Archive for the ‘Private banks’ Category

Depression’s Causes: Righteousness & Viciousness

October 14, 2014


Slowly rising consensus: in some important ways (evolution of relative GDP; employment rate; public investment; education’s relative performance), the economies of the leading countries are doing worse than during the “Great Depression” of the 1930s.

That’s why I prefer the expression “Greater Depression” to “Great Recession”.

And we have seen nothing yet: the cause of the “Greater Depression” of the 1930s was a chain of errors, which were easy to avoid.

(First a splurging in the 1920s, especially in the USA and Britain, and its unavoidable attending crash compounded by the American Senate’s arrogance that the international economy could be tweaked through tariffs, to profit only the USA, the whole thing followed by collapse of international trade and then by “liquidating everything” (as was said at the time).)

Thus, the roots of Depression of the 1930s were shallow, easy to avoid next time: avoid splurging, keep international trade going, use public money to avoid 9,000 bank failures (in the USA alone), and institute a FDIC (Federal Deposit Insurance Corporation: Europe’s “Banking Union” is trying to mimic that).

There are serious problems now, much more serious than in the 1930s. Including a lack of seriousness.

Serious reasons for collapse caused the long decline of the Roman Empire, or struck shortly after 1300 CE, when entangled ecological, climate, demographic, and plutocratic crises, with an attending plague, combined to kill half of Europe, and brought five centuries of war.

Indications are that the world economy, having not really recovered from the 2008 crisis, is stumbling. Especially Europe. Population: more than 750 million (EU + Russia, etc.).

Why? Why not?

In the 1930s, the government of the USA, first under Hoover, and then much more spectacularly under Roosevelt, starting in 1933, made Herculean efforts (in public spending, and legislation). Nowadays, it’s quite the opposite.

Paul Krugman suggests that righteousness is the cause of this decline: see the obstinate Merkel, and the refusal to do away with high debt levels.

In “Revenge of the Unforgiven. How Righteousness Killed the World Economy”, Krugman observes that:”…now [world] growth is stalling, and the specter of deflation looms.

If this story sounds familiar, it should; it has played out repeatedly since 2008. As in previous episodes, the worst news is coming from Europe, but this time there is also a clear slowdown in emerging markets — and there are even warning signs in the United States, despite pretty good job growth at the moment.

Why does this keep happening? After all, the events that brought on the Great Recession — the housing bust, the banking crisis — took place a long time ago. Why can’t we escape their legacy?

The proximate answer lies in a series of policy mistakes: Austerity when economies needed stimulus, paranoia about inflation when the real risk is deflation, and so on. But why do governments keep making these mistakes? In particular, why do they keep making the same mistakes, year after year?

The answer, I’d suggest, is an excess of virtue. Righteousness is killing the world economy.”

Notice that brandishing righteousness diverts attention away from full blown viciousness (which I believe is dominant). Then Krugman presents a small fraction of the problem, affecting to believe naively that high debt is the cause of everything:

“What, after all, is our fundamental economic problem? A simplified but broadly correct account of what went wrong goes like this: In the years leading up to the Great Recession, we had an explosion of credit (mainly to the private sector). Old notions of prudence, for both lenders and borrowers, were cast aside; debt levels that would once have been considered deeply unsound became the norm.

Then the music stopped, the money stopped flowing, and everyone began trying to “deleverage,” to reduce the level of debt. For each individual, this was prudent. But my spending is your income and your spending is my income, so when everyone tries to pay down debt at the same time, you get a depressed economy.

So what can be done? Historically, the solution to high levels of debt has often involved writing off and forgiving much of that debt.”

This is a solution I have advocated since 2008. See “Reforming World Finance”, from November 2008, when I naively still hoped my friend Obama would grab the bull by the horns, as if he were courageous, or something. None of these obvious reforms was implemented, but at least now an economy Nobel was given roughly in this direction (see yesterday’s essay).

The 2011 version is: “To Save The World, Please Default (And Grab Capital From the Conniving Plutocrats)

Iceland and Greece did write-off some debt. They had no choice.

However, debt forgiveness is only part of the problem (Oh, by the way, full disclosure: I have zero debt, so if I were biased, it would be the other way!)

The nature of the old debt, and the nature of the new debt are the core problems.

Debt because housing prices are through the roof comes from lack of building. Debt because of enormous leverage by public-private banks and companies involved in financial horror to steal We The People, is still something else.

The erroneous nature of the debt has misaligned the entire economy. We live in a world where there are master sommeliers. And where millions of people are tickled pink by the idea of being waited by a master sommelier, somebody who can look through a bottle thanks to the light of a candle, he expertly lighted, to stop exactly before the deposit at the bottom gets into the clear wine.

But then there was not enough money, or interest, to invent an ebola vaccine. Civilization is drunk, Bacchus is god, and Death invited to the party.

The entire debt machinery is stuck. Banks have lent to financial conspirators for decades, and are still doing it ever more. This sort of debt ought not to exist. (Bankers have been conspiring to steal on the currency markets, the administration of the USA claims to have just discovered, hinting that this time some bankers may be prosecuted personally. Maybe. Perhaps. We will see… But that sort of outright criminal activity is different from stealing by giving money only to one’s friends and co-conspirators.) What is needed for civilization to survive, is debt that brings new high Return On Investment for We The People. That could be new tech, or new housing, new, sustainable energy sources (my eye being on thermonuclear fusion, a field where power is growing according to its own “Moore Law”, that means, exponentially; to provide clean BASE energy). Plutocracy naturally is not interested by We The People flourishing. Just the opposite: Pluto thrives on misery. That’s the part of the economy which no one very serious, and part of the oligarchy, wants to see.

Even normal people do not want to see it: it’s too depressing, and they don’t know what to do.

Moreover plutocracy is entangled with a more far-out explanation of the present economic distress: the world is getting old, as the Romans used to say. The Romans needed to transit from the old economy, to a new one. As we do. Paralyzed, mesmerized and occupied by plutocracy, the Romans could not even conceive of the notion (all the more as some zones of the empire, especially in the Orient saw their GDP climbing all the way until the barbarians invaded, archeology shows). Roman mines got exhausted, regions which used to produce lots of food became poor, Return on Investment of many activities collapsed,. there were not enough slaves, nor small farmers to support production, or the army, the economy and security organized until then by the state faltered, from too small tax revenues, and finally the middle class and local government (the “curiales”) were destroyed by taxation, while plutocrats went on a rampage, grabbing most powers. Romans had to make transitions (new tech, no more slavery, less plutocracy!) They didn’t. We are in a similar crisis. ROI is collapsing, so is the biosphere. Robots are threatening to destroy much employment all together. The notion of productive activity, thus productive debt, has to change, forgiven or not.

Krugman himself concludes that the debt crisis will not abate. He does not say why. I will: it’s not just out of mental inertia, it’s out of viciousness.

Some will say I exaggerate. Not so. Look at Italy. The government debt is around 145% of GDP, and pays more than 3% interest. So it augments at the clip of around 5.5% a year. To diminish that debt, nominal Italian GDP ought to grow at more than 5.5% a year. But guess what? Not only is Italy not growing, but Italian GDP is smaller now than 14 years ago (with a larger population).

There is only one way out: default. That is tell the plutocrats that they can forget their money, or, more exactly, treating We The People as if we were indentured servants, or serfs. I rest my case.

