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Deprogramming Progressives Indoctrinated into Supporting Austerity

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By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Jointly posted with New Economic Perspectives

A little bit of economics can be a truly terrible thing, for the introductory classes in micro and macro-economics are the most dogmatic and myth-filled part of the neo-liberal curriculum. Dogmas that have been falsified for 75 years (such as austerity) are taught as revealed truth. The poor indoctrinated student is then launched into the world “knowing” that austerity is the answer and that mass unemployment and prolonged recessions are small prices to be paid (by others) to achieve the holy grail of a balanced budget. Students are taught that national budgets are really just like household budgets. These dogmas are not simply false, they are self-destructive and cruel. Neo-liberal economics is so bad and has gone downhill at such a rapid rate that it now worships the economic analog to bleeding patients – austerity – as a response to a Great Recession. Millions of people are indoctrinated annually into believing this long-falsified nonsense, and that includes people who consider themselves progressives.

The remarkable aspect of neo-liberal economics is that the power of its myth has survived for many progressives even after its failed dogmas caused massive economic destruction, massive elite fraud with impunity, and crony capitalism so corrupt that it cripples democracy. Indeed, the brainwashing they received is so effective that even after the eurozone ran a massive experiment with austerity that proved (again) to be a catastrophic failure they remain neo-liberal acolytes. This column discusses three examples that exemplify the problem.

The Guardian (U.K.)

The Guardian is the U.K.’s most famous paper of the left, but its finance editor’s embrace of the neo-liberal austerity myth is passionate and inane. Consider this remarkably incoherent discussion of the “fiscal cliff” by the paper’s finance editor.

The fiscal cliff explained: what to know about the biggest story in Washington
Is America really heading off a cliff? Why can’t Congress and the president strike a deal? Get the lowdown with our handy primer.”

I chose the Guardian’s coverage as the first example because it begins with the most basic and common neo-liberal myth supporting austerity – a nation with a sovereign currency is really just like a household.

So let’s start at the beginning: what is the fiscal cliff?

It’s not one cliff, but two things: a group of spending cuts and tax hikes that will come into effect on January 2.

Why now?

The US has about $2.3tn of money coming in, and it spends about $3.6tn. So imagine you were making $23,000 a year and spending $36,000. What would happen? You’d be in debt, and you’d have to cut your spending. The US is in the same pickle. Except, instead of a few thousand, it has to cut $1.3tn.

The U.K. did not adopt the euro, so it retains a sovereign currency. The U.K. allows the value of the Pound to float freely and it borrows overwhelmingly in its own currency. The Guardian, therefore, has no excuse for failing to understand a national economy like the U.S. that also has a sovereign currency. A nation that borrows in its own freely-floating sovereign currency is not a target for bond vigilantes. It can and should spend considerably more than it brings in through tax revenues in response to a recession. That is what “automatic stabilizers” do. Automatic stabilizers greatly reduce the severity and length of recessions. Austerity does the opposite. Nations with sovereign currencies can create money directly through key strokes on the central bank’s computer or by borrowing at exceptionally low interest rates during a recession. The U.S., the U.K., and Japan all borrow long-term (10 years) at interest rates below two percent because they have sovereign currencies. Nations with sovereign currencies typically run budget deficits in most years. The U.S. has run a budget deficit over the great bulk of its history.

If a household reduces its spending because its income falls during a recession there is a negligible effect on the Nation’s economy. If a national government cuts spending because a recession reduces its income it directly reduces public sector demand and indirectly reduces private sector demand. A recession occurs when demand is seriously inadequate. Governmental austerity inflicts a far more severe recession on the nation by further reducing demand. A household and a Nation should follow the opposite strategy when their incomes fall sharply. The Guardian’s claim that they should follow the same strategy shows their indoctrination into one of neo-liberalism’s most destructive myths. The fact that the Guardian is making this claim in December 2012, after seeing the recession that austerity inflicted on the eurozone, proves that the problem is dogma, for only dogma is impervious to facts that repeatedly falsify its predictions.

The Guardian, of course, knows that the eurozone has been forced back into recession by the “troika’s” policies, but it reverses the causality. Here is a related piece by the same finance editor about the world’s reaction to the failure to reach a deal on the “fiscal cliff.”

Q: What does the rest of the world think of this?

They think we’re ridiculous, and that we’re playing fast and loose with not just our own economy, but that of the world. IMF chief Christine Lagarde said the US is becoming its own worst enemy by delaying a decision. Still, this is a case of pots and kettles. It’s not like Europe can really look down on us: they’ve been delaying the same hard decisions on spending cuts for over three years and have been on the brink of a meltdown many times since. Should we be smart enough to look at their example and avoid the same troubles? Yes, technically. But this is the nature of negotiations: they go down to the wire.

The Guardian’s remarkable explanation of why the Eurozone has been forced back into recession is: insufficient and delayed austerity! If only the Eurozone had made promptly made deeper “spending cuts” things would have been much better. That “logic” comes from assuming that nations are just like households. The Guardian’s answer to the fact that bleeding the patient makes the patient weaker is to bleed them more, and faster.

Note that the Guardian’s finance editor also seems to believe that sovereign monetary systems like the U.S. and the U.K. suffer the same risk of “meltdown” that nations that abandoned their sovereign currencies because they adopted the euro experienced “many times.” The “meltdowns” that the eurozone nations have suffered “many times” because of the deadly vulnerability of nations that lack a sovereign currency to the toxic mix of recession, austerity, and the debt vigilantes. The Guardian’s finance expert’s failure to understand such fundamental and critically important features of the financial system is a testament to the danger of dogma.

The U.S. has “avoid[ed] the same troubles” as the eurozone following the Great Recession. It has not suffered financial “meltdowns” “many times.” It has not been thrown back into recession and it does not suffer Great Depression levels of unemployment. The U.S. budgetary deficit has been reduced at a record rate over the last three years. The U.S. has been able to “avoid the same troubles” as the eurozone because it has not embraced the austerity dogma and it has not given up its sovereign currency. The U.S. did not provide remotely adequate stimulus of the kind recommended by competent economists, but the modest stimulus has been sufficient to produce a modest, sustained recovery. The Guardian, however, implies that we have failed to avoid the eurozone’s troubles after the onset of the Great Recession.

Governor Howard Dean

Governor Dean served as Chairman of the Democratic National Committee from 2005-2009. He was an early opponent of the invasion of Iraq. His self-description is “progressive Democrat.” He is a physician. Dean is a frequent guest on MSNBC’s evening programs. Dean takes the position that the U.S. should go off the “fiscal cliff” because austerity is desirable. He claims that a “balanced budget” is essential and that “everybody” should pay higher taxes to balance the budget. He thinks, contrary to the history of the U.S., that no nation can continue to run deficits.

http://www.realclearpolitics.com/video/2012/12/06/howard_dean_the_truth_is_everybody_needs_to_pay_more_taxes_not_just_the_rich.html

On CNBC, Dean cheered for the austerity that the “fiscal cliff” would inflict on the nation. He did so even though he believed it would cause a recession for at least six months. He predicted that the recession would be short and mild and a small cost to reduce the deficit. He assumed that austerity would reduce the deficit even though he conceded it would cause a recession.

Visit NBCNews.com for breaking news, world news, and news about the economy

http://www.msnbc.msn.com/id/21134540/vp/#50299569

Dean, a self-described progressive, and one of the nation’s most prominent Democrats, is more dogmatic than Speaker Boehner on austerity.

Andrew Stern (former head of SEIU)

Andrew Stern headed one of the largest unions in America. He made it a growing union and a political force devoted to progressive causes. He was a member of the Bowles-Simpson (BS) deficit reduction commission appointed by President Obama. Obama appointed co-chairs he knew were zealous supporters of austerity and unraveling and privatizing the safety net. Erskine Bowles is a leader of the Wall Street wing of the Democratic Party and Alan Simpson is a very conservative Republican. Stern declined to vote in favor of the BS austerity recommendations, but his vote was not based on any rejection of austerity.

Why I Voted No On Simpson-Bowles

On December 3, 2010, I voted “no” on the Simpson-Bowles report presented to the National Commission on Fiscal Responsibility and Reform. Here is what I had to say about it at the time:

This Commission report also challenges our President to offer his plan for economic growth, and fiscal responsibility no later than his State of the Union, and challenges Congress to adopt a plan no later than Election Day 2012.

I voted no, despite my admiration for the effort, because any plan, I feel strongly, must tackle both our fiscal and investment deficit needed to create jobs and a dynamic economy. No family would willfully balance its budget by not sending their child to college. No business can successfully compete with outdated equipment. And no nation can simply cut its way into prosperity. I felt the plan should better balance revenues and spending cuts, could balance Social Security while preserving more benefits, made too many short term cuts in health care before full reform was implemented in 2018, and did not have shared corporate responsibility.

Stern go big” and adopt massive austerity before it statutory deadline in November 2011.

Stern’s co-panelists at the conference, organized by one of Pete Peterson’s groups, whose participants unanimously urged the “go big” super-austerity plan included the former CEO of the AARP, Bill Novelli. Novelli’s support for austerity is particularly noteworthy given the BS plan’s proposals to cut and begin to privatize Social Security – Wall Street’s unholy Grail.

Conclusion

Neo-liberal economics has devastated the global economy and produced all of the predictive failures and evil consequences that progressives have long attributed to its micro-economic myths. Far too many progressives, however, continue to believe the similarly mythical and self-destructive macro-economic myths about deficits, debt, and austerity. It is hard enough countering Pete Peterson’s billion dollar campaign to inflict austerity and unravel and privatize the safety net. Peterson funds myriad front groups. We also have to counter the Wall Street wing of the Democratic Party, which dominates Treasury, OMB, the Justice Department, and the office of the Chief of Staff and favors austerity and unraveling the safety net. We should not have to deprogram progressives indoctrinated into repeating neo-liberal economic dogmas.
Progressives should be able to observe that the neo-liberal macro-economic predictions have been consistently falsified by reality. They should have seen documentaries like Inside Job and Capitalism: A Love Story about the catastrophic failure of neo-liberal economics and economists. They should read sites like New Economic Perspectives and Paul Krugman’s columns that explain why austerity is self-destructive and why the safety net need not, and should not, be attacked. Progressives need to say “no” to anyone who wants to “bleed” the economy through austerity or cutting the safety net.

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282 comments

  1. Chris Rogers

    Bill sir,
    Glad to see you taking The Guardian’s economics and finance editor to task – a once proud newspaper is now but a propaganda rag for the UK ruling elite, and via extension the global elite.

    Further, our masters are doing a good job with all this deficit bullshit and doom and gloom over the non-US fiscal cliff with even my own elderly parents believing the shit spewed out by the MSM.

    A antidote to all these lies and deceptions can be found on this blog and numerous others, the sooner the vast majority wake up to this fact the better, until then, do continue banging away at these lies masquerading as economic facts – as if economics was ever a science, IT’S A BLOODY SOCIAL SCIENCE!!!!!

    1. eric cartman

      As an American, I don’t get it how it’s the “liberal” position in the UK to be pro-EU. The Guardian is just as bad as America’s professional left at kow-towing the party line.

      1. JamesW

        You are exactly right, Mr. C!

        I have much respect for Prof. Black, an outstanding criminologist, and was fortunate to have come in contact with him many years ago during S&L investigations, but The Guardian is a highly censorious newspaper, even more so than this site, which has been known to censor comments if they don’t fall in the purview of McKinsey & Co.’s dictums!

        Also, Howard Dean and Stern are no bleeping progressives; again Prof. Black errs.

        He tends to believe all that godforsaken corporate propaganda vomited forth from the non-media (and how many times must we explain over and over, it IS LEGAL in America to fictionalize the news!!!!!

        In the end I must agree with Canadian R.T. Naylor’s assessment of Prof. Black’s opinions: Sorry, sir, but the entire society is fraud-based and corrupt, simply cleaning up one of the many corrupted agencies (such as SEC, but of course, there’s also FCC, FDA, FBI, ad infinitum….) one suffice.

        Anyone who is capable of doing arithmetic (I realize that leaves out a significant number of Americans today, unfortunately) realizes the austerity program to be the latest David Rockefeller scam in a 50-year long list of scams (Iran sanctions/NAFTA/currency speculation destruction of Mexican economy/missing monies in Iraq, and so on and so forth).

      2. Nathanael

        Well, eric, “pro-EU” can mean a lot of things:

        – in favor of a common fisheries policy? Left-wing!
        – in favor of a European Parliament? Left-wing!
        – in favor of a European Court of Human Rights? Left-wing!
        – in favor of open borders? Left-wing!

        – in favor of the European Central Bank? Right-wing!
        – in favor of centralized EU patent office? Right-wing!

    2. Jim Shannon

      Austerity = We have more than you because we are worth more than you! You have less because you are worth less!

  2. Addicted

    I am amazed the Guardian finance guy pulled out the whole “imagine we were a household” claptrap. As you correctly point out, that may be useful if you are Greece, and like a household, you literally have no control over the money you earn/spend. But it makes absolutely no sense to apply that as a metaphor for a country which borrows predominantly in a currency it controls.

    Also, Paul Krugman has been pointing out a lot of these same myths. I understand that political progressives may completely ignore a blog like NC. But how have they been able to completely ignore PK’s voice too? What am I missing a out the worlds they live in, that none of this stuff is factoring into their thought processes?

    1. hunkerdown

      When stupidity can no longer adequately explain some human condition, look next for malice and fiercely pulverize any that you find.

    2. tiebie66

      I would appreciate knowing exactly where and how the discontinuity arises, that is, the discontinuity between households and sovereign countries causing them to pursue different strategies. In the face of scarcity, one must conserve, the other must spend.

      I see it this way. There is a continuum between the state and the household. If the US can print to solve its fiscal woes, then the solution is for States to declare sovereignty and to print their own currencies. After that, counties can declare sovereignty and print their own currencies. Then, cities and municipalities can declare sovereignty and do the same. Then wards can follow. Eventually, every household can declare sovereignty and print its own currency to use as automatic stabilizer to solve its economic woes. So where is the discontinuity and how does it come about?

      The imperative for households to save and conserve under difficult conditions is simply a manifestation of a very fundamental law of physics – that of the conservation of matter and energy. I do not see how it comes about that Sovereigns are not subject to the same constraints. They can only spend on automatic stabilizers stuff that exist or that they have “saved up”. Printing extra currency does not create goods or services and cannot be distributed by automatic stabilization. Printing -does- have an effect, and a very real one: exactly the same as good counterfeit money has. An effect that proceeds via deceit, whether the deceit is legal or not.

      “A recession occurs when demand is seriously inadequate.” What causes the lack of demand?
      (i) debt that can no longer be serviced because of nonperforming ventures (malinvestments)?
      (ii) debt that can no longer be serviced because of environmental constraints?
      (iii) demographic changes?
      (iv) a dearth of money in ‘circulation’ because most of it has accumulated in some corner of the economy and has been effectively been withdrawn directly and indirectly?
      (v) Other?
      In the case of (iv), the obvious solution is not to print more. It is the same as a trade imbalance between sectors of the economy. The accepted response, prescribed in a number of NC posts, appears to be to get the ‘exporters’ to consume more and work less instead and the ‘importers’ to consume less and work more (by way of illustration: in the US, the rich have to consume more and work less, and the poor must consume less and work more). Instead, the calls for automatic stabilization is akin to getting a supranational entity (e.g. IMF) to create money and spend it to support flagging demand in an importing country. And there is no need to give the IMF’s money back – after all, it is “sovereigner” than a sovereign. It can just create and spend it into existence. No? Or are there actually two discontinuities that neatly carve the sovereign out like an epicycle?

      In cases (i – iii) the system needs to adjust, it needs to -change-, not be stabilized!
      In case (v)…

      1. zygmuntFRAUDbernier

        The OCED in Paris had a release of prognostications a few weeks ago. The Secretary General and the Chief Economist both spoke. There’s consumer sentiment and uncertainty. With people uncertain about their financial future, they’ll think twice about a major purchase; this would apply to the Eurozone. But the Eurozone trades with GB, the US and Asia. Besides that, there’s consumer indebtedness. Also, deflation, where prices decline, is really bad, so I’ve read. I think that’s probably true as it impacts spending and demand. I’m not suggesting deflation is happening.

      2. They didn't leave me a choice

        The difference is, that while any entity, even an individual, can create their own money, the trick is to get it accepted. And that trick is accomplished through taxation/violence. Taxation is ultimately what gives any money its value by creating an ultimate sink for the money. The reason that states don’t print their own money is that the politicians have given up their monetary sovreignty and are forbidden by law from creating their own currency. Ultimately this is enforced by the US military.

        The funny question is, and one which will ultimately exterminate the eurozone: where or what is the EU military?

      3. cawley

        This discontinuity arises between a closed economic system (the US) and an open system (households). (Yes, the US has international trade but it is a very small portion of our GDP.)

        If a household was a closed economic system, when one member cut it’s spending, another would see lower income. By your logic, the appropriate response to the cut in income would be to lower spending further – causing an even greater loss in income for the household. Conversely, if one member of the household has the capacity to spend more when another’s income (and spending) drops, they can maintain full employment for the entire household.

