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PIMCO On The Fiscal Folly Of The Keynesian Revolution, And "Just Saying No" To Keynes
Zero Hedge has been among the most vocal critics of Keynesian economics, and specifically the misinterpretation by modern governments of the core approach of the "Keynesian revolution", which essentially gave them a carte blanche to drown society in preemptively failed stimulus after stimulus, funded with a relentless tsunami of public debt, which, while some believe will never be "called", others, who actually base their opinions on real world empirical evidence and not textbooks, realize all too well that such debt is ultimately unsustainable, reserve currency or not. Which is why we were amused to read today in a letter by Pimco's Tony Crescenzi, the core gist of our argument, repeated so often through the years, namely finally "Saying no to Keynes and fiscal folly." The key paragraph from Pimco: "Politicians and the beneficiaries of their fiscal illusions for the past 80 years abused the Keynesian philosophy, relentlessly and dangerously pursuing the use of debt for self-aggrandizement. Today, the citizens of indebted nations bear a heavy burden and must begin repaying the debts. It is a herculean task, because the debts are mountainous. Yet, there is no choice, because investors have become intolerant of fiscal follies. They are saying no to Keynes, in other words." This also explains why during Bernanke's Jackson Hole speech the Chairman basically threw the ball back in Congress' court. Unfortunately he will soon realize that absolutely nothing will come out of this, and it will be up to him to once again guarantee that Wall Street generates yet another year of record bonuses.
Full report from PIMCO:
Saying No to Keynes and Fiscal Folly
- ?Taxpayers have been hoodwinked into believing the cost from profligate government spending is low relative to the benefits.
- The Keynesian revolution ignited a decades-long abuse of the core principle of Keynesian economics: for government to increase spending when private sector aggregate demand weakens and stymies job growth.
- The central banker is left to shoulder the burden, seeking all the while to pressure the fiscal authority to amend the abuse of Keynesian economics and decades of fiscal folly.
? The reasons are different yet very much related – deficits are big and growth still tepid in the U.S. and U.K., while emerging nations are worried about growth (and therefore demand) from their developed nation partners – but the upshot is the same: Central bankers across the world appear poised to ease.?
A seminal moment in the conduct of public finance in the United States was the enactment of the Sinking Fund Act of 1795, which was amended in 1802. It was the continuation of a policy begun by Alexander Hamilton in 1790 as a means of establishing credit for the United States. The fund set aside a substantial amount of revenue for the retirement of debt, and it henceforth committed the United States to paying its debt through the collection of revenues. The act and the notion of public debts were very controversial at that time; after all, tax collections were at the center of complaints by colonists against Great Britain and a catalyst for the American Revolution.
Kearny (as quoted by Buchanan in “Democracy in Deficit: The Political Legacy of Lord Keynes”) describes how the act established conditions by which a system of public debt could be sustained, as it surely has, although not quite in the way envisioned:
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“The Act of the 3d of March, 1795, is an event of importance in the financial history of the country. It was the consummation of what remained unfinished in our system of public credit, in that it publicly recognized, and ingrafted on that system, three essential principles, the regular operation of which can alone prevent a progressive accumulation of debt: first of all it established distinctive revenues for the payment of the interest of the public debt as well as for the reimbursement of the principal within a determinate period; secondly, it directed imperatively their application to the debt alone; and thirdly it pledged the faith of the Government that the appointed revenues?
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This issue of the Global Central Bank Focus features commentary from Tony Crescenzi on the abuse of Keynesian economics, Ben Emons on a new steady state for interest rates, and Lupin Rahman on emerging markets.?
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should continue to be levied and collected and appropriated to these objects until the whole debt should be redeemed.”
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This system of commitment to the payment of public debts worked well until the advent of the Keynesian revolution in the 1930s, which ignited a decades-long abuse of the core principle of Keynesian economics, which is for government to increase its spending when aggregate demand in the private sector weakens and stymies job growth. Prudence toward fiscal matters has since been eschewed in favor of perpetual fiscal illusions that inflated the national debt.
American taxpayers have been hoodwinked for decades by fiscal illusions that lead them to believe that the cost they bear from profligate government spending is low relative to the benefits. The hoodwinkers have been many, in particular politicians in Washington, who lead the American people to believe that the use of debt is without cost. This is the essence of fiscal illusion, whereby the victims are ill informed and are taken advantage of by those who have control of budgetary matters and use debt to hide the true cost of their decisions.
Italian economist Amilcare Puviani first advanced the notion of fiscal illusion in 1903 in his book, “The Theory of Fiscal Illusion,” or “Teoria della illusione nelle entrate publiche” in Italian. Puviani sought to answer a simple question: How can a politician best use his powers of the purse to promote his political projects? Puviani explains that what is best for the politician is not necessarily best for the public. The motivated politician conducts his office by taking credit for all that is perceived as good about public policy, taking credit where credit isn’t due in pursuit of his self-interest and to self-promote.
James Buchanan, who in 1986 won the Nobel Memorial Prize in Economic Sciences for his work on public choice theory, advanced Puviani’s groundbreaking work in 1960, by tying fiscal illusion to the size of government, believing that politicians manipulate the gap between the public’s perception about the benefits of fiscal initiatives and their costs in order to grow the size of government. This can be done in many ways, including by the use of debt and by applying taxes that are less visible than those that are taken directly out of paychecks.
Central Bankers to Keynesians: No Money for You!
Politicians and the beneficiaries of their fiscal illusions for the past 80 years abused the Keynesian philosophy, relentlessly and dangerously pursuing the use of debt for self-aggrandizement. Today, the citizens of indebted nations bear a heavy burden and must begin repaying the debts. It is a herculean task, because the debts are mountainous. Yet, there is no choice, because investors have become intolerant of fiscal follies. They are saying no to Keynes, in other words.
Central bankers in the United States and Europe are also saying no to Keynes, pressuring their respective fiscal authorities to get their fiscal houses in order. They recognize that it is reckless to use their printing presses to monetize sovereign debt. Central bankers know that history is strewn with countless examples where the ravages of excess coinage debased currencies have wrecked economies.
Today, in a world where excessive debts are forcing nations to throttle back their spending, central bankers are once again under pressure to loosen further their stance on monetary policy. This is a condition that makes central bankers uncomfortable, as it further reduces their independence, which to some extent has been lost in the battle against the financial crisis. Central bankers would rather sideline their balance sheets and reserve their use for more pressing times, to put pressure on the fiscal authority to end its fiscal illusions and go back to the sort of fiscal prudence shown before the Keynesian era.
The New Steady State
Irving Fisher developed a theory about the relationship between nominal and real (inflation-adjusted) interest rates determined by borrowers and lenders. When borrowers and lenders agree upon a nominal interest rate, they have an expectation of inflation but do not know what inflation will be realized over the term of their agreement. As inflation is assumed to be unknown, the nominal interest rate has therefore a component of an expected real interest rate and expected inflation rate. This became known as the “Fisher equation” that says when expectations of real rates and inflation change, nominal market and contractual rates change.
Recently, St. Louis Fed President Bullard used the Fisher equation to identify two combinations of nominal rates and inflation known as “steady states,” one of which occurs in the absence of any shocks, where nominal rates remain in a “steady state.” In cases where the inflation rate is either very low or negative, nominal short-term rates can move to an “unintended steady state.” Figure 1 from the St. Louis Fed shows these steady states occurring where the Fisher relationship crosses the line representing the Taylor rule.
With the policy rates near zero percent in the developed world and inflation expectations now at around 3% (as measured by the five-year break-even rate on inflation-indexed bonds five years forward – a fancy way of looking past current inflation to where markets believe inflation expectations will be in five years looking five years out) global central bank rates (except for Japan) are currently in-between steady states as depicted in Figure 1. However, unlike what the Fisher equation would describe, even with firmer inflation expectations it has become less natural for nominal policy rates to adjust higher. When the sovereign debt crisis intensified, the construct of the policy rate became further embedded into the real interest rate demanded on government bonds. Since the debt crisis enforces severe austerity onto economies, a risk of deflation remains high and could increase expectations of higher future real borrowing costs. According to the Fisher theory, the borrower and lender would have to agree to a new nominal rate that could be significantly higher. With much higher debt levels and lower growth, higher nominal rates may carry greater risk of insolvency and cause financial instability.
