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Squatting On The Shoulders Of Midgets

Tyler Durden's picture


Authored by Simon Black of Sovereign Man blog,

Isaac Newton, the father of classical mechanics and progenitor of nearly every technology we use today, was easily one of the top 10 most influential minds in all of human history... so much so that even Albert Einstein kept a picture of Newton in his study.

Newton’s achievements were so momentous that when he died in 1727, he was buried with the honors normally reserved for a king. His body lay in state for four days at Westminster Abby, and his pallbearers included two dukes, three earls, and the Lord Chancellor.

Yet as accomplished as he was, Newton credited the brilliant scientists and philosophers who came before him, acknowledging that his insights would not have been remotely possible without the foundations laid by great thinkers– Archimedes, da Vinci, Descartes, etc.

In a personal letter to a colleague in 1676, Newton famously remarked “If I have seen further it is by standing on [the] shoulders of giants.”*

No doubt, all great ideas flourish by expanding upon the works of others. Unfortunately, so do terrible ones. And one of the worst ideas in history that continues to play out today is the grand experiment of fiat money.

The idea is simple. Rather than allowing money to be scarce and have intrinsic value, our fiat system grants power to a tiny elite to conjure money out of thin air. Presumably, if the ones in control are smart, honest guys, then everything should be fine.

Fiat was a total failure right from the beginning. When unbacked paper currency was originally introduced in the 11th century by Emperor Renzong of the S’ung dynasty, nasty inflation quickly followed.

The Yuan dynasty later adopted the same tactic of printing paper money without restriction, and they, too, suffered severe hyperinflation.

In fact, upon visiting China from Europe, Marco Polo remarked in his writings with incredulity how ‘[a]ll these pieces of paper are issued with as much solemnity and authority as if they were of pure gold or silver… and indeed everybody takes them readily. . .”

For Marco Polo, this was unheard of. In the Europe of his time, the gold Florin was the major medium of exchange, not paper. And the Florin famously held its metal content at precisely 54 grains of fine gold for nearly three centuries.

It took a few hundred years, but the fiat idea eventually spread to the west. Today, fiat is the global standard; just as in Yuan China, paper is readily accepted as money, and future historians will likely look back on us the same incredulity as Marco Polo viewed the Yuan.

Nevertheless, we have our own ‘brilliant scientists’ championing this bad idea. We award our most esteemed prizes for intellectual achievement to men like Paul Krugman and Joseph Stiglitz who tell us that the path to prosperity is for one person to conjure trillions of dollars out of thin air… or to impose capital controls, raise taxes, or spend more money.

Like Newton, they’re merely building upon the foundations laid by men who came before them. Unlike Newton, they take bad ideas and make them worse, squatting on the shoulders of [intellectual] midgets like John Maynard Keynes, whose works include such gems as:

“Can America spend its way into recovery? Why, obviously!”


“[M]oney borrowed and spent will revive the economy.”


“[E]arthquakes, even wars… serve to increase wealth…”


“[To] fill old bottles with bank notes, bury them at suitable depths in disused coal mines. . . and leave it to private enterprise… to dig the notes up again… is not so different from gold mining…”

It borders on the absurd… as if it were all written as part of a satire. Yet in one of the most intellectually dishonest statements ever made, Paul Krugman recently wrote that “Keynesians have been right about everything.”

This is incredibly dangerous thinking. And it’s important to never forget that, despite how normal things may ‘feel’ on the surface, the economic engines deep below are steered by these same people who worship at the cult of bad ideas.

* The ‘shoulders of giants’ phrase is not originally Newton’s, and when he wrote it to his contemporary and rival Robert Hooke, it was in half-jest, half-humility.


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Thu, 12/06/2012 - 18:49 | 3040821 Zymurguy
Zymurguy's picture

Watch:  Money As Debt video on YouTube.  Share it with everyone you can!

Thu, 12/06/2012 - 19:02 | 3040850 Supernova Born
Supernova Born's picture

Krugman is merely a link in the human centipede of fiat crap passers.

Thu, 12/06/2012 - 19:12 | 3040876 TwoShortPlanks
TwoShortPlanks's picture

Never trust a man who never gave his Ferret a run.

Thu, 12/06/2012 - 20:23 | 3041095 DoChenRollingBearing
DoChenRollingBearing's picture

FIAT$ work very well if you understand that it is for spending NOT as a store of value.  Gold is the best store of value.

Thu, 12/06/2012 - 21:49 | 3041336 Al Gorerhythm
Al Gorerhythm's picture

" if you understand that it is for spending NOT as a store of value. "

 We aren't using printed currencies in most cases, we are using electronic credits (usually), a derivative of a derivitive. 

"Gold is the best store of value."

True but silver is also on par as a value saver, if used as the currency money denoted in gold.

Silver as a currency should store wealth as well as gold but has been driven from use by banker credit notes.

Using fiat currency adds to the debt burden. Is it really working well as a medium of exchange of is it just passing the liability into someone elses' hands?

I just read a report on SGT that said that modern currency was readily accessible because credit is readily available. I contend that that is not the case. I see currency controls everywhere; on how much cash you are able to access and how much you can carry and if you can spend it without being reported (* see below) There are withdrawal restrictions, travel restrictions, spending restrictions, yet easy access through credit cards. There IS a currency shortage, so, are fiats working well? If a fiat comes into your wallet, it is still fiat. Currency should be money as well, not just a derivitive of it. Currency should be a valuable less precious but precious all the same, coin of exchange, not a debt note but a settlement device as well. One that has been brought into existence via work, not whim.It shouln not have nor nedd an interest rate of devaluation risk attached. It cannot be nor need be debt. It shouldn't be a physical symbol of someone eles' liability but rather one's proof of their ability to settle an account. On the other hand it is also the proof of a seller's acceptance of the coin's settlement value. The acceptor Knows that work has been employed in its creation. Work-for-work exchange. The dollar hasn't that inateness. There is no value for value exchange if the currency can be brought into existence by whim.Remove the symbol and we are a little less jolted by the realization of its very existence. Not that many get it, yet. 