        1. tiebie66

          Scarcity of some resources can translate into scarcity of demand. By way of illustration, the baker needs water and flour to bake a bread. Now the well runs dry and water is scarce, but because the baker cannot furnish bread without water, he also cannot use flour. Thus demand for flour sags. The MMT prescription is for the government to print money to augment the flagging flour demand in the hope that it will fix the problem (no water in the well).
          Thus, MMT is still partly trapped in the Solow-Stiglitz fallacy: the baker can bake more bread, not by using more flour or water, but by using a larger bowl (i.e. more capital) and stirring faster (i.e. more labor). It amounts to a belief in ‘supernatural’ powers of money.

          1. run75441

            Hmmm:

            Labor has been supplanted in your example by other means. Further, the greatest growth in profits come from not manufacturing a product with Labor.

        2. LifelongLib

          MMT posits that economic activity is ultimately limited by natural resources, factory capacity, skilled labor, etc. If some lack of these is indeed what is causing a shortage, than simply ‘printing money’ (if that money is not used in ways that increase whatever is lacking) will lead to inflation. However this is not the situation we are in now. The current recession (and most in the last 100+ years) have been caused by lack of demand i.e. lack of money in the hands of people who want to buy what the economy is capable of producing. In this situation ‘printing money’ (really, having a government with a sovereign currency spend it into existence) in ways that increase demand is part of the solution.

          I personally think that taxing to redistribute money or (better) devising an economy where money goes to people who will spend it part of the solution also (maybe the MMT job guarantee idea goes to that?).

          1. Nathanael

            run: Capital *can* profit without labor, but it *cannot* profit without buyers.

            Remember that the capitalists count profit by how far ahead they are of their neighbors. If everyone had a magic replicator like on Star Trek, the capitalists still wouldn’t feel like they were “profiting”.

            The only systems where you can actually *profit* without buyers are feudalism and slavery, under which the serfs and slaves are simply ordered to give you a percentage of their production — and looting and raiding, under which you just steal it.

          2. tiebie66

            Indeed, this is somewhat like I understand it. But the implications are troubling, because a counterfeiter accomplishes, in principle, exactly the same effects (both in the presence and absence of factor constraints). Hence, perhaps (IIUYC), your preference for taxation as a means of token redistribution.

            The other troubling aspect is that the “lack of money in the hands of people who want to spend it”, as you put it, is beginning to look more and more like a trade imbalance (albeit an internal one) to me. The ‘exporters’ have the money, and the ‘importers’ want to spend it but don’t have it. Now imagine a ‘supranational’ body that creates money and spends it into existence so that the exporters can resume exporting and the importers resume importing.

      4. Paul Tioxon

        Your premise is false, there is no continuum from society to household. All other statements following are to be dismissed.

        1. tiebie66

          This reply is most certainly false: Catalonia can secede from Spain, no? And if it wishes, Barcelona can secede from Catalonia in turn. There clearly is a continuum. Or are the following statements too difficult to address, thus the continuum needs to be denied?

          1. Calgacus

            tiebie66: Yes, you are right there is something like a continuum. But the question you are asking was asked and answered by Abba Lerner long ago in 1951, in what is in my opinion still the best book on MMT, The Economics of Employment. I’d say Wray’s 1998 book is a close #2, and Dudley Dillard’s 1948 book on Keynes is #3. (Mosler’s stuff is great, but I think of it more as pamphlets, rather than books).

            The question boils down to: if Functional Finance (=MMT) is so dandy, why shouldn’t every province, every state, every city, every little village etc issue its own currency? The answer is, this makes sense down to the level of an economic unit where there is truly free movement of labor. So, since USAns really do move around, it makes sense to have one currency. Since Europeans don’t, it doesn’t really. Lerner’s observations were later developed into Robert Mundell’s theory of Optimal Currency Areas, but in a neoclassicalizing way, and so Mundell became one of the academic cheerleaders of the Euro monstrosity. The ironies of history: You couldn’t make this stuff up.

            As for your baker/flour/water example above (cawley’s answer is very good too) – it fails because the MMT prescription is a JG to – find more water. Not really to bid up flour prices – although stockpiling it against a future flour shortage/ water surplus is not crazy, and in a realistic economy with more than just flour & water, would help the economy through the “multiplier” too. If there is no possible way to find more water or whatever, MMT won’t help, because it ain’t magic. It only looks like magic because monetary economies tend to be run so idiotically, son insanely. MMT is just Forrest Gump level wisdom: Don’t do really moronic things, like disemploy people.

            In the face of scarcity, one must conserve, the other must spend. You’re asking good questions. But phrasing them exactly right, the main step to getting the right answers is yet more difficult. The answer is that both have the same response in the face of scarcity: what you see as “the other” (the State) “must spend” is actually the state conserving, investing, saving. Public investment when private investment fails is the only way the state, the ONLY logically possible way it can “conserve” – and it can only occur by Spending! Wray has some good quotes somewhere from John Fagg Foster (I think) that are precisely to this point.

            My general point is that there really, really is an answer to your questions and objections and observations somewhere within the MMT/Institutional/Keynesian corpus. But they aren’t always in the forefront, in the most common places. They could & should do better, but perfection is not for human beings. So you have to give them something of the benefit of the doubt to get the basics down first.

            Last, as to your comment Printing extra currency does not create goods or services – the whole point is that this is wrong: YES IT DOES!

      5. NaluGirl

        You make an assumption that I see far too many people, including economists, make. That is equating economic theories with natural law. Gravity works, whether you believe in it or not. Money and monetary theories,are something we made up and agreed to believe in and it works, until it doesn’t.

        1. tiebie66

          The problem is that economics functions within a world wherein natural law also governs. Specifically, ‘land’ and ‘labor’ are both subject to natural law.

          But not capital. Capital is subject to supernatural law. (Just semi-jokin’ and semi-sarcastic about the last bit…)

          1. LifelongLib

            Re land and labor, up to a point it’s true they’re subject to nature. But we humans have a lot of choice about how we nurture and utilize them.

        2. joebhed

          Yes, but does that mean there should not be a relationship between economic theories and natural law, Nalu?
          From the person credited as the founder of both ecological economics and social science, I offer : “The Bearing of Physical Science Upon State Stewardship”, by Dr. Frederick Soddy, Nobelist n Chemistry.
          http://habitat.aq.upm.es/boletin/n37/afsod.en.html

          Thanks.
          For the Money System Common

  3. abelenkpe

    Might be easier to start a new party to the left of older, well-off third way democrats. Recently had my life long democratic aunt and uncle tell me that chained cpi was a good idea because it would only effect my children. Funny that doesn’t seem that different from what Paul Ryan was proposing: make cuts in social programs for future generations who then get to work longer and pay more for less.

    1. different clue

      Well, if we can’t prevent chained CPI from getting passed at all, lets at least try our very hardest to make very sure that it gets retro-passed and retro-calculated and retro-applied against people on Social Security right now today. People like your life-long Democratic aunt and etc. most of all.

      1. MyLessThanPrimeBeef

        Wanna save the proletariat?

        GDP sharing and wealth tax.

        Yes, GDP sharing where university bosses and party bosses make the same as janitors and dishwashers.

        Sincerely,

        A member of A.S.A.P.

        1. MyLessThanPrimeBeef

          I mentioned party bosses because we are not communists after all.

          We Sharists believe everyone gets the same equal share from the pie, or the pyramid.

          By the way, say no to upside down pyramids.

          1. ebear

            Sounds too much like Sharia. People are confused enough already. Why not just call it what it is: Communism. Or is Sharism entirely voluntary? If so, how do you deal with defectors? Don’t share with them? Seems to me we already live in that world.

        2. JamesW

          Now hold on there a minute, MLTPB!

          Are you suggesting there’s something illogical about certain individuals being born owning thousands and millions of acres, or other being born into special families called “royals”?

          Next you’ll be questioning why only specific banksters have the divine right to create money!

          1. MyLessThanPrimeBeef

            yes, and you can call me a Sharist, but just don’t call me a communist.

            We don’t believe party bosses should take bigger shares.

    1. scraping_by

      It’s a start. Not a good start, but a start.

      Like ‘do no harm’, at least it sounds benign. The fact it’s not doing what needs done may be the best substitute for doing the wrong thing.

      1. Hypothetical_Taxpayer

        Ya? TPTB marching towards Neo-Feudalism and “progressives” have no idea where to progress to?

        LOL

      2. MyLessThanPrimeBeef

        A wealth tax is the most direct approach to the problem we have.

        No doing it is the best substitute like you say. That’s why we get the substitutes like money printing and government spending tricle down.

        Let the 99.99% share the money, share in the GDP, and let us trickle up, down and out.

        1. Hypothetical_Taxpayer

          Wealth tax,luxury tax,estate tax and close trust fund loopholes all would help capture and re-distribute personal wealth.

          More progressive income tax.

          Close corporate tax loopholes.

          These are all things the guv has the power to do right now and none would have a negative impact on the economy. That has been known by “liberals” and that flavor economist for a long time.

          Increase tariffs on imports. This will force corps to refigure outsourcing, and raise revenue until they decide to invest directly in the USofA. (besides new marble floors for headquarters)

          Then on to more elusive goals like World Peace, Single Payer, and Negotiated Drug Prices.

          And who knows, maybe we can get an education for less than a hundred grand?

          1. MyLessThanPrimeBeef

            You can have a smaller pie, or a smaller pyramid by working to remove wealth inequality, instead of escalating the war on Nature.

            Here is your parallel:

            To divert attention from domestic problems, you start a war Ior police action).

            To dveirt attention from wealth inequality, you start a war on Nature by propaganda about needing more economic growth.

            S
            O
            R
            R
            Y

            We have enough wealth already. The problem is it is not distribuated fairly.

            To distract everyone from the simple, yes, I say, SIMPLE and direct solution of wealth tax, they give you fiscal and monetary stimulusessssss.

            I say, stick to domestic issues and leave the rest of the world alone and stick to wealth inequality and leave nature alone.

            In fact, we can use a smaller economy, one that is our ‘natural economy,’ without people being brainwashed into consuming not to meet needs but to fulfill desires and yet the 99.99% are better off than under a bigger economy.

            The saying is this:

            A tiny slice of a big pie is not as good as a fair slice of a smaller pie.

          2. Hypothetical_Taxpayer

            You must be on the strong tea today, MLTPB.

            Actually, maintaining a stable, nature friendly environment is going to cost money, so that does show up in GDP.

            It all fits the current system, we just need to realize we are paying for a livable environment as one of our consumer goods and services and that money came from the SUV budget or somewhere.

          3. MyLessThanPrimeBeef

            I first suspected they spiked the office tea pot with midichlorian but when I last checked, mine is still on almost empty.

        2. Derryl Hermanutz

          Monetary inflation is the most effective form of wealth tax. If the government created its own non-debt money, e.g. by minting proof platinum coins in sufficient quantity to give every American with an SS number $1000 per month (for one year, two years, however long it takes), with the stipulation that indebted Americans must use their “free” money to pay down their debt before they could spend or save any of it, then the additional spending that this program caused would erode the value of accumulated wealth by devaluing the currency with CPI and asset price inflation. Poor people have no savings and would be inclined to spend most of their free money. Middle class peeople have small savings and large debts and would be inclined to paydown debt, which does not add to spending so does not cause price inflation (bailing out debtors in this way also bails out their creditors, the banking system, which is what Europe is doing right now by bailing out sovereign debtors: the bailout money goes to the banks as sovereign debt payments). Wealthy people are wealthy because they save their money. They would likely save their $1000/mo, which would offset the erosion of the value of their previous savings. Only very large monetary savings would lose value by this program, because the devaluation of small savings is less than the $1000/month that “everybody” gets. E.g. if you have $10 million savings and this program adds 1% to the inflation rate, then you are losing $100K per year of “wealth” but gaining $12K per year of “money” for a net loss to your wealth of $88k. $1000/month per American over one year is about $2.5 trillion. Obama is already adding $1.3 trillion per year in deficit spending, so $2.5 trillion would not generate much more inflation than we’re already seeing.

          1. MyLessThanPrimeBeef

            There is no need for more money.

            Just implement a wealth tax.

            It’s direct and you let the 0.01% know it by confronting them directly.

            GDP sharing – you are not begging. You’re not on someone’s charity. We share. And we put in whatever hours and we work because we are passionate about what we do, under GDP sharing. No one owes no one self. No government the All-Mighty father above. Take the step. Trust yourself. Free yourself with GDP sharing, wealth tax and single payer. I

        3. Nathanael

          A wealth tax would work. I’d like to make a technical suggestion, though.

          Taxes on assets and wealth can cause weird results, economically. Distortions caused by lack of liquidity. For instance, with a wealth tax, someone who owns a big factory would have to pay a percentage of the factory’s value every year. But that percentage might be something which the owner does not have in liquid form. To pay the tax he might have to break up the factory or get a loan — both bad.

          When you have something bad (like pollution, or concentration of riches), you need to have a “Pigovian tax” to tax the bad thing. But there is a strong economic argument for taxing the *first derivative* of the bad thing. For instance, toxic waste is bad, but we don’t tax the total toxic waste, we tax the amount of *additional* toxic waste produced during the year (pollution tax).

          Concentration of riches is bad, but instead of taxing the total amount, we should generally tax the *increased* concentration of riches. Hence: *drumroll*…. the INCOME TAX on rich people.

          I suggest a 99% tax on every dollar of income after the first $1 million per year. The plutocrats would see their wealth drained fairly quickly.

          1. ebear

            “For instance, with a wealth tax, someone who owns a big factory would have to pay a percentage of the factory’s value every year.”

            In which event there’d be no factories. As a factory owner, if I saw something like this coming I’d liquidate the factory and move my capital offshore, either to invest in financial assets which are harder to pin down (tax havens) or to build a new factory in a friendlier jurisdiction. The only way you’d get to me then is through tariffs, which tend to be politically unattractive, but even so, if you did manage to put them in place I’d simply develop alternative markets for my products. Or maybe I wouldn’t produce anything at all and concentrate on financial speculation instead.

            In the real world, every move has a countermove. You have to think these things through or you end up on the short end of unintended consequences, and those can be quite nasty.

    2. from Mexico

      And allowing superstition and ignorance to go unchallenged is a plan?

      Do you believe in witch trials too?

    1. MyLessThanPrimeBeef

      Here is the question.

      Which came first: Being a tax sovereign or being a monetary sovereign?

      One more question: Do we want to give up our tax sovereignty?

      Since we are founded on ‘No Taxation without Representation,’ I don’t think we should turn over our tax-sovereignty from the people to an inflation index.

      1. Susan the other

        +10 – an inflation index manufactured by banksters to keep the dollar strong… right. Watch Japan where the shit just hit the fan.

      2. ebear

        Your ability to tax the rich is inversely proportional to their ability to move.

        Helicopters are standing by….

    2. dcblogger

      not if it owes its debt in its own currency. If you have a fiat currency, AND you owe your debts in your own currency, you can never go broke. If you borrow in someone else’s currency, then yes, you can certainly be foreclosed on, just ask the noted fiscal expert Louis XVI.

      1. MyLessThanPrimeBeef

        That’s one way to look at it, going broke or not.

        The more relevant isuse, historically, is whether people can retain the trust.

        1. Nathanael

          Whether people retain trust in the currency has nothing to do with money-printing.

          It has to do with completely different things. For instance, a government which goes to war based on lies loses trust. A Supreme Court which steals elections loses trust. A President who ignores the Bill of Rights loses trust. A Congress which ignores the demands of 99% of the population loses trust.

          A government which hands out money to preferred cronies (bank executives) while withholding it from everyone else loses trust.

          Most of all, a government which fails to keep its people fed and employed loses trust.

          And that’s when monetary revulsion becomes likely.

          In contrast, a fair and equitable printing of money distributed fairly and equitably, *even* one which causes a lot of inflation, will not cause monetary revulsion or hyperinflation. We have a real-world example; France inflated away its debts in the 50s/60s (I don’t remember which). The French franc remained a popular and successful currency.

        1. MyLessThanPrimeBeef

          It doesn’t have to foreign military.

          It could be their own people who had enough of reckless money printing or wasteful government spending.

          1. Calgacus

            It could be their own people who had enough of reckless money printing or wasteful government spending.
            Except that there are essentially no (modern) examples of this, of governments recklessly overspending. The “had enough” is basically hyperinflation. This is always a result of supply problems involving a non-financial catastrophe, usually war. Latin American banana republic chronic inflation could maybe get close, but it also involved applying mainstream quackery like raising interest rates to “fight” – actually exacerbate – inflation, or indexation – another “remedy” that made the inflation disease worse. The prevalent modern disease is government grossly, recklessly underspending, not overspending.

            If it spends tax money, there is no new money. There may be no net new money. But there is always new money whenever the government spends, because government cannot spend tax money. Can a theater owner “spend” the tickets that the usher just took from patrons (& probably ripped up) – or is that almost always a crazy way of looking at it?

          2. MyLessThanPrimeBeef

            If we are talking inductively, then there is no problem until there is a problem.

