[Winder]

Well now we are talking nuts and bolts.. see I never said at full value.. As I was told industry standard is 50% of full value.. YES it would take a "village" to sort this out and as you know more of an "operational" and moral constraint than a monetary/economy value..

I think most CDO default would be triggered at less than 80% of matured value for most investors. I am told that is standard, but I don't know enough about that part of the industry.

as to paying them trilll her trill there..isn't that what we have done w/ meager results..

Yes it is and it has gotten us nowhere. Never should have happened.

In a sense I think you and I are on the page where crony capitalism and QE giveaways to banks are considered non- productive.. The only difference between us is the fix... and I don't see a fix from your side..

I disagree here. I don't have a fast fix. Let's say you just spent 5 year and $50,000 to get a degree in architecture in 2007. The construction market crashes and now you have 15% unemployment for architects and 50% unemployment for new graduates. Your "fix" does nothing to deal with structural unemployment. There is no quick fix when it comes to retraining people. Labor will always lag behind shifts in the market because labor is very inelastic. Excess investment (too much money looking for a home...no pun intended) lead to distortions in the labor market and the production to too many architects.

Blowing another bubble is not the answer, but that is exactly what would happen if you went on a "debt jubilee".

We agree taxes are oppressive to an economy... and my only reason for any, at THIS time, is simple.. IF you insist on cutting the safety net I will INSIST on tax increases to the wealthy....those benfitting the most from the chess board of the US......

History is pretty clear that raising taxes on the wealthy does not result in more (or less) revenue or economic growth, so I assume you are using some moral argument for why the wealthy should have higher tax rates because there is no economic benefit to it.

[reeftool]

All the economists have endless theories. Scroll through any financial website like CNBC and you will see predictions for impending doom right along side of predictions of a huge bull market next year. Who's right? The real evidence tells us that the economy is not much more than a house of cards and it doesn't take much to cause it to fall apart. I remember well watching all the experts screaming at each other back in 08. They didn't have a clue and still don't. It's like trying to predict baseball. All the good hitters mean nothing when a pitcher gets hot. The best pitcher in the world can get blasted out of the park in the first inning. All the crap in 08 started with an insurance company that couldn't pay it's claims after Hurricane Ike. All the risky business had been going on for years and all it needed was a little push. The evidence tells us that going back that less regulated pre 08 road will cause history to repeat itself again.

[jeffkrol]

I disagree here. I don't have a fast fix. Let's say you just spent 5 year and $50,000 to get a degree in architecture in 2007. The construction market crashes and now you have 15% unemployment for architects and 50% unemployment for new graduates. Your "fix" does nothing to deal with structural unemployment. There is no quick fix when it comes to retraining people. Labor will always lag behind shifts in the market because labor is very inelastic. Excess investment (too much money looking for a home...no pun intended) lead to distortions in the labor market and the production to too many architects.

Screw the CDO's.. garbage products.. anyways.. my plan would have fixed it and created a manageable bubble coupled w/ regulations .. Our "local" mortgage bankers are complaining about the 20 pg, 3 day waiting period forms for full disclosure.. never realizing it was their own fault.. NEVER taking any (even the fair partial) responsibility for the disaster...
(CDO's CDS's garbage and garbage. In my mind if you have a huge indusrty arise to bet against another huge industry of pooled accounts you got a "problem" and not just a "short selling" type position)
And my "solution" would have helped architects.. Think of homeowners fresh out of debt and the desire to expand/change/remodel
/update their property..

I firmly recognize it is "tricky" but hey isn't that the American way...

A bit on CDS's..

