The horizon is not so far as we can see, but as far as we can imagine

Open Thread

Feel free to use the comments to discuss topics unrelated to recent posts.


America Is About to Feel Like a Third World Nation


Week-end Wrap – Political Economy – August 9, 2020


  1. krake

    It’s time to let the Old Confederacy become the failed narco-state its white people are so desperate to become. Ef ’em. The can have every battle-flag waving diesel-driving big hoss from the north; we’ll take everyone who doesn’t want to stay in Floribama-Texarkana police state.

  2. GlassHammer

    “It’s time to let the Old Confederacy become the failed narco-state its white people are so desperate to become. ” – kraken

    Let’s not do or encourage that.
    The problems of one state spill into neighboring states.

    Also, if you ever want to change/negotiate with the “Old Confederacy” you need to start with two things in mind:
    1. They are the bottom caste of the U.S. and they know/internalize it.
    2. They operate on an honor culture, it governs 90% of what they do/say/believe.

    If you ever wondered why authoritarianism, theocracy, and xenophobia thrive in the “Old Confederacy” it’s because those systems find fertile ground in an honor culture.

  3. bruce wilder

    Yeah, because, with all of our urgent, immediate problems, what we want to do for fun is recreate the Civil War!

  4. bruce wilder

    I look at from time to time and it is all “outrage” all the time. Never mind the “honor culture” of the South, look at the cottage industry the corporate Media has become, its personalities churning out outrage.

  5. GlassHammer

    “look at the cottage industry the corporate Media has become, its personalities churning out outrage” – Bruce wilder

    It’s just entertainment, the networks show outrage for ratings/ad-revenue and the people consume it to make themselves feel better.

    The only noteworthy thing is how many hours a person loses in the extremely unproductive activity of watching it. We would be so much better off if people used their tv time to sleep, exercise, or meditate/pray.

  6. S Brennan

    So, manufactured hatred “is just entertainment”…hmmm..maybe you should ask the 12 million who perished in Nazi death camps, or the 3 million who perished at the hands of the Khmer Rouge or the 1 million Tutsis about the entertainment value of hate. They can’t speak for themselves, they’re dead but, I feel pretty confident they’d tell you to take that glib answer of yours and stuff it.

  7. Zachary Smith

    Garbage Link #1: Gar Alperovitz and Martin J. Sherwin – Aug. 5, 2020

    Garbage Link #2: Kai Bird, Martin Sherwin – Dec. 19, 2003

    Each of these features the tale of Evil Truman and Innocent Peace-loving Japan.

    “Unconditional Surrender is the only obstacle to peace,” Foreign Minister Shigenori Togo wired Ambassador Naotake Sato, who was in Moscow on July 12, 1945, trying to enlist the Soviet Union to mediate acceptable surrender terms on Japan’s behalf.

    Truman knew that the Japanese were searching for a way to end the war; he had referred to Togo’s intercepted July 12 cable as the “telegram from the Jap emperor asking for peace.”

    Like the rest of stuff in the crappy links, this is technically true. It’s also so ridiculous and laughable that even the Japanese Ambassador Sato remarked about it in his reply to Tokyo:

    I send this message in the belief that it is my first responsibility to prevent the harboring of illusions which are at variance with the reality.”

    The Soviet Union was NOT a neutral party. Japan had pulled a “Pearl Harbor” on Russia in living memory (1904) at Port Arthur, and memory of that defeat remained a painful one. As recently as 1939 Japan had attacked the Russians at Khalkhin Gol. Considering how numbers of Russian dead and wounded were nearly the same as the ones the US suffered at Iwo Jima, this was something else which had not been forgotten.

    The Japanese Leaders lived in a fantasy world where they refused to admit defeat. They certainly wanted “Peace”, but only on their own terms. Those terms amounted to a Japanese Victory in WW2, and this was something the US was not going to permit.

    So read the garbage links or not – as you please. If you believe a word of what the hack authors are saying, I suggest it’s time to find some genuine and honest history books – and carefully read them.

  8. NR

    Krake – The problem is that if the old confederacy broke away from the rest of the U.S., it would very quickly become a theocratic police state, and the flood of refugees into what was left of the U.S. would likely be too overwhelming to deal with.

  9. bruce wilder

    people consume it to make themselves feel better

    “better”? than what?