The sovereign crisis has created a new steady state, one where nominal policy rates have to be low to keep inflation expectations higher so real borrowing costs remain stable. As Figure 1 shows, the new steady state would be around 0% to 1% nominal rate with inflation expectations in a range of between 2.5% to 3.5%, as opposed to the traditional steady state that prescribes a 3% to 3.5% nominal policy rate.
In normal times policy rates would theoretically be adjusted to 3% to 3.5% with some degree of synchronized tightening amongst the world’s central banks. In an age of private and public sector debt deleveraging, however, the new steady state aims to prevent deflation rather than inflation. Moreover, although some central banks have started tightening, the new steady state demands very low nominal policy rates stretched out over time, as well as a reduction in the synchronization of tightening cycles among central banks.
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No to Keynes...yes to whom?
Von Mises, Rothbard, Hayek, Schiff, Paul, Faber.
A lot of theory but no real world wins...I think we should go back to Ricardo and Adam Smith and some reflections about the trade balance and their link to jobs...
The only link to any job is someone producing something of value and needing some help.
>...I think we should go back to Ricardo and Adam Smith
Ok, good luck with that.
Enjoy Ricardo's labor theory of value.
I just read Rothbard...it wasn't apleasure trip neither...
Your trolling really needs a lot of work. I rate you 1 out of a possible 10.
I don't know of any good guides on trolling, sorry.
What I mean is neither in Rothbard's (nor Bernanke Jackson Hole speech and PIMCO's paper) a issue like today's managed imbalance by China's cheap manufacturing platform is discussed. No intentional trolling.
Rothbard and other Austrians have addressed mercantilist behavior. They've also addressed the problems created by making your own nation too inefficient to do business afford ably both through warnings about massive increases in the money supply and dimwitted government regulation.
The former, the U.S. has creatively vented off-shore for 30 years with "free trade" inflation that would have jacked prices into the stratosphere had Congress enacted trade restrictions, so the U.S. got the benefits of money printing = cheaper prices as wealth was exported in dollars and invested in Chinese (et. al.) infrastructure. This, of course, totally distorted the U.S. economy away from producing wealth at highly inflating prices, and instead to consumers of cheaply made goods from abroad. That the prices went down temporarily placated the reality that the U.S. swapped manufacturing jobs for Wal Mart and business doing "finance for the sake of finance". That exported inflation was recycled into the U.S. debt system, which itself is in an overpriced bubble, and asset prices that turned investing in the U.S. into a bloating price casino of stocks doing business in a totally mal-structured economy, vs. a value based system of acquiring cash flow at a reasonable price.
Rothbard, et al, tell you clearly that these sorts of distortions in an economy are inevitable and not sustainable, and redirect and economy away from producing wealth towards speculation on asset prices. China and its "platform" were greatly enhanced by the stupid economy and wealth destroying policies of the last 70 years.
(But China, despite its gains, is a horribly mal-structured economy, as well... I mean, talk about trouble when your policy makers have forced the economy to the beneift of those who export, and your #1 customer is a debt addict and soon to be deadbeat!)
David Ricardo and Adam Smith both failed to se the difference in value added pr work hour, and is part of our problem i economics today. Try read Fredrich List, Joseph Schumpeter and more of the other canon of economic history.
>David Ricardo and Adam Smith both failed to se the difference in value added pr work hour, and is part of our problem i economics
I tried to overlook your poor grammar and spelling, but your post still doesn't make any sense.
Sorry for my bad grammar and spelling. One hour in the manufacturing sector add more value than one hour in the service sector. All work hours does not yield the same across different sectors of the economy, so all models based on Ricardo's labor theory of value are flauded.
That's not why the LTV is flawed. Even if each hour of labor were priced equally, LTV would still be false.
LTV is false because value is not a property imbued in objects. It exists only in the mind of the appraiser.
Amen. Just ask the sewing unions in Paris during the introduction of the first sewing machines.
Or the guy who made shoes for horses as the first model T's came off the line.
Or the Union guy who lost his job because his union wage made it more efficient to hire a computer run robot arm to do his welding.
"LTV is false because value is not a property imbued in objects. It exists only in the mind of the appraiser." Yes i see your point, and agree. But what i was driving at is how modern economics has come to understand and use the ideas from the LTV through Marx, Keynes, Friedman et all, both red and blue. LTV were made to fit mathematical modeling. I think one of the biggest mistakes in political economy the last century was to buy all this crap.
Reminds me of what Eugene Fama finally said about his Efficient Markets Hypothesis:
"It's never been an empirical success..."
Jim Rogers.
You guys ought to check out folks like Steve Keen. Where modern econonics has become something akin to a religion (more like a cult), there are still some economists who know it is a science... and an imperfect one at that.
From Wikipedia: "His recent work mostly concentrates on mathematical modeling and simulation of financial instability".
It sounds like he's a positivist and an econometricist - someone who childishly plays with numbers. Akin to AGW climatologists.
This isn't the correct epistemology for studying economics. See "The Ultimate Foundation of Economic Science" by Ludwig von Mises.
Economics is basically human events, the story of people engaged in solving the problems of scarcity, and boneheads in positions of authority (government, politics, or business) trying to co-opt a personal benefit through the use of centralized power.
There is nothing scientific about this. No more scientific or useful scientifically than attempting to conjure up some formula on how many fraternity brothers at the Delta Tau house this weekend will get drunk AND laid based on input variables of beers, who showered, and number of female guest, etc. ad nauseaum.
The Austrians have it right: its Human Action is totally up in the air and can't be captured in any formula with 1) suspect input variables ala GDP and CPI that is 2) irrelevant by the time the data is captured.
The current batch of scientist economists are the blood-letters and voodoo shaman of our era.
>There is nothing scientific about this.
>Human Action is totally up in the air
You make it sounds like senseless chaos. Using praxeology, one can deduce economic laws, for example the law of diminishing returns and the Ricardian law of comparative advantage.
Ok... Let it suffice that general rules of thumb apply regarding time preferences, etc. But this whole price fixing the cost of money with a printing press because our formulas say we know best... that's complete and utter snake-potion.
But it IS senseless chaos. No economic theory works without an assumption of rational actors. How many rat ional actors do you know? I don't know any and that includes me.
Well, you certainly get a whole lot less of it (rational action) when the pricing mechanism is totally rendered irrelevant by the collective idiocy of all past and present central authorities.
On a honest economic foundation, you can get plenty of rational actors, while those who are irrational suffer the burdens of their irrationality on their own.
Much unlike our current swamp of excrament.
Mark my words, the shit winds are blowing, heralding one hell of a shit storm. And when that shitstorm hits, you better hope you've got a damn good shit umbrella.
And some nice boots.
And some hand sanitizer.
Maybe a shit boat.
If you understood praxeology, you'd know why all human action is rational.
But, you don't.
Who is that addressed to?
Small correction: rational according to perceived facts and assumptions. Garbage in, garbage out:
http://www.nazisociopaths.org/modules/article/view.article.php/c1/33
There's that, and there's the relativity factor. One man's old vinyl on the curb is another's treasured collection.
One man's policy for economic rescue is another's recipe for a certain shit storm.
"Using praxeology, one can deduce economic laws, for example the law of diminishing returns and the Ricardian law of comparative advantage."
Yhea but careful where you use the law of diminishing returns, in the manufacturing sector or the agricultural sector. The same goes for comparative advantage in a banana republic, or a industrialized nation.
Danger danger here we can start to see how IMF WTO GATT NAFTA etc hide modern colonialism.
Mountainview said
No to Keynes...yes to whom?Cliff Clavenism
Pardon me while I call total bullshit on this little gem from the article.