Critics assert that naked CDSs should be banned, comparing them to buying fire insurance on your neighbor’s house, which creates a huge incentive for arson. Analogizing to the concept of insurable interest, critics say you should not be able to buy a CDS—insurance against default—when you do not own the bond.[33][34][35] Short selling is also viewed as gambling and the CDS market as a casino.[18][36] Another concern is the size of the CDS market. Because naked credit default swaps are synthetic, there is no limit to how many can be sold. The gross amount of CDSs far exceeds all “real” corporate bonds and loans outstanding.[8][34] As a result, the risk of default is magnified leading to concerns about systemic risk.[34]
Financier George Soros called for an outright ban on naked credit default swaps, viewing them as “toxic” and allowing speculators to bet against and “bear raid” companies or countries.[37] His concerns were echoed by several European politicians who, during the Greek Financial Crisis, accused naked CDS buyers of making the crisis worse.[38][39]
Despite these concerns, Secretary of Treasury Geithner[18][38] and Commodity Futures Trading Commission Chairman Gensler[40] are not in favor of an outright ban on naked credit default swaps. They prefer greater transparency and better capitalization requirements.[18][25] These officials think that naked CDSs have a place in the market.

http://en.wikipedia.org/wiki/Credit_default_swap
" These officials think that naked CDSs have a place in the market"

BRILLIANT !!!! "We" are in such good hands...........

[Winder]

Screw the CDO's.. garbage products.. anyways.. my plan would have fixed it and created a manageable bubble coupled w/ regulations .. Our "local" mortgage bankers are complaining about the 20 pg, 3 day waiting period forms for full disclosure.. never realizing it was their own fault.. NEVER taking any (even the fair partial) responsibility for the disaster...
(CDO's CDS's garbage and garbage. In my mind if you have a huge indusrty arise to bet against another huge industry of pooled accounts you got a "problem" and not just a "short selling" type position)
And my "solution" would have helped architects.. Think of homeowners fresh out of debt and the desire to expand/change/remodel
/update their property...

1. You can't just re-write contract law. We aren't a banana republic and we aren't under marshal law. CDO's might be bad ideas, but they are legally binding contracts. If they weren't AIG would have never gone under. The government is obligated to enforce the execution of these contracts.
2. You don't need an architect to remodel your home. You don't even need an architect for an addition in most places. In most location a licensed GC can perform everything without the need for an architect.
3. Your plan would not have fixed it. Your plan would have created a new set of problems that are just as bad or possible worse than the existing problems.

[Winder]

Scroll through any financial website like CNBC and you will see predictions for impending doom right along side of predictions of a huge bull market next year. Who's right?

Not many economists on CNBC or any of the business channels. The talking heads on TV are probably the last people you want to listen to for financial advise.
Jim Cramer is a good example of a talking head idiot as illustrated by Jon Stewart on the Daily Show. Since you compared it to baseball you will like Cramer's comments at the end.

Lenny Dykstra's Financial Career - The Daily Show with Jon Stewart - 07/14/09 - Video Clip | Comedy Central

Or maybe a collection of idiots as mentioned in the Krugam article at the top of the thread.

Youtu.be

Youtu.be

The real evidence tells us that the economy is not much more than a house of cards and it doesn't take much to cause it to fall apart.

The real evidence is that not that at all. The recession we are currently in was predicted by many people and was totally preventable.
I bought this book when it came out in 2006, and they started writing it in 2004. I had gotten completely out of real estate in 2005.
Cash in on the Coming Real Estate Crash: How to Protect Yourself From Losses Now, and Turn a Profit After the Bubble Bursts

All the crap in 08 started with an insurance company that couldn't pay it's claims after Hurricane Ike.

I have no idea why you think this. The groundwork for our current problems was laid in the mid-1990's and we have a long series of bad decisions by the Federal Reserve, big banks, politicians, and events like 09/11, the dot.com bubble, & hurricane Katrina that snowballed.

I can list a dozen economist from various schools of economics who screamed as loud as they could about the coming collapse. These people are ignored because Politician don't get elected by promising to slow down the economy. They get elected because they promise more growth and faster growth.

[jeffkrol]

1. You can't just re-write contract law. We aren't a banana republic and we aren't under marshal law. CDO's might be bad ideas, but they are legally binding contracts. If they weren't AIG would have never gone under. The government is obligated to enforce the execution of these contracts.

Really?? Maybe you have to read the "emergency powers act"..
.

