WHAT’s WRONG WITH THE ECONOMY?

The strategy. The tactics. Everything. Since 2008, the central banks have created money. Why? Key actors of the economy lost too much money in 2008 to keep on functioning. Some of these actors: banks and “shadow banks”.

How did the central banks create money? Mostly by buying government debts from the large private banks. The banks thus made money. Who caused the 2008 crisis? The banks. Thus the very strategy used is Orwellian, and promotes a vicious circle. Upon closer inspection, the situation deep down inside is more of the same and even worse.

The result has been a faltering of economic growth, a creeping destitution of the 99.9% in the West, and the blossoming of colossal inequalities and corruption, worldwide:

Inequality Has Brought Down World GDP Growth. And Bringing That World GDP Growth Too Low Brings War

True, banks are more regulated than in 2008 (but much less than before the Clinton presidency brought devastation to the regulation of finance!) However, a large, maybe the largest, part of the banking system is “Shadow Banking”. That’s not regulated. By fostering fiscal heavens and anonymous financial entities, Great Britain and the USA are actually expanding the “Dark Pools” of money which feed “Shadow Banking”.

So what have the banks done with the money generously given to them by central banks? Did they invest it somewhere fabulous? No. There has been no new technological, industrial, economic, social breakthrough which needed, and provided with, the opportunity of massive investment.

(There were some efforts towards “sustainable energy”, but those subsidies and regulations are dwarfed by those in favor of fossil fuels, which total 5.5 trillion dollars, according to the IMF; the key is fossil fuels do not require much new investment, including in research, development and education as new energy sources would.)

No new nuclear program was instituted (say replacing all old reactors with better and safer ones), no thermonuclear powers plants (although a crash program would have probably produce those already), no massive space program (comparable to Apollo in the 1960s).

Even biomedical innovation, hence investment, has petered down (research has been smothered down by marketing, regulations, and cut-throat academia producing poor research).

But, mostly, there has been no new construction program in housing and physical infrastructure. Oh, there is a massive need: the dearth of housing is why real estate is getting out of reach of the middle class, in the top cities, worldwide. (Moreover one can now make positive energy buildings, which produce energy.)

And don’t forget public education has been let go to waste, in the leading countries (with few exceptions: Switzerland, Canada…) It is as if the leadership in the West was afraid that We The People would get knowledgeable and smart.

So where did the money the banks were given by the central banks go? To hedge funds and the like. To the industry of HOT MONEY. One day they buy this, the following week, they sell it, making money, both ways (thanks to financial derivatives). The money created by the banks (which are better regulated, as I said), at this point, once given to financial manipulators, escapes regulation (that’s the whole idea).

“Leaders” know about this. But they obviously intent to keep on getting money from shadow financiers. An example: Obama did not try to tax “carried interest” by hedge funds (although Donald Trump proposes to do so!)

The leading states (USA, UK, EU, China, Japan, etc.) believed that to provide money (“liquidity”) would relaunch the economy. Absent this, massive devaluations would help. Thus Japan devalued by 50%, undercutting South Korea and China severely.

Meanwhile the IMF has allowed these competitive devaluations, following the advice of economists such as Friedman, Krugman. However, this is tickling the tail of the worst devil. War. Economic war is the first step to all-out war, indeed. Competitive devaluations are a form of war.

And what’s the main mission of the IMF? Preventing economic war between the states. This is why the IMF has been created in 1945: “The International Monetary Fund (IMF) is an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.”

Thus the IMF is failing to do its main job. Notice that many American economists, from Friedman to Krugman, in their anti-European frenzy, have pleaded FOR the economic war of (European!) state against (European!) state, thanks to competitive devaluations.

Notice too that Abenomics, the devaluation of Japan, has not had much of a dent: Japan is still mired in stagnation, no doubt still afflicted by its main problem, the collapse of its population (a problem many developed countries have, especially in Europe; the USA and UK have escaped demographic collapse, mostly through massive immigration).

The world economic strategy reflects the mood of the times: the so-called “free market” is all the thinking and activity we need since Ronald Reagan. That’s in contradiction with policies followed by Colbert, Henri IV and Sully, or even emperors Diocletian and Darius. (Darius reigned over Persia 25 centuries ago.) They, like Julius Caesar, thought that the economy had to be governed by the state.

Will China try a massive devaluation, a la Abe in Japan?

Since 2008, the governments, mostly in the West, have been cowardly. The USA suffers from massive inequalities (and no, Mr. Obama, the situation is no as good as eight years ago), the European Union suffers from too much regulations (including at the level of services, where the European UNION has not been implemented), China is a dictatorship which became richer by exploiting workers relentlessly, etc.

Those competitive devaluations and lots of money sloshing around have been addictive: central banks engage in them, to give the states space, and the states, momentarily relieved, put off necessary reforms.

Inequalities suck up “liquidity” (so power and means) from average people, while putting huge amounts of money, and power, under the control of a few hands. And this money is invested in liquid investments, instead of serious things such as massive, affordable, state of the art housing and cities. Thus this money slosh around the world, like the waves of a tsunami, devastating all it touches (example: Greece, Spain, Portugal, Ireland, Iceland, etc.).

The reason the crisis goes on is the confusion between symptoms and disease. That the main actors in power have interest not to understand the nature of the crisis explains why understanding has not been fostered. Thus very few economists have seen it, let alone politicians. (From Obama down to Nancy Pelosi, Krugman, and countless “Republicans”, but also French Socialists, EC bureaucrats, USA universities professors, most actors of influence have interest to sound as intelligent as cows watching a train pass.)

How did the world come out of the slump of the 1920s to 1940s? Through reconstruction in the “30 glorious years” after 1945. Reconstruction from total war. Something to think of. One thing: many countries are on the verge of implosion. One culprit? The obvious world devaluation blatant in the collapse of the price of oil.