Central bankers in the United States and Europe are also saying no to Keynes, pressuring their respective fiscal authorities to get their fiscal houses in order.
They sure as shit are NOT saying no. Bernanke is THE central banker and that malicious evil genius came up and sold the government on the whole QE program.
I think Bernanke is primarily a disciple of Milton Friedman, not Keynes. (Although being a product of academic establishment economics, I doubt that he disavows Keynes.) My point is, he is charged with, and is pursuing a Monetarist policy, not a Keynesian one (which falls under the spending authority of congress.) Distancing himself at the present time, as he appears to be doing, from his Keynesian fellow statists in the gov't and academia allows him to paint the govnt as the source of policy failures whereas in reality both Keynesians and Monetarists are equally to blame.
Bernankes primary job is to keep the big banks from failing at all costs, regardless of what anyone says to the contrary.
Pimco is now realizing that their entire business model is at risk... and they are pushing for austerity (of main st and j6pk) in order to save their bond holders from taking severe hair cuts or going totally bk.
No amount of austerity is going to fix this debt overhang... it's too large and there is no driver for jobs in the US. Before this is over the US economy will be totally restructered, if the US still has a recognizable economy.
This depression will far worse than the great depression.
Get out of debt, if you can.
To put it bluntly, yes, that is Bernanke's primary function, to save the big banks at all costs. Talking austerity is a political ploy to point the finger elsewhere. TPTB are rehearsing their stories and arranging their affairs.
What about Neef and his Barefoot Economics? It's a no growth down to the earth economic model, something very much needed right now in this world of paper fantasy economics...
>It's a no growth down to the earth economic model
But, is it true?
>something very much needed right now in this world of paper fantasy economics
Shouldn't economic science remain valid for any world with human beings in it?
Well, people are trying. This guy, Neef, was formed in establishment economics in the US, but when he went back to Chile and Latin America he found out that all he was taught in the Uni didn't work in the ground. So he started to develop a new economic language and model that could reflect what he was seeing in the ground. It is science, but it's a different model.
Adhering to reality is not a yes/no proposition. Say no and, be smited. Say yes and, have a fighting chance.
The bottom line on the great LIE of governments economic stats is that GDP and prosperity is considered as the sum of productivity plus unproductivity where unproductivity is considered a positive.
This allows the FALSE statement: The more we spend, the better off we are. From the perspective of tax eaters, this is true, they don't give a crap, they get a percentage no matter what is done with the money. War is the health of the state.
THE TRUTH IS: GDP and prosperity IS productivity MINUS unproductive activities.
EASILY PROVEN (Keynes refutation):
http://www.nazisociopaths.org/modules/article/view.article.php/c1/32
So, if you want prosperity back, CHOICES must be made that encourage productivity and discourage unproductivity, plus, the economy must be viewed and analyzed in terms of productive and unproductive activity being completely separate and different. Sort of like matter and anti-matter, anhilating each other, on contact.
And, correct CHOICE equals SURVIVAL which is why so much effort is put into confusing YOU:
http://www.nazisociopaths.org/modules/article/view.article.php/36
So, we need to go from "Obey tyrants , OR ELSE", to "Obey reality, OR ELSE"
Not "yes" to whom, "yes" to reality. "no to whom".
</heresy>
>Adhering to reality is not a yes/no proposition
How does one not adhere to reality?
>Say no and, be smited. Say yes and, have a fighting chance.
What's the third option? You said it wasn't yes/no.
Is there any meaning to the drivel you are posting?
How does one not adhere to reality?
By assuming, for example that "something from nothing is possible". Then, despite your intent, "shit happens". Reality (the natural laws of action leading to inevitable consequence) is not instantaneous, consequences take time to manifest.
Because of this, you can temporarily run amok, raping and pillaging, contrary to the greatest natural law of all, mankind's collective will to survive. Then, by the real trail of your havoc, after a time, you will be caught and face the consequences. This is independent of how big, powerful and immune (to reality) you may assume yourself to be.
Be careful, "Dr.", in public perception is rapidly becoming "educated to idiocy"
"Is there any meaning to the drivel you are posting?"
To your "reality", apparently NOT. You have also triggered my TROLL alarm.
>>How does one not adhere to reality?
Ask the Tea Party, for example. Conservative Christians are another very good example.
Faber
"Ron Paul looked upon as an odd ball because he's honest"
ideal portfolio
25% emerging mkts
25% gold
25% cash and bonds
25% real estate
6 mnth outlook for gold
Gold peaked at 1900 not a surprise to see it bottom at 1600
Fed strategy Bernank did the right thing but an explosion in m1,2 and 3 there is a slient monetization going on
interview still underway on Bloomberg radio
1600 Gold based upon what?
$1,600 gold due to no QE3? Maybe. We havent suddenly printed any less however.
In keeping with my "it's the technology, stupid" methodology behind gold prices, the advent of wide spread calculator use coincided the first flight of barbarous relics into the stratosphere, the advent of internet may just see escape velocity.
I'll be absolutely stunned [and happily somewhat poorer] if we don't breach the all time inflation adjusted high on this "cycle", what scares a tulip farmer like myself is could this time be different?
25% emerging mkts( Name a few that are not EAT up with RISK pls), anyone.
25% gold( CHECK+)
25% cash and bonds(UH, who's cash, and who's Bonds?)
25% real estate ( UH, where?, Miami???)
>
I thought the key highlight of the Bernankster's speech was this little gem that came across the DJ newswire- Bernanke: Fed policy can't do much for economy's long-term trend.
Slow news day, eh?
As opposed to the past month? Yes
Just pointing it out. It always weirds me out whenever there's not endless bad news/doom and gloom porn. Not particularly on ZH, but just across the wire.
Makes me think that this week's going to explode. I dunno, it just always seems to be that slow news days/not a lot of developments begat the polar opposite.
Dont worry, the news will explode into high gear again shortly.
Not sustainable, as the energy input required to mine, prepare, build or utilized said energy source (burn, adsorb or react) for energy in order to drive such an economic steady state is impossible. There is a very real cost for creating captial without adding real value to the furture economy. It insures deflation in everything you don't need to survive and inflation in everything that you do need to survive. We have been very bad at managing our resources as of late, this will hinder real productive changes for years to come. hedge accordingly.
thats bullshit. Technology will render oil obsolete is a few decades
I hope so. That downward curve doesnt look like much fun. Wish we would start honoring science a little more as opposed to rap stars. Maybe I just belong in some parallel universe.
LOL, I agree, oil will be obsolete because the energetic cost of retreiving the oil will not be worth the energy you get out of burning it. My brother has been in oil and nat gas for 20+ years. I have consulted on a number of problems associated with recovery. All the big oil companies are heavily vested in the biodiesel arena. Name the technology that you speak of and the up-front energetic costs to get said technology up and running. Spitzer, you are such a fucking troll. Don't be, it really takes away from the occasionally good economic insight that you have.
Technology is what it is, but even the sun goes out one day, so all that really matters is the quality of life, and that won't improve until we get massive human deflation. So sorry, two laws of thermodynamics are working against you, and the fact that over 30% of all the fossil fuels we burn are done so simply to feed us. Sorry, crop rotation with legumes won't feed 7 billion people.
I'll give you a point for being a technocrat and my company loves taking your money. Thanks for supporting biotech!
If food inflation continues at a pace where it makes sense to produce some of your own food (we are already there, in my opinion); then, you will see a lot more food produced in backyard gardens and such, as it will be neccessary for financial survival. If, as a result, a substantial portion of food is produced on residentially zoned land, the demand for petroleum should fall in step with the rise in local food production.
I resent the idea of feeding the world with nutritionally and spatially inefficient corporate farming models. Raised beds, greenhouses, and hydroponics can enhance the efficiency of agricultural production in terms of cost, land, yield, preservation, transport, and labor. My point is that if you break down food production to the individual level, the need for petroleum disappears from agriculture.