            Again, governement spending is trickle down, from the government to corporations to workers.

            Share the GDP and the 99.99% can trickle up, down and out with their money.

            No need for charity.

            No need to beg.

            Kewp the dignity; because we share, it’s everyone’s money.

          3. MyLessThanPrimeBeef

            The government is not the all-might father above.

            It’s time we empower everyone, that’s you and me.

    3. Lambert Strether

      If it can, it’s not sovereign, right?

      I think that’s one way to look at the whole GFC — the banksters view this is an opportunity to take control of the fiscal policy of governments, world-wide. Then, if they wish to make the myth that a government is like a household come true, they will have the power to do so.

      1. MyLessThanPrimeBeef

        Lambert, sorry I didn’t get a chance to reply to your one of your questions before about the fallacy of composition.

        We have a fallacy of composition when, because it’s good for an individual to have more money, it’s always good for the system as a whole to have more money.

        Imagine, the government by fiat, declares a few extra zeroes to the currecy. The systme has more money now, but relative to each other, everyone is still in the same boat.

        Thus. it’s not necessarily good to say we have more private sector savings.

        On the other hand, there is no fallacy of composition to say the government is like a household, once we separate the dual roles of the government, one being the money issur (a fiduciary role placed upon the government by the people based on trust and can be removed by the will of the people, such as when the people transfer that to an ‘indepedent’ central bank) and the other being a money user itself.

        1. Nathanael

          The French government effectively added a few zeroes to the money by printing money to generate deliberate inflation in the 50s/60s. This was done to wipe out the existing “debts”. The result is that debtors were better off and creditors were worse off — in other words, more equality.

          It turned out great. There was no hyperinflation.

  4. JGordon

    That’s a beautiful theory you have there Mr. Balck, but the US is running 1.4+ trillion dollar deficits a year, and meanwhile my pay hasn’t gone up in almost a decade–while everything has gotten a hell of a lot more expensive.

    So that’s a great way to steal from the poor and give to the rich that you’re advocating there; by deliberately ignoring all the rampant corruption, wars, and the police state that all this monetarist non-austerity nonsense is funding you are implicity, and as far as I’m concerned explicitly, endorsing those things.

    1. MyLessThanPrimeBeef

      No to fiscal stimulses.s.s.s.s….. maybe it’s no to fiscal stimuli.

      No to more pigeon money print.

      Yes to wealth tax (forget progressive income tax, forget estate tax).

      Yes to GDP Sharing.

      That’s what I said – GDP sharing. Go ahead, call me a Sharist, but don’t call me a communist.

      A.S.A.P. – American Sharists Amalgamated Party. I am proud to say I am the first and only member…so far.

      By the way, I also belong to S.O.U.L. (Society of United Luddites) and A.S.S. (American Savers Society).

    2. scraping_by

      Inflation has more to do with monopoly than money supply.

      If economics were just an undergraduate course, elite control of material resources might be just another case to argue. However, the elite capture and then withhold, they’re going to bring up prices.

      Most businessmen are taught that price competition is destructive and to avoided at all costs. And far as I can tell, they’ve succeeded.

      Oh, and the flat pay is also a consequence of supply-side collusion. Think about it.

      1. MyLessThanPrimeBeef

        The way it is now, inflation is when the workers are paid more, not when gas and milk are more expensive.

        1. Nathanael

          This is correct. It’s not inflation unless wages are going up.

          Otherwise, it’s just… well…. bread and milk getting more expensive. This is a problem, but it’s not inflation.

      2. JGordon

        The national security state, the war industrial complex, “health”care, finance, the prison industry are all goverment-protected monopolies that can only exist thanks to the Federal Reserve and its infinite money printing. So I don’t understand why or even if you think that what you are saying is contradicting me. The monopolists own the government. Therefore expecting solutions to come from the government is a lot like expecting farmers not to feast on their fat, succulent, deluded chickens.

        1. MyLessThanPrimeBeef

          Don’t trust the government — from the 60′s.

          Actually, I would say trust but verify.

          In any case, this is my question:

          Have you forgotton to wear flowers in your hair?

          Have you turned into a yuppie?

          Have you lost all your hair? (for yours truly, I could use a toupee for those flowers).

          Say yes to small government.

          My small government is a laptop or an smartphone that computes the quareterly GDP/capita (i.e. everyone’s equal dollar amount paycheck).

          Embrace small government with GDP sharing.

          1. MyLessThanPrimeBeef

            We have a lot more in common with ‘the others’ (whoever they are).

            That’s why I made the ceramic piece ‘No Two Sides’ based on Moebius Strip (there is only one side).

            We must unite together (amalgamate, maybe), and I see a lot of flower children in tea partiers.

          2. Susan the other

            You are so right, Beef. Computers would do a much, much better job than politicians. They could be easily programmed and monitored, regulated and fixed.

          3. MyLessThanPrimeBeef

            If the idea is to share the GDP equally, if each of us get the same amount of pay and if we have single payer, that would eliminate a lot of social problems and a lot of government workers.

            Everyone then gets to work on what he/she is passionate about and not just merely to survive. That economic output ought to approach that of a ‘natural economy’ where people consume and accumulate wealth to meet their needs and not to fulfill their desires (for power/domination/vanity/etc).

            That’s what I mean by government the size of a small computer.

          4. MyLessThanPrimeBeef

            I think with GDP sharing, the economy will find its ‘natural’ size, but not collapsing from too many freeriders.

            Why do I think the latter?

            Well, unless I am wrong, or the 99% of our college gaduates or those with even more years in schooling are lying, I believe in every application you will find the answer, where the supplicant, sorry, applicant states he/she is applying not for self-enrichment but to better the welfare of mankind or something similar.

        2. from Mexico

          JGordon says:

          The national security state, the war industrial complex, “health”care, finance, the prison industry are all goverment-protected monopolies that can only exist thanks to the Federal Reserve and its infinite money printing.

          Phew! How can one argue with “logic” like that?

          To begin with, the Federal Reserve has no fiscal powers. The only thing the Federal Reserve can do is to lend money. It can’t spend money. That power is reserved to the congress.

          And you believe austerity is going to be invoked to cut spending for any of the things you mention? When donkeys fly!

          Have you not noticed that the very same ones who hold the things you mention to be sacrosanct are also the ones spreading the gospel of austerity throughout the land?

          1. JGordon

            Are you being deliberately obtuse or do you actually think that what you’re saying makes sense? Right now the Fed is funding nearly all of the government’s deficits. Without the Fed there to monetize government debt, the pig trough would rapidly dry up, and all the pigs in on Wall Street and in the MIC would have to go home and find something else to do with their time instead of slurping up public largesse.

          2. JGordon

            By the way, why does Wall Street et al. own the government right now rather than the People? The answer is because all this free flowing money coming from the private Federal Reserve bank allows Wall Street and whoever else gets relatively first access to the fiat credit to buy the government. And who sits on the board of directors of the private Federal Reserve bank Mr. from Mexico. Huh? Do you know?

          3. Hypothetical_Taxpayer

            Ben has officially confused it with QE. The Treasury sells new long term bonds to the primary dealers and they flip ‘em at a little profit to the Fed.

          4. from Mexico

            Ruben says:

            No, JGordon is pointing at the ultimate cause.

            No, JGordon is doing just the opposite of what you assert. What he is doing is pointing at the proximate cause, and claiming it is the ultimate cause. And by doing this, he gives our elected officials plausible deniability. Let’s place the blame for the things JGordon mentions — “The national security state, the war industrial complex, ‘health’care, finance, the prison industry” —
            squarely where the blame belongs: on the shoulders of our elected officials. To do otherwise lets our elected officials, the only ones accountable to us, off the hook. It allows them to slough off the blame for all these abominations on some unelected technocrat.

            There is really no excuse for the level of ignorance exhibited by you, JGordon and Hypothetical_Taxpayer for the most basic workings of your own government. There are ample resources on the internet that explain how money is created by our federal government and how it gets spent or lent into cirulation, along with the principles and history underlying this.

            In the United States, the “power of the purse” resides exclusively with the United States Congress. This is a law we inherited from English tradition, a hard-fought concession the English Parliament won from King Charles II in the 17th century.

  5. R Foreman

    Balancing the household budget is good.

    Balancing the government budget is tantamount to collapsing the economy.. government being the source of all the money.

    Everyone knows that starving half the country is the path to enlightenment and redemption tho.

    1. MyLessThanPrimeBeef

      Being a money issuer does not mean you are not a money user.

      The government is both because the people agree to it.

      The people can change it if the government abuses that privelege, and thus, from time to time, the central banking temptress was able to got the people to yank it from the government and give it to a central bank.

      But no mistake, as a money user, the government has to balance its book, money issuer or no money issuer.

      They are two separate roles.

      1. R Foreman

        Government is a ‘money user’ when it spends $$ into the economy.

        Without government spending there wouldn’t be any $$ in the economy, so it should spend prodigiously (until inflation says to stop doing so).

          1. R Foreman

            State and local governments spend tax money, since they’re not a currency issuer.

            The Federal Government doesn’t have to tax people to raise money, since it just spends whatever $$ it wants into the economy (nice racket having a monopoly on dollar creation).

          2. MyLessThanPrimeBeef

            Are you talking about what we have now or a model for the futre?

            I thought it was about description.

            Most people would describe it works with government gets approval from the people on how to spend and how much to tax.

            That’s how it works…at least how the people think the agreement is between the government and the people.

            Are you going beyond description?

          3. Ben Johannson

            There will always be a need for “new” money.

            Dollars exit circulation as people save.

            Dollars exit circulation via current account deficit.

            Dollars cease to exist as loans are paid back.

            Dollars are unprinted when taxed.

            To maintain healthy growth, government will always have to deficit spend in amounts that satisfy the savings desires of the non-government sector.

      2. JamesW

        You are making nonsensical comments, you do realize that the government doesn’t issue currency, it is the private banks which have the monopoly over money creation — the Federal Reserve System, established by legislation in 1913, along with the passage of the Sixteenth Amendment to collect the taxes to pay the interest to the banksters which issue the currency, also passed in that session was the oil depletion allowance and the tax exemptions and financial structuring of foundations, allowing for the hiding of wealth and ownership in those foundations by the plutocracy.

        Recall, please, that in 1694 the Bank of Englas was established along similar lines, with their tax law passed concurrently then as well, for the same reason. In the early 1700s, the banksters, now back and resident at the City of London Corporation from Amsterdam, the oldest existing corporation in the Western Hemisphere, would buy off the royalty with a classic S.I.L.O. move (sale in, lease out): leasing the choicest properties in London and outlying areas to the royals at the lowest possible real estate prices in the 1700s, to remain frozen at those prices in perpetuity.

        Don’t believe me? Easily verifiable, chum!

        As long as the gov’t, of the people, by the people, and for the people, can’t issue its own money, it is indicative that its really gov’t of the banksters, by the banksters and for the banksters.

        It’s not about the size of the government, it’s about who has the divine right to create money, and interest-bearing loans at that.

        1. MyLessThanPrimeBeef

          It’s government of the people issuing moeny responsibly.

          That’s the only defense against ‘independent central bankers.’

          At the end, it doesn’t matter how many tricks they have if we have GDP sharing, wealth tax and single payer.

          1. skippy

            GDP is part of the problem imo, why attach it to humanity+ (any living thing [vegetables included]) fate[s.

            Skippy… it is a “consumption metric”… is it not? This has been hashed out quite well on this blog… back in the day… eh.

          2. MyLessThanPrimeBeef

            That’s a problem, skippy.

            We could improve on that, though I still think we spread the the idea of sharing.

            Yours truly,

            one of the many (potentially) A.S.A.P. members

        2. MyLessThanPrimeBeef

          You’re right there about it’s not the size of the government.

          To me, it’s the size of the economy – it’s too big.

          We can do with a smaller economy and yet, still have the 99.99% better off if we distribute our wealth fairly.

        3. psychohistorian

          Thanks for this comment. This is my understanding as well.

          It sure would be nice if we could all get on the same page about whether the Fed and City of London are private or sovereign. It is like the class system and the inherited rich don’t exist, when they have been in control for centuries.

          1. Nathanael

            There are definitely hybrid things which are somewhere between “private” and “sovereign”. The Fed is one of them. These have always existed.

  6. Myr

    What a load of crap.

    Students do not remember ECON 101. It has literally no effect on their political views because all they remember is something vague about supply vs demand. Those freshmen are much more interested in getting drunk and laid. The starting point for this article is utter nonsense.

    1. scraping_by

      Then why do they swallow obvious nonsense?

      The education as disinformation model is part of the current regime. The teachers who went before were good and bad, but were mostly sincere.

      Everyone thinks through the same problems, it’s just the information used.

      1. Myr

        They only swallow the nonsense in order to regurgitate it in full and thereby get a good grade. That’s how college works. No one remembers the crap they were taught in ECON101. The premise of this article is nonsensical.

      2. Nathanael

        “The education as disinformation model is part of the current regime.”

        It sure is. There are studies showing that after taking Econ 101/102 type courses, the average students becomes more selfish, having been indoctrinated for a year with “greed is good” bullshit.

        Obviously not everyone falls for it, but many people are extremely suggestible.

    2. from Mexico

      Methinks the lady doth protest too much.

      If what undergraduate students are taught is of such little import, then why all the histrionics on your part?

        1. skippy

          Myr,

          So quick to personally slur without even a cursory search of this blogs bowels.

          Skippy… education indeed!

          1. Myr

            “So quick to personally slur without even a cursory search of this blogs bowels.”

            I’ve been reading this blog forever and I contribute so please stop with the false claim that I’m not familiar with this blog just to make yourself feel better.

            The insulting claim of “histrionics” where there was none was an insult that deserved a response in kind.

          2. skippy

            “make yourself feel better” – Myr

            There you go again, projecting. Anywho your argument… the starting point (snicker) “The starting point for this article is utter nonsense.” is a decree with out distincto, save getting drunk or laid. Observation or more projection, got any data?

            Actually the Econned indoctrination starts at birth via full psychological immersion, tertiary education for profit is just reinforcement.

            So I find your assertion completely unpersuasive and when when challenged “then why all the histrionics on your part?”, you have a dummy spat.

            Skippy… same thing I’ve been watching on Fauxnewbs… ideological implosion… grasping for Rove thunkit to dispel dissonance…

          3. Myr

            “Observation or more projection, got any data?”

            You should direct this question to the author of this article. The entire premise is that students are indoctrinated at school to believe in austerity and therefore something must be done! You go on to “decree without distincto” that this indoctrination begins at birth. Really?

            I find your assertions completely unpersuasive. Your assumptions as to my political bent, education, and TV viewing habits are equally laughable. Keep on grasping…

          4. skippy

            I’ve already provided my data point.

            RE.”Actually the Econned indoctrination starts at birth via full psychological immersion, tertiary education for profit is just reinforcement.”

            Methinks Mr Black does not go far enough ie starts at tertiary education, when its from birth.

            There is a preponderance of evidence globally which is easily available via the web. Now which school of thought has been doing the majority of injection over the last 40ish years?

            http://elsa.berkeley.edu/~rabin/peboth7.pdf

            Some psychologists cry foul as peers help advertisers target young consumers.

            BY REBECCA A. CLAY

            Ever since he first started practicing, Berkeley, Calif., psychologist Allen D. Kanner, PhD, has been asking his younger clients what they wanted to do when they grew up. The answer used to be “nurse,” “astronaut” or some other occupation with intrinsic appeal. Today the answer is more likely to be “make money.” For Kanner, one explanation for that shift can be found in advertising.

            “Advertising is a massive, multi-million dollar project that’s having an enormous impact on child development,” says Kanner, who is also an associate faculty member at a clinical psychology training program called the Wright Institute. “The sheer volume of advertising is growing rapidly and invading new areas of childhood, like our schools.”

            According to Kanner, the result is not only an epidemic of materialistic values among children, but also something he calls “narcissistic wounding” of children. Thanks to advertising, he says, children have become convinced that they’re inferior if they don’t have an endless array of new products.

            http://www.apa.org/monitor/sep00/advertising.aspx

            Skippy… “same thing I’ve been watching on Fauxnewbs… ideological implosion… grasping for Rove thunkit to dispel dissonance…” skip

            I was not projecting, just observing the dissonance similarity aspect. You try to refute an entire post over – when – the conditioning begins and then as a force multiplier add sex and drinking habits, hence the lack persuasiveness… *Load of Shit* indeed!

          5. Yves Smith Post author

            Myr,

            1. If you don’t know who “From Mexico” is, you are new around here.

            2. There have been several studies that have shown that studying economics makes people more selfish, so your derision is out of line.

          6. Myr

            Yves,

            (1) I’m not new around here. I’ve been coming to this blog for many years and actually send you money. So you are just plain wrong.

            (2) Do you not see the derision in declaring that progressives who don’t agree with you must have been indoctrinated in ECON 101? Talk about the pot calling the kettle black.

          7. jonboinAR

            Okay, you’ve got my curiosity up. Is From Mexico the one who used to comment as Down South? Also, while I’m at it, whatever happened to F.Beard. He (I’ll assume) disappeared suddenly. Is he okay, does anyone know?