Dear Jim,

My friend just arrived back from Budapest after some dental work. This is what he was welcomed to when he got home in Pennsylvania. The following is his email:

CIGA Brian


I had an incident yesterday which has disconcerted me. When I was getting ready to go to Budapest, I went to the bank and got $2000 in $100 dollar bills for spending cash and emergency funds. I never spent the money while I was gone, so when I got home I had all these hundred dollar bills. I went to WAWA and used one. Apparently a Timothy McVey looking guy who was a Federal Agent was standing behind me in line and saw me use a large bill. He followed me from WAWA and stalked me as I stopped at Trader Joes then followed me home and called in back up. I went to take a piss and the front door started banging, I yelled down, "be right there" and the banging got

louder, I stopped mid stream and ran down only to find my house surrounded by Israeli troopers in riot gear ready to shoot anything that moved. I said come in and turned around and they drew guns on me and said don’t do it.

There were at least 6 cop cars and 2nd street was blocked. They took my name and number and then they went back to WAWA to look at the bill in question, which turned out to be a good bill. They called me to apologize for the excitement.

When I asked how they got here so quickly after I left WAWA the Media officer told me about how the Fed agent following me.

I now do not feel safe in America, I want to go back to a communist country like Hungary where the Israeli military tactics are not in force. I would like to complain and make sure this nut job who is harassing tax-paying citizens is removed from this environment. But I just want to go live in a civilized country which operated on the honor system. I have been to the other side and "IT’S MUCH BETTER" than this bullshit, America/Israel sucks. I can’t help but feel this incident has shaken me up and made me feel very uncomfortable. It was a personal dose of reality as to what our country has been turned into – an Israel slave state. Last week I went to Barnes and Nobel to buy a book on beginning Hungarian and they don’t even publish a book on the language. I don’t care; I would rather live in Budapest unable to speak the language than live here and have Israel show up on my doorstep ready to kill an innocent victim. France, Italy, Austria, Hungary, even Greece, one of you, here I come!!!

Dear Brian,

We have to be real. There is no end to this in the next four years. In fact it will double and then double itself until it is so much a part of life that the 47% will welcome it as a form of class warfare. The only difference between Nazi Germany and the upcoming USA is that it will coddle minorities growing into majorities as a political base. The SS is coming out of inland securities as they organize an army. The signal of no return without any doubt will be the disbanding of State Defense Forces.

Already 13 governors have been contacted to make a full report of their State Defense forces and all deployments over the last ten years.

Face the facts. There is no road back and if you try to make one you will end up in the same cell with a Rear Admiral or maybe a General. You want an alternative? Forget passports and start thinking permanent residency permits and work permits that would not trigger tax retribution, at least today.


Thu, 12/06/2012 - 23:47 | 3041625 Real Estate Geek
Real Estate Geek's picture

I'm calling Bullshit on the WAWA story. No fucking way that happened for a good C-note.

Fri, 12/07/2012 - 02:08 | 3041788 Al Gorerhythm
Al Gorerhythm's picture

Hmmmm. I wanna live in that squeaky clean world you live in. 

Fri, 12/07/2012 - 17:40 | 3044009 Diogenes
Diogenes's picture

They call it Fiat money because it depreciates like a rusty Italian car.

Thu, 12/06/2012 - 18:57 | 3040837 devo
devo's picture

Governments throughout history have debased metal coins, too, either by fixing price below market or adding alloys. Just saying.

Thu, 12/06/2012 - 22:27 | 3041439 robobbob
robobbob's picture

and hence the phrase bad money driving out good as people hoarded the true currency while shunning the debased further eroding the economy that the debasement was supposed to help

Thu, 12/06/2012 - 18:58 | 3040839 Pairadimes
Pairadimes's picture

Is it a tradition in everyone's household to spit after saying 'Paul Krugman', or just mine?

Thu, 12/06/2012 - 19:32 | 3040863 Muppet Pimp
Muppet Pimp's picture

Its my tradition now.

Here is some truth for you:

Throughout the crisis the libor provided the best price to sell your debt.  They are being chastised for whatever they did to get the best rate to their clients (and I am sure a lot for themselves on the side, but I digress).  So, who is smarter, the guys in london who served their clients with the best prices, or the fools in NY who charged more?  If there are two coin shops, and one is willing to sell to you below spot and the other at spot, who is taking the best care of their client?  There is a massive dis-info campaign going on that is why you keep hearing about all this progress on the debt from one side and no progress from the other side.  LBMA is also keeping their foot down on precious metals so you can get some before it takes off.  So just consider, who are the good guys, London or NYC and DC.  Draw your own judgements, but I bring you facts fellas.

Thu, 12/06/2012 - 20:26 | 3041098 Slightly Insane
Slightly Insane's picture

We don't spit after saying "Paul Krugman"


We practice vomitting, followed by spewing blood from the eye sockets.  Consequently, we don't like him much here, and he ranks well below a profuse case of hemmorhoids with Ghost Pepper Sauce added for effect.  My brother thought it would be better to just pull the pin on 6 grenades.  I'm thinking he was right.


In future human history, Cockroaches will be remembered as "Krugman's", and "Geitners"

Thu, 12/06/2012 - 18:59 | 3040843 Silver Pullet
Silver Pullet's picture

You didn't invent that physics.

Thu, 12/06/2012 - 20:29 | 3041113 Slightly Insane
Slightly Insane's picture

Of course not.  Invent is to create.  He just "Discovered" physics.  Much as you will discover how little you know about the human scumbags that are taking your country down the crapper.

