Naked Capitalism has the article Asset Prices and Wealth Inequality.

A central finding of this new research is that portfolios differ systematically along the wealth distribution. While the portfolios of rich households are dominated by corporate and non-corporate equity, the portfolio of a typical middle-class household is highly concentrated in residential real estate and, at the same time, highly leveraged. These portfolio differences are highly persistent over time.

An important upshot of this pattern is that relative asset price movements induce major changes in the wealth distribution and can decouple trends in income and wealth inequality for extended time periods. For instance, rising asset prices can mitigate the effects that low income growth and declining savings rates have on wealth accumulation.

This was prominently the case in the four decades before the financial crisis when the middle class rapidly lost ground to the top 10% with respect to income but, by and large, maintained its wealth share thanks to substantial gains in housing wealth.
,
,
,
By contrast, the top 10% were the main beneficiary from the stock market boom and were relatively less affected by the drop in residential real estate prices. The consequence of substantial wealth losses at the bottom and in the middle of the distribution, coupled with wealth gains at the top, produced the largest spike in wealth inequality in postwar American history. Surging post-crisis wealth inequality might in turn have contributed to the perception of sharply rising inequality in recent years.

You may have an intuition of what has been going on in the economy, but until you read this, you may not understand the magnitude of the shift in wealth.

Before the real estate crash, I tried to explain to some people that they shouldn’t tap the growing equity in their house like it was a piggy bank. That wealth growth did not make up for the stagnant wages they were earning.

Luckily they had me to give them some help to keep their home after the crash.

If you want to read how and why this shift occurred, read Michael Hudson’s 2015 book “Killing The Host: How Financial Parasites and Debt Bondage Destroy the Global Economy”

Until this book gets a lot more readership, we may stumble along like this until our economy is completely drained by the 1%

The National Debit website has the article Q) Federal Taxes Don’t Fund Spending, right? A) Wrong.. It nicely makes the point of whay I say that MMT proonents should stop using the meme “ederal Taxes Don’t Fund Spending”.

The oft-abused phrase “Federal Taxes Do Not Fund Spending” is not entirely accurate. I don’t question anyone’s motive saying it, to be clear, I am 100% positive that each time it is said by an MMTer (Modern Monetary Theory enthusiast), no question it is to promote MMT. Federal gov’t DEFICIT spending (the spending that is not funded by taxes) was only 15% of total spending last year. Besides not being entirely accurate, saying ‘Federal taxes do not fund spending’ veers off course from that first of Seven Deadly Innocent Frauds, which states that it is incorrect to think that federal taxes “must raise funds through taxation”, and that it is incorrect to think that federal “gov’t spending is limited by its ability to tax” (7DIF pg 13). I interpret that as saying that because the federal gov’t is now spending fiat dollars, there is no longer any constraint on federal spending, nor any solvency risk. I don’t interpret that as saying that federal ‘taxes do not fund spending’, but as meaning that the federal gov’t, while it is taking in tax revenues, while it is indeed spending those funds, because it is the issuer of fiat dollars (instead of a user of gold backed dollars), those revenues, those federal taxes are NOT NEEDED to fund spending anymore, a big difference. ’Federal taxes do not fund spending’ is a deadly innocent misinterpretation of this MMT pillar…

It is a long article. I must admit that I pooped out before completely reading it. However, I think it gets things mostly right, even if there is some quibbling over words. The point that is absolutely right is this quote.

In other words, when saying ‘taxes don’t fund spending’, these MMTers mean well, but unfortunately they are not advancing MMT (they have no idea how ridiculous they sound to a non MMTer)…

If MMTers don’t want to sound ridiculous and turn off anybody who might be tempted to look into MMT, they should stop making themselves look ridiculous right out of the gate.

“From Democracy to Oligarchy” is title of chapter 18 of the Micahel Hudson book Killing The Host: How Financial Parasites and Debt Bondage Destroy the Global Economy.

I think the point is that it is private bank created debt that is a far more serous threat to us all than is federal government “debt”.

Here is an excerpt from near the end of the chapter.

The popular media distract attention from how it has been possible for the Federal Reserve to create what is now more than $4 trillion in Quantitative Easing without spurring price and wage inflation. Morally, why have the banks’ large uninsured depositors, bondholders and gambling “counterparties” been bailed out in a period of debt deflation for the rest of the economy? Why did the Fed not create this credit to pay off the debts? Why were the debts left in place, leading to foreclosures that destroyed entire neighborhoods while the largest banks were rescued to resume their extravagant bonuses and dividend payouts?