    I suppose the truth is, I do not object to “outrage” as an emotion. I do enjoy writing a good rant, as my fellow comment readers here are no doubt aware.

    It is the intelligence stultifying design of the narratives that CNN markets. Their narratives are like some low-grade form of synthetic opiod and an already gorged U.S. population are force-fed these narratives until an overload condition takes over, and no one can think critically about anything, let alone why billionaires and their corporate toadies are putting out what is frequently heavily distorted half-truths and nonsense. Silence is Not an Option with Don Lemon. really?

    The hook for the outrage may or may not be something actually outrageous. Often, the journamalists at CNN are deliberately misunderstanding or misreporting or omitting facts, in order to sharpen the narrative’s “moral”.

    One thing you can be sure of, the journamalists very rarely dare to bite the hand that feeds them, whether that hand is their employer’s or the “source” they are serving, to maintain all-important “access”. So, yes, they are getting paid for a job. But, why are people consuming the hostess twinkie of news? Don’t they get sick? Rather than “feel better”?

  10. Hugh

    Many ideological divisions in the US are less North-South than rural-urban. A lot of Southern cities are much more liberal than their surroundings. So simple divisions quickly become messy.

  11. krake

    How would people who already move around the country, freely even during a plague, be magically transmogrified into a flood?

    And what civil war? The governors of the Old Confederacy cannot stop parties. We should worry them being able to manage the logistics of a separation from the still-inherently better organized North and West?

    Nah. These people can either doom themselves, alone, or doom us all.

    It’s time to choose.

  12. krake


    A wood hopper in the Allagash has more in common with a Boston blue blood than she ever will with a know-nothing from Floribama.

    I’m in the White Mountains most every day of the week. I might not know if a guy is from Mattapan or Providence, and I can only know with slightly more assurance the difference between a group of women from Portland, Me or Burlington, Vt. Mostly has to do with os and ahs. But, everyone is a Yankee, will be courteous, trail-friendly and considerate. Same, too, for people from Philly, Westchester or Bayonne. But, even before I hear that stupid accent that should’ve been Reconstructed into oblivion, I know a Southerner by how he greeds up the trail, can’t mind his hound, and doesn’t know how not to be an intrusive, gaiter-less dink just passing on a ridgeline.

    I don’t accept the distinction as valid, between regions. Maybe within them, but not between.

  13. GlassHammer

    “So, manufactured hatred “is just entertainment”…” – S Brennan

    We consume extremely large amounts of violence, propaganda, and low brow entertainment. It’s all garbage and every bit of it is harmful to the person consuming it.
    I just don’t see the need to distinguish the “if it bleeds it leads news”, from “Breaking news: this is who you should hate this hour”, or the latest “tv murder/revenge fantasy”.

    Yeah there are agendas being served by propagating it, (the audience is highly suggestive) but God Damn it seems futile pointing that out. I can’t even get my extended family to stop consuming it even after multi-hour long explanations of why it’s bad with them agreeing with me when I am done. They just will not stop consuming it.

    So yeah for me it’s a frustrating topic so I get glib.

  14. GlassHammer

    “better”? than what?” – krake

    They feel better when they get their biases confirmed, certainty gives them comfort. (The producers know you show up with your thoughts on the matter at hand already set.)

    They feel empowered when they are told they are receiving knowledge that others are not.
    It makes them believe they are wiser than the average uninformed person. (This is why shows lead with statements like “most people don’t know” or “we bring you inside and behind the scenes”)

    They feel superior when they see someone fall/struggle because “that idiot deserves it” and “it would never happen to me”. (This is 90% of the appeal of American reality TV)

    They feel a sense of meaning/achievement through violence. All the hate and revenge fantasies are not means to a perfect and just end. Violence magically solves the problem forever.

  15. Hugh

    From Hirohito’s surrender speech:

    “Indeed, we declared war on America and Britain out of our sincere desire to ensure Japan’s self- preservation and the stabilization of East Asia, it being far from our thought either to infringe upon the sovereignty of other nations or to embark upon territorial aggrandizement.

    But now the war has lasted for nearly four years. Despite the best that has been done by everyone– the gallant fighting of the military and naval forces, the diligence and assiduity of our servants of the state and the devoted service of our 100 million people–the war situation has developed not necessarily to Japan’s advantage, while the general trends of the world have all turned against her interest.

