Gresham’s Dynamic As Applied To Billionaires

I wrote an email response to a friend who described to me what his ideal billionaire would do for his/her workers and society as a whole.

Something I learned in my first economics course, and I have seen it played
out over the years.

From Encyclopedia Britannica:

Gresham’s law, observation in economics that “bad money drives out
good.” More exactly, if coins containing metal of different value
have the same value as legal tender, the coins composed of the
cheaper metal will be used for payment, while those made of more
expensive metal will be hoarded or exported and thus tend to
disappear from circulation. Sir Thomas Gresham, financial agent
of Queen Elizabeth I, was not the first to recognize this monetary
principle, but his elucidation of it in 1558 prompted the economist
H.D. Macleod to suggest the term Gresham’s law in the 19th century.

Nowadays, when economists apply this to more than coins, they call
it a Gresham’s Dynamic. What I saw in the dot com bubble, was a
Gresham’s Dynamic of mutual fund managers. The one’s who could
keep their wits about them, and not succumb to the mania, were driven
out of the business by the mutual fund managers that were racking up
great performance numbers by going wild for dot com. I didn’t get
hurt at all by the bursting of the bubble, because I was adamant about
not jumping on the band wagon. As I used to say to my colleagues
who were boasting about how much money they were making ”

The goal
is not to have the highest peak theoretical wealth ever, but how much
of that wealth you still have after the bubble bursts.

I wasn’t the one to have a higher tax bill from stock options that I never got
to cash in before they became worthless.

So, in your dreams about ideal capitalists, there is a Gresham’s
dynamic going on. The ones who want to do right by their employees
and society get taken out by corporate raiders. The rules have
been rigged to reward the raiders, and leave the good capitalists
with no protection. The good capitalists either get driven out of
business, or they have to take on some of the predatory practices
just to survive. This is why we must have some entity (the
government for example) to set the rules to prevent the Gresham’s
Dynamic. So, while I love your idealism, I am aware of how things
work when everybody is set free to do whatever they want.


Elizabeth Warren, This Is A Test

Elizabeth Warren has told us that she is a capitalist to her bones. Here is her biggest test. Will she act like a true capitalist and sell her endorsement for President to the highest bidder? She has also told us that she believes in markets. Will she use her market power in this situation to extract the highest price she can?

This would be a perfect demonstration, sort of a textbook example, of what it means to be a capitalist with near monopoly power. There couldn’t be a better example of what the 99% are up against in this class war.

The pièce de résistance to her little scheme would be to announce her decisions on the Sunday morning talk shows on March 15.

I woke up early this morning with the driving desire to write this piece before someone like Jimmy Dore does a comedy routine with these ideas. I tried this idea out on a sample audience. Perhaps this reference to the ides of March is a bit too cerebral.

Writing this post reminds me of my Bridge playing days, when the winner of the auction would play a trump card, and as the second player, I would decide to play my ace, and think what could possibly go wrong. Well, here goes the ace. Maybe that is too cerebral, also.


Being Mr. Nice Guy Won’t Save The USA

At a meeting of Bernie supporters this evening, I was castigated for expressing ideas like this from Jimmy Dore. (I hadn’t seen this video before I went to the meeting.) The one good thing I heard at the meeting was the question from Steev, “What do exit polls mean when Bernie Sanders’ supporters voted early?” It never dawned on me that the trick to early voting was to skew the exit polls.

If Bernie is Mr. Nice Guy, good for him. He has no control over his supporters, which should be obvious when some of us defy what he suggests. I support Bernie, not just because I like him. I support Bernie because I think he espouses the formula for saving the country. Saving the country is too important to sacrifice because you want to play nice.

If Elizabeth Warren wants to sell us out to advance her career, then I cannot support her anymore. I rue the many days I worked to get her elected. #RecallWarren. Should we keep it a secret from Warren that some of her former supporters would like to see her recalled? Or should we tell her this while she still has a chance to redeem herself?


Is Biden’s Ukraine Story Believable?

RT (Russia Today) has the story Biden treated Ukraine ‘as his private property’, says purged prosecutor Shokin on Burisma scandal – UkraineGate documentary.

Former top Ukrainian prosecutor Viktor Shokin says he was pushed out under pressure from US Vice President Joe Biden, after he seized the assets of the oligarch behind Burisma, the gas company that employed Biden’s son.

I have been aware of this side of the story for some time, but there don’t seem to be many who have any idea about this. Somebody is lying to us about this whole affair. I don’t purport to know who. I never could understand why the Democrats wanted to make such a big issue of this, if Biden is the one who is lying. I do have to ask myself what happened to the Burisma case after Biden got the Prosecutor General of the Ukraine fired. The case that Biden claims he wanted prosecuted more vigorously seems to have died in silence after Biden got his way. Does that even raise any suspicions in your mind?

I can understand some people dismissing the source, RT. However, doesn’t my question above give you even a moment’s pause?

What does this say about our purported dislike of Russia interfering in USA elections? If we don’t like that, why do we foment trouble for Russia in the Ukraine? Is that not interfering in other country’s affairs? If we don’t like it, we should stop doing it.