Patrice Ayme’

Anti-plutocratic Tirolean to Common Sense?

October 13, 2014

Is this site attributing the Nobels?

It sure looks like it: I approve strongly of three Nobels in a row. Amazing. On Friday, the Nobel was attributed to a French writer who worries a lot about Nazism, Modiano. Then there was the anti-sexist, anti-Islamist Peace Prize to Malala.

Today professor Tirole, a French economist at the public university in Toulouse, got the Nobel in economics. Mr. Tirole pondered the best regulations so that large, powerful firms in industries such as banking and communications would act in society’s interest. that’s one of my familiar themes, and I go much further.

It’s the first Nobel in economy in 10 years who is not a citizen of the USA. Are we in an increasingly terrible socio-economic situation just from that monopoly? Tirole is the most American of French economists: a “polytechnicien”, he got an economy PhD from MIT.

He is depicted as “liberal” (right wing pro-capitalist in French parlance), because he believes in share holders’ rights, and that corporations should just worry about profits. As an extreme left wing progressive nut, I, paradoxically, agree with both points.

However how do I reconcile this with what I call “governmentalism”? Well, they go hand in hand.

According to governmentalism, the main actor in economics is the government. That’s pretty much obvious and was even true on Caribbean islands ruled by pirates: pirates, too, had government, and it ruled their economy (and that’s true to this day, except the pirates use finance instead of swords).

Much of what passes today for the free market is little more than global monopolies, organized crime and deregulated madness.

Jean Tirole, defending the real owners, the shareholders, has done important work exposing executive overcompensation, what I call the CEO class, and over-greedy corporate hegemony.

Here is the introduction of Roland Bénabou and Jean Tirole’s “working” paper on the “Bonus Culture: Competitive Pay, Screening, and Multitasking”. (Executive overcompensation, etc.):

“Recent years have seen a literal explosion of pay, both in levels and in di¤erentials, at the top echelons of many occupations. Large bonuses and salaries are needed, it is typically said, to retain “talent” and “top performers” in finance, corporations, medicine, academia, as well as to incentivize them to perform to the best of their high abilities. Paradoxically, this trend has been accompanied by mounting revelations of poor actual performance, severe moral hazard and even outright fraud in those same sectors. Oftentimes these behaviors impose negative spillovers on the rest of society (e.g., bank bailouts), but even when not, the firms involved themselves ultimately suffer: large trading losses, declines in stock value, loss of reputation and consumer goodwill, regulatory fines and legal liabilities, or even bankruptcy.

This paper proposes a resolution of the puzzle, by showing how competition for the most productive workers can interact with the incentive structure inside firms to undermine work ethics–the extent to which agents “do the right thing” beyond what their material self-interest commands. More generally, the underlying idea is that highly competitive labor markets make it difficult for employers to strike the proper balance between the benefits and costs of high-powered incentives. The result is a “bonus culture” that takes over the workplace, generating distorted decisions and significant efficiency losses, particularly in the long run. To make this point we develop a model that combines multitasking, screening and imperfect competition, thus making a methodological contribution in the process.”

Philosophically it can be explained and said much more simply: a culture of greed has taken over.

One should even say a MOOD of greed takes over. Considering recent discoveries in ethology and epigenetics, hell itself is the bottom of that abyss.

Indeed. Just like some fishes, according to circumstances, modify their genetics, and females turn into males, and some males even in “super males”, the top officers of today’s society turned into predators predating onto the rest of society.

It was high time that some authorities (and the Nobel committee is a small sort of authority) recognizes something in that direction. The work of reflection is just beginning.

The philosophy of banking has not been mulled enough. Nor that, more generally, of mighty corporations.

Those are gigantic institutions with a para-governmental role. They are big enough to influence governments, society, law enforcement, and the law itself. The immensely rich heads of major corporations are received by heads of states, as if they were other heads of state.

Yet, officially, banks and corporations are not led by the social good, and other higher principles, but by greed. Just greed. When those greedsters are celebrated as if they were statesmen, “philanthropists”, or even philosophers or “geniuses”, greed is recognized as philanthropic, and genial.

The less we regulate those giant corporations, the more powerful they get, and the more they can change the mind of civilization itself, towards greed. For example executives of Google were loud, clear, and acknowledged by the British government itself, to be of great influence in deciding educational programs: they are credited for making coding mandatory at age 5 in all schools.

Are Britons to become all little googlers? Ogling the mighty founders of Google, who travel the world in their personal jumbo jets, while paying no significant taxes, and being received by heads of states on their knees, another proof of their genius?

Yet Google siphons its multi-billion Euros profits in Europe through Ireland, to lower its tax bill, and then send said profits to paradise islands with no taxation whatsoever. In other words, Google seems to be an organized crime corporation, as it avoids paying tax nearly entirely. Mafias, and other crime syndicates can only admire such brazen arrogance, and no doubt envy Google after tax profit margins.

European regulators condemned Google for cheating with its search engine, to bring itself even more profits, and now say that Google is ignoring their pleas. Yet, we are putting the fate of youngsters under Google’s maniacal guidance.

This is just Google, the Do Evil company.

All other mighty corporations are applying similar tricks. GE, the oldest company in the Dow Jones, paid no tax for years. Disneyland France, the number one entertainment center in Europe, claimed giant losses, and had to be rescued by Disney (while forgetting to say said losses were from paying giant fees to Disney itself, probably re-routed through some tax heaven).

The situation with the banking system is even worse. As Marx noticed, banks have a monopoly. He left it at that. Now we need to talk.

A monopoly of what? Banks create most of the money. Thanks to the states.

So here we have people, the bankers, unelected and unsupervised, who do not have to justify themselves, operating in secrecy, who, through credit, give most of the money which exists in the world, to whoever they like. It turns out, they love themselves.

And, officially, all the motivation that this sort of secret government, by corporations, for corporations, has, is greed.

Time to ask them question, observe, study, and regulate them.

Economy does not need any more equation to burnish its reputation as a pseudo-science. Economy needs a thorough rethinking, of a philosophical nature.

Otherwise the employment situation, which Tirole, after getting his prize, just described as “catastrophic” will only get worse.

Employment is, of course, a crucial pillar of democracy: no employment, no democracy. The economy is more now about plutocracy than anything else: Tirole and company have lifted just a little bit of the veil.

Patrice Ayme’

Elites’ Bad Faith

July 7, 2014

Bad faith was central to Sartre’s philosophy. He should have known, being a magnificent example of it. Bad Faith is vicious. It has to be dealt adequately, that is it has to be outmaneuvered.

An example: the Nazis contacted the greatest photographer in Berlin. He was asked to present his ten best pictures of Aryan babies. The lame Goebbels (a PhD and information minister) selected the best. The picture was published all over the Reich, as the definition of the magnificent human being that the somewhat degenerate Himmler, Hitler and Goebbels were not. Unbeknownst to those idiots, the famous photographer had selected the picture of a Jewish baby, here on the cover of “Sun In The House”, a Nazi magazine.

Aryan Ideal: Jewish Baby Became Chemistry Professor

Aryan Ideal: Jewish Baby Became Chemistry Professor

“I wanted to make the Nazis ridiculous,” the photographer revealed to the amazed parents (who then had to hide their baby, lest she be recognized, and fled to France).