What is the way out of the world socio-economic crisis? The same way as it was done after 1945. Massive social, educative, health and construction programs in the West,  building a useful economy, by taxing those who create the inequalities, and grab all the economy, and opportunities to themselves.
Patrice Ayme’

Wisdom Is Not An Itch, But Economy Hitching The Dark Side, Is A Gangrene

Is Philosophy Just An “Itch”? Far from it. Even if it were, as Wittgenstein had it:

“Philosophy hasn’t made any progress? – If somebody scratches the spot where he has an itch, do we have to see some progress? Isn’t genuine scratching otherwise, or genuine itching? And can’t this reaction to an irritation continue in the same way for a long time before a cure for the itching is discovered?”

It is not true that philosophy asks always only the same questions, and it is not true that philosophy has not progressed in 3,000 years. Philosophy has progressed enormously in 3,000 years. But short term, there is a lot of noise, and often, what passes for “progress” is truly regression (looking at Hellenistic regimes show much of thinking in regression, and that degeneracy accelerated after the fascist Roman empire and its corrupt officials (such as Cassius and Brutus) took control of Greece during the last century of the Republic… Let alone when Justinian closed the schools, five centuries later, in 529 CE, and this time, for good.

Instead the opposite is true. contemporary with Socrates was Xenophon, who named and defined “Economics”. Xenophon was student and friend to Socrates, a writer, historian, soldier, general, and retired as a horse breeder. Differently from Plato and Aristotle, Xenophon was not on the take.

Paul Krugman, appropriately surrounded by the Dark Sides. Krugman Is A Philosopher, He Rules The World Socioeconomy With His Insane Globalism. And Who Pulls His Strings?

Paul Krugman is one of the world’s most respected – and most feared – economists of our time. The illustration above is by David Simmonds.” – from Handelsblatt which adds: “Many think the U.S. Nobel Prize winner is the most influential economist of our time and a leading voice on the left. But many of his major ideas are controversial. And rightly so.”

I don’t know what the “left” is (although I know what it should be). But I certainly know that “Liberalism”, in the US manner is not from the left… Although common opinion in the USA at this point is that “liberalism” is not far from “socialism” (a huge mistake, and why dozens of millions of US citizens have no health insurance, after decades of “liberalism”).

Those familiar with my disagreements with Krugman know that we differ philosophically. Our differences are mostly about finance, banking… And especially believing that, if only bankers had even more money, through Quantitative Easing, the world would become richer, fairer, and more comfortable. That is anathema to me, for many reasons, including the fact I do not trust too much power in too few hands, whatever the reasons evoked, or even if one calls these people bankers, and even if Obama admires them very much.

Philosophy named and defined much progress.

Behind all and any empire is an economic organization backed up by a philosophy. Darius, founder of the Achaemenid Persian empire, changed economic organizations very quickly, according to circumstances, , from military to command and control, to building the world’s first fast road system, to libertarian capitalism.

It is possible to argue that the Greco-Roman empire failed, because it failed PHILOSOPHICALLY. Namely, its philosophy failed. It failed because the (Macedonian) military leaders got imprinted on the erroneous, despicable, and lethal philosophy of their friend Aristotle, itself all too inspired by Plato, Socrates, and other golden youth, or their fellow travellers.

One can view the Middle Ages greatly as a struggle against much of Aristotelian philosophy: not just against Aristotle’s physics, which was egregiously wrong, but also against his Ethics and his, related, preferred theory of government. Aristotle embraced dictatorship, also known as monarchy, hence theocracy.

In Socrates’ times, democratic institutions were, in many ways, brutally primitive and inappropriate for sustaining the Athenian Republic. These brought not just the death of Socrates, but were decisive to bring the defeat of Athens in the Peloponnesian war (which nearly brought the annihilation of Athens, and certainly an eclipse of democracy for more than 2,000 years). The People’s Assembly had decided to massacre entire populations (Melos), and brought hatred against Athens.

Much of Socrates’ work was about improving the Athenian democracy, and many of the philosopher’s critiques were addressed during the Middle Ages, by inventing new institutions.

So there has been progress in philosophy, and also considerable social and political progress in implementing progress in wisdom.

We need more. Behind Krugman’s vision of the world, lays a benign, naive trust in human beings benevolence. At least, that’s the excuse.

Friends, Not To Say Lovers Of The Same Values. How Far Are We?

Instead, I go further than “French Theory“. French Theory, generalizing Nietzsche’s approach, is suspicious of all and any institutions. I propose to remember what the Marquis De Sade implicitly proposed: those who take, those who are entitled, those end up being able to take decisions on behalf of the many, are, intrinsically, moved by the Darkest Side. Even if they did not start this way, the stress they are subjected to, insures that they end up that way.

Yes, Krugman is a philosopher, in the sense that his work, and advice, and popularity among, thus, power on, the mighty, depends upon his philosophical positions. Yet philosophers to the Dark Side, by their very presence where they are, embrace it.

This is not all just words. I love and respect Paul Krugman. in some ways. However, contemplate this: “Enron, a notorious corporation which conspired in organizing energy shortages in California, later to collapse in scandal and bankruptcy, employed Krugman. Paul’s fee? $37,000 for three days work. It provoked outrage. Wasn’t this excessive?. Mr. Krugman used his column to respond: not at all, he wrote. At the time his fee for a one-hour talk was $20,000. Enron got a deal.”

And the worst? Paul Krugman is very small fry, in the plutocratic world, as far as income is concerned. Donald Trump recently pointed out he “knew hedge fund managers. They pay no tax.” And some of those earn billions. General Electric got (60) billion dollars from the Obama administration, paid no tax for years, and then proceed to buy its French competitor, Alstom. Even the European Commission found that not kosher (although the plausibly secretly compensated by huff and fluff ,French government had approved).

Krugman at some point proclaimed himself the “lonely voice of truth in a sea of corruption”. The worst? It’s true. Because Krugman had dared to say the Obama administration was soft on punishing Wall Street after the 2008 corruption affair (the so-called “crash”), he was not invited to participate in said administration of the useless and redundant (as plutocrats connected to the so-called “Deep State” take all the decisions).

Handelsblatt: “Somehow Mr. Krugman’s fury keeps on growing. The source of this anger may be the man’s greatest enigma, since in fact worldwide there has never been as much Keynesian intervention as there is today…”

The answer to this, Handelsblatt, is simple: the crisis is getting ever worse. To the point the spectrum of war is rising. Even the Pope, noticed this.

