“New Economics” Europe’s Fraud

We, and in particular Europe, have been led by fraudsters. Sometimes it takes courage to say it, to denounce fraud. Ed Milliband, the Labor Leader just rightly accused the anti-European politician Lafarge (head of UKIP) to be a fraud, to his face, because leaving the European Union would ruin Britain.

Right. The problem with the EU, though, is that the politics there has been a fraud. Since the 2008 crisis, the USA government injected 8 trillion dollars in the economy. The Eurozone, with the same population, injected only one trillion (the UK did in between).

Europe Is Recovering Worse In the 2010s Than In The 1930s

Europe Is Recovering Worse In the 2010s Than In The 1930s

Another editorial of Paul Krugman asserting that the USA pulled out of the 2008 crisis with standard economics (which Krugman and his kind call Keynesianism, although historical examples are as old as Themistocles’ Athens and even Darius’ Persia. The modern version is assuredly from Henri IV of France and his fiancé minister Sully, around 1600 CE).

That Old-Time Economics

BRUSSELS — America has yet to achieve a full recovery from the effects of the 2008 financial crisis. Still, it seems fair to say that we’ve made up much, though by no means all, of the lost ground.

But you can’t say the same about the Eurozone, where real G.D.P. per capita is still lower than it was in 2007, and 10 percent or more below where it was supposed to be by now. This is worse than Europe’s track record during the 1930s.”

Says Krugman: “I’ve been revisiting economic policy debates since 2008, and what stands out from around 2010 onward is the huge divergence in thinking that emerged between the United States and Europe. In America, the White House and the Federal Reserve mainly stayed faithful to standard Keynesian economics. The Obama administration wasted a lot of time and effort pursuing a so-called Grand Bargain on the budget, but it continued to believe in the textbook proposition that deficit spending is actually a good thing in a depressed economy. Meanwhile, the Fed ignored ominous warnings that it was “debasing the dollar,” sticking with the view that its low-interest-rate policies wouldn’t cause inflation as long as unemployment remained high.

In Europe, by contrast, policy makers were ready and eager to throw textbook economics out the window in favor of new approaches. The European Commission, headquartered here in Brussels, eagerly seized upon supposed evidence for “expansionary austerity,” rejecting the conventional case for deficit spending in favor of the claim that slashing spending in a depressed economy actually creates jobs, because it boosts confidence. Meanwhile, the European Central Bank took inflation warnings to heart and raised interest rates in 2011”

One has to look at whom the “new economic thinking” profited: high finance, whose power and wealth has grown enormously.

The European leadership, from the central bank to the European Commission, is full of people who made stints in High Finance hedge funds, companies (conspiracies such as Goldman Sachs: heads of the European Central Bank, and even Italy, and many EC commissioners, where partners there.) Or maybe they were in banks (such as Rothschild, see young Macron the French finance minster) , or hope to do so some day (and often, some more). This phenomenon is even more marked in Europe than in the USA.

Krugman is not as accusatory: he cannot insult those he meets all the time, and is supposed to mingle with.

“…while European policy makers may have imagined that they were showing a praiseworthy openness to new economic ideas, the economists they chose to listen to were those telling them what they wanted to hear. They sought justifications for the harsh policies they were determined, for political and ideological reasons, to impose on debtor nations; they lionized economists, like Harvard’s Alberto Alesina, Carmen Reinhart, and Kenneth Rogoff, who seemed to offer that justification. As it turned out, however, all that exciting new research was deeply flawed, one way or another”

We have seen that story before: in the 1990s, Harvard economists gave self-interested advice to Yelstin, which destroyed the Russian economy, and paved the road for Putin’s reaction.

In Germany, an aging population has built several causal loops favorable to the present situation of austerity. Some are major UN-SAID (French: Non-Dit, what is not said, religiously).

For example the (relatively recent) German European supremacy necessitates immigration, and the latter is (wisely) encouraged by the Chancellor (who is aware of the dearth of reproduction by Native Germans). So the real German discourse, behind closed doors, is different from the official one (which makes little sense, especially considering how poorly Germany was doing ten years ago; a super low Euro, and Germany running deficits above 3% then helped).