.Earlier this month, Pres. Bush signed an National Security Directive centralizing power in the executive branch in the event of a national emergency. Although the directive has attracted relatively little press attention, it's an extraordinary development when WorldNetDaily and The Progressive Magazine agree that the new directive seems to give the president unprecedented powers without Congressional oversight.

Here's WorldNetDaily:

The directive establishes under the office of the president a new national continuity coordinator whose job is to make plans for "National Essential Functions" of all federal, state, local, territorial and tribal governments, as well as private sector organizations to continue functioning under the president's directives in the event of a national emergency.

"Catastrophic emergency" is loosely defined as "any incident, regardless of location, that results in extraordinary levels of mass casualties, damage, or disruption severely affecting the U.S. population, infrastructure, environment, economy, or government functions."

Here's The Progressive

In a new National Security Presidential Directive, Bush lays out his plans for dealing with a "catastrophic emergency."

Under that plan, he entrusts himself with leading the entire federal government, not just the Executive Branch. And he gives himself the responsibility "for ensuring constitutional government." He laid this all out in a document entitled "National Security Presidential Directive/NSPD 51" and "Homeland Security Presidential Directive/HSPD-20."

To some bloggers, it means that Pres. Bush as laid the foundation for imposing a dictatorship.

worth thinking about at least..

2. You don't need an architect to remodel your home. You don't even need an architect for an addition in most places. In most location a licensed GC can perform everything without the need for an architect.

Maybe you picked a bad example then.........

3. Your plan would not have fixed it. Your plan would have created a new set of problems that are just as bad or possible worse than the existing problems.

You have no proof of that.. and besides the "problem it would solve" still exists and still drags down the economy.. which is better..a fix that may work or............... nothing..that definitely is NOT working..

Though what I "proposed" goes many steps beyond this, this is about the"minimum".. note how little talk about "finances"...........

http://www.dailykos.com/story/2012/04/15/1083582/-Iceland-Strikes-a-Blow-at-Predatory-Bankers

The government and the newly constructed Icelandic banks developed a template to be used in case by case restructuring discussions between borrowers and lenders. The templates facilitated substantial debt write-downs designed to align secured debt with the supporting collateral (i.e bring the loan into line with the value of the house) and align debt service with the ability to repay.

The IMF found that such case by case negotiations safeguard property rights and reduce moral hazard

http://www.dailykos.com/story/2012/04/15/1083582/-Iceland-Strikes-a-Blow-at-Predatory-Bankers

Youtu.be

Youtu.be

[Winder]

Maybe you picked a bad example then......... .

How is it a bad example? I chose architect because it is a perfect example of structural unemployment. The problem is your idea does not address this and fix the problem. Even if people did hire architect for basic remodeling work after your grand stimulus plan, that would just be another bubble that would burst and they would be back where they started. Most of these people need to change career fields and be re-trained, and that takes time. There is no magic pill fix.

Basically you want to president to declare marshal law and destroy contract law and wipe out mortgages while flooding the economy with money, and in your mind this all works great. Didn't you just post an NPR article where they talked about part of the problem being a huge pool of money looking for a place to invest? Now your fix is to repeat that......

I never want to see marshal law in this country and I hope to live to see the "Emergency Powers Act" repealed. You seem to be a fan of Mussolini.

[jeffkrol]

How is it a bad example? I chose architect because it is a perfect example of structural unemployment. The problem is your idea does not address this and fix the problem. Even if people did hire architect for basic remodeling work after your grand stimulus plan, that would just be another bubble that would burst and they would be back where they started. Most of these people need to change career fields and be re-trained, and that takes time. There is no magic pill fix.

Basically you want to president to declare marshal law and destroy contract law and wipe out mortgages while flooding the economy with money, and in your mind this all works great. Didn't you just post an NPR article where they talked about part of the problem being a huge pool of money looking for a place to invest? Now your fix is to repeat that......

I never want to see marshal law in this country and I hope to live to see the "Emergency Powers Act" repealed. You seem to be a fan of Mussolini.