Handelsblatt: “Since the crisis began, the largest central banks have flooded the world economy with liquidity, and brought their base rates close to zero. The governments of the industrialized world, with the exception of Germany, are still running huge budget deficits. They have put together enormous rescue packages, partly to rescue the banks, partly to bail out bankrupt states, partly to invest in infrastructure.”

Well, and this is my main difference with Krugman, rescue packages were all about the (“PRIVATE”) banks, and they bankrupt(ed) the states. To correct this, the entire banking system needs to be completely overhauled. In first approximation, the spirit of the reforms of president Roosevelt, ought to be re-introduced.

In Great Britain Jeremy Corbin, an anti-dictatorial (anti-monarchist) was elected to head Labor. Tony Blair, one of the world’s most corrupt politicians, ever (Bliar gets money from various dictator, including that of Kazakhstan) suggested that: “those who say their hearts are with leftwinger Jeremy Corbyn should ‘get a transplant’.”

Darius, like the Incas, like Diocletian’s Rome, or the Tang in China, or the empire of the Franks (which mutated into the “West”), or Themistocles Athens, let alone Stalin’s USSR, or today’s China, let alone the mercantilist USA, show that the primary actor, and author, of the economy is not the little capitalist, but the massive state. Handelsblatt claims not to understand this, and calls Krugman a fool.

However, the USA’s government institution revealingly known as the “Fed”, created more than 13 trillions (yes, that’s a t: trillion) dollars of money to inject in the economy, and the European Union, less than two trillion. And yes, that’s a problem: too much money chasing too few investment possibilities. So what ought government to do? Create more investment possibilities. Titanic investment program. As Darius did with his Royal road network. Now the Royal Road ought to lead to Mars. And the Quantum Computer. And Thermonuclear Fusion. And the Space Elevator. And a research program to fight aging (a major economic, not just military problem). Those who don’t want progress get regress, not to say egress.

Imagination, ladies and gentlemen, is more important than austerity, and not just in economics.

Patrice Ayme’

Save Species By Exploiting Them

BETTER CYNIC THAN DEAD.

It’s Not Just A Question Of Saving Them, But Saving Our Mental Potential.

Ah, Cecil the Lion, this blood thirsty monster, with giant fangs, was slowly and cruelly assassinated by an evil American dentist. Let’s cry, say the politically correct. Hypocrisy and false reality are the gifts which keep on giving.

A few days ago, a “Mother Bear”, called “Blaze”, in Yellowstone National Park killed and ate, in part, a 63 year old hiker. When she, and her brood, came back for more choice morsels, inhuman, or all-too-human, rangers shot her to death. Her cubs were sent to Toledo, presumably to learn the Flamenco. Let’s cry, it’s the politically correct thing to do.

Rocks @ High Velocity Is The Compassionate Way To Handle Attacking Predators

[Years ago, the recommendation was to lay prone in case of predator attack; this is wrong: predators don’t like to be hurt, a fortiori crippled. By the way, the largest bears are much larger than described above; some subspecies can reach a ton.]

I read some of the “Compassionate Conservationism” press. They are all over the Internet, including the Huffington Post (of course). The comments posted are bloodthirsty against the killer species, man. If only people stopped killing, everything would be great, they scream.

The “Compassionate” ones are against all and any killing. They are also against all and any suffering. As if suffering was the exclusive invention, and province, of human killers. They are completely hysterical about it, forgetting the following: part of wisdom is learning to not be too easily offended.

The problem is not just that suffering is part of the world, and thus, the mind, in full, as I have argued in:

https://patriceayme.wordpress.com/2015/08/01/why-killing-beauty-makes-sense/

The problem is that the best way to insure no animal suffering in a given species is by killing the species. Thus the truly compassionate are terminators. As all good terminators, they don’t have any inkling of the horror they are visiting on the world.

Where is this going?

Last time we had frantic animal rights people in power, they called themselves Nazis:

https://en.wikipedia.org/wiki/Animal_welfare_in_Nazi_Germany

This made sense: the Nazis tended to hate human beings. To show that, nevertheless, they were good and their hearts were pure, they disingenuously claimed to love animals to death.

People who are so sensitive and unreal to believe that if only people stopped killing animals, the world would be set right, are neither very capable mentally, nor capable of defending themselves.

But there is even a deeper analysis: remember that death, nirvana, annihilation, is the best way to terminate animal suffering. Thus those who advocate stridently to terminate animal suffering are actually advocating annihilation.

Philosophically, I disagree with them. Socrates said that the unexamined life was not worth living. Indeed. But what is the examination made of? Of the mind, applying itself. And what is the mind made of? Of the world. The fuller the world, the fuller the life. Hence the interest of REWILDING US. It’s not just about them, it’s even more about us.

A life less full in less worth living. The examining mind fosters, and is fostered, by surviving the world in full.

Ecology, in full, is the ultimate capital given to us by nature. It has to be protected, and, in particular, the species do. This means finding them economic utility.

Man-eating bears roaming national parks is no way to encourage other human beings to visit the parks, or making people feel warmer and cuddlier about bears.

The 63 year old hiker was “experienced”, said the National Park Service. Although he did not carry bear spray (so the “compassionate conservationists claimed he was at fault).

I carry bear spray when in grizzly country, and nearly used it once against a charging moose (with calf). Charging moose with calf kills more people than grizzlies in Alaska. The calf slipped and fell, and I was able to skirt that unbalanced duo through small diameter trees (having made the theory they would hinder those gigantic quadrupeds). I was not at fault: I had stopped, one hundred meters away, and waited calmly for those ferocious beasts to get off the trail. But, half an hour later, they did the Mohican hairdo thing, lowered their ears, both well-known ominous signs, and charged me casually.

In most of the Alaskan temperate jungle, the safety bear spray provides with is illusory: vision is extremely limited by an exuberant vegetation, with giant leaves, you would smell the bear before you see it!