    3. diptherio

      Reminds me of something I read somewhere:

      “If he is right, almost all of our…tools are obsolete…Almost without exception, past [economic] work is meaningless. Surely, before consigning centuries of work to the ash pile we should like to have some assurance that all our work is not truly useless. If we have permitted ourselves to be fooled this long…it would seem desirable not only to have more precise and unambiguous evidence…but also to have some tests with greater power against alternatives that are less destructive of what we know.” Paul Cootner, as quoted in Econned

    4. mafer

      What I remember from College Macro (3 years ago) was that several working class students were dogmatically parroting the common “wisdom” that a “government mandate” that Fannie and Freddie give out sub-prime loans was the cause of all of our ills.

      The class was divided between people who didn’t really care and right-wing ideologues. The people who just wanted to get through the class were the salvageable students, since the right-wingers were so immune to facts that by the end of the semester, I concluded that they were not ideologues, but rather opportunists who were wanted to verbally pleasure the dominant class. It was sickening.

  7. Brea

    Can anyone link me a good succinct explanation (text if short, or video or pictorial) of why a sovereign-currency nation’s budget is NOT like a household’s? I follow all the discussions here but would like something to share with the people I know (perhaps on Facebook) who just don’t read long and in-depth discussions. I’d like to be able to answer some of the simplistic stuff I see on Facebook and in casual discussions in a way that won’t bore people.

    1. Paul Tioxon

      The US Government issues the currency that you and I have to work for. The government does not have to earn anything, it is the self designated origination point of the money that you and I and corporations and state and local governments all use in the course of economic transactions. As the sole origination point of money, it is illegal for you or I or corporations, or the state and local governments to print their own money. They can’t print it, mint it or send an email to their bank and say put a $BILLION in my account. That is known as counterfeiting and fraud.

      So, the US Government can supply the entire nation with all of the money it needs to operate, it can also supply itself with all of the money it needs to operate, because it has the legal monopoly on money creation. When it creates this money, it does not have to trade or barter anything to put it into circulation, unlike you and me, who have to go out to work for someone or have clients who buy from us if we are self employed. The nation state is the historic creation of humanity over time which has developed the social order we now have. So, without the sweat of its brow, or back breaking labor, the nation state creates the money used by us all which we have to work to acquire.

      If there were some 3rd entity, beyond the nation state, where money would be created, we would then have to know by right and by what manner, that money was created. This would lead to a 4th entity, the same question and then an infinite regression, onto absurd lengths, which are simply not needed to explain how and why our country is different from our household. The government creates the currency which is circulated by the process we call the economy. Our household is embedded within the economy without the power to create money. Our nation is embedded in the economy, but is the creator of its currency which it and everyone else uses.

      1. Ben Wolf

        Paul Tixon,

        I’m sure Faraday thanks you in his heart, if not in type, for your explanation to him.

      2. Nathanael

        There were periods when gold mine owners basically had the power to create money, and nobody else did.

        This was such a powerful power that governments routinely spent a lot of effort getting control over the gold mine owners. This usually improved life for everyone except the owners of the gold mines.

      3. joebhed

        Sorry, but wrong on almost every point.
        Perhaps you call the private bankers who create all of this nations money the “government in fact” which would make what you said the truth of what happens.
        The only money created and issued (two monetary sovereign powers) by the government is coins. They are issued into circulation with benefit to the people.
        Currency notes are printed by the government, but issued into existencce in a banking transaction by the private side of the economy.
        Of course, 96+ percent of all the money in circulation is what we call bank-credit money, and its name imparts the source of both its creation and issuance, and therefrom its benefit, although its ‘regulation’, the third aspect of sovereignty, remains with the state.
        The part most accurate in your observation is that the government COULD create all the money needed for the national economy.
        All it needs to do is to NOT renew the Federal Reserve Act next year and instead adopt something akin to the Kucinich proposal for reform of the naional money system.
        http://kucinich.house.gov/uploadedfiles/need_act.pdf

        For the Money System Common

  8. Corinne

    This article has so many picked cherries it may as well be a pie, which is all it’s good for. The Guardian, Howard Dean and Andrew Stern. No other progressives? Surely there must be….

    Howard Dean? Really? When he became governor in 1991, Dean faced an economic recession and a $60 million budget deficit. During his tenure, the state paid off much of its debt, balanced its budget 11 times, raised its bond rating, and lowered income taxes twice. (http://www.governing.com/poy/Howard-Dean.html)

    Mirabile Dictu! (as Yves is overly fond of saying) Howard Dean ran a very progressive state using exactly the principles that Prof. Black says he should be deprogrammed for.

    Remind me again what Bill Black has run successfully using different economic principles?

    1. from Mexico

      It doen’t make any difference how many times you repeat the tautology, it won’t change the reality. A household or a state, which both lack monetary sovereignty, are not the same as a nation that has monetary sovereinty.

      1. Corinne

        Your comment would be more meaningful if you had actually addressed anything I said. The issue is not whether Vermont claimed monetary sovreignty, which it did not. It was Black’s ridiculous assertion that somehow Howard Dean requires “deprogramming.”

        Next time try a reply that gets a little closer to what was said.

        1. from Mexico

          The way to balance the [federal] budget is for Congress to cut Social Security, move the retirement age to 70, cut defense, Medicare and veterans pensions, while the states cut everything else.

          – HOWARD DEAN, “And politicians wonder why they aren’t trusted,” Newhouse News Service, March 5, 1995

          Upon becoming governor of Vermont in 1991, after the sudden death of then-Republican Governor Richard Snelling, Dean made a sharp turn to the right and pursued that course ever since. In his 11 years as governor, Dean would shift rightward on one position after another, all the while claiming to be concerned for the needy and less-fortunate, and disappointing all who thought they were getting someone who would govern from the liberal end of the political spectrum.

          Dean inherited a massive deficit in the state budget from Snelling. Refusing to raise taxes on wealthier Vermonters (and rendering the tax system more regressive than previously), Dean declared in his first State of the State address that it would be his mission to balance the state budget with some “tough” cuts. Even though Vermont has no law requiring a balanced budget, Dean promised, “The pain for Vermonters will be real.”7

          Dean slashed millions of dollars from all sorts of social programs, from prescription drug benefits for Medicare recipients and heating assistance for poorer Vermonters to housing assistance funds. In defending his cuts to social programs, Dean said, “I don’t think I have to shy away from that just because I’m supposed to be a liberal Democrat.”8

          Throughout the 1990s, Dean’s cuts in state aid to education ($6 million), retirement funds for teachers and state employees ($7 million), health care ($4 million), welfare programs earmarked for the aged, blind and disabled ($2 million), Medicaid benefits ($1.2 million) and more, amounted to roughly $30 million. Dean claimed that the cuts were necessary because the state had no money and was burdened by a $60 million deficit.9

          But during the same period, Dean found $7 million for a low-interest loan program for businesses, $30 million for a new prison in Springfield, VT, and he cut the income tax by 8 percent (equivalent to $30 million)–a move many in the legislature balked at because they didn’t feel comfortable “cutting taxes in a way that benefits the wealthiest taxpayers.”10 By 2002, state investments in prisons increased by nearly 150 percent while investments in state colleges increased by only 7 percent.11

          – KEITH ROSENTHAL, The Dean Deceiption

        2. Hugh

          The Clinton years were marked by a strong economic expansion as well as the dot com bubble. These helped to balance state budgets. There was also, feel free to correct me if I am wrong, a fair amount of gentrification of parts of Vermont as wealthier people from Massachusetts moved to the state. This too would make it easier to balance a state budget.

          The larger point though is that a state is a currency user while the federal government is a currency issuer. Very different rules apply to the two. A state is required to balance its budget. The federal government isn’t, and more than that, especially with regard to the problem of interest, should run deficits. The application of the economic principles that govern a state or a household (currency users) are incredibly destructive if embraced at the federal level (currency issuer).

      1. Corinne

        That I can’t tell you without further research but that information alone proves Black’s argument is fundamentally flawed.

  9. kevinearick

    did we learn anything?

    Open Source, Income Deferral, & Black/White Swans

    So, as we have sped up the system by employing the implicit internet, pushed out on the integral side, capital has imploded, into a shrinking two-dimensional box of vertically and horizontally challenged cats, incapable of maintaining the breeder reaction, resulting in a derivative short in its probability matrix, exploding income inequality, as measured by the Fed, leaving Wall Street’s HFTs in the dust.

    Assuming you have read something like Kissel, circa 86, you set up the algebraic equation with a ladder diagram on one side and a wiring diagram on the other, each with its own algebraic equation, leaving simple reduction with the matching algo to make capital transparent to any position you want, effectively eliminating its ability to seal its contacts to the mobility gateway coils.

    To simplify level dimensionality, take that 2D ladder diagram grid you see when you program a PLC into a 3D cube, and then make connections across the dimensions to create additional dimensions. If a single laborer jumps that start to temporarily make the coil contact seal, as a distribution outlier, the ‘stray’ is immeasurable to capital. Only if you allow others to follow and trigger the cascade counter is capital any the wiser. First you build out the new dimension and then you trigger the cascade to measurable income.

    Capital, being capital, employs, grows, the middle class to hunt you down, with increasing efficiency, replication, which slows down the scan in the pertinent areas. Effectively, it is going faster and faster in the wrong direction, eliminating its own recursive pathways as it expends energy to hunt you down, shutting down legacy mobility, which is why it has to bulldoze to keep real estate price inflation going, leaving more and more of the middle class on the outside looking in.

    The only differences between devices is perspective. As capital loses perspective, the flux available to the shrinking labor pool grows. Net, the critters have given up the ability to effectively raise families in return for a ticket to a rigged lottery, with 0 chance to retire in a McMansion with a BMW out front. At equilibrium, capital must pay effective parents to raise children, which is when small business, the opto-coupler, comes in to re-ignite organic growth, and re-start the motors of industrial production.

    By going virtual, capital has effectively cut its own throat, with miniaturized proprietary systems that the middle class cannot see or touch, and compounded the problem by eliminating the physical backups to ensure control, controlling less and less, shrinking volume, with more and more energy expended, increasing pressure, with no exit, until and unless you give it one. You adjust gravity accordingly.

    The trick, of course, is to bring the Cyclops to the cliff edge before waking it up, and then to let its reflexes do the work for you. At this point, Congress can delay itself right over the cliff or go back into its cave. Either way, it’s out of the way. The problem/solution in abstraction is losing sight of the hash table kernel, leaving runaway event horizon stacks.

    But what the hell do I know, I’m just a dumb laborer, which all of capital and most of the middle class is trying to prove is replaceable. Keep priming the pump, from the top, down, and good luck with that.

      1. kevinearick

        who in their right mind would automate nuclear and remove the physicals? that is momentum ignition counting down.

  10. rotter

    what is a “progressive” in our late post modern global finace capitalist hell? there is no such creature. Not within the bounderies of “establishment” “thought”.. Dean, the guardian, obama , pelosi frank etc., etc., etc., are just well paid publicists, personal assistants – maids and butlers of the global banking/finance cartel. The endless army of cable TV talking head simps are infomercial pitchmen selling “Oxy Clean” public policy. Unless we rise up and tear down their racket they will just go on this way.

  11. Eric L. Prentis

    I am sorry Professor Black, but your analysis is incorrect.

    Neoliberal economists, for 45 years, promote laissez-faire “free market” capitalism doctrine of reducing the size of government through deregulation, privatization of government services, and globalization. Neoliberal economists tell us that using now efficient markets to manage the economy, rather than politicians, will dramatically increase US wealth. However, recent scientific research and real-life economic results disprove this myth. Instead, evidence shows that deregulated “free market” capitalism policies are damaging the US economy.

    To learn more, please read my Economic Populist article, published on December 17, 2012, entitled, “WORLD-MARKET-STATE vs. DEMOCRACY: Why We Should Go Over the Fiscal Cliff.”

    http://www.economicpopulist.org/content/world-market-state-vs-democracy-why-we-should-go-over-fiscal-cliff

    1. from Mexico

      Neoliberal policy also prescribes currency boards (Argentina economic crisis), currency pegs (Mexico economic crisis), the use of foreign currency (Ecuador economic crisis) or the use of some other currency over which the nation has no sovereignty (Eurozone crisis).

    2. skippy

      Yes… deregulated – unregulated society is historically and scientifically absurd. So why do – some – believe – markets would function better if such was the case.

      Skippy… societal ideology is at least 5000+ years behind our present knowledge base and it only going to get worse… under the present theology[s.

      PS. Thank you for your blog, its been a great resource.

  12. Mark Oles

    This is utterly amazing when Keynsian Economists come out and bash austerity. They always say the stimulus is not big enough, or that a little inflation is a good thing… He is so right, the US didnt suffer ‘Meltdowns’, just the largest housing bubble in the history of housing. It’s amazing we didnt have two meltdowns…oh wait, you can’t, the market corrected itself. Government educated wonks like this Professor need to read books from the Austrian Economic rhealm, and Austrian Business Cycle Theory.

    1. skippy

      Austrian Economic realm, and Austrian Business Cycle Theory: religious axioms… cough master and slave theology.

      Skippy… Barffff~~~

      1. from Mexico

        I agree. Austrian economics has to rank amongst the most grotesquely pathological follies that the human mind has ever conceived.

  13. Jim

    “Progressives need to say “no” to anyone who wants to “bleed” the economy through austerity or cutting the safety net.”

    And once that happens it might then be worthwhile to question some of the assumptions behind the progressive mindset:

    What are the origins of the relatively new idea that one of the central purposes of the State is the improvement of all the members of society?

    How did society come to be viewed as an object that the State might manage and transform?

    Why does Progressive thought, despite its quite genuine egalitarian and often socialist impulses, seemed to have developed so little confidence in the skills, intelligence and experience of ordinary people?

    1. JTFaraday

      “What are the origins of the relatively new idea that one of the central pruposes of the State is the improvement of all the members of society?”

      You must have thought that one up just now over pizza and beer at the local tavern, because I ain’t never seen it.

      (I mean, jeebus. Who would clean the public toilets so the MMT-ers don’t soil their hineys on their way to their next public appearance?)

      1. Max424

        I ain’t never seen it either, at least not since 1980. And there’s the rub, possibly?

        “Who would clean the public toilets …”

        Pay me 18 plus full health and I’ll gladly do it. And do a good job, too.

        Cleaning up shit stains left by assholes is not that big a deal, if you remain humble.

        And humility is strength, I always say.

      2. Max424

        re: government working for the good of its citizens

        I ain’t never seen it either (certainly not since 1980). And there’s the rub, possibly?

        “Who would clean the public toilets …”

        Pay me 18 plus full health and I’ll gladly do it. And do a good job, too.

        Cleaning up sh*t stains left by assh#les is not that big a deal, if you remain humble.

        And humility is strength, I always say.

        1. JTFaraday

          No can do. Marshall Auerbach says his clean hiney is only worth $7.25 because he’s tasked with sending cheap labor to his free market masters and his fellow money managers in the MMT set who don’t intend to see their profits eaten up just because he has a moral problem with hineys that grow plump eating bonbons on couches.

          But, make no mistake. You will ensure his hiney is spic and span nonetheless. He’s not walking to his next public appearance with a dirty hiney for your sake!

        1. JTFaraday

          Clearly the Founders intended some people to provide the Welfare and for others to have clean hineys, and delivered on their intentions.

          Nothing’s changed!

          1. scraping_by

            Hm. So anyone depends on social insurance is the Enemy?

            The right wing bargain has always been ‘Let us steal everything you’ve got, and we’ll protect you from The Enemy.’ Turning the less fortunate into an active threat is a pretty good spin, if you think that way.

            And there’s this: them today, you tomorrow. If events knock down the former threatened payer into a threatening receiver, is the moral balance shifted and the virtuous become vice-ridden?

            Connections among us, one to the other. Invisible, if you don’t know how to look.

      3. Ben Johannson

        JTFarady,

        You might want to start headlining your comments: Angry Because I’m Wrong

        Always entertaining man, don’t ever change. People are always persuaded by potty-mouths.

        1. JTFaraday

          I take it the last time you cracked a “history book” was in grade school in 1950, at the height of the Cold War or something.

  14. Max424

    If I was the United States, I would borrow at the Fed.

    Smart move, right? Borrow at zero percent interest, park the money, and make a boodle, just like the all the INTERNATIONAL financial houses and banking conglomerates do.

    Poof! No more SCARY deficit. No more fiscal cliff-kabuki hysterics! And happily (or sadly, depending on your possibly, IDIOTIC viewpoint), nothing for the highly paid propagandists at CNN, CNBC, MSCNB, and (oxymoron alert!) Fox News to gab on and on and on about.

    Ah, but maybe the Fed has a rule, that it only lends to people and institutions it likes, and maybe the Fed hates the guts of the United States of America.

    Yeah, but who is richer and more powerful, the Fed, or my beloved United States of the purple mountain majesties and the MIC? Who would win in a cage match to the death?

    Well, apparently, the Fed is WAY richer and more powerful, and would easily slaughter the US in cage match to the death.

