STOP the Zombie Banks

This morning,as the G20 traitors meet, Joseph Akerman CEO of Deutsche Bank and Chairman of the Bank Lobby Group the International Institute of Finance (IFF) is going  to meet our glorious, traitorous leaders to tell them they must not, may not ‘ask’ the  banks and bankers to shoulder any more of the cost of bailing themselves out than the 21% they already voluntarily agreed to .

Akerman delivers his message as Cahirman of the IFF on behalf of the worlds Too big to Listen and Far Too Big to give a Damn for you’ banks. The IFF was created in the 80′s after that financial crisis, by 38 of the worlds biggest banks to lobby against the interests of ordinary people. I’m sorry did I say that out loud? What I meant to say was that they lobby for the interestsof the big banks in particular to make sure that the costs of the regular financial crises are always disproportionately borne by the public.

True to form, this morning Bloomberg reports Akerman as saying that,

Forcing lenders to boost capital would be counterproductive, and getting investors to accept larger losses on Greek holdings difficult, …

Akerman is referring to the agreement between the EU and the private banks who hold Greek debts (IE who lent money to Greece unwisely) to take a 21% ‘haircut’ in what those bonds will eventually return. What he is objecting to is the idea that the banks should have to take a far more severe loss.  Everyone is now talking about 50% and frankly looking at how much Greece owes, the rate of interest on what they owe and contrasting that with their rapidly diminishing chances of any growth at all with which to pay these debts and it seems clear to me  even 50% won’t be enough to stop Greece’s spiral into deeper and deeper debt and social paralysis.  But the banks don’t much care about social paralysis as in places they don’t live and in the lives of people they don’t give a damn for.

The Deputy Managing Director of the IFF, Mr Hung Tran went further than his boss Akerman and made the banker’s position even clearer,

There are no plans to change the deal,

So stick that in your democracy and suck on it! The Bank Imperium has spoken! He went on,

We should remind the public sector that we need to preserve the voluntary nature of the Private Sector Agreement, and therefore honor and implement the deal.

Why do we need to preserve the ‘voluntary nature’ of the agreement? We are sovereign peoples. We don’t have to come to you with our caps in our hands. Your banks are only alive because we, the people, bailed them out. Are still bailing them and you out. This is now a battle to the death between nations and peoples on the one side and on the other a completely corrupt and dysfunctional economic system that is now no more than a looting exercise of the worlds richest 1%. The banks must be put to the sword.

HONOUR!? What would bankers know about honour? What honour was there is systemically lying about the value of mortgages beingSecuritized and sold on to pension plans and the like? What honour was there is creating CDO’s which were designed to fail? CDOs so bad that those creating them referred to as ‘crap’ and which they knew would fail?

The banks of the IFF did all these things. They are a matter of public record.

So as the G20 prepares to betray the people of Europe and America once again, as the share price of banks shoots up again simply andsolely at the prospect of being allowed once again  to suck the life blood from nations we all need a little moment of inspiration and enjoyment.

So I give you this. His finest to date.  Enjoy!

Lynch Pin – AKA – Stop a Zombie Banker Man!

 

And as the song says if we don’t stop the Zombie Banker Man, then  ”Watch your money fade away, Day after day!”

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85 Responses to STOP the Zombie Banks

  1. Jonahsdad73 October 17, 2011 at 10:51 am #

    You correctly sum up the attitudes of the banking classes, and their political lapdogs. And the prospects of a deal is generally presented as a good thing in the media. However, many people and some commentators (Robert Peston for instance) do seem to have twigged that it is likely that the ‘solutions’ being proposed mean that once again taxpayers will be required to bail-out the banks (without first being asked whether they want to), with the consequences for that on jobs, pensions and public service provision.

    I have two hopes on this though.

    First, Merkel has consistently (or at least that’s how it’s been presented) been pushing for the banking classes to shoulder a good deal of the burden. This seems to be different to what Sarkozy has been saying. They both want the same thing, an end to the debt crisis, but it is not clear they share a view on the solution. Without Germany, this deal is not going to happen.

    Second, surely if there’s one thing that the protests in Greece, Spain, the USA and elsewhere (including in dear old Blighty) tell us, it is that people are wising up and are not giving up to their political masters that easily. I think the masters will have difficulty enforcing the further austerity which will be required if the ‘solutions’ proposed are to be brought into effect.

    Will there be enough ‘poor lawyers’? I think there may well be.

    I have one further point to make though. There is talk of the European bail-out fund needing to comprise 2 or 3 trillion euros. Even if a deal is struck, is it likely that this amount of money can be raised, especially considering that some large Eurozone economies (like Italy and Spain) will not be in a position to contribute?

  2. Golem XIV October 17, 2011 at 11:00 am #

    Jonahsdad73,

    There is not enough money for the EFSF to borrow 2-3 trillion. They are not thinking of doing so. What they are considering is using leverage. As I understand it they will set up a new fund/CDO/SIV – who knows what they’ll call it in the end – and this will sell bonds based on leveraged backing of a much smaller amount of actual cash/value.

    This is the same trick that collapsed the banks but they have no other plan and so if they want a larger fund they print it or leverage it. Or both.

    • Jonahsdad73 October 17, 2011 at 11:37 am #

      Thank you for clarifying that for me. In a previous post, I described myself as a layman. I think I have demonstrated that now. However, without wishing to sound like some creepy toad, thanks to you I am a lot better informed than I previously was about the origins and ongoing issues of this crisis.

      The leveraging proposal makes this look like a worse prospect than what I was worried about in my comment for the reasons you have mentioned.

      • Hawkeye October 17, 2011 at 12:10 pm #

        Jonahsdad73,

        Yes, it is leveraging heaped upon leveraging. It was alluded to in this article a few weeks back:

        http://www.golemxiv.co.uk/2011/09/guest-post-hawkeye-the-future-stealers/

        The Zerohedge quote was, although sarcastic, quite accurate in calling it “CDO Squared”. The initial sovereign pledges are essentially Collateralised Debt Obligations (lend us cash now, and we pledge our national assets as collateral), and so leveraging up to 2 trillion appears to be another layer of CDO (hence CDO Squared).

        To any rational person it does not seem at all healthy or sustainable.

        With every sticky plaster used to hold back the tide of defaults we are shoring up more and more problems in the future.

    • RR October 18, 2011 at 4:25 pm #

      or … they will do as you said to keep our minds busy and target people’s expectations to a certain directions in order to ingnore other areas and to increase the crisis , but ( I thnik!) they will also provoke riots, more and more riots, other countries will come to the same situation as Greece, until “public emergency” situation can be declared. The EU conditions for “public emergency” are very largely defined. A bigger EU financial crisis could lead to such a “public emergency” ( and the loss of human rights)

      “The European Court of Human Rights (ECtHR) in Lawless v. Ireland, qualified the time of public emergency as ‘an exceptional situation of crisis or emergency which afflicts the whole population and constitutes a threat to the organised life of the community of which the community is composed’. (13) This definition was further developed in the Greek case, in which the European Commission on Human Rights pronounced that ‘public emergency’ 1) must be actual or imminent, 2) the effects of emergency must involve the whole nation, 3) the continuance of the organised life of the community must be threatened and 4) the crisis or danger must be exceptional, in that the normal measures or restrictions, permitted by [European] Convention for the maintenance of public safety, health and order, are plainly inadequate. (14)

      Second, in response to an argument that ‘terrorism’ could not conceivably be a threat to the UK’s institutions or the UK’s existence as a civil community, the Court held that it had been ‘[…] prepared to take into account a much broader range of factors in determining the nature and degree of the actual and imminent threat to the “nation” and has in the past concluded that emergency situations have existed even though the institutions of the State did not appear to be imperilled…’. (15) The existence of the ‘public emergency’ should be proved by the state derogating from its obligations. (16) Although, the ECtHR has of granted a ‘margin of appreciation’ to states in determining whether a ‘public emergency’ exists, (17) nonetheless the Court held that the discretion of states is ‘accompanied by a European supervision’. (18) In contrast the HRC has made no such reference to a margin of appreciation to that in Silva v Uruguay, found the State Party to be ‘duty-bound to give a sufficiently detailed account of the relevant facts when it invokes Article 4(1)’ and that it is the Committee’s function ‘to see to it that States parties live up to their commitments under the Covenant’. (19)”

      If ‘public emergency’ IS proved by a state derogating from its obligations and being under EU supervision, who takes the lead of that nation?

  3. ChrisL October 17, 2011 at 11:06 am #

    Indeed – where will the 2 or 3 trillion Euros come from?

    Another great post David – it does seem as if the world has gone mad. Nobody is really prepared to actually discuss what the problem is or come up with a real solution.

    The resentment is starting to bubble through – all the protests we are seeing are largely peaceful at the moment but it can only be a matter of time before they turn ugly…

    If you really want to scare yourself, have a look at: http://www.economist.com/content/global_debt_clock or http://www.usdebtclock.org/ (truely frightening)

    C

  4. Charles Wheeler October 17, 2011 at 11:44 am #

    And so the cycle continues, and will continue as long as the ‘neoliberal’ paradigm holds sway.

    More essential reading from Bill Mitchell, of which this is an extract:

    Now what does the IMF say about inequality and growth?

    Their summary note says that:

    … we discovered that when growth is looked at over the long term, the trade-off between efficiency and equality may not exist. In fact equality appears to be an important ingredient in promoting and sustaining growth. The difference between countries that can sustain rapid growth for many years or even decades and the many others that see growth spurts fade quickly may be the level of inequality. Countries may find that improving equality may also improve efficiency, understood as more sustainable long-run growth.

    That is contrary to a lot of the “trickle-down” theory that mainstream economics preaches.