Half-Ton Bear, Flying To Your Annihilation. No Beast That Could Survive The Genus Homo For Millions Of Years Is Easy Game

Bears charge at 20 miles an hour through thickets, that’s a problem. Bear spray also has a guard and is cumbersome: one cannot spent hours with a finger on the trigger. (Bear hunters in the past used dogs, who provide warning, or stick to open country.) Black bears are also very dangerous: they can kill and eat humans, where they think they can get away with it. I have been charged by black bears more than once, and had to go full prehistoric, even hitting a bear with a large rock, with drastic effect.

The way to handle dangerous predators is to collar them with GPS, and have professionals track their activities. You want some employment for the future? Here is one of them! One should make an app giving the location of the ferocious beasts. The National Park in Banff, Alberta, already handles grizzlies that way when they approach inhabited areas.

If we want to save nature, we have to endow it with economic utility. This is the highest morality. Let me repeat slowly: if we want to save nature, all of nature, we have to endow nature, all of nature, with economic utility. This means, in particular rewilding. However, rewilding does not mean that human beings ought to be made fair game.

Quite the opposite. The essence of humanity is that human beings are not fair game.

We own this planet, all of it, and our minds depend upon that. Saving them is about saving us, but it cannot come cheap, so we have to redefine what is expensive, and compassion is one of those values which have to be redefined.

Those who claim animals deserve as much, or more, compassion than human beings are either not honest, or mental weakling whose logic will never stand the heat of reality. They bestow nature a disservice, by brandishing useless, self-defeating, narcissistic self-admiring considerations which aim at befuddling the cosmos.

Not feeling the pain we deserve to make us whole, is a pain we can’t afford.

Patrice Ayme’

Bank Worship

BANK WORSHIP IS ALL WHAT MIGHTY ECONOMISTS KNOW:

I have fiercely condemned, for a decade, the policy of reducing the economy to interest rates. As I have said, and will say again below, this is identical to making (private) bankers into gods. “Liberal” (meaning “left” in the USA) economists love to say that low interest rates is all the socialism we need. Nobel laureate Paul Krugman is trying to make fun of the serious arguments found in scholarly critique of his “interest rate idolatry”. Says Paul:

“I’m With Stupid.

No doubt, dear Paul, no doubt. Being stupid is more profitable, quite often, than being smart and moral.

Banksters Steal The World, And Prosper, Ever More

Via FT Alphaville, James Montier has an interesting piece castigating economists for their “interest rate idolatry”, their belief that central bank-set interest rates matter a lot for the economy…” Montier writes down notions I used to brandish at the beginning of the Obama presidency. I stopped after I realized everybody (Very Serious People, Academia, High Finance, Politicians, Media) was on the con. That meant, in practice that, if one talked about it too much one was viewed as mentally imbalanced (just as pointing out that the Qur’an prescribes terrorism may one looks as a racist, according to the Politically Correct insects). Here is part of Montier’s well-thought essay:

“A wider idolatry: the greatest con ever perpetuated

Lest you think I am being unduly harsh on the world’s poor central bankers, let me turn to the wider idolatry of interest rates that seems to characterise the world in which we live. There seems to be a perception that central bankers are gods (or at the very least minor deities in some twisted economic pantheon). Coupled with this deification of central bankers is a faith that interest rates are a panacea.

Whatever the problem, interest rates can solve it. Inflation too high, simply raise interest rates. Economy too weak, then lower interest rates. A bubble bursts, then slash interest rates, etc., etc. John Kenneth Galbraith poetically described this belief as “…our most prestigious form of fraud, our most elegant escape from reality… The difficulty is that this highly plausible, wholly agreeable process exists only in well-established economic belief and not in real life.”

This obsession with interest rates as a cure-all rests on some dubious views about the way the world works.”

Montier points out that the fundamental official argument for lowering interest rates down to zero is flawed: …”firms generally rely on internal financing to fund investment, rather than borrowing – witness Exhibit 6. Over 100% of gross investment is financed by internal funds.”

The obsession with interest rates has meant, in practice, that so-called liberal, self-described “progressive”, friends of “We The People” economists, have prescribed, implicitly, to lower taxes on the hyper-rich as much as possible. So they masquerade as left-wing, but, in truth, they are plutophiles. This is an old method, and why Polar Bears are white, instead of brown or black as their ancestors were. Montier:

“Just in case you were wondering about the much-lauded ability of the central bank to create inflation via helicopter drops of cash (or its modern-day equivalent), this is actually a form of fiscal policy, not monetary policy. As I noted above, monetary policy alters the distribution of net worth while fiscal policy alters the levels of net worth. Because helicopter drops effectively give everyone a boost of cash, this is clearly a change in net worth and thus is likely to be helpful in stimulating demand.

As you may have gathered from the preceding paragraph, the good news is that there is an alternative to monetary policy, and that is fiscal policy. These days fiscal policy is deeply out of vogue amongst policymakers and politicians. However, it has a much more direct link to growth than any of the channels suggested for monetary policy – it is part of the construction of GDP, and has a clear impact upon incomes.”

Krugman made a very feeble defense, which mostly consisted, weirdly, but tellingly enough, to laud Lawrence Summers, one of the architect of the dismantlement of the financial regulations under Clinton, to create a class of hyper-rich financiers. To his credit, Krugman published my comment:

In the USA, houses are started massively all the times. It’s a mark of unsustainability (presumably flimsy housing is replaced). Reducing the entire economy to this, is imbalanced. Why not consider infrastructure starts? Research? Health?

The fundamental question is: what is an economic activity which is profitable for the society?

The conventional answer is that banks know best. As the banks’ lending goes up as interest rates go down, bringing the latter down, improves the economy, say banks’ friends.

Let’s call that BANK WORSHIP.

Bank worship has enabled big banks’ heads and associated high financiers they collaborate with, to be so powerful and dishonest, that they changed the hearts & minds of all the power that be in society.

The latest case is the French Societe Generale: the police chief in charge of an inquiry on an eight billion dollar fraud therein, now admits, years later, that she was manipulated by the bank (a lower level employee, Jerome Kerviel, was sued, chased down, and condemned severely, although he claims he acted under orders). The fraud was reimbursed by taxpayers. This means that Societe Generale bosses, just in this particular case, of this particular fraud, stole around 50 dollars to each French citizens. Don’t worry for them: the thieves live big. An even bigger picture is that, in the leading countries, big bankers are banksters, and they corrupted institutions of the Republic (including politics, government, justice and police) thoroughly.

