Posts Tagged ‘Socialism’

Must A Reserve Currency Explode The Trade Balance? No! Just Look! Also: Avoiding Slavery Is No Socialism!

July 3, 2018

Established economists say that Trump doesn’t understand the nature of the dollar: its status as world reserve currency causes a trade deficit for the USA. Really? It takes one look at one graph, while knowing the USA conspired to make the dollar official world currency in 1944. (And when the French Dominique Strauss Kahn tried otherwise, as head of IMF, he soon fell to a huge sex prosecution, out of which nothing came, except the destruction of his career. That would teach all those who, like DSK, pretend to follow the exact same idea Lord Keynes had in 1944… when Keynes chaired the Bretton Woods conference!) WTF? 

I have a Facebook friend who is a fanatical anti-Trump, she retweets anti-Trump material frequently. 2 days ago she put out 2 posts (retweeting from overseas oversea junk) which were deeply offensive. One extolled a woman cop killer; the young mom he had killed was unarmed; the other compared Trump to Hitler, and emanated from Germany, supporting whom I call Merkler (for her economic war against the Greeks and others… which has killed many).

My friend didn’t know her (French) jailbreaker hero was an unarmed-woman-officer killer (because my friend doesn’t know much about Europe). Neither did my friend, who has socialist pretentions, know Merkel was a fascist exploiter hiding under a “left” immigration policy (importing slaves to better exploit the working class). My friend took down both posts (and my smart comments, unfortunately!). We are still friends. Some of the political hysteria is just misunderstanding. For example, do conventional economists misunderstand what causes the deficit? If we can’t learn to live with (some) intolerance, we aren’t tolerant.

Another friend, an economist objected to my playing dumb in economic matters. I had asserted there was no connection between reserve status and deficit (contrarily to what self-declared “liberal” economists say). To the price of starting a squirmish with dropping a thermonuclear warhead on the opposition, here is the proof:

Those Who Brought You Reagan, Brought You the Trade Deficit. Economists of the Clinton-Obama persuasion say the dollar as reserve caused the deficit. This is obviously false: the dollar has been a reserve currency for about a century, and officially since 1944. However, there was no sizable deficit before Reagan. Reagan was a tool of global plutocrats, so the deficit exploded under him, right away. He was succeeded by G. Bush, who knew all too well where real power was an re-established the balance. But then came the stooges of plutocracy, and they let the deficit fly, as their masters told them to. The idea was to weaken American US unions, workers, and citizenry.

Eugen Roden wrote:

“Even if it is hard to believe, that you Patrice don’t understand how reserve currency will necessarily create deficit, I will do my best to explain to you and to your followers in a very easy way, why [the status of the dollar as] reserve currency necessarily creates deficit in US.

Reserve currency means,  that the currency is saved in other countries, than [the] country of its origin. It can be done by private corporations or public entities,  or even private individuals, who prefer to hold the reserve currency, as media of savings, because of the trust [they have] in it, compared to the local currency.  By doing so, they create demand for the money itself, as if it would be commodity or item of value by itself. And the truth is the reserve currency is an item of value, because of the trust people all over the world put in it. This trust is result of long history of reserve currency origin country’s military dominance,  democratic political system, free competitive market economy and unchallenged right for private property and wealth. China, even with its size of economy, (a bigger economy than that of US, not in nominal but real terms) doesn’t have a reserve currency, because it couldn’t create the trust in its sincerity in most of the above mentioned issues.  Europe succeeded only partly in making the Euro a reserve currency, because of its history of because of the world wars it initiated, and their economic consequences on Europe. Even 70 years of peace was not enough to create enough trust in Europe, to make from its currency a reserve currency comparable to US dollar, which has a history of continuous respect for the values mentioned above, since its declaration of independence.

The need for reserve currency exists,  to create trust in local currencies, based on these reserves. Just as in the past precious metal reserves, like gold or silver, made the currencies trustworthy, today holding of US dollars makes local currencies trustworthy.

But then if there is demand for reserve currency,  not as media of exchange, but as value holding item, its price, or exchange value will be influenced by this demand, without the question if exists enough additional production capacity to satisfy the value of potential demand that reserve currency promises. But then the relative prices in the country of origin of reserve currency,  have to be higher than in countries who accumulate the reserve currency, that has to create surplus in trade with reserve currency origin country, to be capable to accumulate these reserves. Such a surplus can be created only if the local currency value is undervalued compared to the reserve currency. Then the other side of this surplus has to be the deficit of the reserve currency origin country.”

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Too Much Reserve Makes You Deficient?

