tag:blogger.com,1999:blog-82709067040316415342024-03-13T14:19:23.458-07:00The Animal Spirits PageFrom those to whom much has been given, from them much shall be expected.
-- Luke Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.comBlogger682125tag:blogger.com,1999:blog-8270906704031641534.post-41232321722369291092015-12-26T08:25:00.000-08:002015-12-26T08:25:07.771-08:00Neocons Dream of War with RussiaIf you had any doubt that the neocons are still pulling the strings of the military-industrial complex, you are deceived.<br />
<br />
Stratfor.com, viewed by many to be a mouthpiece for the CIA, has published their decade-ahead forecast, and topping the list is their forecast that Russia will "collapse" and that the US military will have to go in and decommission all their nukes.<br />
<br />
You can read about it <a href="http://www.businessinsider.com/stratfor-has-11-chilling-predictions-for-what-the-world-will-look-like-in-10-years-2015-6" target="_blank">here</a>.<br />
<br />
Of course, an American-initiated invasion of Russia (and it is not conceivable that Russia, with or without Putin, is going to invite the US military in to take away their nukes) is not about making the world safer, it is about controlling Russia's vast natural resources, especially of energy.<br />
<br />
It is not likely that China would welcome such a move either, no matter how much they might like to see Russia weakened.<br />
<br />
The psychopaths running the USA inside the Washington beltway have a war in your future, if they have their way, a war that benefits Halliburton et al., but not you.<br />
<br />
You can count on a Republican president to go along with the plan.<br />
<br />
But Hillary? Yep. Wall Street and the defense industry are her two biggest donors.<br />
<br />
Remember the words of Madelein Albright, Democratic Secretary of State, who, when asked how she felt about five hundred thousand civilian deaths in Iraq, replied:<br />
<br />
"It was worth it."<br />
<br />
For what, Madame Secretary?<br />
<br />
The Deep State has told you what they plan.<br />
<br />
"Preemptive" war against Russia.<br />
<br />
Is that something you want?Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-28421836305884064892014-06-04T07:33:00.001-07:002014-06-04T07:33:01.970-07:00On r > g<p> Here's what drives me up the wall about academic economists, and economists in general:</p><blockquote><p><em>When we absolute know (and there is no credible disagreement about this) that wealth inequality has increased to Gilded Age levels, economists, even progressive economists like Jamie Galbraith and Yves Smith, quibble that "it isn't because r > g" or some other such blather about "Cambridge capital controversies," rather than looking at the facts staring them in the face, the actual causes of the acceleration of wealth inequality: our carry-traded capital markets and our winner-take-all compensation of chief executives (which extends to all who get bonuses based on stock price, a small fraction of employees).</em></p></blockquote><p><em> But as the saying goes, you could put all the economists on the planet in a line and they would never reah a conclusion.</em> Meanwhile the march toward either (a) security state neofeudalism, or (b) social and economic collapse that ushers in some form direct democracy.</p><p>Choose.</p>Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-87831848356293791052014-05-18T09:42:00.001-07:002014-05-18T09:42:43.346-07:00Financial imperialism in the Ukraine<p>Michael Hudson’s masterful exposition of the forces of financial imperialism at play in the Ukraine, from both sides, came out a couple of days ago, but if you haven’t read it—it’s owrth the long read, as it covers the neocon/neoliberal “Great Game” strategy in historical context. Via nakedcapitalism.com </p> <h3><a href="http://www.nakedcapitalism.com/2014/05/new-cold-war-ukraine-gambit.html">Michael Hudson: The New Cold War’s Ukraine Gambit</a></h3> Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-8008955212415978052014-05-17T11:29:00.001-07:002014-05-17T11:29:12.009-07:00Waiting for that Nixon-in-China moment<p>The US strategy toward Russia and the Ukraine is following the neocon playbook: contain Russia, prevent the pan-Asian trade zone from happening.</p> <p>At one time I believe we fought (another illegal) war in Vietnam to “contain” China, a vast country on the brink of abandoning old-style Communism well before the Soviet Union fell. </p> <p>Nixon went to China in 1972, before the fall of Saigon. Deng beat out Mao’s chosen successor in the late Seventies and started liberalizing the economy in about 1980, just as the US was abandoning capitalism for right-wing plutocracy.</p> <p>Subsequently trade with China helped the diminishing American middle class via inexpensive imports, even as it aided its diminishment by taking some of its jobs.</p> <p>Wouldn’t it be nice if, instead of vilifying Gorbachev, Putin could take Gorbachev’s advice and permit democracy to flourish? And if Obama could see that Russia, like China, is a huge market with little sovereign debt that we are going to lose?</p> <p>But we seem to be on the downside of a long wave in a time when confidence fails everywhere, a time, as Martin Armstrong points out, in which governments almost everywhere exist in a state of sclerotic corruption and codependency with the international plutocracy that seems ultimately to serve only the families of the plutocrats.</p> <p>May the meek inherit the Earth on the other side of this. And meanwhile, pity the poor broke Ukrainians, caught between two mad plutocracies who want the black Ukrainian soil but not their debts and who are trying to figure out if a war might give them clear title.</p> Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-15084518261849257852014-05-17T10:14:00.001-07:002014-05-17T10:14:16.435-07:00When will rates rise? -- reprise<p><a href="http://www.zerohedge.com/news/2014-05-17/bernanke-shocker-no-rate-normalization-during-my-lifetime" target="_blank">Bernanke Shocker: "No Rate Normalization During My Lifetime"</a> – Zero Hedge</p> <p>As I pointed out recently in <a href="http://animalspiritspage.blogspot.com/2014/05/interest-rate-reality-check.html" target="_blank">Interest rate reality check</a> I agree that it will be quite a while until rates normalize. The analytical criterion is of course when the ratio of monetary base to GDP returns to longer term averages, which would require the ratio to drop to about 25 percent of its current level of ~0.22.</p> <p>One way for this to happen would be for the Fed to charge off all the bad debt it is hiding for the banking system, and to stop paying them interest on fictitious reserves.</p> <p>I don’t know how bad the debt in the monetary base is—no one does, even within the Fed, apparently—but this (absent a huge increase in GDP growth) is what would have to happen. And as base has been growing at >20 percent annual rates and GDP at… well, you know.</p> <p>John Hussman deserves credit for saying that it is the illusion of solvency created by FAS 157 that has sustained the (stock market) recovery.</p> <p>Will the Western banks do this? Not a chance. The Fed and ECB seem determined to kill their economies and start another world war.</p> <p>Another indication that the big tiger may leapfrog us is Jim Rogers’ assertion that the PBOC is actually requiring banks to charge off bad debts. A sharp contraction followed by really robust growth (after a couple of years) would be the implied forecast.</p> <p>Even Barry Ritholtz is questioning whether FAS 157 should remain in place. </p> <p>But it won’t matter, if the Fed keeps buying up and hiding all the bad debt, will it? Thanks Alan, thanks Ben. Martin Armstrong says his sources in the big “banks” (i.e., Goldman et al., the hedge funds stealing money from the American people via the discount window and Fed largesse in general) tell him the Fed is saying they’re only going to bail out depositors next time—which is exactly what <a href="http://animalspiritspage.blogspot.com/2012/06/obtuseness-of-krugman-and-bernanke.html" target="_blank">I said they should have done last time</a>, which would have let the system clear and avoided a hell of a lot of moral hazard—and to get their trading risk models tuned accordingly.