There are two places to go to read this story. Naked Capitalism has the headline Joe Firestone: Another Danger of the TPP: It Sacrifices Monetary Sovereignity. New Economic Perspectives has the headline How Can Our Senators and Representatives Vote for Giving Away Our Monetary Sovereignty?

Let’s see if giving you the first and last paragraphs can give you a clue as to the magnitude of this blunder.

Right now the US fulfills the three essential conditions for monetary sovereignty: 1) it issues its own non-convertible currency, 2) which it allows to float on international currency markets; and 3) it owes no debts in any currency other than dollars. Because it is monetarily sovereign, and can always meet its obligations the US can never be forced into insolvency.
.
.
.
Which brings us back to our erstwhile Representatives and Senators in Washington. How they can even consider Fast Track Authority for the President without extensively considering and debating the sovereignty-infringing aspects of the TPP is beyond me. Its potential infringement on Monetary Sovereignty is only one of these. There are many others, as well. And it is hard to understand how people who swear fealty to the United States can justify their apparent complete lack of concern for these issues when they make trade agreements.

In one fell swoop, a decision in a single case could force a $350 billion dollar debt on our country and the complainant could insist on payment in Chinese yuan.

If, after seeing the financial collapse of 2008/2009, you realize the magnitude of Bill Clinton’s blunder in doing away with the Glass-Steagal Act, you should contemplate how the TPP could be a blunder of far larger magnitude. What is surprising is that it has taken this long for someone like Joe Firestone to expose the full implications of the Investor State Dispute Settlement (ISDS) tribunals that are set up by the TPP.

All the phoney issues the Republicans raise about our debt to ourselves in our own  currency could be made to come true by changing that debt to be in a foreign currency of the lender’s choice after we have incurred a debt we didn’t even know we had incurred.

Rachel Maddow has an interview with Elizabeth Warren about the TPP controversy.

Senator Elizabeth Warren explains to Rachel Maddow why she is reluctant to give fast track power to President Obama on a new trade deal, citing concerns that the crafting of the deal is ‘rigged,’ and insisting that the deal be made public first.

I have seen people wonder how the Senators could know what they are complaining about. Well, this should stop it. Elizabeth Warren says that she has read the TPP. So here’s the challenge Mr. President, if it’s such a good deal, let us see it. Otherwise, we just plain don’t believe you. The more you keep it hidden, the less we believe you. What you say about it is belied by your actions to keep it secret.

I notice that Rachel Maddow gives deserved credit to Bernie Sanders and others who are fighting this deal. As for the President and interpreting his mentioning only Elizabeth Warren by name, “Bernie who. Never heard of him.” He’ll even mention John Boner, but not Bernie Sanders. The trouble is that Bernie Sanders refuses to go away.

I received an email from Run Warren Run about why she should run.  The main topic was about the trade disagreement between Warren and Obama.  I agree fully about that argument, and I will show the email at the end.

What I found most powerful was the speech by Prof. Lawrence Lessig about why Warren should run.  The email provided the link to that speech in its postscript.

Until Warren says she wants to run, I am putting most of my effort in promoting Bernie Sanders. I also think he has the broader platform of the two candidates. If Lessig is right that she is the candidate we need, and she agrees to run, then I would certainly support her efforts.

Now that we have been forced to accept the unqualified Loretta Lynch as our next Attorney General, all is not lost.

Credo Action has the petition Tell new Attorney General Loretta Lynch: End “too big to jail.”

“Begin your term as attorney general by announcing criminal charges for the fraud that led to the financial crisis, ending the abuse of deferred prosecution agreements without steep penalties, and committing to bring to trial any financial institutions caught breaking the law in the future.”

We are getting close to the statute of limitations for some of the crimes committed during the financial crisis.  However, these crooks are still committing the crimes, so that deadline shouldn’t stop prosecution or quiet our calls for prosecution.

I am aware that these petitions from Credo are probably only a way to get your email address so they can send you junk email, but perhaps it can do some good to at least listen to the message which is a good one.

I may have hinted at these facts before in this blog, but it is time to bring them out, and boldly state them.

There are millions if not billions of people in this world in other countries  who are as smart as we are, as educated as we are, and who are willing to do our jobs as well as we can for less money and under more difficult conditions.

Those are the facts right now, and they won’t change instantly.  As with global climate change, we  can deny the facts, but we  cannot avoid them.  So sit yourself down, take a deep breath, and now start to think about what we are going to do about it that is non-violent and recognizes the brotherhood and sisterhood of people all around the world.

The corollary to the above is that we enjoy a superior standard of living to the people who are competing most strongly for our jobs that has no justification when you look at the facts without blinders.