    Moreover, the enemy has begun to employ a new and most cruel bomb, the power of which to do damage is, indeed, incalculable, taking the toll of many innocent lives. Should we continue to fight, it would not only result in an ultimate collapse and obliteration of the Japanese nation, but also it would lead to the total extinction of human civilization.”

    After all the aggression, rape, and pillage, it came down to “the war situation has developed not necessarily to Japan’s advantage.” Yeah, that’s real awareness and taking responsibility for –well–pretty much nothing.

  16. Trinity

    Another reason, GlassHammer, is that the news also relieves the cognitive dissonance. “The ‘authorities’ (CNN) have everything under control, they know what is what. All that weird shit I saw on my way to and from work isn’t real. CNN is real, they know more than I do. Just as I thought, it was the Russians, again. Back to my porn and pizza, it’s all under control.”

    And in other news, it seems those pesky, entitled, maskless (arrogant, but not stupid!) Americans are already heading north of the border.

  17. Hugh

    Meanwhile as Trump’s Treasury Secretary Mnuchin stonewalled negotiations over a new corona aid deal, Trump released a bunch of executive orders a fair number which are beyond his authority to make to look like he and not the Democrats are doing something.

  18. Ché Pasa

    Civil war? Nah. More like warlordism at least over the short term. Led by police and their white nationalist allies.

    In many areas elected leadership is already being ignored by would be warlords and civilians alike. Soon, I think, they’ll be rendered irrelevant.

    Some incidents recently in Portland and Austin and elsewhere may be indications of a not too distant future for many Americans.

    After the feds withdrew from active “defense” of the courthouse in Downtown Portland, the protests subsided immediately and became rather festive affairs without violence. Nice. Then of course protest continued at various police precincts, for the underlying problem has always been the oh so white rightist Portland Police Bureau and their racist violence against The Other. (Similar to the situation in Seattle and throughout the Pacific Northwest). Violence is routine, and it is almost entirely a matter of police violence against the demonstrators and selected members of the public. And there’s another element.

    In Austin we saw an example when a car plowed into a protest march and the driver shot and killed a demonstrator who confronted him. The demonstrator was also armed but did not fire. Another protester — also armed (it’s Texas!) — fired at the car as the driver sped away. Did not hit car or driver. Turns out the driver is active duty military at Fort Hood. Who woulda knowed?

    There have been dozens of car/truck terrorist acts against protesters and protest marches since the police murder of George Floyd, several resulting in serious injury and at least one other death.

    A truck plowed through a protest march in Portland a few nights ago, driving over the motorcycle of a man who tried to stop the driver. The motorcycle was caught under the front bumper, sparks flying. The driver, who was armed with a pistol, eventually stopped and ran away but soon it was determined he was the son of a former Portland Police Bureau officer who said he “loved Black people!” Shortly afterwards, shots were fired from a BMW at the edge of the demonstration. Witnesses said the shots were fired into the air. No one was hurt.

    Last night, what were called pipe bombs were tossed at demonstrators assembled in a park near a sheriffs substation. Two or three of them exploded, one was a dud and was recovered. One of the men who was thought to have tossed the explosives was tracked down and confronted. He at first tried to hide, then became belligerent, appearing to reach for a gun in a holster at his back. He was late thirties, early forties, bearded, fit and might have been with Proud Boys, but others suspect he was undercover police. He said to the man confronting him, “I’m not someone you want to fuck with.” He claimed not to know anything about pipe bombs.

    These and other incidents are provocative escalations in violence intended to terrorize the protesters — in concert with but separate from the violent escalations by the police. “Running of the Swine,” and so forth. Each escalation has been met with a defensive escalation. So far, it’s a stalemate.

    But that’s not going to last. The better armed and committed will ultimately prevail. At least until they exhaust themselves in the struggle to dominate.

  19. rw95


    Agree 100%. It\’s time to let the south fuck off. If Texas and Florida want to be failed states, why should the rest of the country have to suffer the effects of their stupidity?

  20. NL

    People are not solitary animals.

