are headed within a few years. And, it’s increasingly a question of when, not if.

Money and Banking
China's Awkward Exchange Rate RegimeStephen G. Cecchetti, Professor of International Economics at the Brandeis International Business School, and Kermit L. Schoenholtz, Professor of Management Practice in the Department of Economics of New York University’s Leonard N. Stern School of Business
ht Mark Thoma at Economist's View

Cecchetti & Schoenholtz are the authors of Money, Banking and Financial Markets.

Consumer Confidence 15 year high

This is plowing over some substantially high time periods over the last 15 years. Probably correlates to the last time we had a long period of $2 gasoline like we've had for the last year and the high USD that results.

U.S. consumer confidence hits 15-year high in December https://t.co/T4Sbq2jRAe

— Reuters Top News (@Reuters) December 27, 2016

Here is the artists illustration of this phenom:

Bill Mitchell — Moving on from the post-modernist derailment of the Left

“The linguistic construction of post-capitalist hegemony opens a space for the engendering of the public sphere”. Sounds ominous and deep. Sounds knowledgeable. Then what about the next sentence: “The illusion of praxis carries with it the discourse of the public sphere.” amd the next: “The emergence of normative value(s) opens a space for the ideology of the public sphere.” I could write a whole essay about that topic in the style that typified the so-called post-modernist explosion in social sciences in the 1970s and beyond. Aah, Pomo, the nonsensical shift in literary endeavour that has set the Left back as much as the embrace of Monetarism and, more generally, neo-liberalism. 

This blog continues to add to the material we are working on as part of my next book (with co-author, Italian journalist Thomas Fazi), which traces the way the Left fell prey to what we call the globalisation myth and formed the view that the state has become powerless (or severely constrained) in the face of the transnational movements of goods and services and capital flows. This material will be part of the final section of the book, which we are sort of calling a ‘Progressive Manifesto’, designed to guide policy design and policy choices for progressive governments. We also hope that the ‘Manifesto’ will empower community groups by demonstrating that the TINA mantra, where these alleged goals of the amorphous global financial markets are prioritised over real goals like full employment, renewable energy and revitalised manufacturing sectors is bereft and a range of policy options, now taboo in this neo-liberal world are available. The book will be published in 2017 by Pluto Books, London. 

This blog examines the way the Left became entranced with post-modernism and fell into the trap of disappearing into crevices of meaningless at the expense of a focus on class struggle and a coherent critique of capitalism. We argue that critique is an essential part of the revitalisation of the Left political struggle against neo-liberalism and the restoration of the Left as a political force.

I added some paragraphing based on topic sentences for ease of reading.

Bill Mitchell – billy blog
Moving on from the post-modernist derailment of the Left
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

The Guardian — Corbyn hits back after Obama suggests Labour is 'disintegrating'

More evidence that President Obama and the New Democrats have lost the plot.

Outgoing US president suggests in interview he is not worried about potential ‘Corbynisation’ of Democrats because party is grounded in ‘fact and reality’

Next the New Democrats will publicly distance themselves from FDR?

The Guardian
Corbyn hits back after Obama suggests Labour is 'disintegrating'

Rowena Mason and Peter J Walker

Back to the Future: From the USSR to the Eurasian Century

Get ready, because the thick of the action starts now.

Sputnik International
Back to the Future: From the USSR to the Eurasian Century

Pepe Escobar

Michael Jabara Carley — A Loser's Malice: What's Behind Obama's Attacks On Putin

Some "fake news."

Zero Hedge
A Loser's Malice: What's Behind Obama's Attacks On Putin
Michael Jabara Carley

Matias Vernengo — History of Central Banks Tutorial - Before Central Banks II

Naked Keynesianism
History of Central Banks Tutorial - Before Central Banks II
Matias Vernengo | Associate Professor of Economics, Bucknell University

John Muellbauer — Macroeconomics and consumption: Why central bank models failed and how to repair them

Good analysis of why central bank models fall short based on overly restrictive assumptions and failure to include key factors in the parameters. So the parameters that are identified are miscast and important parameters are ignored, notably the role of credit as a financial accelerator. 

vox.eu

Macroeconomics and consumption: Why central bank models failed and how to repair them
John Muellbauer | Senior Research Fellow, Nuffield College; Professor of Economics, Oxford University; and Senior Fellow, Institute for New Economic Thinking, Oxford Martin School

Matias Vernengo — History of Central Banks Tutorial - Before Central Banks

Short account of the conditions that led to the development of central banking.