However, Nazism was not about smarts. It was about grabbing riches and power. For that, smarts were the enemy. Similarly, nowadays, “conservatives” are not about smarts, or being, actually, conservative. They are all about grabbing power and riches, thus smarts are something that’s in the way. So they target smarts for destruction, and this is exactly what refined studies reveal.

A New York Times’ article reveals that divisions about facts, such as whether the biosphere is warming or evolution happened, commonly attributed to ignorance, is nothing of the sort. The divide “is wider among people who otherwise show familiarity with math and science, which suggests that the problem isn’t a lack of information…

[We] found that factual and scientific evidence is often ineffective at reducing misperceptions and can even backfire on issues like weapons of mass destruction, health care reform and vaccines. With science as with politics, identity often trumps the facts… Unfortunately, knowing what scientists think is ultimately no substitute for actually believing it.

… we also need to reduce the incentives for elites to spread misinformation to their followers in the first place. Once people’s cultural and political views get tied up in their factual beliefs, it’s very difficult to undo regardless of the messaging that is used.”

This is why I suggest that deliberate lying on facts, in a mass media setting, is a crime, and ought to be pursued with as much ardor as some forms of, say, pedophilia. A new branch of government ought to be created: TRUTH (independent of Justice, Executive and Legislative).

Paul Krugman chimes in Beliefs, Facts and Money Conservative Delusions About Inflation with: “The problem, in other words, isn’t ignorance; it’s wishful thinking.”

Wishful thinking? Wait a minute, Paul. It’s, conveniently, the thinking which plutocrats wish for Americans to have. It’s more vicious thinking than wishful thinking. The researchers mention euphemistically “elites”, because they want to keep receiving money. Elites with money, that’s plutocrats. Pluto, Satan, all that: it’s no good. “Elite” is a good word, though. A fresh coat of paint on Satan, should make Satan happy.

Krugman believes that knowing more about the issues widens the divide, because the well informed have a clearer view of what they need to reject, so as to sustain their belief system. Except, of course, and that’s not a small detail, that the “elites” don’t really “believe” in their rejection, as the researchers found. Instead they believe they have to exhibit belief to sustain systems of thought that are convenient for their way of life. In other words, they are lying.

I notice this all the time. I talk to the “elites”, and I notice they use “anti-ideas” namely slogans, while their body language and conversation strategies tell me they absolutely do not believe in the garbage they affect to consider self-obvious (“the climate changed before”) .

In any case, Krugman wrote the article linked above, inspired by the Bad Faith of the elite. He speaks of “Great Recession”, “Disdain for Government”, “Fiat Money”, but he does not go far enough. Either his semantics, or the concepts attached to it, do not go far enough.

So let’s correct Krugman gently:

Great Recession? Great Recession of democracy. How does one make democracy recede? By making the People really stupid.

Much of the pseudo-progress under Obama falls into that category: Obamacare is a pseudo-reform, giant wasteful programs such as the F35 have been left intact, environmentalism has been turned into a Macbeth like contemplation about a particular, irrelevant pipeline, banks have not been reformed back to the much more advanced system president Roosevelt had created in 1933, and plutocrats have been turned into the hidden government, somewhat officially.

Disdain for government” in a democracy, means disdain for the People: in a democracy, the People is supposed to rule.

“Printing money”? Enough money has to be printed to support enough exchanges to support the employment that the potential economy, and the real society, calls for.

But that’s true only in a democracy. If one is attempting to change a democracy into a plutocracy, mass employment, aside from slavery, is counterproductive, as it empowers the People.

In the end all these economic theories that are obviously incorrect in democracy, are profoundly conducive to plutocracy. That’s no accident.

Krugman calls for “Fiat Money”… Through the Central Bank. However, the Fed creates the economy through private banks. That’s still plutocratic.

The really democratic solution is to create money through the Treasury as needed for mass employment projects projecting progress (in efficiency, ecology, hedonism, etc.). Let the government create huge spending programs, and run a so called “deficit”. Sell bonds, whatever. As in Japan. At worst, if there was a default the bonds would turn into a tax (of those rich enough to buy said bonds).

Those who want to reduce the money below what society demands, want mass unemployment, and thus the reign of those who have massive private capital, the plutocrats.

None of those crazily erroneous ideas of the far right and its attached financial and CEO class are thus crazy, when looked at as a system of mood and thoughts that drives towards plutocracy. Then they are entirely logical.

Bad Faith is a mood that produces solid logic. One needs greater emotions to break it, rather than meek reason.

Patrice Ayme

Propaganda From Subject Control

May 2, 2014

Another day, another clueless editorial of Paul Krugman about the socio-economic crisis. Krugman, in his embarrassing naivety, opposes, as all too many do, austerity versus [the attitude that it’s] “no time to worry about budget deficits and cut spending, which would only deepen the depression”. Sorry, reality is otherwise subtle.

[Funny Krugman calls it a depression now. I called it a Greater Depression, all along, precisely because the causes are so deep, and so deliberately misunderstood, I expected the depression to last indefinitely.]

I sent a comment. It was delayed from publication for nine hours, by the censors at the New York Times, and that made sure few people saw it (3 readers approved it). “Preferred commenters” of the New York Time such as Karen Garcia, were published right away (and approved by a thousand people). It’s not that Karen Garcia is wrong (she parrots some of the consequences that I have evoked for years).

The problem with Karen Garcia and other commenters and editorialists the NYT advertises, is that they describe epiphenomena as if they were fundamental, while not even guessing what the fundamental problems are.

Because I understand the fundamental causes, the NYT tries to make sure I am not read. A good way to insure the deepest debates are avoided, is to drown us with thousands of comments always from the same commenters, always late on the critical curve.

Here is one of the perpetually “featured commenter” of  the NYT: “Karen Garcia is a trusted commenter New Paltz, NY

It’s not that economics failed. It’s that the cult of Mammon succeeded. The rich control all of us via such legalized bribery scams as Citizens United. The rich ensure that the austerity dogma is broadcast by their six media conglomerates, and that only two sides of one big business party are allowed to exist. Wherever they detect an opportunity vacuum, wherever they smell another distressed pocket of humanity, they pounce. A study by some Northwestern University researchers reveals that while the wealthy (they like to call themselves “thought leaders”) intellectually accept Keynesian economics, they’re de facto Scrooges.

Some findings: –Only 16% of millionaires think climate change is “very important.”

— While two-thirds of Americans favor single payer health care, less than a third of the wealthy do.

— The rich favor more government spending in only three areas: science, infrastructure, and education. Investment opportunities abound for charter schools, privatized toll roads, university research programs — all funded on the public dime for private profit.

— Only 19% of the wealthy believe the government should create jobs for the unemployed (as opposed to 68% of the general public). Less than half favor raising the minimum wage. Less than half think it is the government’s job to see that nobody goes without food, clothing and shelter. It’s not that economics failed. It’s that we’re living in a nightmare reality show called “Plutocrats Gone Wild.”

Karen Garcia is a trusted commenter New Paltz, NY:

Here’s the link to the Northwestern study cited above:

One of its authors, Benjamin Page, also collaborated with Martin Gilens of Princeton on the just-released preview of a forthcoming report which concludes the USA is well on its way to becoming an oligarchy. That paper is here:…

On one hand, I am proud to be a commenter NOT trusted by the plutocratic owners of the New York Times. On the other, that means that my deeper critiques go unnoticed.