    Group selection — in those hunter-gatherer times, one man – no man, the tribe had to obey the leader, otherwise the whole tribe would perish because of the elements or other tribes. Even women were not spared… why take them, if you defeated their tribe, they carry inferior genes… Neanderthals – gone, Scythians – down to the size of Iran, Celts – from lording over most of Europe to a couple of islands up North, Native Americans – no around… A superior people will replace even the modern people…

    News sources is the modern way for the leaders to communicate with their tribesmen. Listening and obeying leaders/watching news is as instinctive as looking into the horizon and reacting to motion, those who did not do it became a lunch for a predator, people who did not pull together around a leader were easy pickings…

    Machiavelli is not machiavellian. Plato did not argue for might is right. Those who teach this to the elite do malpractice or wish death on this elite. Going after your own tribesmen works only when all tribal leaders do that — like on an island the size of Great Britain or Japan — hence all these private international ‘clubs’ G this G that, trilateral, etc. But then virus comes and now what…

  21. KT Chong

    WhatsApp (the American app) is way more intrusive than WeChat (the Chinese app.) I have been using WeChat (to make free international calls) and avoiding WhatsApp due to WhatsApp being owned by — and sharing data with — Facebook. Now, I am being forced to switch to WhatsApp from WeChat in anticipation of the Trump ban in 45 days.

    So, after I had installed WhatsApp, it refused to let me manually add contacts unless I allowed it to scan my phone contacts… which it would share with Facebook. I refused to let WhatsApp/Facebook to scan my phone or contacts, so I have to tell my friends and relatives on WhatsApp to add me from their ends.

    And then I could not use the call feature in WhatsApp… unless I allowed it to scan my phone, like, WTF? WeChat has never demanded me to let it scan my contacts and phone or share my personal data when I wanted to use any of its features. The American WhatsApp is so much more intrusive and offensive than the Chinese WeChat.

  22. someofparts

    “Barkai was interested in the decline in the amount of corporate output going to labor. He concluded this decline is not occurring because capital is getting a large share of income. Capital investment is going down even faster than labor share. There’s less spent on workers, and less than that spent on robots. So if labor share is down and capital share is down, what is up? Profits. The driver, Barkai found, is firm concentration is up across the American economy since 1985.

    In other words, there’s too much capital all over the world in a savings glut, so interest rates are low or negative. At the same time, the only people who can borrow this surfeit of capital at low rates are those who won’t put it to work in anything but speculative endeavors. Otherwise, borrowing costs are insanely high. The world of finance and monopoly is a small world, a club, and they’ve pulled up the ladder to make sure no one else can get in it.

    What the chart on credit card interest rates shows is that the Fed’s attempt to move money into the economy doesn’t work anymore. The knobs and levers that translate interest rate changes into money being put to work in building things – the monetary transmission mechanism – has been severed.

    The Fed can push dollars into the financial system or pull dollars out, but it does so through markets that only very powerful money wholesalers get access to. Those wholesalers aren’t lending into productive purposes, which is why rates are low or even negative. And when they do lend out to actual people, they do it into concentrated and corrupted markets with extremely high-interest rates, like credit cards.

    Also, here’s a link to the Useful Idiots podcast today. Taibbi interviews Thomas Frank.

  23. Merf56

    Time to really reform the country and halt the insanity. Break up this country into more than several separate countries.
    Here is my plan:
    First off Mexico gets Texas, Oklahoma, New Mexico, Louisiana, Missouri and Arkansas.
    1. Florida, Alabama, Mississippi, Kentucky and Georgia
    2. Tennessee, South Carolina and North Carolina, West Virginia
    3. central and western Pa , Ohio, western Maryland and the rest of Virginia
    4. Northern VA, eastern Pennsylvania, Delaware, suburban and eastern Maryland and NYC and suburbs and Long Island, New Jersey, Eastern Massachusetts, Connecticut and Rhode Island
    5. the rest of New York and western Massachusetts , Vermont, New Hampshire and Maine
    6. Indiana, Michigan and northern Illinois, Wisconsin and Minnesota
    7. southern Illinois, Iowa, Nebraska and both Dakotas and Kansas
    8. Colorado, Montana, Utah, Wyoming and Idaho
    9. Arizona, Nevada, California, Oregon and Washington as well as Alaska and Hawaii..

    You are welcome Former United States. At least some of the people with brains will get something better than the shit we have now.
    Trump supporters and other far right nutters and anyone with a religion are not allowed in country 4 or 9. They have six weeks from the division to get the hell out with whatever shit they can carry. Let’s see how well the average Trump voter will enjoy the prosperity of their new country

  24. bruce wilder

    Matt Stoller is doing important work, no doubt, but his economics is crap.

