Shoshana Zuboff: Surveillance capitalism and democracy 1

YouTube has the video Shoshana Zuboff: Surveillance capitalism and democracy.

The collection and analysis of data is changing the way economies operate. Are these changes so fundamental that they can be said to have led to the emergence of a new form of capitalism – surveillance capitalism? If people’s behaviour is made increasingly transparent, do we become a society in which trust is no longer necessary? Are individuals a mere appendage to the digital machine, objects of new mechanisms which reward and punish according to the determinations of private capital? How is social cohesion affected when people become dispensable as a labour force, while their data continues to provide function as a source of value in lucrative new markets that trade in predictions of human behaviour? How should we understand the new quality of power that arises from these unprecedented conditions? What kind of society does it aim to create? And what ramifications will these developments have for the principles of liberal democracy? Will privacy law and anti-trust law be enough? How can we tame what we do not yet understand?


I had no idea how eyeopening this talk would be. It was worth every minute of the 2 hours I spent watching this. Some of her most profound statements came in the Q & A session after the formal talk. I’ll have to go back and listen to the introductions. I initially skipped over them because I was impatient to hear about this topic that was new to me.


How Modern Monetary Theory (MMT) Actually Works (w/ Warren Mosler)

Deficit Owls put the link to the video How Modern Monetary Theory (MMT) Actually Works (w/ Warren Mosler) on their Facebook page. The video is on YouTube.

Modern Monetary Theory has become a hot topic of discussion. But is it well understood? In this interview with Real Vision’s Ed Harrison, Warren Mosler, the founder of MMT, describes exactly what Modern Monetary Theory is, and how the framework can be utilized. Particularly interesting is Mosler’s ambivalence about the political furor enveloping MMT. He sees the economic framework as more descriptive of monetary operations than prescriptive of policy. Mosler also outlines why MMT’s operational bent made it attractive to finance professionals long before it became a politically-charged debate among academic economists and politicians. Filmed on May 29, 2019 in New York.


Here is a fabulous interview from the godfather of MMT. In the beginning you have to listen fast to some of what he says. He says things faster than you may be able to absorb them. Later he starts to talk about how he came to understand what he had earlier described. For me this is a tremendous payoff. I have been learning MMT for a few years now, and there is always a bit or a piece here and there that I am not sure I get. He clarified so much for me in this one hour. Whatever you can get from this interview will add to your understanding of how money works and why you need to understand it. Whatever you don’t get should just encourage you to listen to more explanations that build your knowledge. Slowly, but surely, your brain will start to light up as you come to understand more. At least that is the way it works for me in any field I decide to study.

In trying to understand how a piece of software works, we often do what is called reverse engineering. We look at the code to figure out what it is doing to accomplish the task it is designed for. If the designer provides you with a description of the design he created before he or she started writing the code, then you will be miles ahead in understanding how the code does its job. In this sense, the interview with Warren Mosler is the design document that tells you how we came up with the concepts in MMT. I have seen documents from others that he worked with to develop MMT, but this is the best piece I have ever seen from Warren Mosler himself.

I took some courses in software engineering that used a book by a revered teacher Donald Knuth called The Art of Computer Programming. He seemed to like to explain computer algorithms by giving you the code in an assembly language he invented for the purpose. When I took the course, I already had a couple of years working as a software engineer. The book drove me batty. I knew already knew some of the algorithms I studied from the book. I kept thinking that if he would just explain the idea behind the algorithm, I could figure out the code for myself. Giving me the code so that I could figure out the ideas only made it more difficult. I decided to stop taking this course before he confused me about all the topics that I had already come to understand and use.

I consider reverse engineering as something I will do if I have to understand the code and nobody has provided me with any other tools with which to learn it. I don’t take pride in doing tricky reverse engineering because it is such a waste of time compared to reading a well written design description.

Mosler’s design for a ferry as discussed in the video is pure genius. Previously I have learned sailing, and read some on naval architecture. I have never read about a design like Mosler’s that puts that knowledge into practice.You never know where you are going to find a brilliant idea on an unexpected topic.


What Kind Of Money Do USA Private Banks Create?   Recently updated !

I think I see a better way to explain one key point of Modern Money Theory (MMT) that the experts have failed to exploit. The money the Federal Reserve bank creates is called “high powered money” by MMT proponents. I always struggle to understand the difference between high powered money and the money that private banks create.

Here is what I have come to recognize. Private banks do not really create money. They create the promise of money. When you have a private bank account or a loan, the bank is promising you that if you ever want high powered money they will provide it to you by the terms of your loan or your bank account balance. As long as your transactions are wholly within one private bank, you are only dealing with promises of money.

It is only when you want to take high powered money out of that bank, that the bank is forced to turn its promise into actual money. If you write a check to someone who is also a customer of the same bank corporation, the bank only needs to transfer its promise to pay you to the account of the person depositing your check into the same bank corporation.

Furthermore, the bank only has to worry about the difference between what people want to take out of the bank and what people want to put into this bank. Under normal circumstance this difference of money is a small fraction of the money obligations the private bank has on its books. This is what makes the idea of fractional reserve banking work so well, under normal circumstances.