First in a series on central banking.

Naked Keynesianism
History of Central Banks Tutorial - Before Central Banks
Matias Vernengo | Associate Professor of Economics, Bucknell University

Tom O'Connor — Syrian Christians Celebrate Christmas Festivities In Aleppo

Social media users this week shared pictures and videos of Christians celebrating Christmas festivities in western Aleppo for the first time in at least four years. The images emerged as the Syrian army asserted control over the city's last rebel-held eastern pockets.

Accounts, many of which belonged to supporters of Syrian President Bashar Assad, posted photographs and footage of Syrians lighting Christmas trees in a square in western Aleppo. Celebrations were reportedly interrupted by a bombing in the city's Aziziyeh neighborhood. However, no injuries were reported. After years of conflict and continued reports of violence on both sides following an uneasy ceasefire reached between the Syrian government and the opposition, Christians expressed their hope that this holiday season would bring stability.

"Despite the harsh conditions the people of Aleppo are enduring, [for both] Christians and Muslims, Christmas brings the hope for peace that we have missed for the last five years. Although many churches have been destroyed in Aleppo, the bells of the other churches will sound and hope they bring us peace," Jesuit Father Ziad Hilal told Christian Post. "Christians are preparing themselves for Christmas in their churches and associations, along with our compatriots in Syria, so that the sound of violence overcomes the deep sound of faith that each believer enjoys — God is with us."...

Yahoo News
Syrian Christians Celebrate Christmas Festivities In Aleppo
Tom O'Connor, International Business Times

This year, many people in the liberated city of Aleppo are celebrating for the first time since the war began. RT’s Lizzie Phelan talked with residents of the war-ravaged city now recovering from its wounds.... 

Video and pictures.

RT

War-torn Aleppo celebrates Christmas, shares stories of joy & loss with RT (EXCLUSIVE

This morning, the local newspaper reported that Christmas was being celebrated in sections of Mosul liberated from ISIS, but there was no mention that Aleppo had been liberated from Al Qaeda and was celebrating Christmas for the first time in five years.

None of the Western media (left, center, and right) bothered to show footage of X-mas celebrations in Aleppo. Why is that? Is that considered "pro-regime propaganda"? Why is that reality bothersome to Western media? What is about those scenes that Western media want to suppress? I mean the rigid propaganda line about Syria in Western media supersedes even the traditional sectarian Christian bias of Western media coverage of the Middle East.

Angry Arab News Service
X-mas scenes from Aleppo
Assad Abu Khalil | Professor of Political Science, California State University, Stanislaus

But even then the celebration in government-controlled West Aleppo was disrupted.

Orthodox Cognate Page

Explosion disrupts Christmas celebrations in Aleppo

UPDATE

Reuters reports on on Christmas in Aleppo, although Reuters apparently has no one on the ground there.

Christians in Aleppo celebrated under a giant Christmas tree lit up for the first time in five years, hailing what many described as the return of peace to a city that came back under full government control last week.

Reuters
Aleppo Christians celebrate holiday in hope peace has returned

Suleiman Al-Khalidi in Amman

Alanna Ketler — Pope Francis: Capitalism is “Terrorism Against All Of Humanity”

Pope Francis doubles down for Christmas.

Once again, Pope Francis has made global headlines, shocking reporters late Sunday after blaming the “god of money” for the extremist violence that is taking place in Europe and the Middle East. A ruthless global economy, he argues, leads disenfranchised people to violence.

Responding to a question from a journalist about whether or not there is a link between Islam and terrorism, more specifically addressing the fatal attack on a priest by a Muslim extremist in France last week, Pope Francis said, “Terrorism grows when there is no other option, and as long as the world economy has at its center the god of money and not the person.” “This is fundamental terrorism, against all humanity,” he continued.

“I ask myself how many young people that we Europeans have left devoid of ideals, who do not have work. Then they turn to drugs and alcohol or enlist in [the Islamic State, or ISIS],” he said....