Thu, 12/06/2012 - 20:58 | 3041205 Backspin
Backspin's picture

I think maybe you missed his point.

Fri, 12/07/2012 - 00:40 | 3041700 Flakmeister
Flakmeister's picture

His point was to get a cheap laugh...

It would have worked better if it had not been a twisted out of context line over-hyped and played ad nauseum....

No, it is pretty clear that he got the point...

Fri, 12/07/2012 - 11:55 | 3042839 Silver Pullet
Silver Pullet's picture

I don't think it's been played ad nauseum yet. Point taken though on 'discovered' vs. 'invented'

Thu, 12/06/2012 - 19:00 | 3040845 kindape
kindape's picture

"Fiat was a total failure right from the beginning."


Wrong. Without fiat we'd never have had the technical/monetary/resource velocity we've had. Gold is fiat too, just takes more resources to mine gold. Real wealth is energy and built capital/productive capacity - what we have today couldnt have possibly been built with metal marker capital (without leverage/digits as well).  Internet memes are mostly just the same -they get part of truth right but err badly on the larger story. "Fiat" is a misused/burned term just like Peak Oil and Sustainability

Thu, 12/06/2012 - 19:11 | 3040875 Seer
Seer's picture

"Without fiat we'd never have had the technical/monetary/resource velocity we've had."

I get what you're saying, but to state that it couldn't have otherwise been possible is to do so knowing that there isn't a parallel universe to inspect.

Velocity is SPEED.  The exponential function, of which fiat employs, clearly expresses speed as time (or, time expresses speed, the correlation is pretty absolute).

Thu, 12/06/2012 - 21:52 | 3040972 Flakmeister
Flakmeister's picture

You are aware that the derivative of an exponential function is another exponential...

y = e^(f(x))  dy/dx = d f(fx)/dx  e^(f(x))

Edit: Based on the junks, the fuckin' Boetians are out in full force tonight.... that along with junking the Brachistochrone story..

Thu, 12/06/2012 - 19:25 | 3040917 NotApplicable
NotApplicable's picture

So, you're saying that without fiat, we'd never had this massive malinvestment that has destroyed an otherwise productive economy?

"Gold is fiat too."

I don't think you know what fiat means. Gold existed as money long before sovereigns designated paper as their exclusive, official money. Fiat ONLY has value due to the coercive force of the sovereign. Gold, OTOH, is valued for all of the reasons that have made it the premiere form of money on the planet (none of which is due to a decree of fiat).

Saying that gold is fiat is akin to legislating that the sky is blue.

Thu, 12/06/2012 - 19:40 | 3040965 kindape
kindape's picture

yes gold has been accepted as money but just like cowry shells or beads or whatever it is a MARKER. my argument isnt really about gold its more that people are naive if they think we could have close to this amount of complexity, trade, standards of living on a gold standard. I fully agree that we wouldnt have had the 'problems' we have now - but my original comment pertained to the amount of productive capacity/energy use.

Thu, 12/06/2012 - 20:19 | 3041075 Raynja
Raynja's picture

if you think that real wealth is stored energy, then you should understand the difference of fiat and gold.  with fiat they can steal your energy after you stored it, with gold they cannot.

Thu, 12/06/2012 - 20:38 | 3041142 steve from virginia
steve from virginia's picture





"So, you're saying that without fiat, we'd never had this massive malinvestment that has destroyed an otherwise productive economy?"


Without fiat, we would never have had the massive malinvestment in the illusion of a productive economy. What is ending today is the illusion ... because lies cost too much.



Thu, 12/06/2012 - 20:50 | 3041182 wisefool
wisefool's picture

In addition to your original comment, People also need to read the first post in the comments section, and then follow the link to the "debt as money" videos. watch them all the way through. Dont turn them off after the first 15 minutes when they talk about how gold was better than barter.

Not everyone on zerohedge is a goldbug, but many are. 99% of people on zerohedge are sound money advocates. So welcome to a respected minority of the majority.

According to some legends, Newton spent more time on alchemy (turning ordinary materials into gold) than his published works. He was also a secret agent for the crown to root out conterfeiting. Like most geniouses, he worked every angle.

Had he succeded at alchemy (gold only), he would still be remembered more for his contributions to physics in general. Alchemy would (and still might) have made gold as worthless as it was on delivery by the last spanish galleon. (also covered in the money as debt series, if you have the guts to watch it all the way through)

Even a broken clock like Keynes is right once or twice in a 50 year career. Too bad millions of people have died in war, non-state violence and suicide. Largely from the rest of his idiotic teachings.

Thu, 12/06/2012 - 21:04 | 3041229 Flakmeister
Flakmeister's picture

You were doing so well until you suggested that millions died as a result Keynes...

Christ, now that is really pushing things....

Deficit financing of wars is as old as warfare itself....

Thu, 12/06/2012 - 21:45 | 3041328 wisefool
wisefool's picture

Good points. I would only offer that the modern Keynesian tax code combined with his monetary theories was purposefully created to be immune from war weariness. Allowed for durations and scales of war not seen before in history.

One good thing about PM currency standards. When the barbarians met the legions on the frontier. They asked for gold. The legions said, we don't have any, they pay us in tin now. The barbarians traversed the countryside. They asked the peasants. Give us your gold. The peasants pointed tword rome and said, we dont have any. they took it. The rest is history.

Fri, 12/07/2012 - 08:42 | 3042057 ATM
ATM's picture

I am wondering how it is the the Roman Empire created all it's infrastructure without fiat? How was all the building done if not via fiat?

Fri, 12/07/2012 - 21:46 | 3044628 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Pretty sure that the "empire" endeavors required debasing their coins...

But just a little bit -- at first anyways...   ;-)

Thu, 12/06/2012 - 20:02 | 3040918 BigJim
BigJim's picture

...Without fiat we'd never have had the technical/monetary/resource velocity we've had.

