Inflation Now! (IN!)

All Too MILD INFLATION HELPS PLUTOCRACY & STAGNATION

Abstract: I have a question for the reality challenged economists who lead the West, in the ever deeper abyss of inequality:

What is best? 2% inflation and 10% unemployment (unemployment, or poor employment, not enough of a living wage)? Or would it be better to have 10% inflation and 2% unemployment?

The well paid dummies with “PhDs” have taken for granted that 10% (or actually 20% or more, see below) unemployment is better (not just in the USA, but also in Europe). Why? Presumably because they are philosophers! After all, PhD means “Philosophiae Doctor”, Doctor of Philosophy. What philosophy? Presumably, because they want to be loved and cuddled by the hyper rich. It’s a very cynical, morally corrupt career choice on their part.

The correct way to manage the economy is to start with the notion that everybody should be employed (decently; not like a slave!) Then a currency should be created. Then the rich. But contemporary economics is made the other way: first please the rich, then accommodate the rest (but without empowering it too much with crucial jobs).

Lack of inflation is deliberate, so is lack of (quality) employment. This is at the core of modern macroeconomics: the theory is actually called NAIRU. Let there be unemployment, so we can have serfs, say the rich, and then they eat caviar.

That mental corruption of macroeconomics had two main sources, one from mainstream American economists and the other in France. In the first case, plutocracy gave those fascist economists the sacred aura of “Nobel”, the inventor of dynamite, and of a famous prize. In the second case, in a phenomenon reminiscent of Obama, the French socialists were desperate to be esteemed by those with money. Both, in turn, contaminated the American and European central banks with an anti-inflation theory that advantaged the hyper rich.

I have dealt with that subject many times in the past, such as in “4% INFLATION BEST“. Adding dimensions to what Paul Krugman says, I sketch why inflation is good. One can summarize that the fight against inflation has been a fight for plutocracy and stagnation, in Europe, or the USA.

***

Another good editorial of Paul Krugman on an interesting subject. Inflation. In “Not enough Inflation“. Krugman points out that, by law, the Central bank of the USA, the “Fed”, is supposed to worry as much about inflation as about unemployment.

“At this point, inflation is once again running a bit below the Fed’s self-declared target of 2 percent.

Now, the Fed has, by law, a dual mandate: It’s supposed to be concerned with full employment as well as price stability. And while we more or less have price stability by the Fed’s definition, we’re nowhere near full employment. So this says that the Fed is doing too little, not too much.”

It is actually the ECB, the European Central Bank, that fixed, long ago, the 2% target for inflation. To indicate how silly all these things are, when European wise men, many of them French socialists (caviar prone), set up the European monetary Union, they “forgot” that unemployment was an important notion. So the mandate of the ECB is only to contain inflation. No wonder unemployment is now approaching some astronomical levels in parts of Europe.

Let’s think about this a moment. One has to realize that what is meant by “unemployment” is people who are so actively looking for work, that they enter the government statistics. Those who have given up don’t count. So, for example in the USA, there are at least twice more of the latter than the former. So real unemployment is closer to 20%.

Unemployment rate U2 is a matter of propaganda, short term. The relevant notion is the employment participation rate exhibited here: not so good! Bad from too much austerity in money supply…

Of the working age population, be in the USA or in Europe, barely more than half work. Most famous economists, the Chicago Boys, the Austrian School, are involved in a theory that will someday be viewed as a fig leaf for plutocracy. It relates inflation and unemployment in a… virtuous relationship.

According to this view, promoted by the (fascist Pinochet loving and employed) gnome Nobel Friedman, full employment means the lowest level of unemployment that can be sustained given the structure of the economy. What plutocrats and their lovers mean by sustenance is: they eat caviar, and they send the police to keep you happy with your unemployment.

Using the terminology from Nobel James Tobin (following Nobel Franco Modigliani), full employment is achieved by implementing the Non-Accelerating Inflation Rate of Unemployment (NAIRU).

That’s when the real gross domestic product equals potential output. Supposedly. Whatever. Even Wikipedia adds tersely: “This concept is identical to the “natural” rate but reflects the fact that there is nothing “natural” about an economy.”