I think I will stop here to let people digest what I have just said. I have posted this story on my Facebook page. We can discuss what I have said, and your questions about it on Facebook.


What Is The Difference Between Federal Reserve Bank Money and Private Bank Money?

Modern Money Theory (MMT) says that money created by the Federal Reserve Bank and money created by private banks are not the same thing, MMT calls Federal Reserve created money “high powered money”. I sort of get the idea, but then I struggle with it. I finally realized that the financial crash of 2007-2009 was all the proof that I needed to see the difference between the two kinds of money.

What the private banks create is a promise to pay you “high powered money” whenever you want it. As long as you are happy to leave your money in the bank, you don’t care if that money in the bank is a promise or is the actual thing. It only matters to you and the bank, if you want to take some money out of the bank. From this realization of the bank arose the idea of fractional reserve banking. Over time, banks learn how much “high powered money” their customers will ever want at any one time. All the high powered money the bank needs to have (in reserve) is the maximum amount of high powered money their customers will ever want to withdraw from the bank at one time. Any money that they hold above the reserve requirement can be lent to someone else for a fee.

The only fly in the ointment is that sometimes too many people who have money in the bank want to take it out at the same time. If word gets out that the bank can’t deliver the money on demand, suddenly all bank depositors want to take all their money out of that bank. This is called a run on the bank. It used to happen often enough that people were on the look out for the possibility of happening.

In 1913, the Federal Reserve Bank was created to back-up banks in case a bank had a run. The Federal Reserve Bank, which held a large reserve, could rush high powered money to the bank that was having a run. If people realized that the bank could give them all of their money that they wanted, the run would stop, the banks could repay the Federal Reserve Bank, and business returned to normal.

During the 1930s depression there were so many runs on banks at the same time, that President Roosevelt had to declare a nationwide bank holiday. You could not withdraw your money from a bank while the holiday was in effect. From this experience, the idea of the Federal Deposit Insurance Corporation. With this in place, your money in a private bank was insured by the government as to always be available to you no matter what happened to the bank where it was deposited. With that insurance, there was no need for there to be a run on a bank, and even if there were, the FDIC would come to the rescue. In fact , runs on banks became very rare.

I won’t go through all the details, but by and large this worked well for almost 80 years. In the interim, the USA went off the gold standard, and the Federal Reserve Bank was given the responsibility to create USA high powered money that was backed by nothing other than the full faith and credit of the USA government.

By the mid 2000s, with deregulation of the private economy, banks (and insurance companies, and the shadow banking system) were taking more and more risks. Not only were there bank deposits and loans, there were also CDOs (collateralized debt obligations), liar’s mortgage loans, credit default swaps, and an alphabet soup of money derivatives. Look this up on the internet if you want to know more. When the real-estate market started to decline, too many of these promises of money started to be redeemed. Lehman Brothers Bank collapsed, and the world’s financial system froze up.

What unfroze the situation, among other things, was the promise by the Federal Reserve Bank to create $20 trillion dollars of high powered money to satisfy all the demands. What better indication can we have that high powered money is different from private banks’ promises of money?

Could a similar problem arise with Federal Reserve Bank created high powered money? It is much less likely, but it could happen. Right now, the USA has a trade deficit with the rest of the world. Countries accept USA money for the goods they sell us, but they don’t spend all that money to buy stuff from us. The excess USA money that these countries accumulate sits in accounts at the Federal Reserve Bank (or it is invested in USA Treasury securities). MMT almost says, “no problem, the Federal Reserve Bank can always create enough high powered money to satisfy the demand for this money”. The USA government can always buy whatever is for sale in USA money. Countries holding all this money won’t try to convert all this money into something else like gold or the high powered money of another country. If they did, the USA money would become worthless, and they would lose the value of all the USA money they still held. However, this accumulated money is not being used for anything by these countries. What if they merely said “We have enough reserves of USA money. We don’t need any more, so you can’t buy anything from us with USA money.”?

I think I will leave you with this thought. Use your imagination, or ask experts what the result of this would be. Imagine what the USA could do (or already is doing) that would bring on this refusal to accept our money?


Shadow Banking

There is a Federal Reserve Bank of New York Staff Report titled Shadow Banking.

In contrast to public-sector guarantees of the traditional banking system, prior to the onset of the financial crisis of 2007-2009, the shadow banking system was presumed to be safe due to liquidity and credit puts provided by the private sector. These puts underpinned the perceived risk-free, highly liquid nature of most AAA-rated assets that collateralized credit repos and shadow banks’ liabilities more broadly. However, once private sector put providers’ solvency was questioned, even if solvency was perfectly satisfactory in some cases, the confidence that underpinned the stability of the shadow banking system vanished. The run on the shadow banking system, which began in the summer of 2007 and peaked following the failure of Lehman in September and October 2008, was stabilized only after the creation of a series of official liquidity facilities and credit guarantees that replaced private sector guarantees entirely. In the interim, large portions of the shadow banking system were eroded.