Assertions are not proof. Give us your reasoning - something along the lines of:

clever bureaucrats have a much better grasp of a society's capital than savers, who mistakenly believe they have a right to delayed spending power... instead of having their masters suck the value out of their savings and 'investing' the capital in exciting (and wealth-creating!) projects like invading Iraq

kind of thing.

Gold is fiat too, just takes more resources to mine gold.

No, chum, gold is not 'fiat'. As its present day value attests. OH???? You didn't know it had been demonetised... and yet still retains value? Unlike the Weimar Papiermark. Or the Hungarian Bilpengo. Or the Argentinian Old Peso, the Peruvian Sol, the Zimbabwe Dollar, etc, etc. Get the picture, idiot? Once the government demonetises fiat currency, it loses all value... except to numismatists. Gold does not.

Now fuck off back to HuffPo where such idiotic memes get swallowed without chewing, you achingly ignorant buffoon.

Thu, 12/06/2012 - 19:36 | 3040933 BraveSirRobin
BraveSirRobin's picture

All you gold bugs are getting PUNKED! The banks and corporations are hording cash created from thin air. Soon, they will knock the legs from under the economy, and stop priniting. Everyone will either sell in the panic to avoid heavy losses, become liquid to avoid bankruptcy and forfieture of collateral, or just to be able to buy necessities. Gold will crash against cash just as well. And all those banks and big corporations hording all the cash will be buying and taking with both fists - your gold, your silver, stock portfolios, bonds, homes, everything.  

Everyone here reading this forum is the little guy, and the big guys (the house if you will) ALWAYS wins.

Bend over and grabs your ankles boys. And you better learn to love it, or else, bitches!

Thu, 12/06/2012 - 19:43 | 3040966 BigJim
BigJim's picture

So - these 'banks and big corporations' will be buying gold & silver with both fists... with money created out of thin air... but somehow the price will drop?

Please explain, I'm sure we'd all like to know how that whole supply and demand thingamajig works.

Oh, and an explanation of the effects of monetary inflation on the prices of hard assets would be quite useful, too.

I knew there was a reason to keep coming back to ZH!

Thu, 12/06/2012 - 20:18 | 3041048 EscapingProgress
EscapingProgress's picture

He's absolutely right. Deflation followed by inflation to buy the world. I also believe that is the end game.

Money is debt, and we have a massive debt bubble. When it pops money will be destroyed because debt will be destroyed (i.e. defaulted on). This will decrease the supply of fiat money (deflation) which will increase the value of fiat relative to other assets. Borrowers will also be wiped out by this high deflation which will encourage large sell-offs of leveraged assets (i.e. real estate). This is the deflation that will preceed the inflation.

After the paper prices of various assets has crashed a printing spree will commence in order to "reinvigorate a once great economy" (or something to that effect). This newly created money will, of course, end up in the hands of bankers (see: Cantillon Effect). A massive buying spree of distressed assets will ensue, and anyone that isn't a banker who is left still holding anything will be desperate to sell just to buy bread.

And thus the scourge will conquer.

Thu, 12/06/2012 - 20:45 | 3041165 JOYFUL
JOYFUL's picture

Pointlessly pessimistic...

the cabbalistic formula for 'world domination' comes with a built in self-destruction mechanism...

"Bankers"(code word for hebraic moneychanger\tax farmer)will weave fantastically complex plans to advance their goals, only to see it all blow up in smoke...again and again...

yet one more confirmation of the fact that all of our waking reality was predicted and modelled by the cartoon geniuses of those 50's studios like HannaBarbera...while I am still a bit confused as to whom the Roadrunner is a stand in for, there is absolutely no doubt of the identify of the Coyote.

And the plethora of mad genius evil no goods constantly plotting no-goodness? The Professor, Master Cyclinder, General Clang...and so on?? Lurianic cabbalists the bunch of them... The Barrick Formula.... =The Federal Reserve System

Fri, 12/07/2012 - 04:23 | 3041884 Maghreb
Maghreb's picture

I think you have a point that fiat isn't all bad. Alot of modern super projects  would have been impossible without Fiat. You see it with the Roman Empire. They were pushing an almost pure fiat system through debasing their own Silver Denarius. It makes alot of things possible that wouldn't be. Not only can you tax the fuck out of people the old fashion way but you get the extra inflation tax that no one can hide from as well.

Thu, 12/06/2012 - 19:02 | 3040849 Seer
Seer's picture

What a brilliant idea, question the premise!

Now, Simon, let's take another step toward THE central premise driving everything: How about asking whether basing everything on perpetual growth is a good idea?

Thu, 12/06/2012 - 19:08 | 3040854 francis_sawyer
francis_sawyer's picture

Newton stole his ideas from some long lost knowledge that came long before him... You don't think the Alexandria library totally burned down [along with everything in it] do you?...

Real ideas are only found on cocktail napkins... You should know that Simon... You seem to spend your life setting your drinks on them in Tiki bars... Newton DID have a goofy little pocket computer named after him though... If you keep at it Simon, in 2 or 3 centuries from now they might name an 'etch a sketch' out of you...

Thu, 12/06/2012 - 19:03 | 3040855 Seer
Seer's picture

BTW - Great way to attract the SEC! ("midget" in the title and all)

Thu, 12/06/2012 - 19:04 | 3040859 Snidley Whipsnae
Snidley Whipsnae's picture

Comparing the current crop of idiots, ie; Krugman, Bernanke, Timmy, et al, to Newton and those upon who he stood to invent a new math for calculating the movement of heavenly bodies, create tide tables, etc, is ludicrous at best.

All MMTers, Fed promoters, ivory tower psudo intellectuals, etc, 'economists' do not equal a pimple on Newton's ass.