Collective Evolution
Pope Francis: Capitalism is “Terrorism Against All Of Humanity”

Alanna Ketler

Michael Roberts — The system is broken

While Skidelsky’s arguments have more than an element of truth about them, he does not really explain why mainstream economics has become divorced from reality. This is not a mistake of education or lack of recognition of wider social sciences like psychology; it is a deliberate result of the need to avoid considering the reality of capitalism. ‘Political economy’ started as an analysis of the nature of capitalism on an ‘objective’ basis by the great classical economists Adam Smith, David Ricardo, James Mill and others. But once capitalism became the dominant mode of production in the major economies and it became clear that capitalism was another form of the exploitation of labour (this time by capital), then economics quickly moved to deny that reality. Instead, mainstream economics became an apologia for capitalism, with general equilibrium replacing real competition; marginal utility replacing the labour theory of value and Say’s law replacing crises.

As Marx succinctly put it: “Once for all I may here state, that by classical political economy, I understand that economy, which, since the time of W. Petty, has investigated the real relations of production in bourgeois society, in contradistinction to vulgar economy, which deals with appearances only, ruminates without ceasing on the materials long since provided by scientific economy, and there seeks plausible explanations of the most obtrusive phenomena, for bourgeois daily use, but for the rest, confines itself to systematizing in a pedantic way, and proclaiming for everlasting truths, the trite ideas held by the self-complacent bourgeoisie with regard to their own world, to them the best of all possible worlds.”

What is wrong with mainstream economics is not (just) that economists of today are too narrowly mathematical and focused on economic models – there is nothing inherently wrong with using maths and models – or that most economists do not have the wider “erudition and multiple talents” of the classical economists of the past. It is that economics is no longer ‘political economy’, an objective analysis the laws of motion of capitalism, but an apologia for all the ‘virtues’ of capitalism.…

The Protestant ethic equated virtue with material wealth and worldly success. This was an underlying factor in the development of capitalism (economic liberalism) as a cultural norm in the West. See Max Weber's The Protestant Ethic and the Spirit of Capitalism and R. H. Tawney's Religion and the Rise of Capitalism, for example.

It is not just market fundamentalism that is the problem, according to Michael Roberts. Even Keynesianism is only a ploy to paper over the warts of capitalism when they arise cyclically, addressing the symptoms rather than the underlying etiology.

In my view, policy makers may have chosen to ignore fiscal spending to solve the ‘technical problem’ of the Long Depression partly “for political reasons”. But there are also very good economic reasons for arguing that in a capitalist economy, increased government spending and running budget deficits would not get an economic recovery if the profitability of capital is low.

If the profitability of domestic investment is low, then increased funding will flow to increases in asset prices, e.g., stock buyback that increase financial wealth but not real wealth, or investment will flow abroad where returns are more attractive.

Michael Roberts' Blog
The system is broken

Michael Roberts

See also

A study of social class — defined by annual income and by education-level — finds that “Social class rank was positively associated with essentialist beliefs [beliefs that genetics is more important than environment in explaining social class]. ... Social class rank was also positively associated with both belief in a just world ... and meritocracy beliefs, ... suggesting that upper-class ... individuals are more likely to believe that society is fair and just than are their lower-class rank counterparts.”

This study, “Social Class Rank, Essentialism, and Punitive Judgment,” was published in the Journal of Personality and Social Psychology, and was performed by Michael W. Kraus and Dacher Keltner, two leading social scientists, whose investigations of the moralities that are applied respectively by the rich and by the poor, are contributing importantly to our understanding of society, of politics, of law, and of economics.

This research found that “Upper-class ... individuals were more likely to endorse beliefs that social class is an inherent, stable, and biologically determined social category relative to their lower-class ... counterparts. Moreover, this pattern emerged after accounting for both political attitudes and material resource measures of social class. ... Beliefs that society is fair and just explained the tendency among upper-class ... individuals to endorse essentialist [biological] beliefs about social class.” Thus: the richer and more educated a person was, the more that he thought the world is just, and the more he attributed his being upper-class to his supposed inborn superiority, rather than to the circumstance of his having been born from rich parents who possessed the money to send him to college and perhaps to an expensive university.

Social Darwinism.