    The IMF paper says that one of the possible reasons “that inequality is strongly associated with less sustained growth” is because it:

    … may amplify the potential for financial crisis, it may also bring political instability, which can discourage investment. Inequality may make it harder for governments to make difficult but necessary choices in the face of shocks, such as raising taxes or cutting public spending to avoid a debt crisis. Or inequality may reflect poor people’s lack of access to financial services, which gives them fewer opportunities to invest in education and entrepreneurial activity.

    You can see that this conclusion was written by IMF economists. They just cannot help putting in nonsense about debt crises etc although it is true that politicians act as if there are sovereign debt crises which clearly influences the capacity of their economies to absorb a negative demand shock. In other words, by invoking austerity – unnecessarily – they actually undermine growth.

    I have in the past emphasised the role that the changing income distribution between wages and profits has played in the crisis. The two points bear repeating. First, the wage share has plummetted in many nations as real wages growth has failed to keep pace with productivity growth. Legislative attacks on trade unions and other welfare-to-work policies have led to this divergence. The question then was how can growth be maintained?

    Second, that problem was solved by the growing financial sector need to push credit onto households. Consumption was maintained not through the traditional means of real wages growth but by credit growth. The financial engineers seized on a winner they could keep economic growth going (via consumption) and earn interest on top of it.

    The real income that was expropriated by the financial sector came from the redistribution of national income.

    The problem with this rising inequality (partly driven by this redistribution of factor shares) was that it could not sustain growth. The rising indebtedness was always going to explode.

    If the OWS movement starts to articulate concrete concepts to guide their “revolution” then one of the first principles is that growth should be based on real wages growth not credit growth.

    That will make it sustainable and more evenly distributed but will also starve the “banksters” of their gambling chips. The question of how much growth we should have is a separate issue.

    Quoting from “The Darwin Economy: Liberty, Competition, and the Common Good” by Cornell University’s Robert H. Frank.

    I cannot say I agree with everything that he writes and in fact I consider his representation of “public finances” to be mainstream and thus incorrect. But the general tenor of the book – emphasising the damage that inequality inflicts on economic prosperity – is well founded and worthwhile.

    The Book sets the theme from the outset:

    During the three decades following World War II, for example, incomes were rising rapidly and at about the same rate— almost 3 percent a year— for people at all income levels. We had an economically vibrant middle class. Existing roads and bridges were well maintained, and impressive new infrastructure was being added each year … No longer. The economy has grown much more slowly during the intervening decades, and only those at the top of the income ladder have enjoyed significant earnings gains. CEOs of large U.S. corporations, for example, saw their pay increase tenfold over this period, while the inflation-adjusted hourly wages of their workers actually fell. The middle class is awash in debt. ”
    http://bilbo.economicoutlook.net/blog/?p=16506

  5. Neil October 17, 2011 at 11:52 am #

    As stock markets crazily continue to rise (the FTSE has gained 10% recently) on hopes of a rescue plan, the Telegraph’s Ambrose Evans-Pritchard gives an apocalyptic warning on Europe’s looming $7 trillion loan crunch:

    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8830072/Europes-lost-decade-as-7-trillion-loan-crunch-looms.html .

    Yep, $7 trillion.

    Meanwhile AEP notes that:

    - France’s banking liabilities are 409pc of GDP (ECB data), compared to 338pc for Spain, 331pc for Germany, 250pc for Italy, 213pc for Greece.

    - youth unemployment is 46pc in Spain, 43pc in Greece, 32pc in Ireland, and 27pc in Italy.

    • Neil October 17, 2011 at 1:06 pm #

      By ‘banking liabilities’, I presume AEP means the “assets” of the countries’ respective banking sectors?

      As for the youth unemployment figures, any government that fails its young people so disgracefully has no legitimacy.

      As ye sow, so shall ye reap.

  6. Wirplit October 17, 2011 at 12:07 pm #

    The understanding is growing at least of what lunacy is being foisted on us…even the Today programme had a MEP who rubbished the plans…
    As addition to this and yesterdays blog on the EC riot force heres a report on one way the EC will pay for it…

    http://news.yahoo.com/eu-considering-massive-cuts-food-aid-poor-110155873.htm

  7. John Souter October 17, 2011 at 12:58 pm #

    This ‘crises’ has gone beyond idiocy and becoming a threat to humanity.

    If it’s allowed to continue it will destroy democracy, create social genocide and lead to a cull of humanity.

    The threat is real, global and having stumbled into it, its advocates are now realising and exercising the power, domination and rewards it could grant them.

    Once established, I would envisage a world population of between two and three billion would be regarded by them as commercially viable and eugenically sustainable.

    I could be wrong their perfect playground could demand it be less. but that could be refined through time.

    • Hugh October 17, 2011 at 4:05 pm #

      Be careful, John Souter.

      If you insist on letting us little people know what the future is likely to hold for us, you may find yourself at the top of the Banksters’ “Surplus to Requirements” list.

      • John Souter October 17, 2011 at 6:56 pm #

        Candidly Hugh I couldn’t give a damn.

        The bankers and their political cohorts have been surplus to my requirements since the mid eighties.

        • richard in norway October 17, 2011 at 10:40 pm #

          One billion would probably be their ideal, the only Q is which billion

          • John Souter October 18, 2011 at 8:26 am #

            Richard.

            I doubt they could be that comprehensive in their initial result.

            But who knows!

            Except it wouldn’t be my or any other thinking humans answer to the sustainability problem.

  8. Delayed Reader October 17, 2011 at 1:25 pm #

    “There is not enough money for the EFSF to borrow 2-3 trillion. ”

    Have you spotted the reports of an unpublicised US $16trillion bailout earlier this year from the Fed to various banks (including US and European ones)? The numbers could use some detailed analysis and then some publicity.

    http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

    • Neil October 17, 2011 at 1:51 pm #

      Delayed Reader: the figures cover 2007-2010. I replied to your earlier post on this (can’t find it now): in essence, the key table can be found by searching for “Scotland” in the PDF of the report – a link is given at the end of the Sanders press release. This shows Barclays, RBS and Bank of Scotland as among the top recipients of loans, though you also need to read the text just before the table for qualification.

  9. Mike Hall October 17, 2011 at 1:28 pm #

    That’s not a bad Telegraph article by Ambrose Evans-Pritchard. Paints quite a dire picture.

    Pulling a couple of quotes…

    “How Europe allowed this to happen will no doubt be the subject of many enquiries. Suffice to say that it was an intellectual failure by everybody: lenders, economists, regulators and the European Central Bank.”

    Good to see something of this in the MSM. But still a bit tepid.

    As there’s no sign of these ‘many enquiries’ 3yrs + into the crisis, and with countless policy decisions making matters worse, not better, one wonders if these ‘enquiries’ will ever appear from the various ‘authorities’.

    The author seems to offer his own reason for this in the next sentence – ‘intellectual failure’. But no, not by everybody, Mr Evans-Pritchard. A number of economists, Steve Keen, MMT proponents & others warned of the Euro’s flaws before it was set up. And also warned of the consequences of the greedy & corrupt banking & economic systems that had been allowed to develop over decades.

    This ‘failure’ could only have been facilitated by the collusion of a variously selfish, corrupt & incompetent political system in its entirety. A complete failure of politicians, senior public service and media to properly represent the interests of the majority citizens, again, over decades, on both sides of the Atlantic.

    And it seems to be getting worse, not better, as ‘authorities’ continue to frame every supposed ‘solution’ entirely within the paradigm of the failed status quo in the interests of the wealthy & financial elites.

    As Golem says, STOP the Zombie banks, & I’ll add STOP the casino.

    StevieFinn posted this link recently & I’ll post it again here. IMO a very useful, concise document on the radical reforms we need in banking. Essentially reverting banking & the entire financial sector to the ‘utility’ it was some 60 years ago (in UK).

    http://www.greenhousethinktank.org/files/greenhouse/home/Banking_inside_final_3.pdf

    • Hawkeye October 17, 2011 at 2:08 pm #

      @Mike

      I met Thomas Lines from GreenHouse the other week at the Steve Keen book launch in London.

      I have a very nice hard copy of that report !

      The recommendations from that report are sound and sensible. Hence they will never be implemented within the current Status Quo.

      Soddy had the right idea for public policy on banking, way back in 1921:

      “Institute a complete organisation for ascertaining, on every public proposal, the feeling of the City, and the views of the captains of finance and banking, but act in precisely the opposite direction. From the point of view of the welfare of the community rather than of its creditors, you could hardly fail to be right every time.”

      http://habitat.aq.upm.es/boletin/n37/afsod.en.html

      In so many respects, Soddy was a man 100 years ahead of his time.

      • Charles Wheeler October 17, 2011 at 3:59 pm #

        That (Soddy) is a fascinating article. I was particularly struck by:

        “There can be only one possible end to this process. Though for a time the advances of science may so increase the revenue from year to year as to render these payments by way of interest possible, in the end the whole of the revenue must be in the control of the usurer. A small part of the population will get into the position of a great rentier class living on interest, and most of the rest will be reduced to starvation in so far as they are not kept alive by State doles.

        “We have in the hitherto association of the function of Government almost entirely with those who live by rent, interest and profit, and thus take from rather than contribute to the revenue of the wealth of the community, a further justification for the view already expressed, that the community in its struggle for existence resembles an army officered almost entirely by the enemy. “

        The example of the Chinese emperor and the chessboard reminded me of this speech by Dr Albert Bartlett on the issue of compound interest:
        http://goo.gl/oZ97M

        • Hawkeye October 17, 2011 at 4:48 pm #

          Charles

          There’s no finer sharp-witted writer than Soddy. Our current situation aptly described 90 years ago:

          “the community in its struggle for existence resembles an army officered almost entirely by the enemy”

          For much of the 20th Century he was treated as a crank and a heretic. This even though he was the only true nobel scientist to study Economics!