The argument seems partially to be that, to create a store of dollars overseas, one needs to send said dollars there, to start with: a deficit. The graph of the deficit from the Federal Reserve which I put on top shows this is not correct: a continual flow of dollars is not needed to entertain a stash. A stash is a stash, it’s not a current.

OK, so we need X amount of dollars to create an overseas dollars stash. Say that stash is $10 trillion (a large overestimate). That’s 25 years at the present rate of deficit with China alone. And the stash existed before, it started before 1945. And also 4 trillion dollars of the stash is unpaid taxes by US corporations…

Moreover, consider, say, Argentina. It has a dollar stash. However the US has long exported cars to Argentina, so how did the stash develop? Through plutocratic mechanisms involving either tax cheating (laundered Argentine currency) or US plutocrats buying vast tracts of the country (also done in Chili).

In any case, the fact that the US dollar is considered reserve doesn’t mean one needs to have a deficit! And the fact is the US has been reserve since 1944 (after cheating Lord Keynes who didn’t want the $ as reserve, and headed Bretton Woods, but documents were switched!) There was no deficit for decades! And the fact is the massive deficit with China and Germany, or Ireland are recent. And the fact is, Germany has used its bankrupt small banks to self-finance its massive export machine, even within Europe…

And the fact is, the industrial core of the USA in the Middle West, got gutted, although it had a large educated population, and lots of fossil fuel energy. I say it got gutted precisely because it was educated (and thus a risk). Unions used to be hyper powerful in the USA, now they are near nothing…

Trade is good, exporting work, exporting ALL work, is bad… Yes, Merkler, 44% unemployment in Greece thanks to YOUR policies, was a terrible thing. Yes, the Greek government was an accomplice, an accomplice of you and your ilk. But We The People of Greece was innocent.

There are legal incentives to exporting job overseas, because corporate plutocrats told politicians to pass such friendly laws: watch how wealthy the Clintons are. And now the Bamas. Bahamas Bamas: a jungle rhythm. Main offenders in trade should be punished, until they cease and desist:

  • China/Hong Kong exported to the US 3 times as much as it imported from the US.
  • Japan exported to the US 2.2 times as much as it imported.
  • Germany exported to the US 2.2 times as much as it imported.
  • Ireland “exported” to the US 32 times as much as France, per capita, all of it being tax evasion by US corporations.

Notice that the French Republic should not save Merkler’s skin: whereas Europe didn’t have the muster to correct the exporting and exploiting ways of Merkler’s Germany, Trump does, and Southern Europe (that includes France, which is both northern and southern…) should enjoy the shooting down of the Merkler vulture by Trump, hopefully ending the austerity which has, and is destroying Europe (see Brexit).

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Krugman, Smelling Blood In Global Plutocratic Waters, Turning “Socialist”?

Krugman blocked and banned my comments for years, presumably because they were “socialist” (what else? I supported Sanders, Krugman dined with the devils, including Obama and Clinton, and took systematically anti-“socialist” position). But now he is changing. Suddenly, “Radical Democrats Are Pretty Reasonable“, opines Paul.

A “Socialist” newcomer young woman defeated the fourth ranking democrat in Congress in New York.

Alexandria Ocasio-Cortez’s upset primary victory has produced a huge amount of punditry about the supposed radicalization of the Democratic party, how it’s going to hurt the party because her positions won’t sell in the Midwest… But I haven’t seen much about the substance of the policies she advocates, which on economics are mainly Medicare for All and a federal job guarantee.

So here’s what you should know: the policy ideas are definitely bold, and you can make some substantive arguments against them. But they aren’t crazy. By contrast, the ideas of Tea Party Republicans are crazy…

Ocasio-Cortez’s positions: Medicare for all is a deliberately ambiguous phrase, but in practice probably wouldn’t mean pushing everyone into a single-payer system. Instead, it would mean allowing individuals and employers to buy into Medicare – basically a big public option. That’s really not radical at all.”

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A hefty minimum wage is not a question of having it more social, it’s a question of avoiding a slave society:

Medicare for all was proposed by yours truly, more than a decade ago: the idea is to open Medicare to all… As long as they pay the cost of insuring themselves. As Medicare is not for profit and is huge (economies of scale), it would be cheaper than ANY private health plan. So Medicare for All would quickly devour for profit healthcare gouging. My friend Obama meekly proposed it to his cabinet, which unanimously rejected it in favor of giving subsidies to healthcare billionaires, their sponsors (“Romneycare aka, Obamacare”).

