Marshall Auerback: Time to Panic (II)

Posted on by

By Marshall Auerback, a portfolio strategist and hedge fund manager. Cros posted from New Economic Perspectives.

Today’s unemployment data suggests that we are experiencing something far worse than a mere “bump in the road”, as our President described it last month. In fact, if last month was the time to panic, as Stephanie Kelton argued here, then today’s data should create real palpitations in the White House. This isn’t just a “bump,” but a fully-fledged New York City style pot hole.

First the headline number everyone looks at: non-farm payrolls. Up 18,000 in June, the increase was 100,000 less than expectations. In addition the prior two month payroll increases were revised down by -44,000 overall. That’s weak – but not terrible.

Dig a bit deeper into the data and it looks absolutely awful: The household measure of employment fell by -445,000. Okay, it’s a noisy number. But, as Frank Veneroso has pointed out to me in an email correspondence, this measure of employment which is never revised now shows no employment growth over the last five months and very negative employment growth over the last three.

But it gets worse: The work week was down one tenth. Overtime was down one tenth. The labor participation rate at 64.1% was the lowest since 1984. The broad U6 unemployment rate rose from 15.8% to 16.2%. In other words, as Frank suggested to me this morning, “many other employment indicators in this report confirm the deep disappointment in the payroll series and the much more negative message of the household series.”

Are there seasonal factors which could explain this? Perhaps, especially in the gap between the BLS and ADP payroll numbers. But as Philippa Dunne of “The Liscio Report” suggested:

After the release, some bulls turned to that old reliable excuse – bad seasonals. According to one analysis making the rounds, had the BLS used last year’s factor – computed, of course, using exactly the same concurrent technique as this year’s factor – the gain would have been 221,000! (Whoever did this made a mistake by comparing the NSA and SA levels for the two months–you have to compare the over-the-month changes.) Still, if you’re going to play this game, you should be consistent, and apply last year’s seasonals to several months, not just one. If you do that, May’s gain of 25,000 would turn into a loss of 19,000, and April’s gain would be a mere 73,000. In any case, why should you do that? The seasonals are recomputed every month based on recent experience and calendar quirks, and should be more aggressive in a recovery. (Hope we won’t be using the trend set in the depth of the recession as the bar going forward.) Also, there is no adjustment to the headline number – the sectors are adjusted separately (96 different industries at the 3-digit NAICS level, to be precise) and the total is the sum of those components. The whole argument is bogus.

Many of us who contribute to this blog have been concerned about these trends for months. We expressed concern that the prevailing deficit hysteria and corresponding cutbacks in government spending (based on a wholly misconceived notion of “national solvency” or “fiscal sustainability” – whatever that means), would engender precisely the kinds of economic conditions that we’re seeing today. Unfortunately, the President, his ineffectual Treasury Secretary and Congress all remain in thrall of Wall Street Pollyannas and mainstream economists, who have continued to predict significantly above trend economic growth quarter after quarter after quarter.

Yet quarter after quarter after quarter growth has come in less than they expected. Why? Because of this persistent tendency to diminish the importance of fiscal policy and an irrational belief in the efficacy of gimmicks such as QE2. The reality is much more grim: Growth has come in at less than a 2% rate in the first and second quarters of this year, and instead of responding to the real crisis of unemployment, our policy makers remain fixated on deficit reduction, and cutbacks in “unsustainable” entitlement programs, in effect withdrawing even more income out of an economy steadily heading back toward the precipice of recession.

And with a deal on the debt ceiling likely to include yet more cuts in government spending, and a major squeeze on real consumer incomes from commodity prices buoyed by speculation to the point of manipulation, the Administration inexplicably continues to forecast, yet again, a resumption of significant growth, because its fundraising buddies on Wall Street continue to reassure them that this will be the case.

Not if we keep proceeding along the path we’re going down. Further declines a la Europe (where fiscal austerity remains fully in swing), gives some clue of where we are heading. Spanish retail sales have been a disaster. They were down 6.6% versus a year ago. That is much worse than the already horrible 4.4% decline during the prior five months. Spain’s unemployment rate is 21%. Greece, which has just implemented yet another round of cuts in government spending, has an unemployment rate above 16% and trending higher. And Italy is finally coming up in the headlines; per-capita income in that country has grown 0% over the last decade. Today the Bank of France put out their monthly business survey:

Industrial activity declined in June due to the weaker performance of the automotive, equipment manufacturing and other industrial goods sectors. The capacity utilisation rate fell. Order books were still considered to be above normal levels but appear to be in a less favourable position than in past months.” That’s the core, not just the periphery. It’s no longer just a problem of the “Mediterranean profligates.

The collective embrace of fiscal austerity has gone beyond perverse. It’s as if Josef Mengele was reborn as an economist, working on some weird new social experiment to inflict the maximum amount of damage on the maximum amount of people. It’s a sick variation on that old joke:

Patient: “Doctor, it hurts when I do this.”

Doctor: “Then keep doing it.”

Twenty eight developed governments have moved to get the oil price down to save the global economic recovery. Professional investors, speculators and fellow traveler manipulators have given these governments the finger over the last week and a half by bidding the oil price up. Given this report and the terrible front end economic data coming out of Europe lately, these governments had better find a way to keep food and fuel prices from taking off once again or its Great Recession Part II right around the corner.

But, hey, what’s the worry? Just a bump in the road! Let’s cut some more government spending (Social Security looks to be the next target) because of course the realization that we are “being responsible” about no longer “living beyond our means” will do wonders to restore confidence and get us out of the ditch in which 95% of the world finds itself. Or so our President will no doubt be telling us if and when he “celebrates” a deal on the debt ceiling. In reality, the only people who ought to be celebrating are the GOP hopefuls in the upcoming Presidential election, one of whom looks increasingly likely to turn Barack Obama into a one-term President.

Print Friendly, PDF & Email


  1. Mogden

    I guess it depends on your point of view. Telling the cartoon animal not to look down doesn’t make his situation any less precarious. The ridiculous levels of wasteful stimulus and bailouts of every criminal and cretin in the land have served to mask our true economic reality – we are poorer than we thought.

    1. alex

      “ridiculous levels of wasteful stimulus”

      Which part of the “stimulus” was wasteful? Tax cuts? Agreed.

      “we are poorer than we thought”

      Who is “we”? If you mean the average American, you’re right. And the Bush/Obama policies have helped to make it that way. If you mean the country as a whole, no. Corporate profits exceed pre-crash levels, banks which made insane bets have been made “whole” (you know, socialism for the rich). It’s a question of distribution, not aggregates.