The Huffington Post
The Rich And Educated Believe Wealth Correlates With Virtue, Says Study

Eric Zuesse

Timothy Taylor — Charles Dickens on Seeing the Poor

Economists might also wince just a bit at the reaction of some economists to poverty, who Dickens calls "the unreasonable disciples of a reasonable school." Dickens writes: "I know that the unreasonable disciples of a reasonable school, demented disciples who push arithmetic and political economy beyond all bounds of sense (not to speak of such a weakness as humanity), and hold them to be all-sufficient for every case, can easily prove that such things ought to be, and that no man has any business to mind them. Without disparaging those indispensable sciences in their sanity, I utterly renounce and abominate them in their insanity ..."

Group insanity or Scrooges?

Conversable Economist
Charles Dickens on Seeing the Poor
Timothy Taylor | Managing editor of the Journal of Economic Perspectives, based at Macalester College in St. Paul, Minnesota

Gary G. Kohls — A Christmas Message of Peace

On Christmas Eve, 102 years ago, one of the most unusual aberrations in the bloody history of the organized mass slaughter that we call war occurred. It was so profound and so disturbing to the professional war-makers that it was never to be repeated again....

Consortium News
A Christmas Message of Peace

Gary G. Kohls (First published on Dec. 24, 2015

Nassim Nicholas Taleb — No, Jesus was not a “NonWhite” refugee who would have voted for …

Setting the record straight. Taleb distinguishes Mediterranean peoples from interior peoples.  So Southern Europeans are differentiated from Northern Europeans, Near Easterners from Middle Easterners, and Mediterranean Africans from non-Mediteranean Africans. 

These are increasingly important distinctions now that ethnicity is coming to the fore in the world as political parameter.

Nassim Nicholas Taleb's blog

No, Jesus was not a “NonWhite” refugee who would have voted for …
Nassim Nicholas Taleb

James Kwak — Kudlow and Economics in the Trump Administration

Title should be Larry Kudow and economism.

I prefer G. W. H. Bush's "voodoo economics."

It seems some people never learn.

Baseline Scenario
Kudlow and Economics in the Trump Administration

James Kwak | Associate Professor of Law at the University of Connecticut School of Law

ht Mark Thoma at Economist's View

See also

New Yorker
Ayn Rand And Corporate Tax Cuts Won’t Mend The Economy

John Cassidy

Noahpinion
The Fundamental Fallacy of Pop Economics

Noah Smith

Anatole Kaletsky — The Crisis of Market Fundamentalism

Every once in a while Project Syndicate publishes a good one. Take that, Hayek.

On the historical dialectic of economics and politics.

Project Syndicate
The Crisis of Market Fundamentalism

Anatole Kaletsky | Chief Economist and Co-Chairman of Gavekal Dragonomics, a former columnist at the Times of London, the International New York Times and the Financial Times, and the author of Capitalism 4.0, The Birth of a New Economy
ht Mark Thoma at Economist's View

Branko Milanovic — A short note on Skidelsky’s interpretation of Schumpeter

Why do we have this “problem” with Schumpeter? Because in his own work, Schumpeter shows a duality, or even a contradiction, between his often unquestionable endorsement of “economics as physics” in HEA where it is hailed as an unambiguous progress toward economics becoming an exact science, and scarce use of this approach in Schumpeter own work. His “Theory of Economic Development” is indeed in its structure very abstract and arid, somewhat similar to Ricardo’s “Principles” (of whose methodology, by the way, Schumpeter was very critical in HEA), but is not mathematical at all. His “Business Cycles” is heavily empirical but shown scant relationship to Walras and is generally anti-theoretical. (I have to confess that I tried three times to read his “Business Cycles” and that I always failed. It seems almost unbelievable that such a splendid writer and beautiful mind produced a work--which moreover he originally saw as a competitor to “The General Theory”—of, yes, such messiness and unreadability.)

Global Inequality
A short note on Skidelsky’s interpretation of Schumpeter
Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Luxembourg Income Study (LIS), and formerly lead economist in the World Bank's research department and senior associate at Carnegie Endowment for International Peace

Also

Liberation from the shackles of space

Full text of my New Republic interview

Bridgewater's Ray Dalio having software designed to model his brain. Great. Isn't there enough junk economics out there already?

Don't we have enough "modeling software" that spews out junk economics?