Hence imposing “new economics” on Europe was not due to chance, but to forces below the surface. They have nothing to do with better economics for the majority.

Empires have known, for millennia, that, to be prosperous, they need everybody to work. Europe does not want to know that, because it is not thought of as an empire. Instead it is still thought of as a “common market”, and a “free” one, at that. In the USA, the government governs an empire and knows unemployment is intolerable, no matter what. So the Fed gave enough money for banks’ lending.

What Europe needs right away, before switching to real, more direct democracy, is to get better leaders, such as Ed Miliband, the UK Labor Leader, who had the courage to tell the truth about Europe (Europe is good for Britain). We don’t need liars like the UKIP (UK Independence Party), or like the UK Conservatives (who want to conserve the money power for their call, by not taxing revenues of their own, as long as they are overseas, even when the overseas presence is just make-believe… Labor wants to change that).

Tax evasion by the hyper rich and their corporations is part of the reasons both necessary and sufficient for imposing austerity on those who are not hyper rich.

However, when the 99% shrink financially, economically, an in their democratic power, so does the economy, and the society. And the democracy.

Patrice Ayme’


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28 Responses to ““New Economics” Europe’s Fraud”

  1. ianmillerblog Says:

    My guess is that the real underpinning problem with the Euro is that there is no common economic policy, and if some of the countries do what they want to do, with a bit of a cheat on the side, then there will be problems. The fact that the rich are the biggest influencers of economic policy does not help either as their self-interest in getting hold of even more riches ruins it for the rest. “Trickle down” does not work when the trickle is at best “drip feed”.

    • gmax Says:

      There are the same problems in the USA, but not as bad, because the state is FEDERAL. So it redistributes wealth. Krugman speaks of this. Different states in the USA HAVE different economies and different taxes.

      But Europe has no FBI, and increasingly local taxes are enforced for internet sales.

      Retirees come to Nevada from California (no STATE income tax), but still they have FEDERAL TAX. In Europe, all sorts of people can go to different countries and pay no tax. Corporations too.

      • Patrice Ayme Says:

        Yes. Some people can escape taxation all together, by going to, say, Eire. The most famous French writer did this. He lives 183 days in Eire, each year.
        Because 183 x 2 = 366… And there are only 365.25 days in a year…

        Let alone corporations. MFST, Twitter, and countless others are based, for their world business, in tax evading Dublin, making the surroundings immensely rich out of cheating.

    • Patrice Ayme Says:

      See my comment to GMax. There is tremendous tax CHEATING, and not just by Luxembourg. Eire, Netherlands and especially Britain are a huge problem. Watch the British deficit.

  2. gmax Says:

    European Union needs more Union, and more people talking about those things.

    What do you think about the TPP? Republicans gave Obama fasttrack authority. They are friends! Corporations will sue the US government! Great!

    • Patrice Ayme Says:

      The Euro was just another step up towards a CONFEDERAL Europe, a sort of much larger, and looser version of Switzerland. However, the idiots thought they could stop in mid-step… To nowhere. If Miliband was heading the UK, with help of the SNP (Scotland), things could improve…

  3. pshakkottai Says:

    Hi Patrice: First of all, the FISCAL DEFICIT is a POSITIVE for the economy. The quantity (FISCAL DEFICIT – NET IMPORT) MUST be positive for people to save. The balance for a money creator is the term in( ) is exactly = NET PRIVATE SAVINGS = PRIVATE SAVINGS – PRIVATE INVESTMENTS. Any amount of fiat money can be created upto full employment and indeed must be to have a sound economy.

    The created money FISCAL deficit is responsible for growth.Note that the net import is heavily weighted by 60, the number of rupees to the $.
    Nobody seems to know how fiat money works! The point to note is a trade deficit of 1% in $ requires a fiscal deficit of 60% to overcome the negative effect of trade deficit.Fiddling with 5% just won’t do. This is for India which has a highly unfavorable conversion rate vs, $.
    Fiat money economy is called cartalism, for carta (token in Latin). Fiat Monet is printed money.
    For Europe which is not monetarily sovereign, Nations that have negative trade balances are in bad luck. Only Germany will win because only Germany has a positive balance. The other nations will gradually go broke. The easiest solution is to make Europe a federation like India. States in India do not go broke like cities in USA because the federal govt makes up shortfalls.