    2. F. Beard

      The ridiculous levels of wasteful stimulus and bailouts of every criminal and cretin in the land have served to mask our true economic reality – we are poorer than we thought. Mogden

      While there has been some real damage to the economy a lot of problems could be solved with the cheapest thing in the world – fiat money – put in the right hands. Instead, it has been put in the wrong hands.

      Still, its not too late; it’s only money and there is an endless supply.

      1. jeff

        That’s right.

        The message that the American Working Class needs
        to hear, memorize and repeat–with their guns in
        their hands–is:

        “If we can create Trillions of dollars out of thin
        air to bail out the bankers and the wealthy, then we
        can create a couple more Trillion to save our
        pensions, social security, medicare and our essential
        public services…”

    3. Yearning to Learn

      The ridiculous levels of wasteful stimulus and bailouts of every criminal and cretin in the land have served to mask our true economic reality – we are poorer than we thought.

      agreed. But too bad we don’t reign in these. No, instead we should go after social security.

      also: not every criminal got bailed out and stimulated. Only the ones that occupy multi-million dollar corner offices.

      nice little sleight of hand.

  2. Sandwichman

    The bump in the road was last month. This month it’s “headwinds”. It is important not to read too much into any one monthly metaphor.

    1. Max424

      “It is important not to read too much into any one monthly metaphor.”

      Too funny.

      Until some honest bastard blurts out, “we’ve hit an iceberg, and we’re going to sink,” and a plummeting Dow forces the Beltards and media bulls to agree with him, it will hold true.

    2. KnotRP

      His presidency is transitory, not that the next bought-and-paid-for-winner will be any better….

    3. Seth

      How will Romney make an ad out of this month’s metaphor? “I am not a headwind”?

  3. Craig Austin

    Well-intended policymakers are only as good as their economic advisers. Economists are giving the wrong advice to policymakers because they misunderstand monetary operations. The objective should never be to balance the budget as a currency issuer. The objective should always be to optimize the budget. Fiscal optimization at any level of public spending requires balancing tax revenues with spending while running deficits at a rate corresponding to users saving rate. Government debt of a currency issuer is the currency user’s savings as a matter of double entry accounting. It is a digital resource – a digital account corresponding to all the savings of currency users’ in banknotes, deposits, and treasuries. For those of you interested I’ve outlined a laymen’s explanation here – DollarMonopoly .com

      1. rps

        “Economists Try to Explain How They Fumbled Jobs Number”

        I’m sorry but the headline has been updated, “Economists Try to Explain How They Were Caught With Their Pants Down”

        1. Valissa

          An econometrician and an astrologer are arguing about their subjects. The astrologer says, “Astrology is more scientific. My predictions come out right half the time. Yours can’t even reach that proportion”. The econometrician replies, “That’s because of external shocks. Stars don’t have those”.

          1. Paul Tioxon

            How many economists does it take to screw in a light bulb?

            None, they are self regulating.

            How many republicans does it take to screw in a light bulb?

            None, light bulbs are not in the Constitution.

        2. KnotRP

          The economists are more upset about being “stunned” than they are about the implications of being wrong for so long.

    1. monday1929

      “well-intended policy makers” ??????????????????????????????
      What part of Fascist rape don’t you and the author understand? Mr. Beard, you must vary your game. I will try to do the same.
      Good weekend all.

      1. monday1929

        And, by the by, we are in a Depression. No one should be surprised by bad numbers, only by good ones.

  4. Brian

    Seems like an echo chamber here these days. Especially the comments.

    MMT and endless government spending, for the win!

    1. F. Beard

      MMT and endless government spending, for the win! Brian

      Would you prefer a gold standard and endless raping of the environment to dig it up?

      Government is the ONLY legitimate source for government money. Further, government should not borrow its money either unless you think the poor should be taxed to pay the rich.

      MMT is not perfect but it is at least a major part of the solution.

      1. Cedric Regula

        The world reached peak Gold in 2003. I think MMTers are quietly trying to corner the market.

        1. MyLessThanPrimeBeef

          People really need to be educated that MMT doesn’t stand for ‘more, more tricks!’

        2. Valissa

          Experienced economist and not so experienced economist are walking down the road. They come across a pile of horse manure lying on the asphalt.

          Experienced economist: “If you eat it I’ll give you $20,000!” Not so experienced economist runs his optimization problem and figures out he’s better off eating it so he does and collects money.

          Continuing along the same road they come across another pile of horse manure. Not so experienced economist: “Now, if YOU eat this I’ll give YOU $20,000.” After evaluating the proposal experienced economist eats it and collects the money.

          They go on. The not so experienced economist starts thinking: “Listen, we both have the same amount of money we had before, but we both ate horse manure. I don’t see us being better off.”

          The experienced economist replies “Well, that’s true, but you overlooked the fact that we’ve been just involved in $40,000 of trade.”

          1. craazyman


            I was thinking of playing that joke today. Put some chocolate ice cream on the floor and pretend to somebody that you think it’s cat shit, sniff it and make a face, then stick your finger in it and eat it.

            ha hahahah ahahha. Makes me crack up just thinking about it.

            almost as funny as thinking that nobody seems to connect the dots that money is always debt and assets at the same time. So no matter how much debt you have, you have assets to go with it. This could be a perpetual motion machine, but the value of the debt depends on the value of the assets, which depends on the value of the currency which depends on the value of the assets. It spirals up from there, or down. If you keep going there will be 16 equations with all sorts of squiggly symbols and 19 unknowns — of which three are nature, capital and imagination. Labor is always a constant because for every person there are only so many ways they can screw up in an automated society. and they all cancel each other out.

          2. Cedric Regula

            We could print up bumper stickers:

            MMTers Do It until we all scream STOP!

            Then we get the 50% tax hike and all file our bankruptcy papers.

      1. Dan Duncan

        And the Law of the Instrument (aka Maslow’s Hammer), which used to be:

        “Give a small boy a hammer, and he will find that everything he encounters gets a pounding.”

        Now reads:

        Give a small-minded bureaucrat MMT, and he will find that everything he encounters–that is not part of the financial/ government class– gets a Rikers Island Style Ass-Raping.”

    2. KnotRP

      Destroying the dollar isn’t going to undo the looting,
      and the looters will have moved into real assets well
      ahead of any attempt to kill the dollar to save the dollar economy. There is no cure….well, no legal cure…left.