          Lame and shameful Ad Hominem rhetoric, given that none could adequately debate or challenge his thesis.

          I just hope that the fullness of time will restore his honour.

  10. Toby October 17, 2011 at 2:15 pm #

    The central dynamic is very simple; unless we have growth in the real economy the interest-bearing debt-money machine will continue to balloon until it bursts, unable to find any new wealth to represent. Some sort of collapse into hyperinflation followed by deflation and increasing social unrest will follow that bursting. All this CDO leveraged leveraging squared jargon is trumped up puffery hiding a simple fact; if the economy isn’t growing, it’s collapsing.

    To keep this system ‘healthy’ we, as a species, have to produce more and more goods and services for consumption, forever. Exponential growth is a systemic requirement while money is created as interest-bearing debt. Do we want that? Do we really want our cupboards to become full of more and more stuff, our landfills full of more and more waste, our available hours filled with more trips to the shops, or hairdressers, or massage parlours? And do we want to insist, for all time, that the only way a human being can be useful or valuable to society is if he or she is earning money doing something, anything? What is it about this Perpetual Growth Waged-Labour Debt-Money Usury system we love so much, that we must keep it going forever and ever? Is this really the best humanity can come up with?

    My answer is, yes, while we can’t imagine anything different. While this is the case, while we suffer this collective failure of imagination and nerve, the collapse which must come worsens (and it is already threatening to be insurmountable).

    Sadly, the New Way has and can have no clear road plan, must remain undefined for the foreseeable future. There are fragments of what we need to do buried in the thinking of various schools and philosophies, in the musings of so-called fringe-thinkers, as in the noise of the Internet. But only by coming together locally and doing the hard work of teaching ourselves a new type of politics, directly democratic, which scales transparently even to global scale, and thereby keeps governance responsive to, and by, the people, so that we one day create the political infrastructure for a new socioeconomic system, will we discover which of these scattered ideas are sound, and which are wind-eggs. We can’t know today what of the existing apparatus, if anything, can be appealed to, since, clearly, all political parties are merged so completely with the so-called Market, or Finance, or The Elites, as to be incapable of properly listening to their masters; us.

    Peaceful, mature rebellion with a view to long-term, sustainable renewal is the only way. An expression which caught my imagination some years ago is this one, “If not you, then who?”

  11. Charles Wheeler October 17, 2011 at 2:32 pm #

    The whole fiasco reminds me of Lords of Finance: The Bankers Who Broke the World http://goo.gl/rqBgA.

    It underlines how the Great Depression wasn’t triggered in 1929, but was the culmination of a decade of financial mismanagement, based on an increasingly desperate desire to cling to the economic orthodoxies of the age – balanced budgets and the maintenance of the Gold Standard – leading to more and more perverse decision-making, with Germany in the role of Greece as the whipping boys of Europe, as governments sought to extract their pound of flesh and b*gger the consequences. Increasingly govt.s were loaning money to Germany to prop it up long enough for it to pay its debts (ring any bells?) – until the inevitable collapse as an Austrian banking failure rippled through the banking system.

    It’s worth remembering that FDR came to office castigating Hoover for his profligacy and promising to balance the budget. It was the force of circumstances which necessitated a change of direction.

    Another alternative view: http://goo.gl/aHqON

  12. keekster October 17, 2011 at 3:40 pm #

    There is more collective wisdom on this blog that can be found in the halls of political and economic power. The key is we keep an open mind to all possibilities. A sensible approach.

    Just received a signed copy of Steve Keen’s latest version of Debunking Economics. Looking forward to getting stuck in.

  13. StevieFinn October 17, 2011 at 4:49 pm #

    BBC documentary on RBS for you lucky lads & lasses in Scotland, showing tonight at 9pm on BBC 1 Scotland. More details from Ian Fraser who worked on it, list of satellite channels also.

    http://www.ianfraser.org/rbs-inside-the-bank-that-ran-out-of-money/

  14. Charles Wheeler October 17, 2011 at 5:18 pm #

    “The most important misperception is that MMT is in some way outlining an ideal or a new regime that could be introduced. The reality is that MMT just describes the system that most countries in the world live under and have lived under since 1971, when the US president at the time, Richard Nixon, suspended the convertibility of the US dollar into gold. At that point, the system of fixed exchange rates—in which all countries agreed to fix their currencies against the US dollar, which was in turn benchmarked in price against gold—was abandoned. So since that day, most of us have been living in what we call a fiat currency system.”

    Essential reading for anyone interested in MMT:
    http://hir.harvard.edu/debt-deficits-and-modern-monetary-theory

    • Mike Hall October 17, 2011 at 9:25 pm #

      Great to see MMT & Bill Mitchell’s accessible explanations of it getting some coverage there.

      On Bill’s blog today:

      “….Modern Monetary Theory (MMT) does provide insights to the general population that are not only obscured by the mainstream media but which if they are broadly understand will empower the 99% to demand governments redefine their roles with respect to the non-government sector. Part of that re-negotiation has to be to reduce unemployment and redistribute national income more equally. We will also be better placed to have a sensible discussion about the human footprint on the planet. The three goals – full employment, reduced inequality and environmental harmony – should be central to the current civic protests (such as OWS). But we also have understand that government has to be involved in the pursuit and maintenance of those goals. The problem is not government but the politicians we elect and the coalition between them and the corporate elites. An understanding of MMT can energise the progressive fight back.”

      Aside from the fact that MMT, in it’s technical aspects could be adopted virtually tomorrow (UK, US etc. not Euro without elements of fiscal union), it’s this aspect of ‘empowerment’ I paticularly like. Shifting the debate of what governments could do for the welfare of the 99%, only constrained by actual tangible resources (incl labour) not the false ideology of a ‘borrowing’ constraint.

      As regards Bill Krasting’s rather poor effort to refute the interest rate position of MMT, Prof R A Werner (Southampton University & co=author of positivemoney) suggests the empirical evidence of (base, Central Bank) interest rates’ determination is in fact the reverse of the currenty accepted cause/effect. ie interest rate setting is an outcome of economic conditions not a mover of them.

  15. 24K October 17, 2011 at 5:25 pm #

    Hey dude I’m glad you liked it :D

    Some of those zombies were pretty scary and and the zombie banker who came up to me was a star. Out of all the zombies the one that came up was a banker!

    They were all pretty cool mind. Made my day if not year.

    See the zombie banker with the crazy face at the end?

    He actually works in a bank! Not sure which bank, I sorta shut up when he said that. I was like OMFG!

    I just stalked him like paparazzi then :)

    Anybody coming to London this weekend? It’s gonna be good I think.

    • Roger Lewis October 18, 2011 at 10:56 am #

      Great Track love the Guitar on it obviously the subject matter hits home too.

      • 24K October 19, 2011 at 5:48 pm #

        Hey thanks dude.

        Maybe we can jam sometime if you venture to blighty :)

  16. Charles Wheeler October 17, 2011 at 5:50 pm #

    “If the private sector is intent on net saving (saving more out of income flows than it spends on tangible investment) then some other sector must deficit spend. Otherwise, nominal income growth will slow, or implode, as is evident in the nominal income deflation apparent in Greece. Of course, that is all entirely too heretical to even consider, even though it follows from the logic of Wolfgang’s argument, and even though it follows from the principles of double entry book keeping (that are, by the way, centuries old, but somehow remain ignored by macroeconomists who have yet to figure out how to pursue a stock/flow consist approach). Stating such simple truths will only get you burned at the stake by the Neoliberal Inquisition ruling the eurozone (at the moment).

    Rather, the real problem is that the policymakers and economic advisors in the eurozone (as well as the UK and the US) are practicing a faith based economics, and the basis of their faith is clearly and patently false. Their ignorance is well on the way to encouraging the emergence of one failed state after another in the eurozone – precisely the opposite of the initial intent behind the eurozone. Greece is already nearly ungovernable.

    It is not just that they ignore the fallacy of composition, Wolfgang. They believe in outright lies (and do ask yourself, which interests are served by those lies). They belong to the cult of neoliberalism, and it is killing the rest of us. To their three decade old claim of TINA (there is no alternative to the neoliberal agenda) it is time to see them, and raise them one with the cries in the streets of AWIP (another world is possible). It is high time to toss aside the faith based economics of the neoliberal era and build a world worth living in.”

    Worth reading: http://goo.gl/Kpze9

  17. allcoppedout October 17, 2011 at 6:26 pm #

    I hope you don’t let them trick you into bending down to take your boots off Golem (hence to rub out the ‘e’ on your forehead – turning the Jewish work stamped on Golems to ‘death’ and hence you to mud).
    We have to be able to do better than this mess (theirs) – productivity is now massive and we expect people to live in poverty? I suspect it is not you that is some mythical creature, but that the Undead roam in broad daylight. The truth is now, as CW says above, despised.

  18. Neil October 17, 2011 at 6:33 pm #

    From Business Insider via the Telegraph:

    Amazing Charts Show How 90% Of The Country [the US] Has Gotten Shafted Over The Past 30 Years…

    “In the past 30 years, 96% of the growth of average incomes in this country have gone to the richest 10% of the country. And in the past 10 years, the incomes of the other 90% have declined.” [statistically speaking, naturally]

    http://www.businessinsider.com/income-inequality-charts-2011-10

    The charts are interactive (click on them).

    See also Four Charts That Explain What The Protesters Are Angry About…

    1. Unemployment is at the highest level since the Great Depression (with the exception of a brief blip in the early 1980s).