The problem is the same in Anglo-America: time after time, giant frauds of the biggest banks are exposed, and they are condemned to fines. In the end, a bank-too-big-to-fail condemned to a fine means nothing: in the worst possible cases, it’s tax payers who pay. It is the case where the criminals’ punishment is to make the victims suffer.

The latest such case is the LIBOR “punishment”, proclaimed today. In it, big banks in London manipulated the world’s leading interest rate (they call that the “market”). You would think that, after stealing billions the heads of banks such as JP Morgan would go to jail. No. Taxpayers go to jail.

Zero Interest Rates, To Serve High Finance Plutocracy:

Another problem is that zero interest rates have proven devastating for small savers, while providing the banks and their accomplices with quasi-unlimited funds for playing with each other the derivatives’ market, something that is not a real economic activity, except by making the richest ever richer.

One lends to the rich. By making lending ever easier, government policy has made the rich ever richer.

Correct economic activity would consist in the government encouraging activities which are profitable to the people at large, very long term.

The “market” is driven with what bankers think is profitable, short term.

Conventional wisdom by the economists in power is that we can trust the bankers to encourage the economic activity most suitable to the “market”, hence society.

Governments were told by the economists in power to make the job of bankers easier, to make for a better economy, hence better society. Trust bankers, give them all the lending capability, hence all the power they want, and We The People will become richer.

Thus the general strategy of bank worship assumes a trait that is true: a banker is a government official. A banker is a non-elected, uncontrolled government official, with unlimited funds, and inexistent oversight by the People’s representatives.

Bankers control the market, which controls the economy, which control society. Is that the society we want? Do we want to be controlled, financed, by an oligarchy of non-elected little Big Brothers who decide what activities the society will engage in?

Bankers are little Big Brothers who are free to finance the high financial class they belong to, as much as they want. That’s why derivative trading is more than ten times larger than real trade, worldwide. This is also why half of the world’s money is in Dark Pools. And so on.

The cause of this nightmarish world is bank worship. Bank worship is very smart for the Big Bankers. Krugman is NOT with stupid, as he disingenuously claim. He is with the winning crowd. To go interact with people such as Paul Krugman and Joe Stiglitz, the fact is, one needs to be seriously independently wealthy (then one can become a “student”, meaning a future co-conspirator, or mingle at parties).

It is very stupid for the rest of us to have become adulators of bank worship. Bank worship made society subject to a dictatorial oligarchy operating in the shadows.

What happened to the Enlightenment? It seems to have sunk in “Dark Pools”.

Patrice Ayme’

“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

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’

Economic Incompetence A Cover-Up?

Senator Elizabeth Warren (Democrat, Massachusetts) is one of the couple of American politicians with a progressive mindset. She has criticized the latest government funding bill because it repeals part of Dodd-Frank (notice that the Democrats are still in power, doing this re-augmentation of the power of financial plutocrats, just before leaving office, no doubt to reap their rewards when they will be looking for juicy compensations in a few weeks).

Warren also disagreed with Obama’s nomination of investment banker Antonio Weiss for the Treasury Department (not the first time Obama names such a fat cat to watch the hens, a method now copied by Hollande).

Warren will never be part of the real government of the USA (those are people such as Weiss, or (famous for her “Fuck-Europe”) Nuland who stand just below the figure heads (Obama, Hagel, Kerry, etc.) Or then she will have to do what she is told.

It is true that some American politicians instituted forceful reforms: the two Roosevelts and JFK were from a plutocratic background, and the three of them were also warriors (real ones). Johnson, however rotten, rode JFK’s assassination to pass a progressive agenda, and Eisenhower, with his 93% upper margin tax, was also a warrior.

In all cases, progressive American politicians were extremely aggressive types. In comparison, Bill Clinton, a spineless schmoozer, made it so that the financial derivatives market went from 80 TRILLION dollars to the present 800 trillions.

So the financial derivatives market is about 12 times WORLD GDP. In other words, for one transaction among the low lives, the fat cats make 12.

Here comes Krugman, in his latest, “Made As Hellas”:

“The Greek fiscal crisis erupted five years ago, and its side effects continue to inflict immense damage on Europe and the world. But I’m not talking about the side effects you may have in mind — spillovers from Greece’s Great Depression-level slump, or financial contagion to other debtors. No, the truly disastrous effect of the Greek crisis was the way it distorted economic policy, as supposedly serious people around the world rushed to learn the wrong lessons.”

Well, I have several twists on this: first, the fundamental crisis was the financial derivatives crisis in New York and London. Second, as I will show, the wrong lessons were taught by the usual cast of deviant characters and their servants. It was, it is, a case of intoxication with the wrong ideas, to poison the world’s entire economy, thus its society, and future… to profit the few who hold the strings.

Krugman pursues: “What happened last time, you may recall, was the exploitation of Greece’s woes to change the economic subject. Suddenly, we were supposed to obsess over budget deficits, even if borrowing costs were at historic lows, and slash government spending, even in the face of mass unemployment. Because if we didn’t, you see, we could turn into Greece any day now. “Greece stands as a warning of what happens to countries that lose their credibility,” intoned David Cameron, Britain’s prime minister, as he announced austerity policies in 2010. “We are on the same path as Greece,” declared Representative Paul Ryan, who was soon to become the chairman of the House Budget Committee, that same year.

In reality, Britain and the United States…were and are nothing like Greece. Now Greece appears to be in crisis again. Will we learn the right lessons this time?

…I have no idea how events in Greece are about to turn out. But there’s a real lesson in its political turmoil that’s much more important than the false lesson too many took from its special fiscal woes.”

Krugman is superficially correct, but fundamentally naïve.

An elite of sort-of thinking thieves conspiring with the world’s biggest plutocrats, rules, abuses, exploits, and splurges.

That elite of robbers has run out of sophisticated bogus arguments which everybody believes in, so, now, they are trying to present themselves as incompetent … but they then add that anybody else would do much worse than they do.

In other words, the plutocrats and their political accomplices and agents use now their own incompetence as a cover-up.

How do I know that they deliberately use incompetence as a cover-up?

