Creditslips blog has the article The Behavioral Economics of Bitcoin by  Adam Levitin.

Bitcoin is a completely decentralized peer-to-peer currency and payments network. There is no central Bitcoin authority that verifies transactions, etc. This also means that there is no central for-profit manager that has to be paid to operate the system.  Instead, every Bitcoin user has a Bitcoin wallet on a personal electronic device (or webhosted). This wallet consists of open-source software that interfaces with other Bitcoin users’ software.

The above excerpt is only the beginning of the explanation.  There is something called bitcoin mining that is the mechanism for creating bitcoins.  I had heard about this, but hadn’t found an explanation until reading this article.  I won’t steal Adam Levitin’s thunder by quoting it here.  You’ll have to read the article yourself.  The explanation is pretty brief, but it is enough to satisfy me for the moment.

New York Magazine is has the article Steve Kornacki: George Washington Bridge Lane Closure Was About More Than a Traffic Jam based on an MSNBC video.

This morning, Steve Kornacki offered up a new theory for why Chris Christie’s aides closed two of Fort Lee, New Jersey’s George Washington Bridge access lanes back in September. According to the MSNBC host, the shutdown was about much more than giving Mayor Mark Sokolich a nasty but temporary headache by causing a traffic jam in his town. Instead, Kornacki says that the lane closures may have been part of a long-term scheme to disrupt a project that Sokolich considers the “defining mission” of his tenure.

As seems typical of shows on MSNBC, there may be too much verbiage in this teaser, but it sure makes a whole lot more sense than any other explanation i have heard so far.

There was one comment on the magazine’s web site that I particularly liked.

TH_NY

I saw American Hustle this weekend, and now I’m picturing Christie with a combover and lapels as wide as the Hudson.

Liked By You and davifranci

The Daily Kos article Al Roker tells Rush Limbaugh to “Stuff It” reports on the NBC segment below.

The Daily Kos also has a petition for you to sign, Thank NBC weatherman Al Roker for telling Rush Limbaugh to “STUFF IT”.

Before I saw this article and video, I was thinking about today’s weather.

Now that the temperature in Sturbridge, Massachusetts is 60 degrees on this January 11th, are the deniers going to notice this unusual temperature extreme, or are they going to pretend it isn’t happening? Pretending today’s temperature isn’t what the thermometer says it is would be the ultimate act of denial.

New Economic Perspectives has a two part series by by L. Randall Wray.  The first part is The Greatest Myth Propagated About The FED: Central Bank Independence (Part 1). I think the main point of the first part is best exemplified by the following excerpt:

While many supporters and critics alike have stressed the Fed’s nominal ownership by member banks as evidence that it is somehow independent of government, the Fed’s Bruce MacLaury interprets the independence as follows[6]:

First, let’s be clear on what independence does not mean. It does not mean decisions and actions made without accountability. By law and by established procedures, the System is clearly accountable to congress—not only for its monetary policy actions, but also for its regulatory responsibilities and for services to banks and to the public. Nor does independence mean that monetary policy actions should be free from public discussion and criticism—by members of congress, by professional economists in and out of government, by financial, business, and community leaders, and by informed citizens. Nor does it mean that the Fed is independent of the government. Although closely interfaced with commercial banking, the Fed is clearly a public institution, functioning within a discipline of responsibility to the “public interest.” It has a degree of independence within the government—which is quite different from being independent of government. Thus, the Federal Reserve System is more appropriately thought of as being “insulated” from, rather than independent of, political—government and banking—special interest pressures. Through their 14-year terms and staggered appointments, for example, members of the Board of Governors are insulated from being dependent on or beholden to the current administration or party in power. In this and in other ways, then, the monetary process is insulated—but not isolated—from these influences. In a functional sense, the insulated structure enables monetary policy makers to look beyond short-term pressures and political expedients whenever the long-term goals of sustainable growth and stable prices may require “unpopular” policy actions. Monetary judgments must be able to weigh as objectively as possible the merit of short-term expedients against long-term consequences—in the on-going public interest.

Although, I can’t help including the next excerpt because it uses my favorite metaphor.