How many of these modern clowns that call themselves economists have had a single original thought?

Thu, 12/06/2012 - 19:13 | 3040887 AUD
AUD's picture

Leibniz was no less influential in the development of the calculus.

Thu, 12/06/2012 - 19:24 | 3040913 Snidley Whipsnae
Snidley Whipsnae's picture

Many were influential. Newton was extrodinary.

One thing that sets Newton apart was his frugal life style and his willingness to be alone for years with his work and no human companionship... male or female. At times he would go without food for a week or more, even though it was delivered to his door. He was very unusual and almost alien to those around him... and he didn't care what others thought of him. He only cared that whatever he published or lectured upon was absolutely correct. Even so, he made a few mistakes.

Who doesn't?

Thu, 12/06/2012 - 19:35 | 3040944 AUD
AUD's picture

If any event need be singled out as the beginning of the integral calculus, it was the recognition that the determination of an area is the same thing as solving a differential equation, and the credit for this step is mainly due to Leibniz, who also introduced the dx symbolism

Mathematics for the Million, Lancelot Hogben, 1936

Fri, 12/07/2012 - 22:03 | 3044672 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

I was gonna say that Isaac has a cookie named after him, proving his superiority, BUT it turns out Gottfried Wilhelm also has this distinction.

Thu, 12/06/2012 - 20:20 | 3041083 Strider52
Strider52's picture

Thank You. I studied Newton, and he was likely the most intelligent man ever born. Yes, this made him obsessive to the point that he was practically a freak, but you have to admire his accomplishments.

Thu, 12/06/2012 - 19:14 | 3040891 Seer
Seer's picture

Of course it's STUPID to compare "economists" to Newton!

Anyone know what Newton thought of the exponential function?

Thu, 12/06/2012 - 20:02 | 3040914 Flakmeister
Flakmeister's picture

Not sure but have you read the story about the Brachistochrone problem...

Thu, 12/06/2012 - 19:26 | 3040919 Snidley Whipsnae
Snidley Whipsnae's picture

"Of course it's STUPID to compare "economists" to Newton!"

Why? Today's economists claim that their discipline is a science and feel that they right to accept Nobel prize for their 'work'... lol

Thu, 12/06/2012 - 19:45 | 3040977 Flakmeister
Flakmeister's picture

I suggest you lookup who exactly gives the Nobel prizes in science and who gives the prizes for Peace and Economics....

Fri, 12/07/2012 - 02:22 | 3041800 Al Gorerhythm
Al Gorerhythm's picture

Yes; he invented the gold standard.

Thu, 12/06/2012 - 19:29 | 3040929 macholatte
macholatte's picture


All MMTers, Fed promoters, ivory tower psudo intellectuals, etc, 'economists' do not equal a pimple on Newton's ass.


Nevertheless, THEY are in POWER and that is all that matters. The rest of it is blather.

Thu, 12/06/2012 - 19:36 | 3040952 Snidley Whipsnae
Snidley Whipsnae's picture

Hitler was in power once... How well did that work out?

Thu, 12/06/2012 - 19:57 | 3041011 macholatte
macholatte's picture


Depends on which side of the fiat you're on.

They all prayed to their God to save them from their enemies. 60+ million sheeple died while banksters and industrialists proliferated. The USA went from being just another country to world power. Japan and Germany became world class economic powers without needing to waste resources on a military. Russia became a world power. China is now a world power.

It's all perspective, Snidley.

Thu, 12/06/2012 - 19:07 | 3040865 AUD
AUD's picture

Rather than allowing money to be scarce

That's not what makes money, money. The demand for money approaches the infinite, so what does it matter how much there is?

Still pimping the quantity doctrine.

Thu, 12/06/2012 - 19:21 | 3040905 Supernova Born
Supernova Born's picture

Now fiat "money" is plentiful and productive work is scarce.

Thu, 12/06/2012 - 19:28 | 3040923 AUD
AUD's picture

It is plentiful but as long as it trades 'money good', the status quo, if you want to call it that, will continue. Until one day, sometime, it won't.

Thu, 12/06/2012 - 19:36 | 3040932 Supernova Born
Supernova Born's picture

As that one guy said (and seems to think it deserved his name): "If something cannot continue, it will not continue."

Thu, 12/06/2012 - 22:13 | 3041397 Coke and Hookers
Coke and Hookers's picture

Quantity matters because money is not just a tool for exchanging goods. It is a measuring instrument like a barometer or a measuring tape. Let's say I buy a plank of wood from you and pay you '100 centimeters' for it because it's 100 centimeters long. You can exchange the centimeters for something else, like a burrito which costs, say, 50 cm. Now, in the spirit of central bankers, I stretch the tape (print money) before I buy the next plank from you. You give me 110 cm plank and I pay you 110 cm for it (I just created 10 cm of those by stretching the tape). Then you go and get another burrito, which now costs 55 cm because it's now measured on a stretched measuring tape that's actually 110 cm long because the new definition of 'centimeter' has found its way into the system. Your 100 cm plank will soon cost 110 cm and your customers' centimeters in the bank will therefore buy fewer planks than before. Your centimeters in the centimeter bank will also be worth fewer burritos and you'll lose weight.

I know this is an exceedingly ridiculous and somewhat counterintuitive example but it demonstrates how manipulating fiat amount in circulation fucks up the fiat's measuring function in the economy - and guess what - you will not profit from it unless you control the measuring tape. The biggest problem with fiat money is that it can be manipulated on purpose to manipulate the value of real goods and transfer assets from those who don't control the fiat to those who do through inflation/deflation/bubbles. Fiat money is an instrument for faking wealth measurement and stealing real wealth from people.

Fri, 12/07/2012 - 04:36 | 3041895 AUD
AUD's picture

Do you value a measuring tape based on how many of said measuring tapes have been manufactured?