Ray Dalio runs the world's largest hedge fund, Bridgewater Associates. He's having software created to model his brain.

Dalio believed or still believes that

The U.S.A. is "out of money."
The central bank monetary policy such as QE and ZIRP will cause hyperinflation and collapse the dollar.
That central banks are or, soon will be, out of "ammo."
That we borrow from the Chinese.

And on and on.

Dalio is more proof that just because someone has a lot of money or, even lots of money under management, doesn't mean they are smart or know what they are talking about.

Albert Einstein was arguably one of the smartest humans to ever live, and he earned about $65k per year in today's dollars.

Anyway, no problem for me. Instead of taking Dalio's money, I will take his computers' money.

Edward Harrison — More on the coming trade war with China

Well, if we have to have war, I'd rather it be a trade war with China rather than a real war with Russia, which was in the cards with HRC.

Credit Writedowns
More on the coming trade war with China
Edward Harrison

Also

Reuters
Chinese media alarmed at Trump trade adviser, warn of U.S. showdown

Thucydides trap?
Peoples Daily
Trump appoints ‘Death by China’ author to lead new U.S. trade council
By Curtis Stone (People's Daily Online)

More on the Accounting

John Harvey (MMT in paradigm) takes issue with the confusion surrounding the govt exclusive use of the Modified Accrual basis of  accounting here:

It’s not a pension fund into which you put your money when you are young and from which you draw when you are old. It’s an immediate transfer from workers today to retirees today.

What John is saying in effect is that you cant accrue on the right side while using cash basis on the left side... he is recommending Cash Basis for both sides...

"Social Security Is Not In Trouble" https://t.co/9SAhQteaxu

— Nathan Becker (@netbacker) December 22, 2016

State of the Nation

Zero Hedge
Baby Boomers Increasingly Having Social Security Checks Garnished To Cover Student Loan Payments

The Obama 'Recovery': Number Of Millennials Living At Home With Mom Reaches 75-Year High

Tyler burden

Russ Baker — Trump and the Bushes — the New Guy and the Old Guard Dance

And now, notwithstanding the tremendous enmity between the Old Money clan and the semi-new money guy, the Bushes and their allies and fellow travelers are finding ways back inside the White House.

One example is Rex Tillerson, Trump’s choice for Secretary of State. The only reason he was even considered was because Robert Gates and Condoleezza Rice suggested him to Trump.

Gates, of course, comes out of the Bush machine, having served as CIA director under George H.W. Bush and as defense secretary under George W. Bush. Ditto Rice, who also served under Bush father and son....

In fact, it now turns out that none less than George W. Bush himself, along with — wait for it — Donald Rumsfeld, worked their influence on behalf of Tillerson, albeit indirectly.…

Trump had been considering, as Deputy Secretary of State, Richard Haass, president of the old guard’s Council on Foreign Relations, and former member of both Bush administrations. But apparently [Roger] Stone has convinced Trump to not appoint him.

Stone considers Haass “New World Order…Globalist…Neocon” — anathema to Stone, with his paleoconservative/libertarian inclinations. Much of Trump’s rhetoric against elites has come from Stone....

WhoWhatWhy
Trump and the Bushes — the New Guy and the Old Guard Dance
Russ Baker

George Eliason — Russia Hacking the Election the Inside Story

We know by now that Alexandra Chalupa was the person in charge of the Democratic National Committee’s “ethnic outreach” efforts. According to Yahoo News, she was one of the 16 people that shaped the national election in 2016. In the Yahoo story journalist Michael Isikoff described her as a normal person that shaped history.

Alexandra Chalupa has been the voice behind saying Russia illegally interfered with the election. And according to her story, she was almost hacked repeatedly while researching Paul Manafort. The Democrats say this caused the Clinton defeat. No one explained why “researching” Paul Manafort, an American, would excite Russian attention.

Strangely, every article about her neglects to mention that Chalupa and her family are not Democrats as suggested. Instead they are admitted ultra-nationalists bent on sending America to war with Russia by any means possible. And they are vocal about it.

None of the articles connect the fact that the Clinton loss is personal for the Chalupa family. At least 2 of them were going to the White House as advisors and cabinet members….

The Ukrainian nationalist connection. Backgrounder on OUN Bandera.