Indeed. What’s an ‘economy’? it’s a way to manage (“nomy”) a house (“eco”). I always say this, because that is of the essence. One make the house Pluto’s house, and then one gets a “plutonomy” (the term invented and used by the biggest banks to qualify their vision of the economy).

***

INFLATION IS GOOD FOR THE DEMOCRATIC ECONOMY:

Here is Krugman again, rolling two good reasons for inflation: debt reduction and injecting cash, thus activity in the economy: would a rise in inflation to 3 percent or even 4 percent be a terrible thing? On the contrary, it would almost surely help the economy.

How so? For one thing, large parts of the private sector continue to be crippled by the overhang of debt accumulated during the bubble years; this debt burden is arguably the main thing holding private spending back and perpetuating the slump. Modest inflation would, however, reduce that overhang — by eroding the real value of that debt — and help promote the private-sector recovery we need. Meanwhile, other parts of the private sector (like much of corporate America) are sitting on large hoards of cash; the prospect of moderate inflation would make letting the cash just sit there less attractive, acting as a spur to investment — again, helping to promote overall recovery.

In short, far from fearing that more action against unemployment might lead to an uptick in inflation, the Fed should actually welcome that prospect.”

There are deeper reasons for wanting inflation, but those, contrarily to Krugman’s above, are not in economic textbooks. Actually I have not come across them anywhere, but on my sites. Those reasons involve deeper psychology.

The hyper rich, the plutocrats have, since time immemorial, lived of rents. (In the nineteenth century, hyper rich were called “rentiers”, that is, people who perceive rents. The archetype of rents is payments from government bonds. ever since there are government bonds and that goes back centuries (France, Britain, and, earlier, Italian Middle Age republics).

Why so? Because money is power. One of the reasons people want power is that they prefer to enjoy more and do less. A rent, government bond style, is perfect for that. It’s passive income, no risk (or as little risk as possible). Real, active investments in the economy are exhausting: one has to watch over them, manage them, think, work.

This is why the hyper rich have pushed governments, in Europe and the USA, to live off borrowing money from them ever more. The more governments borrow to the hyper rich, the richer, and the more lazy the hyper rich can get.

Another thing the rich detest is to see their capital evaporate. So they detest inflation.

So in 1973, the right-wing government in France passed a law allowing government to borrow from the hyper rich. Hence the obsession with inflation started in Europe. The hyper rich were able to persuade the French socialists that, to be mature, they had to be anti-inflation. (By the way, the fact that, to show that they are mature, left-wing people have to please wealth contaminated Obama, in a similar way: that is why Obama, just like the French socialists in the distant past, implemented mostly policies to please wealth. By opposition, to please dozens of millions of ex-soldiers after world War Two, even the right-wing governments in the USA and Europe conducted very left-wing policies: marginal tax rates under Eisenhower were higher than what the French socialists now propose).

To show the wealthy that they were good citizens, the French socialists  fabricated a monstrous machine, the European Monetary Union (EMU), where the states would be financed, not by themselves, by rising taxes, or by going to their central banks, but by going begging to the hyper rich private individuals and banks.

In other words, plutocracy had captured the minds of the socialists builders of Europe to a point not even seen in the USA. That way, far from being a union of welfare socialist states, the EU turned into a plutocrats’ paradise.

Work resist to inflation, because work is always needed, so work can always ask for enough money to live.

That, of course, before work got farmed out to China. And that gave one more good reason for plutocrats to farm out work to China: it would kill both work and inflation, two enemies with one stone.

New technology also loves inflation, because it forces people to re-examine their old habits, relative to the new temptations.

Why “4% Inflation Is Best” goes over all this in more details.

4% inflation is not really an over-statement, as 2% inflation is way too close to deflation. Some will say: oh, but real inflation is well above 4%. Well, this is a related can of worms. Governments have interest to underestimate inflation, so that they will diminish the payments they have to make to veterans, retirees, the down and outs, etc. So they have invented “hedonistic” adjustments to cheat on inflation where it hurts the most.

Where it hurts the most? Well where it hurts the People the most. If the plutocrats can inflate up their rents, they are all for it. That is why there is so much inflation in school costs, health costs and prison costs. In all cases, one notices the inflating payments go to plutocrats.

Progressives ought to want good inflation: by the People, for the People. They ought not to want hedonistic inflation, by the plutocrats, for the plutocrats.