Selling out voters to campaign contributors promoting pro-One Percent policies has led both major U.S. political parties to be distrusted by large swaths of the electorate. In view of how the Occupy Wall Street demonstrations won worldwide emulation by catalyzing awareness of how big money has corrupted our government and our economy, it seems remarkable that no Democratic or other would-be left coalition has sought to mobilize the widespread rejection of today’s pro-bank policy. Advocacy of truly socialist policies might stun the beltway class with its popularity, as Syriza has done in Greece (described in Chapter 24 below).

The Tea Party (and libertarians with roots in the anarchist tradition) fail to realize that only a government strong enough to tax and regulate Wall Street can check today’s financial and rentier power grab. Attacking “big government” without distinguishing between Big Oligarchy and a Progressive Era mixed economy – what used to be called socialism – dilutes efforts to regulate and tax wealth, and ends up being manipulated to support the vested interests, Koch Brothers-style.

I am learning some nuances about Modern Money Theory that had escaped me up till now. The economic difference between FED created money and private bank created money is that private bank created money entails debt and interest payments to the private banks that created the money whereas FED created money spent into the private sector does not produce any personal debt to the members of the private sector.

Federal government debt, unlike private, personal debt, does not require any person or corporation in the private sector to pay back that debt. The government sector debt created by deficit spending will be paid with money created by the FED.

New Economic Perspectives has the article Bank Whistleblowers United Told DOJ to use 4506-T as Kryptonite v Banksters.

Had the regulators (particularly the Fed through its HOEPA power) required each bank making liar’s loans to conduct a 4506-T audit, the senior managers would have faced a dilemma. They could stop the fraudulent lending or provide DOJ with a great opportunity to prosecute them. The bank CEOs’ response to the internal audits showing endemic fraud and the retaliation against the whistleblowers combine to offer superb proof of senior managers’ ‘specific intent’ to defraud. The reasons for the failure to prosecute were some combination of cowardice and politics. If Democrats win control of the House they can use their investigative powers to force each bank regulator to cause every relevant financial institution to conduct a 4506-T audit.

Of course, the Republican Senate and House chairs could order those steps today. We are not holding our breath, but BWU’s co-founders are eager to aid either, or both, parties restore the rule of law to Wall Street. Instead, we are rapidly creating an intensely criminogenic environment on Wall Street that will eventually cause a severe financial crisis.

The level of corruption in our government displayed by its refusal to prosecute white collar crime is past the point where it is intolerable. Even our most progressive politicians aren’t pushing hard enough against this corruption.

The Real News Network has the two part series The Truth About the 2008 Financial Meltdown and How it Contributed to Trump’s Rise

What is the truth behind the 2008 Financial Collapse, why was no one prosecuted and how did Obama’s not prosecuting the “banksters” and strengthening Glass Steagal lead to Trump in the White House? Economist Bill Black joins us bring clarity to this mystery

Here is the first part The Truth About the 2008 Financial Meltdown and How it Contributed to Trump’s Rise (Pt 1/2)

Here is the second part The Truth About the 2008 Financial Meltdown and How it Contributed to Trump’s Rise (Pt 2/2)

I have been publishing these interviews and posts from William K. Black for years. It is so frustrating that they don’t seem to be making the slightest dent in the public’s consciousness. What is it going to take to get people to wake up?

The Real News Network has a two part series starting off with the segment Obama Joins Club of the Super-Rich – Defends Global Capitalism in Lecture.

This segment and the one I will post next get frustratingly close to the point, but still manage to miss it. That point is that Obama did have a choice when he came into office, and he worked tirelessly to avoid that better choice. He had a golden opportunity to turn the situation around, and he purposely chose people for his administration that would obstruct that choice. He inherited peopple in the technocracy of goivernment who were begging him to do the right thing, and he pushed them out in favor of his chosen Wall Street types – Rubin, Summers, and Geithner did not have to be given control.

Here are two of the people who were pushed aside over the years Sheila Colleen Bair the 19th Chair of the U.S. Federal Deposit Insurance Corporation (FDIC), and Brooksley E. Born from August 26, 1996, to June 1, 1999, was chairperson of the Commodity Futures Trading Commission (CFTC), the federal agency which oversees the futures and commodity options markets.

The Warning: Brooksley Born’s Battle With Alan Greenspan, Robert Rubin And Larry Summers.

Here is the next segment Obama Says Inequality Led to Rise of the Right, but Takes No Responsibility for It (2/2).

They talk about how certain things are endemic to the system without mentioning agency of people who made it that way. The system didn’t become the way it is without active participation of people who made it be exactly what it has become.

The following may not be the perfect article to explain what the Obama administration could have done instead of what they did to “resolve” the financial crisis, but it was an article that I found easily – Sheila Bair on Helping Banks Fail

Telesur TV has the article $2B Nigerian-Chinese Currency Swap is ‘Win-Win’ Deal: Experts.