Damn right it "is an exceedingly ridiculous and somewhat counterintuitive example". Quit the coke & hookers.

Thu, 12/06/2012 - 19:10 | 3040871 Quintus
Quintus's picture

Hooke, Newton's great rival at the time, was a midget, or 'Vertically challenged' as we would say these days.  Newton was having a laugh at hooke's expense.  I wouldn't read much more into it than that.

Thu, 12/06/2012 - 19:10 | 3040873 econature
econature's picture

I always find it funny that we have different schools of economic thought: Keyensian, Austrian, etc., as if economic laws aren't concrete. We might as well have Chinese Physics, or Indian Mathematics.

Imagine if the physicists and engineers in China suddenly adopted a new view on gravity, and started designing flying objects with these new principles in mind. It may look like their idea is working after they go off the edge of a cliff: "hey, this thing works! We're soaring through the air! I can't believe no one thought of gravity this way before!!"....splat.

Thu, 12/06/2012 - 19:28 | 3040922 koncaswatch
koncaswatch's picture

Really?! There are economic "laws" as in proven principle?

Thu, 12/06/2012 - 19:55 | 3041006 Flakmeister
Flakmeister's picture

"You make a profit by buying low and selling high"

And that is about the extent of it...

Thu, 12/06/2012 - 19:50 | 3040991 Seer
Seer's picture

Economic "thought" is not highly testable.  This should tell a person that the entire notion of economics as a science is an oxymoron: yes, PIECES of economic thought/systems can be tested against, but once connected to the BIG PICTURE all bets are off.

BTW - Wasn't it an Indian who gave us "zero?" Sunya Hedge?  I'd like to remembered for contributing such a "nothing" - ha ha!

Thu, 12/06/2012 - 19:56 | 3041007 Flakmeister
Flakmeister's picture

Economics is the continuation of Ideology by other means

tm Flakmeister 2008

Thu, 12/06/2012 - 19:11 | 3040879 otto skorzeny
otto skorzeny's picture

Newton was an Illuminati and a heretic

Thu, 12/06/2012 - 19:15 | 3040894 Snidley Whipsnae
Snidley Whipsnae's picture

"Newton was an Illuminati and a heretic"

Extrodinary claims require extrodinary proof...

Thu, 12/06/2012 - 19:23 | 3040912 CH1
CH1's picture

Claims require proof. "Extraordinary" is claimed by someone who wants to make the claim unprovable.

Sat, 12/08/2012 - 05:53 | 3040921 Supernova Born
Supernova Born's picture

His father turned him into a Newton.

Thu, 12/06/2012 - 21:11 | 3041243 JOYFUL
JOYFUL's picture

Extro-dinary at your service squire!

Otto is correct. Newton was the first in a long line of 'celebrity scientists' whose reputations were built up by a PR machine financed and operated by the usual suspects(the Venetian financial oligarchy)...there's certainly no mystery why another specimen of this same coin\con would have his picture upon their walls!

Newton was a foot-soldier in the war upon actual scientific rationalism, as conducted by Bacon and other dabblers in magic: the gradual merging of mystical cabbalism with experimental science has replaced and covered up true science with it's simulacra -scientificism- which is a expression of the talmudic hatred of the natural world and our birthright as free persons.

He dabbled extensively in arcane formulations of the Dee kind, and would be better termed a failed magician than a scientific pioneer. He also was slavishly devoted to the notion of Srael, and millenialist madness that would terminate in the disease of sionism centuries later. All this is out there, easily accessible on the web for those of an enquiring mind...but hero worship will heavily discount the motivation of those who have bought into the scam of general education disinfo to enlighten themselves of the truth.

The law of statistical averages dictates that some day Simon will get something right. But today is not that day!


Thu, 12/06/2012 - 19:20 | 3040886 Ignatius
Ignatius's picture

Apparently Newton is dead.  The National Insitute of Standards and Technology killed him.  Bazant killed him when he published his initial paper on the 'collapse' for the twin towers 0n 9/13/01. 


1) A body in motion tends to stay in motion and a body at rest tends to stay at rest, unless acted upon by a force.

(except when it doesn't)

2) F=ma

(except when it doesn't)

3) For every action there's an equal and opposite reaction.

(Except when there isn't)


Welcome to bizarro world.  And I used to think "Gravity: because it's the law" was a funny thing to put on a tee-shirt.

Thu, 12/06/2012 - 19:33 | 3040937 BraveSirRobin
BraveSirRobin's picture

Gravity is a constant force. Don't believe me. Step off a tall building.

Thu, 12/06/2012 - 19:37 | 3040954 Ignatius
Ignatius's picture

Excuse me, but I'm having trouble following your complex argument.

Thu, 12/06/2012 - 19:16 | 3040896 lolmao500
lolmao500's picture

I'm longing for the day an hungry mob catch Krugman and hang him by his chicken-neck...

Thu, 12/06/2012 - 19:54 | 3041004 Seer
Seer's picture

You either have  been to too many WWF matches (or whatever they're calling them these days), or not ENOUGH! (violence/hatred seems to be a preoccupation- unless you work for the govt I'd be careful, the NSA is recording all of this).

NOTE: Krugman is a distraction.  TPTB will just re-tool as needed.  Energy is better spent disconnecting from their Matrix.

Thu, 12/06/2012 - 19:25 | 3040915 my wag
my wag's picture

If not MMT...what? We have been off the Gold Standard since Aug 1971 and....Boo!!!

Nothing happened except economic expansion and periodic business cycle recessions. Also 2 serious oil price shocks, the financial manipulation of Savings and Loans, the financial manipulation of bundling mortgages and over leveraging our housing stock.

The main reason we are economically slow today is the cutback of State and Local govts due to the percieved lack of ability of the Federal govt to provide funding during this severe economic shock.