Employment for all, as presently done in the USA is a good thing… Except if people work for free, in which case that’s called slavery. Thus, to avoid slavery, a hefty minimum wage insuring minimum living standards, in particular the capability of affording a home. In places like Oakland, California, or cities around, with all those jobs, a minimum one bedroom is $3,000 a month. That’s 36K a year. Cities around Oakland are instituting a minimum wage of $15. That boils down to 30K a year, working full-time, 2,000 hours a year: not enough to afford a roof! Thus college professors in San Jose have been observed, sleeping in cars….

$15 an hour is not socialism, it’s not even, a realistic minimum wage in the most booming part of the US. It is just an effort to avoid a slave society.

We are all socialist, just as we are all progressive. Just as we have to be somewhat conservative (to save the planet). The only question is how much. Not whether. 
Patrice Ayme

Scandalously Socialist France

January 17, 2014

Abstract: Dissecting an editorial misrepresenting the social, economic and political situation in France. However, the heavy misrepresentation is preceded by many things I said for years. It’s a sort of bait and switch with truth itself.

What’s the interest could big bankers find in this maneuver? Simply that the socialists governing France are represented as having given up on socialism. The truth is anything but.

Those who prefer to read me rather than Krugman can jump to the second part, “THE TRUTH”.

***

Pseudo panicky New York Times editorial by Paul Krugman “Scandal In France”. Yet it starts well:

I haven’t paid much attention to François Hollande, the president of France, since it became clear that he wasn’t going to break with Europe’s destructive, austerity-minded policy orthodoxy. But now he has done something truly scandalous.

I am not, of course, talking about his alleged affair with an actress, which, even if true, is neither surprising (hey, it’s France) nor disturbing.”

(In truth Hollande’s First Girlfriend, an arrogant woman… from a banking family, had her trouble coming: she, a star political journalist who made a career on her looks, pursued Segolene Royal, with whom Hollande had four children, with great vengeance and treachery, sabotaging even her political carreer, for all to see; Hollande’s family came to detest her; unsurprisingly, and hopefully, Hollande will send her packing.)

Krugman: ”No, what’s shocking is his embrace of discredited right-wing economic doctrines. It’s a reminder that Europe’s ongoing economic woes can’t be attributed solely to the bad ideas of the right. Yes, callous, wrongheaded conservatives have been driving policy, but they have been abetted and enabled by spineless, muddleheaded politicians on the moderate left.”

This is what I have been saying about Pelosi and Obama, for years. In Germany, Schroeder, a Socialist, carefully made the bed in which Merkel has been contently sleeping since. Yet, one can argue the tough reforms of Schroeder enabled Merkel herself to take a hard left turn in 2008… which boosted the German export machine.

Here is more Krugman repeating, almost verbatim, what I have been saying for years:

“Right now, Europe seems to be emerging from its double-dip recession and growing a bit. But this slight uptick follows years of disastrous performance. How disastrous? Consider: By 1936, seven years into the Great Depression, much of Europe was growing rapidly, with real G.D.P. per capita steadily reaching new highs. By contrast, European real G.D.P. per capita today is still well below its 2007 peak — and rising slowly at best.

Doing worse than you did in the Great Depression is, one might say, a remarkable achievement. How did the Europeans pull it off? Well, in the 1930s most European countries eventually abandoned economic orthodoxy: They went off the gold standard; they stopped trying to balance their budgets; and some of them began large military buildups that had the side effect of providing economic stimulus. The result was a strong recovery from 1933 onward.”

In this depressed and depressing landscape, France isn’t an especially bad performer. Obviously it has lagged behind Germany, which has been buoyed by its formidable export sector. But French performance has been better than that of most other European nations. And I’m not just talking about the debt-crisis countries. French growth has outpaced that of such pillars of orthodoxy as Finland and the Netherlands…

Mr. Hollande has spoken up about his plans to change France’s course — and it’s hard not to feel a sense of despair.

For Mr. Hollande, in announcing his intention to reduce taxes on businesses while cutting (unspecified) spending to offset the cost, declared, “It is upon supply that we need to act,” and he further declared that “supply actually creates demand.

Oh, boy. That echoes, almost verbatim, the long-debunked fallacy known as Say’s Law — the claim that overall shortfalls in demand can’t happen, because people have to spend their income on something… ”

All the evidence says that France is awash in productive resources, both labor and capital, that are sitting idle because demand is inadequate. For proof, one need only look at inflation, which is sliding fast. Indeed, both France and Europe as a whole are getting dangerously close to Japan-style deflation.

So what’s the significance of the fact that, at this of all times, Mr. Hollande has adopted this discredited doctrine?”

