The World Socialist Web Site has the article Jacobin editor Bhaskar Sunkara makes a fool of himself.

While proclaiming his support for the presidential campaign of Bernie Sanders, Sunkara also declares that he will back Elizabeth Warren if she beats out Sanders and Joe Biden if he is eventually the Democratic Party nominee.

Well, that sure puts a damper on my reading Sunkara’s latest book. After I finish the book, I’ll have to come back and contemplate these remarks.

It’s a good thing I didn’t know of this view of Biden by Sankara or I might have foregone reading the book. Maybe, after I finish the book, I will conclude that it was a waste of time. Yet, I did learn a few things that I had not known before even if I completely write off any conclusions he may come to.

RT has the article ETF whale: Bank of Japan (E1391).

In this episode of the Keiser Report, Max and Stacy discuss the fact that the Bank of Japan now owns 73 percent of the country’s ETF market, and how this creates some relative winners at the expense of the growing pile of global “deplorables.” They also discuss the spread of negative rates to mortgage bonds, and how Trump’s Huawei ban may harm rural cellphone users. In the second half, Max interviews Randy Voller, a former Bernie delegate and former head of the Democratic party in North Carolina, about the entry of Joe Biden into the 2020 race for the Democratic nomination.

This is one of those Keiser report episodes where it is hard to figure out where the insights stop and the craziness begins. The insights are in the facts they quote, presuming that those are actual facts. What those facts mean as a prediction of events has the parts that may contain some craziness.

RT has the story Russia-China real gold standard means end of US dollar dominance.

The BRICS are considering an internal gold trading platform, according to Russian officials. When this happens, the global economy will be significantly reshaped, and the West will lose dominance, predicts a precious metal expert.

When I hear predictions like this in the USA oligarchs’ news media from “precious metal experts”, I am always skeptical. I suspect that they are heavily invested in precious metals, and they want to pump up the prices. RT may have different motivations for taking this line.

I post this because I cannot be absolutely sure that none of this will come true. I wonder if this will eventually undermine the policy prescriptions from Modern Money Theory. MMT has the phrase, “The USA government will always have the money to buy whatever is for sale in USA dollars.” They tend to ignore and most MMT devotees tend to ignore what happens when there is very little that is for sale in USA dollars. Such an outcome was hard to imagine until Donald Trump came to office.

New Economic Perspectives has the post How to Pay for the Green New Deal – Levy Institute.

This paper follows the methodology developed by J. M. Keynes in his How to Pay for the War pamphlet to estimate the “costs” of the Green New Deal (GND) in terms of resource requirements.

Here is the link to the actual How to Pay for the Green New Deal WORKING PAPER NO. 931 | May 2019. This is a 56 page PDF document.

Naked Capitalism has the article Why Martin Wolf Is Wrong on Modern Monetary Theory (MMT). I thought it was a very good article, until I got close to the end.

I do not understand how we get to the conclusion

The result is we need to sweep away the central bank and the independence it has that is this impediment to progress.

I don’t see the central banks as an impediment to progress. I see that central banks only have monetary tools. Those tools are not enough to do the job. The government spending for things like the GND are using fiscal policy tools. The impediment to progress is the part of government that refuses to make use of its fiscal tools.

Back in the 1930s and 1940s, John Maynard Keynes explained exactly why monetary tools are not enough to stimulate an economy out of a deep recession or depression. Just because the word money or monetary is in MMT is no reason to forget that monetary policy is only half of the set of economic tools that must be applied to run an economy.

RT has the episode Are Americans living the ‘American dream’ in rented trailer parks? RT’s Keiser Report finds out.

Roughly 1 in 15 Americans live in so-called trailer parks which are shorthand for poverty, according to a report by the Financial Times. Most of them are part of households earning less than $50,000 a year.

RT’s Keiser Report looks into the problem where many Americans have to pay rent for the land underneath their own trailers while traditional mortgages on such properties aren’t available.

The actual details are much more horrifying than the above summary hints. Then the report talks about China, which is just as scary.

This gets two OMGs from me. It does talk about an “investment” “opportunity” that I have been missing. I think I will do a better job of staying away from this one than I did with Collateralized Debt Obligations that led to the economic crash of 2008/2009. The other OMG is about China.

