SteveG’s Posts


Modern Monetary Theory and the crisis of capitalism: Part one

The World Socialist Web Site has the article Modern Monetary Theory and the crisis of capitalism: Part one.

Throughout the history of capitalism and its recurrent crises, various theories have been brought forward by “left” theorists who maintain that these crises and the social ills they generate can be ameliorated, if not entirely eliminated, by changing the monetary system without touching the foundations of capitalist production itself.

While presenting themselves as “leftist” and “progressive,” advocating reform of the capitalist system, history shows that in periods of great crisis they seek to divert the working class from the program of socialist revolution while at the same time providing the ideological foundations for political forces that advance a counterrevolutionary solution to the crisis.

Modern Monetary Theory (MMT), the essential principles of which are outlined in this book by one of its foremost advocates, is the latest expression of this phenomenon.

This part one of this two-part article is full of promises with no delivery. It provides a more or less accurate description of MMT, promises there is an alternative, but gives almost no deep description of that alternative. It hints at the idea that the labor theory of value is a good foundation for the alternative. However, I have never seen a presentation of the labor theory of value that addresses its own contradictions. Do labor theory of value proponents seriously want us to believe that the value of the labor of a master crafts person has no more value than the same labor of someone who has no skill at the job?

The problem of assigning value to anything is not an easy one to solve. I am waiting to see how the second part answers this basic question.


October 26, 2020

The second part has been published – Modern Monetary Theory and the crisis of capitalism: Part two.

The way forward is not the false perspective of some reform of the capitalist system via the “tricks of circulation,” but its overthrow by the working class to establish a workers’ government in order to open the way for the establishment of a democratically controlled and organised socialist economy in which the vast productive forces are used to meet human need.

This part is as vacuous as the first. If the above paragraph is all the author has to describe the deep workings of his proposed alternative, then he has nothing.


The Supreme Court Makes Decisions That Affect Our Lives

YouTube has the video David Sirota On the REAL Reasons Dems Won’t Block Amy Coney Barrett.

The Movement for a Pepople’s Party introduced this video on Facebook with the comment

The Supreme Court makes decisions that affect our lives, but not the way you would expect. David Sirota analyzes the Barrett nomination.


It has passed the point where loyalty to the Democratic Party is just untenable if you work for a living.


The Coming War on China (John Pilger)

YouTube has the video The Coming War on China (John Pilger) | Full Documentary | Reel Truth.

The Coming War on China, from award winning journalist John Pilger, reveals what the news doesn’t – that the world’s greatest military power, the United States, and the world’s second economic power, China, both nuclear-armed, may well be on the road to war.


There actually is some semblance of balance in this movie. The picture of China that John Pilger presents is not as blindly rosy as depicted by Eric X. Li in his TED talk presented earlier, Eric X. Li: A tale of two political systems. I am still concerned for the Chinese people that there are so many billionaires in China. They are allowing one of the worst examples presented by USA capitalism.

I don’t know if Chinese billionaires are as steeped in Finance Capitalism as USA billionaires are. Their power may not be the same as billionaires in the USA, but I still see a danger to it. Apparently other people in China see that danger, too. I fear that Eric X. Li has about the same understanding of the lives of ordinary people in China as our billionaires, like Jeff Bezos, understand the lives of ordinary people in the USA.


Eric X. Li: A tale of two political systems

YouTube has the TED talk Eric X. Li: A tale of two political systems.

It’s a standard assumption in the West: As a society progresses, it eventually becomes a capitalist, multi-party democracy. Right? Eric X. Li, a Chinese investor and political scientist, begs to differ. In this provocative, boundary-pushing talk, he asks his audience to consider that there’s more than one way to run a succesful modern nation.


I am not suggesting that you accept this talk without question. I am just now considering the possibilities of what this talk suggests. I spent one year at UCal Berkley in 1983. I met someone who had suffered through the Chinese Cultural Revolution. Years later, I think I heard that she had gone back to China. This talk may explain why she might have done that.

Here is the link to a conversation on Facebook that started me looking into this information about China. China is winning the global economic recovery. Here is the link to the article mentioned in this post – China is winning the global economic recovery.


Capitalism’s Charade Continues

Michael Hudson has posted the interview Capitalism’s Charade Continues

Maybe I get this because I have read and heard a lot from Michael Hudson and Steve Keen over the last few years.

Here are some tips in case you aren’t familiar with these two economists.

Listen to Michael Hudson explain that it is not a transfer of wealth but an inflation of asset prices that is making the rich so much richer. If the bottom 90% have only a small fraction of wealth, there isn’t much wealth to transfer to the rich. The way the rich get richer is if what they already own becomes “worth” more.

