Greenberg’s Laws

Universal truths about the world around us.


Wolf Richter: How Much Money Laundering is Going On in the Housing Market? A Lot

Naked Capitalism has the article Wolf Richter: How Much Money Laundering is Going On in the Housing Market? A Lot.

The US housing market has been a perfect platform to launder large amounts of money, no questions asked. Brokers, banks, and other industry professionals played along. There were no reporting requirements. Everyone in the world knew it. And they came to launder their cash by buying expensive homes.

I hadn’t thought about this activity until reading about it in this article. It is valuable information because it may give a hint at a bubble that is about to burst. As a participant in the economy, it is always nice to know when it may be wise to take cover.

As an aside, this may explain why 45 thought this was an opportune moment to get out of the luxury housing market and take a safe job as President of the United States.

I am going to file this under Greenberg’s Law of Counterproductive Behavior.

If you see a behavior that seems to you to be counterproductive, perhaps you have misunderstood what that behavior is meant to produce.

In case you wondered why there were people who were willing to pay exorbitant (and seemingly counter-productive) prices for luxury homes, now you know what they were trying to produce. They were paying to get their money laundered.


Let’s Talk About Bernie’s Capitulation To The Democratic Establishment   Recently updated !

Newslogue has the article Let’s Talk About Bernie’s Capitulation To The Democratic Establishment. The article has many positive things to say about Bernie Sanders, but it also wants us to be aware of this critique.

… Bernie is not our leader. He isn’t. The extent to which the establishment has sunk their talons into him proves that we can’t afford to allow him to lead us. They will use him to steer us in unwholesome directions and guide us away from our desire to destroy their sick institutions. “Bernie says” should not be received with any more authoritative weight than “Noam Chomsky says,” “Julian Assange says” or “Caitlin Johnstone says”; it should always be taken as data about someone’s opinion, never as gospel truth.

There are a number of interesting quotes from authorities about the danger of just trusting to authorities. Maybe that makes their quotes to be paradoxes, but I think they are right.

Remember Greenberg’s Law of Reverence.

Principles are not great because a revered person spoke of them. A person is revered because he or she spoke of great principles.


Greenspan: “There is nothing to prevent the government from creating as much money as it wants.”   Recently updated !

There is the YouTube video Greenspan: “There is nothing to prevent the government from creating as much money as it wants.”

You can see in the way that Paul Ryan nods at Alan Greenspan’s answer that this is going in one ear and dribbling right out of the other. Given as Greenspan says, that the government cannot possibly run out of money to pay social security beneficiaries, and given that anything in the private sector can run out of money, then private investment accounts are obviously much less secure than federal government operated social security.


Establishing The Validity Of The Modern Money Model   Recently updated !

At this time what I am calling the Modern Money Model goes by the name of Modern Money Theory as far as its other proponents are concerned. I think that MMM or MMT is a good model of the reality of how money works. The acceptance of the part that applies to the sovereign money of a country like the United States of America is meeting fierce resistance in some quarters.

To put it very briefly, in a country that creates its own money, uses only its own money to transact business, and has idle resources in labor and capital, then the entity that creates the money needs to put more of that money into the hands of the people who can put the idle resources to productive use.

I think a fair amount of resistance of this idea is the fear that people have that when we run out of idle resources we will have inflation, even hyper-inflation. We proponents tend to have a standard response, “That’s not the problem we have now. Let’s take appropriate actions for the situation we have now.”

I think it is only reasonable for skeptics to have their doubts if that is our only answer. MMT proponents like L. Randall Wray and Stephanie Kelton, to name a few, do have better answers to the question, but I think this topic needs to be discussed in more detail in public forums.

My understanding of the answer is that we use taxes to take excess money out of the economy when we start to have more money than we need to employ the actual resources that we have. We faced this situation in WW II. Besides rationing and prices controls, there was another technique that was used. The government sold war bonds to the people. The purpose was not to finance the war, since creating money was not problem. The purpose was to temporarily take the money out of the hands of the people who wanted to buy things that we did not have the resources to produce. After the war was over, and the economy could return to producing consumer goods, people would be able to redeem their war bonds to start buying this new output from our economy.

When we start to discuss these solutions in detail, we must face up to the political and human nature resistance to the solutions that will occur when we try to implement these solutions.

Back in the 1970s we had high inflation that was exacerbated by the OPEC oil embargo. Many people and I felt that the solution to the problem was to raise the taxes on gasoline, for one. This would make it even more expensive to buy the product that was in short supply, and therefore reduce the demand for it even faster than was happening already. Most people used the exact opposite logic to resist the tax increase. They said that the price of gasoline was already too high. Why make things worse? The resisters won out, and we had inflation until Ronald Reagan came along and put the country into a near economic depression to rein in consumer demand that was fueling the inflation. Reagan’s solution was much more painful for more of the population that a gasoline tax hike would have been.