Washington's Blog
Russia Hacking the Election the Inside Story
George Eliason, an American journalist living in Ukraine

Poll — Majority of Dems want 'someone entirely new' to run in 2020

A majority of Democratic and independent voters want an entirely new name to compete for the Democratic Party's 2020 presidential nominee, according to a new poll.
A USA Today/Suffolk University poll released Wednesday found 66 percent of Democrats and independents chose “someone entirely new” from a list of possible contenders for the Democratic nomination in 2020. Of those surveyed, just 9 percent said that an unknown individual should not run....

The Hill
Poll: Majority of Dems want 'someone entirely new' to run in 2020
Paulina Firozi

Clifton Leaf — The Business of Humanity

Is capital waking up?

Fortune
The Business of Humanity
Clifton Leaf

macromon — World Current Account Balances (CAB)

We have ranked the world’s 2016 Current Account Balances (CAB) by country from largest deficit to largest surplus in the ginormous table below. The data are from the October 2016 IMF’s World Economic Outlook database. Note, 2016 are IMF estimates.

Global Macro Monitor
World Current Account Balances (CAB)
macromon

Bill Mitchell — It is just ridiculous to starve public investment funding

On Monday (December 19, 2016), my blog – US central bank decision to raise interest rates doesn’t make much sense – examined the recent interest rate hike in the US and made a case that it didn’t appear, on the basis of the evidence at hand, to be a well-reasoned policy decision. In researching the case I was struck by how far public gross capital formation has fallen in the US, particularly at the State/Local level as mindless austerity takes its toll. Governments find it easier to cut capital spending than recurrent spending because the ‘costs’ of the those spending cuts are not immediately obvious to the population and, typically, do not manifest until after the political cycle exhausts. Cutting pensions, school outlays, and other recurrent targets usually brings an immediate political outcry because the impacts are immediate. But it takes time for public infrastructure to degrade from lack of maintenance and replacement. Eventually it does degrade and in some cases becomes unusable. Then the costs of repair/replacement are usually higher than if the resource had have been maintained and replaced according to reasonable engineering schedules. The US Bureau of Economic Analysis (BEA) publishes a very interesting data series that allows us to examine the ageing of the capital assets (public and private) on an annual basis back to 1925. I thought I would explore that dataset to inform the proposition that neo-liberalism has been associated with degraded public infrastructure and the loss of service (to the non-government sector) that accompanies such degradation. The results of my enquiry are fairly stark.

I wrote about that sort of policy mypopia last week in this blog – Austerity is the enemy of our grandchildren as public infrastructure degrades....

Bill Mitchell – billy blog
It is just ridiculous to starve public investment funding
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

David Fields — Review of Keynesian Economics: Free-access articles

Free is good. Several articles of interest for those interested in MMT and monetary economics. Lot of of other things that may be of interest, too.

Radical Political Economy
Review of Keynesian Economics: Free-access articles
David Fields

More on National Balance Sheets

More on debunking the "govt is same as a firm!" or "govt is same as a household!" rote falsehoods.

Magpie's Asymmetric Warfare: On National Balance Sheets. https://t.co/LSqcxBQIdY

— peterc (@heteconomist) December 21, 2016

From an accounting perspective, how this falsehood is remaining operative is through a lack of knowledge about the unique Basis of Accounting that is used exclusively by the Federal Government.

This Basis of Accounting is termed, Modified Accrual basis.

What is 'Modified Accrual Accounting' 

Modified accrual accounting is an accounting method commonly used by government agencies that combines accrual-basis accounting with cash-basis accounting. 

Modified accrual accounting recognizes revenues when they become available and measurable and, with a few exceptions, recognizes expenditures when liabilities are incurred.

So what this means is that the federal govt reports the right column using Accrual Basis while at the same time, uses Cash Basis in the left column.

The federal government institution is the only institution that does this.

So if you are the typical unqualified moron going all around out there all around the place dispensing rote falsehoods, you don't understand this.

The morons use the typical non-govt Accrual Basis standards in their evaluation of the govt position and will look at the right column (accrued) as overwhelming the left column (cash) and think "the govt is bankrupt!" and start going all around the place repeating this false phrase attempting to edify fellow citizens via rote methodology.

When the truth is they are stupid which you can learn via active learning methodology via the accounting science.