Naked Capitalism has the post A Movement to Organize Against the Systemic Corruption of Congress.
Well, there you have it folks. A proposal for a movement to turn around the systemic corruption of the United State Congress – systemic corruption of the kind our founders feared might eventually destroy democracy. Left unaddressed, it probably will.
I wonder if this has any more chance for success than the People’s Party Movement.
Naked Capitalism has published a transcript of the interview Economist Michael Hudson explains inflation crisis and Fed’s secretive $4.5 trillion bank bailout. I started reading the transcript, and finished by watching the video.
Economist Michael Hudson discusses what is causing the global inflation crisis, and also how the US Federal Reserve quietly bailed out big banks in September 2019 with $4.5 trillion of emergency repo loans that appear to have blatantly violated the law.
You couldn’t ask for a more complete coverage of all things economic and diplomatic.
Stephanie Kelton has published this amazing, mis-titled article The Clock Runs Down on Mainstream Keynesianism.
I argued that deficits put downward pressure on interest rates. Krugman says I got that wrong. The standard line — Krugman’s line — is that deficits normally lead to rising interest rates. I argued that deficits actually put downward pressure on the interest rate and that policymakers have to fight against this natural gravitation by doing something to prevent the overnight rate from dropping toward zero. This is really just basic supply and demand.
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The government is coordinating its deficit spending with bond sales, thereby doing a reserve drain (selling bonds) along with a reserve add (deficit spending), so that the newly injected reserves are quickly transformed into newly added Treasuries. The bond sales are done to coordinate the impact so that the government’s fiscal operations don’t leave the banking system with a larger monetary base (and lower interest rates).But this is fighting against the gravitational effects on the interest rate. Deficit spending pushes down on the overnight rate, and bond sales pull it back up. When bond sales are perfectly coordinated with deficit spending, the opposing forces cancel out, leaving the monetary base looking stable as Krugman’s graph shows.
To finish the thought experiment, consider what would happen if Congress decided to dispense with Treasury auctions and simply allow budget deficits to supply the system with base money instead of Treasuries. Clearly, that would drive the overnight rate to zero. If it wanted to, the Fed could still achieve a positive overnight rate, simply by paying “interest on reserve,” or IOR, balances. That, too, would be fighting against the natural tendency for rates to go to zero.
I find this amazing because I have been trying to explain this for years, but proponents of Modern Monetary Theory, including Stephanie Kelton, have been discouraging me from saying this. In her lectures she sometimes explains that Treasury bonds are just another form of money. I keep saying that bonds are not just another form of money in that you cannot go to the grocery store to buy a loaf of bread and pay for it with Treasury Bonds. You would first have to sell your bond to someone who would give you the money that the grocery store would accept.
Kelton mentions paying interest on reserves to counter the effects of the “Congress decided to dispense with Treasury auctions and simply allow budget deficits to supply the system with base money instead of Treasuries.” The implication here is that the selling of Treasury bonds counteracts the effect of “budget deficits to supply the system with base money”.
Before Stephanie Kelton married, she was Stephanie Bell, publishing this article in September 2000, “Do Taxes and Bonds Finance Government Spending?” So, she ws explaining all this to the academic world long before she was discouraging me from saying this.
I want to have this post at the ready for the next time someone tries to discourage me from explaining this. The trouble with both of these Kelton/Bell articles is that you have to pay to see them in their entirety.
Oh, by the way, here is the reason that I say that this article is miss titled. One of the biggest lessons I learned about Keynesianism is that, in a depression, you cannot stimulate private sector spending by putting more money into the private sector. The Government actually has to buy things that put people to work. This lesson is hidden inside what Stephanie Kelton has written in this miss titled article. If the government puts money into the private sector by buying stuff, and then takes the money back out by selling bonds, the impact of that money as a stimulus is pretty much negated.
The Guardian has the opinion piece The next US civil war is already here – we just refuse to see it.
The United States needs to recover its revolutionary spirit, and I don’t mean that as some kind of inspirational quote. I mean that, if it is to survive, the United States will have to recover its revolutionary spirit. The crises the United States now faces in its basic governmental functions are so profound that they require starting over.
This article is a perfect example of the fact that coming up with solutions is far harder than identifying the problem.
Yahoo! Finance has the article Mohamed El-Erian says a ‘trifecta’ of dangers will haunt the US economy in 2022 — here’s how to protect your portfolio.
Inflation erodes our purchasing power. If you’re holding cash, you won’t be able to purchase the same amount of goods and services as before.
Someone made the sarcastic remark that he was told that inflation was transitory. I felt compelled to respond to that comment.
Inflation may be transitory if the Government does the right thing to combat it. Unfortunately, the Fed is not the part of the government that has the tools for fighting inflation. Raising the interest rates will only make prices go higher. Breaking up monopolies may be the best tool for fighting inflation. Another tool is to shift business “investment” out of raising stock prices, and using that money to invest in productive growth of the economy which includes infrastructure improvement. I said infrastructure improvement is part of the solution, but it isn’t the whole solution.
To El-Erian, i will agree that holding cash might erode your purchasing power as the purchasing power of cash in constant dollars erodes. However, holding cash won’t be as bad as holding “investments” that lose in face-value, too. Crypto-currencies may be what people are using as a store of value instead of gold, but crypto-currencies’ dollar value is dropping like a rock. I don’t see how that will end up being a store of value. I’ll stick to a little bit of gold as a hedge against inflation.
RT has the post The world’s largest trade pact is a game-changer for China.
China sees itself becoming more prominent in the global economy, trading more and using its giant market, while the US has decided to sit on the sidelines, engage in sabotage, cry foul, and still demand it should be able to dictate the flow of the game it refuses to play in. Who do you think is going to come out of all this best?
From my own knowledge of the facts, I don’t see anything wrong with this description. The USA media will try to counter this if it ever decide to report on this. If anybody is lying to you, it is probably the USA government and its minions in the USA press.
Michael Hudson has published a link to his discussion with Max Kaiser – On Bitcoin, With Max. The interview starts at 14 mins. What comes before that is not worth wasting your time on.
The second part of the interview is in a form that I can embed here. I start the video at Michael Hudson’s interview. The global stilling of money part that comes before Michael Hudson is pure rubbish.
The Financial Times has the article Why bitcoin is worse than a Madoff-style Ponzi scheme
A Ponzi scheme is a zero-sum enterprise. But bitcoin is a negative-sum phenomenon that you can’t even pursue a claim against, argues Robert McCauley.
This is an even stronger opinion on Bitcoin than I have been saying myself.
The greater fool theory of “investing” certainly applies to Bitcoin. The idea is that when you want to cash out, there will always be a greater fool than you were who will buy your bitcoins at a price higher than what you paid.
It is amazing how some notable people cannot figure this out.Here is Glenn Greenwald as an example.
Robert Reich has the post Psst: You want to know the truth about inflation? (It’s not what the Fed thinks it is.)
In sum, inflation isn’t driving these price increases. Corporate power is driving them.
This is what I have been saying for years, but I don’t have the credentials that Robert Reich has.
Read the article MONOPOLY POWER AND MARKET POWER IN ANTITRUST LAW.
Examination of key antitrust law opinions, however, shows that courts define ‘market power’ and ‘monopoly power’ in ways that are both vague and inconsistent. We conclude that the present level of confusion is unnecessary and results from two different but related errors: (1) the belief or suspicion that market power and monopoly power are two different concepts, when they are in fact, for antitrust purposes, qualitatively identical, and (2) the failure to recognize that anticompetitive economic power may manifest itself in two distinct ways.