There are going to have to be some adjustments to our expectations that we must make.  We have a range of options in the adjustments we choose to make.  There is a set of choices that will spread the pain reasonably fairly across all segments of the American population.  There is also a set of adjustments that will exempt the rich from having to share any of the pain, but will concentrate it even harder on the rest of the population.

The rich know which set of options they are willing to fight tooth and nail for.  Do most of the rest of us have a clue as to what the fight is all about?

Oh, one thing the rich may not know, or maybe they do, is that there are potential CEOs in other countries that are just as smart as our CEOs, but they are willing to work for lower salaries and under more difficult circumstances.  There is no reason why the CEO jobs won’t leave this country and move to China, India, Korea, Japan, Hong Kong, Singapore, and all  those other countries where the rich people also want the TPP.  You can bet our corporate executives who are writing the TPP rules are working overtime to protect their asses from the competition of the executives in these other countries.  That may be the only reason there is any resistance at all from the other countries.

Once the rich people in our country can make it clear to the rich people in other countries that all the rich people will do exceptionally well with the new scheme (and there are plenty of billionaires in the emerging countries, too), then their will be nobody left to resist the rest of us from being driven into poverty.

So what are some of the things that we can do?  Here is a list in no particular order.  In fact we can do many of them at the same time if we  can muster the political will.

• Get the government to spend more money to get us all back to work at reasonable wages for this country.  That means investing in the infrastructure we all know we will eventually have to pay for anyway.  Investing in making our own education affordable as they do in all the countries that compete with us.  Invest in the research that corporations will not pay for on their own, and don’t then give it away to the corporations without extracting something for the rest of us in return.
• Let the value of the dollar sink so that there will be more parity on income levels internationally.  It won’t be as painful or maybe even as noticeable to our own standard of living if we all adjust in about the same way relative to people in the rest of the world.  Moreover, it will bring the balance of living standards across the world to a more sustainable level.  It will also tend to fix trade imbalances.
• Work cooperatively around the world to get all people labor rights and human rights. That may raise other people’s standards of living so ours won’t have to drop so much to reach parity.
• Try to fix the laws around the world that encourage the mal-distribution of wealth and income.  We must warn developing countries about the dangers of allowing wealth to be concentrated in the hands of the billionaires in their own countries.
• We must stop allowing our oligarchs to use this country’s military might to help them hold  onto their own untenable advantages in life.
• Make sure the technological advantages of workplace automation are shared equitable among all classes of people in all countries.  We can make technology the friends of all of us, instead of just some of us.

That ought to be a good list to start with.  Let’s have a discussion around our issues rather than around the issues our oligarchs want us to focus on.  They can’t use us as cannon fodder to protect their privileges while they are taking our privileges away.

The Daily Kos has the article On TPP, Warren Shows Backbone, Fires Back At Obama; Watch Bernie Sanders, Too

If you want to know what is what, just watch the Sanders’ video below that the article points to.

Sanders’ spends the beginning of his talk completely debunking the arguments for many previous trade agreements foisted on us from President Bill Clinton on to President Obama.

He talks about the arguments given to us about normalization of trade with China. Besides his very good discussion I have to ask the obvious BS detector question of the proponents of the agreement.

If we’d rather have products from China because they are cheaper, why would the Chinese buy products from the US? Would they buy them because they are more expensive? Does that make any sense?

If a simple thought experiment like this gives the lie to the argument, then there had better be a damn good argument as to why the obvious is in fact not true.

Compare what Bernie Sanders’ has to say to Obama’s assurances as seen in my previous post Obama Says Elizabeth Warren Is ‘Wrong’ on Trade.

Look at Elizabeth Warren’s rebuttal as described in this previous post, Elizabeth Warren: I’m Not Wrong on TPP.

Now who are you going to believe, President Obama, or your own lying eyes?

Oh, by the way, imagine Hillary Clinton having the depth of knowledge to give a speech like this on this subject any time in the near future. (Remember all the qualifying nouns and adjectives in that sentence. Don’t give me any arguments that ignore those words.)

Will the Republicans, please, please go through with their threat and impeach this President? I am begging.

The Daily Kos has the article Faux Noise & Sarah Palin Denounced In Stunning Earth Day Video (36M Views).

In this visually beautiful and mesmerizing piece, 27 year-old Prince Ea apologies to future generations for what we are doing, and not doing, to the planet today. The six-minute video contains so many great thought-provoking quotes, it’s bound to be shared for many years. So far, in less than 48 hours, his video has garnered over 35 million views on Facebook.

Here is the YouTube video version. It certainly doesn’t have 36 million views there, but of course that is not Facebook.

When there are discussions of which model of the economy is “true”, I like to keep one particular analogy of the economy in mind.  It is an analogy with physics and the balancing of forces.