***

Patrice Ayme’

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26 Responses to “Inflation Now! (IN!)”

  1. Old Geezer Says:

    You are perfectly correct to assert that the FED is only doing HALF its job – the other half being to promote full employment. In fact, the US Congress passed the Full Employment Act in 1947 and I do not recall its having been repealed.

    And inflation does in fact make the bonds held by the rich worth less. But it also makes other assets like real estate worth more. Regardless, you can’t have inflation without demand, and the people in this country don’t have the cash to transform their desires into actual purchases.

    This is because since Ray-Gun busted the Patco union, labor’s share of the pie has been stagnant. But, not to worry, the nice banksters allowed labor to borrow its way to the American Dream.

    But now that the dream has become a nightmare, there is no borrowing and nearly no spending.

    Helicopter Ben has printed nearly 10 TRILLION US Dollars and floated them neatly into the global money system.

    No inflation.

    Why?

    Because there is so little spending. But someday, somewhere, spending is gonna pick up. And when it does, the problem will switch from trying to get inflation to trying to get rid of inflation.

    OGP

    • Patrice Ayme Says:

      dear OGP: You are entirely right too. Inflation switches values around: change, in particulat adaptation, technology, work, are worth more, debt, less. One of the reasons debt costs so much is that it expects inflation, and keeps doing so (and rightly!)

      The drama is that all this printed money is not going towards profitable investments, like a crash program in lithium reactors. By the time it’s clear we are running out of energy, there may be no time to deploy anything but vast armed forces… In a way we have run out of government. Look at the ECB: it creates a more than a trillion dollars, and gives to banks, who then can give it to? Their friends??

      Obama wears a heavy responsibility, because, when he became president, everything was possible. Turns out his ambitions were small and dumb. Impress the fat cats, that was about it. Unfortunately for him, maybe they prefer the original Romneycare to the erzatz Obamacare… In any case, he will point out he did it, whatever “it” was, and the likes of me, did not. Well, achievement is also a question of moral values.

      At some point, Tiberius had shamed some of his opponents to commit sucide, but a haughty aristocrat with “high intellectual principles” refused to, arguing he had been morally right to shelter some children of Sejanus. He survived Tiberius. Is morality higher than vitality? Obama, and many of out leaders, say no. And they are wrong. They are wrong, because they have such a puny view of vitality. Let’s see if they can live with our contempt.

      OK, time to go that Easter Egg chase… Baby, who nowadays talks a storm, has made her wishes clear. I can always claim that it’s not an Abrahamist rite, but obviously pagan… Anyway, I have no qualms stealing the best from Abrahamism, after all it made us endure…PA

  2. Jens Says:

    The biggest reason for a low inflation goal of 2% is because government is printing fiat money, that are basically worthless as soon as people stop trusting them. The fear of hyperinflation is well grounded, and hyperinflation definitely doesn’t help the poor.

    I’m not saying I believe in the trickle down effect or that most of today’s system encourages higher inequality. But having stable ground rules, such as a stable means of exchange, is necessary for any organisation to be able to function smoothly and plan long term.

    I’m fully open to changing the monetary system from debt-based fiat money to debt-free fiat money (e.g. social credit), or basing a currency on energy. But for the current monetary system to have a credible and long-term outlook, you need to have a steady and low level of inflation. Raising the level of inflation would not solve anything but for the most immediate short term, while putting the long-term at risk. I’m not saying 4% is dangerously high, but it is more risky than 2%, which the central banks have only seldomly achieved in the past 20 years they’ve been trying.

    You state the most important thing is full employment yet you do not explain why. Is not the most important thing that everyone has the ability to live a simple, but good life and have an internet connection (e.g. free speech)? And surely this can be arranged with a basic income, which is not really relating to inflation at all.

    Rising costs of education will stop soon. udacity.com and others like it will soon be providing people with top quality education for free or a small fee if they don’t have the discipline to get it by themselves from the library. The ‘diploma’ bubble of trusting a piece of paper will soon be replaced with real skills and knowledge actually mattering instead of perceived. To bring power to the people and spread education, wee need such things.