    There is a basic paradox at the intersection of invested capital ( “invested” meaning embodied in productive organization and equipment and inventory and so on — “tools” in some broad sense. Investing capital tends to be self-defeating as increasing invested capital reduces the marginal product of capital in an application of the law of diminishing returns and increases the marginal product of labor. If you are thinking that income going to capital is simply proportional to the amount of capital invested, you are thinking wrong.

    Average (not the same as marginal) productivity of labor has been rising in the long run, even as marginal product (= wage) has stagnated. This implies capital disinvestment, reduction in the stock (a dubious concept, but go with me on this) of invested capital. Disinvestment — basically reproducing the capital stock in ever smaller sums, running things down and using technological advances to replace more with less, throws off a lot of cash. It is not unlike stopping maintenance on a rental house while the rent stays the same.

    Here is another thing about capital investment: almost all of it is sunk cost. A business only makes money on a capital investment, if it has essentially political power derived from some combination of technology, custom and property rights, to extract that return on capital in the prices it gets from selling products or services. Finding a strategic business model that delivers such a return on invested capital — such a return on sunk cost invested capital is technically a “quasi-rent” — is the analytic skill taught in business school. All private business is rent-seeking, because that is necessary to secure the ability to earn a return on investing capital.

    Money and finance are about keeping score. The notion that banks borrow money from you when you make a deposit into your checking account and loan it out to businesses wishing to make capital purchases as part of investing capital is dangerously misleading. MMT ought to be killing such “loanable funds” thinking.

    Money is not primarily tokens for transactions. Money is about insurance and making deals with an uncertain future. Banks operate the payments system and in the process manage risk for all involved. Mostly they do this by authenticating credit.

    The proper task of banks in a well-functioning financial system is to prevent money from spilling out into negative present-value investment and to clean up the minor spills that inevitably do occur. This is sometimes termed, maturity transformation.

    Volatility makes insurance more valuable and when the financial system starts manufacturing volatility in order to divert more income to itself, the rest of the economy is in trouble.

    People want the economy to be a morality play for a just world because that would be easy to understand, but it is not. Not a morality play. Not just. And not apparently easy to understand.

  25. Stirling S Newberry

    >Matt Stoller is doing important work, no doubt, but his economics is crap.

    This needs a long response, but I have other thing to do, therefore will take up later.

  26. Hugh

    The economy exists to help build and maintain the society we want. And is consequently easy to understand: What kind of a society should we have? That’s inherently a moral question.

    A “well-functioning financial system” only has a meaning within the context of the society it serves. We certainly have never seen one.

  27. someofparts

    So Krake, what about the black citizens in the South? My hometown is a national epicenter of black wealth and power. If you let them leave before you close the borders on their white neighbors, will the good people of your region replace the mansions, businesses and universities they will be obliged to leave behind?

  28. different clue


    While your plan is perhaps intriguing to play with, it perpetuates an unfairness that remains current and ongoing.

    That unfairness is this: the Geographicultural Region known as Appalachia has always been divided by several states who all occupy part of it. None of them respect it except perhaps West Virginia which is somewhat based on its own little section of Appalachia. Appalachia has been the Kurdistan of America for centuries.

    If we are to have a New Plan based on a New Breakup into New Nations, Appalachia deserves some small measure of minimal fairness and recognition. Appalachia should BE one of those New Nations. Till now, the States and the Nation have run Appalachia as their political Kurdistan (divided between hostile Flatlander Entities) and their biophysiconomic Tibet ( exploited and steadily rollingly destroyed). That should really stop. Or be stopped.

    If America evolves towards breakup, I would just love it if West Virginia changed its name to Appalachia. And every Appalachian-type county outside the borders of Appalachia could hold a vote on whether it wanted to stay in whatever State it is now in, or whether it wanted to join the New Nation of Appalachia.

    Appalachia is perhaps tired of still being America’s Tibet. If Appalachia were a Free Country it might at least become a “Madagascar of the Mind”.

  29. bruce wilder

    The economy exists to help build and maintain the society we want.

    The economy exists to manage decentralized social cooperation given specialization of labor and resource commitments in the face of pervasive uncertainty. So, yes, buried in that mouthful, somewhere, there is, in the hands of people of good will (which we know is not everyone we meet) the shared capacity to enable the making of a good life for the many, and not just the few.

    And is consequently easy to understand

    I am not so sure.