I usually like your posts, but subsistence farming is far more efficient than agribusiness has ever dreamt of being- and it disturbs me that people keep shelling out for the GMO crap like they do. People are ramping up food production in my 'hood; but, I live in a predominantly redneck area. Just don't count out the victory garden (especially those run by motivated / resourceful people).
Time to leave this "Earthly" cradle then; the surface of a planet is NOT the correct place for an expanding technological civilization.
Well there you go. Based on that post, I'm sure as hell convinced as I'm sure everyone else is.
maybe so but what are we going to do in the meeantime
oil to $250 within 5 years not including inflation. we need your oil free tech now
>oil to $250 within 5 years
Do you have a crystal ball? Because the speculators risking their fortunes on forecasting the future price do not.
Diminishing returns...
That's why the "peak oil" fear mongers are so irritating. Almost all energy on this planet comes from the sun (even uranium, forged in the heart of an exploding star) and oil just happened to be the best way to get to it. Quantum leaps in direct extraction- solar energy- are occurring, and will soon reach a price point where it competes with oil. Solar requires decentralization, but new paradigms of distribution and novel approaches to "mini-power plants" will happen if government will just get the fuck out of the way!
Realistically, what i think is going on is the Governement and the Fed are trying to engineer a soft landing for US living standards.
I suspect this task is impossible, but i believe they are trying.
Filling the mattress with quantitatively eased money?
Thats the Chinese part...
Actually I agree that was the plan.
However, their models were were too linear. And did not take into account the ways in which their solutions could be exploited.
There you have in two sentences the entire history of this credit event and the reason why the TDs are right to assume that a reset looms. You could read a million words of financial analysis and at the end you would not have any better understanding of what has happened and what is happening and what is going to happen than those two sentences will give you. Salut!
Nor do they really understand exponential functions tied to the growth require to drive their fantasies.
This...
"However, their models were were too linear. And did not take into account the ways in which their solutions could be exploited.'
Technically, that is what the government is supposed to do. The one point though that sticks in my mind is that not one major conviction has happened against Wall Street insiders. To me it signals complete system capture (either coorperative or hostile means) and raises my concern that soft landing is not possible.
Not sure what is worse either.
Nope Lizzy I disagree, this was a planned implosion. The implosion part is accomplished already, just waiting for the staged event to provide the cover fear chaos and panic to pull the rug out suddenly.
Ultimately it is the beleagured tax payer that shoulders the burden of this epic 'folly' series and effectively will not stop until the people say no - loudly and adamantly.
The Chairman has painted himself, and us into a corner that leaves no escape route without creating a bigger mess than we were already in. Turn out the lights, the party's over.
Exactly as planned.
Better go get that Lazlo "Kermit" Biriyni ruler and draw a straight line boner off last week's lows.
Just in case....
LOL.....
Not a big surprise when you consider that most university teachers in economics and students have only heard of Keynes in their courses all their lives... and since they have ``degrees`` they know it all... so they don't go looking for answers or different approaches to economics... only the fringe does.
Hell I talked about Austrian economics in my economics class and nobody knew what the hell I was talking about, not even the teacher... and we were 200+ in the class...
People are frigging idiots, believing everything the teachers tell them to, never thinking by themselves. Those who do are ``crazies``...
This is the kind of people running the economic system... a bunch of sheep who never thought by themselves.
Hell they keep teaching that American bonds are the ``safest place in the world`` to put your money... and that how Bernanke is a great guy and the like...
I minored in economics in the early 90's and not once heard anything about AE, Mises, or Rothbard. Menger was discussed of course, but only to introduce the idea of the margin. Not surprisingly, the only allowed alternate theory mentioned was Friedman.
Years later, it took an online friend to ask me one day, "Hey, do you ever go to LewRockwell.com?" When I found out that there was actually a coherent school of thought in both the economic and political spheres, I was floored. Meanwhile, I'm still paying on student loans for my non-education in economics.
NotApplicable, I feel ya. Did the Econ minor too, and when I discovered AE via LewRockwell I was floored. Finally, economics made sense! I went from being a "soft" socialist to anarcho-libertarian in a few months. All of my history classes and poli-sci theories were turned on their heads, but the world finally made sense.
Listening to these Keynesian fucktards blather on about their models and econometric bullshit makes me sick. They can't predict the results of their actions, and are constantly surprised when their intricate models and carefully constructed equations produce predictions that are 100% wrong. Then they do the same goddamn thing again and again, are again surprised when it fails.
Too bad they've reached the endgame. Their fundamentally flawed policies and constant currency debasement have sown the seeds of destruction for their rigged system, and when it fails (spectacularly, and virtually overnight) the Austrians will be able to pick up the pieces. It will be wrenching and dangerous, and the world will suffer, but the dawn will come and the world will be a much better place after the detritus has been swept away.
The Endgame is scorched earth, by design. You really think the Brotherhood of the Snake would break the world purposefully just to replace the world order with something sane?
Do you think that they created all of this chaos, suffering and meaninglessness to end up letting us implement what would lead to healing and utopia?
Fuck no. The end doesn't justify the means; the means are the end. Once you really understand this you will start getting a clear image of where they're leading us.
Hint: this present moment is part of the very long-term plan. Sure, grains of sand did pop up (I'm quite sure they couldn't have foreseen the information age) but the gears are still running smoothly. The globocrats are salivating to implement their One World Company, limited and the high-level occultists can't wait to expose their True Doctrine of Lucifer to finally enslave us from the soul down. They're not going to let any random well-meaning goyim fuck up their plans by actually wanting to repair the world...
Research some deep politics and history. The coincidental (mainstream) view of history is shit; it doesn't explain anything. This happened, then this happened, then this happened. Why? No clue. Conspiratorial history is the one that actually manages to link events in a causal, interlinked sequence of meaningful events. Hegelian Dialectics exposes the way hidden actors influence/control the world narrative through shaping events, conflicts, persons, corporations and other artificial entities, and even cultures (think christianity/zionism vs radical islam, left vs right paradigm, etc) to embody both the thesis and antithesis whose confrontation will inevitably lead to the intended result as a synthesis.
The rabbit hole goes deep.
If money really did grow on trees, if you really could just print your way out of trouble, don't you think it would have been tried long, long ago?
Truth is they have, and it has never worked. In fact, history shows that the longer you delay the inevitable, the worse it gets.
Prepare for it, try to protect those most vulnerable, attempt to soften the landing, but d o not pretend to have the hubris to think you are bigger than the problem and you can change the tide or the length of the day by simply changing the time on the clock.
see, in the old days, you could ride in a horse drawn carriage at 25mph. No seatbelts were given. If the carriage crashed, you could survive.
Now that' we're in the 21st century, Bernake is saying, we have a 200mph super car. Since in the old days most people survived carriage crashes without seatbelts, we can, through historical linear interpolation, drive this modern car at 200mph into a brick wall with no seatbelts and everyone will survive.
He knows it cos he wrote his PhD thesis on it.
So now that we have this magic computer that can create money at zero cost, he thinks the laws of money have disappeared.
Aaah, the folly of the arrogant professor. Unfortunately he won't just kill himself, he's going to take us all with hm.
Pimco just doing thier part now to focus blame on the politicians and away from central banks now. Political crisis act of the grand play is right on time.
'The politicians messed it up'...yea funny line, the politicians the asspuppets of the central banksters.
They're doing their part to escape their past overly cozy affiliation with DC, period. They done went and sucked everything possible out of that open sore.
This is a VERY slick video on bank collapse.
http://www.youtube.com/user/Snordelhans#p/u/8/JqgDzEqdvb0
Argos, that was AWESOME. Chilling, disturbing, disconcerting...but awesome nonetheless. I fear(?) that the creator is spot-on in his assessment- the inevitable outcome of these bankster policies is death and destruction. Too bad that D&D will be directed at their corrupt asses by an enraged populace.
+1000!!!
Faber
If somone wants to meet with me and I am in Chiang Mai they can find me at Linda Bar at 6pm where I always go for a cocktail at the end of the day.