    Now, does this mean the Fed is a thousand times richer and more powerful than my country, I ask in sheep like fashion? No, not if you go by the free Federal Reserve cash given out daily to INTERNATIONAL banks, and the fractional money and psychotic casino bets created as a result. Then, we’re talking the Fed is a thousand times a thousand times richer and more powerful than the broke, busted poorhouse known as the US.

    In fact, if we were to sum up the relationship metaphorically, the Fed –and its buddies on its, INTERNATIONAL Favorite’s List– are to the United States, as a candle of anteaters* are to an unsuspecting ant colony, comprised of juicy, tasty, stupid, fiscally restrained ants.

    Note: Poor Bill. Not only is he not preaching to the choir, he’s trying to illuminate simple concepts for a mass of dim witted zombies that have misplaced the mental facilities they never had.

    *Yup, a pack of anteaters is called a candle. Although, anteaters seldom co-operate in numbers, unlike neo-liberals, who work in packs to swallow whole continents (and nation-states, and monetary unions, and principalities, regions, cities, townships, basically, anything that walks or crawls and has a tangible smidge of edible residual wealth).

  15. Hugh

    Came late and it has probably been said by others, but at some point we have to stop making excuses for our various opinion leaders. It is immaterial whether they believe the crap they are spouting. Their position as opinion leaders and the privileges that attach thereto mean they are supposed to see through cons faster and more clearly than the rest of us. The fact that they do not and that these cons just happen to benefit them and their class, at great expense to the rest of us I should add, show rather that they are in on the con.

    Saying that they have been programmed or that their beliefs are dogmatic essentially lets them off the hook. They are just mistaken. This completely ignores their responsibility (for which they receive their wealth, position, and privileges in payment) to get it right the first time, and failing that not to persist in and double down on their “errors”. How many times over how many years will it take us, and in particular Bill Black, to understand that screwing us is not an accident but the purpose of the exercise? Our elites, progressive and conservative, are not programmed, dogmatic, mistaken, or incompetent. They loot us because they mean to loot us. Of course, they do not call it this. They simply identify their good, looting, with the general good and proceed from there. For our elites, they are looting us for our own good. This is both crazy and sick, but we are just aiding them, and their looting, by making excuses for them, rather than holding them to account. It isn’t like they were wrong once or twice. They have made their careers out of being wrong, but nevertheless consistently benefiting individually and as a class from those failures. That is not incompetence. That’s design.

    1. JTFaraday

      “How many times over how many years will it take us, and in particular Bill Black, to understand that screwing us is not an accident but the purpose of the exercise? Our elites, progressive and conservative, are not programmed, dogmatic, mistaken, or incompetent. They loot us because they mean to loot us.”

      Well, there is no excuse for anyone with a “liberal” media platform when we had even the partly-Pete Peterson funded former IMF chief Simon Johnson telling us they were going to use the bank bailouts as an excuse to loot us way back in 2009:

      http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/307364

      This was in The Atlantic, and it made a stir. Of course the liberal chattering classes read it.

      There is also no reason for Bill Black to sacrifice his own framework for the self serving “theoclassical ignorance” framework of the UMKC “MMT” crew– which they primarily adopt because they believe it advances their careers as providers of the theoretical “corrective.”

      It apparently doesn’t matter to them that their theoretical corrective does not adequately address the historical realpolitik of what SJ calls “The Quiet Coup.”

      Indeed, shifting into the criminological (and political) framework does less than nothing for their careers– particularly their careers as the new progressive “litmus test” that they’ve been trying to set up amongst the internet crowd–because it is clear that “MMT,” defined as “merely that monetary system that we currently have,” is not only deeply implicated in the financial crisis, but is at the fulcrum of the financial crisis.

      It is also at ground zero of our permanent war on terror, and thus, on the growing police state grip on the domestic US.

      It seems to me that the MMT-ers and their internet fan-boys don’t want to accept that there may be something about such putatively unlimited financial power that democracy, particularly a democracy of financial dependents–which is what we are, as a working class nation– cannot control.

      Bill Black also has no excuse for abandoning his own criminological framework for the limited and limiting (pedantic) framework of the MMT-ers at UMKC because he has Michael Hudson down the hall, who, even more than SJ, has looked carefully at “Quiet Coups” all over Latin America and Europe.

      1. Aquifer

        Thanx for the very good piece from SJ – would be just as timely today, and, I suspect, will be tomorrow and tomorrow and …

  16. swendr

    All the classic signs of a pseudoscience cure are present:

    Try my cure. Didn’t work? Take a bigger dose. Still nothing? You must not have started soon enough.

    Nothing quite so ugly as a bunch of rubes swilling snake oil – asking for more even…

  17. Positively Cynical

    We can thank the Chicago School of Economics for pushing the neo-liberal economics, you know, Milton Friedman, et.al.
    I tend to think that maybe Naomi Watt’s theory of “disaster capitalism” has merit. Create the conditions for the disaster, blow it up and then harvest the bits and pieces. Or in this case blowing up the government social safety net further increasing economic inequality.
    Ah the old ghost of Salvador Allende and Pinochet following us around like characters from Scrooge.

  18. Carlos Millantros

    Had a great time reading the comments on this thread, critical thinking splatteeeeeerrrrrrrrzzzzz.

  19. backwardsevolution

    Voila, just print up more money! That’ll cure everything (sarcasm).

    The elite start the bubbles (with the help of government policies), then use the media propagandists to suck in the people and blow the bubble bigger. Then – surprise, surprise – pop goes the bubble. Rinse and repeat.

    Hello, when are you going to wake up? Don’t you think it would be smart to stop the bubble-blowing, stop creating inflation? In Professor Black’s last article, he stated he wanted “growth” back again. Well, fine, let’s blow some more frigging bubbles!!!!! That’ll fix things.

    The banks should not have been bailed out; the homeowners should not have been bailed out (of course, their motive is not to help the homeowners; it’s to help the banks). Pain is very helpful because it’s actually what makes people change their ways.

    You print more money and you screw people who have been prudent, who have saved and done without because you debase the money supply. Very, very selfish and unfair.

      1. backwardsevolution

        Lambert – once you strip away everyone’s agenda, you are left with the truth. The very people who caused this mess want to be bailed out. They want something for nothing.

        IMHO, Paul Krugman is as abhorrent as Milton Friedman. Why do you think Krugman won his pseudo Nobel Prize? Could it be because the elite saw that he spoke their language? The elite must be laughing all the way to the bank (no pun intended) as Krugman goes along with their game: “Yes, yes, keep those asset prices up, keep printing”. Nothing artificial there!

        It’s all a prop job. If not for the Federal Reserve propping up the house of cards, it would all come crashing down.

        Remove all of the agendas and what are you left with? It looks a lot different, doesn’t it?

        1. Lambert Strether

          Left my secret decoder ring at home, so no, I don’t know how it looks. To you. Aside from the “print money ZOMG” diatribe, which looks –and smells– like what it is.

          1. backwardsevolution

            Lambert – I don’t think you need your decoder ring because I think you understand perfectly well; you just don’t like the message.

            “That “logic” comes from assuming that nations are just like households.” Yes, we all know nations can print, and when they print they debase the currency. If households could print (for example, so many Smith or Jones dollars), they’d debase their money too.

            When you cause more money to be printed, you hurt the person who has worked hard and saved some of his hard-earned money throughout his working career, while you protect the person who took the risk, or perhaps took no risk at all (because he had no stake in the game, no money down).

            Who has the agenda? Who? The one who took the risk and lost or the one who didn’t play?

            What bankers are you working for? I ask this because you are advocating exactly what they want, you and Krugman. Do you think the bankers want austerity? Really? Austerity causes more jobs to be lost, which causes more ill-gotten houses to be put back on bank balance sheets. Then the Ponzi scheme really falls apart.

            What banks are you working for? Oh, right, this is to help the people. Yeah, right. Or is it to keep the Ponzi economy going without ever having to change anything?

            “Next bubble, please! Let’s crank this up again, just until I’m bailed out. Some more growth, please.” Yeah, that always works until it doesn’t.

            Krugman, Friedman, the whole lot of you, will be the ruin of the world.

          2. skippy

            @backwardsevolution,

            Debase currency[?], look out the window… the hole world is trying too.

            Skippy… stone, bronze, iron, steel… ages… that’s how it rolls. Now if you want to talk about allocation, finite resources, increasing background toxification, crooks using high level mathematics and physics to cloud the rubes minds, politicians in bed with Der Capital, well…. as of this moment they win – both – ways. Got that… they win either way. SO you better have… a better plan…. than hard money and guns.

          3. Ben Johannson

            Crediting accounts does not “debase” a currency, and your use of that particular word shows you’re thinking is still mired in the gold standard.

  20. psychohistorian

    A lot of heat and not much light here….sad.

    The brainwashing of the public by the rich has and continues to be overwhelmingly successful.

    “I don’t have an answer but know a flamenco dancer.” Phil Ochs

  21. backwardsevolution

    “The “Money Fairy”, that is, deficit spending and/or monetary games such as QE are exactly identical to a tax on the economy.

    Again (and I’m going to keep pounding this into people’s heads until I start hearing it on CNBS!) if you have 10,000 units of output (e.g. oranges, gallons of gasoline, cars, etc) and there are 10,000 units of currency and credit in total available in the economy to be used, the exchange rate is 1:1.

    That is, one unit of currency or credit buys one unit of production.

    Now press a computer button (as The Fed and Federal Government do) and increase the number of units of credit and currency (by “borrowing and QEing”) in the system by 100% to 20,000.

    If you happen to have 100 of those units of currency in your home you can now only buy half as many units of output as you could have before. In the best case, where the government evenly distributes that “created” money through the economy, you’re in the same place you were before. But you never see the “best case”; someone always get privilege, they get more of it than you do, and thus you see a real, tangible loss of ability to buy things.

    This is an act of pure redistribution, exactly as if you were taxed.

    Were the IRS to instead show up at your door with a gun, shove it up your nose, and demand 50% of every dollar you have in the house, the effect on your ability to buy gallons of gasoline would be very close to identical.

    But nobody talks about this, because were they to do so the public would understand “en-masse” what had been done to them — and that it was all a scam.”

    1. from Mexico

      backwardsevolutionsays:

      Again (and I’m going to keep pounding this into people’s heads until I start hearing it on CNBS!) if you have 10,000 units of output (e.g. oranges, gallons of gasoline, cars, etc) and there are 10,000 units of currency and credit in total available in the economy to be used, the exchange rate is 1:1.

      That is, one unit of currency or credit buys one unit of production.

      Now press a computer button (as The Fed and Federal Government do) and increase the number of units of credit and currency (by “borrowing and QEing”) in the system by 100% to 20,000.

      If you happen to have 100 of those units of currency in your home you can now only buy half as many units of output as you could have before.

      What backwardsevolutionsays regurgitates here is the tautology we hear chanted ad nauseum by the austerians. For instance, it was also repeated by tiebie66 in his December 29, 2012 at 1:54 am comment higher up on this thread:

      The imperative for households to save and conserve under difficult conditions is simply a manifestation of a very fundamental law of physics – that of the conservation of matter and energy. I do not see how it comes about that Sovereigns are not subject to the same constraints. They can only spend on automatic stabilizers stuff that exist or that they have “saved up”. Printing extra currency does not create goods or services and cannot be distributed by automatic stabilization. Printing -does- have an effect, and a very real one: exactly the same as good counterfeit money has. An effect that proceeds via deceit, whether the deceit is legal or not.

      So where does this dogma by which the austerian pathology lives or dies come from? Answer: It is Austrian economics. Here, for instance, is Ludwig von Mises writing in his essay “The ‘Austrian’ Theory of the Trade Cycle”:

      The material means of production and the labor available have not increased; all that has increased is the quantity of the fiduciary media which can play the same role as money in the circulation of goods. The means of production and labor which have been diverted to the new enterprises have had to be taken away from other enterprises. Society is not sufficiently rich to permit the creation of new enterprises without taking anything away from other enterprises.

      In an economy where there is high unemployment, idle plant and ample natural resources, the logical fallacies of this argument are self-evident. Mises makes no distinction between investment in speculation and investment in production, assuming all investment is speculative investment, and that the amount of production that currently exists is all that can be or ever will be.

      Other economists, however, such as Joseph Schumpeter and Hyman Minsky, make a distinction between entrepreneural productive investment and speculative investment.

      Here, for instance, is Schumpeter on entrepreneural productive investment:

      It is always a question, not of transforming purchasing power which already exists in someone’s possession, but of the creation of new purchasing power out of nothing….

      The entrepreneur…can only become an entrepreneur by previously becoming a debtor…. his becoming a debtor arises from the necessity of the case and is not something abnormal, an accidental event to be explained by particular circumstances. What he first wants is credit. Before he requires any goods whatever, he requires purchasing power. He is the typical debtor in capitalist society….

      Even though the conventional answer to our question is not obviously absurd, yet there is another method of obtaining money for this purpose, which…does not presuppose the existence of accumulated results of previous development, and hence may be considered as the only one which is available in strict logic. This method of obtaining money is the creation of purchasing power by banks…. It is always a question, not of transforming purchasing power which already exists in someone’s possession, but of the creation of new purchasing power out of nothing….

      J.A. SCHUMPETER, The Theory of Economic Eevelopment: An Inquiry into Profits, Capital, Credit, Interest and the Business Cycle

      And here is Minsky on productive investment:

      If income is to grow, the financial markets, where the various plans to save and invest are reconciled, must generate an aggregate demand that, aside from brief intervals, is ever rising. For real aggregate demand to be increasing, . . . it is necessary that current spending plans, summed over all sectors, be greater than current received income and that some market technique exist by which aggregate spending in excess of aggregate anticipated income can be financed. It follows that over a period during which economic growth takes place, at least some sectors finance a part of their spending by emitting debt or selling assets.

      And here is Minsky on speculative, or what he calls Ponzi, investment:

      Ponzi finance unit is a speculative financing unit for which the income component of the near term cash flows falls short of the near term interest payments on debt so that for some time in the future the outstanding debt will grow due to interest on existing debt… Ponzi units can fulfill their payment commitments on debts only by borrowing (or disposing of assets)… a Ponzi unit must increase its outstanding debts.

      Both Minsky quotes come from HYMAN MINSKY’s Can “It” Happen Again?: Essays on Instability and Finance.

    2. Ben Wolf

      That is, one unit of currency or credit buys one unit of production.

      Now press a computer button (as The Fed and Federal Government do) and increase the number of units of credit and currency (by “borrowing and QEing”) in the system by 100% to 20,000.

      If you happen to have 100 of those units of currency in your home you can now only buy half as many units of output as you could have before. In the best case, where the government evenly distributes that “created” money through the economy, you’re in the same place you were before.

      Sorry, but the Quantity Theory of Money is a neo-liberal myth, and you’re buying into it.

      Inflation, which is rise in prices, is not dictated by monetary aggregates. There is no correlation between money supply and rate of inflation, which you would know if you were interested in pursuing truth rather than spewing misinformation.

      http://static2.businessinsider.com/~~/f?id=4a39162b4b5437dc00253961

      1. backwardsevolution

        Ben Wolf – is credit “money”? It sure is on the way up, isn’t it? When more credit chases goods, what happens? Inflation. Easy credit (you know, when anyone who can fog a mirror gets credit) puts more money out there, doesn’t it?

        So the same old/same old continues, and through the FHA credit continues to be doled out to people who should never be able to get a loan, and these people chase goods and services, but this doesn’t cause inflation?

        Hello? Anybody home?

  22. backwardsevolution

    hermanas – a great deal of the 1% (including the banks, which are still insolvent) should have been forced into bankruptcy.

    QEing to infinity is all about propping up the banks and their assets.

    They could give a sh#t about the people.

    The debt is being unloaded onto the backs of the taxpayers. Has history demonstrated anything different? It’s always the same.

    1. skippy

      Banks and autonomous monetary sovereigns are not the same thing. Yeah they stuck it to the citizens, nothing new under the sun, especially during the gold standard… look at history!

      “It allowed credit to expand exponentially with no constraints.” – backwardsevolution

      You need some basics…

      http://en.wikipedia.org/wiki/Causes_of_the_Great_Depression

      Skippy… Personally I’m down with:

      The Debt-Reset Theory supported by the research of Steve Keen, Hyman Minsky, and Irving Fisher proposes that aggregate debt drives economic growth and thus economies must periodically reduce aggregate debt/GDP ratios in order to start borrowing again and fund future consistently positive GDP growth rates.[1] Thus, the cause of the Great Depression was 1) failure to address the private debt bubble accumulating during the 1920s, and 2) failure to appropriately respond to subsequent private debt deflation. The “reset” method advised by Steve Keen is large-scale debt forgiveness or direct payments to citizens, as other methods result in suppressed GDP growth rates. – snip

      My only addition would be environmental adjustments not yet fleshed out.