I haven’t had a chance to read all 38 pages of the report, but even the introduction is packed full of useful information. As I learned from the person who suggested this paper to me, it is possible to read this paper and let your preconceived notions completely obscure the lessons of this paper. I don’t know how you could read the excerpt above, and miss the message, but somehow the suggester that I read this managed to do it.


Don’t Light That Torch

There is a scene in an episode of the TV show “Emergency” that metaphorically illustrates what happens when I warn people of impending political disaster. I have not been able to find the video anywhere on the internet. Please help. Perhaps you can get it from NetFlix if you have a subscription.

No.
overall
No. in
season
Title Directed by Written by Original air date
105 7 “The Exam” Richard Bennett Tom Egan November 13, 1976 (1976-11-13)
Roy and John are concerned about their paramedic re-certification exam; Dixie asks Dr. Brackett to put together the exam at least part of the way. Molly (Bridget Hanley), a fireman’s widow, calls for help for her daughter, Jeanine, who got her head stuck in a table, and John is concerned about her calling them for minor things, until Jeanine has a really bad fall. An accident on a movie set turns deadly.

I have been unable to find the video of this episode to be able to post the scene on the internet. Close to the end of the episode, the team is called to an accident on a movie set. As the fire engine approaches the scene, the captain sees someone trapped in a crashed vehicle. There is a gasoline spill at the accident. The captain sees a technician about to light a torch to cut the vehicle open. The captain gets on the loudspeaker in the fire engine, and shouts “Don’t light that torch”. The technician does not listen, and he lights the torch. The car immediately goes up in flames killing the occupants. I think the video of this scene would have much more impact than my description of it. That scene still sticks in my mind 43 years after I saw it.


Economic Update: Libertarianism, Capitalism & Socialism

Democracy At Work has the video Economic Update: Libertarianism, Capitalism & Socialism.

[S9 E47] This episode of Economic Update features an exploration by Professor Wolff of how Libertarians defend capitalism by saying its many current flaws/faults flow from the state’s economic interventions, not from the system itself. He then explains why Libertarians oppose socialism as another, even more, state-dominated intervention into the capitalistic system. Prof. Wolff then offers a critique of Libertarianism based on Capitalism’s long history of strong state interventions and socialism’s long-standing anarchistic components. He goes on to wrap it all up by inviting Libertarians and Socialists to find potential points of agreement against capitalism.


This might blow the minds of Libertarians (and even some Socialists).


Unemployment is low only because ‘involuntary’ part-time work is high

Business Insider has the article Unemployment is low only because ‘involuntary’ part-time work is high.

Misleading unemployment numbers may be prompting the Fed and the Bank of England to make a huge error.

It is not that misleading unemployment numbers are prompting the Fed to make a huge error. The point is that the Fed and Trump are purposely using misleading numbers to justify transferring more wealth to the wealthy.

The value of this article is that it explains how Trump is lying with statistics better than I could just be using qualitative explanations.

“Headline” unemployment is only at a record low because of a 42% increase in the number of people who are in “involuntary” part-time work.

To back up my statement about the use of misleading numbers, I give you yhis quote.

“During early 2018, involuntary part-time work was running nearly a percentage point higher than its level the last time the unemployment rate was 4.1%, in August 2000,” according to Rob Valletta, a vice president in the Economic Research Department of the Federal Reserve Bank of San Francisco. “This represents about 1.4 million additional individuals who are stuck in part-time jobs. These numbers imply that the level of IPT work is about 40% higher than would normally be expected at this point in the economic expansion.”

The Fed is fully aware of what the problem is. They just aren’t bothering to make it clear to the public. The oligarchs’ news media has no incentive to inform its readers with this information.


How White Collar Criminals Get Away with Murder

New Economic Perspectives has the article How White Collar Criminals Get Away with Murder. I don’t watch The Real News Network anymore since they pushed Paul Jay out, so I only post this because it is an interview with WIlliam K. Black and I was pointed to this from New Economic Perspectives.

White-collar crime prosecutions are at a 33-year low. Corporate leaders can cause environmental disasters, economic crashes, and the deaths of thousands and still walk free. But there’s a way out.


Confidential documents reveal U.S. officials failed to tell the truth about the war in Afghanistan

CNN has the MSN article that appears to come from The Washington Post. Confidential documents reveal U.S. officials failed to tell the truth about the war in Afghanistan. You can translate the phrase “failed to tell the truth” into “lied like hell” if you want a more accurate headline.

“Our policy was to create a strong central government which was idiotic because Afghanistan does not have a history of a strong central government,” an unidentified former State Department official told government interviewers in 2015. “The timeframe for creating a strong central government is 100 years, which we didn’t have.”

This is something I figured out years ago. If I could figure this out despite all the lies we were being told, how could the so-called experts in our government fail to figure this out? We do revere these kinds of people who are blind to the obvious. You can imagine what these experts don’t see about what is happening in the world now. Iran, Iraq, Venezuela, Syria, Bolivia, and on and on. Hillary Clinton and John Kerry are typically blind as Secretaries of State.