Just to be sure you understand what is being swapped, here is an excerpt.

The swap, totaling 15 billion Chinese yuan for 720 billion Nigerian nairas, or vice versa, aims to facilitate bilateral trade and investment and can be extended by mutual consent.

This isn’t necessarily a direct example, but I think it does show that China is not hemmed in by the $3 Trillion it has in US dollar reserves. The theory is that China can’t put that $3 Trillion to use without buying USA goods. If one of its trading partners is being pressured by lack of dollar reserves, I bet China could spare some to bail them out.

The Atlantic has the article Are Stock Buybacks Starving the Economy?

Stock buybacks are eating the world. The once illegal practice of companies purchasing their own shares is pulling money away from employee compensation, research and development, and other corporate priorities—with potentially sweeping effects on business dynamism, income and wealth inequality, working-class economic stagnation, and the country’s growth rate.

That’s a rhetorical question in the headline. Of course it is starving the economy. What the article doesn’t talk about is the need for companies to shrink down to the size of the market for their products. There are consequences for the government not stimulating consumer demand.

Companies also need to keep the cash down so that they don’t attract a leveraged buyout. Even companies that don’t want to do stock buybacks are forced into it by our rigged system.

If we want companies to consider the good of the economy as a whole, we need to protect the good companies from hostile takeovers. If good companies are taken over by hostile takeovers, they will be turned into bad companies. The regulations that Reagan overturned were part of the protection for good companies.

Politico has the article ‘Eye-popping’ payouts for CEOs follow Trump’s tax cuts.

In a speech last month, the SEC’s Jackson said, “There is clear evidence that a substantial number of corporate executives today use buybacks as a chance to cash out the shares of the company they received as executive pay.

“In fact, twice as many companies have insiders selling in the eight days after a buyback announcement as sell on an ordinary day,” he said.

This is information I have been looking for. I have been wondering what the insiders are doing with their stocks when their companies have been buying it back. I couldn’t figure how it would benefit them in the long run if they stripped away the company’s future prospects.

Why do the insiders wait a day to trade if they know the buyback is coming? If they bought before the buyback was public knowledge, that would be illegal trading based on insider knowledge. This is the crime for which went Martha Stewart to prison.

Huffington Post has the article Stephanie Kelton Has The Biggest Idea In Washington.

Once an outsider, her radical economic thinking won over Wall Street. Now she’s changing the Democratic Party.

I don’t usually expect much from HuffPo, but this article is pretty good once you get past the fluff.

I am pretty familiar with Kelton’s economic views, so I didn’t need the Huffington Post’s explanation of it. What interested me was an explanation of some of the political events that had frustrated me.

But it’s hard for many to believe that achieving such ambitious goals wouldn’t come with some other searing social price. While she got Sanders’ attention talking about economic rights and social justice, he balked at the implications of her broader theory. He had been pounding Republicans on the deficit for years and didn’t want to give it up. He had voted against the expensive Iraq War, the George W. Bush administration’s Big Pharma–friendly Medicare prescription drug benefit and the Bush tax cuts, arguing they were too expensive and diverted resources from programs that would genuinely help the middle class. While Kelton the radical theorist wanted Sanders to shrug off deficits, Sanders the politician wanted to pay for his plan by taxing the rich.
.
.
.
For all its ambition, Sanders’ agenda wasn’t very creative. It just expanded the scope of existing programs that liberals already liked. The minimum wage would be higher. Tuition at public universities would be not just reduced, but free. Medicare would be available to everyone, with better coverage. Kelton didn’t have a problem with any of it, but almost nothing distinctive about her economic thinking ended up in the platform.

She thought her boss was walking into a trap by insisting that higher taxes on the rich and economic growth could pay for everything he wanted to do. She was right. When the campaign enlisted University of Massachusetts at Amherst economist Gerald Friedman to calculate the cost of Sanders’ platform, Friedman relied on overly optimistic assumptions in his modeling. Economists aligned with rival Democratic candidate Hillary Clinton pounced, accusing the Sanders operation of fiscal irresponsibility and economic illiteracy. Sanders staffers still wince at the memory. The numbers shouldn’t have mattered, but they didn’t add up.

I had also been warning Democrats not to get trapped into the deficit issues and not to get trapped by their own rhetoric about paying for ambitious programs. Knowing of Kelton’s position with Bernie Sanders and knowing her economics, I was wondering why he wasn’t listening more to what she had to say. Now, at least, I know she fought for her ideas, but failed in this case. I also now see what the Sanders’ excuse was for failing to heed wise advice when he received it.