I saw recently the worst accusations being flung at some cabinet ministers in France (where it is a crime to insult the members of the government) and against others, such as Juncker (a fitting name, close to “junk”).

Juncker, the new head of the European Commission, who, over a quarter of a century, as Finance Minister, and then Prime Minister of Luxembourg, organized outrageous tax evasion of the order of trillions of Euros by some of the wealthiest individuals and corporations in the world, thus putting in misery hundreds of millions of Europeans. Juncker, is arguably, one of the world’s top criminals, ethically speaking. His monstrous crimes leave him impassible: apparently he has seen, or committed, worse.

So how do these extremely high level politicians react, when they are told, in public, they are greedy, thieving, conniving, low lives? Well, they react as if they fully expected those complaints and insults: they find them natural. Why? Obviously because they did, indeed, commit them, and they know very well their crimes are in plain sight.

We have many examples of the worst regimes in the last 4,000 years of recorded history, when regimes went astray, and yet, they found many to serve them.

We are experiencing now such a case. Basically all European politicians, and the political system they grew from ought to be thrown out, and replaced by direct democracy. How? Just copy what is done in Switzerland.

The problem is the same in the USA. But, as the world’s largest national economy, and military, and networked empire, the USA plutocrats have fed their servants with more crumbs. Hence the more subdued and less revolted state of the American populace…

Patrice Ayme’

Krugman Rising From The Deep

Nowadays, I rarely bother to criticize, let alone advise, Obama (OK, I did it on Syria).

The One has become insignificant, it does not matter what he thinks, supposing he thinks at all. (Chuck Hagel, the Defense Secretary just called the policy of the USA in Syria strategically compromised, long term, as it profits the other enemy of civilization, Assad. Hagel is right. Attacking ISIL without taking out Assad is unbalanced. I am sure another Christain, or Druze strongman can be found.)

Soon the entire Congress will be Republican, and the Obama groupies will wonder what happened. Well, they have only themselves, and their reveling, to blame.

What happened is that, while Obama adulators were celebrating, when Obama became president he got surrounded by a thick cloud of plutocrats and their servants. Thus all Obama’s policies were all plutocratic, including (most of) Obamacare.

Unfortunately, the so called “Democrats” were not brainy enough to realize this. They believed that their beige hero would save them all. And, besides, superman like, find a solution to everything.

And, even if “Democrats” had brains, they had neither theory, nor a plan on how to handle the world.

The same problem has arisen with Clinton, Bill, earlier, and with the dimwits of the Socialist Party in power (supposedly) in France: no progress whatsoever.

I can’t reproach right wingers such as Cameron, or Merkel to be right wing. Even Abe in Japan does what he said he would do.

But the left, in Europe and the rest of the West has long been derelict.

Why? How? Lack of correct ideas. They did not think it through.

The best Krugman could suggest, for years, was more money for kleptocratic banks (“QE”), or devaluation (as Abe is doing in Japan). Fortunately, at last, Krugman is changing. As he is the most followed political economist in the world, it matters. Polls in Europe showed that the (Ex(?)-Europhobic Krugman) is the most trusted voice… On the left!

Then, of course, it all makes sense: if Krugman, the most trusted voice on the left, was actually on the right, or nowhere in particular, then no wonder the left was a right, and civilization got off the rails.

Krugman is realizing, slowly, that the debate has been framed by the plutocracy, especially about the lack of investments.

So now Krugman realizes that he and his kind (ex-Fed chief Bernanke) owe apologies to Japan. Says he:

“TOKYO — For almost two decades, Japan has been held up as a cautionary tale, an object lesson on how not to run an advanced economy. After all, the island nation is the rising superpower that stumbled. One day, it seemed, it was on the road to high-tech domination of the world economy; the next it was suffering from seemingly endless stagnation and deflation. And Western economists were scathing in their criticisms of Japanese policy.

I was one of those critics; Ben Bernanke, who went on to become chairman of the Federal Reserve, was another. And these days, I often find myself thinking that we ought to apologize.”

Well, indeed, you should: to keep its economy up, the Japanese government engaged in a gigantic effort (its debt is now 240% of GDP… Slightly more than the 90% of Britain or France).

And Krugman to diagnose: “… the West has, in fact, fallen into a slump similar to Japan’s — but worse. And that wasn’t supposed to happen. In the 1990s, we assumed that if the United States or Western Europe found themselves facing anything like Japan’s problems, we would respond much more effectively than the Japanese had. But we didn’t, even though we had Japan’s experience to guide us. On the contrary, Western policies since 2008 have been so inadequate if not actively counterproductive that Japan’s failings seem minor in comparison. And Western workers have experienced a level of suffering that Japan has managed to avoid.”

If it were only workers! Grandmothers and everybody not a banker or hedge fund managers also suffered from Quantitative Easing (which brought savings’ interest down to zero).

So what happened? Krugman again:

”What policy failures am I talking about? Start with government spending. Everyone knows that in the early 1990s Japan tried to boost its economy with a surge in public investment; it’s less well-known that public investment fell rapidly after 1996 even as the government raised taxes, undermining progress toward recovery. This was a big mistake, but it pales by comparison with Europe’s hugely destructive austerity policies, or the collapse in infrastructure spending in the United States after 2010. Japanese fiscal policy didn’t do enough to help growth; Western fiscal policy actively destroyed growth.”

And Krugman to evoke the austerity mistake even in Sweden, and to conclude:

“I’ll be writing more soon about what’s happening in Japan now, and the new lessons the West should be learning. For now, here’s what you should know: Japan used to be a cautionary tale, but the rest of us have messed up so badly that it almost looks like a role model instead.”

I added the following in a comment:

The case of Japan is special: it has collapsing demographics, not compensated, as it is in many Western countries, by a vigorous immigration. Japan also has no indigenous energy to speak of (even its nuclear waste recycling long depended upon France).

It was long obvious to yours truly, that the conditions we are in are worse than in 1930s. The Great Depression of the 1930s happened mostly accidentally; it was a succession of obvious mistakes: a boom, followed by a crash, made worse by a tariffs war, leading to industrial shrinkage, and a liquidation of banks.

