Economist James Galbraith: Economists Should Move into the Background, and "Criminologists to the Forefront"

George Washington's picture

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hbjork1's picture

George Washington:


Thanks for posting this summary;


Galbraith – FRAUD


Kaufman – FRAUD


Kaptur – FRAUD


Warren – Suspects FRAUD


Smith – Fraud


Black – FRAUD


Johnson – FRAUD


Weekend is coming.  I hope to get a letter off to my Congresspersons and others this weekend (with titles for the names of course)


Only possible remedy is to keep pounding away.


Thanks again!

ajax's picture

Fraud from sea to shining sea and then over the seas. I wonder what 'sophisticated' 'savvy' investor has this bijou of US RE 'asset' in their CDO?

"Jim the Realtor"

tom's picture

Horse hockey. Yes, fraud flourished. Yes, fraud should be punished to the maximum extent of the law. But when the government and central bank are driving massive credit expansion, bubbles are bound to appear. In every bubble, there are sharks and schools of gullible fish. You cannot stop the bubble by policing the sharks. Could the .com bubble have been prevented by sending an army of government regulators to police the exaggerated claims of every IPO? Get real. It's the economics, stupid.

Popo's picture

I'd like to add some corollaries to the above:


1.   Not only is Wall Street based on fraud:  Wall Street is based primarily on fraud.  This is extremely important to understand.  Simply put:  Most of the money generated on Wall Street for the past decade has been generated through one form of fraud or another.  We are not talking about isolated incidents, we are talking about what has become the very fabric of the "industry".


2.   You cannot regulate this industry through threats of fines or exacting monetary compensation.   The threat of incarceration, and only the threat of incarceration will reform the individuals guilty of fraud.


3.  There are many thousands of guilty individuals.  What is needed here is not one or two figurehead perp-walks.  What we need is the largest set of criminal prosecutions and incarcerations in the history of global finance.  And it must begin today.

Kina's picture

They need the Chinese over-sight system. You fraud you die. These CEOs will be less keen to game the system if there was a bullet on the end of it.

There are no consequences and when there are it is understood they wont be pursued.
These people commit economic treason and instead of being lined up against the wall stuff their pockets full of country killing bonuses.


Hulk's picture

+1000. The reason the system is riddled with fraud is because there is no accountability. zero. Let there be consequences..Millions of decent folks lives have been ruined by the new mobsters

The Alarmist's picture

So what? What are you, John Q. & Jane A. Citizen going to do about it?  Haven't you heard that protest is seditious, racist, and just downright mistaken.

It is time to declare that the 700 year experiment with freedom and capitalism was a failure and only exposed the world to greater danger, and that the prudent course of action is a quick return to the safety of feudalism under the protection of our lords and masters.


dumpster's picture

the solution . how to put a muzzle on the top dogs

start with the hidden powers behind the politicians

the fed . muzzled . but by whom  most are in the pockets already

majorities pounce  on the meat thrown onto the floor . waiting for the next round ,

i am afraid that the twist of time will arrange the cards

the long picking up speed decent into the heart of darkness .

empire closes its book... as history has shown over and over .


tony bonn's picture

there was a conspiracy to commit fraud, commission of a fraud, and a conspiracy to cover-up fraud in precisely the same manner as there was conspiracy orchestrated by the cia to murder john kennedy....

crimes were committed and no one is being prosecuted. america is a lawless corrupt and evil nation. the filth is disgusting.

it is time to take to the streets in protest. i have emailed my congressshits all i care to. it is time to march on the cess pools and pig stys in washington.

MaxPower's picture

All you need to know about the SEC and any chance we have at true reform:


RecoveringDebtJunkie's picture

Nothing will change unless we stop taking the attitude that we need to continually grow exponentially and create ever more fancy things in order to be happy, at the expense of billions of people and the very environment we have to live in. Fraudulent banking ponzi schemes are just one of many ways to exploit those desires and create justifications for otherwise unjustified jobs.

We can regulate executive comp, create "transparency" in derivatives markets and generally tweak incentives here and there, but we still be on the same collision course we have been on for decades, if not centuries.

three chord sloth's picture

I really hope that Washington will listen to these guys and enact the reforms they call for, but sadly I think it's unlikely. Just look at this one quote:

"We're looking at incentive structures. Not people suddenly becoming evil. Not people suddenly becoming crazy. But people reacting to perverse incentive structures."

Perverse incentive structures. Well, doesn't that describe pretty much all of Washington nowadays? Let's face reality -- what Washington wants these days runs exactly counter to good business practices and most economic laws.

Look at liar loans for example. Washington turned a blind eye to them because they were often going to an "underserved" segment of society. If we were to return to the old established mortgage standards, that segment would be renters again... and there'd be hell to pay politically.


Crab Cake's picture

So who should we talk to about fixing the economic crisis?

Well, if "criminologists", or cops, or the People's fucking representatives don't have the balls to take care of the criminals in DC and on Wall St then I hereby nominate a posse of pissed off deputized unemployed folks to do it; lord knows they need a job.

Catullus's picture

I stopped reading Galbraith after he said deficits don't matter. I know it's tough writing someone off for one thing they write, but this was beyond explanation.  The man does not have a grasp on reality.