</p> <p>We shall see. I hope Janet is up to the task.</p> Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-11328994914358929712014-05-13T11:34:00.001-07:002014-05-13T11:34:50.683-07:00Why I’m probably on a watch list<p>From the <a href="http://www.theguardian.com/world/2014/may/13/glenn-greenwald-anonymous-mass-surveillance-governments-nasa-no-place-to-hide" target="_blank">Guardian</a> reporting on Glenn Greenwald’s new book:</p> <blockquote> <p>One document from the Snowden files, dated 3 October 2012, chillingly underscores the point. It revealed that the agency has been monitoring the online activities of individuals it believes express "radical" ideas and who have a "radicalising" influence on others. The memo discusses six individuals in particular, all Muslims, though it stresses that they are merely "exemplars".</p> <p>The NSA explicitly states that none of the targeted individuals is a member of a terrorist organisation or involved in any terror plots. Instead, their crime is the views they express, which are deemed "radical", a term that warrants pervasive surveillance and destructive campaigns to "exploit vulnerabilities".</p> <p>Among the information collected about the individuals, at least one of whom is a "US person", are details of their online sex activities and "online promiscuity" – the porn sites they visit and surreptitious sex chats with women who are not their wives. The agency discusses ways to exploit this information to destroy their reputations and credibility. […]</p> <p>All of the evidence highlights the implicit bargain that is offered to citizens: pose no challenge and you have nothing to worry about. Mind your own business, and support or at least tolerate what we do, and you'll be fine. Put differently, you must refrain from provoking the authority that wields surveillance powers if you wish to be deemed free of wrongdoing.</p> <p>This is a deal that invites passivity, obedience and conformity. The safest course, the way to ensure being "left alone", is to remain quiet, unthreatening and compliant.</p> </blockquote> <p>Are you going to remain quiet because you are afraid of being put on a watch list? You are part of the problem. Reform will require an expansion of consciousness to the point where people can begin actually think about things as deeply troubling as whether Building 7 which wasn’t hit by anything at the World Trade Center didn’t collapse because of the little fire on the third floor, but was professionally demolished….</p> <p>It is frightening to contemplate what our government has become. Follow your conscience.</p> <blockquote> <p><i>First they came for the Socialists, and I did not speak out-- <br />Because I was not a Socialist.</i></p> <p><i>Then they came for the Trade Unionists, and I did not speak out--</i> <br /><i>Because I was not a Trade Unionist.</i></p> <p><i>Then they came for the Jews, and I did not speak out--</i> <br /><i>Because I was not a Jew.</i></p> <p><i>Then they came for me--and there was no one left to speak for me.</i></p> <p><em>--Pastor <a href="http://en.wikipedia.org/wiki/Martin_Niem%C3%B6ller">Martin Niemöller</a></em></p></blockquote> Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com1tag:blogger.com,1999:blog-8270906704031641534.post-14553178399439205272014-05-10T09:25:00.000-07:002014-05-10T09:26:00.197-07:00The "government bad" meme<p> It's so easy to say that "government is bad, government is worthless, all government does is accumulate debt that it will never pay off. Martin Armstrong, an entertaining writer, is chiding the Pope for saying that some redistribution of the world's ever more concentrated wealth to the poor is called for. Armstrong says "even God is not on the Pope's side," citing the commandment not to covet thy neighbor's wealth. This is a biased use of citation to say the least.</p><p>It takes a rare strain of delusion to think that government is going away in this world. The libertarians are de facto shills for the status quo, no matter how much they say they'd like to tear it all down.</p><p>We still seem to be heading toward total dysfunctionality.</p>Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-4460307194159287722014-05-08T10:10:00.001-07:002014-05-08T10:10:55.721-07:00Interest rate reality check<p>There is a lot of talk about when “the Fed” is going to “raise rates.” Rates are actually determined mostly by supply and demand in the money market. Without getting into an academic fracas, I am going to present some graphs representing <strong>very strong empirical regularities that suggest interest rates, long or short, are not going up any time soon.</strong> </p> <p>I’ve presented one of these before, the long term chart; here I’ve added the 3-month T-bill. These graphs show the relationship between interest rates and the ratio of the St. Louis monetary base to GDP. Data is to April or first quarter 2014. The ratio of base to GDP is ~0.23 currently.</p> <p><a href="http://lh4.ggpht.com/-MxMOuB4bdNw/U2u6jVgDJqI/AAAAAAAAChM/fPY3bVEPvWI/s1600-h/image%25255B3%25255D.png"><img title="image" style="border-top: 0px; border-right: 0px; background-image: none; border-bottom: 0px; padding-top: 0px; padding-left: 0px; border-left: 0px; display: inline; padding-right: 0px" border="0" alt="image" src="http://lh3.ggpht.com/-uauk-GuZlcQ/U2u6kAoXpwI/AAAAAAAAChU/GSVDQO0XuMI/image_thumb%25255B1%25255D.png?imgmax=800" width="644" height="247" /></a></p> <p><a href="http://lh5.ggpht.com/-Ym9zUHjrOdY/U2u6kxVa96I/AAAAAAAAChc/uEdvyzYL7q8/s1600-h/image%25255B7%25255D.png"><img title="image" style="border-top: 0px; border-right: 0px; background-image: none; border-bottom: 0px; padding-top: 0px; padding-left: 0px; border-left: 0px; display: inline; padding-right: 0px" border="0" alt="image" src="http://lh5.ggpht.com/-2Z6bX5_orVc/U2u6lX60qMI/AAAAAAAAChk/GscnpsiIi8c/image_thumb%25255B3%25255D.png?imgmax=800" width="644" height="247" /></a></p> <p>Here is the trajectory of the base/GDP ratio. Can you spot the taper?</p> <p><a href="http://lh4.ggpht.com/-EB3qAw1Kz48/U2u6l5o92yI/AAAAAAAAChs/HZnwiGhcTEs/s1600-h/image%25255B11%25255D.png"><img title="image" style="border-top: 0px; border-right: 0px; background-image: none; border-bottom: 0px; padding-top: 0px; padding-left: 0px; border-left: 0px; display: inline; padding-right: 0px" border="0" alt="image" src="http://lh4.ggpht.com/-7_bD1yt6QhI/U2u6mXDbPCI/AAAAAAAACh0/RM42vMn4lys/image_thumb%25255B5%25255D.png?imgmax=800" width="644" height="247" /></a></p> <p>Here is the trajectory of base:</p> <p><a href="http://lh3.ggpht.com/-u7rtLxRVLp4/U2u6nFLDZNI/AAAAAAAACh8/Znm7hmauxoc/s1600-h/image%25255B15%25255D.png"><img title="image" style="border-top: 0px; border-right: 0px; background-image: none; border-bottom: 0px; padding-top: 0px; padding-left: 0px; border-left: 0px; display: inline; padding-right: 0px" border="0" alt="image" src="http://lh3.ggpht.com/-Hw3zCzimQck/U2u6nqJpdQI/AAAAAAAACiA/Ns9yPZfrsF8/image_thumb%25255B7%25255D.png?imgmax=800" width="644" height="247" /></a></p> <p>From these empirical regularities I draw the following conclusions:</p> <ul> <li>Interest rates aren’t going up any time soon. The “taper” is really a reduction in the rate of addition to base, not a reduction of base.</li> <li>Nor is inflation taking off any time soon, except for stagflationary cost-push. Negative real interest rates will continue. The labor market has no power; the reserve army of the unemployed (whether they are categorized as such or “not in the labor force”) is growing. There is no wherewithal for a wage-price spiral to get started.