    2. At the same time, corporate profits are at an all-time high, both in absolute dollars and as a share of the economy.

    3. Wages as a percent of the economy are at an all-time low.

    4. Income and wealth inequality in the US economy is near an all-time high: The owners of the country’s assets (capital) are winning, everyone else (labor) is losing.

    http://www.businessinsider.com/here-are-the-four-charts-that-explain-what-the-protesters-are-angry-about-2011-10

    • Charles Wheeler October 17, 2011 at 7:45 pm #

      This would be a neat irony:
      “So in an environment where the asset side of household’s balance sheet is falling in value (as in recent years in the US), it makes sense for households to save more, regardless of the interest rates. That’s debt deleveraging or balance sheet recession as we know it.

      Of course, when everyone is saving and not spending and borrowing, asset prices will be under even more pressure, and that encourages even more debt deleveraging as that pushes everyone’s balance sheet even deeper under water. So we have a vicious circle of falling asset prices, increasing saving level, and deflation.

      If central banks can’t break this deflationary vicious circle even as they are getting bigger and bigger, Prof. Nick Rowe considers the following somewhat bizarre endgame in his terrific post:

      “What happens as we push this process to the limit, and keep on reducing the long run inflation rate, down to zero, and then into deflation? The central bank keeps on getting bigger and bigger, and owns a larger and larger share of the total assets in the economy. It buys all the short-term government bonds, then all the long-term government bonds, then all the commercial bonds, then all the shares, then all the land, then all the houses….Because as the rate of inflation falls, falls to zero, and keeps on falling into negative territory, people will want to hold more and more of their wealth in the form of central bank money. And unless the central bank satisfies that demand, by selling them money and buying their other assets, the result will be an excess demand for money and recession.

      Where does it end? Do we ever hit some absolute liquidity trap where people want to hold money rather than any other asset? Well, not really. Because the central bank has to keep on buying assets that people do not want to hold because they want to hold money instead.

      It doesn’t end in a liquidity trap. It ends when the central bank runs out of things to buy, because it already owns everything, right down to your house, furniture, and toothbrush, which it rents back to you. It ends in communism.

      Karl Marx certainly did not say that quantitative easing can achieve his goal, although he did want to see the following according to the Communist Manifesto:

      Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.

      Oh… er… !
      http://www.nakedcapitalism.com/2011/10/from-qe-to-communism.html

  19. Bearbonez October 17, 2011 at 7:13 pm #

    BBC documentary RBS: Inside the Bank That Ran Out of Money will be available shorly after airing on the bbc iplayer for those who cannot receive BBC Scotland.
    http://www.bbc.co.uk/iplayer/episode/b01690y5/RBS_Inside_the_Bank_That_Ran_Out_of_Money/
    Looking forward to that, cheers

  20. John Souter October 17, 2011 at 7:27 pm #

    Banking will never make sense unless it reverts to managing a straightforward exchange mechanism.

    The theories of economics have no place within a banking system.

    How else, other than incompetent hubris, can you explain the failure of an industry which is allowed to ‘invest’ 95% of its income and charge 5 -15% additional interest over cost?

    When an industry that makes money out of money fails, what chance is there for industries that provide goods or real services to make the money that encourages investment?

    Service is the name, but fraud the game.

    The banks were not too big to fail – they already had – merely too big to fall in the eyes of those whose fortunes relied on their continuance.

  21. PhilJoMar October 17, 2011 at 11:53 pm #

    @keekster
    Good luck enjoying Debunking Economics. At the moment it’s reminding me of the Economics Higher (a Scottish qualification) that I had to give up on. It’s very hard going when practically every neo-classical theory he touches upon is so far removed from the real world it starts to lead to a kind of intellectual sickness. Even Adam Smith didn’t start with scarcity or opportunity cost: look what the division of labour can do! Look at all these f***in’ nails man!
    Now…sorry to come over as an intellectual dilettante but I was thinking today about Hegel and his ‘cunning of reason’. Some of the posts have mentioned the word ‘exponential’ and much of what has been taking place has come from the ideas and actions of the 1% who are the real beneficiaries of the Ponzi schemes, the leveraging, the salaries that go up 25% a year and so on. We have allowed them to do what they want, given them a free hand, and they have given us an object lesson of the purity of their capitalist ethos. Call it Always MorE (e for exponential). But they have been so blatant that the more people see what they have done the more they may be sickened by it and the easier it will be to transition to another system, which is exactly what is needed for the planet. Stangely, a more egalitarian, even a more meritocratic capitalism would make this transition more difficult as a system that seems fair would be harder to change. What is also needed now is to make our ideas spread like a virus and lo and behold we have the tools for that appearing in the last ten years. That Hegel bloke, he knew a few things!
    Just some random thoughts. Hope they didn’t intrude too much…

  22. Mike Hall October 18, 2011 at 1:44 am #

    Chris Hedges interviewed at the Occupy DC protest. Well worth a link:

    http://www.ianfraser.org/chris-hedges-on-%e2%80%9cthe-alyona-show%e2%80%9d/

  23. Hawkeye October 18, 2011 at 9:43 am #

    Not watched it yet, but the Renegade Economist has an interview with Steve Keen:

    http://www.renegadeeconomist.com/blog/video/in-conversation-with-steve-keen.html

    • Mike Hall October 18, 2011 at 3:20 pm #

      Quite a good interview with Keen imo, tho’ in general Keen tends to use more technical language than others.

      The stand out for me was Keen’s comparison of the level of private debt (ratio to GDP) at the time of the Great Depression with the present. Being very much higher in both periods than during any other recession episode, he asserts that the 1930s is the only comparable period we have, but notes that (US data IIRC) private debt now is worse still at ~ 1.7 times the private debt/GDP ratio back then.

      He concludes from this that recovery will take very much longer than the 1930s with an extended period of economic devastation (except for the top few percent, of course!), or at least stagnation (which for many will mean the same thing). He suggests that what is needed is debt ‘jubilee’, pretty much across the entire private sector, presumably sovereigns too.

      Another interesting aspect Keen mentioned briefly is his work on aggregate debt movement, in the private sector, from researching empirical evidence. He suggests a key metric (indicator) for growth is the rate of acceleration of debt (up or down). (ie the rate of change of the rate of change over time.). He also concludes the signs now aren’t good.

      It occurs to me that we have had significantly better ‘automatic stabilisers’ in place this time, in most countries, than the 1930s – the ‘counter cyclical’ effect of unemployment benefits, helping to ameliorate some of the fall off in spending. From what I’ve gathered, Greece has been perhaps poorest in this regard, benefits even lower than the US, & the results of this, combined with draconian austerity, are pretty evident.

      But overall, it might be fair to consider, in Keen’s terms, the situation is still at least as bad as the 1930s, albeit from a better starting postion (for many, but far from all) of accumulated wealth, . And he’s one economist, as regards forecasting & understanding how the economic system really works, we should absolutely be listening to carefully.

      I guess the thing I’m really not sure of, either way (who is?), is the practicalities of a wide ranging debt jubilee?

      As I understand it, about the only thing that Keen & MMTers disagree on (but bear in mind the emphasis of their work has been different) is the question of whether soverign (fiat currency +issuing+ etc.) authorities +should+ spend ‘debt free’ into the economy. (I understand they are on very good terms & this point has been debated at length, neither side convincing the other.) I say +should+ because AFAIU, Keen accepts the postion that such currency issuers, technically, +can+.

      So, generally, MMTers propose +some+ ‘sovereign’ debt cancelation & debt free spending, directly via ‘employer of last resort’ programmes etc, by currency issuing authorities (to the extent that such is needed to counter recession & unemployment – +no more+), to ‘grow’ out of the debt overhang. (Tho’, if practical, I’m sure MMTers would support a debt jubilee – it’s just not the main thrust of their work.)

      Whereas Keen proposes a massive, private sector (& presumably public sector as much has been dumped there now) debt cancelation exercise & presumably sovereign borrowing to finance economic ‘stimulus’ spending.

      Whilst Keen is derserving of the utmost respect imo (and who could argue with a debt jubilee if it’s possible on the scale he proposes?), I still feel MMT with ‘functional finance’ has the greater potential for the paradigm shift we desparately need, particularly with regard to governments’ proper role – and it is by far the most ready to introduce, & quickly, over any other possibilities. Not only is the ecological clock ticking, but the window of opportunity, appearing now/soon with OWS etc. will need to put something concrete forward at some point. (Tho’ I absolutely support the careful, organic process of determining that – cf. my support (with minor contributions), of eg. http://www.2nd-republic.ie/files/citizens_assembly_draft.pdf )

  24. Hawkeye October 18, 2011 at 10:07 am #

    And here’s another Tuesday morning treat for you all:

    http://www.chrismartenson.com/blog/gold-and-economic-decline/63730

    This article isn’t just about the gold price, but tackles the evidence for a more systemic malaise / decline in the global economy. Gregor work is usually short but perceptive.

    No disappointment here, as he also weaves in a bit of Frederick Soddy, Joseph Tainter, Jared Diamond and Reinhart & Rogoff too.

  25. cynicalHighlander October 18, 2011 at 5:08 pm #

    Tried to edit above post to include a link but is blocked as ‘spam’.

  26. Mike Hall October 18, 2011 at 7:13 pm #

    China has been discussed here recently. The prolific Prof Bill Mitchell offers a macro analysis from the MMT perspective today:

    http://bilbo.economicoutlook.net/blog/?p=16523

  27. Dave October 18, 2011 at 8:20 pm #

    Hawkeye 10.07am — your link was actually a ‘tuesday evening’ treat for me, and well worth a read .

    http://www.chrismartenson.com/blog/gold-and-economic-decline/63730

    I was familiar with the work of the others you mentioned but Frederick Soddy was until very recently here , a newcomer to me.