The “Garcias” the NYT submits us to, look very “lefty”. And I approve Garcia’s message above. But, just as with Krugman, that talk does not have much teeth (being very late on my curves).

Indeed: how did the cult of Mammon arise? That “Garcia”, in her zillions of “featured comments” has never said, and never will, not any more than Krugman (except, of course, when, and only when, everybody knows about it: Garcia and Krugman use the concept of “plutocrats” now… but did not, for years).

The rise of Mammon has to do with the, leverage, government guaranteed, unsupervised Public-Private Fractional Reserve System, and the Public-Private Central Bank. Instituting a world wide hedging casino also helped. All together allowed financiers to get immensely rich, and, thus, powerful.

That Krugman will not tell you, and nor will “Garcia”. Quite the opposite. Too technical. Krugman insisted for years that the futures’ market had no effect on the real economy. Clueless max (I sent him plenty of comments to enlighten him, but I am still waiting for results!)

Krugman asked a number of rhetorical questions in “Why Did Economics Fail?”. He made clear that it is not “economics” that failed. I answered them:

Krugman: Why inadequate demand?

Because there was not enough money for the real economy (a good way to get there is by cutting the incomes a normal people). Why not enough money? Because banks create money, through credit.

Banks extended that money to financial co-conspirators, the hedge fund managers and other financial and future commodity traders, quite a few of them in house. One could not do this in the past as these activities, using all the money in the world to run a casino, did not exist in the past.

That basic problem has not been fixed. It requires re-instating a modernized version of the Banking Act of 1933. The casino-that-uses-all-the-money-in-the-world ought to be dismantled, too.

Krugman: “this was no time to worry about budget deficits and cut spending, which would only deepen the depression.”

Yes, I have called it the Greater Depression, and so it is in term of unemployment and GDP, as, in many countries, the numbers are worse than in the 1930s.

When budget deficits are caused by hedge fund managers paying less taxes than janitors, or because corrupt bankers funneled money to co-conspirators to build airports, or towns in the middle of nowhere, and the banks have to be rescued, we should worry about deficits.

When spending has to do with crony capitalism, we should worry about deficits.

Krugman: “why didn’t we use the economic knowledge we had?”

Because the plutocrats are not after repairing the economy. They are after their own profits first, destroying democracy second. To get to the latter, the more high unemployment and poverty, the better. Whether the plutocrats in command are aware of this desire of them, is irrelevant. They have it, deep inside.

Naturally, the hyper wealthy tend to reward economists that support their views, and since the wealthier the university, the higher the salaries and the more they are connected to plutocracy central, the desire of the Plutos became the teaching of the most respected economists, the mainstream economic thought.



In imperial Rome, and Constantinople, plutocrats feared revolution, and the return of the Republic.

(That fear extended all the way to 17C England and France; Anne of Austria, reigning queen of France, mother of Louis XIV, faced by the Parliament’s deputies told them it was “evil to prefer the government of a republic to that of a monarchy… We are not in a republic.”) .

To prevent the return of the Respublica, Roman plutocrats made sure that most people were unemployed in Italy in general, and especially in the world’s largest city, Rome. Unemployed people are powerless (idleness can’t strike), and unemployed people dependent upon the “philanthropy” of the richest (a phenomenon in plain evidence in the USA, where filthy plutocratic tax free plotting conspirators have to be called “philanthropists”, especially when they capture the educational, social, or health care systems).

We The People have been trained to behave like pigeons feeding in the hands of some of the basest individuals in the universe (that’s typically how they got to be so rich: look at the dynastic, government  leech Carlos Slim in Mexico, second richest man in the world, if you don’t want to look at the hyper well connected Gates, ever since he was in the womb).

There is every reason to believe that the same phenomenon as in Rome and Constantinople is at work now. Actually, in the ideal plutocrats’ world, this debasement of man by wealth is the only thing that should work.

To underestimate the Dark Side, and to exclude it from economic theory, is missing out half of the motivational universe of the genus Homo. But it goes well with underestimating the venality of economists. And then economists can turn around and pretend to predict what’s good and bad for entire nations.

All what this achieves is the rise of plutocrats determined to outdo themselves and their “partners” (a word the Mafiosi around the Kremlin love to use). Hence the rise of the Kochs and Putins. Hence the decay of the biosphere.

The decay of the biosphere is used as a decoy, a sacrificial pawn, that attract attention. It’s made into a debate where the population is invited to lose all sense of reason and evidence.

How does that work? Take an example: the snowpack in the high mountains of California is 18% of normal (April 2014); California’s reservoirs are half full (instead of 100%). It’s obviously a crisis. But then plutocrats roll out their well-paid deniers (Putin does the same, even inside the USA!), and they flood the media with their insults to reason and evidence.

That creates a secondary crisis, more general than the first one, as now people are invited to deny reason and evidence.

While We The People waste energy debating individuals of extreme bad faith, the real problems such as why is it that Putin has 40 billion in Switzerland alone, and why is it that all the media and political systems are controlled by so few? (See the references of “Garcia” above, or mine in earlier essays). How can that be compatible with democracy?

And how come the rich is not taxed enough to prevent the chain reaction of the plutocratic phenomenon? Well, because we have been obsessing about trivialities, or red-herrings.

In other words, false debates hide the real ones. And control is achieved that way. Thus Krugman’s droning propaganda at giving ever more money to precisely the banks and individuals who created the Greater Depression of 2008, and calling that the antidote to austerity. (Of course he does not put it that way.)

Censorship and media manipulation are more subtle in the USA, than in Erdogan’s and Putin’s Great Reichs. Thus, they are not seen by most… And are even more efficient.

Patrice Aymé

Plutocracy, USA, Switzerland, EU.

April 13, 2014

Plutocracy is to politics what cancer is to life. It’s malignant, invasive, pervasive, and a killer.

Such is the obvious banner one should use at the top of one’s thoughts, when reading:

As said there: “When organized interest groups or economic elites want a particular policy passed, there’s a strongly likelihood their wishes will come true. But when average citizens support something, they have next to no influence.”

Representative politics is already, to start with, if not dictatorship, at least intrinsically oligarchic.


What to do about it? Well, do what works. Other countries, from Japan to the EU, have tried to reduce the influence of money in politics, just as it was augmented in the USA. But one has to go much further.

A way out is to do what Switzerland has been increasingly doing in the last three decades; have We The People vote the laws (through “votations”, every three months), and let the parliament (= Congress; or the “Federal” as the Swiss put it) figure out the details of the laws We The People passed (Courts and the like also chip in to check the proposed laws are constitutional).

As a result, Switzerland has an increasingly mighty anti-plutocratic arsenal, including all sorts of caps and regulations on the wealthy and banks. And more are coming… Every three months. Income caps have even been proposed (Republican Rome had those, 23 centuries ago!). They were rejected, but more subtle caps are coming.

Being a professional politician in Switzerland is increasingly difficult, and of little interest. The People (demos) is increasingly ruling: People-power: Demos-kratos.