All right. End of the Krugman circus. I understand that he may mean well. But he so enormously misrepresents the situation in France, that he is not doing a service to progressivism in the USA. Now for a bit of real data.

***

THE TRUTH: FRANCE IS SOCIALIST, BUT IS NOT GOING TO ATTACK THE USA:

General government spending in France is 57% of GDP. Only Denmark exceeds 55% in Europe. (The USA is at 39% of GDP, Federal government spending plus States plus Local Governments; it’s 37% in Japan.)

France has both a very centralized state and a government made of 15 “regions”. In consequence, France has several times the number of civil servants of some other European countries (relatively speaking). The USA has less than 20 million civil servants, France nearly seven millions.

French workers are paid nearly 50 dollars an hour (more than Germany). French minimum wage is more than 13 dollars per hour. Schooling, all the way to universities is free. Health care is free and universal.

So Mr. Hollande can go as much right as he wants, the French Republic is going to stay socialist by inertia, for a very long time to come.

Some of the measures proposed by Hollande are just about doing away with some department, to create more… local government. For example the city of Lyon will grow, at the expense of the department it lays in. There is talk to remove the 4 departments that dissect the city of Paris.

True, Hollande is not rabidly anti-plutocratic. But he is not going to declare war to Washington and Wall Street. All Americans are behind those, or nearly so.

Thus Hollande will stick to the 75% tax on income above one million euros that was introduced a few weeks ago.

France is, by USA standards, the very definition of a socialist country. But, without fighting the American Circus, little can be done against global plutocracy. The USA pretty much behaves like a Den of Thieves. Look at the F35 program, the most expensive military program in the history of the world, by far. It has dragged many countries into a most dangerous corruption.

Similarly, what can France and Germany do against the increasingly crazed surveillance state of the USA? Attack? Or talk slowly, and try to walk the patient through his derangement? It starts with getting to know reality. And reality is that Europe is physically small and civilizationally socialist, whereas the USA is physically huge, and thus relentlessly exploitative.

Last, but not least, the honorable professor Krugman does not explain how the mad spending of the 1930s ended. First France did not join it. Second Germany got broke down economically very quickly (by 1938), albeit “solved” the problem… with the “final solution” (stealing Jews and other Europeans).

Great Britain made the economy of an army, thus losing in 1940, but in the end did not escape expensive debts to the USA, that ruined the UK thereafter. The USA won, because all the spending, and a timely late, cheap intervention in the war, allowed it to win, and grab the world.

The only lesson? Keep cool, and try to understand what is really going on.

Patrice Ayme’

Mandela, Algeria, Zizek, Truth

December 9, 2013

ALGERIA’S DISASTER, SOUTH AFRICA’S SURVIVAL:

I wrote an essay celebrating Mandela using truth as hammer with which to pulverize hatred. This was Mandela’ s primary mission, and it succeeded.

That was not obvious. Look at Algeria. In 1960, Algeria was richer per capita than South Africa, and enjoyed (on paper) more freedom (apartheid, although practically observed in Algeria, was not imposed with the force and arrogance it was in South Africa; the first universal suffrage vote happened in (French administered) Algeria a third of a century earlier than in South Africa.

At first sight, it should have been easier to make Algeria into a democratic commonwealth in 1951 than to achieve this in South Africa in 1991 (the year Mandela was released from detention). However:

War Slashes Souls

War Slashes Souls

The weight of the past can be overwhelmed, though. Mandela showed that. So why did it not happen in Algeria? Intellectual failure. All over.

The situation in Algeria turned out catastrophic, because no man, no leader, spiritual or political, in France, or Algeria had the philosophical, and political stature of Mandela (Camus did not reach Mandela’s philosophical understanding). As I pointed out, Mandela understood something that was not understood, or proclaimed, before: the Will to Truth can overwhelm the Will To Power.

The problem with the Franco-Algerian civil war, was not just that there was no Mandela. But that the whole political and intellectuals landscape was full of short sighted hateful dwarves, full of racism, on the left or the right, on one side of the sea, as on the other (yes, I include De Gaulle, the OAS, the FNL, and all Franco-Algerian intellectuals, Camus excepted, in this global condemnation).

The vicious Franco-Algerian war had hardened hearts, and left only draconian mentalities in power (Draco gloated that most offenses were worthy of the death penalty, 2,615 years ago in Athens).

Mandela avoided this. He avoided vicious war, the type that feeds mostly hatred. As Mandela talked, in his jail cell, with South Africa’s top (white) general, he told him:“General, in this war, you and me are both generals. Whatever happens, at the end of this, we will have to meet, and negotiate. How we treat each other then, depends upon how we treat each other, now.”