Again, if not MMT...what?

Thu, 12/06/2012 - 19:58 | 3041015 Seer
Seer's picture

So, massive personal debt (killing consumption) and escalating commodity prices (oil being key) aren't factors?

(I'm still contemplating whether to add to your collection of red arrows.)

Thu, 12/06/2012 - 22:07 | 3041385 shovelhead
shovelhead's picture

"Mr. Krugman...

Clean-up on aisle 5."

Thu, 12/06/2012 - 19:25 | 3040916 nodhannum
nodhannum's picture

Newton...Shmuton...Barack Hussein Ombammy, he be da man!

Thu, 12/06/2012 - 19:29 | 3040924 reader2010
reader2010's picture

“I can calculate the motion of heavenly bodies but not the madness of people.” 


Newton on his finanacial losses in the South Sea Bubble.

Thu, 12/06/2012 - 20:05 | 3041035 Seer
Seer's picture

Voltaire was able to calculate the madness of people.  AND, he wasn't a financial disaster.  AND, he was no tool of TPTB.

Newton has allowed us to make widgets (and I really appreciate his contributions on which the likes of Einstein were able to work from).  BUT... it is WISDOM that we're most sorely missing, something of a mind like Voltaire's is very hard to come by these days.

Thu, 12/06/2012 - 19:28 | 3040927 Flakmeister
Flakmeister's picture

Historically it is more like midgets standing on the shoulders of giants...

Look Simon we all know that fiat is bad idea, but could you remind us of the balance of payments were and the rocketing oil imports when Nixon closed the window?

It is no coindence that the US went full fiat when domestic oil production peaked....

Thu, 12/06/2012 - 19:33 | 3040936 matsoR
matsoR's picture

Isaac Newton - Rejector of the trinity - Believer in one god bitchezzz... (Isaac newton biography documentary)

Thu, 12/06/2012 - 19:34 | 3040942 pragmatic hobo
pragmatic hobo's picture

according to Adam Smith, the true value of goods are labour necessary to produce the goods and the value of exchange of the goods, based on money, are simply reflection of value of that labour. It is true that the powers that be continue to devalue the money (fiat or not) but if the value of labour stays the same then the devaluation will be reflected in higher nominal value based on the devalued currency. But what are we seeing exactly now? The competitive devaluation of currency is not elevating the intrinsic value of labour. Instead the value of labour for most part either stays stagnant or is falling. This is direct result of so called free trade where the value of labour descends to that of common denominator, that of Chinese/Indian labour. Adam Smith foresaw this but was hopeful that the corporations and their duty for social obligation will act as "invisible hand" to favour home labour and somehow things will work out. Well, indications are clear by now the naive hope of Adam Smith was a complete rubbish.

Thu, 12/06/2012 - 20:00 | 3041021 Flakmeister
Flakmeister's picture

No shit...

And what was that about "a well regulated market"??

Thu, 12/06/2012 - 20:05 | 3041038 exi1ed0ne
exi1ed0ne's picture

Value of labor is close.  It is the value of EFFORT, not labor since not all labor is created or valued equally.  A brain surgeon, requiring deep knowledge and many years of training has more "value" per unit of work than a ditch digger.  This is why reinvestment is so critical to an economy.  The pursuit of efficiency of effort, aka Capitalism, creates the need for effort to be spent.  It is this act that creates new markets as old ones die.  AKA, the Doctor reinvests their barter units rather then leave them idle in a safe or bank account.  If there is no pursuit an investor is willing to part with capital on which requires effort, then the amount of barter units makes no difference.

Thu, 12/06/2012 - 20:36 | 3041136 Seer
Seer's picture

Smith failed to comprehend the real world just as Keynes did.

Not that he, Smith, didn't try.  I haven't studied Smith much, but one thing that I recall as standing out was his warning about trading with unequal nations; that and not to trade like goods (like all the countries selling cars to each other).

What is going on is that our valuation meme is becoming upended not because of currency or labor manipulations but because of a scarcity of resources and an already over-saturation of goods.  This might seem like it's contradictory, but it's not.  The over-saturation phase/era produced over-stimulated growth, it sucked in capital to fewer hands.  This has resulted in peoples' closets being full (one can have only so many gadgets) with stuff of limited utility, and their bank accounts empty.  The hyper-growth set up systems that became huge consumers of natural resources, with ever-increasing growth goals, and these resources are becoming more depleted by the day.  There's been a race for some time to off-set increases in resource costs.  The race isn't the problem, it's the symptom.

With growth stalling consumption starts to drop off.  It can all be explained by the right-hand side of the parabola (vertex on positive Y axis).  Left-hand side was the past and was "economies of scale" seen in the positive. The right-hand side is the future and is "economies of scale in reverse."  As much as we benefited from the positive scaling of "economies of scale," the negative scaling will be equally as impactual, to the "downside."

The value of most things got to be based on stuff whose future demand cannot be met.  Savvy (evolving) humans would recognize them as things to not put much stock in (because those around you with which you will become more reliant upon, do more trade with, won't accept them because of this very reason- applying precious energy toward trinkets will be foolish, if not downright dangerous for one's survival).

I wonder if Smith (or Keynes for that matter) had a clue about the exponential function... sometimes one just gets caught up in things and forgets to question the premise...

Thu, 12/06/2012 - 19:35 | 3040945 Snidley Whipsnae
Snidley Whipsnae's picture

Off Topic: "Fools Gold: CFTC Says 12 Firms Sell Phantom Metals"

In case you are or are considering doing business with those on the list in this article...

Thu, 12/06/2012 - 19:39 | 3040959 kevinearick
kevinearick's picture

is that Krugman in the background, singing the praises of negative interest rates and a VAT?