Another positive effect has been on wealth of the Demos and the economy. Switzerland’s unemployment rate has collapsed (in spite of colossal immigration, higher in percentage than the peaks ever experienced by the USA). The wealth per capita is now much higher than in the rest of Europe, or the USA (main source of wealth: pharmaceuticals, and high tech).

Nowadays, everybody who can, and know, wants to live in Switzerland: the population has augmented by 15% in ten years.

So We The People (of Switzerland) voted an obscure law that demands, within three years, to somehow constrict the migratory flux from the EU to Schweiz. The EU screamed a lot, in righteous indignation.

(The German president even allowed himself to suggest, several times, that total democracy went a bridge too far in Switzerland, in obvious allusion to Nazism… Thus demonstrating that he was not aware that Nazism was a plutocratic phenomenon masquerading as populism. Nazism had nothing to do with the democracy in Switzerland, and more to do with what Putin is doing: sending armed assassins.)

An obvious solution to Europe’s Swiss problem is to realize that it’s Europe that is the problem.

The solution? Make the rest of Europe more democratic, and thus wealthier, by imitating what is done in Suisse.

Lack of democracy is leading to the greatest evil of them all, the destruction of the biosphere. See how dramatic it is getting:

What’s the relationship between deterioration of the climate, and deterioration of the democracy? It’s not just that fossil fuels favor top heavy organizations. It’s also that evil is what evil does: Pluto, by definition, loves what’s bad, and even satanic…

The deterioration of the democratic climate implies that of the planet.

Patrice Aymé

GDP Doesn’t Produce Life

March 10, 2014

One of my not so sophisticated jokes is that GDP stands for “Gross Demonic Product”. I have long compared France and the USA in economic matters, as the two republics are highly comparable. Paul Krugman is now of this opinion. As he puts it:

“I think I can usefull [sic] phrase my concerns in terms of my favorite comparison on these matters, which is between the United States and France.

The GDP Economy Roars Ahead In the USA: Nowadays, Americans Pay For everything

The GDP Economy Roars Ahead In the USA: Nowadays, Americans Pay For everything

Why this pair? Because we’re talking about two advanced countries that clearly have similar levels of technological competence but have made very different social choices; in particular, France not only does much more redistribution, it has expanded its redistribution over time, limiting the rise in overall inequality, while the United States has not.

So how have the countries’ destinies compared during the New Gilded Age? French growth actually has been somewhat slower, although hardly the catastrophe the country’s incessant bad press might lead you to expect.”

Overall French GDP is about 20% less, per capita than that of the USA.

However, it’s not clear that it means a lesser way of life.

Take medication: the French can buy the exact same drug, from the exact same manufacturer (French, American, or German), and the same package, and pay a fifth the cost. That’s fifth LESS contribution to GDP. The money contributing to GDP ends up, overseas, in some tax haven. How does that help well-being? By helping tax dodging plutocrats?

Take education: there is more than a trillion dollar of student debt in the USA. That’s a trillion dollar of contribution to GDP… of inextinguishable debt. The French GDP is terrible that way, because there is NO contribution to GDP, in France, from over indebted students.

Take transportation. Contemplate an American going around with his car. The car uses much more GDP per mile than the High Speed trains millions of French use every week. So GDP tells us the greater the efficiency of fast, modern transportation, the poorer a nation.

The USA’s economy has much improved since 2007. Thanks to fracking. Now the USA is the greatest fossil combustible producer in the world, even beating Putin’s petro-state. Fracking the planet to death since 2007 is great for the GDP of the USA. However, scientific studies in 2013 show that methane leaks all over much of the USA: that’s not so great for the planet, as CH4 is twenty, or more, times more of a greenhouse gas than CO2. (CO2 itself acts as a trigger for H2O, itself the prime greenhouse gas.)

The French, in vacation all the time and retired, early on, enjoy life outrageously. That brings a lower GDP. OK, so the French GROSS product is lower than it could be. Does that mean that French refined product is low? Of course not, quite the opposite: the grosser, the less refined.

Is a slave working the GDP per capita of his master up, better off?

France has been handicapped in recent years by artifacts related to her refusal of some methods, such as OGMs. The result? France went down from the world’s second food exporter to fifth. France has also outlawed fracking. An efficient crack-down on corruption (by contrast to corruption perception) has led to the loss of many contracts overseas.

What is GDP? The sum of all moneyed transactions. Thus, when a young French retiree works exclusively in a non-profit fashion, no GDP is generated. But that does not mean nothing is produced. Instead what’s produced is too precious to be moneyed.

In general, in an economy, what is the most precious, cannot be bought, or sold. That’s one thing free market naïfs don’t get.

It’s not a coincidence that Doctors Without Borders, Journalists Without Borders and the like got started in France.

Patrice Aymé

Bitcoin: Naïve, Evil & Demented

March 1, 2014

But Some Related Hope Nevertheless Lays Down Deep Inside, Thanks To ABSOLUTE WORTH ENERGY (AWE).

Shall I start with the evil part, or the demented part? Bitcoin is not just a bit con. Bitcoin is obviously a Ponzi scheme. It’s always a pleasure to infuriate geeks and tiny crabs. “Harriet” from Oakland (a Silicon Valley suburb) contradicted me, with typical techie arrogance: “Please learn what a Ponzi scheme is. Wikipedia will help you.”

Wikipedia is to geeks what the bible is to pedophile priests. A Ponzi, or pyramid, scheme is a financial scheme where early investors make money from later investors. That’s surely the case of Bitcoin. In 2011 the value of one Bitcoin rapidly rose from about $0.30 to $32, before falling back down to $2. Those who bought $30,000 of Bitcoins at $30 soon found their so called “investment”, or “saving”, to be worth $2,000. Now in Japan, a Bitcoin bank disappeared. Real money was exchanged for sheer bamboozling.

The Truth About The Public-Private Fractional Reserve System

The Truth About The Public-Private Fractional Reserve System

Geeks tend to be extremely mentally undeveloped outside, while being very smug about their small pathetic idiosyncratic view of the world (in particular all that they do not understand, they turn into a two cent joke; that’s also a characteristic of mathematicians; being one of them, I know the syndrome well).

Geeks believe that there are no empires, and they believe that, if there were some empires, they would be evil, thus irrelevant. They also believe, that they, the Geeks, are not evil, that Wikipedia (in English) is never wrong, and that links are all the truth you need.

Why to step in that mental swamp? Because Bitcoin is a delicious counterexample to the naïve concept of currency.

What’s a currency? It’s a space where an empire allows rewards and promises to be exchanged, backed-up by the empire military might. Fundamentally, a currency is the token system the empire’s soldiers are paid with. Emperor Septimus Severus pointed out to his sons, while dying in Britannia in 211 CE, that was the basis of all.

This is the hard version. This is reality.

To feed the state, the population needs to works, partly, for the state. That’s why taxation was invented. When there is not enough taxation, the state collapses. The best example of that collapse is the Late Roman empire, when there was not enough taxation of the rich to pay for defense (thus the cheap trick to use the Franks to insure defense).

Compare with the only back-up of bitcoin: not an army of soldiers, but an army of con men on Wall Street and other well organized crime. (Organized crime used Bitcoin for money laundering.)

Here is a related example: why is betting so popular in Asia? Because those who bet actually win. Why? So that they will be encouraged to bet some more, throw more money in the system. For which purpose? Because Organized Crime needs to launder money, and betting is how it does it. Losing 20% or so, is the cost of the laundering service to Organized Crime (such as Drug Trafficking).