Sometime the Keiser report is equal part information and craziness. This one is very low on the craziness scale and high on the information scale. If the thought of watching something on a Russian supported medium is too much for you to bear, then you won’t know what is hitting you when it does.

When I heard Max Keiser mention KOA in the discussion of mobile home parks, I thought he had just picked a wrong company to mention. Then I decided to do a little research. Here is the first clue I stumbled across – Golden Rule Koa Mobile Home Park.

The Google search KOA “mobile home parks” may not be the best, but there are additional hints here.

Then there is the Forbes article 7 Powerful Benefits To Mobile Home Park Investing. The early 2000s purveyors of real estate derivatives backed with liar loans didn’t ask “What could possibly go wrong?” They had back tested the theory of their investments using decades of real-estate mortgage history. There would have to be a rate of mortgage default unheard of in history before the CDOs would run into trouble. What they didn’t account for was that history was built in an era of high standards in mortgage underwriting. The very product these purveyors were inventing would smash those standards to bits. Is there a similar route to disaster in large scale investing in mobile home parks?

YouTube has the video Dr Steph Kelton unpicks dangerous myths about our economy.

Dr. Stephanie Kelton is a professor of public policy and economics at Stony Brook University. She served as chief economist for the Democrats on the U.S. Senate Budget Committee in 2015, and as a senior economic adviser to Bernie Sanders’s 2016 presidential campaign. In 2016, POLITICO named her one of the 50 people most influencing the public public debate in America.

Doctor Stephanie Kelton toured Australia with Becky Bond in November this year to promote a raft of bold economic policies to meet the serious challenges our society is facing.

In this talk, she discusses the problems with how progressives discuss government expenditure, dispels myths about currency, deficits, and tax, and encourages a new conversation about economics that focuses on public good and outcomes for real people.

More people in the USA need to hear this talk, and digest it. I’ll admit that there is a flaw in her easy explanation of the graph she shows about how the government deficits are an exact match for the private sector surpluses, If you are sharp enough to see it, we can discuss it. It does not negate the point she is trying to make, but if you insist on being accurate, you need to understand where it comes from.

Hint: Think about foreign trade deficits. It actually reinforces the point she is trying to make, but it would complicate the explanation. The picture of the three pots on my Facebook page is the one that I use to clarify the picture. It is a standard tool of Modern Money Theorists.

Well, as long as I have gone this far, I might as well show you the image I used in a previous post Stephanie Kelton Explains It All.

There is more explanation of the image in the previous post When Will the White House and OMB Ever Learn About Sector Financial Balances?

YouTube has the video Making Money as a Rentier – How?

What is rentier capitalism and how do those with wealth make more, by having YOU do the work, using their money? Making money as a rentier is how.

Rent-seeking behavior or rentier capitalism has been around for centuries. But what is it, and how does it work?

Rentier is a term I use frequently. Here is the definition pretty succinctly.

Jacobin Magazine has the article How Obama Failed.

These aren’t the words of a Trump supporter, or even a Republican. Nor do they come from an advocate of some kind of Red-Brown alliance. The author in question is Reed Hundt, a high-level Democratic Party apparatchik — Al Gore’s longtime advisor (and high school classmate), Bill Clinton’s former FCC commissioner, a McKinsey consultant and a member of both the Clinton and Obama transition teams.

Hundt is, in other words, a card-carrying member of the Democratic establishment. And yet he’s written a book witheringly critical of not just the Obama administration’s handling of the 2008 financial crisis and its aftermath, but of the Democratic establishment’s response to it — an insider’s step-by-step account of all the mistakes, false assumptions, and timidities that, over Obama’s eight years, helped deliver the electorate into the hands of Trump.

It is articles like this that assure me that nothing less than Bernie Sanders will do. If the Democrats prevent Sanders from getting the nomination, I hope the Green Party will run somebody who can get the job done. I am sorry to says that anybody without a deep team like Obama lacked, will not do either.

Vox has the article The radical plan to change how Harvard teaches economics.

While reading this long article, I think I was more troubled than encouraged.