    I have a sense that what you are trying to get at is that there shouldn’t really be a credible store of wealth over time. But not being able to do that could equally harm the less well off. Most Japanese for example, have savings, and often in government bonds. A 4% inflation rate in Japan would impoverish the Japanese people at the expense of the state and big business (which are heavily indebted). But I see your point that in the US it soul allow people to get off of their debt, but isn’t the problem in the US rather an excessive appetite for debt? I mean if interest rates went up to 4% people would just borrow more, and interest rates would just go up, still leaving the plutocracy.

    Whereas, a basic income could basically remove poverty or at least the extreme poverty (that is so symptomatic of the supposedly rich US). It is a simple and easy way to distribute money to those who need it, people. And if you keep the inflation low, that money might actually be worth something.

    Otherwise, great blog, Patrice!

    • Patrice Ayme Says:

      Thanks Jens!
      The debt effect, and the inflation effects ought to be subordinated to managing a great house. Sustainable, progressive activity ought to come first. Creating “stores of wealth” is secondary. I am no friend of the government stealing property: I was stolen may be half, in one case, and all of it, in the other, of my personal worth through inheritance by two governments (on different continents). Putting people to productive work ought to be primary, though.

      Of course in this “sustainable”, “progress”. “productive”, and even “work” ought to be defined, and this is all philosophical in nature. reagan and his psycho descendants believe that the “market” knows best. By the way, that’s not just American: thatcher started with the obsession earlier, and Mitterand made a complicated dance that scared pseudo cowboy Reagan, but was the opposite of what it appeared to be, as it all ended with europe in the lap of plutocrats, begging for milk.

      There is debt and debt, there is inflation and inflation. As I pointed out, the CPI inflation, with its hedonistic cheat is very low, but, in truth real inflation is higher, in the sectors that are selected for expansion (such as education, increasingly part of the plutocratic machine). I have no sympathy for people who live in mansions while always clearly incapable of affording them. I have even less sympathy for plutocrats who drive prices incredibly high in the top cities, blocking access to them for the masses.

      Prime specimens there are London and Paris where real estate is astronomical. In the poorest arrondissements of Paris, the price per square foot, $1,300, that is 10,000 euros per square meter, is higher than in the costliest places of the Silicon valley. That’s bad, as the two cities were recently found to the greatest intellectual centers in the world. If I want to go there, strike an intellectual pose, and pontificate in a cafe’, how am I going to do it?

      My position is more subtle than Krugman.
      1) I am globally AGAINST Quantitative Easing, just like I am against a fight to death. however, the other guy (the USA) has come to the fight with a gun, and started shooting. Europe had to start shooting back. So Dragghi ex-Goldman is doing well. He tricked many a German, that’s even better (that Stark guy, the ECB economist who resigned has understood nothing; he does not understand that Germany cheated).

      2) I would give money to the banks only for the sectors the government has correctly determined that they present an interesting future. (I don’t mean Solyndra, or Musk.) The gov can do that in anumber of ways: regulations, loan guarantees, co-investment, CCC etc.
      PA

      • Jens Says:

        Dear Patrice,
        2) I wonder when the government has _correctly_ determined anything. Anyhow, what would these correct sectors be?

        And do you not think it is important to reduce government from the, in some cases, prohibitively high 50% of GDP?

        The market would know a lot better if externalities are internalised, wealth more equally distributed and monopolies broken.

        Apart from this, I believe in more spending on infrastructure (mainly rail and non-rocket space launch) and research (a mix of free and directed (i.e. towards the pressing needs for LFTR) research).

        J

        • Patrice Ayme Says:

          dear Jens:I could give the example of the Solar Industry. China has eaten the Western lunch. How? Government(S) subsidies. I am all for those subsidies, because I am all for Solar. Simply, the West ought to have a quick reaction force, and reply with subsidies in kind. Instead, it mostly went the other way. The Solyandra approach was terrible, a corruption, just like the Tesla/Space X thing.

          Which subsidies? Well Chinese cities offer land, and Chinese banks offer LOANS!!!!! I guess Chinese banks are not putting all their efforts in quick fire trading… rather ironical that the capitalistic West is starved of capital… Even Marx had not anticipated that one: capitalists exploiting capital, no workers needed.