      1. F. Beard

        The population could be bailed out without destroying the dollar. It’s simple: 1) Just forbid any further credit creation. That would be massively deflationary by itself as existing credit was paid off with none to replace it. 2) Send out bailout checks to the entire population metered to just replace existing credit as it was paid off.

  5. Jean-Paul Marat

    “Don’t be deceived when they tell you things are better now. Even if there’s no poverty to be seen because the poverty’s been hidden. Even if you ever got more wages and could afford to buy more of these new and useless goods which industries foist on you and even if it seems to you that you never had so much, that is only the slogan of those who still have much more than you. Don’t be taken in when they paternally pat you on the shoulder and say that there’s no inequality worth speaking of and no more reason to fight because if you believe them they will be completely in charge in their marble homes and granite banks from which they rob the people of the world under the pretence of bringing them culture. Watch out, for as soon as it pleases them they’ll send you out to protect their gold in wars whose weapons, rapidly developed by servile scientists, will become more and more deadly until they can with a flick of the finger tear a million of you to pieces.”
    — Jean-Paul Marat

  6. pws4

    I remember this one episode of Star Trek in which the aliens replaced Captain Jean Luc Picard with a double because they wanted to do a sociological experiment on the concept of authority. At one point in the episode, the Enterprise is near a pulsar, and the fake captain keeps telling the crew to move closer and closer to it.

    Well, they keep getting closer, and the bright pulsing light of the pulsar fills the cabin, and he tells them to get closer still… after a bit members of the crew start making little objections, but he still tells them to bring the ship closer to the pulsar… ever closer…

    I forget how the episode ends.

    1. Cedric Regula

      I must have missed that episode, but my guess is that Worf exclaimed “Today is a good day to die!”

      Austrian sort of fellow, that Worf.

    2. Psychoanalystus

      I remember another Star Trek episode where the Borg wired captain Jean Luc Picard with the intent of destroying the Enterprise, conquering the Earth, and enslaving all humans.


      1. Cedric Regula

        That idea ended up being a full length movie, and the Borg hive queen didn’t use money at all to conquer most of the Universe!

        1. Psychoanalystus

          I used to think Obama was a Wall Street trojan horse. Now I’m thinking he’s a full-fledged Wall Street borg. But I’m not sure what’s difference…


          1. ambrit

            Dear Psychoanalystus;
            Easy! The Wall Street Trojan Horse has Greeks inside it. The Wall Street Borg has Greeks on the perihiphery.
            Either way, remember; Beware Bonds bearing grifts.

  7. patrick

    As one of his voters in 2008 I can confidently assert that President Obama needs no help from the Republicans to turn himself into a one term president. He’s doing just fine on his own.

    1. Jessica

      Obama needs the help of Republicans to get a second term. The only reason he isn’t so obviously unelectable that even his own party starts bailing (Truman in 1952, LBJ in 1968) is that everything he has done wrong, the Republicans want to do more of.

  8. Hugh

    I wrote on this earlier today as well:

    I agree with Auerback that the big number this week was the decline in the employed by 445,000. The labor force (the sum of the employed and unemployed) actually shrank last month by 272,000, meaning that the BLS dropped a lot of people off its rolls. This doesn’t mean they ceased to exist or don’t want jobs. The BLS just arbitrarily defined them out of the work force.

    I agree too with Sandwichman. May jobs were revised down from 54,000 to 25,000. What we see here has been going on for 2 months so we can see a trend developing. I have to admit I was surprised last month at the original 54,000 number because I expected the flection point in jobs to occur in May. Now I feel more confident because the new numbers show this was the case. (You can look at the data for 2008 and 2009, if I remember correctly, but not 2010 because of the Census hirings.)

    Most people never made it out of depression but the current employment numbers plus Wall Street scams plus the Washington ones strongly indicate a return to recession even for those clinging to technical definitions for recession.

    1. Cedric Regula

      Personally, I’ve been in a state of low level panic since 2008, and completely missed the opportunity to stop panicking and buy stock.

      But the market was up 120 yesterday on the bogus report we got and only down 60 on the gov report we chose to believe.

      Not to mention we had 8 days straight up on the Miracle of the Greece Solution and the discredited Moody’s down grade of Portugal.

      My upper spinal cord averaged all this out and remains in low level panic, however.

    2. Hugh

      Disregard: You can look at the data for 2008 and 2009, if I remember correctly, but not 2010 because of the Census hirings.

    3. MyLessThanPrimeBeef

      The BLS just arbitrarily defined them out of the work force.


      That’s a very useful tool for people dealing in abstractions.

      Here is a nubmer that reflects everyone’s inflation…everyone, as in everyone in the country.

      Take that. Not meaningful, you object? Who cares? How else can I make abstract theory work?

      1. Valissa

        A central banker walks into a pizzeria to order a pizza. When the pizza is done, he goes up to the counter get it. There a clerk asks him: “Should I cut it into six pieces or eight pieces?”

        The central banker replies: “I’m feeling rather hungry right now. You’d better cut it into eight pieces.”

          1. ambrit

            Mr Beard;
            Is that yet another of your Yellow Stone jokes? (Yellow Stone, the new standard for jokes!)

  9. George Phillies

    You are seeing a collision between people who think ‘improving current unemployment and getting the economy to do better’ is the key issue, and people who think ‘change course yesterday or we end up like Greece, except there will be no one who can afford to bail us out’.

    There is a complete disagreement on the nature of the problem, and hence on the nature of the solution.

    When the disagreement is between ‘that is a tornado on the front lawn, head for the basement’ and ‘the house is on fire, get outside’, and neither side cares about the other’s chief fear, like looking out the window or sniffing for smoke, there is little hope of progress.

    A further complication is that the older Republican leadership made a variety of promises about fiscal prudence and shrinking government that they did not keep, and the people who supported those promises elected a new bunch of Congressmen who may give the Republicans a Congressional majority but do not support the Republican leadership.

    1. F. Beard

      … and neither side cares about the other’s chief fear George Phillies

      True though I think there is a compromise that should satisfy both sides assuming genuine good will.

      That compromise is to allow the US Government to print and spend to its heart’s content BUT to allow the private sector to escape the “stealth inflation tax” via genuine private money alternatives.

      But don’t take my word for it; the idea of separate government and private money supplies is implicit in Matthew 22:16-22 (“Render to Caesar …”).