Nowadays, it’s different: the planet is crashing, a more serious problem. This could be stopped, but for that the general mindset would have to be different. However, said mindset is constructed by an ever more powerful plutocracy, a few hundred individuals who order the world around.

In particular, the plutocratic mindset has seized the financial sector and the government. The former does not need the public to make money: the financial sector has tricks such as Quantitative Easing up its sleeve, boosted by the continual authorization for banks to cooperate with, or engage in financial piracy.

The latter, the government, refuses to engage in massive public investment, from top notch free public schools, to massive infrastructure to massive public healthcare (if you brandish Obamacare, contemplate its deductibles). Simply because, as a proximal reason, if government goons hold that line, cushy jobs are for them to take when they come out of government.

The way it connects with the financial pirates is simple: money creation is a zero sum game, when pushed to the max. If more money went to the real economy, it would be as much not going to the financial pirates.

Krugman, and his eminent colleagues have not understood this yet, that all the money created for financial thugs, is as much not going for vaccine research, schools, bridges, healthcare, etc. Hopefully, they will, some day. Before that day, do not expect progressive polices to bear fruit, or, even, to exist.

The media, everywhere, is little better than FOX News: it’s a giant propaganda machine which has interest to make the rich richer, and the poor, stupider.

Plutocracy is the metastatic cancer which has invaded, paralyzed all the minds. Before a stunted economy, and decaying society, we are confronted to decomposed minds. And mostly on the left. The right, at least, the plutocratic right, knows how to take care of its own.

Patrice Ayme’

Anti-plutocratic Tirolean to Common Sense?

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’

Stealth Climate Deniers

The United Nations 300 top climate scientists from all over the world, came up with an alarming climate warming report: the warming is fully on, and its weird effects are showing all over, with changes in winds, the strongest hurricane ever, by a long shot, and even paradoxical situations, such as local cooling offshore, from twice stronger trade winds, causing a high pressure ridge, and a massive drought in the American West. (OK, it’s me observing the latter, not the UN, but it’s true nevertheless!)

There are two types of deniers: the grotesque ones, paid to say CO2 is good, climate has always changed, it’s not warming up, and getting more acid, and anyway, both are good. And then there are the stealth deniers.

50 Billion Tons Of CO2 Equivalent Gases Dumped In Earth’s Atmosphere, Per Year

[Observe the important role played by Methane. Although CH4 does not acidify the oceans as CO2 does.]

Stealth deniers are within, say, the media of the USA itself, under an unassuming form. The New York Times wrote several anti-deniers editorials. And yet, the Times itself is ambiguous, at best, about whether there is a CO2 problem.

Take the otherwise honorable Paul Krugman at the New York Times, the self glorified “Conscience of a Liberal”: Krugman talks to no end about providing “liquidity” to his friends the bankers and about the abysmal, pathetic pseudo-reform called Obamacare. That’s socio-economy for Krugman. (Obamacare is a dismally unimpressive tweak in the American greedy health care system that Obama himself, nowadays, tries his best to sabotage!)

However, Paul Krugman, blessed be his name, and all too many economic pundits in the USA, never, ever, talks about the most major economic issue of our times, the necessity to effect a massive transition towards sustainable energy.

By talking obsessively about minor economic issues (success! Obamacare now covers 2% of the population of the USA, 4 years after being passed into law! Sadness! Banks starving for free money so they can’t leverage, and play futures and dark pools as much as they want!), Krugman avoids the most serious of our times, and any times before those. Namely, the poisoning of the Earth, while most of the planet’s effective activities are starving for energy.

Yet, such a transition would provide with millions of jobs in the USA alone (a small and partial energy “change” in Germany provided officially with 400,000 jobs; it is a lame change, as it shot down futuristic nuclear energy solutions, though).

So what’s going on? Comments of mine making this observation were censored at the New York Times. Actually, the New York Times (supposedly left, liberal, with a conscience, blah blah blah, etc.) is shilling for fracking. “U.S. Hopes Boom in Natural Gas Can Curb Putin… by sending our surplus natural gas to Europe and Ukraine in the form of liquefied natural gas (LNG), the United States …stiffen resistance to Vladimir Putin’s aggressive behavior.

Forget that the United States currently lacks a capacity to export LNG to Europe… until the 2020s… Just focus on the article’s central reportorial flaw: it fails to identify a single reason why future American LNG exports (which could wind up anywhere) would have any influence whatsoever on the Russian president’s behavior.”

Instead, the economic main stream of the USA is going full steam ahead, fracking away. The fracking is causing huge leaks of methane. It’s also impossible to speak of the USA and omit its main factory, China. The tandem of the USA and the PRC are into ever more desperate fossil fuel production. USA coal production is now sent to Germany and China… Giving a biting irony to Obama’s notion of fracking gas playing the role of a “bridge fuel“. A bridge, across the oceans, to disaster, indeed.

Ever More Fossils Burned, Most Of Them, Now.

(Meanwhile the short sighted Obama proposes to reduce thermonuclear fusion research by 17%, in 2015, while giving the rich a gift of $7,500, each time they buy a car from the 7 billion dollar boy, Elon Musk; thermonuclear fusion is the one and only long term hope for sustainable energy; all other energy sources, except geothermal, which does not work, are derived from thermonuclear fusion!)

Another point I have made for years: at some point, exactly, the methane tipping point, massive amounts of methane will be catastrophically released from the oceans. Methane is already massively released from USA fracking, and from the oceans. Catastrophic release will involve tsunamis, and greatly accelerated warming. (That has happened in the North Atlantic, 7,000 years ago.) It will start suddenly. It could start tomorrow.

The media of the USA is culprit of not emphasizing that the climate problem is, first of all, an economic catastrophe, and opportunity to smash out of an unsustainable past dominated by fossil fuel plutocrats. But then most of the Main Stream Media in the USA is owned by plutocrats, partial to the present order of things, including the energetic order.

Anyway, as usual, it was an irritating pleasure to be censored by the Times: this way I know what New York plutocrats really care about, where they fear truth the most. It’s a sort of radar to detect malfeasance.

Patrice Aymé

INFLATION GOOD, STAGNATION BAD

INFLATION FEEDS SELF EXAMINATION, EMPLOYMENT, FUTURISM.

