Not sure that anyone can put a finger on it. Speaking as a statistician perhaps the best method of determining how much we each are getting screwed by is to take the mean per capita income and compare it with the median per capita income. The median would be the level of wealth that the typical person in this country has (i.e. upper working / lower middle class person). Whereas the mean would be upwardly skewed by the ultra-high net worth individuals. The gap is the amount (per person) getting screwed by the growing income inequality.

If we presume that the figure is likely to be something like £10k (i.e. mean income is probably about £35k in the UK, whereas median about £25k), then that sums up to £600bn of pilfering.

That would just show the current level of filching though, not the stealing of our futures!

There is talk of an EU tax on financial transaction which is reported to be going to cost the City of London £40 billion a year. It this is true, at 0.1% tax rate, that indicates transactions of £40 trillion! It is £40 trillion right? That doesn’t even take into account the 0.01% on derivatives (whatever they are), which would push this last figure up higher, correct?

How the hell is any ordinary mortal supposed to understand how big or small a 3 trillion euro bailout is when we are faced with such incredible figures? I know we’re all being screwed, I’d just like to know by how many zeros.

I think the main reason that the dollar, euro & pound have all remained in a reasonable range is more to do with the fact that all their banking sectors are so interlinked that a major shock in one area is considered a shock to all. And in the extreme circumstances of the domino effect from a significant default, no one is able to quantify any likely large differences in effect, one currency area to another. Markets also know that in this (extreme) situation, authorities will work together. (There has been some small rise in the dollar likely reflecting the flight to safety of US treasuries,)

But, in terms of the economic fundamentals that drive currency fluctuations over time (which are there to see in euro vs $ or £ rates since the euro’s inception) they are absolutely free floating currencies.

That’s my take on it anyway!

As others here know, I’m very enthusiastic about MMT & the accompanying use of ‘functional (government) finance’.

As far as the ‘monetary’ operations side of MMT goes, it’s proponents state categorically that aside from non-debt net government spending, all other monetary operations are actually what is done in reality now. (But that mainstream/neoliberal economists either pretend or simply don’t know how the present mechanisms actually function.) Bill Mitchell probably has the most detail on this (& most current events MMT commentary) on his blog:

http://bilbo.economicoutlook.net/blog/

Also central to MMT macro economic thinking is an ‘accounting’ methodolgy – which is a key identifier for those few economists who saw the ‘bust’ coming and, importantly, could back up their assertions with robust, logical explanations. (ie they weren’t ‘lucky guessers’)

Prof Steve Keen has done a great deal of work with this in his ‘Debunking Economics’ & has no criticisms of MMT’s understanding. Keen has been highly critical of the mainstream approach based on flaky ‘modelling’, empirically wrong ‘assumptions’ & most important the exclusion of the effects of debt & credit. (The latter particularly explains why all the major institutions did not either see the bubble/bust building or consider it important – yes, it’s that bad!)

As far as monetary operations go, there are no significant ‘structural’ changes needed, as I understand it. (But please read the source material for more detail on this.)

So, functional government finance can be readily adopted. Are there any examples? Well, Bill Mitchell’s blog is again the best source for this. Mitchell generally argues that the post WWII period, up to the oil price crisis of the early seventies, demonstrates a very similar approach in operation. Particularly in the US, UK & Australian economies. That is to say that governments considered near full employment to be the primary goal of policy & that governments had a major role to play in both stimulating demand & employing directly for the public purpose. Whilst this was financed by ‘borrowing’ particularly in the early period, in reality it was never considered neccesary to repay the debt. The assumption was that economic growth quickly diminished both the debt size & the debt service cost in real terms. It was a very successful period. I grew up in the UK at the tail end of this period & can atest to this. Employment was readily available, wages & standards of living grew. As did the quantity & quality of public services in health, education, welfare benefits etc. I got a full & substantial grant (free, gratis) to go to university. There was some means testing & contribution required of wealthier parents, but the sums were not onerous at all for parents on average incomes. I graduated debt free & had no difficulty finding work.

It’s worth noting that the UK was also in massive debt due to the war at the beginning of this period. Of course, there was no massive & unproductive ‘financial’ sector hoarding or ‘casino’. Investment surpluses were largely recycled to useful productive purpose in the ‘real’ economy.