    2. HJ

      George Phillies — I’d like you to specify exactly which group of people you identify as those “…who think ‘improving current unemployment and getting the economy to do better’ is the key issue.” Then identify the group who “…think ‘change course yesterday or we end up like Greece, except there will be no one who can afford to bail us out.'” And then identify in what realm of possible earthly arenas you think that these camps (as if there are only two) are on a collision course.

      Your framing of the “problem” as a polarizing argument followed by your concluding commentary about Republicans indicates that your posting intends to convey your poetic assessment of the currently unresolved decision to lift the U.S. debt ceiling as a serious ideological argument between the two major U.S. parties. However, the arguments you repeat (from MSM) are mere Trojan horses. The real ideological “argument” in current political circles is how much of the national wealth will be redistributed, to whom, and by way of what channels — the public sector, the private sector, or some combination thereof.

      Both parties have displayed unseemly eagerness to burn or blow down domestic, non-military/police spending. They have repeated various propagandized as reasons for doing this. But both parties conceal that such a choice is merely another method by which the public sector will further relinquish power in the process of redistributing wealth at home, and that the private sector (or some P3 combination) will be allowed to exert even more control on national wealth distribution. Historical economic data evidences to what end of the distribution tail that private wealth tends to flow absent strong public investments, progressive taxation, and regulations.

      The only political argument playing at the MSM of your choosing is whether, or by how much, federal tax revenues will be boosted, i.e., how fast the public sector will permit increased flows of wealth to one end of the tail. The political tactics of both parties are designed merely to avoid taking the blame for what will be in the end, bad joint decisions for most of us being shoved to the other end of the economic tail.

      According to the media coverage, neither side is negotiating ways to create jobs (let alone good jobs), although spokespersons from each side will suddenly bend over backwards in order to convince anyone who asks that their unquestioned adherence to their current political agenda will most certainly fix all and every problem known and unknown, including jobs, education and housing.

      This blog is one too-rare source of works from the few pundits, legal beagles, economists, and philosophers who dare question the stated motives and wisdom of the current marketeers of public austerity as a new, communal value.
      They often present different and not dichotomous views. These few do not comment as spokespersons for a political party nor are they receiving much MSM coverage. These few brave souls are not an any possible collision course with the political/corporate powers that be. Most of them obviously do not travel in the same circles. If a few of them do, they are somehow able to distance themselves from unhealthy influences.

      1. Paul Tioxon

        I want to personally thank you for your encouragement and keen observation that we of the NC community are NOT one handed economists. You know, the economist who always answers on the one hand. And usually the invisible one, which no one can see, making it not much of an answer at all.

  10. Jackrabbit

    Gimmics???? Like . . .

    . . . the President telling us that he wakes up every morning thinking about the unemployed? (href=”″>USATODAY April 2010)

    “… keeping the economy growing and making sure jobs are available is the first thing I think about when I wake up every morning. It’s the last thing I think about when I go to bed each night.”

    . . . or Geithner telling us that we are in a recovery? (href=””>NYTIMES August2010)

    . . . or Bernanke “riding to the rescue” (QE2 was all about the unemployed, you know) just in time to extend the Bush tax cuts?

    It seems that the “Extend and Pretend” con has run its course. Will people be smart enough to trace the coming hardships back to the these three stooges decision to save the bankers instead of the economy? Will ordinary working people finally come to see the “change that you can believe in” president as a shame? Or are they where progressives were a year ago – simply hoping that he would “grow a pair?”

    1. Jackrabbit

      I’ll try to make this more readable.
      Gimmics???? Like . . .

      . . . the President telling us that he wakes up every morning thinking about the unemployed? (USATODAY April 2010)

      “[Other issues are important but]…keeping the economy growing and making sure jobs are available is the first thing I think about when I wake up every morning. It’s the last thing I think about when I go to bed each night.”

      . . . or Geithner’s “Welcome to the Recovery” happy talk? (NYTIMES August2010)

      . . . or Bernanke claiming that the Fed would fight unemployment with QE2 – taking the heat off congress just in time to extend the Bush tax cuts?

      It seems that the “Extend and Pretend” con has now run its course. But will ordinary people wise up enough to trace their hardships back to the these three stooges decision to save bankers instead of the economy? So they yet see that the “change that you can believe in” president is a sham? Or are they where progressives were a year ago – fretting that he is too weak and hoping that he will “grow a pair?”

  11. CaitlinO

    If Obama ends up being a one-term president it will be because he has worked tirelessly every day of his term to earn it.

  12. Steve Roth

    It’s strange. Haven’t Obama and his political operatives figured out what it was that FDR did to achieve four consecutive electoral victories? (With a pretty major misstep ’37/’38…)?

    “I welcome their hatred.”

      1. ambrit

        Dear Hugh;
        Well, that Obama doesn’t accept ‘their’ hatred could indicate that he doesn’t want to be associated with ‘ordinary Americans.’ Scratch a conciliator and you come up with, a conformist.

        1. Renodino

          My own pet conspiracy theory is that he sees his presidency is evaporating and must therefore implement his primary directive given to him by his corporate overloads months before he tool office. Curtail, if not eliminate, the progressive agenda. He could have balanced the budget pretty much by letting the Bush tax cuts expire and demanding a lifting of the debt ceiling at the same time. But by letting it run out of control here, he can destroy the progressive agenda while appearing quite reasonable. By losing his base and destroying the economy with cutbacks, he opens the door to another “approved” successor. I need to stop this and get a hobby.

          1. mk

            maybe when obama got into office he realized that if he wanted to stay alive, he wouldn’t rock the boat. remember what happened to jfk…

    1. Michael Cain

      “It’s strange. Haven’t Obama and his political operatives figured out what it was that FDR did to achieve four consecutive electoral victories?”

      FDR also had substantial majorities in both houses of Congress. It seems likely that if Obama had those same majorities, we would have gotten a very different health care plan, different bail-out plan, different regulatory changes, and different tax changes.

      1. John

        No, not at all. Obama had huge majorities and a mandate for change. He folded.

        One should realize that it wasn’t exactly a secret that the Bush Administration was virtually the most hated in history. The Rovean MSM overlords knew this perfectly well, and weren’t going to sit back and be blindsided by a progressive Democratic victory which would destroy them. Hence Obama and Clinton became the two Democratic front-runners before a single primary was held.