    I think the political economy, as an institutionalized social system, is deeply problematic, meaning that it addresses a lot of problems in social cooperation that do not have obvious or perfect solutions. If there is a lot of ruin in a nation, there is a lot of waste and injustice in a political economy.

    What kind of a society should we have? That’s inherently a moral question.

    It is.

    Economics, like law, prescribes institutions as answers to moral questions. The institutions taken altogether as an emergent system tend to take on an aspect like that of a complex system, rather like a finely geared, mechanical chronometer, with many balancing and compensating mechanisms.

    Even though all of us are familiar with the economy in which we participate on a daily basis, that familiarity with the tasks it assigns us, may not prepare any of us to think clearly about the needs of its management, features of its design or the merits of its architecture.

    I think it behooves us to at least try to think clearly about the political economy. And, I think there’s a grand conspiracy to make it much harder to do so than is really necessary and that grand conspiracy encompasses mainstream, neoclassical economics, which not incidentally makes deceptive use of the just world fallacy to seduce people into believing foolish statements asserting the “meaning” of policy that ignore the consequences. I think that pattern of deception is 90% of neoliberal ideology.

  30. different clue


    Under your scenario, if Black Citizens of major Black Wealth Cities feel they cannot live safely and freely in a newly independent Southistan, and feel they must leave, they could leave the Balkan way.

    What is the Balkan way? As they leave, they burn down and destroy everything of value they created there so that the new nation of Southistan gets zero value from it. If they have time, they salt the earth upon their departure, so the new nation of Southistan will never get any value from it.
    That’s “leaving the Balkan way”.

  31. bruce wilder

    My problem with Matt Stoller’s crusade is that, while I agree that it is a good fight to have and he brings a lot of energy and insight to his often well-aimed polemics, he is not careful enough imho to distance his critique from the metaphors of Econ 101 that Chicago School economists and lawyers used so skillfully to subvert antitrust law and policy from the 1950s onward. By skillful interpretation of basic terms like “monopoly” to correspond to the concepts of Samuelson’s textbook and similar elementary treatments developed in the economics specialty known as Industrial Organization, they trapped the law into uselessness. He clearly knows a lot of this history, but he does not seem, to me, to take it seriously enough. It is too easy to start talking about vague notions of “market dominance” or downward-sloping demand curves as characteristic of a single-seller and end up lost in a legal thicket with no sharp tools to cut one’s way out.

    I read his essay linked above today about finance and I saw the same lazy reliance on seemingly elementary notions that will just lead nowhere good. I read

    Normally when you put money into a bank account, you get paid some interest on your savings. This is because a bank account is essentially a bank borrowing your money and using it to finance other loans that go into productive purposes like building factories.

    and I saw shades of loanable funds and despaired.

  32. nihil obstet

    Even though all of us are familiar with the economy in which we participate on a daily basis, that familiarity with the tasks it assigns us, may not prepare any of us to think clearly about the needs of its management, features of its design or the merits of its architecture.

    I go on something of a tangent here. From the New York Times in February:

    A growing number of states are requiring students to study money matters in high school, the Council for Economic Education found, reflecting a broader realization that “people are responsible for their own financial future,” the head of the group said.

    Chez moi, the state is requiring among other things that the course include the cost of borrowing money. It would be more effective to require lenders to provide a clear standardized information sheet along with any offer of a loan, along the lines of “Lender will provide [$X] to be repaid at [$X] per month for [X] months. The repayment will total [$X]”.

    Legal requirements for fair and honest commercial dealings have been abandoned throughout the society in favor of the false principle that the target be provided with sufficient information to make an informed decision in a format that misleads and/or hides reasons to walk away. The state builds a hunting ground for financial predators. The required courses are to teach young citizens that they are responsible for being victims when they are conned — they should have known better.

    The economic system of a complex society will be complex, but most citizens should no more be expected to know all the complexities than they should be required to know medical diagnostics to get health care.

  33. bruce wilder

    @nihil obstet

    Amen, amen, amen.

  34. Mark Pontin

    Bruce W. wrote: ‘ I saw shades of loanable funds and despaired.’

    Yeah. I like Matt Stoller too, but Bruce is right. For those who don’t already understand this and don’t want to deal with all the nonsense and politics attendant on MMT, this guy Richard Werner — who actually worked as a central banker — is so clear and succinct that he covers the basics in the first couple of minutes, then analyzes the implications in the remaining eight of this video —

    ‘How do Banks actually create money ? Professor Richard Werner’

    The Bank of England has some good material on this too, but they get much more into the technicalities and the weeds —
    ‘Money creation in the modern economy’

    ‘How is money created? Most money in the economy is created by banks when they provide loans.’