Thu, 12/06/2012 - 19:55 | 3040987 Insideher Trading
Insideher Trading's picture

Fiat paper doesn't take a genius like Descartes, Newton, or Einstein to understand why it is tried so many times after it has failed. 

It's very simple and it has nothing to do with sound money, liberty, freedom, free markets, or even a healthy economy. It simply comes down to command and conquer.

The most addictive advent in all of human history is credit. If you control credit you control the lives of everyone.

Anyone with the vaguest understandings of fractional reserve banking knows that debt = money. The dollar in your wallet isn't money, nor is it debt, it is simply a receipt that a transaction of debt has occurred. It is simple monetary physics that a liability on one side of the ledger is an asset on the other side.

Why do you think that Obama wants to have control over the debt ceiling? The fiscal cliff really isn't that big of a deal, sure, it will slow the economy, but the debt ceiling is the true bastion between kick-the-can and destruction of the banking system. Tim G is going to borrow against Federal Pensions like he did last time. Why? Because if the debt ceiling issue doesn't get resolved then alllllll the people on government subsidized ENTITLEMENTS get cut-off and are forced to be productive. The relationship between the FED and the Treasury has allowed this entitlement system to exist for the sole purpose of control. Is that so hard to understand?

Why do you think Obama wants totalitarian control over the debt ceiling but is so cavalier about the "fiscal cliff" Because if the debt ceiling doesn't get raised he loses...power. Don't think Obama is some altruistic patriot, he is a narcissistic megalomaniac with only his own self-interest in mind. His rhetoric on usurping the ability to raise the debt ceiling from congress elucidates that point like a smack in the face.

Thu, 12/06/2012 - 20:17 | 3041070 negative rates
negative rates's picture

All that is true and mostly accurate. But I think the truth is that he (obama) is one of them. He wants to keep interest rates low, but like he says, if the ceiling is breached, it will ruin your credit, or credit rating, forcing the creditors to raise interest rates to balance the risk of not paying your bills on time. If rates go up, the Fed is powerless and useless to their own selves, since they will need more future money in order to borrow more future money which they are already committed to paying in the form of entitlements. And suddenly now they have none, until the debt ceiling and all the back log of issues is resolved. I have seen some good jugglers in my day, but it will take the likes of a magician they havn't seen to fix this broken circus ride.   

Thu, 12/06/2012 - 20:33 | 3041118 Insideher Trading
Insideher Trading's picture

The FED itself needs the Treasury to raise the debt ceiling (Tim Geithner understands this) he's not a stupid person he just plays one on teevee.

Any idea what the Fed's DV01 is? For every 1 basis point that Treasury yields move up how much of a hit does the Fed take on it's holdings?

The whole fucking shabang comes down worldwide if the debt ceiling does not get raised. Money needs to be created = debt needs to be created.

That is why Obama will attempt to usurp the power of congress via executive order if no compromise on that issue is met. Then you have the beginnings of how Hitler became a dictator. Total control is what it comes down to. Period. The fiscal cliff is a circus side show to distract attention.

Thu, 12/06/2012 - 20:54 | 3041190 Seer
Seer's picture

The existing debts and interest can NEVER be repaid.  Matter of factly, since the beginning this was true.

Those thinking that Obama is behind anything clearly don't understand that the devil has been with us a LONG time.  No, Obama is no Hitler: Obama is a puppet, Hitler was not.  Save over-dramatization for when it's really needed.

Yes, the fiscal cliff is a side show, but don't miss out what it stands for.  It is a mirror to our entire System, an ugly system whose image is sure to crack that mirror to a million pieces.

The Fed and Treasury are doing a dance of death.  Death will not be denied.  That will be the death of consumerism and growth: and with it, the global JIT economic system.

That power looks to double-down shouldn't be a surprise.  It's as natural a reaction as one can find. This reaction, however, ought not be confused with "success."  Entropy is a bitch, and I see NO powers that are of the slightest match for it.  Sure, TPTB will attempt to stretch out their rule through more power grabs, through more war, but ultimately they're running with a losing hand.  Life, no one said that it was going to be easy: when Mother Nature reclaims us, as she will, we might look back at all this and tell ourselves that we really weren't all that ill-intentioned as we once thought (naive, yes, but not necessarily cruel).

Thu, 12/06/2012 - 20:19 | 3041074 Rompoculos
Rompoculos's picture

Keynes’s comments betray his love of privilege and hate of what it is to work hard and to save. That’s some act, what do you call it? The Aristocrats!

Thu, 12/06/2012 - 21:45 | 3041329 Bob
Bob's picture

Steinbeck saw it differently:

This is the thing to bomb. This is the beginning—from "I" to "we". If you who own the things people must have could understand this, you might preserve yourself. If you could separate causes from results, if you could know that Paine, Marx, Jefferson, Lenin were results, not causes, you might survive. But that you cannot know. For the quality of owning freezes you forever into "I", and cuts you off forever from the "we".

Grapes of Wrath

I suppose he'd see the "Shoulders of Giants" cant as empty historical revisionism in the Age of Celebrity. 

Fri, 12/07/2012 - 01:03 | 3041726 indio007
indio007's picture

Issac Newton says the official 911 story is bullshit.

Fri, 12/07/2012 - 03:43 | 3041861 BlackVoid
BlackVoid's picture

You are falling for propaganda. FIAT money may be a bad idea for you, but for the banksters, it is an excellent idea, allowing them to plunder the wealth of others.

Fri, 12/07/2012 - 13:38 | 3043176 fresno dan
fresno dan's picture

Paul Krugman recently wrote that “Keynesians have been right about everything.”

Yup...the plan was to crush the middle class, the only group with the knowledge, organization, and power to enable self government. 

I mean, he can't possibly mean that Keynesians vanen't been running the economy accroding to their precept - deficits bigger and bigger, longer and longer...

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