      1. joebhed

        skippy,
        good to hear.
        Minsky late took up with Fisher’s cure for The Debt-deflation Theory of Great Depressions and endorsed both full-reserve banking and public money, something the MMT school denies.
        Fisher’s work is founded on Soddy’s money ideas from a couple of decades earlier.
        While Keen’s modern debt-jubilee is ostensibly based on many of Fisher and Minsky ideas, he never addresses the real cause, which is debt-based money, privately-issued.
        We the people are the renters of our own money system.
        Debt-servitude prevails.
        While the Kucinich Bill (soon history) addresses the money-creation problem, it is the work of IMF researchers Benes and Kumhof that aims at a full solution to not only money-creation and debt-saturation, but also the toxic asset hangover from the financial crisis.
        http://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf
        Yes, it’s a slog.

      2. from Mexico

        skippy says:

        Banks and autonomous monetary sovereigns are not the same thing.

        It never ceases to amaze me how fervently the extreme right-wing has come to embrace Marxism.

        The conviction that the polity is always and invariably the handmaiden of capital is unadulaterated Marx.

        1. ebear

          “It never ceases to amaze me how fervently the extreme right-wing has come to embrace Marxism.”

          If you push something hard enough, it flips into its opposite. McLuhan pointed this out in the 60′s but people were too busy trying to figure out what he meant by “the medium is the message” to notice anything else that he said..

  23. backwardsevolution

    Ben Johannson – “…you’re thinking is still mired in the gold standard.”

    It’s “your” actually, not “you’re”. Yes, wasn’t that wonderful when the gold standard was abolished? It allowed credit to expand exponentially with no constraints. What a boon to the banks that was, but I’m sure it wasn’t intentional, was it?

    So tell me, Ben, is risk gone? The bond market no longer has a say as the Fed is buying up all of the bonds? Interest rates are artificially suppressed? Houses are intentionally kept off market in order to create a shortage? Banks keep loans on their books at a higher value than what they’re worth in order to appear solvent? Et cetera, et cetera.

    Is risk gone, or is it just gone for awhile? And Madoff goes to jail?

    1. Ben Wolf

      You seem quite confused.

      Yes, wasn’t that wonderful when the gold standard was abolished?

      Correct.

      It allowed credit to expand exponentially with no constraints.

      No, it didn’t. Stop peddling misinformation.

      So tell me, Ben, is risk gone?

      Risk is an entirely different issue than whether currency is linked to a commodity. You aren’t making a lot of sense here.

      The bond market no longer has a say as the Fed is buying up all of the bonds?

      Ah, an Austrian who thinks “market discipline” should rule the day.

      Interest rates are artificially suppressed?

      Not sure what “artificial” means, as rates have always been set by the central bank. Doesn’t really matter, if we abolished Fed involvement the rate would fall to zero on its own.

      Houses are intentionally kept off market in order to create a shortage?

      You’ve gone from railing against government interference in markets to suggesting government tell people when they must sell their assets.

      Banks keep loans on their books at a higher value than what they’re worth in order to appear solvent?

      It’s truly amazing how many trolls hit this site. The subject is that austerity is needless, but you bring up mark-to-market rules that Congress relaxed back in 2008-2009 for some strange reason. The two are not related, but by all means keep trying to derail threads.

  24. backwardsevolution

    “As long as I’m all right, I don’t care.” Well, they’ll come for you too. Wait until your property taxes go up and you can’t afford to pay them and you lose your property. Perhaps then you’ll care.

    Once things get really bad, do you think they’ll let you keep your land? Look at history – who owned it? Not the slaves.

  25. Hugh

    backwardsevolution says: “Pain is very helpful because it’s actually what makes people change their ways.”

    I assume this is a restatement of the libertarian idea of creative destruction and that if markets are left completely unregulated, they will self-correct. The problem though is that markets are never free, even unregulated ones. They are always run by someone, and then the question becomes for whose benefit? In the unregulated case, those who run them and those who benefit from them are one and the same. In the regulated case, if the regulation is not subverted by the rich and powerful, it is the public which benefits.

    Pain is not a successful teacher of anything for the very simple reason that those who create it are not the ones who experience it. The rich and the elites caused the present series of crises but they experienced remarkably little pain from them. Their net worths went down initially but these recovered as they quickly bailed themselves out. The rest of us, their victims, were not so fortunate. We did not create these crises. We suffered the worse of their consequences, and we continue to do so.

    You ignore wealth inequality in your analyses. Printing money, as you call it, to bail out the already rich and powerful is very different from “printing money” to bail out the public. In each case, printing money/crediting accounts effects a change in the distribution of wealth in the country. The only question, as before, is for whose benefit is this or should this be done.

    1. from Mexico

      Hugh said:

      Printing money, as you call it, to bail out the already rich and powerful is very different from “printing money” to bail out the public.

      Absolutely.

      Half-truths are the stock and trade of the austerians. Their sophistries have just enough truth to them to make them verisimilar.

  26. Chuck

    Bill,

    Certainly you do not subscribe to austerity, in that your economic security is tied to a government entity. Your solution is to print more dollars. That works fine for you in that you get a raise. The austerity that works is to cut the military. If you cut the military a trillion dollars there would be no deficit.

  27. Element

    Because deficits that are massively above REAL GDP, and printing the difference, and a lot more, makes so much more sense?

    Gez Bill, you and Billy Mitchell should get a room together with Ben, and have a deep and meaningful, and agree to agree.

    1. Lambert Strether

      It’s kinda like one of those old-time horror movies, a really cheesy one. Somebody says “printing money” and there’s this huge flash of lightning followed by doomy organ music.

      And the amazing thing is, that seems to be the only ritual incantation needed. The audience gasps in amazement at the bold stroke, or does not, and then breaks into a storm of applause, or does not. It’s like dealing with Obama Fans, except of course with non-trivial subject matter.

      ‘Tis a puzzlement!

  28. docG

    This is how we got into so much trouble in the first place, by listening to technical “explanations” of what’s what by economists like Bill Black, rather than exercising simple common sense.

    The silly idea that a nation can simply print as much money as it needs to pay its bills is right up there with the idea that “innovations” in the area of risk management have made economic meltdowns obsolete. Do we need to wait for the next meltdown to learn, as Alan Greenspan learned, that we were following a “flawed paradigm”?

    That said, I have to agree with Mr. Black as far as austerity is concerned. That’s not the answer either.

    What no one appears to notice is that the United States is not only the wealthiest country on Earth, but the wealthiest that has ever existed. The money is there — in abundance. What is lacking is the will to stand up to the plutogarchs who control the means of production and the wealth that comes with it. What is lacking is the willingness to see this issue in its correct historical perspective, i.e., as related to class struggle.

    1. citalopram

      Amen, class consciousness is the number one goal. How one goes about doing that is beyond me considering we have a mass propaganda apparatus, the likes of which the world has never seen.

    2. Ben Wolf

      “The silly idea that a nation can simply print as much money as it needs to pay its bills is right up there with the idea that “innovations” in the area of risk management have made economic meltdowns obsolete.”

      You’ve done nothing more than make an unfounded assertion.

  29. TC

    ==> “The U.S., the U.K., and Japan all borrow long-term (10 years) at interest rates below two percent because they have sovereign currencies.”

    Not really. It’s more like because the U.S., the U.K., and Japan are at the core of the imperial Ponzi scheme called “globalization.” If (actually, it’s “when”) the City pulls the plug on this scam, your analysis of “sovereign currencies” will fail. Rates are held down because if they are not, the global banking system instantaneously would blow out. Per the Guardian: was this crew once a backer of war criminal and mass murderer Tony Blair whose call for an end to the Westphalian system of sovereign nation states is harmonious with the Guardian’s misguided financial prescriptions?

    ==> “‘The “meltdowns’ that the eurozone nations have suffered ‘many times’ [are] because of the deadly vulnerability of nations that lack a sovereign currency to the toxic mix of recession, austerity, and the debt vigilantes.”

    Again, not really. The euro-tomb meltdowns have occurred because the imperial Ponzi scheme called “globalization” has been built through a credit creating machine employing an infinite multiplier whose private sector manifestation’s collapse in 2008 (once criminal rating agencies fully co-opted into the zero due diligence regime that is the shadow banking system could no longer be given garbage which to bless with a AAA rating) meant lenders of last resort needed to be coerced (a.k.a. “swindled”) into filling the void. As employing this coercion at the core of today’s imperial Ponzi scheme for the moment unwantedly risks blowing out the global banking system (has the memory of 2008 faded already?) prior to world war being launched (this aiming to provide the coup de grace to the Westphalian system), the need has been to “buy time,” this that the animators of al Qaeda occupying the White House and 10 Downing might soldier on (as we see in spades their handywork in Syria these days) and move to provoke World War with all necessary haste.

    ==> “[The U.S.] has not been thrown back into recession and it does not suffer Great Depression levels of unemployment. The U.S. budgetary deficit has been reduced at a record rate over the last three years.”

    I’m not sure where Black is buying his sophistry sandwiches, but I am positive he is being ripped off. Not suffering G.D. levels of unemployment? Oh, we’re supposed to buy into the Labor Department’s fudge-packed data? As for a “record rate” of deficit reduction, what is this, Black venturing to challenge Dimon to become the next Treasury Secretary? Truth is under the current arrangement of the U.S. physical and financial economy the U.S. Treasury is hopelessly insolvent, and we can thank Sir Greenspan for this sad state of affairs.

    Don’t get me wrong. I appreciate any critique condemning those whose idea of “progressive” is fascism. Yet the real issue is the quality of debt, such as can, indeed, make debt a blessing. Given today’s dynamic wherein an unprecendented mountain of debt has been created at the behest of a Ponzi scheme for which confidence has flown and will not soon return no matter how much liquidity and new debt is added, Keynesian notions are thereby doomed to fail (which fact, I believe, is as well intended per a Venetian-modeled oligarchy’s intention to destroy the Westphalian system of sovereign nation states).

    So how do we fight this? First, and foremost, in the face of 20 dead children, any woman who is not at least once daily calling the White House and SCREAMING how can the president propose cutting the budget for mental health services in the face of mass murder occurring with increasing frequency throughout the country, well, maybe she is unfit for a vagina. My apologies for using such offensively pointed language, but the quality of debt is a serious issue that 20 dead children positively brings to the forefront of discussion, and if the mental health of our nation’s citizenry is not a priority, then this nation is unfit to survive and 20 dead children will not be the end of it.

    1. from Mexico

      Here we get the mirror image of backwardsevolution.

      The left-wing extreme shares two features with the right-wing extreme:

      1) The excessive pessimism that says that government is always bad and can never do anything worhwhile, and

      2) The marked departures from reality.

      1. backwardsevolution

        from Mexico – The left-wing extreme shares two features with the right-wing extreme:

        1) The excessive pessimism that says that government is always bad and can never do anything worthwhile, and

        2) The marked departures from reality.”

        It is you who does not see reality. You might elect your President, but he certainly does not work for you. This is what people do not see. Obama could give a sh*t about the people; he works for corporate interests (you know, the ones who put him where he is). Does anyone think that Obama would have succeeded otherwise, an unknown from Illinois? Come on!

        Government works for corporate interests, plain and simple. If you happen to benefit, then fine, but whatever they do is for the express purpose of helping corporate interests. Take a look at the price of higher education. The government guarantees the education loans, the banks lend to anyone and everyone (as there’s no risk for them) – and voila, supply and demand – the price of education screams higher. Over a trillion dollars in college debt, anyone?

        Every single time the government gets involved, just ask yourself what corporate interest they’re paying off.

        1. Lambert Strether

          Question: Is it easier to make the people the source of sovereignty again, restoring Constitutional government, or destroy government itself? Seems the latter is the goal of some, given that government can never do anything good, but it would be nice to be clear.

    2. JTFaraday

      “First, and foremost, in the face of 20 dead children, any woman who is not at least once daily calling the White House and SCREAMING how can the president propose cutting the budget for mental health services in the face of mass murder occurring with increasing frequency throughout the country, well, maybe she is unfit for a vagina.”

      Wow. Thank goodness you have an a**hole. That way you can have a raison d’etre too!

    3. citalopram

      Chances are that screaming at the staffer will not reach Obama’s ears, and Obama won’t care either way. None of these people do unless their political careers are on the precipice. It is then that they’ll all morph into populists and ring in the New Year.

      It’s the same with these phony whitehouse petitions; it’s just a mechanism for you to waste your time thinking that they care, thinking that they make a difference when in fact it’s smoke and mirrors. It’s a prop.

    4. different clue

      Perhaps better than screaming at Obama staffers would be politely informing Dem-officeholder-staffers, especially DSenate staffers, that you will never vote Democratic ever again if any version of this passes at all.

        1. different clue

          I’ll settle for half the bonus points by saying I will vote Justice Party (like I tried to do last time) and giving THEM the money.

          But of course if the Democrats DO kill Barry McCatfood’s
          Grand BS Bargain, then I will give money to those Democrats who ACtually killed it. And if my Democratic officeholders were involved in cutting the Catfood Plan’s throat and bleeding its body out on the floor of Congress, I will vote for those Democrats again.

          After all, saying I will never vote for them ever again if they pass the Catfood Plan would imply that I will indeed vote for them again IF they KILL the Catfood Plan.
          Stick AND carrot.

      1. Aquifer

        Actually what i said to a staffer, who sounded quite young, when i called was that i wasn’t terribly worried about myself as i was rather old, but about her, as her benefits were the ones that would be sacrificed if her boss didn’t oppose these cuts – those bennies wouldn’t be there for her and her kids when she/they needed them ….

  30. Element

    Of course excessive usury, TBTF’s taking countries hostage and runing political coups, unbelievable corruption, ever accelerating debasement, jobs that are gone, would has nothing to do with the current systemic dysfunction?

    Sorry Bill, you’re just peddling shallow kool-aide with this nonsense, and thinking it’s an answer to anything at all.

    Irrelevant – dismissed

  31. Mista B

    Tell it to Japan. Perfect example of where indefinite QE and deficit spending leads. If you say that to a “Progressive”, though, be prepared for the following response: “We’re not Japan.” Makes as much sense as watching a Japanese man blow his brains out then picking up his gun, pointing it at your head, saying “It won’t hurt me because I’m not Japanese”, then pulling the trigger.

    1. Ben Wolf

      The Japanese lead longer, healthier lives than we do. What is it you think deficits have done to harm them?

      1. backwardsevolution

        Ben – Japan is in serious trouble. The only thing that kept them going was their strong exports, which are now falling. Plus they’re having a little problem with China.

        But don’t worry, Ben, I’m sure that huge deficit will help them (not).

  32. E.L. Beck

    “A nation that borrows in its own freely-floating sovereign currency is not a target for bond vigilantes.”

    But this is exactly what happened in the Clinton administration, forcing him to balance the budget. The difference between then and now? Investors have no real alternatives in terms of safe havens, and are forced to accept paying the gov’t for taking their money to weather the coming storm.

    1. Ben Wolf

      There were no bond vigilantes during the Clinton Administration. Interest rates increased because the Federal Reserve increased them from 3.25% to 6% in four years.

  33. knowbuddhau

    I’m thrilled to hear Prof. Black refer (at least 8 times) to myth, myths, and mythical, including, “The remarkable aspect of neo-liberal economics is that the power of its myth has survived for many progressives….” That’s what I’m saying!

    However, I also like what Hugh has to say, as well as ‘from Mexico.’ And as Positively Cynical points it, we have the Chicago School of Economics to thank for loosing Disaster Capitalism on the world (starting first in Chile). But of course, the CSE didn’t act alone. It was aided and abetted by the the federal government. The shock therapy applied to Chile was sponsored by the full force and credit of the US government.

    One of the things that strikes me as very odd is the unwillingness of some to imagine that those same forces would use the same wildly successful programs right here at home.

    Someone, somewhere, had to come up with this idea. The nefariousness of this idea, though, isn’t necessarily evident to people who, in later decades, have been subjected to indoctrination in neo-liberal econ classes. They might not know that they got, not educated, but myth-jacked.

    Of course, the whole point of the CSE/gov’t program isn’t to promote the general welfare; the point of Disaster Capitalism is dominance now, dominance forever.

    One of the lessons to be drawn from history is that there are basically four groups that comprise societies: the high priests, the warriors, the merchants, and the great unwashed hordes. Numerically, the hordes vastly outnumber the brahmans.

    This corresponds to the 1% vs the 99%. I seriously think TPTB have taken the foregoing lesson of history and decided to make it their model. They don’t see a need to promote the general welfare; on the contrary, they see a need to keep us in our lowly place. For our own good, of course.

    It isn’t just that a generation or two of econ students have naively learned the wrong lessons, lessons that just so happen to advance careers and ambitions. Whose idea was it to teach the wrong lessons in the first place?

    What is the natural history of the myth of austerity? Where did it arise, how does it function, who preaches and benefits from it?

    I like to call it Perkinsian economics, after self-confessed economic hit man, John Perkins. Is the economic hit job the default mode of the USG and its notorious partners in the so-called “international community”? Is the push for austerity another deliberate econ hit job?

    I certainly think so. See, the thing about the DoD’s drive for full-spectrum dominance (our official “defense” posture) is, they can’t assert it abroad if it doesn’t obtain here at home.