        The plot: have them campaign on hope and change, encourage the progressives to work extra hard and go the extra ten miles, and then betray us. Not only do the Roveans keep most of their policies and practices, but the hit on Morale becomes devastating. The progressives become just too tired, and too distrustful to mount the effort again — how do we know we won’t be betrayed again?

  13. Jessica

    “his ineffectual Treasury Secretary”

    Ineffectual depends on what you think his job is. In terms of what I or Mr. Auerback want done, yes he is ineffectual. But for the elites that he belongs to and works for, he is doing just fine.

    1. rps

      To paraphrase Bush II, “Timmy, you’re doing a heck of a job!”

      Timmy’s friends would second that. If George was around he’d bequeath Timmy with the Medal of Freedom

  14. monday1929

    Bribes. The people must fund a bribe paying system to bribe prosecutors and judges to enforce the law. I mean Large, million dollar+ cash bribes.

    1. sayer

      Unfortunately, they’d probably keep the money and throw us in jail. From any angle, the deck is stacked.

  15. rps

    I think I saw the original movie where the priests are throwing virgins into the volcano to appease the gods. This remake has the econ/advisors telling the king to throw the entire village into the fiery volcano to appease the profiteer godsters. Ya know Hillary was right, “It takes a village to save the rich.”

  16. Edwardo

    To the stupid chartalist -Frank Beard- who wrote the following:

    “Would you prefer a gold standard and endless raping of the environment to dig it up?”

    You must live under a rock, otherwise you would recognize the ongoing emergence of a global gold standard. I’m sorry to inform you that it has been in process for quite some time, and continues to evolve towards a new equilibrium. You and your MMT fellow travelers have about as much chance of derailing it as you do of killing a bull elephant with a rusty thumbtack. But don’t worry the new gold standard won’t resemble your grandad’s or your dad’s gold standard not that that will be any consolation to you or your ilk.

    1. F. Beard

      You and your MMT fellow travelers have about as much chance of derailing it as you do of killing a bull elephant with a rusty thumbtack. Edwardo

      Who cares? Do you think a new gold standard would last very long? And when it makes things worse instead of better, it is you silly primitives who will be to blame. And if we end up with something worse to follow it, you will be partially to blame for that too.

      Quit worshipping a shiny metal and start thinking about ethical money creation. You PM bugs are going down a dead end road we have already been down.

    2. Yves Smith Post author

      The odds of a new gold standard are zero. Its economic record was disastrous and that is well known and well documented. Frequent depressions, panics, and a much more variable rate of inflation, including one year bouts of meaningful inflation. How do you think businesses would do if inflation went from -2% to 7% in the next year? Planning becomes impossible.

        1. ambrit

          Mr Regula;
          The primary drawback of ‘hard’ money regiemes anywhere and everywhere was best stated by the immortal Gresham, and way back when to boot! Much as I love the feel of dense and sensuous silver ’rounds’ in my pocket, a quick perusal of the recent history of the market movements of ‘poor mans gold’ will educate one on the mischief possible when interested actors try to manipulate any commodity. Unless the personal credit market totally implodes, (as in no credit cards etc.) ‘hard’ currency doesn’t have a chance.

          1. Cedric Regula

            Plus we would need to invade Mexico and Peru again whenever we need to grow the money supply and hit our 2% inflation target.

    3. ambrit

      Dear Edwardo;
      Your analogy is hilariously inept. A rusty thumbtack can indeed kill an elephant. Ever hear of Tetanus? A new Gold Standard will indeed kill societies and economies, slowly and painfully.

  17. mp

    I absolutely agree with everything Marshall has written except one thing: in my opinion, it’s not a Great Recession II just around the corner, it’s a Great DEPRESSION II.

    1. sayer

      Max: My recipe for waking up in the morning:

      1 cigarette
      1 coffee
      1 minute of CNBC

      My BP quickly gets up to 150/90 and I’m rarin’ to go. WARNING: More than 1 minute of CNBC may cause hemorraghic stroke.

      1. ScottS

        I dunno. I like to unwind in the evening with a little Mad Money. Jim Cramer is hilarious.

    2. ambrit

      Mr mp;
      It’s looking like the Great Depression II started in 2008 and is just now entering its’ real downward spiral.

  18. Max424

    I watched a little financial TV today (CNBC, Bloomberg, etc and ick…) , and the talking heads were blabbering on about how responsive the Dow was to the bad job report. They were touting the fact, almost bragging, it seemed; like see, American underclass, we told you, the Dow and you … are inseparable!

    What a bunch of hoary bullshit. Ancient history tells us, Mr. Market doesn’t give a hairy rat’s ass about the job report; we know this — for a certainty — from the last 25 BLS monthly releases.

    When it comes to unemployment, I follow the Gallup Poll (my blood pressure demands it). I like the GP’s gentle rolling average. I find it … soothing.

    And I like the fact that you can count on the GP underemployment number — always. Yup, it seems Old Faithful will remain above 18.0 … forever …

  19. lambert strether

    I’d call Geither quite the reverse of “ineffectual.” Rather, for the elite, this is a real “mission accomplished” moment if, via Occam’s razor, you make the assumption that an outcome of permanently higher DISemployment is the desired policy outcome. Just look at the record:

    The banks are bigger than ever. The CEOs are making more money than ever. The corporations have trillions in cash. And now that the Obama administration has successfully normalized permanently high DISemployment, working people have no leverage at all. That’s why in this recovery they got nothing. Zip. Zilch. Nada. (Except, of course, a mandate to pay the health insurance parasites for junk coverage that won’t work with money they don’t have.) Those who do have jobs are desperate to keep them, and their reward is the speed-up. And those who don’t have jobs are desperate to get them, at any wage, so they keep wages low.

    So what’s not to like? At least for the people who matter?

    NOTE Look! Over there! Michelle Bachmann!

    1. Fractal

      I was all wound up to knock down Auerback’s suggestions that Obama & Geithner are just innocently mistaken, when Lambert nailed it. I agree with his angle: the economic misery we are suffering is a deliberate result of Obama’s intentional coddling of the oligarchs and corporations.

    2. sayer

      @ Lambert: “So what’s not to like? At least for the people who matter?”

      Well, for one thing, the “people who matter” still have the problem of their middleman (aka the federal government) skimming off money that rightfully belongs to them. It may be necessary for them to privatize the IRS.

