[jeffkrol]

I just did--at least through all 7 of the deadly frauds. I skipped his life story and read his proposals. Fascinating stuff. He makes some of the observations that have always seemed obvious to me, and I thought I must be too ill-trained that I don't get why they aren't true. The first one being that the "Carter inflation" was primarily the result of a spike in OPEC oil prices--not tax and spending policies. We are focussed on the numbers on an account sheet rather than true causes.

Second, that the demographic problem with Social Security has nothing to do with the revenues and spending of that particular program. It is that with more retired seniors and fewer "producers," allocation of goods and services is a problem. It has never made sense to me that this would be more of a problem with an investment in SS than with an investment in the stock market. Either way, if there are fewer people working and producing to provide goods and services to support more people who aren't, there is a problem.

I need to read the last half more closely, but what I didn't see discussed well in the 7 frauds is that "fiat" money requires trust, and a reason for that trust must come in the belief by a foreign producer that there is something of value they can purchase with U.S. dollars. He just assumes that away with statements about China voluntarily trading its goods for electronic entries at the Fed which represent dollars. Perhaps he discusses this later, but at some point we do have to actually produce something the world wants, or this gravy train of a trade deficit will end.

Yes we have to produce something. Some of the "trust" is the fact that our economic engine is sooo far away from full capacity that the trust is in the surplus..

china understands fiat money a lot better then we do. There whole economy is pretty much "Mosler". Gov subsidies to industry to produce. Massive home projects both productive and idol.. Hasn't really hurt them yet.
They are also aware that they are going down the slippery slope of wealth inequality and a real estate bubble...

Paul McCulley does Modern Monetary Theory | Credit Writedowns

No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetarily Sovereign, and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.

Remember that the next time you’re tempted to ask a dopey teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it screwed up the economy.”

–How Monetary Sovereignty differs from Modern Monetary Theory — simplified Monetary Sovereignty – Mitchell

http://www.henryckliu.com/page215.html

When China exports real wealth to the US for fiat dollars, it is receiving US sovereing credit in exchange of material wealth in the form of goods. Thus the US trade deficit denominated in dollars is in fact US lending to China through buying Chinese goods on soveriegn credit. China now is a holder of US fiat money and as such is acting as a state agent of the US, with the full faith and credit of the USe behind the US sovereign credit instrument (dollar), which is good for paying US taxes and is legal tender for all debt public and private in the US. Fiat money, like a passport, entitles the holder to the protection of the state in enforcing sovereign credit. It is a certificate of state financial power inherent in sovereignty. Since China does not pay US taxes, the dollars that China recieves can only be used to buy US sovereign debt (Treasuries) through extingusishing the US sovereign creidt instruents (dollars). Through this transaction, China changes its position from that of an agent of US sovereign credit to that of a creditor to the US. This is why China must buy Tresuries with its surplus dollar - to change it s poistion from that of a US agent to that of a US creditor.

The only way for China to become free of this dilemma is to require all Chinese exports to be paid in Chinese currency.

Certainly market forces in a runaway-debt economy have not created Adam Smith's "universal opulence which extends itself to the lowest ranks of the people". The only trickling down has been poverty and misery. In a world of 6 billion people, only about 1,000 currency traders and a small circle of rich investors in their hedge funds seem to enrich themselves further through the unbridled manipulation of the free financial market. Even in advanced economies, workers are misled to accept low wages as a trade-off for stock options that become worthless when the debt bubble bursts.

Corporations seduce share owners with fantasy capital gains based on debt to replace regular dividend payouts. When market capitalization of major corporations inflated by debt can fall by 90 percent within a matter of months while top executives can cash out at peak prices and resign with severance packages worth tens of millions of dollars, there is no other way to describe the situation than reversed Robin Hood: robbing the poor to help the dishonest rich.

This view is now shared by increasing numbers across ideological spectrums. Economist John Kenneth Galbraith's famous description of trickling down prosperity was if you feed the horse enough oats, the sparrows will some day benefit from its droppings. In finance capitalism, the poor sparrows are crushed by the wheels of the carriage of debt that the horse pulls.

If debt is dilapidating, foreign-currency debt, mostly dollar debt, is deadly. Thus those governments that had been misled by neoliberals to borrow massive amounts of foreign currency unnecessarily and subsequently dutifully implemented IMF prescriptions, such as Brazil, Argentina, Turkey, South Korea and Indonesia, saw their economies destroyed to the point where recovery may now take decades, if ever, and only if the poisonous IMF medicine is quickly rejected.

The IMF has now admitted that it made a "slight mistake" in dealing with the Asian financial crisis of 1997. It might have been slight for the IMF, but the cost to the economies of Asia was horrendous. Trillions of dollars of hard-earned assets and economic capacities have been destroyed, lost forever. In fact, lives have been lost, children malnourished, families ruined, governments fallen and ethnic animosities intensified. The cooperative partnership among neighboring countries has been undermined and regions destabilized. This is the direct result of predatory lending followed by predatory IMF rescues. The operations were technically successful but the patients died.

Since World War II, the term "capitalism" has been gradually displaced by the more benign label of the free market. Capitalism ceased to be mentioned in most economic literature. In the process, economists also squeezed out of official dialogues the word "capitalism", the once-traditional name for the market system, with its subjective connotation of class struggle between owners, through their professional managers, and workers, through their trade and industrial unions, and with its legitimization of the privileges that go with various levels of wealth.

The word "capitalism" no longer appears in textbooks for Economics 101. A Harvard economist, N Gregory Mankiw, author of a popular new textbook, Principles of Economics, told the New York Times: "We make a distinction now between positive or descriptive statements that are scientifically verifiable and normative statements that reflect values and judgments." A whole new generation of economists have grown up thinking of "capitalism" only as a historical term like "slavery", unreal in the modern world of market fundamentalism.