In my career, I tried to avoid demanding that people do things my way. I preferred to do things my way as a model for what good comes from doing things my way. Some people did adopt some of my techniques.


Sanders Explains Castro


Here is the story on Bernie Sanders’ remarks about Fidel Castro according to Steve Greenberg. If the oligarchs in Cuba or in the USA insist on taking all the benefits of the economy for themselves, and don’t share those benefits with the rest of the people, eventually a bloody revolution will ensue. The leaders of that revolution will gain the support of the people by sharing some of the economic benefits with the people. If our oligarchs like that result, they can keep on doing what they are doing. If they want to avoid a bloody revolution, they need to stop hoarding all the benefits to themselves.

Time after time in history this scenario has played out. Except for FDR (and maybe some other examples) the oligarchs never learn in time how to prevent a bloody popular uprising. Bernie Sanders is telling us how to prevent that uprising, but the chances that the oligarchs will get the message are very slim.

I think too few current day oligarchs have any knowledge of the song Brother, Can you Spare A Dime?

The Brunswick Crosby recording made on October 25[. 1932] with Lennie Hayton and his Orchestra became the best-selling record of its period, and came to be viewed as an anthem to the shattered dreams of the era.


Stiglitz Explains Democratic Socialism

In an interview, Joseph Stiglitz was asked:

Ana Kasparian
In a few sentences explain democratic socialism.
Joseph Stiglitz
So all that Democratic Socialism is – let me say it’s not socialism as it was understood, until, say, 1980. Socialism was the ownership of the means of production … No one is talking about that. No one says that is the direction we are going. What Democratic Socialism is actually very close to what in Europe is called Social Democracy. …

You might look on the internet to find a definition of social democracy. Here is a wordy explanation that I am not sure captures it all, but it is a start. This is from the Wikipedia definition of Social Democracy.

Social democracy is a political, social and economic philosophy that supports economic and social interventions to promote social justice within the framework of a liberal democratic polity and a capitalist-oriented economy.

For instance, Bernie Sanders is advocating that government pays for health care. If you buy a car from General Motors, I hope you don’t think you own the means of production for building cars.


Debunked: Bloomberg’s claim that redlining led to the housing crisis

The Hill’s show Rising has the segment Debunked: Bloomberg’s claim that redlining led to the housing crisis

Aaron Glantz shares his thoughts on Michael Bloomberg’s comments about redlining.


Now here is where Krystal Ball and Saagar Enjeti do the typical pundit game of playing extremely dumb. They and their expert don’t get anywhere near the problem that caused the housing bubble. I could have explained it better than they did, at least in the part of the video I could watch before I almost threw up.

The housing bubble started when the banks figured out they could sell their mortgages to “investors” by packaging up whatever mortgages they could originate into collateralized debt obligations (CDOs). Once the bank was going to recoup what ever money it lent by selling the loans to investors, they had no reason to care about the quality of loans. They just needed lots of loans to sell. If they had to lie to the “investors” about the quality of the loans they were selling them, no problem. Bribe real estate appraisers, bribe bond rating agencies, no problem. Anything they had to do to originate a mortgage that they could sell. Mortgage brokers writing lies on mortgage applications that the borrower never even saw, no problem with that either. Mortgages to sell the investors (suckers) were so desperately needed that there was no depth too low for bankers to stoop to. Tell me if Krystal, Saagar, and their expert ever got around to telling you that story.

I know the story because I was an investor trying to stay clear of this kind of investment, and I got sucked in anyway a little bit.


Thomas Piketty says Bernie Sanders’ electoral strategy is the way to beat back the right

Salon has the article Thomas Piketty says Bernie Sanders’ electoral strategy is the way to beat back the right.

New paper explores how both parties were captured by the “elite,” leaving a politically rudderless underclass

Piketty’s paper from March 2018 is Brahmin Left vs Merchant Right:Rising Inequality & the Changing Structure of Political Conflict(Evidence from France, Britain and the US, 1948-2017). After you click on the link, you have to change the “https:” to “http:”. WordPress won’t let me publish the link without the “s”, but the link won’t work with the “s”


Centrist-Child Syndrome

The Outline has the article Centrist-child syndrome.

Two of the Democratic party’s most proudly moderate candidates seem to still be rebelling against their Marxist dads.

This is a terrific article. I think I understand this better than even the author does. My maternal grand-father was a socialist (although he played the capitalist game pretty well). My mother married my father whose parents were Republican. I grew up as a Republican. Somewhere around my sophomore year in college, I did some research for an essay and had an awakening. As I have grown older, I have become a “what worksist” that understand the need for a healthy dose of socialism to go along with our capitalism. My daughter and her husband are not nearly as leftist as I have become. Her in-laws are staunch working-class Republicans.

I know there are many counter-examples, but my experience has been that if your children don’t rebel against you, you have cheated. Actually, the problem may be being too doctrinaire. Maybe that is what they feel that they have to rebel, at least in some things.