Periodic Posts

Posts made periodically by a particular author. The periodicity may be totally random.

Jim Chanos: China’s “Leveraged Prosperity” Model is Doomed. And That’s Not the Worst

Naked Capitalism has the article Jim Chanos: China’s “Leveraged Prosperity” Model is Doomed. And That’s Not the Worst.

Jim Chanos: In 2013, we put a slide in our presentation for investors and talks that was very controversial – especially for Chinese nationals. It showed President Xi Jinping in emperor’s garb. People thought we should take it out, that it was offensive. At the time, Xi was widely seen as just the latest in a series of technocrats who had risen through the ranks — one who would follow along with Deng Xiaoping’s reforms. It’s “capitalism with Chinese characteristics.” It’s okay to get rich as long as the country prospers.

But a few things made us think, no, this guy is different. His first speech in China after becoming president was critical of the Soviet Union for being soft on perestroika. They should have crushed it when they had the chance, he said. Xi then set up an institute to study the Soviet Union’s collapse. That was a red flag to us that he was going to be more hardline than people thought. He went on to do an anti-corruption drive, which people dismissed as a typical settling of scores that Chinese leaders do. But it actually extended beyond that. A couple of years later, he began talking in Puritanical terms about social issues. Again, that was different. Nobody had cared about that stuff for 20 years. Do what you want as long as you don’t question the party. Next, we had the book collecting his speeches and writings, which people could be seen carrying around. He started showing up in military events dressed in Mao jackets. This symbolism isn’t lost in China.

We noticed all this, but the real switch occurred in 2019 when he started going after celebrities like Jack Ma [co-founder of Alibaba]. At that point, it was clear that this president was not stepping down at the end of 10 years. He was taking a much harder line on the “flowers of capitalism,” if you will, than past presidents. In 2021, all of this exploded into the open. There’s been initiative after initiative. Redistributing wealth to the masses. Going after other leaders. Overlaid on top of this is the Evergrande saga.

Here was my reaction to the post.

Why not ask Michael Hudson what he thinks? Chanos has a distinctly western view about everything China. Michael Hudson has a more inside view. I think it has been MMTer Steve Keen who has been concerned about private debt in China for many years. For a while, I didn’t realize his concern was strictly about private debt, not government debt. Chanos does not recognize that the increasing USA belligerence may be driving China’s reaction. He doesn’t realize that China’s crackdown on private capitalists may be an attempt to avoid the mistakes of the USA. You can always put a western perspective on everything happening in China. It is just possible that the Chinese perspective might be the more realistic one. I certainly don’t know for sure what the future holds. Michael Hudson would certainly have a better perspective than I have.

We Need to Think Harder About Inflation

Stephanie Kelton as posted on her blog The Lens the article We Need to Think Harder About Inflation.

Here is one excerpt that summarize on of the points the post is making.

It’s not that MMTers don’t “believe in monetary policy” (whatever that means). It’s that we believe it’s unrealistic to think that the central bank can steer our colossal macro ship by periodically nudging the overnight interest rate around in search of alignment with some mythical r*. It’s that we agree with former Fed governor Daniel Tarullo, who candidly professed that “the Fed has no reliable theory of inflation.” It’s that we share Jeremy Rudd’s skepticism about the role of “inflation expectations” as driver of actual inflation, and we question the very idea that rate hikes necessarily mitigate inflationary pressures.

As for the article as a whole, this is something I have been trying to tell proponents of MMT to do for years. Dismissing inflation as no worry when there was no inflation was not a good idea. There needed to be a discussion of why there was no inflation, and talk about what could change that would allow inflation to occur. I think this post talks about and tries to correct what I thought was missing from the discussion.

Economist, Stephanie Kelton, Explains How Spending MORE Is The Solution To Inflation   Recently updated !

YouTube has The Hill video Economist, Stephanie Kelton, Explains How Spending MORE Is The Solution To Inflation.

Stephanie Kelton, professor of economics and public policy at Stony Brook University and author of The Deficit Myth, details the economics behind supply shortages sweeping industries across the nation.

I haven’t watched The Hill since Krystal and Saagar left. Putting Ryan Grim on to fill the space was another negative. However, if they are going to have Stephanie Kelton on, I watched. Pretty quickly she mentioned the magic words that I had hoped for “just in time” manufacturing. Over the last 30 or so years the idea of “just in time” has spread around the world. Manufacturers realized that they were spending a lot of money in warehousing the supply of raw materials and other inputs to the manufacturing process. If they could get the inputs delivered “just in time”, they could eliminate the cost of putting the inputs into a warehouses and then taking them out when they were ready to use them. Taking out the buffer zones of warehouses saved money, but it made the system more fragile to any interruptions of the “just in time” deliveries. We are now seeing the results of this added fragility. The pandemic put a big kink in the supply chain.