In the early 1990s, 19% of South Africa was “white”. Nowadays it’s 9% (the poor tend to reproduce like rabbits, everywhere).

In Algeria, upon so called “independence” 15% of the population fled (including lots of Jews, whose ancestors had arrived in the area 2,100 years before, 8 centuries before Arabs and Muslims invaded by the sword). Many of the Jews ended in Israel, as the French Republic had been, naturally enough, Israel’s main sponsor.

It was independence from Paris, but not from hatred and other vicious habits many of them learned there (such as the pseudo-leftism clamored by hypocrites such as Jean-Paul Sartre, the pseudo-philosopher, and his ilk of ill disguised collaborators).

In the full light of history, one may wonder if Africa and Numidia (in the Roman geographical sense) will ever recover from democratic Carthage’s monstrous demise, and the just as monstrous Arab-Muslim conquest of the Maghreb (647-709 CE)

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SILLY ZIZEK:

I mentioned that, ideally, Mandela would have told a few truths that needed to be told, and, first of all, that wisdom pays, and only wisdom does. Long term.

Second, that wisdom arises from a wealth of knowledge, and only from that: Mandela, a king, was also a lawyer, a boxer, and someone who learned Afrikaner as an adult.

The average salary of an employed black man is eight times less than that of a white employee. But Mandela would have shrugged:”Do you have anything better to propose?” Zizek thinks so, but he is just posing:

Slavoj Zizek, the famous European (Slovenian) philosopher, psychoanalyst and social theorist at the Birkbeck School of Law, University of London, wrote an incisive essay for the New York times”Mandela’s Socialist Failure“. The essay is transverse to my “Mandela, Truth Philosopher”. I do not disagree with its spirit. Just the details, where the most pernicious devils lurk.

Zizek says: “South Africa in this respect is just one version of the recurrent story of the contemporary left. A leader or party is elected with universal enthusiasm, promising a “new world” — but, then, sooner or later, they stumble upon the key dilemma: does one dare to touch the capitalist mechanisms, or does one decide to “play the game”? If one disturbs these mechanisms, one is very swiftly “punished”If we want to remain faithful to Mandela’s legacy, we should thus forget about celebratory crocodile tears and focus on the unfulfilled promises his leadership gave rise to. We can safely surmise that, on account of his doubtless moral and political greatness, he was at the end of his life also a bitter, old man, well aware how his very political triumph and his elevation into a universal hero was the mask of a bitter defeat. His universal glory is also a sign that he really didn’t disturb the global order of power.”

Amen to this. Zizek ought to realize though that Franklin D. Roosevelt (from plutocratic background) and Eisenhower (Republican president) were conducting policies way left than anything proposed by the democratic party of the USA, or any “left”, “socialist’, or “labor” party in the West in the last 40 years.

Those who are serious about debt reduction ought to follow Republican president Eisenhower’s drastic remedy: bring up the highest margin tax rate to 93%.

In general, most of today’s economic and social ills would disappear if one returned to the conservative fiscal methods of the 1950s. Those would allow to keep in good functioning order the welfare state established in the period 1933-1965.

Roosevelt and Eisenhower would have certainly presented themselves as free market liberals, pro-capitalists. And they were. So, Zizek, it’s not about “capitalist mechanisms”.

It’s about having forgotten the wisdom of the past. And it’s about intellectuals who, like Zizek, do not go inside the machinery enough to make a cogent critique of what went wrong.

Mandela did not do such a mistake: he had the Algerian disaster in full view, and tried to avoid it. This, Zizek does not see.

And it’s going wrong all over, in newer ways: witness the suicidal rise of fossil fuel companies’ influence, in the last 15 years. Something never seen before, and that no socialists of the past could have envisioned, in their worst nightmares.

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Patrice Ayme

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Note: 1) Millions died or fled from the Algerian War. Nearly all the population of Algeria suffered, and the suffering extends to this day.

2) The accusation of racism against De Gaulle is amply documented. Through many statements. On 5 Mars 1959, he confessed the following to Alain Peyrefitte : « Si nous faisions l’intégration, si tous les Arabes et Berbères d’Algérie étaient considérés comme Français, comment les empêcher de venir s’installer en métropole, alors que le niveau de vie y est tellement plus élevé ? Mon village ne s’appellerait plus Colombey-les-Deux-Églises, mais Colombey-les-Deux-Mosquées ! »

Translation: France is so rich, all Algerians want to come here. So we will not do integration. Down with Mosques.