Is a currency always created by an empire? At first sight two objections come to mind: the Thaler, and the Euro. For both it looks as if no empire was connected to them. However, that’s an illusion. (As anti-European fanatics are finding out, to their horror.)

The Thaler (or Taler or Czech Tolar… hence Dollar) was a silver coin used throughout Europe by many states for four hundred years. ( Etymologically, “Thaler” comes from German for “valley”, same as Neanderthal.) The Thaler was backed by states with serious armies: Austria, the Holy Roman German empire, Prussia, the Netherlands, etc.

A loose coalition of states can just be articulated around the army of just one state. That’s what happened with Prussia, which totally dominated the German speaking world from 1815 (partial dismemberment of Revolutionary France) until 1945 (eradication and annihilation of Prussia).

Similarly, the Euro is (mostly) backed by Franco-German might at this point. (Franco-Germania plus its immediate satellites makes a super-power, albeit one different in nature from the territory-rich USA.)

The naïve fundamental idea of Bitcoin was to create a currency without guns to back it up. Bitcoin one of the most famous Ponzi schemes in history? Some naive “techies” furiously object.

They are the same ones who firmly believe that Yahoo, Google, Facebook, are not, repeat: not, government spies agencies. (Hey, did not their chiefs “protest” to the “commander in chief”?)

If you think the usual suspects, the pirate speculators  of the Wall Street type have nothing to do with Bitcoin, please learn about Wall Street. But Wikipedia won’t help you (Wall Street guys have enough money to make sure Wikipedia says exactly what they want it to say).

On 19 November 2013, the value of Bitcoin on the Japan-based Mt.Gox exchange soared to a peak of US$900 following a United States Senate committee hearing, at which the committee was informed, by the FBI, no less, that virtual currencies were a legitimate financial service. On the same day, bitcoins traded for over RMB¥6780 (US$1100) in China.

How could the FBI be that corrupt? Some will whine. Well, what’s the FBI? An instrument of the state, just like the Dollar. It’s all about a tribe, or its leaders, exerting power.

Now visualize this: the true leaders of the USA are the plutocrats. They devised a tax code so that they don’t pay enough taxes to prevent them to become ever richer (why would they? They are in power, and the rabble does not know it!).

How did the plutocrats acquire so much power in century? Mostly by doing exactly what president Jackson was afraid the Rothschild would do to the USA (and what the Rothschilds claimed they were doing in Europe… not that their fellow big time bankers were not doing it too). In the present fractional reserve system, the state has farmed out the making of money to some private, unelected individuals, the bankers.  The Bitcoinists thought they had found a scheme to do the same. That was naïve. They drunk Ronald Reagan’s idiotic propaganda, and come to believe that We The People could do without a state.

For more than 2,000 years in the West, the government created money (with a face value often much higher than its real value), but tax collecting was farmed out to private enterprises. Now it’s the other way around: tax collecting is public, money creation, private. That’s a big mistake. We have, unsurprisingly, a system in which the money creators, the bankers, create money, that is, power, at will. That abundance of money has allowed them to buy the “democratically elected” representatives.

Thus now, as Rotschild said, the bankers control the government. Plutocracy found that money creation to be its best trick in a long time.

Can we enjoy a loftier perspective? Sure. Money is power, and power is measured by energy. Not all energy is good: blowing up the Earth won’t be good. A way to do that? One could set fire to 20 trillion tons of coal underground, and get plenty of energy, until the biosphere is destroyed. (Some plan to do that.)

So energy expenditure has to be controlled by long term ethics. This is what I call AWE (Absolute Worth Energy). With the enormous computing power we now have, it’s practical. AWE, accounting in useful energy units, is unavoidable, as it’s the only accounting system that will save civilization. AWE would make a perfect Bitcoin (AWEC: Absolute Worth Energy Coin). But of course it would need the support of the government, and that only if We The People pass laws to force it to do so.

Patrice Aymé

Note 1: A big deal  is made by Bitcoin crooks that computers are computing the scheme. In the geeks’ minds, computers are superior souls, above the fray. However, it doesn’t matter that  computers compute in the background of Bitcoin. Pyramid schemes are always about guys making computations in the background.

Note 2: Those who believe in bitcoin don’t believe in history, or sovereignty. That the wealthiest use a parallel currency with artworks, reinforces my point: only the sovereign, wealth, can create a currency durably! The wealthiest can use artwork as a currency in all impunity, precisely because they rule the world (and only the wealthiest are wealthy enough to use that currency). Average bitcoin users don’t rule the world (although governments let organized crime use bitcoin for quite a bit…)… thus their currency will not rule the world, either…

Worse Than The 1930s

December 15, 2013


I have long argued that we are in a Greater Depression. See:

Europe is actually doing worse, GDP-wise, in the aftermath of the 2007 crisis than it did in the Great Depression shock of 1931. Actually these are the early stages of the greatest catastrophe ever known to have struck the genus Homo, I claim, and will so develop, lest drastically new thinking is applied. Krugman is slowly coming on board.

In the 1930s, the word “plutocrat” was well known, & an object of contempt. In the early 1930s, revolution was simmering; the governments had to do something. The USA & UK went into full, Soviet-like, command & control economy to rearm. FDR launched a program of construction of no less than 24 giant (“fleet“) aircraft carriers in 1933!

In “If Only It Were the 1930s” Krugman shows the latest graph of relevant GDPs.

Worse Than 1930s Great Depression

Worse Than 1930s Great Depression

[Germany, UK and USA were not in the Gold Bloc, but applied pretty much the Sterling method: default. France refused to default thus kick back on her armament program… When war against Hitler was already in full swing (1939-1940)]

Says Krugman:  the UK actually had a substantially higher ratio in the 1930s— and even more so after World War II. How did it deal with this debt? Not through the recipe currently being imposed in Europe, of fiscal austerity and internal devaluation. Instead, the UK relied on a cheap-money policy that produced low interest rates and moderate inflation — “financial repression” — with the central bank “subservient” not just to the government, but to government debt-management policies.

Amusingly, but tellingly, Krugman forgets to mention that the USA devalued in 1933 (devalued its debt, that is). That’s one of the first things Roosevelt did, hence the hatred of bankers.

Nowadays, erroneous policies boil down to who owns the world. The world has been colonized by the plutocrats. To service them, they impose slavery on all.

Little economists paid for sleek plutophile propaganda form a crucial, well rewarded, part of the scheme.

(Otto Rehn, by the way is thinking to run as a major extreme right wing politician in the coming European elections; thus the European Commission is led, in economic & financial matters, by a declared right wing extremist, and an ambitious one, indeed, not the cool technician he claims to be… hence his rage against socialist France.)

The radical solution is to default on the debt (I have advocated this long ago in: ”To Save The World, Please Default”).

Or at least default on interest payments. That could be done right away. Plutocrats would not be happy, they would plot.

To shut plutocrats down entirely, establish a worldwide register of property, and tax plutocracy accordingly.

Using force is not as utopic as it sounds: the Swiss Parliament just denounced a fiscal accord between France & Switzerland. What’s next? France will use force and impose whatever it has decided Switzerland will do fiscally. That involves, among other things, not just taxing French plutocrats hiding in Suisse, but also 190,000 Swiss citizens.