Nassim Nicholas Taleb talks about making things anti-fragile. However, in the short term it is more expensive to protect yourself from fragility. “Free” market competition makes it harder to choose anti-fragility. Banking regulations used to require banks to carry a certain level of reserves to protect against bank runs. That buffer has been cut to the bare minimum and perhaps below that minimum.

White Paper: Modern Monetary Theory (MMT)   Recently updated !

Warren Mosler has posted White Paper: Modern Monetary Theory (MMT). Originally created on Created on Feb 22, 2019.

The purpose of this white paper is to publicly present the fundamentals of MMT.

I don’t know how you will take this presentation. Since I have been learning about MMT for quite a few years now, I may have a different take on it than newcomers might have.

MMT for You and Me

This is the easiest to understand explanation that I have seen about taxes, government spending, borrowing, deficits, and surpluses.. It is on YouTube as the video MMT for You and Me (consolidated).

You may not believe any of it, but the explanation is impossible to refute. Warren Mosler is a successful investor and owned a bank at one time. Warren knows how it works, whether you want to believe him or not.

Bernie Sanders on his White House visit as Biden’s domestic agenda is in peril

I had to post this here to be able to turn on the volume and listen. Maybe you won’t have that trouble if you go directly to Bernie Sanders on his White House visit as Biden’s domestic agenda is in peril.

Otherwise listen to the embedded video. Be sure to click on the play button (Even if you think the video is running without clicking on the play button, it isn’t).

Senator Bernie Sanders was among a group of lawmakers who met with President Biden on Wednesday, as he seeks to unite democrats over party disagreements that threaten two major legislation pieces. Sanders joins “CBS Mornings” to discuss the meeting and the state of the Democratic party.

I think Bernie Sanders admits to pulling an Obama losing strategy. He wanted $6 Trillion but agreed to only ask for $3.5 Trillion. You don’t trim your request down before you even start bargaining. It never worked for Obama, and it does not look like it is going to work here.

New Proof Emerges About the Hunter Biden Laptop: a Definitive Account of the CIA/Media Fraud

Glenn Greenwald has posted the story New Proof Emerges About the Hunter Biden Laptop: a Definitive Account of the CIA/Media Fraud.

New evidence on Monday proved what has long been clear: that documents about Joe Biden from the Hunter Biden laptop were authentic. Big Tech censorship in the weeks before the 2020 election of these genuine documents is one of the most severe assaults on free speech and a free election in years. That the corporate media was their key ally by endorsing and spreading a CIA lie — that these documents were “Russian disinformation” — makes this episode even more grave.

Saagar and Krystal reported on this book, but they only said a very small portion of what Glen Greenwald says here.

Krystal Ball: Democrats continue MASSIVE Billionaire Giveaway in spite of AOC Dress

Breaking Points posted the video Krystal Ball: Democrats continue MASSIVE Billionaire Giveaway in spite of AOC Dress.

Krystal looks at the huge tax giveaway Democrats are planning on giving to their billionaire donors, despite the tax the rich dress worn by AOC that said otherwise

I was hoping someone would post this outside the Breaking Points paywall. Here is the quote that I think is so important.

The wealthiest people don’t actually earn income. Instead they have capital gains or they engage in a strategy like Elon Musk does. That strategy is called “Buy, Borrow, Die”, and it effectively allows them to skirt taxes forever. Here is how it works. It is actually pretty straightforward. You buy an asset, or in Musk’s case you start a company. As that asset increases in value, rather than selling it, which would trigger taxes, they borrow against it, avoiding taxes on their actual wealth for their entire lifetime. Then when they die, they can pass their asset to their heirs. Currently a provision in the tax code called a stepped up basis allows those heirs to avoid paying capital gains on any increase in value that happened over that asset over the life of Musk or whoever leaves it to them. So again, “Buy, Borrow, Die”. The end result is this strategy allows massive fortunes to escape taxation for ever.

So, don’t believe the Republican lie that an inheritance tax, that they call a “death tax”, taxes money that has already been taxed. This wealth is never taxed, and the Republicans like it just that way. If my descendants are lucky, I will be able to bequeath them wealth to take advantage of this loophole, albeit on a tiny scale compared to Elon Musk.

EXPLOSIVE Truth About Vaccines & COVID w/Inventor Of mRNA Vaccine Technology, Robert Malone

Jimmy Dore has the video EXPLOSIVE Truth About Vaccines & COVID w/Inventor Of mRNA Vaccine Technology, Robert Malone.

This is darn hard to dismiss even though my brain was fighting this video for a long time as I watched it. I am not saying to buy this information hook, line, and sinker. I am saying, take it in, and let it roll around in your brain with all the other information you take in. At some point, you may come to a conclusion. I am not prejudging what that conclusion should be.