</li> </ul> <p>This mirrors the experience of the Thirties. ZIRP in that period lasted until near the end of WWII. It took a war to get the inflation started. Federal debt exploded. But America had relatively less sovereign debt going into that war; we are already at comparable levels.</p> <p>So people who suggest that the Fed “raise interest rates” are really asking the Fed to reduce the size of the monetary base a huge amount. There is no question the Fed would crash the stock market if they did this, purely because of the “optics,” so it won’t happen. Moreover, if the Fed sent all those bad debts back into the banking system they’d be subject to “stress testing” (heaven forbid they were actually marked to market) that I somehow doubt the Fed does on the stuff they hold. (Comment if you know better than I, please.)</p> <p>Plutocracy World, the Global Casino, rocks on for years to come. The banking system hangs like an albatross around the neck of the world economy. China seems to be making the same mistakes; it will be interesting to see what they do with all their bad debt. </p> <p>The great economic task of the first half of the twenty-first century will be to reform the world’s monetary system.</p> Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-63540764640296810462014-04-28T06:37:00.001-07:002014-04-28T06:37:30.213-07:00Sanctions salami tactics<p> Plutocrats have a certain grudging respect for one another. Naturally, they would like to put each other out of business unless it impacted their own business adversely. So I conclude that Obama's sanctions are an attempt to isolate Putin from his plutocratic supporters (although perhaps supporters is too strong a word; Putin keeps his plutocrats on a pretty tight leash, just ask <span style="line-height: 1.24; background-color: rgb(255, 255, 255); color: rgb(34, 34, 34); font-family: HelveticaNeue, Arial, sans-serif; font-size: 15px; -webkit-tap-highlight-color: rgba(0, 0, 0, 0);"><a href="http://en.wikipedia.org/wiki/Mikhail_Khodorkovsky" target="_self" title="">Mikhail Khodorkovsky</a></span><span style="background-color: rgb(255, 255, 255); -webkit-tap-highlight-color: rgba(0, 0, 0, 0); line-height: 1.3em;">).</span></p><p>But what if under the table the West is inviting Putin's plutocrats to join them, where the grass is greener and you don't have old Vlad busting your chops. We're not going to mention that we're going to give you a haircut on the way, but are you really ready for the rebirth of the Soviet Union? The London bankers must certainly be for it.</p><p> On the other hand, you have the Chinese promising big business... but China's biggest real estate investor is <a href="http://www.sovereignman.com/trends/the-richest-man-in-asia-is-selling-everything-in-china-14208/" target="_self" title="">unloading everything</a> as China replicates the Western real estate bubble and collapse....</p><p>It's tough being a Russian plutocrat these days. It's tough being a plutocrat anywhere, really, with all this talk that plutocrats are *too* wealthy (and are actually mass murdering their fellow humans with their insatiable greed by hording wealth and depriving others of health care, education and jobs). </p><p>Come to America! Come to the UK! Plutocrats rule! This is the subtext of what the Russian plutocrats are hearing.</p>Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-86853911717446884102014-04-24T04:55:00.001-07:002014-04-24T04:55:06.143-07:00The West breaks faith<p>With a country on the brink of civil war, crying out for a diplomatic solution--and actually with a diplomatic solution in place crying out for organized referendums to plot a sane course of action--the USA has fallen back to its default option--"bomb bomb bomb"--having sent first the CIA director on a secret mission that did not stay secret, then the Secretary of State, then the Vice President to Kiev to egg the quite possibly illegitimate Ukrainian government on to military action. The Russians are apparently sending a column of "peacekeeping" military in from the east.</p><p>This morning's first reports are <a href="http://www.zerohedge.com/news/2014-04-24/fighting-breaks-out-ukraine-deploys-tanks-apcs-troops-slavyansk-deaths-reported" target="_self" title="">here</a>.</p><p>One of the Rothschilds once said, "Buy on the smell of gunpowder." The stock market seems to like it. More on this below.</p><p>We will see if Putin's position is as strong as he seems to think it is. I think he is counting on being the leader of a global wave of blow-back against the US from the G20 - USA - UK to support his action.</p><p>This is clearly not the time to "unite" the Ukraine by military means. Those Ukrainians in the east who were "neutral" or merely desiring a peaceful resolution will never forgive the US and its puppets in Kiev for this, I think.</p><p>Our CIA-puppet president is proving to be stupider than he looks. Of course the underlying plan is to bankrupt the Ukraine--and possibly the EU--and swoop in and gather up the assets. We'll see how that works out.</p><p>America is doing what it does best to defend its currency, sowing chaos abroad. According to Martin Armstrong, the US stock market will benefit as well, as hot money pours in from China (collapsing) and Europe. He thinks the Dow will double by the end of 2015. This is not investment advice, but reportage. You invest at your own risk, unlike the Wall Street banks, who also invest at your risk.</p>Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-70693681329673854542014-04-22T07:18:00.001-07:002014-04-22T07:18:17.862-07:00How I got my anonymous handle<p> I blog anonymously using a handle given to me by Google. Why do I blog anonymously? Because I am humble and don't want the brilliance and perspicacity of my views to cause waves of adulation to return to me from my postings.</p><p>But today's revelation is how I got my handle. This is a true story. I got an email from Google one day several years ago saying that they had changed my user name. No reason was given, but because my previous user name was a simplified form of my real name perhaps they thought it was better for security. Or so I thought at the time. Nowadays lots of people have Gmail accounts with their real names on them.</p><p>Google said, "You new user name shall be 'b9brodwicz.'"</p><p>Hence, by inference I figured my first name must be "Benign."</p><p>True story.</p>Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-16560678088089805832014-04-21T13:24:00.001-07:002014-04-21T13:24:42.516-07:00Ukrainian forces in east disarming<div class="separator" style="text-align: center;"><iframe title="YouTube video player" class="youtube-player" type="text/html" width="500" height="305" src="http://www.youtube.com/embed/VNig07RtWxA" frameborder="0" allowfullscreen=""></iframe></div><p> <span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">http://youtu.be/VNig07RtWxA</span></p><p> I recommend the entire playlist of Vice News coverage of the Ukrainian crisis.</p>Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com3tag:blogger.com,1999:blog-8270906704031641534.post-46204962578781846492014-04-17T08:50:00.001-07:002014-04-17T09:04:45.047-07:00How stupid is our CIA-appointed president?<p>Washington has already lost the war in the Ukraine. The BRICs are accelerating their arrangements to avoid the petro-dollar. Russia and China have accelerated their plans to form a pan-Asian trade alliance. Russia is building an independent settlement system so that the US cannot impose economic sanctions through the banking system. The BRICs are forming their own development bank and have expressed a desire to avoid contact with the IMF.</p> <p>First the CIA stage a coup after Yanukovych cancels an agreement to join the EU in favor of closer relations with Russia. RT (note source) interviewed the former security chief of the Ukraine who described in detail how the coup was run out of the American embassy in Kiev. The director of the CIA, John Brennan, recently visited Kiev to follow up. This was reported on RT and in the American alternative press, but nowhere in the MSM. The White House confirmed the visit.