    Being rather busy re-insulating my roof and now down to the last 500 slates to protect it all, I’m absorbing MMT by occasional osmosis from these Golem – threads…

    Well, it does take time to adjust to New Ideas and evaluate them,

    I do wonder if within the Treasuries around the world there are more significant people than myself exploring in the same way ?

    frog2 at CiF

  28. Charles Wheeler October 18, 2011 at 9:25 pm #

    What we’re up against is the fact that many bankers do really see themselves as the Masters of the Universe – with Jamie Dimon in the role of Zeus. A recent Citigroup report talked about the rise of a plutocracy, not in pejorative terms, but as the realisation of an ideal (though they quickly tried to bury it when the reaction wasn’t as welcoming as expected – if only because they were clumsily laying bare the mind-set inside Wall St).

    So, it’s always worth remembering just how far out these views are coming from. Rather than the half-baked free-market nostrums of the Mont Pelerin Society, these ideas are inspired by the barely partially baked ravings of Ayn Rand and her pseudo-scientific theory of Objectivism which holds that consideration of any concern beyond one’s own self-interest is contemptible. Even involvement in charity is a sign of weakness and compromise (as an aside, Rand’s insistence on the primacy of self-interest didn’t prevent her from commanding blind obedience to her diktats even when they may have conflicted with her disciples’ own interests – but a foolish consistency is the hobgoblin of simple minds!). This echoes the Spencerian economic Darwinism of the 19th C., which castigated the givers of charity for perpetuating the underclass and which finds its parallel in Charles Murray’s theories on welfare dependency which are driving the latest crackdown on the disabled.

    Rand’s ultra-individualist views can be seen in their stark simplicity in ‘The Virtue of Selfishness’. ‘Atlas Shrugged’ is a bit of a slog – but its preoccupations are reflected in the comments drawn from a vox pop of bankers views on the protesters in the Independent today, who argue that the 99% should be grateful to the 1% for generating the wealth they enjoy – which, apart from completely ignoring the issue of the massive bailouts that prevented a self-inflicted banking collapse, assume that the act of ‘wealth creation’ is confined to those in control of banks and major corporations, with mere workers as leeches or ‘moochers’. Moreover, the growth of the banking sector is presented as an unmitigated benefit to the economy. And yet, that growth has largely been at the expense of other sectors, given that much of its income comes from zero-sum arbitrage and inflated charges on the genuinely productive sectors; presumably, when banking accounts for 90% of economic activity we’ll be in financial nirvana? The default position is that there is a manichean choice between pure laissez-faire or Communism (in reality, as Paul Mason has blogged, the protests are “profoundly less radical on economics than the one that swept the world in the 1910s and 1920s; they don’t seek a total overturn: they seek a moderation of excesses.”
    http://goo.gl/YlNCS

    The Randian doctrine represented a, psychologically understandable, reaction against the Communist totalitarianism she escaped from, but we are now careering into a Rand-style dystopia at the other extreme, as this blog argues:

    “Once upon a time, Alpert explains, American capitalists paid American laborers with something called a “salary.” Henry Ford famously boosted his workers’ pay to $5 a day so they could buy the Model Ts they were assembling. The better part of a century passed, and, by the early aughts, globalization had created a world oversupply of free-market labor—a hiring hall now housing about 2.6 billion recruits from emerging nations, together with roughly 550 million in the developed world. It no longer made financial sense to pay American workers high wages when you could pay Chinese workers low wages to do the same work. On the other hand, if American workers lost their spending power, who would keep the U.S. economy afloat?

    The rise of cheap credit provided the answer. American labor effectively got paid in a different currency: debt. Instead of Model Ts, the latter-day working class bought overpriced houses and all sorts of other stuff it couldn’t afford. The beauty for the capitalists was that, when laborers got paid with debt, they had to pay it back with interest. Alpert calls it “middle-class serfdom.”

    Alpert doesn’t believe there was a capitalist conspiracy; his point is that had there been a conspiracy, the outcome wouldn’t look much different.
    http://goo.gl/KU59b

    The bottom line for the libertarian right is that ‘Taxation is Theft’ – hence the relaxed approach to the issue of tax havens, which are simply devices for short-circuiting the democratic mob’s expropriation of the just gains of the wealthy. If the hoi polloi demand healthcare, education and social security they can pay for them without the subsidies of the rich. There is no recognition of the argument that top earners benefit from living in a less unequal society. As a result, the squeezed incomes of the bulk of workers come alongside tax cuts for the richest and a decimation of the public sector. If this leaves the disabled without social care, the elderly without heating, the young without access to education, and the poor without healthcare, so be it.

    It’s not so much that it results in a more ‘efficient’ outcome – though mainstream economists, armed with their notions of Ricardian Equivalence and the Efficient Market Hypothesis, will argue that case – but that, in this Alice-in-Wonderland universe, it’s a question of principle. Providing care to the sick, educating the poor, securing people from want involve the corollary of taking from the ‘most productive’, and are therefore ethically suspect.

    A major problem for opponents of this system is that they are divided between those who argue for a need to increase government involvement in regulating markets, seeing the gradual dismantlement of the system put in place after the last Depression as a prime cause of the crisis, and those who seek to blame government for causing the collapse by commission rather than omission. As a result, it can be quite difficult to find common cause – indeed there is an incongruous alliance between leftists suspicious of ’the state’, and ‘small government’ right-wingers, while many of those caught in the middle can feel like extras in a scene from The Invasion of the Bodysnatchers, who just begin to feel that they have found some common ground with a survivor from libertarian indoctrination, only for them to turn, pointing an accusatory finger and screaming an alert to the ‘pod people’!

    • Roger Lewis October 19, 2011 at 10:29 am #

      Charles this is a whole education in itself. Thanks for posting this another morning of inspired learning.

    • Hawkeye October 19, 2011 at 10:56 am #

      Charles

      An interesting piece, and one which I’m slowly digesting.

      A key point that I spotted is here:

      “The default position is that there is a manichean choice between pure laissez-faire or Communism”

      This is where a false dichotomy can easily be set up to force sides (“are you with us, or against us?”).

      In Polanyi’s view protectionist policies emerged in the 1930s as a reaction to the failure of un-fettered Capitalism.

      In their own different ways the New Deal, Communism and Fascism were the social responses to the collapse of Laissez-Faire Capitalism; a way for society to re-assert primacy over the market.

      This was covered quite extensively in this blog posting, and the follow-up discussions it provoked:

      http://forensicstatistician.wordpress.com/2011/06/07/wall-of-illusions/

      Post WWII Europe and the US were a “mixed economy”, a social democratic tamed free market.

      Since the 1970s this social “compromise” has been eroded.

      As Polanyi quips “Laissez Faire is planned!”

  29. richard in norway October 18, 2011 at 9:35 pm #

    I’m getting more interested in this MMT stuff, but there something which makes me doubtful and I don’t know what it is. Can anyone point me to an understandable critic of MMT. I know it sounds odd but I need to hear the arguments against before I can be in favour.

    • Charles Wheeler October 18, 2011 at 9:45 pm #

      In the blue corner: Paul Krugman
      http://krugman.blogs.nytimes.com/2011/08/15/mmt-again/

      In the red corner: Warren Mosler
      http://mikenormaneconomics.blogspot.com/2011/08/warren-mosler-critiques-paul-krugmans.html

      A lot of these debates are difficult to disentangle because they’re often based on misinterpretation or misrepresentation, but if you google ‘Krugman mmt’ you should get an idea of what each side thinks.

      e.g.:
      http://pragcap.com/james-galbraith-responds-to-paul-krugman

      • richard in norway October 18, 2011 at 11:24 pm #

        Thanks for those links. The one in the red corner I couldn’t read because it was too strident but the galbraith one was good. I suppose that the Austrian gold freaks view MMT as pure evil. But I wonder is there a variant of MMT which does away with fractal reserve banking or have I misunderstood the MMT concept. That American guy I think he’s called bill stiller, he made a tv doc about the wizard of oz being a metaphor for monetary reform. What he’s proposing is quite similar but I think it restricts banks to only lending money they have

        This all very confusing the more I think I know the less I understand

        • StevieFinn October 19, 2011 at 1:07 am #

          I eventually got the gist of it, there’s a lot that I still don’t know, but I know it’s got to be better than what we have now. I just hope we get to try a new system & when & if that happens, I shall leave it to those who have the aptitude to get their heads around this sort of thing, it has the same effect on my brain as algebra once had. I’m sure I can find something useful to do, we don’t just need economists.

        • Mike Hall October 19, 2011 at 1:31 am #

          It takes a little time Richard – some months in my case before I felt I had a handle on it (but still regard myself as ‘intermediate’, not expert). I’d guess your ‘feeling’ about is the notion of creating money from nothing? There are constraints – just not in strict ‘money’ or level of ‘deficit’ terms. This goes against everything we intuitively grasp from our years of household budgeting. But that’s the point. We are currency users, fiat, free-floating currency issuers are profoundly different.

          But there are other concepts (near all shared with other, non-mainstream, ‘schools’ who typically saw the crisis comimg, like Steve Keen, but many others too), like ‘sectoral balances’, which are important. The latter isn’t a ‘theory’, but an actual accounting ‘identity’. Most significantly missing from +all+ mainstream narratives, it’s a matter of simple sums, simply ignored & notably missing from the Eurozone debate. After taking account of the small net exports balance of the Eurozone as a whole, when countries like Germany, Netherlands etc. are running large intrazone trade surpluses, by accounting definition, some of the rest +must+ be running deficits. When that continues year after year, those numbers add up to serious imbalances. It follows that all Euro user countries cannot possibly all run surpluses together, unless there is a massive extra-zone trade surplus. A total fantasy given the structure of the economies in question, Yet the Euro Stability & Growth Pact (of so-called fiscal ‘responsibility’) is based on precisely this fallacy. Didn’t happen before the bust & even less chance now, but it remains the basis of ECB & Eurozone ministers’ policy. Absurd doesn’t get close.