          France is supposed to have 55% of its GDP government tied up. But comparables are to be compared only. As far as I am concerned, the Big Bank industry in the USA is indistinguishable from the government. So it should be viewed as part of the government. Same for health care. Obaromcare is little more than an enormous government subsidy to the health care industry, and pays even for the cute girls sent to seduce doctors…

          By the way, the construction of the Very High Speed network in France is “privately” financed, mostly in self financing, but not corrupt as it has been in Spain (where the banks conspired with politicians). So the same industry is in one case (France) done according to the capitalistic canon, whereas in the other (Spain) it has crossed the line over into corruption. It’s all very subtle.
          PA

      • Jens Says:

        Dear Patrice,

        Have you had the chance to pick up ‘The Third Industrial Revolution’ by Jermey Rifkin? It outlines how to make the transition to sustainability, while also empowering people and creating jobs through cleaver mixes of micro (jobs) and macro (the framwork for those jobs) projects.

        I agree on the ‘quick reaction force’, China does seem to get some advantages by flooding certain areas with capital. So the idea is for the ECB to lend directly to companies in sustainable industries at 1% instead of merely to banks? It is surely very appealing, the question remains though in how to pick the ‘winner’ companies reliably…

        I agree that the Big Bank industry, Big Pharma, Big Agriculture, Big Oil, Big Armaments and Big Automobile are all pseudo-governmental in the US with a confusing tangle of subsidies, cross-ownership and a sacrifise of long-term outlook for immediate corporate profit. At least they are honest and open about it in Singapore.

        Here is an interesting read about how the SA, Oil and Auto-industry axis in the US killed the railways: http://en.wikipedia.org/wiki/Amtrak#Causes_of_the_decline_of_privately_operated_passenger_rail_service It’s also a nasty example of how unions sadly tend to work againt the interests of their members.

        J

  3. Old Geezer Says:

    Not sure that “debt costs so much” as you write. Ten year T bills would yield 6, 7 maybe 10 percent if people really expected inflation in the near term. Maybe people figure that the international banksters have the world by the throat. It might be true. For it Europe continues to drink the austerity kool-aide, her GDP will continue to shrink, causing the welfare state to have to shrink as well. A certain downward death spiral. The people will have to revolt and throw out their governments to change it.

    Is there a soul who lives and breathes who thinks that the Irish will calmly pay out roughly $40,000 per person over the next 30 years and get NOTHING in return?

    Oh, and then there’s Portugal and Spain. And Italy.

    But the US can go on printing money because the US controls all the oil on the planet, and it must be purchased using US Dollars.

    Global demand for oil and USD is the only explanation for why the US has no inflation.

    And why the world’s financial institutions are stuffing their money in USDs for lousy returns. Return OF investment is more important than return ON investment.

    • Jens Says:

      Old Geezer, I never got why the US would ever want (to invade Iraq and get) higher oil prices until I read your comment a few posts down. It makes perfect sense that it strengthens the USD.

      “austerity kool-aide” you say, well I think I know what you mean regarding the Irish people paying $1333 a year. But a certain sense of ‘debts must be paid’ is important, a populace that votes in a government giving unconditional guarantees to banks or starts imperial wars should see at least some consequences. I’m not saying voters get the right information, but they do have a responsibility to seek the right information, otherwise when are they going to learn and vote for parties that are in their own self interest?

      The Irish should not pay all of this, but government in Europe is blaoted. There is no reason to kill off the welfare state, but means testing should be a given. Also, bureaucracy is ridiculuous, and the weeds of regulation don’t seem to benefit the week anymore, but only those powerful enough apply the lawyer/bureaucrat pesticide and then do whatever they want.

      And just to say it, if the Irish paid back all that dirty bankster money, they would at least prove that they were trustworthy and would follow through their promises. (even though they are not Swiss)

      But the way Europe is heading is in my mind a lot better than the US. Better to accept that trusting the bankers had a cost and then try to get on with things. And the way to get on with things is to get on with all the reforms that most people agreed upon in the 90’s, less government debt, more efficient government, more research, better infrastructure, better education, get wages and prices closer to world prices, deal with global warming and the demographic crisis etc.

      Once the commitment to those type of long-term reforms actually gets forced through all over Europe, the sweat-inducing long-term planning has been endured and the short term kool-aide can be refreshed in the shadow…a few years down the road towards a functioning mass driver (www.statram.com) and efficient LFTR.