PIMCO going on as if its a 'battle of philosophers' LMAO, look this was DESIGNED!
Ive been writing this here for about 2 years now, this was a planned demolition operation, with the craziest evil scientist experts they could come up with to ensure we get in a depression and collapse that can not be gotten out of.
We didnt suddenly find ourselves in economic difficulty, people have been warning about insane Bretton Woods monetary policy, FED central banksters, bubble blowing, everyone knew it but those who just mind their own business!
Mad professor Bernank the 'expert on depression', not selected to get us OUT of a depression but the top expert in getting us into one with no way out except the overall plan- 1 world govt with 1 world currency. Even today you can already see that as the conclusion everyone is looking to.
+ the greenie....
Gentle Ben was appointed to the single most important high visiblity position within the paradigm, the plan, design of establishing the "NWO", One World Gubamint, Currency, etc., or whatever folks want to term the future condition.
His actions have been a necessary fundamental cornerstone to permit the mass looting of the industrial societies, world wide.
Stop and think about it. The world's most powerful central bank (caretaker of the world's reserve currency) owned by it's member banks, with no effective oversight, no audit, able to coin money electronically at the stoke of a key, capable of wiring any funds, any amount without question to any destination on the globe, and in large part ensuring the flood of free funds to the then bankrupt entities which cratered the world's financial syste to do as they see fit.
That's about as powerful a position as can be concieved until one begins pondering the spiritual.
He represents an important cornerstone in the whole drama unfolding before our eyes; the unhidden and strangely unopposed looting of the public coffers for private benefit by a select powerful few.
And if he has not been indstrumental in such, he has abdicated his responsibility to stop such as the head of the regulatory body of the largest and most powerful entities for which he has oversight responsibility.
Further.... every time a hew and cry is raised concerning public angst and awareness of such concerns, Congress ensures it dies a slow, quiet death. Complicit or again, irresponsible? (Not forgetting the money creation and transfer ability.)
Nope, likely not a "chance" appointment.
Yes, every thing is fine until we ask the question: how does the Federal Government pay the bills (at least the 40% we currently do not collect from taxation)?
I suspect the answer is: "we print it".
Therefore: hyperinflation...
or we could just undergo horrible deflation...but what politician could resist picking up the phone and saying: "print or I'll find someone who will". I'll bet even President Perry would make that call, treason or not . It is simply in the blood of the collective...we will not die by deflation given ANY choice.
qed: buy gold
First day in over a year where deep cyclicals like U.S. Steel outperformed pretty much everything else.
And its only the first day off the lows.
Robo hoping a hindsight trend is forming...nah, just more pump and dump from here on out. Round up the sheeple, get em in the pen, whack em on the head with a mallet...do it all over again.
The markets are dead kid, youre just looking at a slaughterhouse now.
Was that a last gasp?
I'm not so sure using taxpayer debt to fund insolvent banks and provide 100% of all their profits and bonuses, thus also propping up bank stock values, is Keynesian.
If Keynes knew what was being done in his name (erroneously in most examples) he would be turning over in his grave.
Keynes was a real human, living in the real world. He knew exactly what he was doing, which was providing intelligent sounding sophistry in order to serve the status quo, in order that it serve him.
Intelligentsia 101.
To believe that he believed his theory would ever be put into practice is laughable on it's face. His job, is the same job that Greenspan and Bernanke have, which is to convince the world that criminals should be in charge of the money supply.
To put it in the engineering idiom, we have exceeded the design limits of Keynesian Economics. It is failing.
Cordially,
TwoHoot
This is laughable. It's always "Keynesianism", yes that one with an E for Eeeevil. But it's never Milton Friedman, the neo monetarists and the keynesian synthesis...
Always cheap reductionisms to give the serfs a bogey man to hate and not think... I'm so tired of this attitude.
No kidding. And really, are we not really talking about rehashed John Law idiocy when it comes to Keynes, Chicago, monetarists, etc., and all the Neo-popular Ph.D. derivatives thereof these days?
Friedman was just Keynes set on cruise-control (2% target), with no reverse. Now, I can see how theorists might get all wound up about these details, but in meat-space, they are of no practical difference. It's just another example of arguing over how many angels can dance on the head of a pin.
Or to put it in your words, "Always cheap reductionisms to give the serfs a bogey man to hate and not think... I'm so tired of this attitude."
"the core principle of Keynesian economics, which is for government to increase its spending when aggregate demand in the private sector weakens and stymies job growth."
- this 'core principle' needs to add a footnote: 'for this to work the government needs to be solvent and not already in debt up to its ears!'
Actually... What really matters is you can't have been doing it in ever-increasing amounts for 100 years before you permanently disable an economy's ability to shoulder all the malinvestment, engineered by the miracle of eating and redistributing the national economic seed-corn -- which is really all Keynes is and ever was.
The Authorities long ago crossed the Rubicon, and for the last 20 they've been constantly reinventing ways to kick the can further down the road. Economic leg too week, and can of economic rot to heavy to succeed much longer.
I love the reference to Alexander Hamilton. What's missing there is Robert Morris who purchased a lot of the worthless bonds in the market, only to have his buddy Hamilton commit a system of federal taxation to repay the bonds that Morris purchased. First case of bond market front running.
Hamilton = scum. Got his, he did.
Keynesianism is great. Everybody loves it. The politicians can pay off voters. Voters get their boondoggles. Useless intellectuals who cannot obtain a sensible salary by actually serving other people get tenured jobs. And I love the utter nonsense and mindboggling inconsistencies we hear everyday from these Keynesians: Broken window fallacies galore, "we owe it to ourselves", WWII ended the Great Depression, in the long run we are all dead, spending multipliers, printing money, better 5% inflation than 5% unemployment, government spending is better than private spending, when fiscal stimulus does not work it proves that it was too little stimulus, fighting aliens, nobody cares where the money comes from the government spends, paradox of thrift, an economy grows because of consumption etc. etc. etc.
Been reading the great Hazlitt have we?
http://www.fee.org/pdf/books/Economics_in_one_lesson.pdf
Indeed a great book that I can recommend to anyone. But fortunately, there are many more sources that convincingly reject the Keynesian fallacies.
Well put sir. I am sure that you also recognize that the "growth" you speak of requires more and more energy input and if capital is not allocated wisely (as in the current liquidity trap we now have) that requirement can grow exponentially.
These near-zero interest rates are allowing governments to run up huge debts and setting us up for a huge catastrophe eventually. So long as interest rates remain low, a government can service a debt of 100% or even 200% of GDP with no problem. But if interest rates suddenly shoot up to 5% or so, the government will have severe problems in making debt payments and will be forced to default or inflate, in which interest rates would rise far above 5%. So pursuing a ZIRP policy for an extended period allows an unstable situation to develop which must lead to a spike in interest rates.
What could trigger the upward spike? One thing could be large sales of government securities by a major holder (e.g. China or Japan in the case of the US). Remember that with zero interest rates, there is very little incentive for people to loan money to the government. If a better investment comes along (say in an emerging market), there would be a very strong temptation for people to cash in their near-0% government securities and switch over into that new area. And even if no better investment comes along, why should I leave my money in an investment that has some risk but yields 0.1%? With long term government securities, the there is a risk of future inflation. And with short term government securities, there is the risk that they would be unilaterally converted to long term securities when a crisis hits. Why not just sacrifice the 0.1% yield and keep my money in a safe-deposit box or private vault?
That is what I am doing.
Seriously, a banknote (in the USA a FRN) is effectively a zero term zero coupon government bond. If Treasuries yield zero, convert to cash and put it into a safe deposit box (YOU own the contents, not the bank). If enough people did this we could bring the end game on more quickly, and that would be a good thing because the quicker the end comes the smaller the mess that will have to be cleared up.
I´m sorry. Here I thought that PIMCO was in on the ponzi scheme when in fact they recent it as much as me.
This is the key...when rates rise, disaster will strike.