</p> <p>The ever-stupid American public is being told the Russians fomented the coup; that it is the Russians destabilizing the Ukraine; and they are buying it.</p> <p>The German “60 Minutes” has just investigated the sniper shootings at the Maidan and found that they were perpetrated by the protesters, not pro-Russian agents. This is typical false flag chaos-creation by the CIA.</p> <p>Putin has been consistent in his demands: he wants the Ukraine to be a buffer state, not aligned with NATO; and given the demonstrably split demographics and east-west hostilities, for referendums to be held in the east to establish more autonomy for the eastern provinces, who large dislike Kiev. The statistics I’ve seen on eastern Ukrainian sentiment on secession and joining Russia are about a third for, a third against, a third just want peace and don’t care. </p> <p>Putin is correct that the primary danger now is civil war. Military action by Kiev in the east virtually guarantees it. If Putin is smart, he will not engage militarily; and the West will lose the hearts and minds of Ukrainians for generations to come. As the EU goes bust they will look to the east. They will likely default on debts to the IMF under such conditions.</p> <p>What is is disturbing this morning is that our CIA-appointed president is on TV looking very gray and exhausted saying that under no conditions will America take military action, that our only course will be tightening sanctions. </p> <p><strong>In contrast,</strong> Michael Hudson, who is better connected than I, is on RealNews saying that under the table the Americans are threatening Russia with military action, including nuclear, and that Europe and the rest of the world are terrified by this.</p> <p>The neocon-neoliberal Washington Consensus is on its last legs. Their program for world domination has already failed; they’ve hollowed out the US economy and turned the rest of the world against us. The plutocrats who are pulling the strings everywhere have no national allegiances. They park their money beyond national tax jurisdictions; and they will make themselves at home in Europe or Asia and encourage the EU to join the pan-Asian trade zone if that suits them; and where would that leave the US?</p> <p>It is time for Russia and America to work together to let the Ukraine develop a federalized structure; and to jointly support this impoverished, ransacked region so that it may support itself. America via the IMF wrecked the Russian economy when the Soviet Union fell (by “free market shock treatment” that destroyed the social fabric, fostered anti-Semitism and created pronounced inequality and government by a plutocracy that Putin is trying to ride herd on).</p> <p>Destroying the Ukraine in the name of freedom helps no one except Blackwater, or Xi, or Academi and the rest of their military-industrial-financial complex ilk. And of course the plutocrats on both sides who would like to buy up Ukrainian assets at bargain prices.</p> <p>But this is what Washington does best, destroying countries in the name of freedom. </p> <p>But starting World War III would guarantee that the rest of world would turn on us.</p> <p>Time to throw the psychopathic bums out, America. Wake up!</p> Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-41473986568235090392014-04-11T16:08:00.001-07:002014-04-11T16:08:44.546-07:00Krugman on Piketty<p>Paul Krugman has a beautiful review of Thomas Piketty’s <em>Capital in the Twenty-First Century. </em>I have described Piketty as the hero-economist on a white horse who will finally and I hope irrevocably shut up the neocons and neoliberals who would tell you that the distribution is not a worthy subject of economic analysis. Now, next, if economics would take note of Wilkinson’s <em>epidemiological</em> work on inequality (see <a href="https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CC4QtwIwAA&url=http%3A%2F%2Fwww.ted.com%2Ftalks%2Frichard_wilkinson&ei=mHNIU7ijKKONygH-nIDwCQ&usg=AFQjCNGYNPCwRJpaf7e257h41gwzZf_Niw&sig2=9WT_kgDH6leoTxWM4qSW4Q&bvm=bv.64542518,d.aWc" target="_blank">this</a> for intro) we might be able to say economics is a noble profession seeking social justice (as some used to think of it) rather than a bunch of whoring cheerleaders for the rich. </p> <p>Those of us who were young economics professors in 1981 as Ronald Reagan began his program of fraudulent “supply side” tax cuts for the rich (“trickle down economics”)  told our students that America was being duped, that it was time for “mourning in America,” that is was not “morning in America.”</p> <blockquote> <h4><a href="http://www.nybooks.com/articles/archives/2014/may/08/thomas-piketty-new-gilded-age/?insrc=hpss" target="_blank">Why We’re in a New Gilded Age</a></h4> <p><a href="http://www.nybooks.com/contributors/paul-krugman/">Paul Krugman</a></p> <p><a href="http://www.nybooks.com/issues/2014/may/08/">MAY 8, 2014 ISSUE</a></p> <h6><a href="http://www.amazon.com/gp/product/067443000X?ie=UTF8&tag=thneyoreofbo-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=067443000X">Capital in the Twenty-First Century</a><img alt="" src="http://www.assoc-amazon.com/e/ir?t=thneyoreofbo-20&l=as2&o=1&a=067443000X" width="1" height="1" /></h6> <p>by Thomas Piketty, translated from the French by Arthur Goldhammer</p> <p>Belknap Press/Harvard University Press, 685 pp., $39.95</p> <p><a href="http://www.nybooks.com/media/photo/2014/04/09/krugman_1-050814.jpg"><img alt="krugman_1-050814" src="http://www.nybooks.com/media/photo/2014/04/09/krugman_1-050814_jpg_250x1434_q85.jpg" /></a><small>Emmanuelle Marchadour</small></p> <p>Thomas Piketty in his office at the Paris School of Economics, 2013</p> <p>Thomas Piketty, professor at the Paris School of Economics, isn’t a household name, although that may change with the English-language publication of his magnificent, sweeping meditation on inequality, <i>Capital in the Twenty-First Century</i>. Yet his influence runs deep. It has become a commonplace to say that we are living in a second Gilded Age—or, as Piketty likes to put it, a second Belle Époque—defined by the incredible rise of the “one percent.” But it has only become a commonplace thanks to Piketty’s work. In particular, he and a few colleagues (notably Anthony Atkinson at Oxford and Emmanuel Saez at Berkeley) have pioneered statistical techniques that make it possible to track the concentration of income and wealth deep into the past—back to the early twentieth century for America and Britain, and all the way to the late eighteenth century for France.</p> <p>(continues <a href="http://www.nybooks.com/articles/archives/2014/may/08/thomas-piketty-new-gilded-age/?insrc=hpss" target="_blank">here</a>)</p></blockquote> Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-78122105771048755352014-04-07T06:57:00.001-07:002014-04-07T06:57:35.893-07:00MMT is here already<p> I cannot recomment strongly enough reading David Stockman's cogent exposition of how MMT is already here:</p><h1 class="entry-title" style="box-sizing: border-box; word-wrap: break-word; margin-bottom: 6px; background-color: rgb(255, 255, 255); -webkit-text-size-adjust: 100%; line-height: 1.2; font-size: 18px; font-family: Lato, sans-serif; color: rgb(30, 30, 30);"><blockquote><p><a href="http://davidstockmanscontracorner.com/2014/04/02/yellens-dog-is-eating-homework-congress-didnt-even-assign/" target="_self" title="">Yellen’s Dog Is Eating Homework Congress Didn’t Even Assign: Reflections On The Greatest Mission Creep Ever</a></p></blockquote><p> </p></h1><p> MMT is just another egregious form of fiat money. I have come to believe that human primates are not sufficiently self-controlled to handle the ability to print money without abusing it in extreme ways. Money based on metal provides, historically, stable prices, and hence removes the impetus for ever-increasing leverage (to get rich quick). The proponents of MMT on the left would use it to promote social welfare, I agree; but the Fed has beaten them to it, to promote welfare for bankers.