Some will say: “Is not force bad? If France uses force against Switzerland, surely, this is bad.” Well, no. First, force is already used. Plutocracy is satanic violence, the worst side of man, ruling. Second, force in the service of goodness is always good, just as weakness in the service of badness is always bad. The difference? Morality.

At that point the famous John from Hartford, who is paid to sound smart on the behalf of the plutocracy, intervened. Said he: “Default on the debt? Yes I can see that doing wonders for growth and employment when personal and corporate credit in the US economy totals around $60 trillion compared to the less than $3 trillion of cash in circulation.”

John meant to be sarcastic, but he is just idiotic instead. I politely replied: John, thanks for pointing out this misunderstanding. Please pay attention to the context. We are talking about government debt. This is in the name of what the austerity is done. First point. I would be glad if this got cleared up in your mind, all the more since you are probably not the only such case.

Second point: money is created through credit from private banks or dark pools, in normal circumstances. But, for example before and during WWII, this was thrown out of the window, when a command and control system was put in place.

That the USA required Great Britain to pay its war debt after 1945 was hostile to justice, decency, civilization, and highly detrimental to the British economy. That was made possible only by a British elite sold to Washington. That this is still going on today does not mean it will, tomorrow.

All governments’ fiscal problems would vanish if the hyper rich were taxed enough to kill the plutocratic phenomenon. This is a necessity, not to re-establish fiscal balance, but to re-establish civilizational balance.

Oh, by the way, John Hartford is grossly ignorant of what happened in the 1930s. Then all major governments (USA, UK, Germany) but for those on the gold standard (France) defaulted. The non-default of France was a disaster for the French economy.

Patrice Ayme

Housing & the Money Trap

November 23, 2013

Economics is a subject founded, and dominated, by philosophy. or rather, it should be. Instead it got to be dominated by gangsters and banksters.

The crisis the western economy comes from what passes for rational economic theory is far plutocratic lunacy. To put it in one sentence: “greed is not just good, but god.”

How did this come to be? Force. Force is what gave meaning to economics. In 1945, Allen Dulles, head of the OSS, was sitting in Berlin, in charge of de-Nazifying his Nazi friends he had made such good business with. A few thugs got tried, but the real friends and business associates were taught to make American style jokes, so they could go back to business. Force works:

Wall Street Golden Calf: Larger Than Life Itself

Wall Street Golden Calf: Larger Than Life Itself

Decades unfolded. The OSS, now called the CIA imposed military men all over the Americas, if not the World, covered up by Harvard, Chicago or Stanford certified “economists”. No god, but greed: an old story, already found in the Bible (the adoration of the gold calf). That was great for We The People of the USA, as riches flowed towards the USA. That comforted USA universities in their knowledge that their vision of economics as all about greed was correct.

The City of London poodle reinforced that notion and that system, after Thatcher came to power.

Then Reagan came to power. His greatest feat was probably to have introduced a tuition in the public University of California. That University had been founded specifically to be free, in contradistinction with the plutocratic universities, where diplomas were paid for, to give the appearance of distinction and qualification on merits to the children of plutocrats. Reagan broke that nasty idea.

From there on, all what was worthy in the USA would be paid for.

Reagan had in his cabinet two twenty-something economists, eager to please and succeed: Larry Summers, hyper connected to plutocratic economists with Nobels, and Paul Krugman. Nowadays Krugman, is viewed, erroneously as the most progressive economist there is. And his blog is the most read in economics, worldwide (complete with my more damaging comments censored).

Summers’ attempt to head the Fed, supported by Obama, was shot down by an Internet born campaign. As far as I know, I am the first to have excoriated Summers from way back. What Summers did under Clinton would have made FDR scream. Summers not only destroyed the Banking Act of 1933, FDR’s most important economic reform, but he allowed the expansion of banking scams to realms never imagined before.

Now, Summers, seconded by Krugman, has embarked in a vast campaign to justify the abysmal economy they helped to create in the last three decades. See:

Recently, Krugman has been trying to explain that Keynes was not an idiot, that Keynes was just joking when he said real stupid stuff. I have long argued Keynes was partly a confirmed idiot, and even a lethal one.


Lord Keynes was just not an idiot, in many ways, he was also a Nazi. A Nazi incubator. a mother hen for Nazism. No wonder he wanted people to fill up holes at the bottom of coal mines; he was inspirational for Nazism.

Krugman is a strange case: on one hand, he is violently and haughtily condemning those who call him, Larry Summers, Alan Greenspan, Robert Rubin Jews, as they originally are, although he admits he is badly estranged from his roots.

On the other hand, Krugman exhibits wild enthusiasm and total devotion to Lord Keynes. Lord Keynes was a rabid partisan of murderous, German fascism, and regretted loudly and extensively that the Versailles treaty had freed enslaved nations subjugated by Prussia and Vienna. Keynes, as early as 1919, wrote down the entire system of thought the Nazis would run away with. Then he published it, as “The Economic Consequences of Peace” and that piece of trashy Nazi propaganda became the Bible of pseudo-progressives plutocratic sycophants throughout the Anglo-Saxon world. Including presumably, that of Krugman as he is all things Keynes, night and day.

To this day, Keynes’ TECP is the source of much anti-French hatred and contempt in the Anglo-Saxon world (something Krugman deplores, another of his charming contradictions). Most cultivated Americans have been brain washed, by a time honored Nazi tradition,  to deplore “Versailles” as the cause of everything bad. Those Americans ought to have to line up, and be spanked vigorously by Poles, Czechs, Slovaks, Romanians, Serbs and assorted others. French judges could assert when USA buns are rosy enough.

So now Krugman is again in love with Summers for all to see (Curiously he does not extend that affection to Summers’ compère, the Maestro of bubbling, babbling and mumbling, Alan Greenspan (Greenspam, Greenmail? who is out with another trash book).

Summers’ theory is that bubbles are good. It’s nothing new: that “theory” was put in practice by him and Greenspan under Clinton. Now our errant boy, Krugman, is embracing it idly (caveat: although, before anyone, I pointed out 4% inflation was good, I do not embrace bubbles.) In ‘Bubblephobia and Monetary Policy’ Krugman opines that:

How do you know that monetary policy is too loose? The textbook answer is that excessively expansionary monetary policy shows up in rising inflation; stable inflation means money is neither too loose nor too tight…I’m pretty sure the side Janet Yellen is on, says that at low inflation rates this rule breaks down… stable inflation at a low level is consistent with an economy operating well below potential. [I agree with this.]

But there’s a critique from the other side that seems to be gaining a lot of traction with central bankers not named Janet Yellen — namely, the notion that if asset prices are rising, and that this might signal a bubble, it’s time to tighten, even if inflation is low or falling.

And Krugman to inform us than an esteemed colleague at the Swedish Central Bank was fired because he disagreed with rising interest rates. Indeed, it makes no sense:

Killing The Economy: Good, Say The Plutos, We Will Shine More Brightly

Killing The Economy: Good, Say The Plutos, We Will Shine More Brightly


The Riksbank raised rates sharply even though inflation was below target and falling, and has only partially reversed the move even though the country is now flirting with Japanese-style deflation. Why? Because it fears a housing bubble.