      • Jens Says:

        edit: not ‘www.statram.com’ but ‘www.startram.com’

      • Old Geezer Says:

        Dear Jens:

        Before we moralize with the “debts must be paid” sermon, let us remember that those debts are the result of a building boom, fed by German and French banks, to finance ill conceived housing estates which lie empty. The average Irish citizen was NOT involved in making those decisions. The banks made those loans.

        They went bad.

        The banks should take the loss.

        Isn’t that how capitalism works?

        • Patrice Ayme Says:

          Dear OGP: Especially if the building boom resulted from organized crime. Bank managers and our masters, the politicos got together, and plotted to rip the public off. There is enough evidence of this in the Valencia region, in Spain. Of course they will say it’s not organized crime because it’s the mafia which did it.

          But it is certain that it is the same all over, otherwise the behavior of the banks would not be understandable. I called for applying RICO long ago.
          https://patriceayme.wordpress.com/2009/02/24/time-for-rico/

          I am going to transcribe part of an exchange in the WSJ, in the last two days. My interlocutor, in the financial industry, outright said we are not in a democracy. That is why I was wrong, because I did not understand that!
          PA

      • Jens Says:

        Dear OGP,

        well, the banks should take the losses, but the only problem is that since they have been piling up debt instead of money, the banks cannot afford to take the losses. Which means a collapse of the monetary system. If we let the monetary system collapse, inflation or debts is clearly no longer an issue. It is difficult to say exactly what would happen if we let that occur, but the west would probably move closer to world prices, with a resulting loss in relative prosperity. It might be good for the world, but would be very painful for the ordinary westerner.

        So in reality, the question becomes more like how to distribute the costs between the different European taxpayers. And the Irish have seen a sharp increase in real wages, whereas the Germans have kept theirs down. Hence, why is it fair that the average German should pay while the Irish get off? All I’m saying is that this Eurocrisis is a golden opportunity for Europe to increase competitiveness, increase efficiency in bloated government (the only way to keep the welfare state) and increase European integration. All of these things should have been started a decade ago, and the 10 year wait has only made it more painful.

        J

        • Patrice Ayme Says:

          Dear Jens: Agreed. The crisis is a way to get out of lots of excess. Obama is sending his 13 year old to Mexico escorted by an army, in taxpayer paid jet.

          Meanwhile Merkel for her vacation went to Naples/Napoli in a low cost plane, and she was guarded by the Guarda finanziale. Angela is trying to tell us something…
          Obambi in Washington should listen and learn.

          Clearly more European integration is needed.

          Clearly, the Irish are still way richer per head than the French and German (on last numbers we have). Something similar happened in Greece: greeks became much richer, very quickly, thanks to the EU. So one should look at the last 30 years, not last 30 months only.

          Clearly Europe should close immediately all its public markets to all countries with public markets not open to European enterprises.

          Clearly Europe and the USA ought to share and collaborate on industrial projects, working off each others’ strengths, not just corruption.
          Actually corruption ought to be phased out.

          All financial tricks not of public utility ought to be outlawed.

          All banks are public (I have said in the past, and will re-iterate in today’s essay). So is money. what conspiracies do with public money ought to come under public scrutiny.
          The banks are public utilities. Truly their officers are functionaries. Functionaries, civil servants, ought to be srcutinized, and paid not very much.

          Nationalizing bank holding companies to save the banks themselves, no problem. Look at the UK.
          PA

      • Jens Says:

        Dear Patrice,
        Corruption is arguably the biggest problem we face. Even the transparency international’s is about as transparent as a lead wall. Norway, is supposed to be ‘least corrupt’, but having a sharp eye when reading one realises it is corruption PERCEPTIONS index. It is simply a survey where they ask people if they think their country is corrupt. This is simply a measure of how aware people are of the corruption going on in the country, meaning Norwegians don’t have a clue of how thoroughly corrupt their country has become.

        One way to flush out corruption could be to make a model of the ICAC’s purges in Hong Kong in the 70’s. One important point is super-nationality, or some way to give an anti-corruption body the ability to take down even the highest of office (MPs, heads of state/govt etc). A second point is an element of the first, and that is full independence, like the judiciary or the press is supposed to be. Finally, an anti-corruption body needs full and absolute transparency, absolutely all their doings, communication must be published and available forever online…if something is related to an ongoing case it can be sealed until the case is closed.