</p><p>As to the critique that metal-backed money creates too much instability, two points:</p><p>First, fractional reserve banking existed during the gold era, and yet prices were stable on average over long periods. To my knowledge, this effect hasn't been totally explained. To dispense with the assertion that modern, post-1971 monetary policy created a "great moderation," no, it created a great debt bubble, as spending went further and further beyond income.</p><p>Second, the very idea that the business cycle should be stabilized is suspect. People should be stabilized. Most cyclical adjustments (or even more so, structural adjustments) need to be made; and "stabilization" policy simply masks what needs to be done, and generally prevents progress from being made. For example, preventing bad debts from being charged off rather than being put on the backs of taxpayers (around the world, as our model has been copied).</p><p>People in transition should be stabilized. People are in fact any nation's greatest resource. They should be kept healthy and offered transition assistance or at least a basic income.</p><p>What we are learning is that "stabilization" has been coopted on behalf of the haves, the have-nots don't have enough money, and aggregate demand and human capital are collapsing.</p>Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-29187046024634618312014-03-29T13:16:00.001-07:002014-03-29T13:16:38.955-07:00A diplomatic solution in the Ukraine<p> US Secretary of State John Kerry meets with Russian Foreign Minister Lavrov in Paris next week to talk about a negotiated settlement in the Ukraine, even as some 60,000 Russian troops mass on the eastern Ukrainian border.</p><p>An optimal negotiated settlement, in my view, would be approximately as follows:</p><ul><li>Voting in May determines a federal structure for the country;</li><li>West and Russia let portions that want to join EU join; NATO membership not an option;</li><li>Russia is assured it can keep its navel bases in the Crimea (they already had them); while a second plebescite if necessary validates the Crimea returning to Russia; all such voting needs to be internationally monitored and squeaky clean;</li><li>Russia provides as close to an apology as possible to the Ukraine for its invasion of the Crimea, accompanied by a large chunk of the IMF money that has flowed to it in aid to the federated Ukraine.</li></ul>The costs of war would fall on innocents, the profits would flow to plutocrats on both sides. I hope Putin sees this. Russia is collapsing demographically (see <a href="http://fabiusmaximus.com/2008/06/06/russia/" target="_self" title="">this</a>); it is an early-dying nation of drunks and Putin is holding on to power only by increasing domestic repression and fanning the flames of nationalism.<p><br><p>Should Putin invade eastern Ukraine before May as many expect, NATO will surely arm the Ukrainian forces, which can be described as rag-tag (Vice News has great video reporting from the Ukraine). This war would be pathetic in the extreme. NATO could send in drones, no boots on the ground. The Ukraine would be torn up for a generation. There would be further losses to Western banks, who have just coughed up a bundle to keep the gas flowing, and who, through London, have a huge interest in seeing the Russian and Ukrainian plutocrats stay whole. So I can only imagine that the banks are doing their best to sweet talk both sides into playing nice.</p><p>When the bankers don't want war, it's not likely to happen. When it does, the bankers generally try to line up on the side that will win. If the hawks in the West push for war and get it, Russia might collapse, and another Russian revolution might easily be the result--the Western banks can't count on a stooge like Boris Yeltsin this time to let them come in and loot. Anyway, the Russian plutocrats already have their positions, are being serviced by the London banks, and would probably be happy to run the country as regional war lords. If the West can turn the Russian plutocrats against Putin by telling them what a sweet deal they could have if Russia fell to the West, then Putin might find himself odd man out. I wonder if the Russian plutocrats still in the country can leave if they want to.</p><p>Would the plutocrats trust the Western banks and the CIA? Well, they did pretty well working with them 23 years ago.... But can Russians ever make democracy work, or do they need an authoritarian Father figure? The neo-cons might not care, so long as they weaken Russia for another generation.</p><p><span style="line-height: 1.3em;">Who or what would come after Putin? </span>That is the question.</p></p>Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-64420367001899616052014-03-27T18:39:00.001-07:002014-03-27T18:49:52.556-07:00Putin collects his chips<p>With an <a href="http://www.cnbc.com/id/101514648" target="_self" title="">IMF deal</a> in the neighborhood of $18 billion on the fast track, and <a href="http://www.cnbc.com/id/101514648" target="_self" title="">Putin asking</a> for about $16 billion<span style="line-height: 1.3em;"> amount in payment for gas much already delivered and other obligations, it would appear that Putin is coming out ahead financially so far on his Crimean adventure.</span></p><p> While President Obama authorized the sale of some of America's Strategic Petroleum Reserve, oil prices seemed to up this morning when I checked.</p>Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-78333728607895104052014-03-26T10:48:00.001-07:002014-03-27T07:54:53.245-07:00After QE; Piketty and neo-feudalismThere is a lot of nonsense going around about interest rates going up post-QE. Following John Hussman's lead, in a <a href="http://animalspiritspage.blogspot.com/2014/02/when-will-long-rates-rise.html">recent post</a> I showed the empirical regularity governing the relationship between central bank balance sheet as a percent of GDP and long-term interest rates proxied by the 10 year T-bond.<br />
<img src="http://lh6.ggpht.com/-Fwghvzlz6Vo/UwJmcxu4yxI/AAAAAAAACgE/prgZ6QBISoI/image_thumb%25255B1%25255D.png?imgmax=800" /><br />
<blockquote>
Recently Base/GDP has been about 0.22, so we are way out on the right end tail. It would take a reduction of the ratio of about 15 percent of GDP to begin to raise long rates, or about $2.6 trillion at current rates of GDP. The St. Louis base is currently at $3.7 trillion, and has been growing at over 20 percent a year since the last recession.</blockquote>
Now, "tapering" is a reduction in the <em>rate of increase</em> of additions to the base, not a reduction of the base. The chart looks to me like a very strong empirical regularity indeed. So the chance that long rates will rise anytime soon is remote in the extreme, as the Fed has no announced plans whatsoever to actually reduce the base.<br />
Long rates will remain low and the bad debt clogging the banking system will remain impacted, that much seems assured for years to come.<br />
What is a somewhat lower probability outcome is that the dump-the-dollar movement internationally gains sufficient momentum that the Fed has to buy up more and more (perhaps virtually all) new Government debt. This might be called the MMT-by-force-<em>majeure</em> outcome, as there is little chance that such additions to the Fed's balance sheet will <em>ever </em>go away.<br />
<br />
In this latter case rates will not go up because of the empirical regularity shown above, but as the dollar falls on the foreign exchange markets due to weak demand to hold or trade in dollars, there will be import inflation domestically in the US. This will cause a further collapse of effective demand--already afflicting the bottom 80 percent or so of Americans--as real purchasing power of consumers is decimated. The US will become an even less attractive place to invest, and capital flight will occur. The US's status as a banana republic will be cemented.<br />
<br />