These shameless political econo-trolls (Keynesians are more politician than economist as they advocate massive spending as a means to win elections, all notions of fiscal sanity be damned) are more dangerous to your children than any other form of human species. They would gladly sacrifice $6 trillion to keep their party in power.
The seemingly benign task of reading their polluted machinations sends me into near apoplexy. I have no words to express the disgust I have for these creatures, who would suggest we mortgage your children's future via absolute dollar destruction, so that their side might retain a few more House seats in November.
Without words, I will resort to the only thing I have left: raw emotion. F*ck you Brad Delong. You are the most irresponsible, despicable Keynesian econo-troll I have ever come across, including your cousin Krugman. May you and your kind (Keynes) lose power and may you personally get buried under 2,000 pounds of Ding-Dongs inside your Berkeley headquarters. And do not share the processed chocolate delights with your soulmate Christina Romer, as she, like you, has had plenty already.
http://dailybail.com/home/and-you-thought-bernanke-was-bad-brad-delong-fantasizes-abou.html
Amen Daily Bail!!! Fuck DeLong and Krugman and the Bernank- criminal sociopaths all around.
The Daily BELL is one of the best sites on the 'net for exposing the machinations of these parasites.
You should check out the video Argos posted upthread- Black Swans are circling...
Keynes's various economic observations were proved cogent and well reasoned. See, for example, his work The Economic Consequences of the Peace and compare those observations to how things turned out.
As a general observation, Keynes felt monetary expansionist policies (advocated by Milton Friedman and being used by Helicopter Ben) were less effecient than direct government spending. Its hard to argue with Keyne's observations, as shown by the impact of QUE2, which mainly served to make wealthy folk wealthier. Ferrari had a record year and Tiffany's is running strong.
Its very strange to read the RW polemic towards Keynes. Obviously they never read his works. Because they sometimes deride Keynes, then advocate the same general policy ideas he espoused, and blame him for Republicans doing something quite the opposite from what Keynes recommended--all in the same message.
Zero Hedge previously published Keynes's letter to FDR. Even while Keynes was alive, people were misusing his name, ideas, and observations.
Not sure why anyone who knew some basic economics, read Keyne's work, or failing that at least had read Keyne's letter to FDR, wld find any issue in Pimco's comments about how Government's misuse his ideas.
And since the economic factual situation is different now, no one can be sure what Keynes would recommend. But his observation that direct government spending usually has more impact than increasing the money supply has proven usually correct many, many times. Keynes warned AGAINST inflationary policies opining that the dangers from inflation were usually worse than those associated with deflation.
Very good Lex. Not often do we find on ZH anyone with the slightest hint of the real Keynes.
+10.
May I add that Joan Robinson as a Keynesian propounded before anybody else in her economic research that the over-riding trend in capitalism, EVEN in a market economy, was to Dominant position of Oligarchical structure, which produced the opposite efect to competition. Prices went up instead of down. It was inevitable as competition and innovation were then stifled. She proved it on factual evidence over a cross section of economic activities. She was derided in the sixties as a neo Marxist. She was a maverick who had her pro MAo spell. So she fed that line of thought through her avowed political leanings. But her research was beyond reproach. Her work is spot on as the events have proved once again over the last 30 years as in the past during the depression and pre depression days that she studied.
Keynes is no more to blame that fucking vanilla ice cream!
if it was Austrian or Egyptian economics at play the EXACT same outcome would have been had by ALL!
CORRUPTION!
Everyone wants to pretend that the wool was pulled over their eyes so that they can hold themselves innocent of the Crimes they have witnessed.
Economic Theory did NOT! Land us here.
Corruption did..
and for al of you dumbass hicks who dont know any better and / or the difference.. should go vote for Bush again and pray that the end comes swiftly so that you do Not! have to suffer your fat, hairy wives any more.. miserable fucking people that the majority is in the United States is a fucking embracement!
Economic theory enabled corruption, Jolly Wodger.
Your spelling is an embracement.
;)
+1 ROFLMAO
I could use speel checkerestly ounce in a whille!
Well, I don't know about you, but I've had my fill of fucking vanilla ice cream!
It's time for a change.
Chocolate.
Of course, I used to say, "If fucking vanilla ice cream is wrong, I don't want to be right."
I can't get that image out of my mind. Cone or cup?
Ahhhemmm,... cough, cough...
Hasn't PimP-Co - by virtue of being the biggest dealer/gamer in Gov. debt - been a direct beneficiary of Keynesianism all these years? And now its got religion?
To wit: PimP-Co, forever & shamelessly talking its book, sez "citizens must begin repaying the debts. It is a herculean task, because the debts are mountainous"
And what if we DON'T? You gonna send scawny Bill Gross to beat us up?
Better look out - here's Billy! LOL!!!
Eff you Billy G- and the toupee you road into town on! LOL!!!
does this mean that bill gross is done shaking hands with the gubbermint?
Keynes has not been followed, just the parts that are easy. But the real idiots are those who believe that since we did not follow Keynes that Austrian psychology is a good substitute. Freudian spirits are not the essence of equations/premises/conclusions but boil down to anal retentitveness. The worst part of the anality is that this is also attributed to God's will.
God's will? Well, I prefer 'shit happens,' as it fits nicely into Mises' Regression Theorem.
Care to provide a real critique of AE, or is the idea that it "isn't Keynes" all you've got?
Great article but it is a bit out of whack on inflation expectations. The relatively low inflation numbers are 'average' inflation. Myself and others argue that we are in a biflationary collapse, where commodities and necessities inflate while housing, assets, wages etc. deflate. The net result can be zero inflation but at huge cost. What isreally needed is a biflation index, but that will take some thinking.
In short, the only way to change the political Ponzi scheme is through some sort of civil war, which is already in progress just not called that. What will eventually really shake the system to the core is when some sort of cybercurrency lkie Bitcoins comes along and wipes out the central Banks. Maybe call it a cold civil war. http://www.futurnamics.com/civilwar.php
Works for me.
Classic! LOL!!!
Deficit spending on downturns is Keynesian ... but balanced trade is also Keynesian.
The current problems can be heaped on Friedman (trade deficits don't matter) as much as on Keynes.
Gross said, "Central bankers in the United States and Europe are also saying no to Keynes, pressuring their respective fiscal authorities to get their fiscal houses in order. They recognize that it is reckless to use their printing presses to monetize sovereign debt. Central bankers know that history is strewn with countless examples where the ravages of excess coinage debased currencies have wrecked economies."
What is he talking about? There are only a small handful of countries without negative real ineterest rates.
Re: "What is he talking about?"
Billy boy is tawkin his book - make sense now?
ROFL, here comes the calls to pay off the fraudulent debt.
The debt won't be repaid. Only idiots want to repay it. Although there are sections of it that can be, the fraudulent portions within it...since it's not 14.x trillion in a single batch...is not to be repaid. Although the more we mix good debt with bad, good debt will go bad. So the faster we start, a lesser amount of legitimate debt is caught up on the shitstorm. The clock is ticking.
But here are the assholes saying the fraud they all benefited on the way up, now they have to switch gears to Austrian dogma, pay off the fraudulent debt, so they collect on the way down. Where is the assessment of whether or not it is 'legitimate'. Hamilton was talking about LEGITIMATE debt. Because they had rules dictating what kind of debt could be taken on.
You kind of forgot that point dumbass PIMPCO
It's a false paradigm
Austrian = Keynesian.
Keynesian = Austrian
Because BOTH are monetary schools of thought, both are filled with their own dogmatic bullshit that only enriches the banksters at the expense of the people.
Monetarism is the enemy. ALL FORMS of it.
The debt is above the people under any MONETARY school of thought. Fuck that.
Glass-Steagall...and wipe away the fraud...fuck Austrians. fuck keynesians. fuck monetarism.
The grass isn't greener on the other monetary side. But every Austrian would have you believe that. Sorry, your shit stinks just as bad as Keynesians. There's just a whole lot more Keynesian manure in the cow pasture right now.