        I’m thinking of a body, preferably at UN level, but possibly at EU level, NAFTA level etc. What other aspects should such a corruption-killer body have?

        J

        • Patrice Ayme Says:

          Dear Jens: This indeed always infuriated me. If transparency international had asked the Germans in 1939, they would have all answered that they lived in the least corrupt country in the world. “A total democracy” as Goebbels called it, only half joking.
          In places such as France cynicism about the system is viewed as a demonstration of intelligence, the most basic quality one can brag of.

          In the USA, as in Saudi Arabia, corruption is in the legal system; see the pathetic intrusion of giant money in American politics.
          PA

  4. Old Geezer Says:

    Dear PA:

    It is not organized crime.

    It is not even disorganized crime.

    Because during the past 30 years, those banking operations and financial transactions have been made PERFECTLY LEGAL by our Congress. The best politicians money can buy.

    • Patrice Ayme Says:

      Dear Old Geezer: Right, I forgot that point. Big time.

      But what happens when unconstitutional laws are passed? This is what happened under Augustus. Then Tiberius did the same, just worse. He passed an anti-treason law… And basically nearly did not apply it. Only 52 people got condemned under it, in his entire reign (and some obviously deserved it, like the traitor Consul Sejanus). However, the law was there, and it got used by Caligula.
      Actually the entire Principate was unconstitutional, but the Roman constitution, like the British one, was rather verbal, customary.

      However the French and American constitutions are in writing. France has a Constitutional Court (and it took the weirdest position on holocausts recently, defining them as something disrupting the peace in… France!!!). The USA does not have such a court.

      Right now the laws passed by Congress are clearly unconstitutional… I am developing that in the essay I am finishing, but first my daughter is aslking to go to the park.
      PA

  5. Old Geezer Says:

    Dear PA:

    Enjoy your walk in the park with your daughter. At least Congress cannot stop you from that.

    OGP

  6. Someday Says:

    There are very strong reasons for both low and high rates of inflation, genuine macroeconomic reasons. The tensions between them are to be bridged first by appreciating the complexity of the issue and not by resorting to conspiracy.

    • Patrice Ayme Says:

      Indeed, Someday! But conspiracy is what we have. Conspiracy between financial types and politicians. Through interlocking actions, they make each other ever more rich and powerful… To the point that they are cutting not only into industrial muscle, but into the mind of our civilization. The result can only be an unparallel catastrophe, except if we put an end to it, before it gets much further. And the first way to do that is by appreciating the complexity, as you say!
      PA

  7. pshakkottai Says:

    Reply to
    Jens Says:
    April 9, 2012 at 6:08 pm

    The 1% have created the myth that govt debt is unsustainable and has to be paid back essentially fooling people to think that the govt budget is similar to household budgets. The biggest problem in public analysis is the economic illiteracy of mainstream media, congress, president and neo-liberal economists who confuse the budgets of USA (the currency issuer) with budgets of everybody else (currency users). Scare words like “unsustainable debt”, “living beyond our means”, “debt crisis” etc. are used and comparisons made to household budgets, a totally incorrect analogy. The dollar is basically a token that keeps the economy running.
    Modern Monetary Theory is true. Lots of data is conformity with it. Deficits are good, surplus is bad, govt debt implies private sector wealth, national debt need not be paid back, USA does not need taxes to spend, the (debt/GDP) means the same thing as (private wealth/GDP), for a monetarily sovereign nation, China does not fund our economy, inflation is not a risk until full employment is reached, USA can afford to bailout the states and stop all austerity. Almost everything said in the mainstream media is wrong. The congress and the president repeat talking point economics as does Fox News. It is a shame!
    http://my.firedoglake.com/pshakkottai/2012/04/20/misunderstood-deficits/
    The 1% talks always about cutting deficits and adjusting taxes which prevents the true solution, viz., more deficits.