I think this example is a great demonstration of why MMT (MMM) proponents need to talk about these issues now, before we are in the type of crisis we faced in the 1970s. If people are educated when not facing the crisis as to what will have to be done should we face a crisis like that, then they will be more prepared to take the actions that need to be taken. If we wait for the crisis to happen, and then spring it on people that taxes need to be raised, then there will be stiff opposition.


Why I must Abandon Bernie Sanders

I posted many comments and signed many petitions telling Bernie Sanders not to endorse  Hillary Clinton.

I placed this post in the category of Greenberg’s Law of Idle Threats.

Greenberg’s Law of Idle Threats

Never make a threat you don’t intend to carry out. If you have any doubts about your ability to carry out the threat, do not make it.

Corollary:

If you never test the opposition about whether they make idle threats, then you enable them to ignore this law.

 

If I broke this law, I would lose all my credibility, just as Bernie has.


Airstrikes Against Syria are a Trap, Warns Former ISIS Hostage Nicolas Hénin

Democracy Now has an interview in two segments that make a very compelling case that our strategy for dealing with Syria and Isis is completely counter-productive. The segments are Airstrikes Against Syria are a Trap, Warns Former ISIS Hostage Nicolas Hénin and Former ISIS Hostage Nicolas Hénin: Welcoming Refugees is the Best Strategy Against ISIS.

Here are just a couple of snippets of what is in the transcripts of this interview.

I mean, one must be totally stupid to believe that we punished Osama bin Laden and al-Qaeda, invading Iraq and Afghanistan. And even the opposite: The real success on 9/11, this is not the collapse of the twin towers; the real success of 9/11, this is the invasion of Afghanistan and Iraq. And this was not made by the terrorists. This success is only due to the victim. The Americans were victims of the terrorists, but they offered to their aggressors their success. And this is something that we shall always keep in mind every time we are hit by a major terrorist attack: What want our aggressor us to do? What would you like me to do, and how shall I react to displease him?
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“Welcoming refugees is not a terror threat to our countries; it’s like a vaccine to protect us from terrorism, because the more interactions we have between societies, between communities, the less there will be tensions,” Hénin says.
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AMY GOODMAN: What would you say to young Europeans who want to join, who what to become jihadists?

NICOLAS HÉNIN: This is a very important message. Basically, ISIS will recruit you, telling you jihad is cool, because, yes, it’s cool, if you have no life, no girlfriend, no job, no money, nothing in your home country, and ISIS promises you, what, adventure, engagement, a girl, a car, a weapon, power, money, whatever. So, they all play like jihad is cool. And my answer is: ISIS is a scam, because ISIS does not really fight Assad, does not protect the Muslims in Syria, but kills, to wide extent, a number of Muslims in Syria. ISIS is a disaster for the Syrian people. So, for those who want to join ISIS, I tell them, “I understand the reason for your rage, because, yes, there are many reasons actually to be unhappy about both your life in the West or both the situation in Syria and these civilians being massacred in huge numbers. But ISIS will just make you make this crisis bigger.”

There is somewhat of a trick you have to play with the following videos to see the parts that correspond to the transcripts. When you get the video playing, you will see a little dot on the time lines. The first one has the dot about ⅔ of the way along the timeline -at about 31:04. If you hover over the dot, you will see the headline of this blog post. Drag the left big dot to the small dot to skip the part of the video unrelated to this post.

In the second segment the little dot is at 40:38 along the timeline. As the video starts to play, drag the big dot to the little dot.

The title of the book that Nicolas Hénin has written about his experiences is Jihad Academy.


Here’s Why the Latest Conservative Talking Point About the $15 Minimum Wage Is Meaningless (and Here’s What You Can Do About It)

Civic Skunkworks has the article Here’s Why the Latest Conservative Talking Point About the $15 Minimum Wage Is Meaningless (and Here’s What You Can Do About It) – August 12, 2015 11:53 am

“It’s a sad fact that bullshit travels faster than truth on the internet, but if we all work together, we can stop the conservative agenda from drowning out our good news with their meaningless noise.”

There are two follow-up posts as of this writing.