We are NOT to be monetarists. That's the American way. Monetarism is antithetical to America.
Don't cut for fraud
Don't print for fraud
Don't tax for fraud
Don't sell gold for fraud
Fuck Pimpco
Bitch slap that ho with Glass-Steagall
Does anyone remember HOW they collected taxes? Hint: Reagan did away with this policy like the dumbass he was. Followed by other dumbasses like Clinton's NAFTA. So on and so forth. Even now they want the South Korean and somewhere in Central America...(that one is to fuck china over...within the MONETARY game)
TARIFFS
You know, what we had in place to protect our industry, and allowed us to foster the greatest manufacturing base the world at that time had ever seen. All impossible without TARIFFS. So what has happened to our industry since we ditched this approach? It's dissappeared. Makes sense huh? If not, get a copy of hooked on phonics.
*side not....what country has tariffs and has replaced us as the manufacturing capital of the world....hint: CH__A .
Answer: China
So now they want FREE trade, and to pay off the debts...except the debts are FRAUD. But we have to forget about that says PIMPCO.
So instead of paying off legitimate debts through excise taxes and tariffs. It's obvious we're still going to have taxes, although after the fraud, I bet they could go down for all but the richest and the corporations. But that debate of how much lower can only take place AFTER we place ourselves into that position. Will the Colts sit Peyton Manning game 16 of the regular season? I don't know, we have to get to week 16 first.
Pimpco wants us to pay off fraudulent debts without tariffs. Of course they'll be for lower corporate taxes as well. Just feel the strangling of the gov't in the bathtub...not get rid of waste, but get rid of spending, whatever the cost.
Gee, looks like is proposing policy that is as much different and as wrong (in another direction) as Keynes (or his offshoots) did. For their own anti-american dogmatic fallacies.
Austrians and Keynesians...both monetary dipshits.
Oh and fuck Adam Smith. He was a dipshit monetarist. From Catholicism came all the protestant religions. From Adam Smith, came all the monetary religions.
American Credit System under Hamilton was a fresh and different take based on a PHYSICAL economy and manufactures.
Where the federal gov't EMITS credit for federal projects, not BORROWS from banksters so they get a cut. Does this get paid back? Yes, just not to banksters. It gets retired, as it doesn't need to circulate endlessly in search of a spot. When the payments of debt don't get rolled over into other investments....what happens to the inflationary impact of emission of credit? Beuller? Anyone? That's right, it pulls it out of circulation, reducing the inflationary impact. Meanwhile....the REAL GAINS of the project....REMAIN!
Some of it can be forgiven in select cases, but generally not. Plus federal credit is not done for idiot reasons, thus you aren't getting federal credit to create derivatives, or buy Apple, or crap.com. No federal credit will be used to buy Sino Forest.
So what is created with federal credit emission?
REAL WEALTH creation...like mag-lev, NAWAPA, fusion, fusion arc, NASA, desalinization, so on and so forth. Real projects, that bring real wealth, and a benefit to society for decades, which private business can hook into and profit from for decades.
Again, federal gov't emits credit for REAL WEALTH BUILDING projects that private business can hook into. If people want to buy Apple with borrowed money, private banksters can lend them that. But under Glass-Steagall guidelines. Not a zillion to one leverage of funny money so you can have 100x the futures contracts of someone actually wanting to take delivery of a commodity thereby controlling the price. Of course most if not all of today's banksters would be bankrupted, but hey they are already broke...they're just trying to drag the rest of the world with them, and extract blood for fraud.
Foreign trade paid through excise and tariffs. We also have other taxes, so it's not like there would be a revenue problem, even with lower taxes for the regular people, because the fraud is what is strangling us. It's not social security. Medicare can work, although the blood hmo's need to go. Hill-Burton standard. What builds these hospitals that can be used for decades? Federal Credit Emission. Thus the part of the cost of healhcare related to constructing facilities, IS NOT prey to wall street's grand real estate pump and dump. There are quite a few ways things can be done to lower the costs in this fashion. It's not fucking hard.
So these in some cases already aren't and in other cases won't be the cause after a few fixes of our problems. It's the fraudulent debt, foisted on us by our fraudulent monetary structure. Get rid of it.
We can produce what we need here. Many countries can and used to do that. Globalization was a scam. It was imperialism under a new, friendly name that had great marketing numbers, with all the disastrous consequences of imperialism. But the plebes would have to relearn that...in between then and now, their clutches dig deep.
Of course trade between countries continue. But we don't need every country buying their food from a few companies. We need the world fed by each country growing their own food, because the means were created for them to do so. We don't need one country building all of one item. Countries that can readily produce what they need with a few projects, should be able to do so. We're not talking about making bamboo baskets in Finland here people.
Why should 3rd world countries buy their food from us? Because it's 'cheaper' with free trade? Until it isn't. They destroy the internal capacity to make food, prices go up, and there is no flowback into internal production via vacuum tube thinking idiots who say people will start replanting food because it's cheaper and the market will dictate it. Because the people are in ruin and can't get what they need to start that back up, not to mention all the lost skills the population then doesn't have. They need to raise their tariffs, and the credit must be made to them to rebuild those rice paddies. It will be a process, so you do things wisely.
Same thing here. People bitch about how if we raised tariffs, things would be more expensive or we wouldn't be able to get it because it's made elsewhere. That's what free trade did to us. We didn't just become fraudulent debt junkies. We became addicted to cheap imports that sacrificed our own industry. So we'll need to rebuild these. Not everything, but lots of different industries can return here.
It's not that fucking hard. But it all starts with Glass-Steagall. That rids us of the fraudulent debt.
PIMPCO is using 1790's laws of what should be paid off, with 2011's rules for issuing debt. They ARE NOT EQUAL.
The founders did not think we'd ever acquire debt in the fashions that we did. The debt THEY were talking about was LEGITIMATE debt. Not this fraudulent shit we are neck deep in. For PIMPCO to forget that makes them just as much of an idiot as any Keynesian. But hey, it serves a purpose for them...right?
Once the fraudulent debt is wiped, we can pay off our LEGITIMATE debt. Never confuse the two. Which of course, in the grand debate is NEVER DIFFERENTIATED.
We add all debt together as if it was all the same. It isn't.
But don't tell PIMPCO, they might have to switch their operations a bit.
We're not going to get rid of one fraud, by starting another. By another incorrect MONETARY interpretation of an ANTI-MONETARY Hamilton policy.
Glass-Steagall (world wide)...but we control our own implementation
American Credit System (world wide) but we control our own implementation
Fuck Pimpco
BRILLIANT Jmc888! Effin Brilliant!
Particularly liked this snippet: "But here are the assholes saying the fraud they all benefited on the way up, now they have to switch gears to Austrian dogma, pay off the fraudulent debt, so they collect on the way down"
And, last but not least, this one:"Fuck Pimpco!"
JUst about sez it all folks ! POST OF THE YEAR!!!
I'm saving this sucker!
If you fukk monetarism, if you fukk fractional reserve banking, if you do ONLY one to one trade deals, you are back to precapitalisitic world. The whole thesis of capitalism is time value of money and allocation through investment of today's wealth to create tommorow's greater return, based on a risk and return evaluation scale to do capital resource allocation. This needs monetarism and fractional reserve banking and transferable paper IOU's so that liquidity increases. Our problem is not capitalism per se but the sterile ponzi of replacing normal business cycle by short term manipulated bubble cycle. Also we need a paradigm change away from material wealth to immaterial wealth creation as yardstick of well being in a resource constrained world, which allocates material resources to bare necessity needs first, and conserves rather than wastes precious reserve of nature. Our new frontier is finding unlimited sources of energy, the renewable kind, and unlimited sources of human wealth, the intellectual kind. And using the finite space-time constraint to basic necessities.