You wouldn't DESTROY Mortgages you'd pay them off at the Standard assumption of 50% of FMV over the term...or some such "negotiated" settlement..

you wouldn't destroy the CDO's either as they would go from worthless to worth something...(CDS's who cares the're fake anyways )

You'd patch a giant festering hole.. Creating a "bubble" would be up to what was done later and how "wise" we would have grown. Granted I probably only have a little more optimism then you on this regard but it certainly is better than a long drawn out moral killing, economy wounding recovery as we see now..
Compound it w/ more money removed from the economy (while keeping the banks/industry flush w/ cash ) and the US..........WILL..............GO..........ABSOLUTELY.. .........NOWHERE

Never said there was a :magic pill fix" since it will be necessary to recognise past mistakes and work to avoid them. Also a lot of work on keeping things from getting too inflationary..
some inflation is a good thing............

just post an NPR article where they talked about part of the problem being a huge pool of money looking for a place to invest? Now your fix is to repeat that..

ahhh so you believe "we" will just repeat the past.. or are you assuming creation of a new and improved economy crushing mechanism...??

not sure you can ever avoid that.... except by creating permanent misery you can ever stop THAT....is that what you want????


The economy is suffering under a private debt crisis.............. which can be fixed by a improving economy............ which won't happen while the private sector is in debt.............
so the economy will. at best .. improve ever so slowly damaging it's fluidity and creating a moral hazard to a good work ethic.. which could be fixed by employing a moral hazard payoff or write down of private debt........paid for by your "beholding to the people" fed money printing machine...

Insidious isn't it..............

[jeffkrol]

I never want to see marshal law in this country and I hope to live to see the "Emergency Powers Act" repealed. You seem to be a fan of Mussolini.

not at all.. Actually I'm surprised Obama sooo easily got it extended..........

funny how when you get the gov. to work for the little people suddenly facisim gets mentioned .. never Plutocracy...

Some contemporary and modern historians, politicians and economists believe the United States was effectively plutocratic for at least part of the period between the end of the Civil War until the beginning of the Great Depression.[9][10][11][12][13][14] After the Civil War, with large industries reaching monopolistic or near-monopolistic levels of market concentration and financial capital increasingly integrating corporations, a handful of very wealthy heads of large corporations began to exert increasing influence over industry, public opinion and politics. Money, according to contemporary progressive and journalist Walter Weyl, was "the mortar of this edifice", with ideological differences among politicians fading and the political realm becoming "a mere branch in a still larger, integrated business. The state, which through the party formally sold favors to the large corporations, became one of their departments."[15]

In his book The Conscience of a Liberal, in a section entitled The Politics of Plutocracy, economist Paul Krugman says plutocracy took hold because of three factors: at that time, the poorest quarter of American residents (African-Americans and non-naturalized immigrants) were ineligible to vote, the wealthy funded the campaigns of politicians they preferred, and vote buying was "feasible, easy and widespread", as were other forms of electoral fraud such as ballot-box stuffing and intimidation of the other party's voters.[16]

In modern times, the term is sometimes used pejoratively to refer to societies rooted in state-corporate capitalism or which prioritize the accumulation of wealth over other interests. According to Kevin Phillips, author and political strategist to U.S. President Richard Nixon, the United States is a plutocracy in which there is a "fusion of money and government."[17] A similar position was taken by the Fourth International in January 1941, which stated "Roosevelt’s administration, which claims to be democratic, is really the representative of these piratic plutocrats" and that "the twin capitalist parties control all the main avenues for reaching the masses (the press, radio, halls, etcetera... they collect millions from their wealthy masters and spend them to bamboozle the public and buy elections".[18]

always worrying about "what could be" completely ignoring what is..............

[graphicgr8s]

I am working.. I'm a great multitasker.. and working within walking distance of home makes it even easier..
as to "stealing time" fortunately my boss believes in my crusade.. Pay sucks but hey it's not all about money.. (or is it???)
We are kind of like family here (well the best it can be considering one can be fired..usually not possible in a family)

Who cares what "I" say????? without evidence..I care little about what you say.. without evidence..

But 87.6223998% of the cut and paste you do is from left wing liberal rags or "news" (the news term used very loosely of course) channels so you really can't claim that as evidence yet you do.