  20. KFritz

    Having just read for the umpteenth time that BHO and Team Obama believe, or at least parrot, what their Wall St. funders tell them, it occured to me that maybe, just maybe this guy is AN ECONOMIC DUNCE. It’s a fact that he’s intelligent. And it’s more than possible that he’s so cynical, self-serving, and hell bent on fulfilling his self-image as THE GREAT CONCILIATOR that he’d sell most of America down the proverbial river to feed his self-image building. But what if….WHAT IF the key enabling factor is that he’s a genuine economic DUNCE? Just sayin.

    1. ambrit

      Dear KFritz;
      The problem is, he’s not really that good of a politician either. FDR now, there was the real thing. He at least knew enough to surround himself with real economists and real ‘social systems’ experts.

    2. Mark P.

      KFritz wrote: ‘WHAT IF the key enabling factor is that he’s a genuine economic DUNCE?’

      You’re just now figuring this out? It was obvious when he came in — I’m many paygrades below the financial wisdom of quite a few folks who orbit through NC, and my strong surmise was that our new Prez probably knew less than even myself about economic matters.

      The fascinating thing is that, in the worst financial disaster since 1929 and the decade that followed, the guy elected by the American people to be president clearly has remained supremely and entirely disinterested in educating himself on the subject, and still knows less than me about it.

      Those are singular levels of compounded narcissism or stupidity. I can’t tell in what mixture. But either way the guy is an Olympian-level empty shirt.

  21. Juan

    Lets add the 6 July Challenger, Grey & Christmas report on
    *planned* job cuts:

    CHICAGO, July 6, 2011 – The number of planned job cuts
    announced by U.S.-based employers increased by 4,297 or 11.6 percent to 41,432 in June. Despite the increase, the overall pace of downsizing through the first half of 2011 is at the lowest level since 2000, according the latest
    report on downsizing activity released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

    The June increase is the second in as many months. Announced
    layoffs in May were up 2.0 percent to 37,135, after falling to a four-month low of 36,490 in April.

    The two consecutive months of increased job cuts did little to impact the overall slow pace of downsizing. For the quarter ending on June 30, a total of 115,057 job cuts were announced, down 12 percent from 130,749 in the first
    quarter and 1.2 percent lower than the second quarter in 2010 (116,494).

    [Remainder –

    Negative, yes, but CG&Y apparently see some, though minimal, improvement. Which, given the early severity of so-called recession, is only to be expected.

    CFNAI 3MA has gone negative over the last months but still not to ‘recession’ level.

    Household Survey and Business Payroll [ht/Spencer] – 1968 to present, note the longterm tendencies.

    Highest profit Rate, most economically active region of the global economy – SE Asia and Korea – began breaking down in early 1996, became evident with currency crises, hot money flows, IMF warnings, bankrupties, very high unemployment, vultures and bailouts — rate of nonfinanancial profit in U.S. turned down 3Q97. Asia Crisis might be seen as turning point for global capitalism, which is in much more than a ‘recession’ but a transitional moment which neoliberalism cannot solve – European debt crisis is an extension and one running into the social limits of countercyclic policies.

    I must say though, counter to the U.S., at least Europe has a Left left.

  22. Juan

    Monday1929 said: And, by the by, we are in a Depression. No one should be surprised by bad numbers, only by good ones.

    And he is absolutely correct. I will add that this depression grew out of a long contractionary wave begun moreless with the sharp decline in Rate of profit in the U.S. from roughly 1968. My recolection is that profit [not earnings] rate fell around 40% from ’68 into ’74 and that this had little to do with policies and lots to do with over-accumulated capital relative to living labor and, same time, a large build in unproductive [but neccessary] labor which absorbed value created on the productive side…it was a cost that had been building since 1948. Additionally there seems to have been quite a bit of personal/household debt relative to earlmier moments and, of course, later 1960s currency crises leading into ’71 and ending of dollar/gold relation.

    Yes, Mass of profit has grown dramatically but the Rate remains subdued, particulary when calculated vs total capital. Simply pumping in more money can mitigate [which is worthwhile] but cannot correct overaccumulation and expansion of unproductive labor, cannot bring a real and durable rise in Rate of profit. Cannot force a recovery.

    1. Hugh

      “overaccumulation and expansion of unproductive labor”

      That’s a reference to banksters and CEOs I presume.

  23. Rodger Malcolm Mitchell

    Mr. Aueerback is one of the very, very few bloggers and economic commenters who understands Monetary Sovereignty. Congress doesn’t. The President doesn’t. The President’s advisors don’t. Media editors don’t. Surely, the public doesn’t.

    As the Tea philosophy sinks America into oblivion, all I can do is I hope there will come an awakening. If so, all the old-line economists, and anti-debt theorists will exclaim in unison, “I knew it all the time.”

    Rodger Malcolm Mitchell

  24. Mickey Marzick in Akron, Ohio

    Whether Keynesian or Austerian, the premise of both is that investment is the engine of economic growth insofar as it requires fixed capital [machinery] and variable capital [labor]. Investment, whether private or public, creates jobs… right?

    Then why no private investment is the question? With coffers bulging, corporate Amerika is not short on cash. Uncertainty is the preferred excuse – blame the government!

    I’m not buying that argument.

    The issue of private investment/unemployment is no longer economic but POLITICAL. CAPITAL IS ON STRIKE!

    By refusing to invest job creation languishes with federal revenues unable to sustain federal spending, making the case for austerity – fiscal responsibility – which feeds on itself in a downward spiral more plausible. The MMT argument notwithstanding, its adherents aren’t winning the POLITICAL argument.
    The real target of the reactionary right has been and remains the dismantling of the New Deal – Social Security and Medicare. This was obvious 40 years ago when this neoliberal gibberish began to ooze out of academia and see light of day. The precursor, ATLAS SHRUGGED, was a rebellion by the “producers”. Remember who Hank Reardon, Dagny Taggart, Franciso D’Anconia, and John Galt were? No looters there. Anyone who didn’t see this coming was an IDIOT. What else could “starving the beast” mean? Whether the latter works or not depends upon one’s purpose in resorting to it. CUI BONO?

    CAPITAL IS ON STRIKE because of the lesson learned by those unfortunate enough to experience involuntary unemployment. Their memory is scarred for life – the debilitating psychological effects, attendant social dislocation, etc., become imprinted on their psyche for the remainder of their lives. My granfather lived through the Great Depression but he never forgot being in the unemployment line no matter how good times [1960s] were. For those still employed, the “inner cop” reminds them that they could be next, resulting in a compliant labor force. Yes, knowing one’s place in a capitalist society must be enforced lest the workers begin to believe that they are entitled to the fruits of their labor. But without labor there is no fruit to enjoy! And to add insult to injury, many of the involuntarily unemployed come to believe that it’s their own fault. In a capitalist society where more than 95% of the labor force sell their labor-power to someone else, employment is the only means whereby one secures his/her existence. Being reminded of that on occasion has a purpose in the manufacturing of consent. The ownership society is for the owners [of capital] only!