This kind of fits the H.L. Mencken definition of Puritanism: “The haunting fear that someone, somewhere, may be happy.” But here’s the thing: if we really are in the Summers/Krugman/Hansen world of secular stagnation, things like this are going to happen all the time.”

Krugman, Summers, Greenspan, and the entire economic establishment are barking up the money tree. But an ultra major economies have worked without money. I sent Krugman the following, and, perhaps having understood it, he kindly published it.

Thinking of the economy in terms of money only brings the lowest bounds and deliquescent traps to the economic discourse.

There is a housing problem, from Germany to California. A neighbour’ two full grown, professionally employed children, just moved in to share her small apartment. Why? Because in San Francisco, studios are renting at $3,000 a month.

Real estate prices have tripled in Munich, und so weiter.

Verdict? It’s not about money, or “inflation”, it’s about supply of housing. The old solution is to throw money at banks and to hope them to throw some more money at the housing market.

But bankers, and other rich people, have interest to see housing prices go up: thus they become richer, while doing nothing. That is they have more and the others, relatively less. So housing’s supply diminishes, relatively speaking.

In more than three decades, the population of California more than doubled, but housing did not. Especially not where the jobs are. So prices exploded, especially after international plutocracy bought itself a few adobes. Does that mean there is inflation? No. Just not enough housing.

How was the problem solved after WWII in Europe? Entire cities had been levelled (say Toulon in France). Well, the governments simply decided to build housing. Forget the banks. Just pay the contractors directly, and get on with the work.

This stays true today. Government driven, quality (energy neutral) housing ought to be governmentally decided throughout the West.

That would surely help the economy more wisely that frantic fracking. (Fracking can be considered a Ponzi, or pyramid scheme, because it does not pay for the escalating damage it causes, so it’s a repeat of the “subprime” madness, and a crazed bubble.)

So we need more governmental intervention in the economy. But not by just exacerbating the consuming. Turning “patients” into “consumers”, on the “health marketplace” as the clueless Pelobama did, is the way of error. What we need is a government that brings work where needed, directly. (Although fiscal tools could help, say by cutting taxes on construction, and relaxing some regulations.)

Big time energy policy, both in research (Thorium reactors, Thermonuclear Fusion, etc.) and development (replacing planes by nuclear-electric trains, so to speak, etc.) scientifically driven is needed. There are simply projects only the government is big enough, and free from short term profit enough to engage in; see “Synthesis Found”.

Just throwing money at banksters, so they be good, as Krugman and his colleagues have advocated, forever, is not good enough. It’s just perverse enough.

And measuring inflation, as is done in housing, by lack of supply, is deeply erroneous, indeed.


Patrice Ayme

No Ideology But Greed

November 8, 2013

Standard & Poors, the most prominent USA rating agency, which pretends to rate, if not rule, the world, has downgraded France. Same S&P which used to give AAA ratings to banks too big to flail… until the moment they went bankrupt in 2008. Same reason, as we will see, to downgrade France than there was, and is, to praise the banksters.

Because France hurt the plutocrats, and threatens to hurt them much more, insults are in order. Warren Buffet, America’s own grand father, owns S&P, S&P barks. Good doggie.

S&P (Sadist & Posh?) claims that  “France hasn’t carried out the reforms that will enhance its medium-term growth prospects“. Another factor is the inchoating agitation of the French plebs, says S&P. The Sans Culottes are rising, S&P disapproves. Meanwhile Great Britain keeps it AAA rating. Although Britain has clearly performed less well. Here are the French and British per capita GDP:

Britain: Lower GDP Than France, Absolutely, Comparatively, Overall & Also Recently

Britain: Lower GDP Than France, Absolutely, Comparatively, Overall & Also Recently

The plutocrats are the party of no taxes to themselves, hence no government by and especially for, the people. They can only hate, with all consuming passion, that the French Republic has brought up taxes to 75% on those earning more than a million euros.

The truly abominable French idea behind this was to enforce equality and decrease debt. As it is France has a lower deficit than the USA. The USA is suffering sequestration, a slash and burn cutting-into-the-muscle of the country, reduction in spending. Whereas France suffers indignities from a few anxious soccer stars and one demented actor with, apparently, an alcohol soaked trunk, in the middle of his face.

British total debt (98% GDP) is worse than France’s. Amazingly the British and USA deficits (= the rate at which debt grows) are about 6%, or nearly TWICE the French deficit. Here is the evolution of French & British Debt Per GDP:

Britain: More Debt Than France In Spite Of Astronomical Tuition "Public" Universities

Britain: More Debt Than France In Spite Of Astronomical Tuition “Public” Universities

What the plutocrats are afraid of is that such tax margins on high salaries will spread. And then what? With heavy taxes all over, plutocrats would just disappear. That would be the extinction of the species that has come (erroneously) to define itself as the pinnacle of civilization, the very engine of creation (insisted Ayn Rand, and her bleating followers).

And why is Great Britain so valued, although it performs worse than France?

The Tax Justice Network came up with the answer: with its overseas territories (Isle of man, Anglo-Normand isles, British Virgin Islands, etc.), Great Britain is the world number one tax heaven. This explains why plutocrats love London. The plutocratic mayor of new York has a 50 million dollars residence in London; he pays just $3,000 in taxes (yes three thousands; meanwhile schools close in London, from lack of funding).

I of course, beg to disagree, I think the USA is an even worse tax haven… for worldwide plutocrats.  It’s a den of thieves, and no propaganda is too low, too base, too outrageous. As a German Chancellor who came to incarnate the Dark Side put it: “Make the lie big, make it simple, keep repeating it, and ultimately they will believe it.”

What mainstream economy has been hammering, that big, simple lie, is that the market decides everything, and decides it for the best, it’s god. However, most of the “market” power is held by the plutocrats, either directly through their increasing purchasing power, or indirectly, through their paid propagandists and pet politicians. So indeed, it’s all ideology. Plutocratic ideology. And the ground state of plutocratic ideology is that it hates the French Republic.

Says Krugman in “Ideological Ratings” (thanks Kroog for the graphs!):

…”where is this coming from?

I’m sorry, but I think that when S&P complains about lack of reform, it’s actually complaining that Hollande is raising, not cutting taxes on the wealthy, and in general isn’t free-market enough to satisfy the Davos set. Remember that a couple of months ago Olli Rehn dismissed France’s fiscal restraint — which has actually been exemplary — because the French, unacceptably, are raising taxes rather than slashing the safety net.

So just as the austerity drive isn’t really about fiscal responsibility, the push for “structural reform” isn’t really about growth; in both cases, it’s mainly about dismantling the welfare state.

S&P may not be participating in this game in a fully conscious way; when you move in those circles, things that in fact nobody knows become part of what everyone knows. But don’t take this downgrade as a demonstration that something is really rotten in the state of France. It’s much more about ideology than about defensible economic analysis.


Why is the French Republic so frightening to plutocrats? Because, as France is the sister Republic to the USA, they are afraid that French solutions too friendly to equality will be applied in the USA too (something about 1789).

Ever since May 1, 1914, a flood of venom and viciousness has been directed at the French Republic by all too many USA based plutocrats. Result: two world wars, a few holocausts, and counting. But it will not be over, until the fat lady sings.


Patrice Ayme