Government ‘debt’ was not considered an issue – nor was it, the thriving economy could easily afford it. The only constraints were largely labour and material resources. (The key constraints to avoid inflation that MMT recognises & say must be responded to by reducing net government spending.)

The reason it all hit problems began with the oil price rises of the early seventies. The price rise was massive & sustained (think 2008, but sustained for a decade) & the entire economy, as now, depended on energy. This, external, ‘cost push’ inflation created major economic disruption & no governments could do much to stop it.

This was the opportunity for the anti-government neoliberals who hated the idea of health services, welfare & a fair share of productivity gains accruing to workers, to push back. Greatly helped by their friends in the MSM (& to some extent by some greedy beggar-thy-neighbour unions, to be fair, & some ineptitude of the ‘left’ politicians) the blame for economic woes was transferred from external energy price shocks to (left wing) government policy. Monetarism, greed-is-good & the ‘trickle-down’ fallacy took hold. Enter Thatcher & Reagan & the regained power of their corporate & bankster backers.

The rest, a they say, is history. Labour stopped recieving any significant share of productivity gains. Inequality grew, wealth did not ‘trickle down’. Unemployment remained much higher than before even during the business ‘up’ cycles & socially devastating for many. Various asset bubbles grew periodically and enriched the few at the cost to the many of the following busts & recessions.

The banksters grew in power & got governments to enable even greater use of their core scam – the creation of money out of nothing as debt (erroneously termed ‘lending’). Things like privatisation of public assets, the private pensions scam in UK and student loans, not grants etc. etc.

All culminating, as we now know, in the creation of a massive casino of leveraged (more debt money creation!) financial ‘products’ which have absolutely no ‘productive’ purpose. And of course, they’ve done this in such a way that the losses – bad debts – are very difficult to write off, as ‘capitalism’ would rightly demand. Rather the ‘solutions’ being pushed on the admittedly compromised, corrupt & intellectually ‘captured’ ‘authorities’ is……yes!….more debt (debt money creation for private banks) and debt service, privately or via governments, for ordinary citizens.

Nothing less indeed, than what Michael Hudson (& others) terms a financial ‘coup’ over ‘democracy’.

So what we need is to get rid of the corrupt politicians, political & public service/’advice ”system’, similarly ‘captured’ MSM, and reinstate government that operates as it was intended, in the interests of the (non-rich) majority.

MMT & functional finance offers a framework for that purpose which is infinitely better than we have now. Could it be worse? Not likely, it may need some adjustments as we go, but no, not a chance it could be anyway close to as bad as we endure now. (IMHO!)

The CDU’s deputy leader Wolfgang Bosbach:

“The first medicine didn’t work, and now we are simply doubling the dose,” Wolfgang Bosbach told the Wall Street Journal last night, in relation to the Greek debt crisis. “My fear is that when the big bang happens, it won’t just be us who will have to pay – but generations hereafter.”

http://hat4uk.wordpress.com/2011/09/29/crash-2-eurozone-bailout-bombshell-as-lenders-draw-line-at-20-haircut/

Senile Grandad alert, 3 yrs old when the photo was taken.

I guess because if the Euro goes down, then it will take the pound and the dollar with it (maybe the Yen too). You have to remember that all fiat currencies (although technically floating) are in fact locked in a strategic embrace. They are all merely reflections of the petro dollar standard;the bedrock of international trade. To some extent then the US does have a vested interest in protecting the Euro, but only enough that it sweats more than the dollar does:

” the strategy has been to expand dollar liquidity & financial sector leverage. The cost for servicing this build-up of unsustainable debts is pushed outwards to the innocent citizens of periphery countries and onto the shoulders of future generations.”

Indeed. But can someone please explain how the Euro has been maintaining its value (against the pound, at least) thus far? Why isn’t it being allowed to float (sink) down?

“So what happens if the Fed decides enough is enough and pulls the plug?”

Well then the score card will look something like this:

US: 1
Europe: 0
China: 3

It might help the US in the short term, but really the only true benefactor is China / BRIC bloc.

As ZH keep reminding us, this is a three way fight:

http://www.zerohedge.com/news/currencytrade-wars-begun-they-have