    One must ask themselves if the private sector IS the source of job creation then why no investment when the funds for such investemnt are readily available? If interest rates get any lower, banks are going to start charging us for holding our money. Oh, I forgot they already do!

    Labor arbitrage as an explanation alone is inadequate. It restricts discussion to “economics” and refuses to consider the political/ideological ramifications involved. It’s the technocratic argument devoid of emotion and predicated on supposed objectivity. As such it depoliticizes the issue of unemployment, which is its intended purpose. It also makes globalization and the “knowledge economy” appear as ineluctable forces of progress against which resistance is futile.

    Shift the discussion to “technologial unemployment”, the increasing redundancy of labor in the production process, and the fact that the work week remains stuck at 40 hours with the productivity increases of the last 30 years going largely to the owners of capital without a commensurate decrease in working hours and ask yourself, why? Maybe sharing the work rather than the wealth is the real issue.

    CAPITAL IS ON STRIKE because persistently high unemployment puts labor at a distinct disadvantage, exacerbates the fiscal crisis of the state, makes the emasculation of Social Security and Medicare appear fiscally responsible, and renders political opposition by Democrats fiscally irresponsible with the result that the electorate punishes them at the ballot box, reinforcing the political reasons why CAPITAL went on strike in the first place.

    What MMT adherents have to answer is how does one break this strike by capital, especially when CAPITAL can refuse to invest in the knowledge that it can wait out the government in this politically/ideologically polarized atmosphere, starving the beast if you will, by simply refusing to invest. CAPITAL cannot be coerced in such an environment. Moreover, what incentive does CAPITAL have to quit striking when its politcal agenda moves forward? Is this the virtual cycle heralded by neoliberalism? Can it be broken?

    1. F. Beard

      What MMT adherents have to answer is how does one break this strike by capital, … Mickey Marzick

      1) Put the banks out of the counterfeiting business by forbidding any new credit creation.

      2) Bailout the entire population,including savers, with new, debt free fiat.

      The above would free the debt slaves and make it much more difficult to re-enslave them.

      Also, without a government backed counterfeiting cartel to borrow from then so-called “Capital” would most likely have to issue “shares” (common stock) to finance their operations.

      1. F. Beard

        And then the entire population would be “capitalists” instead of a small, privileged group.

    2. KnotRP

      Capital isn’t on strike. Put down the bong.
      It’s just not being deployed towards US labor (which is still expensive, and located in a place with environmental and
      work standards are expensive to follow).

      Might as well prepare for a globalized lifestyle…there
      won’t be much else to do for many years to come.

      1. Mickey Marzick in Akron, Ohio


        You’re so used to being bent over, you don’t know anything different. I’m old enough to know better…

        Have another hit off your GLOBAL bong.

  25. Paul Tioxon

    Please view the above link for an interactive map showing how much money the US spends per day on oil imports and where we pump the cash to around the world, since 1973.

    If you look at the chart you see many things, chief of which is that oil imports cost us over $1BB/day or approx $375BB/yr. And in 1973 it cost us next to nothing. And, if you put up our military budget for 1999, $335BB and 2011 $928BB, you can see that it costs $2 more to protect every $1 we send to foreign oil exporters. The price of importing oil is now over $1TRILLION/YR, INCLUDING CRUDE AND PROTECTION. This is the surplus capital that is not being reinvested to provide the next cycle of commercial expansion. To invest in conservation and solar and wind will build new factories, offices, businesses that do not exist and will circulate money inside of our domestic economy and at less cost and disruption due to speculators in future contracts, wars, political instability etc. But instead, $2TRILLION OF PRIVATE SURPLUS CAPITAL SITS ON THE SIDE LINES WHILE WE BLEED MONEY, KILL CITIZEN SOLDIERS IN FOREIGN PROTECTION MISSIONS AND POLLUTE OUR DRINKING WATER AND AIR. This is why we need a Green Economy. It will put people back to work for generations building out an internal energy production and distribution industry not subject to Wall St manipulation or supply disruptions. It’s nice to only have to worry about calm days or a few clouds.

  26. Martin Finnucane

    Just a general observation, from someone without any training in economics:

    It seems that in this forum, the central tenets of MMT are accepted as true by all serious posters. There are a few right-libertarian types that disagree, but they are short on argument and long on name-calling. There are others, I think Cedric Regula being an example, that question the MMT school‘s approach, originality, political astuteness, etc., but that is not the same as doubting the theses of that school.

    So: “[A] sovereign government is never revenue constrained because it is the monopoly issuer of the currency.” (Quote taken rather randomly from one of Bill Mitchell’s blog posts: .) Do we all agree?

    One thought: To me, most of what I hear from the MMTers, once I get my brain around it, is self-evident, even to the point of being trivial. Yet, in the world outside of the friendly confines of NC, Credit Writedowns, the MMT blogs, etc., speaking the MMT gospel gets you labeled a whacko in short order, and it’s off to the UMKC ghetto with you. That seems important to me. It also increasingly gives me the feeling that the world is mad and set for destruction.

    Another thought: someone responded earlier that the NC comment section is starting to become an echo chamber for MMTers. It occurs to me that scientific journals must sound like echo chambers to young earth creationists and geocentrists.

    1. Paul Tioxon

      Here is something else to consider about MMT. Look into the Federal Law called Check 21. The digital copy of yr check mailed to you is now legally the check. You don’t get back hard copies with the cancellation on the back by the Fed check clearing facilities anymore, the whole system has gone digital. The banking systems check clearing has speeded up the time to clear checks, killing check kiting and floating. If you do not have the money in yr account, you can no longer count on about a week for the money to get taken out before yr direct deposit pay goes in. The bottom line is, money is not an immutable artifact or even concept of divine or natural origin. Money is something we made up and the US Congress just make it a digital image because we now can due to the internet and computer technology. Understanding that, makes understanding money a lot easier. What rules money does have to play by is determined more by the structure and function of nation states, markets and societies. Once a nation passes laws, that constrains money. Once markets figure work arounds that can obviate but not break the law, that expands the uses of money and once people learn the new culturally learned expectations about money, they change their behavior accordingly. And it is all subject to change based on changes in laws, politics, markets and what people can learn to accept.