    Of course it is a fraud to pretend the gold standard is still operational. It is not. It died in 1971. The balance used to be different. In those days the source of money was borrowed. No longer. It is created which is why the deficit is the source of money. The old names should be discarded and redefined. It is silly to call a source a deficit. Stupid , in fact.

    • Patrice Ayme Says:

      Dear Partha: Lots to say about your comment. It seems that I understand it better than comments on the same subject you made many years ago. (So I am progressing, hahahaha.)
      However, first it’s not made easier by talking about India, rupees, etc. The dollar is at this point (and it’s not just unfair, but nasty, Keynes was against it, Krugman said, disingenuously, that it does not matter) the world reserve currency.
      So I vaguely understand what you say.

      However, in the practical world, there are several factors which are not details:
      1) a sovereign nation does not have to reimburse a debt. OK, if Greece defaulted, it would suffer tremendously. However, when, say the USA defaults (as happened in 19333, as far a I can understand, although it does not seem to be in textbooks!), nothing happens: the USA is an island, has the biggest military, and is self-sufficient, all things Greece is not.

      Without defaulting, the USA attracts lots of investments, especially in real estate, at PEAK of markets. Although the following collapse is not a real default, it brings money in, for free. Right now the Chinese (once again) are starting to invest massively in USA real estate (sign of coming market peak, in a few years).

      2) Many major countries have defaulted. Some, many times.

      3) If people from overseas want to invest in a country, it can run a deficit indefinitely. This is true for money… But also for population: all of Europe with the exception of France and Ireland is an example here. Economics and demography are related. For example the recent economic surge has forced, but also allowed, Germany to import one million people (some, engineers from Greece!)

      I have questions. However let’s notice France and Germany had a (rare) official clash about economics this week.

      • pshakkottai Says:

        My point is to compare the euro union with Indian federal govt and Greece with West Bengal. Greece suffers austerity and West Bengal does not. Indian federal govt makes up the deficit for a non sovereign state with money created by a sovereign nation. If all nations in Europe become a true “nation”, there will be no austerity.

        • Patrice Ayme Says:

          Well there is austerity under a plutocratic Raj. For the People, that is. Problem in Greece is that many powers, the greatest, the church, the ship magnates, don’t pay tax… As I said for years, and plenty of others now do, including Obama himself this week

  4. Alexandros HoMegas Says:

    UK is part of the Judeo-Anglo-American Empire, the EU is submissive towards Anglo-jewish interests, just look at the War with Russia.

    • Patrice Ayme Says:

      Coincidentally, I just published an update on Putin/Russia. “War with Russia”? Britain and the USA saved the skin of the Soviets in World War Two. No, it was not just about colossal amounts of material goods sent by the UK and the USA, through Teheran and Murmansk. It was all about intelligence.

      “Jewish” interests?????? Do you know how many “Jews” there are?

  5. brodix Says:

    Money is not printed into existence, but is borrowed into existence.

    Currently most money in circulation is backed by government, i.e. public debt. Therefore the government cannot afford to actually effectively budget, or there won’t be nearly enough money in circulation, for the present economic model to function.

    To budget is to prioritize one’s needs and desires, then spend within reason. What the government does, is to put together these enormous bills, add sufficient goodies to get enough votes, then the president can only pass or veto it in whole.

    If they actually want to budget, then logically the legislature could prioritize, say by breaking these bills into their various items, have each legislator assign a percentage value to each item and put it back together in order of preference. Then the president would be the one to draw the line. To quote Truman, “The buck stops here.”

    There would be no cover to overspend for the president and all that didn’t get funded wouldn’t have sufficient support to override him.

    Of course, the world as we know it, would seize up the next day.

    The deeper problem is that in our monetized, atomized society, money has come to replace all the normal organic obligations and reciprocity that would allow groups of people to function together. It is like refined sugar.