This is the essence of the dreaded global currency reset: the dollar falls on international markets, import inflation slams domestic real demand, but neither short-term nor long-term interest rates rise (short rates exhibit a similar empirical regularity to that shown above). A domestic stagflation occurs. The Fed, ever the servant of Capital, will fight the inflation with modest rises in short rates (this can be done administratively in the short run) sufficient to beat any thought of asking for higher wages out of the heads of workers even though labor cost-push inflation exists only as a curiosity in economic history textbooks.<br />
In the final chapter plutocrats of various "nationalities" (with allegiance to none) will divvy up Plantation America, keeping the best parts of it private, for themselves and their would-be-royal progeny.<br />
<strong><br /></strong>
<strong>Enter the Anti-Mainstream Economist</strong><br />
<br />
Certainly Thomas Piketty is the most important economist of the past 80 years, since the last Fourth Turning (Keynes got it that time). I highly recommend <em>The New Yorker</em>'s review of his big book (<a href="http://www.newyorker.com/arts/critics/books/2014/03/31/140331crbo_books_cassidy">here</a>). A Frenchman, Picketty came to the US at 22 as a young economics superstar and to his great credit, became immediately disenchanted (disgusted is a better word, probably) with the status-quo-supporting mathematical fictions he encountered at MIT. (Disgust afflicted your correspondent upon entering economics at the graduate level in search of "science" after an undergraduate career studying literature.) Son of a leftist French couple, Piketty imbibed the Marxist notion of capital increasingly displacing labor leading to the reserve army of the unemployed and set out to study the issue of the distribution empirically, probably sensing that only real world data could displace the mathematical fictions of the self-congratulating, narcissistic mathematical economist-priests ruling policy in the West.<br />
<br />
Piketty's concerns over where the world is going are as dire as mine. He is the Anti-Mainstream economist on the white horse that I thought could never possibly arrive. <em>The</em> <em>New Yorker </em>disappointingly pooh-poohs Piketty's suggestions that we need to raise taxes on the incomes and wealth of the plutocrats as politically infeasible. (But of course <em>The New Yorker</em>’s readership inhabits the status quo, so what else could they say?) <br />
Democracy will have to be reborn to prevent a return to out-and-out feudalism.<br />
It couldn't happen here, of course (although Piketty now has a stateside ally in fellow French-born Berkeley economist Emanuel Saez). Piketty turned tail after a couple of years in the US and returned to Paris, where he has remained since.<br />
<br />
[Editor: spelling of Piketty's name corrected 3/27/2014]Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-88105038694475591172014-03-23T13:29:00.001-07:002014-03-23T13:29:55.112-07:00“Pushing on a string”—because the status quo<p>When I learned my macro, it was accepted that increasing reserves of the banking system when it was already in a substantial excess reserves position would have no effect on real output; hence it was called “pushing on a string,” an expression that I believe was coined in the Great Depression with respect to the excess reserves of the day.</p> <p>In the Liquidity Trap, monetary policy was considered to be useless.</p> <p><img src="http://research.stlouisfed.org/fredgraph.png?g=u8g" /></p> <p>Now we have the trickle up theory of asset inflation, openly acknowledged by the Fed. Janet Yellen says the trickle down happens after the trickle up. But of course, the Fed does not acknowledge that asset inflation is inflation; it’s just wealth effect. John Hussman has pointed out that even the wealth effect is caused by an illusion, that the banking system is solvent, courtesy of FAS 157. Nevertheless, the Fed feels compelled to sweep the bad assets under the carpet before they can be audited. In the end we’ll have Good Bank, Bad Bank, with the Bad Bank being the Fed.</p> <p>The non-economists readers of this blog need to be aware that current Fed policy, QE, goes against everything the entire mainstream macroeconomics canon says, but you won’t find an academic economist to admit it. If they’re conservative, like the Establishment Blowhard Gregory Mankiw, they like it because it lines the pockets of their clientele, the 1 percent (the “because capitalism (the banks want it) otherwise martial law” argument). If they’re liberal, like Paul Krugman, they like it because liberals always like accommodative monetary policy; it always serves their clientele, government, through monetization of the debt.</p> <p>So mainstream academic economics has aligned itself with the status quo, and established its lack of intellectual integrity beyond any doubt.</p> <p>The two political parties and their mainstream economist cheerleaders both support the status quo, while the structural rot continues. You just need to know they’ve abandoned everything the discipline has been saying for over thirty years in doing so.</p> Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-79592353969953196332014-03-23T08:16:00.001-07:002014-03-23T08:16:57.862-07:00Comment posted on another website<p>Posted this morning in comments at FabiusMaximus.com</p><p> <span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">Fab,</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">You amusingly take your contrarian tendencies to meta-levels of self-revolution that virtually are always entertaining! But you must be dizzy at times. Thanks for being so entertaining!</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">Two comments semi-germane to today's post:</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">1. As I've pointed out before, the rehearsal of catastrophe is always good entertainment (Aristotle), but that doesn't mean it's wrong! W.r.t current forecasts of collapse, my personal take is that the economy still exhibits the signature of pre-collapse seen before the Great Depression: excessive debt/GDP, mostly bad debt not being cleared by the banks; and very high income inequality. So I expect another financial collapse. This is a judgment call resulting from 30 years post economics PhD following the economy and learning to separate the mainstream propaganda from "the truth" as far as I can discern it. </span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">2. John Robb is out with a proclamation that the problem with the world is that "the American dream" (that one should be able to get ahead by working hard) and that it needs to be reborn. I assert that it is excessive greed of the "managerial capitalist class" and their focus on profit (i.e., usually by screwing labor; record high profit/GDP etc.) that is the problem, and until all corporations face regulations similar to those in Germany and Scandinavia recognizing that employees are valid stakeholders in a corporation the problem won't be solved.</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">Back in the 'Seventies when regulation was in its heydey businesses used to say (re: environmental protections, for example) that they couldn't do it by themselves, that it needed to be required of all or they couldn't make a decent profit. Same thing applies today. Employee rights need to be enforced via law around the world in a reasonable way.</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">In my more optimistic moments I speculate that, as the most powerful form of social organization on the planet today, that corporations will naturally evolve to optimize their internal distributions a la Wilkinson (see his great TED talk on inequality) to maximize health and welfare benefits of all.</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">Interestingly, Putin has encouraged his oligarchs to register their businesses for tax purposes in Russia to support the nation. Radical concept.