Fox Business Twists the Truth Seven Times in 100 Seconds on Seattle’s Minimum Wage – August 13, 2015 12:52 pm

The Data on That Minimum Wage Report Continues to Fall to Pieces – August 14, 2015 10:54 am

This is a good series of articles to remember. Put it in your arsenal next time someone asks you to just tell them when did Faux Noise ever lie. You can also use it to cast aspersions on the “scholarship” of The American Enterprise Institute. It isn’t scholarship unless they are trying to teach how to lie with statistics.

Here are some laws to remember.

Greenberg’s Law of Counterproductive Behavior

If you see a behavior that seems to you to be counterproductive, perhaps you have misunderstood what the actor’s real goal was.

Greenberg’s Law of The Media

If a news item has a number in it, then it is probably misleading


Pavlina Tchernerva Has Insights On Fixing The Eurozone and Greece 1

Not only does economist Pavlina Tchernerva analyze what is going on with the Eurozone/Greece economic crisis, she identifies what the fix to the situation is. We have this solution available to us in our own system, but we just refuse to use it.

The interview segment starts at 17:09 minutes into the video. To go directly to the interview, use the link YouTube Video starting at 17:09 minutes.


This is the time to cite Greenberg’s Law of Counterproductive Behavior.

If you see a behavior that seems to you to be counterproductive, perhaps you have misunderstood what the actor’s real goal was.

In both cases, the Eurozone and the USA, the behavior is actually accomplishing the divestiture by the governments of public resources so that the greedy oligarchs can purchase them at fire-sale prices. We call it privatization rather than admit that it is the equivalent of rape and pillage by the rich perpetrated on the rest of us.


House Rejects Trade Measure, Rebuffing Obama’s Dramatic Appeal

The New York Times has the article House Rejects Trade Measure, Rebuffing Obama’s Dramatic Appeal.

House Democrats on Friday thwarted … his chance to secure a legacy-defining accord spanning the Pacific Ocean.

I went back and checked. As far as I can tell, this was intended as a news story. It was not printed on an op-ed page, so I don’t think they warned you that it was an opinion piece. I wonder if you can detect from that opening to the story whether or not The New York Times has an opinion about the trade deal and whether or not they are keeping that opinion suppressed so that they can just bring you the news.

Ironically, President Obama should shake the hands of every one of those Democrats for saving him from the fate of leaving a horrible legacy.

More ironically, Obama refused to enlist the support of the people to get his programs passed. When he went against the people, they showed him what power they have that he failed to use for his own purposes when he needed it.

Sometimes, I still just cannot understand what this President is thinking. That just made me think to classify this blog post under the category Greenberg’s Law of Counterproductive Behavior.

If you see a behavior that seems to you to be counterproductive, perhaps you have misunderstood what the behavior was trying to produce.


Study: Social Security in REALLY bad shape

USA Today has the story Study: Social Security in REALLY bad shape.

“The projections developed by the Office of the Chief Actuary for the Trustees Reports are intended to reflect all aspects of future possible trends in demographic, economic, and programmatic factors, given current Social Security law,” Goss and other SSA officials wrote. King and Soneji’s projections “were within the range of reasonable uncertainty as specified in the Trustees Report, and therefore should cause no alarm.”
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“Fair, transparent and accurate forecasts give Congress more of a chance to consider of all the policy proposals to preserve the solvency of Social Security,” King said. “And it’s easier to make changes to Social Security now than in the future.”

The other unmentioned assumption has to do with the wealth and income distribution. Since income has been shifted from the middle class to the wealthy in the last 30 years or so, the level of social security contributions from the middle class has declined below previous expectations.

If the SSA actuaries disclosed the impact of income distribution on their calculations, then I would be all for increased transparency. The Republicans would ignore that issue, but one can only hope that at least one politician who was looking out for the middle class would keep harping on it. Who is going to be the politician to do it after Bernie Sanders finishes his term as President?

I have put this story in the category of Greenberg’s Law of the Media.

If a news item has a number in it, then it is probably misleading.

In this case, there are several things that are misleading.

  • The numbers they give you are intended to lead you to one of the solutions. If they had put in the numbers that they left out, it might lead you to think of other solutions.
  • When the article talk about using fiscal gap accounting methods they say, “Under this accounting system, SSA’s projected unfunded liabilities would be $24.9 trillion (instead of the $10.6 trillion projected in 2088).” They don’t explain that you cannot draw the same type of conclusions from a larger number calculated by a different method, than you would if that same larger number had been calculated by the traditional method. In fact the implication is that the larger number is more “truthful” in a sense. It makes no sense to imply that.

If I didn’t make clear the reasoning behind my judgment, tell me why you think I am wrong, and I will try to tell you what I left out of my explanation. I can’t guess all the things that were going through your mind when you read this compared to all the things that were going through my mind when I wrote it.