Moderate Inflation Optimizes Consumption, Self Examination, A Questioning Attitude, Full Employment, New Economy, Technology & Science, Enough Money For What’s Needed.

Why?

1) Inflation advantages the implementation of more advanced technology, because inflation forces people to a continual reevaluation of their old habits.

2) Inflation stirs the economic soup and advantages workers relatively to rentiers. (A rentier, by definition works from a rent; rentiers’ existence is less active than that of workers, they have to do less. Advantaging them is advantaging laziness. Activity ought to be more encouraged by a better income than the one received by doing nothing; it’s harder to negotiate the augmentation of a rent than that of a salary.)

3) Inflation insures that those who want to work, in particular with the future, have enough money to do so.

Inflation creates, de facto, negative interest rates. With inflation turned on, the very rich and corporations could not sit on the money, or lend it to each other through “dark pools“. The money would have to be invested profitably in the real economy.

Putting inflation back in gear is ONLY PART of the return to the winning recipe of the 1950s. But a master piece. It fights economic stagnation.

Conventional economic theory has it that people look for the cheapest products, or for better products, or a mix of these characteristics. Right. That fantasy is called the “market”. As in a real market, people are supposed to go down the alleys, and pick up what they deem to be the best.

In the imagination of vulgar economists, the “market” is supposed to solve everything (including health care in Obama’s Financial Times addicted mind). Let’s leave aside for now the problem that what they call a market is rather a jungle.

Before comparing products, people have to want to bother to look at them. Comparing is tiring, risky, and involves training (be it of a slightly new taste). Be it to buy sushi, a car, a new TV, or a vacation. In a steady state economy, with always the same prices, why would people want to look?

And what about, not just comparing old products, but looking at completely new products? Say you always bought apples and never looked at oranges? Why would people want to look at those? Curiosity? What about adding necessity to curiosity? Inflation insures the latter, because inflation introduces an element of discomfort with one’s old world. 

Inflation forces people to look and make comparisons, not just between the products that are offered, but between the habits they themselves hold (and that, left unchanged, would lead them to yesterday’s products). Continually rising sticker shocks spur a more demanding demand that questions one’s old demands.

Socrates said that the unexamined life was not worth living. Inflation says that one cannot afford the unexamined life.

Verily, conventional economic theory had forgotten that detail: if consumers don’t need to bother, they will not bother. MENTAL INERTIA RULES, and turns into generalized economic inertia. Inflation is a spur that forces economic participants to reconsider their relationship with the economy, and all values, and makes actually the entire public into savvy , even philosophical, economic participants, lest they drown in rising prices, and an unaffordable past.

Having more demanding consumers (that nominal price inflation creates), in turn incites would be suppliers to offer new products, as they know consumers are continually examining not just the products offered, but examining if the habits they have make life as worthy as possible.

Indeed, old habits depend upon old values, and old consumption patterns. When inflation permeates the economy, all prices rise, and force a dynamic ecology, by changing continually the environment, forcing speciation of new technology, that serve new habits.

It is similar to what happens when speciation in biology is forced by environmental changes.

Increasing prices force people to continually look afresh at whether their old habits are WORTH IT. People see the costs and prices of what they used to like, go up, and they ask themselves: why not to try something better?

Inflation continually swirls the economy, for higher performance. It creates an ever changing world, never boring, always valuing work

It’s no coincidence that the period of the 30 years of gloriously expanding economy after World War Two was characterized with significant inflation. Nor is it a coincidence that a depression is characterized by years of deflation.

As one can see today, or one has seen in Japan, deflation is hard to fight. Work programs in infrastructure financed by the government in Japan, over two decades, resulted with a government debt to GDP basically the highest in the world (more than 200%). And still Japan is stuck. Maybe what’s lacking in Japan, are animal spirits.

How is inflation controlled? By not expanding the money supply too much. What does that mean? Those who have the money keep it, others can wait for the grave. In other words no inflation profits first the established order.

Some will say: oh no, you don’t understand, with 4% inflation, the rich will get richer. Question: how come did the rich not become richer during the post war forceful expansion? High margin tax rates (93% under that well known Marxist, President Eisenhower). Just reinstitute those and redistribute to the indigent (including victims of inflation).

The “market” has been the paradigm of economics, and it’s made possible by the fractional reserve private-public money creating banking system. The latter has been ignored by most thinkers (except for president FDR and his men, who regulated it cleanly… and which the Clinton and his weasels destroyed). 

Of course the FDR reforms ought to be reestablished (this is what the inchoating “Banking Union” is about in Europe, and the various fines given to EU & USA banks in recent weeks… although jail sentences would have been better).

But more generally, the very image of the free economy as a “free market” is meek.  And irrelevant.

There is no “free market”. Most of the impulsion for new technologies was given by governments (even cans and microwaves were initially military programs; actually the question ought to be inverted: which new technologies were started as non-governmental programs, or not governmentally supported? Good luck to find any!) 

Through the (mostly private) bankers, the (plutocracy captured) government regulates the money supply, and has opted to restrict the new flow to old money.

A better picture of reality than the “free market” is the jungle. The genus Homo evolved through war, in the jungle. It’s hypocrisy and obfuscation to pretend that it’s otherwise in today’s economy. Once one has admitted this, and only then, can one mitigate this efficiently. Let’s bring some light to that obscure and tragic reality.

And let’s bring fresh money, enough money to employ youth well and irrigate the future. That is, allow enough inflation to insure this.

Could that create problems? Sure. And it did, in the roaring post-WWII expansion. However, corrective mechanisms were then applied: help to first time home buyers, construction programs, free universal health care and education, anti-plutocratic taxation.

One ought to argue that inflation is progressive, as it forced the implementation of these progressive measures (otherwise society would have exploded in rage; whereas now its put to sleep in the torpor of stagnating plutocratization).

Last, but not least: in the unprecedented confrontation between human technology and the biosphere, stagnation is not an option. Missing out on inflation, and the reality of the jungle it makes obvious, and the progressive answers it requires, maybe missing out on the animal spirits we need to survive.

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Patrice Ayme