    Now if people understood that it is not really personal property, but is a form of public medium, then they would start to be more careful how much value they extract from their lives, communities and environment, in exchange for this quantum of promises.

    They would also be far more vigilant to others abusing the system, knowing it is a public utility and not just a personal commodity.

    Money to society is like blood in the body. The heart, the banks, don’t own it, they circulate it, matching lenders to borrowers. When they take too much for themselves, it just clogs the arteries and valves, making the heart pump harder, resulting in high blood pressure, aka. quantitive easing. Yet the circulation to the extremities is poor. It “trickles down.”

    There was a time when government was private, aka monarchy, but they lost sight of their social function and so it became a public trust. Now the banks are doing the same with the financial circulation system. When the world goes to public banking, the profits will be used as taxes.

    Like democracy, there would be local, state, regional, national and international levels, working together, or balancing each other. Knowing their greatest asset with be healthy communities in a healthy environment. Not just this vortex of extracted wealth, with no other use than satiating the egos of the wealthy.

    When the bankers do blow up the financial system, their levers of power will no longer work and those they gave the guns to, will no longer need bankers to hold power.

    So after the wave, comes the trough and hopefully humanity will make it through. Otherwise the planet will take a few thousand years to recover.

    • Patrice Ayme Says:

      Hi John:
      Agreed that banks are vampires, and just clog the arteries.

      OK, true most money is borrowed into existence, in the system we PRESENTLY have. Otherwise the government can create money as needed.
      In particular, government borrowing means nothing, or very little. If the Japanese gov defaulted on its 230% GDP debt, it would just be a tax…

    • brodix Says:


      And a lot of distressed pensioners, given the money men will make sure they get out before those whose money is being managed.
      The central bank does “print” money. The problem is they have to then spend it into the economy and with the Japanese, that has reached the point of buying stocks outright.
      When people don’t want to sell what they have, then the price goes up and the value of the money goes down. If there is no faith in the accountability of the government, it can go very far down. Then the only power the state has is fear and then everything gets blamed on “others,” so war is the answer.
      A lot of this is physics, but the physicists can only tell us it’s “multiworlds,” so people are just herded around by those bigger then they and hope their Gods can save them.

    • brodix Says:


      A bit of the physics goes back to the point I kept trying to make about time and temperature at Scientia Salon. What drives greed is the calculation of linear time, that progress now gets you and your descendants ahead, but if we better appreciated the thermodynamic feedback loops, people might understand how the blowback is created and that societies function as a whole, not as atomized components. “Particle politics.”
      This is why I try to change the debate in physics discussions. They monopolize this education process and so people turn back to their old religions. Which only know good and bad, us versus them.
      Safe to say, I don’t have much luck. As the moderators would reply, “We don’t understand your point.”
      Academia can obscure as well as enlighten.

      • Patrice Ayme Says:

        Well, even when I don’t get a point, I respect the possibility that the person who offers a comment has something interesting to say, which I do not understand at that point. Doing otherwise is apparently believing one is god. This is the problem with Scientia Salon.

        Academia is paid by the powers that be, and say what they want at that point. After repressing the heliocentric system of Buridan for 2 generations, the Pope suddenly wanted to hear about it, so mighty Abbot Copernicus was asked to expose the heliocentric system. By the Pope.

        I don’t think thermodynamics (which I have taught) helps primarily to explain human behavior. Feedback is another matter. We are going to get plenty of it soon with the greenhouse.
        Please don’t nestle comments too much, they become unreadable, especially on small devices (I observe, and have been told).

      • brodix Says:


        I try only posting to the original subthread, to reduce nesting.

        The idea of thermodynamics as a basis of feedback doesn’t seem to gain much favor. Keep in mind though, that all information has to be manifested by energy. No 1’s and 0’s, without those electrons racing through the gates.
        The mind can only process static forms, not the dynamic creating those forms, or it would be all white noise.

    • pshakkottai Says:

      Hi Brodix https://mobile.twitter.com/StephanieKelton/status/389441574993526784/photo/1
      shows that money is created not borrowed. This is actual US data.
      It is a demonstration of the balance shown above. With low trade created money becomes people wealth. Red plotted positive = blue peoples’ money plotted positive upwards. And red area = blue area = wealth of the people. Money transfers from the govt to the people. Note the symmetry.