  35. GlassHammer

    “The required courses are to teach young citizens that they are responsible for being victims when they are conned — they should have known better.” – nihil obstet

    During the various lawsuits//trials of the 2008 financial crisis the defense of those accused of fraud was “well these are smart investors so they should have known the investments were bad/fraudulent”.

    What you are describing is just an extension of that defense.

    And to point out the obvious, if you are smart enough to see through the deception of professionals you are either one of them already or on your way to becoming one of them.

  36. different clue


    It could be that some people smart enough to see through the deception of professionals may well be on their way to becoming anti-professional economic-combat warfighters. One can always hope.

    Is there hope for the rest of us? Maybe! Even if we are not smart enough to see through the deception of professionals in detail, we may be smart enough to know that the professionals practice detailed deception at many levels to part us and our money, time, work, attention, conscious awareness, etc.

    I remember back 10 or whenever years ago it was . . . . the big Madoff scandal . . . where Bernie made off with the money. He must have embezzled at least 50 billion dollars. Some of it from some very smart people. And yet, he was not able to suck a single sardine through the side of a single one of my cans of sardines. Is there a lesson in there, a lesson on the difference between money and wealth?

  37. bruce wilder

    @ Mark Pontin re: Money Creation

    There’s an inherent tension between what we understand about how the economy works from being participants and what we need to know about the principles governing how the economy ought to be managed, which we need to know as informed citizens.

    As participants, our experience is that we have to work or get lucky or sell things (or steal or deceive others) to get money — money is scarce and we need it and have to make an effort to get it. The idea that banks “create” money at will is titillating, given that personal experience.

    My problem with these narrative revelations concerning money creation is that they draw people in — often in MMT discourse in much the manner of an hypnotic trance induction or infomercial for some health product — and never get to what I would think is the critical point: if banks effortlessly creating money while the rest of us struggle to get it, what is the economic function of the banks?

    Banks operate the payments system and in the process manage risk; mostly they do this by authenticating credit. The proper task of banks in a well-functioning financial system is to prevent money from spilling out into negative present-value investment while also discouraging people from simply hoarding money secretly. They are basically score-keepers, who keep the score more or less public and, ideally, in some important sense, “accurate” and reality-based. Money’s most important function in the economy is that it enables calculation where it would otherwise be impossible, and deal-making regarding an uncertain future; score-keeping with money supplying the unit of account creates the information system for the political economy. The integrity of that financial system is critical to the functioning of the political economy.

    Let me say that again: The integrity of the financial system is critical to the functioning of the political economy. I feel like that punch line too often gets lost in the contested narratives of economists and pundits.

    If you think about it, it is pretty clear why the integrity of the financial system is always under threat: for one thing, as Bill Black has put it in the title of his book, The Best Way to Rob a Bank is to Own One. There are many aspects of the system of finance and accounting where the temptation to defraud or to create volatility to drive up the value of financial wealth is a serious problem driving business cycles, business corruption and creating traps to ruin people’s lives.

    As citizens who do not wish to be peons, it is in our common interest to organize politically as well as we can, to see to it that the financial system’s integrity is a central purpose of state policy and public institutions established for that purpose.

    Instead, that public spirit and interest is diverted by the agents of the predatory rich (are there any other kind in America?) to campaign for public austerity.

    Public austerity, like financial fraud, is a means of distorting the financial system in ways that fleece the many for the “wealthy” few.

    Instead of political support for financial integrity, too often imho, tales of money creation by banks leads to directly to arguments for other policies, which may be worthy, but that bypass financial integrity. Universal Basic Income, for example. The stupid Left, which is pretty much all of it apparently, loves that kind of thing. I am not saying that policy advocacy is wrong, but I am saying it is wrong to let go so easily of outrage against injustice and predation. (Or to let outrage be directed at silly made-up nonsense like Russiagate.)

    I am sorry to be writing this at the tail end of a dead comment thread on a somewhat obscure blog, but such is life.

  38. nihil obstet

    Comment thread isn’t quite dead, and we hope the blog isn’t quite obscure. But it’s more than worth reposting on an “Open Thread”.

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