Capital, when monetized in dollars, is in essence credit from government. Capitalism in a money economy is a system of government credits. Thus a case can be made that in a capitalistic democracy, access to capital and credit should be available equally to all in accordance with national purpose and social needs. The anti-statist posture of neoliberalism is not only logically flawed, but its glorification of a private-debt economy will inevitably lead to self-destruction.

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Last edited by jeffkrol; 04-23-2011 at 12:08 PM.

[causey]

Have you read Mosler????

Not yet, and I don't know when I'll get the time to read it. In about a month, most likely.
About China, an interesting little video here:

You Tube

You Tube

[jeffkrol]

Not yet, and I don't know when I'll get the time to read it. In about a month, most likely.
About China, an interesting little video here:
YouTube - China's Ghost Cities and Malls

There building it for American retirees... Health care included......

[GeneV]

Not yet, and I don't know when I'll get the time to read it. In about a month, most likely.
About China, an interesting little video here:
YouTube - China's Ghost Cities and Malls

It does not take long to get what Mosler is saying.

Actually, it may be very smart of the Chinese to build malls ahead of the consumer demand, in an attempt to become a more self-contained system. Mosler points out that accumulating U.S. currency in exchange for sending us goods gives the Chinese little real wealth in exchange for the real wealth (goods) they are sending this way. At least by building the mall, they have invested in real production at home.

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Last edited by GeneV; 04-25-2011 at 06:06 AM.

[jeffkrol]

Right, Like we should have been doing here instead of paying off thankless banks that decided to just keep the money instead of tricking it errr down..

It's not how much you spend but what you spend it on......even Cheney in his twisted way understood that.. Unfortunately he was looking for cheap oil...
Paying off mortgages made more sense then feeding banks and still having them fight over their bad paper, flushing people out of their homes when in effect, they've already had those loans paid for by the Fed.. bit simplistic I know.

For later:
http://www.examiner.com/political-buzz-in-national/david-stockman-usa-danger...e-to-class-war
Stockman said the Democrats were intent on assuring "the vast bulk of Americans left behind" that they will be spared any tax increase, while he accused the Republicans of failing to recognize that 2011 USA is "[a] quasi-bankrupt nation saddled with rampant casino capitalism on Wall Street."

Stockman accused Paul Ryan of attempting to "coddle the rich", and he concluded that Republicans "have seemingly sent an R.S.V.P." to "the Democrats’ invitation to class war".

Stockman has reversed himself on the idea that lowering taxes produces higher government revenue, or that it reduces government spending, and has plainly said "we will be in the tax-raising business for the next decade.

Continue reading on Examiner.com: David Stockman: USA "dangerously close to class war" - National Political Buzz | Examiner.com http://www.examiner.com/political-buzz-in-national/david-stockman-usa-danger...#ixzz1KYA2YAsZ

Of course on taxes he's still wrong, but let's leave that be for a moment. They can always add "loopholes".....

[GeneV]

The full Stockman op-ed is here. http://www.nytimes.com/2011/04/24/opinion/24stockman.html?_r=1 He seems to acknowledge that the changes begun in his time were a bit misguided and led to windfalls for the super rich. His numbers on their wealth seem a little off, though.

[jeffkrol]

The full Stockman op-ed is here. http://www.nytimes.com/2011/04/24/opinion/24stockman.html?_r=1 He seems to acknowledge that the changes begun in his time were a bit misguided and led to windfalls for the super rich. His numbers on their wealth seem a little off, though.

I only give him credit for half understanding... but you already know that..
Unbridled fed debt since Reagan (slight reprieve in Clinton years) has NOT trashed our country. Banks did that w/, of course, our help. Japans' 200% debt has not trashed their country.. People keep saying "soon" soon" but soon never gets here.. Maybe it's now, maybe it's never.
One thing IS certain, we haven't been spending all that money on our people....

[causey]

Follow-up to my initial post:
American Values Network :: Christians Must Choose: Ayn Rand or Jesus

[Todd Adamson]

This thread just blew my mind. LOL

[mikemike]

This is a very interesting discussion.

I like to approach life like a game and analyze my decisions from the POV of game theory. So I see that everyone has their own self as well as coalitions (family, friends, company, nation, colleagues, etc.) to think about. So I kind of classify encounters based on this then decide to choose my move within those encounters based on the relative importance and impact on those coalitions. So I look at it more in terms of competitive vs cooperative rather than objectivism vs altruism.

Cooperation is often a good choice because every cooperative move builds up a little bit of credit and trust for future reciprocity. It can also be bad if overused and that reciprocal cooperation is extracted in a competitive fashion by making someone prioritize repayment of the favor over more important things like you see with the mob.

I don't think the complexity or simplicity is necessarily a bad thing if those simple things are always true. So much of our world - mathematics, physics, chemistry, and biology - are all built on a few basic axioms from which we derive more complex things by examining how these fundamental forces interact.

As the great philosopher Lil Wayne said, "face it, if we too simple then y'all don't get the basics."

[jeffkrol]

I don't think the complexity or simplicity is necessarily a bad thing if those simple things are always true. So much of our world - mathematics, physics, chemistry, and biology - are all built on a few basic axioms from which we derive more complex things by examining how these fundamental forces interact.

As the great philosopher Lil Wayne said, "face it, if we too simple then y'all don't get the basics."

Like fiat money..............

[jsherman999]

Follow-up to my initial post:
American Values Network :: Christians Must Choose: Ayn Rand or Jesus

Great link.

FWIW, I live in what many would consider 'Tea Party Country' right now, and frankly I don't think most Tea-Partiers would know Ayn Rand if she saddled them up and rode them in the Kentucky Derby.





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