</span></p>Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-5265235668643456442014-03-22T09:50:00.001-07:002014-03-22T09:50:26.292-07:00Petrodollar alert<p> In case you missed it, ZeroHedge caught the announcement of a non-dollar-denominated energy deal between Russia and China:</p><h1 class="title" style="padding-bottom: 5px; margin-right: auto; margin-left: auto; background-color: rgb(255, 255, 255);"><p style="font-family: 'Lucida Grande', Verdana, sans-serif; line-height: 21px; -webkit-text-size-adjust: auto;"><a href="http://www.zerohedge.com/news/2014-03-21/petrodollar-alert-isolated-west-putin-prepares-announce-holy-grail-gas-deal-china" target="_self" title=""><font size="3">Petrodollar Alert: Putin Prepares To Announce "Holy Grail" Gas Deal With China</font></a></p><p style="font-family: 'Lucida Grande', Verdana, sans-serif; line-height: 21px; -webkit-text-size-adjust: auto;"><font size="3"><span style="font-weight: normal;">China will sell US Treasuries to buy Russian oil, and Russia will stop borrowing from Western banks, is the general idea.</span></font></p><p style="font-family: 'Lucida Grande', Verdana, sans-serif; line-height: 21px; -webkit-text-size-adjust: auto;"><br></p></h1>Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-3906984233627780072014-03-20T19:06:00.001-07:002014-03-20T19:06:34.740-07:00Janet Yellen interview<p> I have just watched the Janet Yellen interview (available <a href="http://www.mauldineconomics.com/landing/janet-yellen-exclusive-video" target="_self" title="">here</a>) from forthcoming movie, <em>Money for Nothing: Inside the Federal Reserve,</em> and I must say I found Ms. Yellen's Brooklyn folksy I'm-your-friendly-Berkeley-macro-teacher persona absolutely nauseating.</p><p>Questioned aboat the steps taken to resolve the financial crisis in 2008 she presents the same tired "we had to do something of the system was gonna collapse" without the slightest seeming awareness that when FDR, one of her putative heroes, I would guess, attacked the same structural problem in the 'Thirties he took <em>structural actions to remedy them.</em></p><p> She certainly has never made a loan and has no understanding of what bad debt is, debts that will never be repaid and should be charged off by the bank with the bank taking the loss. </p><p>It's the same old Hank Paulson, either/or, bail Wall Street out, ignore the fraud, let them increase their bonuses in coming years on the backs of the taxpayers--or it's martial law.</p><p>And these macro people still think the Phillips Curve works! </p><p>I could go on, but I can't. It was just sickening. </p><p>Janet Yellen will do Wall Street's bidding and like Bernanke cash in afterwards. </p><p>I hope I outlive the Fed. It will be great day for America when the Fed is abolished.</p>Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-32350740313757942892014-03-20T07:40:00.001-07:002014-03-20T08:17:33.797-07:00Fiat money = funny money => Fed must screw labor<p> h/t Mish for pointing out <a href="http://www.project-syndicate.org/commentary/adair-turner-says-that-some-central-banks--particularly-japan-s--will-never-shrink-their-balance-sheets" target="_self" title="">an article</a> by <span style="line-height: 1.3em;">Adair Turner, former Chairman of the United Kingdom’s Financial Services Authority, a member of the UK’s Financial Policy Committee and the House of Lords, suggesting that the Fed or any fiat money central bank might accept conversion of assets on its balance sheet, i.e., Treasuries, into zero coupon perpetuities, and so create "helicopter money" and permanent monetization of the sovereign debt.</span></p><p><span style="line-height: 1.3em;">I suggested just this strategy as a joke some time ago (<a href="http://AdairTurner,formerChairmanoftheUnitedKingdom’sFinancialServicesAuthority,isamemberoftheUK’sFinancialPolicyCommitteeandtheHouseofLords.Readmoreathttp://www.project-syndicate.org/columnist/adair-turner#WJceWCyQzqYv0bMi.99" target="_self" title="">here)</a>.</span></p><p> However, we all knew that the Fed can and does print money. But stating it as baldly as this brings me back to the problem this causes in the labor market. </p><blockquote><p>As I have said repeatedly, inflation (a sustained wage price spiral inflation) is always and everywhere a labor market phenomenon accommodated by monetary policy.</p></blockquote><p>Thus, with the vast overhang of base the Fed must worry about inflation in the long run, even if not so much right now. Why not now? Because prosumers are overburdened with debt and inflation is nowhere raising its ugly head. Looking more deflationary now, it is.</p><p>But should actual deleveraging take place by some other means than a few bad debts actually being charged off (imagine that!), such as bad debts being recognized as such (FAS 157 thrown out, good riddance) and debtors finding relief as the (unpaid) debts hit statute of limitation dates with no more recourse--<em>then</em> the Fed would have to worry about a wage-price spiral getting going.</p><p>In other words, the Fed is intrinsically anti-labor and always will be. What did Paul Volcker teach us, if not that? You got to recruit some cannon fodder, some <em>inflation fighters</em> to win the war on inflation.</p><p>There's an interesting wrinkle in here in that Janet Yellen has allegedly stated her desire to see the labor force participation rate improve, while at the same time worrying that it will adversely impact the unemployment rate (duh!) and hence, confidence. (My readership is small but highly intelligent and knows that if discouraged workers are included the unemployment rate is well above 10 percent by the governement's own questionable figures.) </p><p>I do believe the Fed economists are aware of the psychological importance of the unemployment rate that the unknown economist whose work I channel has established, and which the econophysicists seem to appreciate far more than the professional economist (i.e., generally establishment cheerleaders) community does.</p><p>Sometime within the next few years the unemployment rate will meet its falling adaptation level and rise above it. That is when we will see the next collapse of confidence. So the model predicts.</p><p>In passing I note that MMT does not really offer a way out of the wage price spiral problem. They just seem to be willing to inflate the debt out, disco style. However, the danger of hyperinflation may be greater this time, given the size of the base, and they seem oblivious (to me) to the Austrian distributional implications that those who get new money first can increase their wealth at rates much faster than those depending on increasing real wages can expect.</p><p> To bing this discussion full circle, let's ask what comes next for the international monetary system? Does an IMF ADR basket currency make the central banks love labor any more? I think not. Unless they're playing competitive devaluation games, they still can't afford too much inflation ("a little inflation is a good thing, but not too much"--this is the mainstream cant). </p><p>Given the plutocratic distribution in the world today, it seems to me that <em>any</em> fiat money system broadly adopted is going to result in labor continually getting screwed, absent really aggressive incomes policies (guaranteed basic income and health care, for example; or even better, enforced limits on wage contours, now being challenged even in Sweden, such is the prevalence of greed in the current historical moment).</p><p>History shows that a metal based system achieves stable prices over long periods. Sorry, "Rich Dad, Poor Dad," you're not a genius for investing in real estate. To paraphrase Paul Samuelson, during an inflation every fool is a great financier. It takes no brains to load up on debt when inflation is guaranteed.