There is some discussion of the way economics is taught at Harvard traditionally.

Mankiw’s textbook covers the abstract theory that underpins economics as it has been understood for decades. It is about supply and demand, about how prices can be used to match production of a good to its consumption, and about the power of markets as a tool for allocating scarce resources. Students in Ec 10 are asked to plot supply and demand curves, to solve simple word problems about what happens when the mayor of Smalltown, USA, imposes a tax on hotel rooms.

The idea is to impart a basic theory, to lay a foundation for understanding how society works. And that theory strongly implies that markets tend to work without much intervention, and that things like minimum wages might hurt more than help.
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Feldstein and Mankiw were perfect leaders for the course. They both write frequently for popular audiences and are somewhat heterodox for Republicans. Feldstein became an irritant in the Reagan White House by bemoaning soaring budget deficits and demanding that tax increases kick in if Reagan’s cuts continued to add to the debt.

I have known about Feldstein and Mankiw for quite a while. I knew how pernicious was their influence on economic “thinking” is the USA. This article emphasizes just how big an influence they have been.

The part of the above excerpt talking about Mankiw is a good demonstration of the fallacies that crop up when you build macro economic theories on the framework of microeconomics. When you get to size of the economy that macroeconomics covers, there are feedback effects that become important that were not even measurable on the microeconomics scale.

The mention of Feldstein and federal government deficits showed how little Feldstein understood about macroeconomics that had all been thoroughly explained by John Maynard Keynes in the 1930s.

Data analysis was so subjective, so easily pliable to one’s own pre-chosen conclusions, as to feel almost useless. Then a new generation of economists — like Card, the late Alan Krueger, MIT’s Joshua Angrist, and many others — took it upon themselves to change that status quo, by carefully adopting research designs better able to determine causation (not just correlation), and focusing heavily on actual experiments and quasi-experiments where it’s clearer what factor is causing what phenomenon.

There is little in the article that talks about exactly how the new generation of economists are better able to determine causation not just correlation. I have read a number of books by Nassim Nicholas Taleb, Skin In the Game, Antifragile, The Black Swan, Fooled by Randomness, and The Bed of Procrustes. In one of them, he had a simple thought experiment about the difficulty of discerning causation by reconstructing it from the evidence you can gather. If you see a puddle on the floor in the kitchen, you would be hard pressed to give a detailed description about the ice cube that melted to cause the puddle. You would need a lot more information than you can get just by observing the puddle. He emphasizes that you are on much firmer ground describing what you see than in explaining how it happened.

George Soros introduced the idea of reflexivity in showing the difference between Social Science and Physical Scinece. (This may explain reflexivity – Reflexivity and Economics: George Soros’s theory of reflexivity and the methodology of economic science).

When you are developing the theory of planetary motion, the planets are not going to read your theory and change their behavior just to trip you up. On the other hand, when you write about how economic markets work and you pass laws to regulate those markets, the key players in these markets are avidly reading what you wrote and the laws you passed to figure how the loopholes that they can exploit. What you wrote about the market does change the way the market operates.

I’d be very interested to learn how these new economists are using big data statistics to avoid just these two pitfalls.

The article extols the use of differences of differences. I have heard the term before, but I don’t have much knowledge of what the experts are meaning with this phrase. All I have at this point is this excerpt from the article.

But most of Chetty’s discussion of the paper was about his methodology, what’s known in economics as a “differences in differences” approach. The key was to compare how sales of unaffected products in the stores changed from the start (26.48 sold per week) to the end (27.32 sold per week) of the experiment to how sales of affected products with the new label changed: from 25.17 per week to 23.87 per week.

The discussion sections for the class, run by Chetty’s graduate student teaching fellows, hammered home the point further. Michael Droste and John Macke, the grad students whose sections I attended, emphasized that differences-in-differences is a general technique that can be used in cases even when an actual experiment hasn’t been conducted.

I have used differences of differences in some personal financial software I have written. I have found the data calculated this way to be close to useless. Since I have other ways at getting at the information that are more likely to tell me something useful, I don’t know why I haven’t ripped out the differences of differences part of the software. Sometimes I find it hard to throw away software that I have worked so hard to write.