[graphicgr8s]

Oh, and John things aren't completely rosy here.. We lost one good employee because his wife was "downsized' and decided he had more opportunities in the progressive Capitalist country of Botswana!!!!.....
opened a restaurant of all things.. Couldn't afford to do that here..........
Maybe it was the healthcare which they could no longer afford ... ehh whatever.. He'll miss the bone chilling cold.. LOL

This country.. getting pretty sad for opportunities.. pretty pretty sad....

You libs pretty much put us in the spot we're in. So thank you very much. And the evidence that you choose to ignore has been posted by others recently and myself back in 2009.

[Winder]

You wouldn't DESTROY Mortgages you'd pay them off at the Standard assumption of 50% of FMV over the term...or some such "negotiated" settlement..

No. It would not be "negotiated" it would be forced. There are reasons people loan other people money to buy houses. The first is to make money with their money. The second is that they know they state will enforce the execution of that contract. You would destroy the private mortgage market.

you wouldn't destroy the CDO's either as they would go from worthless to worth something....

CDOs are basically backed by the Federal Government since they bailed out AIG. They are already worth something.

You'd patch a giant festering hole.. Creating a "bubble" would be up to what was done later and how "wise" we would have grown. Granted I probably only have a little more optimism then you on this regard but it certainly is better than a long drawn out moral killing,

You really think creating another bubble is the answer. We are on the tail end of this. Housing will show decent growth next year. We have already created many long-term problems by kicking the can down the road, and you want to kick another one?

Also a lot of work on keeping things from getting too inflationary..

Which you have no idea how to do.

And you still have not answered the question. Why not just make the money that people already have more valuable? This would be for better for people on fixed incomes and on welfare. It would help the poorest of the poor.

so you believe "we" will just repeat the past.. or are you assuming creation of a new and improved economy crushing mechanism...??

We already have repeated the past. Each recession is a little different, but just a little.

The economy is suffering under a private debt crisis.............. which can be fixed by a improving economy............ which won't happen while the private sector is in debt.............

The debt crisis is a symptom of the problem. The public debt crisis is not the disease that got us here.
Creating another bubble is not a fix. It is just kicking the can farther down the road. It is exactly the kind of thinking that got us into this problem.

Insidious isn't it..............

Insane is what I was thinking.....

[jeffkrol]

No. It would not be "negotiated" it would be forced. There are reasons people loan other people money to buy houses. The first is to make money with their money. The second is that they know they state will enforce the execution of that contract. You would destroy the private mortgage market.
CDOs are basically backed by the Federal Government since they bailed out AIG. They are already worth something.
You really think creating another bubble is the answer. We are on the tail end of this. Housing will show decent growth next year. We have already created many long-term problems by kicking the can down the road, and you want to kick another one?
Which you have no idea how to do.
And you still have not answered the question. Why not just make the money that people already have more valuable? This would be for better for people on fixed incomes and on welfare. It would help the poorest of the poor.
We already have repeated the past. Each recession is a little different, but just a little.
The debt crisis is a symptom of the problem. The public debt crisis is not the disease that got us here.
Creating another bubble is not a fix. It is just kicking the can farther down the road. It is exactly the kind of thinking that got us into this problem.



Insane is what I was thinking.....

Capitalism EVERYTHING is negotiable.. contracts are not written on stone tablets..nor passed down by deities..
The "debt crisis" fueled mega profits.. you are arguing against capitalism...

And to be honest it is up to the "board maker" i.e Fed to keep the rules up (you know beholden to "the people" not just 1% of the people).. Capitalism is amoral and beholden to no one but themselves.. Conserv. or Lib.. you will get no argument at the base level..

no each recession is not a "little different".. But even if so.. nobody's "fixed" anything yet.. nor apparently plans to.. too much profit involved...
too much greed got us here.. not debt...per se..
how do you make the money more valuable for society in general?? tie it to gold?? We know that is wrong..
floating exchanges are just that floating and for good reasons..
you know it's funny how "your guys" are always cutting on Japan.. yet the Yen remains strong and THAT is more of a problem to them than "debasement" or inflation..
Then the answer is the debt is internally financed.. well that only goes so far..
PEACE in the "financial lost decades'..... LOOK and actually see.. Of course another round of "just wait-ers are here..