</p><p>Are there financial crises under a metal standard? Yes, just like under fiat banking as it rides into its sunset. The answer to cyclical variations is always to let them happen, to concentrate on stabilizing people and not "the business cycle," to take care of displaced persons during the adjustment. And to keep banks out of the business of speculation with other people's money.</p><p> </p>Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-73416628019621745852014-03-18T14:48:00.001-07:002014-03-18T14:48:54.648-07:00What currency shall we trade in?<p> From my reading and YouTubing it would seem that the question on the mind's of the Russians and others who resent the dollar's hegemony as a reserve currency is this:</p><p>How destabilizing would it be to accept payment in another currency for our oil (Saudis), gas (Russia), or other heavily traded good?</p><p>The Chinese stopped accumulating Treasuries a year ago but along with the Japanese still own a bundle, and would like for the purchasing power of those securities not to fall while they're buying up real assets (land, capaital goods) in places like Africa.</p><p>My entirely subjective estimate is that if the Russians started asking for gold or Euros for their gas that the dollar would swoon but not collapse. As Yves pointed out the other day, that would technically speaking increase the desirability of our export goods, while dosing those of us stateside with some cost push inflation on our imported goods (oil, i.e., gasoline for most of us and other goods).</p><p>Meanwhile the Chinese are letting their yuan swoon a bit within a wider trading band, indicating that they are still in the race to the bottom as far as currency devaluation goes. The Russians are reported to be fighting the decline of the ruble by raising gas prices.</p><p>I keep hearing about the currency reset, how the feds will split off an international ("scheiss") dollar that will be about a third less valuable than the current dollar. I really don't know how you do this except through forex market interventions to debase the dollar by flooding the market with them. Could happen by dint of others' interventions as well. But as I say, not everyone abroad wants to see the dollar collapse.</p>Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0tag:blogger.com,1999:blog-8270906704031641534.post-29293473792437734562014-03-16T10:48:00.001-07:002014-03-16T10:48:27.881-07:00First the IMF, now NASA<h2 class="itemTitle" style="padding-top: 10px; padding-bottom: 4px; border: 0px; font-weight: normal; background-color: rgb(255, 255, 255); -webkit-text-size-adjust: auto; line-height: 39px;"><p><font size="3"><a href="http://truth-IMFUrgesRedistributionToTackleGrowingInequality.org/news/item/22496-imf-urges-redistribution-to-tackle-growing-inequality" target="_self" title="">IMF Urges Redistribution To Tackle Growing Inequality</a> The usual pro-forma self-flagellation, but it can't hurt.</font></p></h2><p>From <a href="http://www.rawstory.com/rs/2014/03/14/nasa-industrial-civilization-headed-for-irreversible-collapse/" target="_self" title="">Guardian</a>:</p><blockquote><p style="margin-bottom: 15px; border: 0px; vertical-align: baseline;"><em style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">Natural and social scientists develop new model of how ‘perfect storm’ of crises could unravel global system</em></p></blockquote><blockquote><p style="margin-bottom: 15px; border: 0px; vertical-align: baseline;"><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">A new study sponsored by NASA’s Goddard Space Flight Center has highlighted the prospect that global industrial civilisation could collapse in coming decades due to unsustainable resource exploitation and increasingly unequal wealth distribution.</span></p><p style="margin-bottom: 15px; border: 0px; vertical-align: baseline;"><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">Noting that warnings of ‘collapse’ are often seen to be fringe or controversial, the study attempts to make sense of compelling historical data showing that “the process of rise-and-collapse is actually a recurrent cycle found throughout history.” Cases of severe civilisational disruption due to “precipitous collapse — often lasting centuries — have been quite common.”</span></p><p style="margin-bottom: 15px; border: 0px; vertical-align: baseline;"><span style="font-style: inherit; line-height: 1.3em; background-color: rgba(255, 255, 255, 0); -webkit-text-size-adjust: auto;">The research project is based on a new cross-disciplinary ‘Human And Nature DYnamical’ (HANDY) model, led by applied mathematician Safa Motesharri of the US National Science Foundation-supported</span><span style="font-style: inherit; line-height: 1.3em; background-color: rgba(255, 255, 255, 0); -webkit-text-size-adjust: auto;"> </span><a href="http://www.sesync.org/" target="_blank" style="font-style: inherit; line-height: 1.3em; -webkit-text-size-adjust: auto; margin: 0px; padding: 0px; border: 0px; font-weight: bold; vertical-align: baseline; text-decoration: none;">National Socio-Environmental Synthesis Center,</a><span style="font-style: inherit; line-height: 1.3em; background-color: rgba(255, 255, 255, 0); -webkit-text-size-adjust: auto;"> </span><span style="font-style: inherit; line-height: 1.3em; background-color: rgba(255, 255, 255, 0); -webkit-text-size-adjust: auto;">in association with a team of natural and social scientists. The study based on the HANDY model has been accepted for publication in the peer reviewed Elsevier journal, Ecological Economics.</span></p><p style="margin-bottom: 15px; border: 0px; vertical-align: baseline;"><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">It finds that according to the historical record even advanced, complex civilisations are susceptible to collapse, raising questions about the sustainability of modern civilisation:</span></p><p style="margin-bottom: 15px; border: 0px; vertical-align: baseline;"><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">“The fall of the Roman Empire, and the equally (if not more) advanced Han, Mauryan, and Gupta Empires, as well as so many advanced Mesopotamian Empires, are all testimony to the fact that advanced, sophisticated, complex, and creative civilizations can be both fragile and impermanent.”</span></p><p style="margin-bottom: 15px; border: 0px; vertical-align: baseline;"><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">By investigating the human-nature dynamics of these past cases of collapse, the project identifies the most salient interrelated factors which explain civilisational decline, and which may help determine the risk of collapse today: namely, Population, Climate, Water, Agriculture, and Energy.</span></p><p style="margin-bottom: 15px; border: 0px; vertical-align: baseline;"><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">These factors can lead to collapse when they converge to generate two crucial social features: “the stretching of resources due to the strain placed on the ecological carrying capacity”; and “the economic stratification of society into Elites [rich] and Masses (or “Commoners”) [poor]” These social phenomena have played “a central role in the character or in the process of the collapse,” in all such cases over “the last five thousand years.”</span></p><p style="margin-bottom: 15px; border: 0px; vertical-align: baseline;"><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">Currently, high levels of economic stratification are linked directly to overconsumption of resources, with “Elites” based largely in industrialised countries responsible for both:</span></p><p style="margin-bottom: 15px; border: 0px; vertical-align: baseline;"><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">“… accumulated surplus is not evenly distributed throughout society, but rather has been controlled by an elite. The mass of the population, while producing the wealth, is only allocated a small portion of it by elites, usually at or just above subsistence levels.”</span></p></blockquote><p> </p>Anonymoushttp://www.blogger.com/profile/06852145145315416007noreply@blogger.com0