Bigdaddydvo's picture

Good call; As soon as I saw a headline with Galbraith at the top I clicked so I could post this same article.  Galbraith is probably a bigger Keynesian clown than Krugtard is.  A decent rebuttal:

James K. Galbraith continues the Galbraithian tradition begun by his late father of economic ignorance, promotion of fallacies, and all-around stupidity in his recent article in (What else?) The Nation. “In Defense of Deficits” sets a new low, even by Galbraithian standards. Here is a jewel:

For ordinary people, public budget deficits, despite their bad reputation, are much better than private loans. Deficits put money in private pockets. Private households get more cash. They own that cash free and clear, and they can spend it as they like. If they wish, they can also convert it into interest-earning government bonds or they can repay their debts. This is called an increase in “net financial wealth.” Ordinary people benefit, but there is nothing in it for banks.

As they say on late-night TV, “Wait! There’s More!”

Here is another one:

The misinformation is rooted in what many consider to be plain common sense. It may seem like homely wisdom, especially, to say that “just like the family, the government can’t live beyond its means.” But it’s not. In these matters the public and private sectors differ on a very basic point. Your family needs income in order to pay its debts. Your government does not.

Private borrowers can and do default. They go bankrupt (a protection civilized societies afford them instead of debtors’ prisons). Or if they have a mortgage, in most states they can simply walk away from their house if they can no longer continue to make payments on it.

With government, the risk of nonpayment does not exist. Government spends money (and pays interest) simply by typing numbers into a computer. Unlike private debtors, government does not need to have cash on hand. As the inspired amateur economist Warren Mosler likes to say, the person who writes Social Security checks at the Treasury does not have the phone number of the tax collector at the IRS. If you choose to pay taxes in cash, the government will give you a receipt–and shred the bills. Since it is the source of money, government can’t run out.

Lest you think the guy is being a comedian, read on:

It’s true that government can spend imprudently. Too much spending, net of taxes, may lead to inflation, often via currency depreciation–though with the world in recession, that’s not an immediate risk. Wasteful spending–on unnecessary military adventures, say–burns real resources. But no government can ever be forced to default on debts in a currency it controls. Public defaults happen only when governments don’t control the currency in which they owe debts–as Argentina owed dollars or as Greece now (it hasn’t defaulted yet) owes euros. But for true sovereigns, bankruptcy is an irrelevant concept. When Obama says, even offhand, that the United States is “out of money,” he’s talking nonsense–dangerous nonsense. One wonders if he believes it.

Nor is public debt a burden on future generations. It does not have to be repaid, and in practice it will never be repaid. Personal debts are generally settled during the lifetime of the debtor or at death, because one person cannot easily encumber another. But public debt does not ever have to be repaid. Governments do not die–except in war or revolution, and when that happens, their debts are generally moot anyway.

So the public debt simply increases from one year to the next. In the entire history of the United States it has done so, with budget deficits and increased public debt on all but about six very short occasions–with each surplus followed by a recession. Far from being a burden, these debts are the foundation of economic growth. Bonds owed by the government yield net income to the private sector, unlike all purely private debts, which merely transfer income from one part of the private sector to another.

I could go on, but you get the picture. Note that he is a professor at the Lyndon B. Johnson School of Public Affairs and at the Department of Government, University of Texas at Austin. How fitting that a crank like this would be at the LBJ school.

(Thanks to John Saxton for sending me the original link)



hbjork1's picture


Galbraith's economic theories are questioned by many but the issue is that casting this current meltdown as an economic issue is a dodge.  What it is really about is fraud.  If I sell you a piece of tungsten plated with gold as pure gold I might get away with it but it is fraud.  If I help someone who cannot possibly pay falsify his financial records arrange a loan to sell him a house for much more than it is worth, that is fraud.  If I package that and other bad loans with some good loans and resell the package as AAA, that is fraud.   And so on.

IMO, the big players are quite happy to have the suckers in the  public debating economic theory, who is right and who is wrong, because that isn’t really what their game is all about.

In the real world, it is about sellingr goods that have been bought at a lower price.  If those goods are what you represent them to be, that is honest profit that the seller gets for making them available to the buyer.

IMO, the different theories work for a while in different situations.  I like the analogy to the three blind men describing what an elephant is like. 


FranSix's picture

"James K. Galbraith continues the Galbraithian tradition begun by his late father of economic ignorance, promotion of fallacies, and all-around stupidity in his recent article in (What else?)The Nation. “In Defense of Deficits” sets a new low, even by Galbraithian standards. Here is a jewel:"

The Economics Of Innocent Fraud by J.K. Galbraith:


Its a small book.  Takes a little reading.


My take is that commercial banking is much more precarious right now than governments.

Commander Cody's picture

It is possible he's off the meds and has been struck by a bolt of reality.

MarketFox's picture

And that's not all.

How about the incestuous SEC employment revolving door ?

Police cannot and should not police the police.

Until there is a line drawn in the sand between public and private employment, the US will keep trending further and further to true Facism.

Also, the lobbyist system has to be removed.


Hulk's picture

Saddle up Black and get him going.

BlackBeard's picture

yeeeahhhhh! that brotha will start locking fools up!

Hulk's picture

I was thinking more along the lines of shooting on the spot...

Mitchman's picture

Would you go long or short on the MSM putting him on the air?

Thunder44's picture

Criminalologists to the front.great,==============Reform,These guys could let the politicians or regulators sit in their office 24/7 and they couldn't catch them.

throwthebumsout's picture

Wow! Right on target.  I the politicians herd him.  60 minutes needs to interview him.


Kayman's picture

Massive Fraud on Wall Street !  Wrong !