    Europe is not monetarily sovereign but USA is. Balancing the budget means different things to sovereign money creators and non-sovereign money users.
    (Federal Deficits = Net Private Savings+ net imports), applies to USA and other nations that have their own currencies. The above is an accounting identity and is used by the treasury and fed and is shown numerically in fig 4 of
    http://pragcap.com/resources/understanding-modern-monetary-system
    States have to balance the budget all the time. USA, the money creator has to be in deficit to keep the economy alive, the more the deficit the better. Without deficits there is no growth (unless net imports are negative). The deficit is extremely inadequate. There is no need to be afraid of a deficit, because it is nothing but peoples’ wealth. I have shown this in numbers
    http://pshakkottai.wordpress.com/2012/02/27/national-debt-and-national-wealth-compared/
    Federal deficits are the source of money and taxes are the sink. See a diagram of money flows in
    http://pshakkottai.wordpress.com/2012/03/21/157/
    Govt-debt is equal to peoples’ wealth and can be anything. 100% of GDP is not a limit. Japan’s is 230% now and it can get much higher. Japan knows how modern monetary theory works and pays no attention to dire warnings by “bond vigilantes”. Japan has been deficit spending for more than a decade with no austerity. USA should do the same.”

    • Patrice Ayme Says:

      dear pshakkottai: Most of the positions you evoke would make conventional economists and verios serious people, including Kanzlerin Merkler run to the hills, screaming. But I approve you 100%, and i am sure most people reading this site would. There is lots of hogwash out there, and the masses, especially the European massess, are supposed to turn it, that garbage, into their daily fare. For years, I have condemned Dimon, and the outrageous commerce beteen that creature and the president of the USA. Now we learn that Dimon was splurging. maybe the taxpayer, the People, will have to replenish him again, so he can keep on terrorizing us some more, and the president sing about their friendship?

      The example of Japan is very clear. If anything, Japan should have spent much much more, be it only to protect its nuke plants from tsunamis. The tsunami danger was blatant. Not just out there, but tsunamis happened next to plants, up to 30 meter high. I think the plants actually have to be displaced out of reach. Building walls is naive. Next to Tokyo, walls are risen. to handle 18 meters tsunamis. However, the possible tsunami, in my opinion, is several times higher than that…

      Money is the power the state puts at the disposal of the citizen to irrigate the free market economy. However, the state is the People. in democracy When Merkler say money, and the state, should be limited, she says the People she should be limited. She should go hug Hitler’s grave. OK, nobody knows where that is: it’s a grave of the mind.
      This is no exaggeration. Hitler made exactly that argument.

      Anyway, I was just writing an essay on that, after struggling with fascists in several countries harassing my baby and me about all the baby stuff I insisted upon carrying through many airports. That included a blonde stewardess from Lufthansa, half of the baby’s mother age, who felt righteous enough to harrass, but was not moral enough to help. It was interesting to be told I did not deserve elementary decency as we were not travelling in business class.

      The stewardess got accused back for sticking to rules she misapplied, while showing a characteristically old German insensitive way of being inhuman in the guise of arrogant, albeit fake, righteousness. The captain of the plane, standing feet away, benefited from this lesson in basic philosophy of elementary human decency, all the more since he turned deep red, as obvious parallels could be drawn with historical tragedies of the mass murdering type, even by the most clueless.

      Decency within the polis starts one on one. Philosophy can bark, and should bark back, especially in German. That basic lesson was also for the greater profit of 200 Germans waiting in a bus like as many slightly haggard cows… It was a bit like Auschwitz in reverse. In the end philosophy scored, and the spirit of Merkler was in disarray, for all to see. Austerity was reppelled, fake authority cowered away. Some basic Germans even helped kindly with the stroller.
      PA

  8. pshakkottai Says:

    Dear Patrice:
    I like your statement “Decency within the polis starts one on one. Philosophy can bark, and should bark back, especially in German.”
    Thanks!
    Partha Shakkottai

    • Patrice Ayme Says:

      Partha: You are welcome! I must confess I was as happy as a barking dog putting the sheep back where it belonged… It’s also the occasion to test the effect of unusual logic is having on conventional wisdom… In this case what used to be conventional German wisdom, 70 years ago (with the consequences we are all familiar with…)
      PA

  9. Patrice Ayme Says:

    Inflation Now! Inflation flushes sclerotic ways:

    sent to: https://ianmillerblog.wordpress.com/2017/04/27/trump-on-taxation/

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