Also try to understand the difference between Finance Capitalism and Industrial Capitalism. Michael Hudson slips in some important insights that you may miss if you are not prepared. You may not understand that Socialism and Industrial Capitalism are complementary. Socialism and Financial Capitalism are antithetical.

One of the things that neither one mentions in talking about corporate stock buybacks is that companies don’t have to pay dividends on the shares they have bought back. Those of us who hold stocks for dividend income get the remaining dividend payments to maintain our income, and the corporations get to use some of what used to go to dividend payments to pay the interest on the money they borrowed to buy back their stocks. So the rise in stock prices per share is only one of the benefits of stock buybacks.


IBM executive says blockchain becoming a useful ‘real business tool’

Cointelegraph has the article IBM executive says blockchain becoming a useful ‘real business tool’.

We’ve also come to understand that blockchain fits into the enterprise architecture in its ability to allow companies to digitize their business processes with other companies.

This article gives some hints as to how the concept of blockchain can be used as a tool for other purposes than creating another form of money.


Cosmic Inflation: How It Gave the Universe the Ultimate Kickstart

Space.com has the article Cosmic Inflation: How It Gave the Universe the Ultimate Kickstart (Infographic).

In 1980 astrophysicist Alan Guth proposed the idea of cosmic inflation, a kind of repulsive gravity that pushes things apart rather than attracting them. Inflation caused an explosive scaling-up of space-time a tiny fraction of a second after the Big Bang. In another fraction of a second, inflation slowed to a more leisurely expansion that continues to this day but is accelerating.

I am hoping this infographic will answer a lot of questions I have about general relativity and inflation/expansion.

There are still a lot of questions, but there are answers I have never dreamed of. Here is one in WikiPedia – Comoving and proper distances.

The integral below is formatted a little strangely, but if you read the description of the variables, you can make sense out of it. The a(t’) belongs under the c, not under the dt’.


Michael Hudson: How an “Act of God” Pandemic Is Destroying the West

Naked Capitalism has published the article Michael Hudson: How an “Act of God” Pandemic Is Destroying the West: The U.S. Is Saving the Financial Sector, Not the Economy.

When reading this article always remember that Hudson is talking about private debt owed by money users. This does not apply to public “debt” owed by money creators like the Federal government. In the USA, there are no money creators like the Federal government. Only the federal government can create money.

China is using an age-old policy common ever since Hammurabi and other Bronze Age rulers promoted economic resilience in the face of “acts of God.” Unless personal debts, rents and taxes that cannot be paid are annulled, the result will be widespread bankruptcy, impoverishment and homelessness. In contrast to America’s financialized economy, China has shown how natural it is for society simply to acknowledge that debts, rents, taxes and other carrying charges of living and doing business cannot resume until economic normalcy is able to resume.

What angers our oligarchs so much about China is that China can figure this out, but our oligarchs hate this solution because it works.

If we can’t take our blinders off to see the obvious, our downfall is nobody’s fault but our own.


Jackson Hole: Fed Chair Powell unveils effort to target ‘moderately’ higher inflation

Yahoo! Finance has the story Jackson Hole: Fed Chair Powell unveils effort to target ‘moderately’ higher inflation.

Federal Reserve Chairman Jerome Powell unveiled a new framework of thinking for the central bank that will tolerate inflation “moderately” above its 2% target. The Fed also committed to reviewing this policy every five years.

It would help if Powell understood how to create inflation before he tells us he is going to try to create it. Of course, the Fed perfectly well understands how to create inflation in the stock market, just not in the consumer price index.

Might the Fed ask itself, what did we do to cause inflation in the stock market that we might learn to apply to the consumer market? It might flash through their minds that they created $10 Trillion dollars to bail out the banks and Wall Street. The people they gave that money to tend to buy stocks. If they could conceive of giving that kind of money to consumers, then those consumers might actually want to consume consumer goods, thus raising inflation in the Consumer Price Index.

It’s amazing how experts can retreat into their think tanks to think deeply about a subject, and yet miss the obvious answers they pretend to be looking for.


How Do Banks Create Money?

Naked Capitalism has posted the article How Do Banks Create Money?

How do banks create money? Banks can create money easily but how safe is it for them to do so and can they go bust?


I would argue that we stop saying private banks create money and just say that private banks create promises of money. The difference between what private banks create and what the central bank creates is that the central bank only promises to give you what they create in exchange for what they create. Private banks promise to give you what the central banks create in exchange for what the private banks create.

Let’s stop creating confusion by using the same word for what private banks create and what the central bank creates.

I have checked this with Warren Mosler, and he hates my idea. I hope he sees this video.

Here are some of the previous posts where I have made this argument.