Donald E. Simanek has a picture in his article S-1 VECTOR ADDITION OF FORCES that is a useful starting point to understand my view.

In the above picture we see a balance of four weights of equal size.  See if you can use your imagination to expand this picture to millions of weights on millions of strings arranged at millions of angles on the above balance wheel.  You can look at any one of these strings with weights on both ends as a single model of one of the forces in the economy.  Whether or not that string tilts the balance wheel toward one side of the other  surely depends on the sizes of the weights on both ends of that string.  If these weights dominate all the other weights in size, then measuring the size of the weights on this particular string will tell you which way the wheel tilts.  However, if the weights on this particular string are very small compared to the other weights, then they will have very little impact on the tilt of the wheel.

There are even more complicated problems about the small  difference in weights in a set of very large weights, but we don’t need to get into that to understand the issue.  When you discuss systems involving people, as opposed to ones that are only composed of inanimate objects, then there are even more complications which we don’t need to consider here.

Even if the weights you are  concerned with don’t change much, all the other weights can be undergoing huge changes.  If you think your particular economic theory explains all economic behavior in all possible circumstances, then you will be mystified by real world behavior which varies wildly even when the parameters you measure hardly change at all. In another circumstance, the factors you measure may change wildly, but the behavior of the system doesn’t change much at all.  That could be because the sum of the other weights and their changes are much larger than the changes in the weights you are looking at.

When you study any particular economic theory such as MMT (Modern Monetary Theory), you have to consider the circumstances under which the changes in the economic elements of the theory can have large impacts on the economy and when they are unlikely to have much impact.

I think a lot of arguments among theorists and bystanders have to do with not understanding when a theory is important to apply and when it  isn’t.  When arguing against a theory, it is important not to think that behavior of the economy under circumstances where the theory is unlikely to have much impact become a valid argument against the theory.  You shouldn’t assume that the people proposing the theory are unaware of the limitations of their theory, unless they explicitly demonstrate their lack of awareness.

When arguing for a theory, it is beneficial to mention the circumstances that must exist for the theory to apply.  It helps people to get in the right frame of mind to understand your theory.   People will not have a host of subconscious thoughts of where your theory does not apply in history, if you limit the explanation to be clearly appropriate only under the right circumstances.

Few will take your explanation into account when they try to debunk your theory, but you can always remind them of what you said when they get away from the area of applicability of your assumptions to prove that it is a bad theory.

When I originally wrote this article, I made the cryptic remark:

When you discuss systems involving people, as opposed to ones that are only composed of inanimate objects, then there are even more complications which we don’t need to consider here.

Today, I made a blog post that explains that remark – see Soros: General Theory of Reflexivity

Occupy Democrats has the article Watch: Bernie Sanders Epically Shreds the ‘Immoral’ Republican Budget.

In this video from today’s Senate hearing, a passionate Bernie Sanders unloads both barrels on the immoral Republican budget, listing the many ways that it does “exactly the opposite” of what the American people think needs to be done to rebuild the American middle class.

Here is the video.

Thanks for Bernie Sanders’ saying this, because it leaves me speechless.

Not that this will settle any arguments, but it is “interesting” to see who the Federal Reserve Bank thinks of Who owns the Federal Reserve?

The Federal Reserve System fulfills its public mission as an independent entity within government.  It is not “owned” by anyone and is not a private, profit-making institution.

As the nation’s central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.

However, the Federal Reserve is subject to oversight by the Congress, which often reviews the Federal Reserve’s activities and can alter its responsibilities by statute. Therefore, the Federal Reserve can be more accurately described as “independent within the government” rather than “independent of government.”

I wonder if Rand and Ron Paul know of this?  If they do know, do they care?  Even if they know and care, they will still argue about what this means.  I only use the Pauls as representative of the people who argue this.

Someone is bound to say that the private member banks own shares of the Federal Reserve Bank, and thus they own it. So here is the last paragraph from the Federal Reserve’s document.

The 12 regional Federal Reserve Banks, which were established by the Congress as the operating arms of the nation’s central banking system, are organized similarly to private corporations–possibly leading to some confusion about “ownership.” For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

I can imagine all the “Yes, but …”s gurgling through the readers’ minds. My take on the meaning of this second excerpt is that the “shares of stock” are more like tickets the banks have to buy if they want entry into the system. It gives the banks who buy them certain privileges and benefits, but it doesn’t give them ownership. When you buy tickets to Ringling Brothers’ Circus, do you think you own the circus?

There are other links in the document, but the above two excerpts are all the explanatory text in it at the time of writing this post.

See my subsequent post Bernanke: “The Fed will do whatever Congress tells us to do.”