      • Patrice Ayme Says:

        Very interesting graph, Partha.
        In any case, bank money creation through borrowing is directly an amplification of the money provided by the state (more precisely the central bank) at this point. That gets obscured by the fact they have different methods to do that (pure check writing, or Quantitative Easing where the Central Bank buys government bonds, that is, from the state, to increase the capital reserves of… allegedly “private” banks…)

        • pshakkottai Says:

          Yes Patrice. Money created by banks is much larger(about 10 times larger) than govt created one but bank money balances to zero at any fixed time, lenders (=savers) and borrowers owning equal and opposite amounts( except for the small interest). This accelerates transactions but produces no net gain = people wealth. Only govt Created FISCAL DEFICIT becomes people wealth as the money balance shows. And quantitative easing is a fraud.

      • brodix Says:

        That does seem to show the point. The creation of money is largely backed by government debt.

        Which goes to the point that the current system cannot afford governments to balance their budgets. Thus they need to find ways to spend it, such as large armies and feeding unemployed people, rather than finding ways to create employment. It is a money focused world, not a people focused one. Eventually the house of cards does fall.

  6. dominique deux Says:

    Sorry for the late comment – the brand-new public hospital I inhabited for a week, enjoying care which is testimony to the remarkable resiliency of France’s besieged health system, simply did not have wi-fi in its rooms.

    I agree to everything you wrote. But I want to stress that a central point, in analysing Europe’s cretinous economics, is the Alesina-Ardagna-Reinhart-Rogoff affair, which Krugman only refers to in passing.

    Their mercenary falsifications not only provided faux-academic glitter to European finance’s conspiracy against the people (they were still quoted by the demented Finn, Economy Apparatchik Olli Rehn, years after they had been debunked), but their debunking, which should be recalled in any serious discussion and reshaping of the Union’s economic strategy, is never, ever, ever, mentioned.

    And this is quite telling about the conspiratory nature of the European Commission’s embrace of their views. This was not, as you rightly stress, happenstance. The Commission and the powers-that-be now completely agree that truth is dangerous for them. Gagging the naysayers is crucial. Even the so-called dissident economists and politicians simply ignore the issue, which should be central in their argument (there, ignorance and laziness may play their usual part in bolstering propaganda).

    • Patrice Ayme Says:

      Excellent comment, Dominique! We depend upon your health to impose sanity on this site, so please keep your health as good as possible. A brand new hospital without WIFI is just grotesque. (However there is even more grotesque in the USA: the worst places to get Internet access generally is top notch universities, something I officially protested about for years; I think they are afraid one will steal their secrets, although they all hang at the public teat, whether they are private or public, so most of their “secrets” ought to be in the public domain… Places like Berkeley with a huge patent portfolio would beg to differ… Not that their meek defenses will scare professional thieves.)

      There are indeed plenty of conspiracies out there. However the first thing American students are told, is that those who “believe in conspiracy theories” are mentally insane. So, by definition, the sane, in the USA does not believe in conspiracies.

      Yet, the New York Times just ran an article, today, basically saying there is a conspiracy about air piracy by crazed pilots. So there is progress.

      Most of history is about a number of people conspiring. For example Louis XVI’s attempted reforms (with Turgot, etc.) were opposed by a conspiracy of very short sighted, suicidal, exterminating plutocrats. The King reciprocated with his own conspiracy, which he held in a secret ledger, and which involved officers such as La Fayette: the American Republic, aka, the USA. Later Louis went a few conspiracies too far, and lost his topology in the process.

      (Similar observations hold for Louis XIV, or Louis XI.) So abusing conspiracy, and governing by conspiracies alone, can become a habit hard to quit: this is exactly the case of Brussels.

      (Let alone Obama with Iran right now: the, late, urge to make a deal, any deal, now that Obama has discovered all he could safely do as president, has to do with opening up commercially with the USA, among other things, and counterbalancing the Islamabad-Beijing axis…)

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