While hyperinflationists have been pointing to the fact that the Fed is essentially “printing money” (actually reserves) to finance the budget deficits, most other observers have endorsed the Fed’s notion that QE might allow it to “push on a string” by spurring private banks to lend—which is thought to be desirable and certainly better than “financing” budget deficits to allow government spending to grow the economy. Growth through fiscal austerity is the new motto as the Fed accumulates ever more federal government debt and suspect mortgage-backed securities.

The second part of the series is The Greatest Myth Propagated About The FED: Central Bank Independence (Part 2).

According to MacLaury,

When fiscal policy does not match spending appropriately to tax revenues, then the monetary authority is faced with a difficult choice: (a) how severely should it restrain the inflationary forces that may develop, and (b) to what extent should it permit inflationary forces to have their effect in higher prices? When the   failure to provide appropriate tax revenues generates acute forces of inflation, then even the best compromise may require severe monetary restraint. This has the effect of appearing to be at cross-purposes with congressional intent and can also produce severe disruptions in some areas of the private sector such as housing. (p. 8 )

If Ron and Rand Paul could read this with an open mind (if they had one between the two of them), it would squelch a lot of nonsense that they spout about the FED.

I also include the following excerpt because it relates to current economic policy:

Bad policy—whether monetary or fiscal—is always possible and painful. Fortunately, there is nothing in the post-Great Depression experience to warrant unduly pessimistic views of the motives of either Congress or the Fed. Even the extremes of the Volcker years—short term rates driven above 20%–were eventually reversed and, one hopes, lessons were learned from the experience. And there is nothing approaching a Congressional consensus that the US government ought to budget to produce hyperinflation.

If anything, all the budgeting errors are on the other side: insufficient fiscal stimulus in the GFC, Partisan silliness over expanding the debt limits, tying compromises to sequestration, and an unhealthy fear of budget deficits. While the Fed has a great deal of independence in setting its interest rate target, it appears unlikely that in a crisis (whether induced by excessively high rates on private debt or high rates on public debt that create an exploding debt ratio or a major war that requires cooperation between the Fed and Treasury) the Fed would resolutely pursue dangerous policy. And if it did, Congress can intervene.

On December 23, 2013, I wrote a Facebook post recommending the movie American Hustle. Last night, I realized why that movie was so great and how it connects to politics. I’ll use the Massachusetts’ race for governor as an example that is important to me now.

I think every candidate for that office will tell you how important it is to attract companies to Massachusetts that will create high paying jobs in the state. No matter where they fall in the political spectrum, they will probably tell you that we need to offer tax incentives to lure these companies to Massachusetts.

So here is the question that I will ask of every one of them that I get a chance to meet.

Every state and location in the country wants to attract business to their location that will create high paying jobs.

Every corporation that has these kinds of jobs to offer will play one state or locality against the others in order to extract the maximum tax breaks and other concessions from the candidate locations while giving up the fewest commitments on the part of the corporation.

Inevitably this has led to a race to the bottom for localities for giving the most tax breaks, loosening of regulations, changing labor laws, and even building infrastructure for the corporation while asking for the least commitments in return.

As candidate for governor, what can you tell me about how you would play this game so that the non-rich citizens of the state would get the best deal possible, instead of becoming patsies in the game the corporations are playing?

You are free to use this question with any politician you meet. Do not offer any hints or suggestions as to how you would answer this question. You want to know if the candidate has give any thought to the question. That is why I am publicizing the question. It can be an open book test. What you want to know, in any case, is whether the candidate understands the issue and whether that candidate has any reasonable and even creative ideas.

This is where the movie American Hustle comes into play. The main characters in the movie give you, for only the price of admission, a first class lesson in how to get people to come to you begging to give you their best offer. Now in the movie, the people giving you this lesson are con artists of the highest caliber. However, you can also use the techniques to accomplish honest and meritorious goals.

How I wish that this movie had come out in 2008 or earlier and President Obama could have seen it and learned the lesson. What he could have accomplished in his presidency would have been so amazing and so good for the country. Oh well, that is water over the dam, but we can still get the massive benefits if progressive politicians could only take these lessons into the future. I think Elizabeth Warren is a prime example of a politician who knows how to play the game for us.

Alternet has a very interesting article The One Crucial Detail That Could Sink Legal Pot in Colorado.

Weed may be legal now in Colorado, but one key detail threatens to boost crime, raise costs and sink the business.