Foreign investors who sell Japanese bonds short would obviously prefer the yen to weaken, not strengthen as it has for years. It was probably the haven appeal of Japan with its serene culture and stable, if flat, economy, as well as other reasons discussed in Part 1 of this series, that have buoyed the yen for two decades

You ignore current history in favor of antique history..and try to tell people it is more factual than the observed reality...

Of course, the easy way to make each Dollar worth more is to have FEWER in circulation...

So go ask your local vendor of trinkets if they want more dollars taken out of the economy for "their own good".. good luck w/ that..

I've already agreed that the QE dollars were dollars not well spent.. And WHAT IS that axiom of business" You need to spend money to make money" How easily we forget it because we attach FED to it...

Yes, bubbles have always ended badly. Even so, that doesn’t mean that bubbles are all bad. We think -- and this may smack of financial heresy to some -- bubbles actually have certain redeeming aspects. In our view, bubbles are one way that capitalism enriches investors (if they exit the bubble at an opportune time) and helps to finance bold, new ideas that can revitalize markets and economies. We would go so far as to say that bubbles may be the price that occasionally must be paid for a dynamic economy such as ours -- an economy that showers material bounty on people but in doing so sometimes spills over into excess.

News & Commentary Market Commentary Position Papers Archive Why bubbles aren't all bad at Turner Investments


And if you know anyone that can run your ideas and mine in an economic simulation I'd be more than happy to add more clarity and input.. At it is it is just your "word" against mine..........

Oh and by the way.. ask any good capitalist if they WANT a "debt crisis" ...you may be surprised w/ the answer..... Banks RUN on debt..
and if you "believe" thet "capitalism;' will control debt.. THAT is the biggest joke told today......... it's not how big your debt is but how much can you pay and are we going to make a profit.. using odds and worst case best case.. THAT my friend is Capitalism.. certainly not worried if you can pay it all.. only if you can pay enough to make a profit..
All the better if they can make a profit AND get their "stuff" back....though that is a bit messier than just paper pushing..

http://www.bloomberg.com/news/2012-06-07/strong-yen-won-t-survive-japan-s-fiscal-cliff.html
http://caps.fool.com/Blogs/print-more-money-to-make-it/485076
http://www.turnerinvestments.com/why-bubbles-arent-all-bad-/

[jeffkrol]

But 87.6223998% of the cut and paste you do is from left wing liberal rags or "news" (the news term used very loosely of course) channels so you really can't claim that as evidence yet you do.

Yes.. but is only because both intellectually and "gut feeling" tells me they are more "right".. I did quote Breibart(?) , Frum, and Fox from time to time.. When something makes sense..

When one believes in evolution would one sit and quote the Bible????

When one believes in the Bible do you sit and quote the "atheists gazette"???

Naked Capitalism
Mitchell's "monetary sovereignty"
B. Mitchells "Billyblog
Bill Mitchell – billy blog | Modern Monetary Theory … macroeconomic reality
Steve Keen
Steve Keen's Debtwatch
Mosler
Cullen Roche
Norman ect

call them what you want..they just make sense to me.. 100% sense.. Well nothing is perfect..


Let5s face facts.. No matter where I post from if the "idea" doesn't sit w/ your philosophy.. well it really doesn't matter now does it..

You want Ron Paul to give up on the gold standard?? Good luck...

So no matter what I say or post.. It really isn't for you or Winder.. but for others to THINK about...right or wrong.

Keens "manifesto" for Winder...........

The fundamental cause of the economic and financial crisis that began in late 2007 was lending by the finance sector that primarily financed speculation rather than investment. The private debt bubble this caused is unprecedented, probably in human history and certainly in the last century (see Figure 1). Its unwinding now is the primary cause of the sustained slump in economic growth. The recent growth in sovereign debt is a symptom of this underlying crisis, not the cause, and the current political obsession with reducing sovereign debt will exacerbate the root problem of private sector deleveraging...ect


The debt and asset price bubbles were ignored by conventional “Neoclassical” economists on the basis of a set of a priori beliefs about the nature of a market economy that are spurious, but deeply entrenched. Understanding how this crisis came about will require a new, dynamic, monetary approach to economic theory that contradicts the neat, plausible and false Neoclassical model that currently dominates academic economics and popular political debate.