          New Economics Perspectives has an MMT ‘primer’ running -

          http://neweconomicperspectives.blogspot.com/p/modern-money-primer.html

          Cullen Roche at ‘Pragcap’ has been putting some MMT intro videos on youtube:

          http://pragcap.com/resources/media-section

          Neil Wilson recently posted inviting discussion on some areas not completely addressed by MMT – but +note+, most if not all of these are problem areas for the existing paradigm & most others, not just MMT! (Terms are raised there which you may not be familiar with, like ‘quantity theory of money’, ‘rational expectations’ etc. – I recommend doing a search on these at Bill Mitchell’s blog for practical explanations.)

          Here:

          http://www.3spoken.co.uk/2011/10/musings-on-mmt-exposing-soft-bits.html

          & here:

          http://www.3spoken.co.uk/2011/10/musings-on-mmt-another-soft-bit.html

          I may seem somewhat evangelical about MMT, but for many reasons I feel it’s the top contender for something we could get behind to bring about real change, with important implications for the democratic role of governments. I’ve simply not found anything close, or any refutation worth a sh1t. Belive me, I’m picky. I’m with Keynes “When the facts change, I change my mind. What do you do?” I’ve done a lot of research this year, nothing has got near challenging MMT.

          …Except, one proposal, which is not really an exception because it differs (and this a partial answer to your question also) from MMT in only one minor respect that I can see – the positivemoney.org (UK) ICB submission. That difference is fractional (MMT) vs full (PM) reserve banking. I haven’t seen a comparison on these slightly different approaches yet, but note that both MMT & PM see serious banking reform – essentially back to a ‘utility’ function – as an essential, parallel neccessity. (Thomas Lines ‘greenhouse’ paper is a reasonable statement of their positions.) http://www.greenhousethinktank.org/files/greenhouse/home/Banking_inside_final_3.pdf

          Note that Lines has no issue with fractional reserve banking as practised – as a utility function – in the 28yrs free of bank failure following WWII.

          Hope this helps?

        • Toby October 19, 2011 at 6:15 am #

          As I have understood it, MMT doesn’t see the private money creation sphere as ‘dangerous’, because credit-money “nets to zero.” That is, when credit is extended it is created out of thin air, and repaid back to zero; the debt is eventually expunged. Money created by the government sector or Central Bank, on the other hand, is “high powered money” and does not expire unless government taxes it into the trash bin or swaps it out of the economy via government debt (treasuries and bonds). Hence, in MMT’s rendering, government has power over ‘real’ money, while commercial banks get to play with mere credit-money, the creation and destruction of which has no effect on the amount of high powered money in existence.

          This perspective is gainsaid however by Steve Keen (and others) in Keen’s article “The Roving Cavaliers of Credit”, which shows that it is in fact commercial bank credit-money which leads central bank creation of high powered money, and not the other way around. In the end, credit money has purchasing power, just as high powered money (which includes but is not only notes and coins), so its power to buy is just as effective.

          On this Steve Keen makes most sense to me, and this is my chief concern with MMT. In the final analysis, MMT is an explanation of the power of central bank money creation as we currently have it, and an insistence on things like perpetual growth and full employment. On those two points I side with steady-state economists and those who support ideas like a social dividend or guaranteed income.

          If ecologists are right and we humans are consuming 1.5 earths right now, growth of consumption is the last thing we need. And the amount of energy consumed per job has stayed flat since the 1970s, so more jobs means more energy consumption necessarily, something we ought to bear in mind. Thus far I haven’t seen MMTers addressing these issues in detail, but my studies in this area are far from complete.

          • Hawkeye October 19, 2011 at 10:11 am #

            Toby,

            A good summary of the key differences.

            Having spoken a few weeks ago to a couple of the NEF & Positive Money authors of “Where does money come from”, they are still a bit curious about MMT and how it gels with their theory.

            They are in agreement with Steve Keen (and also Lord Adair Turner, the BoE, the BIS etc.) in that private credit creation comes first. This makes sense from the operational functions of banking, through to demonstrable evidence (c.f. Roving Cavaliers of Credit).

            I would challenge the notion that private credit “nets” to zero. Only if debts are paid back or defaulted on! When credit expands the balance sheets of banks expands too. To net to zero we would have to go through a full fledged “debt deflation”.

            This BoE article is dynamite:

            http://www.bankofengland.co.uk/publications/fsr/fs_paper10.pdf

            The paper describes how liquidity has been generated in the banking sector mainly through balance sheet largesse, and that this is a precursor to financial instability.

            I am still confused how MMT tackles the whole balance sheet expansion thing! Credit levels exceeding real income / wealth levels is the problem, whether Private Sector created or the purvey of the Public sector / Sovereign.

          • Toby October 19, 2011 at 10:25 am #

            “Nets to zero” is MMT’s Achilles’ heel, in my opinion, a blind spot if you will. If I were to support a movement that sought reform of the current system I would back Positive Money, since 100% reserve banking (alongside other changes) would be able to deal more effectively with steady-state, at least in theory, which is all we really have at this stage.

            Nevertheless, my preferred ‘system-friendly’ transition plan is Charles Eisenstein’s because of its comprehensive nature, and its adherence to sensible first principles. The system would be revolutionized while being able to use existing financial infrastructure. That’s quote a positive.

            Interestingly, in response to a citizen’s request for 100% reserve banking earlier this year, the German government ‘accidentally’ conceded that fractional reserve banking is a systemic addiction to perpetual growth. Here is the key paragraph (as I translated it):

            “As a rule, interest on borrowing is earned through additional production and income. Financing with new debts, on the other hand, would indeed lead to over-indebtedness and—practiced across the board—to a collapse of the financial system.”

            I.e., if the economy is not growing, the fractional reserve money system is collapsing. That is a serious design flaw. Here’s the article I wrote on the government’s response:

            http://thdrussell.blogspot.com/2011/09/german-government-admits-money-system.html

            I shall look at the BofE piece now. Thanks for the link.

          • richard in norway October 19, 2011 at 11:03 am #

            Thanks guys

            It’s nice to be able to be honest about being confused and not get mocked or patronized. Lots of helpful comments and more links than I can deal with in one day.

  30. Neil October 18, 2011 at 10:33 pm #

    And for those looking for a quick guide to Ayn Rand (know your enemy), see http://www.btinternet.com/~glynhughes/squashed/rand.htm . Mind you the original’s less than 200 pages (not that I’ve read it).

    Ayn Rand featured in Adam Curtis’s All Watched Over By Machines of Loving Grace. Coincidentally, the second piece Charles quotes (which is actually a blog repost from a New Republic article – see the end) echoes an Adam Curtis post on his blog, Let Them Eat Plastic http://www.bbc.co.uk/blogs/adamcurtis/2010/07/let_them_eat_plastic.html .

    Paul Mason’s most recent post, meanwhile, harks back to the one Charles links to: ‘Occupy’ is a response to economic permafrost, http://www.bbc.co.uk/news/business-15326636 .

  31. Jim M. October 18, 2011 at 11:44 pm #

    Can’t remember where I found this, so no attribution. (mea culpa)

    Nails Ayn Rand for me , tho!

    “I found “Atlas Shrugged” to be one the funniest books I’ve ever read, but in a very strange way. Ayn Rand appears to have little grasp of either engineering or science, even though her heros tend to have technical backgrounds (if you want an author who understands science on its own term, try Pynchon). The comment about her finding physics to be “corrupt” is fascinating (where can one find that quote?). Science and engineering are based heavily on the fact that one can be wrong – deeply wrong at times – in one’s assumptiions. That enforces a kind of humility which is quite lacking in her books. There have been many times when I had an idea, ran through the detailed calculations (and they could take weeks to do), and found that my idea was rubbish. Ayn Rand’s substitution of a non-testable belief over theory and experiment – and the tight tension between the two – turns her philosophy into fiction. There is precious little information in that philosophy. But, much of Russian philosophy was and is anti-science and steeped in Romanticism. She simply brought that strain to America. The idea that one can be wrong, in spite of best intentions and effort, is not easy to live with, but it is essential to the technical ethos. You do your homework, you obsess about what is missing in the analysis (both known and unkown) and you wait to find out if you are right. Sometimes that waiting can take many years and often the results are brutal. Much of science is non-intuitive, much of its structure is poorly understood. “Atlas Shrugged” reads much more like a fairy tale than an attempt to understand this world.”

  32. StevieFinn October 19, 2011 at 12:58 am #

    @ Neil, I had to laugh during ” All watched over……. when one of Ayn Rands former lovers recounted how she had reacted when he had personally applied her philosophy, by leaving her for a younger woman.

    I found this article from the Orion online magazine, by some guy named Christopher Ketcham, he’s a New Yorker & the article describes the late 19th century depression which also gives a sense of deja vu & he also talks about how the rentier class have manged to squeeze out the culture & arts movements within the city, except of course, the stuff that is percieved as an investment opportunity.

    http://www.orionmagazine.org/index.php/articles/article/6470?source=patrick.net

    It’s called the reign of the one percenters.

  33. richard in norway October 19, 2011 at 1:18 am #

    Golem

    Is there any chance that you could make a sidebar with links to videos of you public talks

  34. andrew October 19, 2011 at 1:31 am #

    steve finn “how the rentier class have manged to squeeze out the culture & arts movements within the city, except of course, the stuff that is percieved as an investment opportunity.”

    Note the extent to which arts have become state subsided over the last 30 years.
    Is it any wonder that the arts are mute as to the hypocrisy of the state, when the the state is footing their bills?.