The simple economic matrix to evaluate material resources has to be widened to account for qualitative constraints other than the simple economic replacement value based on competitive advantage and marginal unit cost, which totally ignore the finite reserves of certain resources. This resource constraint is now part of the material reality. Some resources are too precious to be exhausted just on rate of return basis. We need a multi criteria evaluation scale for food, water, basic human needs or non replaceable RM.
For someone who can press that many keys, you sure don't understand Austrian Economics.
But hey, keep it up if it makes you feel better, as you're not likely to gain any converts, nor will anyone attempt to quote you (Protip: people tend to quote facts, not raving rants).
Maybe you should try the CAPSLOCK? That way you'll be assured of being seen, and well, people just like it.
By far the BEST post on ZH. This post makes ZH writers look like bunch of pimps for institutions like PIMCO. FUCK debt peonage, raise TAXES and make the very rich pay off all the debt. Now that's real KEYNESIANISM and not the disinformation one reads pn ZH.
linrom,@ 18:34,
Pls define VERY RICH.
Also, how about the One's that are able, the 40% who PAY ZERO, pay their fair share.
The top 10% in this country, already pay 60% of the taxes.
Shut the loopholes, on Corporations, and tax overseas Corporations TRIPLE.(also do not allow them to OFFLOAD jobs there, and MOVE facilities offshore). I KNOW to get this done, the NWO idea will have to go down the TERLET.................past time,IF we are to survive.
It's WAYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYY past time we got a mfg base of sorts back up and running.
We need tariffs, we need FAIR, and reciprocal agreements with our Trading partners.
NO WAY In Hell this debt even get dented, with a service econ, and if you took 100% of ALL the top 10%'s earnings, would be like a fart in a spacesuit!!!!!.
RESET......................
I had to look up "monetarism" on wikipedia just to make sure I didn't have the wrong impression, because this post above is confusing. Here is how wikipedia describes "monetarism":
Monetarism is a tendency in economic thought that emphasizes the role of governments in controlling the amount of money in circulation.
Well, let me get this straight. So if we have a 100% physical gold and silver COIN system (AKA "commodity money"), how on earth is this supposed to be an instance of "goverments controlling the amount of money in circulation"? How exactly? But discovering and mining new gold deposits? But blowing up private gold mines? I mean, really? How is that supposed to work?
As always happen, people mischaracterize positions to mislead people, and I can't say I've read all "Austrian Economics", so I won't claim that the "official" austrian economics mandates a 100% real, physical gold coin standard with zero forms of "fractional reserve banking". However, that was my impression. Furthermore, I've never heard anyone who claims to support Austrian Economics diss the 100% real, physical gold standard (without fractional reserve practices), and I've definitely never heard any of them advocate central banks or fractional reserve practices. So I wonder who exactly you're talking about.
As far as I'm concerned, all theories are way overblown and go where no theory should go. What I mean is this.
EVERY legitimate transaction is a producer trading his real, physical goods with another producer for his real, physical goods. It is perfectly okay if the physical goods exchanged by one party is a pile of gold or silver, and it is perfectly okay if the physical goods exchanged by both parties are other goods (eggs, lumber, nails, cement, chickens, cattle, tires, anything).
What is NOT okay is when an exchange happen in which one party does not receive real, physical goods. When that happens, one party has been cheated or scammed. Nobody in their right mind would exchange the valuable goods they worked so diligently to produce... for a few pieces of paper with fancy colors and fonts upon it. Of course, due to centuries of bankster propaganda and government laws, very few people are in their right mind these days, and people do accept pieces of paper for their valuable goods. That is insanity on the part of producers, and over predatory criminality on the part of central banks and governments.
ALL the rest about economies is utterly and completely irrelevant. Why? Because NOBODY has a right to interfere with the exchange of real, physical goods for real, physical goods. Since nobody else is legitimately involved in any of these exchanges, this must be 100% of "the economy" (unless you consider weather conditions and such as part of the equation, which is wrongly introducing irrelevant information into the topic). Thus, the entirety of economics beyond identifying this one and only aspect of "economics" is frivolous at best, and almost always FRAUD, because it seeks to let others (the author or those he apologizes for (central bank or governments) manipulate, steal and enslave by inserting themselves into the process of free voluntary exchange of real, physical goods for real, physical goods.
Am I saying "debt should be outlawed"? No, it is not my place to tell any producer he cannot throw his products into a ditch or flush it down a toilet or lend it to another human. However, most definitely NOBODY has any right to lend anything they did not already produce, or lend anything that is claimed to have value that does not have intrinsic value (which includes all forms of paper money). That is simply pure, overt, unmitigated, unadulterated FRAUD --- and enslavement if practiced on a large scale.
The fact is, just about every transaction formulated in the past 80 years has been fraud, because one part of the transaction was some form of overtly fraudulant, non-valuable, often non-physical "paper debt". Though it isn't exactly fair to let every borrower "off the hook", it also isn't fair to expect them to repay someone who gave them nothing to begin with. AS ALWAYS, it is productive workers who have been raped, from low-wage workers to small business owners. They are the parties who gave real, physical goods to someone else, and received only pieces of utterly and completely fraudulant paper.
The only trail that need to followed to find the scam artists and fraudsters is... the trail that leads to where these pieces of paper and computer bits originated. And the answer to that question is ALWAYS the same --- to banks and government. THEY are the predators, and THEY need to be eliminated. Not "controlled". Not "restrained". Not "limited". But completely and utterly eliminated. They are, by their very nature, pure, unadulterated, unmitigated evil. There is no other choice, as the modern world makes so utterly clear. Look around at the world. Everywhere you see the same pattern. A bunch of sociopathic predators running roughshod and defrauding and doing their best to totally enslave the entirety of mankind.
End ALL banks, central banks most certainly included. End ALL govermnents at all levels. End ALL predators and defrauders. And just leave this planet for honest, ethical, productive individuals. The rest of them can stick it. You've been predators and parasites far too long, and it is infinitely past time for you to be exterminated --- without a second thought.
To hell with "economics". There's nothing to it.
.
"specifically the misinterpretation by modern governments of the core approach of the "Keynesian revolution", which essentially gave them a carte blanche to drown society in preemptively failed stimulus after stimulus, funded with a relentless tsunami of public debt,"
It goes far deper than that. the core of Keynes was the assumption that government had the power to claim the entirety of a person's property and future income. It was all to be available for manipulation in a vain attempt to bring about a world where money was so inexpensive to borrow that nobody would be poor.
And Keynes' theory could work without the active collusion of government, and in return he gave an academic theory to justify what politicians yearned to do anyway, which was to spend, spend, spend. And all that spending was done with borrowed money, so in the process of buying votes, it put all citizens in a form of indentured servitude.
I may be mistaken.I've no prfessional background in finance or economics.Was'nt it Milton friedman ,who convinced Richard Nixon to abandon the Gold stadard?
"..the Chairman basically threw the ball back in Congress' court"
The ball hits the Congress' wooden heads, and bounces back to Ben.
NEWSFLASH PIMPCO.....................
Today, the citizens of indebted nations bear a heavy burden and must begin repaying the debts.
I ain't paying ONE MORE DIME..............................Buh-Bye!
http://lonerangersilver.wordpress.com/2011/08/30/pyramid-of-capital-syst...
We need Keen, Steve Keen, and his post neo-classical economics based on the real world and understanding of ‘aggregate debt’. What we have is a lack of demand in the economy as a result of excessive debt levels. Debt must be destroyed/reduced to increase the disposable income available and this will stimulate consumer spending and in turn the economy recovers. What we have a crisis of capitalism caused by over accumulation of wealth. Lack of real wage rises, due to businesses increasing productivity (and keeping wages low), and business owners filling their trouser pockets, would have constrained demand over the last 20 years, so instead debt has been used to fill the gap. Now we have reached a point of peak debt, and so demand evaporates. I always find it hard to believe why economists tend to forget that employees are also consumers. It may cost businesses more to pay their staff higher wages, but if wages are not high enough they wont be able to afford to buy the products they are making! And therefore you get a fall in demand and an economic downturn. Simples.
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