  27. ECON

    Several commenters snigger at the failure of economists to predict events or whatever while these commenters are not able to comprehend that whoever pays your salary will demand that you sing mightly from the company prayer book. To survive people will sacrifice their integrity…even Presidents do that too.

    1. Foppe

      My, aren’t you a bright lad. Did you realize yet that your argument also applies to criminals?
      I have trouble feeling sorry for academic economists having to scrape by on whatever it is they earn, though. I could be wrong, but I think they get a bit more than a welfare check, so I guess the difference is what pays for their conscience. But I guess it sounds a lot better when you call it a “sacrificing in order to survive.”

      Lastly, it might be wise to think 5 seconds before using phrases such as “commenters are unable to comprehend”. It isn’t always the case, but it often reflects badly on the writer, especially when readers have a sneaking suspicion that the writer is protesting a bit much.

      1. Cedric Regula

        FYI, deLong admitted to a salary of $100K, and accruing a pension of $100K.

        But then if you are enterprising there is summer vacation, spring break, etc… (two 15 week semesters adds up to 30 weeks, if I did that right. Wouldn’t want to argue it with ’em tho.)

        So there is book writting, the lecture cicuit, 3rd world counties to run (and 1st world – if you are a really talented one), etc…to make a little extra mad money.

  28. Don Levit

    Craazyman wrote:
    Money is always debt and assets at the same time. So no matter how much debt you have, you have assets to go with it.
    Let’s take a couple of examples.
    First, Intragovernmental Debt. The Treasuruy owes the Social Security trust fund over $2 trillion.
    What are the corresponding assets that can be liquidated without tapping general revenues, a dedicated funding source, that is the corresponding asset?
    Second, debt held by the public.
    I buy a Treasury security for $1,000. What is the correspondiong asset fitting the parameters of my first example?
    Don Levit

    1. F. Beard

      US Government debt is backed by its taxing authority and its authority to coin money and regulate its value.

    2. Cedric Regula

      I recall everyone answering your endless questions at Angry Bear – totaling at least 500 responses I believe – and if you start all over again at NC I will have Dan or Bruce Webb or Dale Coberly contact Yves and demand that you be banned from NC.

      Next I will suggest to Dan that he leak your comment threads to WikiLeaks. Assange could use a laugh lately.

  29. Juan


    When I wrote -“overaccumulation and expansion of unproductive labor”- I was referring to worldwide expansion of capital relative to surplus value creating human labor. This has been developing for some time since the early 1980s double slump and tends to depress the average rate of nonfinancial profit, generating stagnation, crises and governmental/supranational reactions to these.

    You are basically correct about banker as unproductive labor but this category extends to most all employed in exchange based sectors as well as the rest of FIRE, guards, govt employees…Which does not mean all or even many of these people are unnecessary for the system to function, only that they do not directly create surplus value.

    If interested, here’s a relatively short paper by Andrew Kliman –

    On the Roots of the Current Economic
    Crisis and Some Proposed Solutions

    [He and I don’t agree on everything and ‘the current crisis’ he refers to was that of 2000-02. Still, his profit rate info is worthwhile, particularly, unlike most, he grasps that it did not strongly recover during the 1980s]

    1. Hugh

      It all depends upon how “value” is defined. How do you quantify a symphony or the work of EPA regulators that results in you getting cleaner water to drink and cleaner air to breathe (not that this has been happening a lot under Bush-Obama)?

      I would say the problem is not unproductive labor but unproductive capital. We have this vast, unproductive, and sometimes incredibly destructive paper economy that floats over and is many times the size of the real economy. It, not the real economy, calls the shots. For the last 35 years, labor has been bled white. Wealth has been siphoned away from it and to an unproductive, parasitic, bubble-blowing rentier class. It is rather like beating someone unconscious and then blaming them for not being active enough.

  30. Don Levit

    It was an honor to be banned from Angry Bear.
    That blog was heavily weighted toward the left, and my voice, backed by reputable government web sites, was an oasis in a tightly controlled desert.
    Don Levit

    1. Yves Smith Post author


      You seem to think being a troll is an honorable occupation. It isn’t. Hogging comment threads is grounds for eviction on any blog no matter what your views are.

      And your “heavily left” comment says you think you have superior insight and that the left is wrong. That sort of attitude is guaranteed not to win converts.

      Being able to link to “government sites” proves nothing in and of itself; I see people in all walks of life use statistics to make misrepresentations. I’m not saying that you did, mind you; I’m merely pointing out your claim is unconvincing.

  31. Don Levit

    I’ll make one final comment, and will respond on this particular story, if any one asks me to do so.
    Otherwise, I look forward to participating on your blog.
    Bruce Webb stated on Angry Bear that Treasury debt was more valuable than cash, because Treasury debt pays interest.
    Do you think that makes sense, considering the principal and interest on Treasury debt is paid by new general revenues and/or debt?
    When someone is of that mindset, there is very little we can agree on.
    Don Levit

    1. A Real Black Person

      I think Don’s got a point here. He’s shaking up a deeply ingrained belief that the government can grow its way out of debt by increasing thee money supply. This belief assumes that developed economies can continue to grow. Debt creation is useless if output of useful goods remains static. So, barring any major scientific breakthrough that allow us to break the rules of thermodynamics…Kensyian spending is only reshuffling of chairs on a sinking ship. The government could make all the rich people stand up and all the poor people sit down, and it probably won’t mean a thing. In other words, if the rich were taxed 100%,that would not solve all fiscal and economic problems. Probably not. Growth requires increasing amount of inputs of finite resources, particularly fossil fuels, and the world’s supply of finite resources is not growing as fast as debt creation.

  32. Juan


    Yes, but I define ‘value’ as labor value, that created by living labor, not by machines which can only transfer some portion of value they contain and has already been paid for. Machines cannot create surplus value without which there cannot be profit other than through exchange – which is to say a fully automated production system could not be a developed capitalism, which depends on labor created surplus value which is also an unpaid labor.

    This is much more objective than neoclassical econ’s [subjective] utility theory of value based on individidual’s desires, demands and consumption with production pushed to the background.

    Samec time, there are better and worse labor theories of value, from Locke to Smith to Ricardo to Marx [who had the most developed and most difficult].

Comments are closed.