    • Mike Hall October 19, 2011 at 1:51 am #

      As the interests of the ‘rentier’ class & their (usually well remunerated) acolytes have invaded near every part of the state over these decades, this corruption is evident in near every area of mainstream culture & media.

      Only one sure (as far as possible) solution imo – get rid of the corruption (small ‘c’ & big ‘C’) at source. Remove the ‘money’ from all areas of (majority) public interest representation. If some people aspire to sgnificant wealth, fine, but don’t allow them to pretend they can represent the majority, who, by definition, cannot attain such wealth.

    • StevieFinn October 19, 2011 at 11:53 am #

      I take your point Andrew, a lot of artists who are supported through public money, often get it because they are the best at playing the system. I have been very disappointed by the lack of response from the arts world, especially from musicians, but it is called the music industry after all. like some giant factory spewing out mainly the musical equivalent of pot noodles. The major bands are corporations. U2, how can they be taken seriously when the minute they lose there artists tax exemption, they go offshore, when Ireland could have done with the cash most. I expect if the #OWS becomes more mainstream someone will organise a concert, Occupy the park, rock’n'roll eh ?

      Jeez, I am so cynical.

  35. Kenny boy October 19, 2011 at 6:14 am #

    Apparently on Christmas Day in 1124 Henry I punished all the mint masters at the Assize of Winchester for debasing the currency by cutting off their right hands, now theres an idea!

  36. Neil October 19, 2011 at 9:00 am #

    Win £250,000! From the Telegraph:

    “08.20 An intriguing attempt to solve the eurozone crisis courtesy of Next chief executive and Tory peer Lord Wolfson.

    He is offering a £250,000 prize to the person who can come up with way to restructure the euro and allow a failing member state to leave the currency in an orderly way.

    Lord Wolfson writes in this morning’s Times:

    “If it is possible that the monetary union cannot survive in its present form, it is vital to explore a way out that protects savings, jobs and financial stability.”

    With France and Germany reportedly considering expanding the scope of the bail-out fund to cover €2 trillion of liabilities, £250,000 for the winner could be a bargain, depending what answer they come up with … ”

    Good luck… You’ll need it.

  37. James October 19, 2011 at 9:13 am #

    Brilliant article Mr Malone, it puts me in mind of an interview John Lennon once gave, where he asked what are the plans of our “leaders” ? He suggested that they put it down on paper, and said the world was being run by insane people for insane purposes, and that he could be locked up as insane just for saying so.

  38. keekster October 19, 2011 at 9:24 am #

    Toby October 19, 2011 at 6:15 am
    Thanks for that Toby. You have summed up my current thoughts much better than I could have put them. I have also read the “Cavaliers” article and it makes sense to me. I’m also wading through his new edition of Economics Debunked. Although not an easy read, its very well written, and he in effect, repeats or highlights in different ways the flaws of neoclassical economics, that if I dont get it the first time I do after a few more pages. First up was law of demand, and how its based on individuals but it fails when its aggregated up to markets. He also demonstrates that its not reasonable to conclude that income distribution does not have an impact of market demand. This is fundamental, because it has been argued for decades that inequality of income distribution has no impact on demand. In reality it certainly does, as any average person would logically conclude. Great book/

    • Toby October 19, 2011 at 10:31 am #

      I read the first edition of Debunking Economics and learned plenty from it. I think it’s hard work though because economics itself is counter-intuitive, and based upon assumptions which are flat out stupid. I know I push him a lot, but Charles Eisenstein writes very clearly and tackles economics from a far more intuitive place; the earth, Universe, and our place in it (or on it). Starting from homo economicus is wrong, in my opinion, and leads to all sorts of tangled problems, where we have to bend reality to fit the theory.

      As Keen says, only an economist could say, “Yes, very good. It works in practice, but does it work in theory?” There is much happening now which does not fit the theory, so is ignored.

      • Mike Hall October 19, 2011 at 1:35 pm #

        Thoughts on ‘steady state’.

        1. It guarantees absolutely nothing in terms of sustainability if we cannot decouple from depleting & polluting fossil based energy. So, as regards this key, perhaps only real constraint, steady state is not relevant.

        2. We have no example of an economy trying to operate in this way, certainly nothing at the size & complexity that exists today or in recent history.

        3. I cannot see how steady state can operate without bringing the ‘time’ elements of money/credit creation & extinction into balance as well as the ‘quantity’. Steady state cannot even be measured, let alone controlled without precise knowledge of both elements. This is a major unaddressed issue in the full reserve notion of trying to match ‘maturity’ of deposits on the one hand and loans on the other. But that’s only one area. What I’m getting at here is that whatever system is chosen, we have inherently a continuous +dynamic+ system. Maturity (time) imbalances are going to exist no matter what (arbitrary) accounting period is chosen. This is one reason accurate figures for GDP growth etc. are not available until some time after the accounting period (whilst the economics institutions & media pretend they have greater accuracy than in reality).

        4. What are the precise policy tools to be used to control for steady state, and how do they function within the broad architecture we now have?

        5. In political terms (small ‘p’), I cannot see it being viewed in the near term as anything other than a massive leap into unknown territory. It has taken the academics of MMT over 15 years to get just one article in something like the Harvard Review & begin to be considered seriously. It has simply been ignored & by many still is without any effort to engage in appropriate academic debate. This is just beginning to change. Being realistic, it must gain more mainstream traction to be seriously considered. Where ‘steady state’ is now, I don’t see it even remotely gaining the level of acceptance in a time scale useful to the present crisis & ‘window of opportunity’ or indeed the pressing ecological crisis.

        6. Much is discussed in steady state about ecology (but see 1. above) & a greater purpose to human development (fine). But the issue of employment remains for many of primary importance in social justice & cohesion. What credible policy tools in steady state address (near) full employment?

        • Toby October 20, 2011 at 8:02 am #

          Of course there are questions regarding an untried mode of socioeconomic organization, just as there are of ‘tried and tested’ modes, but when it comes to the unprecedented, no one, whether within government or without, can or should believe anything other than a leap into the unknown is being attempted or pondered. This should go without saying. As such, there can be no answers the many questions an idea like steady-state economics throws up, only suggestions. How could it be any other way? Dismissing the untested for being untested is easy, easier by far than admitting the current system of perpetual growth must be left behind (or transcended, take your pick).

          (As a side-note, might we not say that Japan’s famous lost decades are initial, if ‘undesired’ experiments with steady-state? Similarly, are we of the West not already in steady-state, which is a snaking growth-contraction movement around a mature growth state? (We’re not bumping along the bottom, we’re snaking around the top!) Trying to ‘reignite growth’ so as to get money (spending power) to people via jobs is futile, and failed attempts at stimulus thus far are at least some evidence this is so. Hence we could say that regardless of how hard it is for ‘experts’ and politicians to accept it, we are already there, and our system is in the early to mod-stages of breakdown due to a failure to appreciate what is taking place, applying tools that no longer work.)

          Your point 1 is redundant. Of course steady-state is about renewable energy and utterly different amounts of consumption. Point 2 I addressed above, but it is, in my opinion, not that relevant unless it is not true that humanity is over-consuming (apparently at a rate of 1.5 earths). If the planet cannot keep up with current levels of consumption, it is up to us to react accordingly, not stick fearfully to the devil we know simply because the new way is unclear. I do not mean to dispute that the task is enormous, however!

          Point 3’s questions apply to economic growth generally, and have nothing to do with steady-state per se. For what it’s worth, negative interest currency spent into existence along MMT lines would be workable within current financial infrastructure while coping with steady-state growth. As for GDP, I for one will be happy when people stop referring to it as a useful measure of anything at all. There are many alternatives, but the ‘best’ (I would be for a basket of measures) has yet to surface. Hardly surprising in a paradigm which inists on GDP growth.

          Precise policy tools can’t be known in advance. Point 5 I addressed above. Again, the situation will force our hand at some point. Denial is only ‘effective’ for so long.

          I’m not attracted by full employment (smacks of state communism to me), rather by the concept of full, meaningful social participation, as (slowly and painfully) enabled by a revolution in education, introduction of a social dividend, and the simultaneous functioning of multiple currency types for different human needs. “Sacred Economics” goes into (all of) this in depth. Seriously, it’s well worth a read. :-)

          • Mike Hall October 20, 2011 at 4:13 pm #

            Toby

            The thrust of my arguments is not that some of the many different aspects you put forward, broadly under a ‘steady state’ banner, have no merit into the future, but that starting from the present crisis, existing monetary & fiscal structures, public mindset, media control, the kinds of things you propose +are+ a massive leap into a radical, untried & novel system & structures.

            Moreover there is no core common approach being put forward by the various proponents of those different elements. There is no agreement on what combination of policy elements should be put forward as regards such things (you mention) as the ‘commons’, multiple currencies, citizens’ dividends etc. Even such fundamentals as the appropriate roles of the private sector and government are far from agreed by any core of proponents.

            It seems to me simply untenable that some ‘ready to go’, implementable ‘plan’ for ‘steady state’ can be said to exist. Most certainly not from what you posted so far, & nothing I’ve found.

            The contrast with MMT (& ‘functional finance’) could not be more stark. All the required structures are already in place & any minor modifications needed are easy & virtually instantly implementable. And there exists already, with a lot of work behind them, a significant core of proponents, both academic & financial sector ‘practitioners’ with a common understanding of requirements. Lets be clear, all that is required to change to implement MMT is +conceptual+ – a recognition of what our existing monetary & fiscal systems can actually do – and radically different, right now – if we simply make that conceptual leap.

            Simply put, that conceptual leap is that with most (near all, globally) monetary systems, as +now+ constituted, ‘money’, +by itself+ is not a constraint to government action. It’s +resources+ that are the constraint. Do you not see how that seismic shift in the public/government debate naturally leads us to consider the real constraints of our finite planet?