    They’re willing to spy on us, even assassinate us; what makes anyone think they wouldn’t myth-jack us to hell with austerian hysterics, and then stick us with the bill for our own oppression?

    That sound I hear is probably TPTB laughing all the way to the bank.

  34. Mickey Marzick in Akron, Ohio

    “A recession occurs when demand is seriously inadequate…”

    When is demand ever inadequate? Only when more “goods and services” have been produced than can be consumed because of inadequate purchasing power. And the source of inadequate purchasing power is? Unavailability of credit and/or insufficient wages. For the last 30 years the latter has been offset by the former, no?

    Now the credit spigot has been turned off or at least that’s the impression one is given. But any car commercial suggests that if you have a pulse you can drive away today – 0% APR, no down payment, no payments for the first three months or longer. Sound familiar?

    MMT [more money today/tomorrow?] is simply an attempt to borrow money to restore the “equilibrium” between supply and demand by stoking the latter. The mismatch is between production [supply] and distribution/consumption [demand]. In this respect, MMT is still within the orbit of conventional economics – the law of supply and demand – which assumes that “scarcity” will always be with us FOREVER. It never asks the more fundamnetal question: Is scarcity now induced more by nature or more by human beings who control/own the means of production? Are we talking more about natural scarcity or artificially-induced scarcity?

    Economic growth remains the panacea for MMT much like that for the willing penitents of austerity, progressive or otherwise. So why all the blather about either when neither confronts the underlying systemic issue: POSTSCARCITY. The mismatch in advanced political economies is between the profusion of goods and services absent sufficient income to consume them. Austerity is merely the smokescreen with which to legitimate the return to scarcity by curtailing production, wringing out any “excess capacity”. And many an environmentalist obsessed with global warming and peak oil, etc. is playing right into the hands of the austerians when it’s more an issue of quantitative growth versus qualitative growth in which equitable distribution is paramount. Equitable distribution is the decisive issue here and MMT remains fully within the “efficient allocation of scarce resources” capitalist economic paradigm. To pretend otherwise is nonsense. It’s more of the same… just austerity-light.

    Even the MMT proposal for ELR – employer of last resort – is little more than a jobs program to create more demand so as to restore the virtuous cycle, the equilibrium between supply and demand without any discussion of the social relations of DISTRIBUTION which would remain largely intact. Indeed, in an ELR policy format unemployment insurance wouldn’t be necessary because you’re working plain and simple, either in the public sector or the private sector. Of course those with sufficient means would not have to “work” much like now. That’s real progress!

    So instead of arguing the merits of MMT ad nauseam and getting nowhere because most Americans are more preoccupied with employment [eating] versus unemployment [hunger], why not concentrate on JOBS, something they can relate to? And if the jobs aren’t there because the “job creators” refuse to invest then ask why?

    Is it just possible that the only scarcity in an advanced political economy characterized by postscarcity is EMPLOYMENT – the conventional means on which consumption is based? And so long as we subscribe to this “belief” we reinforce the ideological justification – conventional economics – underlying neoliberalism? Isn’t it time to move beyond the very rationale for economics – scarcity – and begin to challenge its core assumption?

    Destroy the illusion of scarcity and what remains of orthodox economics?

    Destroy orthodox economics and what remains of liberalism and its more pernicious successor neoliberalism?

    Destroy both and what ideological justification is there for capitalism?

    1. Nathanael

      You’re actually very confused about MMT.

      MMT is explaining that “money” is not a limit. If we can get control of our government, we can print as much money as needed.

      So what is the limit, according to MMT? ACTUAL resource limits — lack of oil, lack of trained workers, lack of good agricultural land, et cetera!

      MMT is very compatible with actual environmental economics.

    2. Calgacus

      Mickey Marzick : And if the jobs aren’t there because the “job creators” refuse to invest then ask why? Asked and answered by Keynes & Minsky and their followers – investment theory of the cycle, and financial theory of investment.

      the underlying systemic issue: POSTSCARCITY. The mismatch in advanced political economies is between the profusion of goods and services absent sufficient income to consume them. Austerity is merely the smokescreen with which to legitimate the return to scarcity by curtailing production, wringing out any “excess capacity”. And many an environmentalist obsessed with global warming and peak oil, etc. is playing right into the hands of the austerians when it’s more an issue of quantitative growth versus qualitative growth in which equitable distribution is paramount. Equitable distribution is the decisive issue here and MMT remains fully within the “efficient allocation of scarce resources” capitalist economic paradigm. To pretend otherwise is nonsense. It’s more of the same… just austerity-light.

      Not at all. That’s what Keynes and MMT are all about – postscarcity – the problem of poverty amidst plenty. You’re right about environmentalists often playing into austerian hands. But ultimately, the problem of “efficient allocation of scarce resources” is a matter of how God set up the universe – and is not an artifact of the capitalist economic paradigm. Desirable, necessary goods and services don’t just appear when you wish for them. All that MMT observes is that the existing capitalist economic paradigm is fantastically inefficient and destroys colossal amounts of real wealth for no speakable purpose at all. That until we make the most obvious change to this crazy system – stop forcing people to not work – in essence, stop randomly imprisoning people by unemployment for no reason – that we are turning down a colossal free lunch. That in going from this predator capitalist paradigm it will very much seem that things will appear just by wishing for them – an index of how stupidly economies have been run.

      Is it just possible that the only scarcity in an advanced political economy characterized by postscarcity is EMPLOYMENT – the conventional means on which consumption is based? That is what Keynes and the real Keynesians and the MMTers have said ad infinitum.

      On the one hand, you are criticizing MMT & real economics for “not confronting” what it actually does confront – all the time – obsessively – incessantly. The solution is to read more and understand better.

      On the other hand, about the solutions which the comment seems indicate:
      Sorry, but such “bright”, “new” ideas are – very, very, old and stale. Every time a plutocratic oligarch seems them – he smiles. Basically, it seems a BIG (Basic Income Guarantee) is proposed. Sure I’m for a BIG. But it won’t work, cannot work without a real JG to protect it, which is thus infinitely more important.

      Even the MMT proposal for ELR – employer of last resort – is little more than a jobs program to create more demand so as to restore the virtuous cycle, the equilibrium between supply and demand without any discussion of the social relations of DISTRIBUTION which would remain largely intact. Very, very wrong. The JG goes to the heart of “the social relations of DISTRIBUTION”, which is why it is the bad guys’ nightmare. It’s very simple. In our current economies, there is nothing that an individual can do, as a matter of right, to obtain goods and services, no matter how necessary they are. Common human morality thus indicates that someone involuntarily unemployed has every right to rob those who have robbed him – to join Robin Hood’s Merry Men. But employing people as austerity-enforcers, thieves and jailers is not very sensible. Why not just employ everyone who wants to be employed at doing good stuff – at a reasonable living wage? This is a practical, solid, ineradicable way of ensuring sane distribution. And it is really the only way it can happen. A BIG – something for nothing – as a right- is inflationary and unstable and doomed. Unless there is a JG – something for something. Then both can last forever.

      1. Mickey Marzick in Akron, Ohio

        Calgacus,

        Thank you for your condescending tutorial. It was much appreciated. Clearly, I’m just not as well-read as you. Your admonition regarding more reading and research is well taken.

        But you missed my whole point when you imply that resources, natural or otherwise, are limited and that scarcity is somehow ordained by God. Jesus, I thought I was reading John Calvin – again! Let me ask you: Why would God design a universe in which SCARCITY inheres forever? Efficiency? Now that’s intelligent design… But who’s I don’t know? Lloyd Blankfein’s comment about “doing God’s work on earth” perhaps? But surely a well-read person like yourself sees the flaws in this argument. And if you don’t I suggest a bit more reading and research is necessary on your part. Max Weber or Werner Sombart might be a good start.

        While I do agree that goods and services must be produced before they can be consumed, your argument pivots on the inherent inefficiency of the allocation of those “scarce” goods and services [resources?] in the present system. Are they really scarce in an absolute sense and if not, why are they “scarce” in a relative sense? And EFFICIENCY is such a value-laden term dependent on individual interpretation and context as to defy objective analysis. The efficency argument is a bait and switch, deflecting from the issue of postscarcity.

        My argument is that the present system [advanced political economies] is not only inefficient but OBSOLETE because scarcity is no longer a “natural” constraint ordained by God/Nature but by human beings. It is the private OWNERSHIP/CONTROL over these “resources” that belong to us all that is the source of scarcity. Their presumed efficient allocation is merely a defense of the institution of private property – private ownership of the means of production to be more specific. And if MMT or Keynes repudiate this specific form of ownership please show me where and when. The last time I read either I found both still within the boundaries of this institutional setup and the inequality inherent to it, however much they propose remedial actions to ameliorate its “inefficiencies”.

        A job guarantee program merely reinforces the value system in which a person’s worth is determined by his/her “work” – his/her presumed contribution to society and the rewards commensurate with such activity, right? Or is it marginal productivity? And we wonder why LIBERALISM and its successor, NEOLIBERALISM, still persist in the hearts and minds of progressives like yourself?

        Was it Minsky [1986] or Wray more recently who suggested that with such a job guarantee program that the need for unemployment insurance would be unnecessary? Another inefficiency, right? When does this guarantee become a duty – compulsory behavior? Isn’t this the next logical step in the “no work no eat” environment of perpetual scarcity?

        I find MMT merely another bandaid in an effort to staunch the bleeding out of a dying, moribund economic system. If it facilitates the destruction of this illusion called MONEY and all the baggage attendant to it predicated on scarcity then it is a positive development. But to the extent that it requires cognoscenti like yourself to explain it to the rest of us – the illiterate, unwashed like myself – it’s just another sterile debate among academics and intellectuals confined to the blogosphere. If it doesn’t make it down to the boots on the ground it is useless.

        Perhaps if we reduced the workweek from 40 hours to 32 or less and shared the work, old working stiffs like me would have more time to read and become more erudite like you. But one of the interesting things about MMT or post-Keynesianisn discourse in general is that I have never even seen or heard any proposal to reduce the work week. Why is that? Perhaps it’s outside the scope of such grand academic theory but it seems to me that it reinforces my previous comment that both MMT and Keynesianism still fall within the purview of LIBERALISM and/or NEOLIBERALISM’s preoccupation with WORK – conventional economic orthodoxy – just the other side of the same coin. And so long as progressives remain mired in this preoccupation with jobs and work, forget about getting beyond scarcity because the race for “scarce” goods will continue with predictable results.

        Please don’t feel obliged to respond, I probably wouldn’t understand anyways and don’t want to waste any more of your time. Happy New Year!

  35. MG

    Too many comments to read all, but fiscal cliff, austerity is nothing but theatrics, Kabuki, as the so called progressive pukes seek long term changes to SS/Medicare. Only a democrat president, a fraud like Obama can pull this off.

    I welcome and await unrest and upheaval on a global scale as the dying democracies of the western white world turn more toward corporatocracy and neo-facism. Hopefully the new year will bring about this upheaval in any and all forms. As Bush said in 2007-8, I paraphrase, “you have to destroy a democracy in order to save it

    1. allcoppedout

      The Grauniad was once the Manchester Guardian and featured such as ‘The Screwtape Letters’. I haven’t seen anything worth reading in it for years beyond the letters page. Politicians show little sign of knowing how spreadsheets work let alone economics. My guess is they are conned by something much simpler than the neo-liberal fantasy and financial modelling, as are most of the rest of us. Fear is the real key.

  36. different clue

    . . . ” the Bowles-Simpson (BS) Commission” .
    The “BS” Commission. Very good. Worth meme-viralizing?
    The “BS” Commission. ( Bowles-Simpson).

  37. backwardsevolution

    Hugh – “I assume this is a restatement of the libertarian idea of creative destruction and that if markets are left completely unregulated, they will self-correct.”

    You assume wrongly. Who said anything about leaving markets unregulated? It’s deregulation that got us into this mess. I would bring back old regulation, then add some more. You assume I do not realize that this was the plan all along, to deregulate, lever up, and then party until they’re drunk. The elite and policymakers knew what they were doing. Securitization must end; make these banks hold onto every loan they make. Then they’d certainly loan differently.

    “Pain is not a successful teacher of anything for the very simple reason that those who create it are not the ones who experience it. The rich and the elites caused the present series of crises but they experienced remarkably little pain from them. Their net worths went down initially but these recovered as they quickly bailed themselves out. The rest of us, their victims, were not so fortunate. We did not create these crises. We suffered the worse of their consequences, and we continue to do so.”

    Oh, Hugh, pain is the only real teacher. The rich and the elite who caused this mess should not only feel pain, but they should be behind bars (including Eric Holder who is refusing to go after them), and they should be stripped of their assets.

    But what’s with this “victim” crap? I realize the bankers were the professionals and they made the loans, so they are more culpable, but to say that “we did not create these crises” is a real stretch. Anyone who bit off more than they could chew, anyone who speculated on short-term holding in order to realize a gain is guilty too.

    People listened to the realtors, the MSM, the elite, and got sucked down the tubes. No different than the carnival barkers of old. “Oh, I bought some snake oil and it doesn’t work” has been going on since the beginning of time. Is it fair? No, but it is what is. Accept your part in it.

    Self-reflection is a healthy thing. That’s where you get real and you realize YOUR part in it as well. (And notice I’ve said the bankers should be in jail).

    Many of you here just want to be bailed out, made whole (just like the bankers), given a second chance, when you should be marching on Capitol Hill to have the laws changed and stripping the guilty parties of their assets. You are not children. If you want change, get marching.

    1. Hugh

      I see so when a bank is robbed you would blame both the bank robbers and the bank’s customers.

      Banks had the expert knowledge and resources as well as the fiduciary responsibility to verify basic information about the loans they were making and assuming. Banks also had legal responsibilities to see that the subsequent securitization of these loans were done according to well established law. They didn’t do any of this. But we are supposed to equate their actions with those of ordinary largely economicly illiterate Americans. We are supposed to believe that several million Americans managed to perpetrate frauds on banks across the country. And we are supposed to say not only they weren’t victims but we are supposed to say to the nearly 30 million un- and under employed, and countless other Americans reduced to working crap jobs: this is your own fault.

      What I don’t get is how this is supposed to work. According to you, we are all guilty. At the same, time you counsel us to go out and strip the assets of the guilty. It sounds like the logical consequence of this argument is that we go out and strip our assets from ourselves.

      Like a lot of us, you do not like what you see, but I do not think you have put what you see together into a coherent analysis yet. I think this is why you are getting the comments that you are. One moment you are an Austrian, the next not. One moment you are railing against the banks. The next you are saying it is all our fault. All of these are elements, but they do not have the same weight, and a coherent analysis needs to integrate them.

      1. backwardsevolution

        Hugh – “I see so when a bank is robbed you would blame both the bank robbers and the bank’s customers.”

        What a ridiculous statement! I already said the bankers were the most guilty, culpable parties, but for borrowers to take no responsibility, none, is complete silliness. It’s called “eyes wide open”. If something looks too good to be true, usually it is!

        Were these children? Did they enter contracts as under-age minors? No, they entered contracts as adults. Children try to blame others; adults don’t.

        “One moment you are an Austrian, the next not. One moment you are railing against the banks. The next you are saying it is all our fault.”

        I am neither an Austrian nor am I a troll. The bankers/elite/government are the most blame-worthy, but the borrowers need to own SOME of the blame themselves.

        Hugh, people should be marching on Washington over what has happened, but they’re not going to if they’re just bailed out too. Then we will have more of the same over and over again.

  38. backwardsevolution

    Ben Wolf @ 3:20 p.m. – I think you are confused, Ben, or are you just another vested interest who wants the status quo to continue?

    So going off the gold standard did nothing? I said, “It allowed credit to expand exponentially with no constraints.” You replied, “No, it didn’t. Stop peddling misinformation.” Who is peddling, Ben? Perhaps you could enlighten us all and do more than just saying “stop peddling misinformation”.

    This is what happens when vested interests get on sites like this. They state “you’re wrong,” but say nothing more. They try to paint you as a buffoon, but don’t enlighten at all.

    I asked, “So tell me, Ben, is risk gone?” Ben replied, “Risk is an entirely different issue than whether currency is linked to a commodity. You aren’t making a lot of sense here.” I asked Ben a simple question, not relating to gold, just simply whether “risk” was gone, and Ben links my question to “a commodity,” then tells me I’m not making a lot of sense. This is how vested interests work.

    Clever, Ben, but you didn’t answer my question. I’ll state it again.

    Ben, without referring to gold, IS RISK GONE?

    1. Calgacus

      To horn in – yes, you are right that going off the gold standard made it easier for credit to expand exponentially. But it did not, not in a horror story way. It allowed desirable, real economic growth to continue, even when the whole world returned to superstitious gold-standard quackonomics, exactly when the gold standard was abandoned. It is as if Galileo seeing the moons of Jupiter through a telescope convinced everyone that the world was flat and the sun revolved around it!
      Private credit vs state credit expanded, which is the serious problem. Going off the gold standard made this problem easier to solve, less serious. But as a matter of historical fact, it was not solved, not even seen as a problem, but more of a desirable condition. But in practice it is desirable only if you are a depraved inhuman oligarch.