Escaping from the debt trap we are now in will require either a “Lost Generation”, or policies that run counter to conventional economic thought and the short-term interests of the financial sector.
Preventing a future crisis will require a redefinition of financial claims upon the real economy which eliminates the appeal of leveraged speculation.

http://www.debtdeflation.com/blogs/manifesto/

See I don't really expect anyone to believe "me"... but I believe those whom I consider better than "me".....

IF I wander a bit it because
1)field definitions are screwed up

2)my understanding needs revision from ime to time when new facts/data/ideas are presented that are relevent..
Having a bit of flexibility is to me and intellectually good trait..

The economic and financial crisis has been caused by unenlightened self-interest and fraudulent behaviour on an unprecedented scale. But this behaviour could not have grown so large were it not for the cover given to this behaviour by the dominant theory of economics, which is known as “Neoclassical Economics”.

Though many commentators call this theory “Keynesian”, one of Keynes’s objectives in the 1930s was to overthrow this theory, but instead, as the memory of the Great Depression receded, academic economists gradually constructed an even more extreme version of Neoclassical economics than that against which Keynes had fought. This began with Hicks’s “IS-LM” model, which is still accepted as representing “Keynesian” economics today, but which was in fact a Neoclassical model derived two years before the General Theory was published:

[jeffkrol]

for your "slooooooooooooooooooooooooooowwwwwwwwwwwwwwww" way of dollar appreciation:

The only real question we face is not whether we should or should not repay this debt, but how are we going to go about not repaying it?

The standard means of reducing debt—personal and corporate bankruptcies for some, slow repayment of debt in depressed economic conditions for others—could have us mired in deleveraging for one and a half decades, given its current rate (see Figure 12).

I do understand that this would be morally repugnant to many but please don't PRETEND it is of fiascal concern.. It is not.

A Modern Jubilee would create fiat money in the same way as with Quantitative Easing, but would direct that money to the bank accounts of the public with the requirement that the first use of this money would be to reduce debt. Debtors whose debt exceeded their injection would have their debt reduced but not eliminated, while at the other extreme, recipients with no debt would receive a cash injection into their deposit accounts.

The broad effects of a Modern Jubilee would be:

Debtors would have their debt level reduced;
Non-debtors would receive a cash injection;
The value of bank assets would remain constant, but the distribution would alter with debt-instruments declining in value and cash assets rising;
Bank income would fall, since debt is an income-earning asset for a bank while cash reserves are not;
The income flows to asset-backed securities would fall, since a substantial proportion of the debt backing such securities would be paid off; and
Members of the public (both individuals and corporations) who owned asset-backed-securities would have increased cash holdings out of which they could spend in lieu of the income stream from ABS’s on which they were previously dependent.

There are, I believe, no prospects for fundamentally altering the behaviour of the financial sector because, as already noted, the key determinant of profits in the finance sector is the level of debt it can generate. However it is organised and whatever limits are put upon its behaviour, it will want to create more debt.

There are prospects for altering the behaviour of the non-financial sector towards debt because, fundamentally, debt is a bad thing for the borrower: the spending power of debt now is an enticement, but with it comes the drawback of servicing debt in the future. For that reason, when either investment or consumption is the reason for taking on debt, borrowers will be restrained in how much they will accept. Only when they succumb to the enticement of leveraged speculation will borrowers take on a level of debt that can become systemically dangerous.

Ultimately I believe we’ll work out a means to live sustainably on this planet and, in the very distant future, to live beyond it as well. But to do so, we have to understand our current situation properly. There is no chance to move towards a better future if we misunderstand the situation we are currently in. That’s why I keep on going.

Me too...though I am a bit pessimistic in the US "leading the way".........................