            As I’ve said before, it opens up an entirely new dialogue as regards the role of government in dramatically improving the welfare of citizens. And much else besides, including the role that government can take, on behalf of citizens, to get the key decoupling of energy supply from fossil sources. That opens the way for all the needed recycling of other key resources.

            We need no longer accept the +lie+, from politicians, mainstream advisers, & the wealthy corrupt elite that run them, that the ‘problem’ is ‘money’. It is not.

            That is the vital ‘conceptual’ leap that MMT offers, not after 20yrs of deliberation of ‘steady state’ on how to throw out near every system, structure & institution & replace with untried new ones, but +right now+, +tomorrow+.

            At a minimum, imo, MMT deserves to have the most serious, properly performed academic & public debate. Not just the crass, insulting to our intelligence, two paragraph ‘throwaways’ in a newspaper column by Paul Krugmam & his (egotistical) ilk.

            A flavour of just some of the unresolved issues around steady state: (An honest call for the ‘plan’ you keep stating exists, but only seem to offer one book by Eisenstein & the work of Daly different from that in many details.)

            “Richard Smith: If Herman Daly Has A Better Plan, Let’s Hear It?”

            http://rwer.wordpress.com/2010/12/17/rwer-issue-55-richard-smith/

            You say:

            “I’m not attracted by full employment (smacks of state communism to me)…..”

            First let me restate (again) my position. I talk about +near+ full employment, as the source advocates of MMT also make crystal clear. What is meant by that is that something in the region of 2% unemployment (of working seeking citizens) would be an appropriate goal, fully recognising the vagaries of the real world. (In between jobs, personal ‘life’ issues etc.)

            Come on, Toby, are you really saying, as you strongly seem to imply (with such ‘loaded’ language as ‘communism’) that you are comfortable in some way with the current lack of jobs (& all that entails in social depravation) for between 1 in 10 and + 1 in 3 + of work seeking citizens, depending on age demographic?

            And that those who are not as comfortable as you with that misery are somehow calling for – by implication of your ‘loaded’ language – some form of totalitarian ‘communism’?

            Sorry, that, to me, ‘smacks’ of the kind of gratuitously divisive narrative of the neoliberal mess we currently suffer.

            Do you really think it possible that the attitude & politics you express there are really conducive to the kind of harmonious, co-operative, mutually supporting, low ecological impact, less materially selfish society you seem to say you want?

            I have no doubt Eisentein is a ‘good read’. It may surprise you to hear that I’ve read a great deal more than that on the topics you mention & listened to proponents first hand, & over many years. Countless discussions with people deeply concerned with both our planet’s future and ours.

            I have no doubt, in concluding, that we must have concern for +all+ citizens as a primary goal absolutely parallel with that of sustainable ecology. Or whatever policies we advocate will not gain the majority democratic backing they need. Yes, in the short term, that is going to mean pandering to a little more ‘materialism’ than I personally feel is either good for planet or healthy for us. But this is the world we have +now+. And we must begin to act +now+ & try to persuade the majority, as their conciousness is +now+, that action is needed +now+.

            Whilst I strongly accept (& advocate here – a blog concerning financial topics) the merits of MMT, what I would like to see, produced by movements such as OWS, are national citizens’ led conventions to consider & propose the kinds of root and branch radical reforms we need, with mandatory adoption following referenda. But I believe parallel, wide ranging public debate of practical reforms to be a vital part of that process.

  39. Hawkeye October 19, 2011 at 10:01 am #

    Cartoon on the media response to the Occupy protests:

    http://i.imgur.com/wDOu1.png

  40. StevieFinn October 19, 2011 at 11:55 am #

    Up to 100,000 people gathering in Athens at start of 48hr strike.

    http://www.keeptalkinggreece.com/2011/10/19/athens-protests-live-blogging-in-e-oct-19-2011/

  41. Neil October 19, 2011 at 12:55 pm #

    Telegraph:

    “the European Commission has started an investigation into manipulation of the inter-bank lending rate, known as Euribor.

    Reuters reports that the London offices of Deutsche Bank have been raided as part of the investigation. Deutsche declined to comment to the news agency.

    The Commission said today it had seized documents from institutions active in financial derivative products linked to Euribor because of concerns they may have violated European competition rules

    Euribor, which is set by 44 banks, is used to set benchmark interest rates on trillions of euros worth of euro-denominated loans and debt instruments.”

    Zerohedge:

    http://www.zerohedge.com/news/german-10-year-bund-auction-fails-cover-issuance-contagion-rages-core .

    And the forces of law’n'order in Greece are using teargas…

  42. John Souter October 19, 2011 at 1:26 pm #

    Economics is a ‘science’ for institutions not people.

    As such people are targets, averaged by average and thereby removed from dignity.

  43. Neil October 19, 2011 at 2:49 pm #

    An extra incentive to switch to the Co-operative Bank:

    http://www.co-operativebank.co.uk/servlet/Satellite/1193206375355,CFSweb/Page/Bank

  44. Toby October 21, 2011 at 7:12 am #

    @Mike Hall, in response to his 20.10.2011 4:13pm comment.

    “It seems to me simply untenable that some ‘ready to go’, implementable ‘plan’ for ‘steady state’ can be said to exist. Most certainly not from what you posted so far, & nothing I’ve found.”

    No one is saying that such exists, least of all me. In fact my entire response to your questions went to tedious lengths to say precisely the opposite (yet again).

    “The contrast with MMT (& ‘functional finance’) could not be more stark. All the required structures are already in place & any minor modifications needed are easy & virtually instantly implementable.”

    Steady-state’s contrast with the system as it currently operates is also stark. So what! Its contrast with feudalism is stark, with a blueprint for a new house, or anything else tried and tested, is stark; obviously, since what we are talking about with steady-state economics is UNTRIED. I’ve said this over and over, in agreement with your position, only for you to say, “It seems to me simply untenable that some ‘ready to go’, implementable ‘plan’ for ‘steady state’ can be said to exist.” Are you even arguing with me? My name is at the top of your comment yet your arguments barely address what I say.

    As for common ground, that there is such in MMT is neither here nor there, IF its insistence on growth (in GDP terms!) is counterproductive (I think it is). There is common ground among neoliberals too. Common ground is not the hallmark of a good plan. And it is blindingly clear to me that the fringe ideas I echo here (I did not create them) are fringe (though not as fringe as you suggest). I am not expecting anything to change simply because of my comments. I have nothing like the force of authority of Warren Mosler of Randal Wray. I’m just some guy putting forward the thinking that seems most appropriate to me. Would you stop attacking me as if my efforts here are about to derail the entire MMT project! That you continue to treat me as a serious threat I can only take as a weird compliment, albeit one attached to a slap in the face.

    But, for you to keep on saying there’s no plan—there isn’t, there are only suggestions that together are the beginnings of a possible plan—yet not read the book in which those suggestions are to be found because you’ve read many like it, then offer up that Herman Daly has no plan, is a bit rich, and rather evasive. Now I’m not telling you (I wouldn’t presume) to buy the book, I’m just saying there is the beginning of a plan therein, that it proposes using existing infrastructure, need disrupt nothing, need only be discussed and pondered. What’s not to like? We’re talking about how to preserve the environment that gives us life.

    “Come on, Toby, are you really saying, as you strongly seem to imply (with such ‘loaded’ language as ‘communism’) that you are comfortable in some way with the current lack of jobs (& all that entails in social depravation) for between 1 in 10 and + 1 in 3 + of work seeking citizens, depending on age demographic?”

    Come on, Mike, are you really telling me that you think that? That what I am all about is keeping unemployment up and wages down? Do you really think any old job is better than a meaningful role in the community where a social dividend frees people to offer and contribute what they can? If there were really a way not to further degrade the environment and give meaningful paid labour to all who sought it, I’d be for it. But like I said, I don’t think there is. I work with ex East-Berliners, who tell me often of their times in their old jobs, simply sitting idly eight hours a day, to ‘earn’ a wage to buy stuff with. What’s the point of tying people to a chair as if the job contributed something? Why not just give them the money to enable them to contribute as passionately and creatively as possible? It uses far fewer resources that way. I’m not aware of any neoliberal support for guaranteed income, by the way, but Martin Luther King was for it. Are you against it? It has growing support in Germany (though resistance is strong for cultural reasons) due to the tireless efforts of one Götz Werner, a professor of economics (I think it’s economics) who also happens to be a very successful business man (an unusual mix). His proposal is to pay all citizens something like 1,000 Euro a month and keep the money supply from booming via VAT, then do away with all other taxation. The recently elected (to Berlin’s regional assembly) Pirate Party (“Die Piraten”) are exploring alternative ‘funding’ ideas for a guaranteed income. And I haven’t even mentioned professor Franz Hörmann’s plan (also a collection of suggestions and ideas). Personally, I like Eisenstein’s proposals best. (And I seem to recall that the SPD in some western county (perhaps Rheinland Pfalz?) has adopted guaranteed income as part of their platform.) In short, at least in Germany, this is not a crazy idea only discussed by ‘loonies’ like me; a debt-free, happily married father of two healthy girls, both doing well at school. As to the demurrage idea, it has been discussed in ‘serious’ circles too.

    Anyway, far too much from me again. A request from me to you to wrap up with: If you stop treating me as if I were some enormous threat to MMT I’d be a happier man. MMT isn’t perfect, nothing is. Your touchy reaction to criticism of it hardly endears you to me, nor does it increase my respect of MMT. If anything you inspire me to further critiques. And the tone you adopt, that I am somehow beneath the right to criticize a system so carefully crafted over decades by Great Minds, is elitist, and one I cannot respect.

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