      Going off the gold standard just made money more what it always was, just removed a superstitious constraint, similar to a law that says a chicken must be sacrificed to make a contract legal, and then having chicken shortages cause economic collapses.

  39. joebhed

    I really appreciate Dr. Black’s fine work here in explaining the neo-liberal economic stranglehold against global academic freedom and discourse.
    And also his correct portrayal of Dr. Dean as a progressive wannabe.
    Turning that around will take volumes.

    But I don’t see the policy space being discussed in the comments laid out very clearly by Dr. Black. And Dr. Black’s observation require a little more understanding to be purposeful.

    Here: ““The Guardian, therefore, has no excuse for failing to understand a national economy like the U.S. that also has a sovereign currency…. A nation that borrows in its own freely-floating sovereign currency is not a target for bond vigilantes. It can and should spend considerably more than it brings in through tax revenues in response to a recession.”

    There is no process laid out by which a sovereign fiat-money nation “can and should spend considerably more than it brings in through tax revenues”, implying therefrom the need to borrow whatever spending is not covered by taxation.

    Later, Dr. Black offers this: “Nations with sovereign currencies can create money directly through key strokes on the central bank’s computer or by borrowing at exceptionally low interest rates during a recession.”

    The problem with getting a new progressive monetary paradigm out is that, except for copious public borrowing as an option, this is just not true. Keystrokes on a CB computer are not capable of creating new money. Above ‘diptherio’ offered this video of Chairman Bernanke’s explanation on the nature of reserves:
    http://www.youtube.com/watch?v=mWl6JI4KBTg

    Jump right to minute 19 and stay tuned for 4 or 5 minutes as the Chairman explains that massive new reserves do not increase the money supply, and thus why reserve-expanding monetary policy is not inflationary.
    This is diptherio’s quote of the Bernank above.
    “…the amount of currency in circulation has not been affected by these activities. What has been affected…is reserve balances…And so the banking system has a large quantity of these reserves but they are electronic entries at the Fed. They basically just sit there, they’re not in circulation.”
    Reserves that just sit there are no economic counterpoint to austerity.

    I hope Dr. Black receives this observation in the spirit in which it is offered.
    We do need a complete new progressive paradigm to replace the neo-liberalized brand of false and corrupted monetary economics.
    But, absent any truth to the claim that the CB creates the nation’s money by ‘keyboarding’ reserves, and absent the truth to the claim that the government creates money when it spends – viz, that there MUST be a positive account balance in the TGA BEFORE government can write a check – the ‘government-as-monopoly-issuer-of-the-currency’ is an emperor without clothes when we operate an exogenous debt-based money system.

    We NEED a clothed public money creating entity, and I’m still unconvinced that MMT provides one.
    Thanks.

  40. backwardsevolution

    Ben Wolf – “There were no bond vigilantes during the Clinton Administration. Interest rates increased because the Federal Reserve increased them from 3.25% to 6% in four years.”

    Bond vigilantes did not bend Clinton over? That’s not what history says.

  41. Andrew J

    I disagree that the provided excerpt supports the criticism of Mr. Stern. The implication is that the federal government should concentrate investment in infrastructure, education, and programs that promote general wellbeing, particularly during recession or prolonged periods of weak economic growth. Investment in infrastructure could possibly be the best stimulus, but the fact is that such investment is today being marginalized at every level of government. To any ingenuous individual who either has first-hand experience at federal agencies or has been on a super FOB in Iraq and witnessed egregious waste, the contention that all spending is essentially positive economic spending has patent flaws.

  42. Jim

    For anyone who is interested in what I consider a pretty good critique of MMT see the commentary (in numerous posts and articles) of JKH and Cullen Roche (of MMR fame) over the past few years. For example on May 31, 2012 in a post by Bret Fiebiger entitled “The International Dimension of Currency Autonomy,” Cullen Roche said the following about the MMT boys:

    “Your guys could learn a thing or two from Austrians. Here’s what Austrians do. They present their view of the way the world is messed up (mostly too much govt). And then they present their view of how the world could be fixed (gold standard or policies revolving around less govt). But they don’t try and claim that their gold standard position is perfectly consistent with today’s world. No, they know it is a totally different reality. That’s what they want. They want to shift the operational realities to hamstring the govt. That’s the whole point. Why are their followers so loyal? Because their argument is clearly defined and consistent.”

    “MMT, on the other hand, says banks mess up our world, but that banks are “public/private partnerships serving public purpose” and that we need to crush the banks so we can align their interest with that of the world we want. And they create this public/private obscurity to satisfy the alternative reality of a money monopoly. It is totally inconsistent. You can’t say you have the banks and they need to be crushed but that they’re also designed as is, serving a public purpose. This is such a blatant contradiction that it blows the mind.”

    1. Jack Parsons

      “But they don’t try and claim that their gold standard position is perfectly consistent with today’s world. No, they know it is a totally different reality.”

      “Why are their followers so loyal? Because their argument is clearly defined and consistent.”

      And non-verifiable because it will never happen. Because they have a magic “this is how it will be so wonderful” schtick, they do not have to rent a booth in the “Marketplace of Ideas”. This is the mark of a cult.

      And if someday Austrianism should come to pass, it will fail like all other ideologies, and the cultists will say, “Oh, they did not make it Austrian enough”.

  43. different clue

    Because I don’t have my own computer and computer time at my workplace computers is not for hours and hours, I sometimes can only “skimread now and deepread later” .

    While skimreading Bill Black’s post I notice that he features Howard Dean as saying that we should reject any panicky legislation and just go right “over the cliff”. Has Bill Black missed the wider political significance of Dean saying “let’s go right over the cliff” because of differences-in-detail between himself and Dean over what “might happen”? Is he not grateful for the political support for rejecting the Catfood Plan that Dean provides when he says it is no big catastrophe to go “over the cliff”?

    Well . . . I’m grateful for it. The whole point of the engineered so-called “fiscal cliff” was to advance the Disaster Crapitalism agenda by shock-and-aweing the fear-struck masses with the deadly threat of what will happen if we don’t adopt the Catfood Plan against the “fiscal cliff” right now. And Dean’s statement is counter-fear counter-mongering against Barry McCatfood’s “shock doctrine” fear the cliff noise-machine. So what is Bill Black upset about?

    If we can survive the BS Obama Catfood Conspiracy over the next few weeks and months, then we can try to tune up the analysis over the next couple of years after that. Right now we have to hose down the Grand Bargain with lighter fluid and set a match to it . . . if we can.

    1. LifelongLib

      Don’t know what your situation is Different Clue, but you can get a second-hand computer cheap (even for nothing) and download any number of free operating systems off the web. You don’t have to pay Micro$oft $1500. Sometimes the older computer is a little slow and the free software a bit clunky, but for internet use at least they’re OK. Of course you still need internet access (basic cable + $30 where I’m at) which can be an obstacle.

      1. different clue

        Thanks. Unfortunately, my situation is that I am a slowly de-hoarding hoarder in a small dwelling unit. Procrastinertia is the strongest force in my personal universe. When I blast open enough space to put a computer ( a REAL computer that squats commandingly on the center of a desk), then I shall get a computer and really start computering. It could be a while. Meanwhile, my situation is nobody’s fault but my own.

  44. Lambert Strether

    Serious question: Is everybody who uses the phrase [lightning flash; doomy organ music] “print money” seriously a troll or — it amounts to the same thing — an Austrian? If not, what’s the percentage? 95% troll? 50%?

    NOTE Sadly, the German hence Austrian word for “troll” is in fact troll. The plural, however, is trollen. So there is denotative hope.

    1. different clue

      The words and understanding “print money” are fairly widespread out here in society with or without specifically Austrian input. Since language guides thought by giving the thinker words to think in, which often amounts to channels to flow down; I found the info-bit that “troll” is German for troll to be very interesting. Why? Because the largest single ethnic-origin-of-claimed-ancestry in America today is German. I read that in the last census which asked this question and kept track of the answers, that rather more Americans claim German ancestry than claim English (Anglo-Saxon) ancestry. One might not see that too much in New England, but here in Michigan the German-ancestry presence is plainer than plain. And since America was strongly bi-lingual German-English until the antiGermanitic persecution unleashed by President Wilson during World War One, millions of people may still think in
      “GermanEnglish” to this very day. And if the traumatic fear of “paper money hyperinflation” still lives among these people, you could hear “print money” in all sincerity from all over.

      Of course, when the Tea Potty Pranksters say “print money”, they may be a whole lot less sincere.

    2. different clue

      Also, “troll” and “Austrian” are not the same thing. They are functional opposites, in fact. A “troll” wants to get your goat for the fun of it. An “Austrian” wants to convert you to its point of view.

    3. Calgacus

      Well, I am a rabid MMTer, and I use “print money” intentionally, a lot. I think that the academic MMTers made a colossal practical, rhetorical and pedagogical mistake by consciously deciding to not use it. (Bill Mitchell has mentioned such an agreed decision.) They are following Keynes, but a mistake of Keynes. They’re not following Lerner, who especially liked using “print money”. For reasons that are not just practical, pour epater les bourgeois, but theoretical. Noticed that Mosler started to change his mind and started using “print money” more a while back.

      On MMT rhetoric otherwise, I think they have done OK aside from a few such glaring mistakes, but the recent stuff about memes – well frames and memes is mostly just second-rate ersatz philosophy reinventing the wheel. And the popular MMT reframing is generally in the entirely wrong direction imho – prettifying – if one wants to persuade. I forget what them old Grecian guys called the rhetorical device – but for rhetorical – and more importantly, theoretical – purposes it is generally better to use the most negative words one can find to express such concepts – e.g. “Money is debt” is better than the equivalent “Money is credit”.

    4. Roland

      Well, we didn’t need Austrians to tell us that printing money can lead to bad results.

      Ill-judged money-printing is the only thing that could possibly redeem such a stupid idea as a Gold Standard.

  45. charles sereno

    Bill Black, Sir: There are those who consider you uncouth, with the manners of a union steward (yuck, horrors!). I wanna let you know a lot of us stand solidly behind you.

  46. backwardsevolution

    Lambert – and more of the same is better? Spinning around in a circle is better? Saint Obama, Holder, and the rest of the clowns in Congress and the Senate have really stopped these bankers in their tracks, haven’t they? Boy, they went after them and none of this will happen again, will it?

    Wait a minute, it will. Everyone will be bailed out, we’ll get more and more of that wonderful inflation to take care of the problem, and all will be well.

    You don’t want a change. You want a magic wand to wipe it all away, and then you want the status quo to continue.

    What vested interest or banker do you work for?

  47. backwardsevolution

    MMT = More Money, Thanks!

    As if “printing more money” is going to solve anything! Oh, it will for awhile, until the next calamity, but like sweeping dirt under a rug, the dirt is still there, isn’t it?

    Bill Black? Great man, I highly respect him for what he did during the S&L Crisis. But I don’t hear a huge cry from his followers for more of the same. No, the cry is for more “money printing” in order to bail themselves out. “Oh well, the bankers got bailed out, wasn’t right, no, but since it’s done, we want money too.”

    Instead of marching on Washington and correcting the bank bailout and insisting on tightly regulating the banks, you bit your fingernails and re-elected the buffoon who has done nothing to inhibit the banks. About the only thing Obama has done is brought in more laws to strip away your Constitution. Step out of line and you could be arrested and detained with no trial whatsoever. Now, that’s progress, I guess!

    Both the Democrats and Republicans work for the same people; they are one. It appears you are happily along for the ride, as long as you get something for yourselves.

    Much too narrow-minded.

    1. F. Beard

      As if “printing more money” is going to solve anything! backwardsevolution

      When banks create money (“loans create deposits”) they do not create the required interest nor do they recyle (spend) 100% of the interest they receive back into the economy. Hence, new money creation by the monetary sovereign (“deficit spending”) is normally REQUIRED to prevent at least some loan defaults or accelerating (non-sustainable) debt as the interest itself is lent into existence for even more interest. And apart from the required interest, since over 90% of the money supply is lent into existence by the banks and is destroyed as it is repaid to the banks then if new bank lending does not keep up with the repayment of existing debt to the banks then over 90% of the money supply will eventually disappear. And since people don’t want to borrow and banks don’t want to lend during deflationary times then we could easily get into a self-perpetuating deflationary spiral that would wipe out a good chunk of the economy and your paycheck.

      1. backwardsevolution

        F. Beard – thanks for your reply. I understand what you’re saying, but I contend that the system then needs to be changed. Perhaps it should not be done the way it’s being done?

        We’ve had the great sucking sound Ross Perot talked about with globalization. We’ve seen corruption, fraud, manipulation of facts get a hand slap. Tax havens have never seen more business.

        Perhaps it’s time for a change? Instead, what I hear people saying is just put more money out there and it’ll all be well, or just get “growth” going again.

        None of it addresses the underlying problems.

  48. JohnB

    The idiot msm talking heads and some of you doom and gloomers are just not getting it!

    Souvereign Govts (US,UK,Jpan etc) that issue their own paper currencies and spending (it) into circulation is NOT a debt but a means (or a tool) for payments and exchange for commerce of all goods and services of a nation. Hence, a souvereign Govt can not go “broke” involuntarely since they can create all the money they need to pay for their bills and obligations.

    Everything else is all fluff, politics, fear mongering, lies and misinformation, but… ofcourse you allready knew that.

  49. different clue

    As I read this post and the comments yet again, I realize this is deeply analytical material for the ages. I hope someone writes a crass, vulgar, and shallow post about the immediate problem of why so many progressives and liberals choose to mistake Obama for a progressive and a liberal. And why all these liberals and progressives are running right over the Buffalo Jump which Obama has set up just for them. And how the liberal progressive herd might yet be turned and directed to trample Obama and his minions under a million flashing thundering hooves.

    This post was not about that. I hope we get a post which is about that.

    1. backwardsevolution

      different clue – “…liberals and progressives are running right over the Buffalo Jump which Obama has set up for them.”

      I hope we get a post about that too. In fact, it should be the ONLY post day after day after day. Until people truly see what’s going on, they will continue to try to cure necrotizing fasciitis with a dose of sugar.

      They have been HAD!

  50. ebear

    Thought Experiment:

    If you redistribute all the wealth of the world evenly amongst everyone presently living, would we each live in:

    A – a fabulous mansion?

    B – a nice home in the suburbs?

    C – a modest apartment in the city?

    D – a rough hewn shack in the mountains?

    E – a cardboard box?

    1. docG

      I lived for a time in a society where things appeared to be roughly equally distributed. No one was poor. No one was wealthy. This was Tito’s Yugoslavia during the mid 1960′s. As far as I could see, everyone living in the small towns and cities I visited was in fact living in a fairly nice house. I didn’t spend much time in the countryside, so maybe some people were living there in shacks, I don’t know. I never saw any slums. Also, this was the only country I’ve ever lived in where I encountered no beggars.

      Everyone I spoke with spoke freely, no one seemed intimidated by the authorities. Most people seems reasonably happy and relaxed. This was NOT a consumer society. Few people had cars. But there was excellent public transportation. If I’d stayed longer I might have seen some things that disturbed me, but while I was there I did not.

      So, sorry, your experiment doesn’t sound to me as rhetorical as you may have intended. A relative degree of equality IS in fact possible — and it’s reasonable to expect it, if not demand it.

      1. ebear

        “So, sorry, your experiment doesn’t sound to me as rhetorical as you may have intended. A relative degree of equality IS in fact possible — and it’s reasonable to expect it, if not demand it.”

        Not meant to be rhetorical really, and I agree in principle with what you said. The problem is how do we get there from here? I’ve noticed that progress tends to occur over long time spans – definitely longer than a generation, although the rate of change is speeding up – no denying that. Nonetheless, most of what I read here and elsewhere consists of otters. We otter do this, or we otter do that, but with no practical sense of how to go about it. I suppose the fact we’re discussing it at all could be considered progress, although the method is somewhat lacking – no way to have in depth discussions here as the format doesn’t support it, so all you’re left with is drive-by attempts at irony, and just hope that someone gets it. Most of the time it fails, which could just be lack of skill on my part, but I have noticed that many poster here are defending a position, as opposed to elaborating one in concert. I wish I had the certainty they possess. Now I’m being ironic.

    2. Roland

      In the spirit of the question, my reply would be C minus, i.e. a kind of crappy apartment in the city.

      An equal distribution would probably be inefficient and the average lifetime real earnings might well be lower than they could be.

      But I would be okay with that. In my view, the bundle of goods and services known as “Social Equality” is highly valuable and worth paying for to have in itself. I would be willing to part with as much as 30% of my lifetime real earnings to enjoy the shared possession of “Social Equality.”

      Unfortunately I cannot go into the marketplace as an individual and purchase that very special bundle of goods and services. As yet, no entrepreneurs have found a way to offer that product in the political marketplace.

      But who knows, we might eventually see a burgeoning market demand for the “Social Equality” brand of goods and services.

  51. backwardsevolution

    ebear – if redistribution was ever seriously contemplated, so much so that it became a clear threat to the elite, a lot of us would live in:

    F – a casket.

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