In looking through the comments on the article I saw a couple of mentions of this idea already, but what a boost to bitcoin this is.  If nothing else, bitcoin does produce some competition for the government for creation of money.  If the government does not want bitcoin to succeed, then they had better fix the rules they thought they were free to make when there was no competition for creating money.

I wonder if Ron and Rand Paul will use this example as another reason to get rid of the FED?

I wonder what the MMT people and Paul Krugman would have to say about this.

What a case  for the aphorism about politics making for strange bedfellows.

Martha Coakley, a candidate for Governor of Massachusetts, will be coming to Sturbridge on January 26th, 2014.  The house party (not at my house) begins at 7:30PM. This will be a great opportunity to speak to her in person.  This is an opportunity to find out what kind of a person she is without the filter of the media between you and her.   If you are already a Coakley supporter, I am sure  you would not want to miss this event.  If you are not sure if you want to be a supporter, this is an excellent chance to find out what she is  really like.

Another thing to consider, if you live in the area, is our attempt to get candidates to pay attention to us. When we finally manage to get candidates to visit, if they are greeted by a large turnout, then they and the other candidates are more likely to pay continued attention to Sturbridge and the surrounding area.

Since there will be limited space, I want to extend an invitation to you “in person”.  So contact me by email by clicking on the previous link, and I will call you back on the phone with the details of the visit.

If you want to find out more about Martha Coakley before you come to the house party, visit the Coakley campaign website.

Naked Capitalism has an article David Dayen: Elizabeth Warren, Tom Coburn Introduce “Naked Capitalism Was Right About the Corruption of Financial Regulators Act” (Not Actually Called That) that discusses the Truth in Settlements Act sponsored by Senators Elizabeth Warren and Tom Coburn.

I particularly liked David Dayen’s postscript.

P.S. I asked Warren on the call about something I was tipped to in the Justice Department’s year-end IG report. It appears that after announcing these fines, the MO of the Justice Department is to “take in stride” the fact that they go unpaid:

But securing a financial judgment is not enough. The Department must also use all available tools to recover money owed to it, and it must ensure that the recovered money is wisely spent. In FY 2012, the U.S. Attorneys’ Offices (USAO) collected $13.2 billion in criminal and civil actions, more than double the amount collected in FY 2011. However, at the end of FY 2012, an additional $23 billion was owed to the United States, including $18 billion in criminal fines and $5 billion in civil debts.

So I said to Sen. Warren, does your bill include something on the timeliness of payment? Her answer: “This one is about the disclosure. You have identified another problem, and one that’s worth talking about… we’ll see what kind of effect we get from sunlight.”

State Senator Stephen M. Brewer represents my town in the Senate of the Commonwealth of Massachusetts.  He is Chair of the Senate committee on Ways and Means.  As such, he has been a counterweight to some of the investments that our Governor Deval Patrick has wanted to make in transportation infrastructure in our state.  I sent him a note about a “very difficult decision” he is going to be making about his political future.

I sent the note using Senator Brewer’s contact web page.

I understand that you are making a “very difficult decision” about politics in the next month.  If it has to do with running for reelection, then I must ask you to please consider how strongly you can back Progressive Democratic principles in your next term.

The next Democratic governor is going to need strong support from the Democratic legislative leaders of the state.  If you feel that you must be a counterweight to the initiatives of our next governor, then I strongly urge you to consider retirement.

It is time to turn the reins of power to someone looking toward the future of this state, not its past.

Feel free to communicate your thoughts to Senator Brewer, no matter what they may be.

The Think Progress article Democratic Members Of Congress Slam Obama For Massive Cave To Republicans On Judges starts off with the following:

Last November, Senate Democrats invoked a procedural maneuver that allowed them to confirm judicial nominees by a simple majority vote, thus cutting off the GOP’s ability to maintain control over a key federal appeals court by simply refusing to permit anyone to be confirmed. So it’s a bit odd that, just over a month after Senate Republicans effectively lost their ability to veto nominees from the minority. President Obama decided to outsource selecting nominees to most of the open judicial seats in Georgia to two Republican senators.

Read the article to find out why the Republicans want President Obama to talk to them more often.  I’ll give you a hint. Whenever he does talk to them, he sells the rest of us down the river.  On the other hand, maybe this is the kind of deal that made Harry Reid decide he needed to use the “nuclear option” to stop our President from doing his style of bi-partisan negotiation.