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

The Continued Collision Between Trump and the Fed

As I noted before, the Fed and the Trump admin are on a collision course. More evidence:

The Fed’s argument is that the unemployment rate is low enough that it is at the natural rate of employment which doesn’t cause wage-push inflation. As of December, that was 4.7 percent. (There are tons of problems with this, but we’ll ignore most of them, what matters here is what the Fed thinks.)

I am old enough to remember when an unemployment rate of five percent was considered a scandal, but no matter.

The fact is that the people who elected Trump aren’t feeling good. To make them feel good, Trump is going to have get the official unemployment rate lower than it is now, at least under four percent, and hopefully to three percent or lower and hold it there for some time, at least two or three years.

This stuff takes time to ripple through the economy, and it takes time for a tight labor market to push employers to both raise wages and to hire people who they consider marginal.

If the Federal Reserve raises rates if/when Trump’s policies (“fiscal,” in the above) start to work, they will be making sure he can’t deliver to his constituency.

This is a direct collision course.

Now let me say something simple. The Federal Reserve, for over 30 years, has deliberately crushed wages. This was policy. Policy.

The idea that the Federal Reserve should be able to sandbag the policy (“fiscal”) of elected representatives has always been anti-democratic and bogus. They work fastidiously to make sure the rich get richer, to bail out banks, and ensure their profits. Despite “full employment” supposedly being part of their charter, they have defined full employment to mean “employment pressure which doesn’t lead to general increases in wages faster than inflation.”

That is, they have deliberately set out to create stagnation and decline of general wages, while deliberately also ensuring that the rich get richer.

That’s what the Federal Reserve does in practice, and has done since the early 80s.

And that’s why, as with many of Trump’s other targets, I have no intention of defending the Federal Reserve. Yes, Trump is bad, etc. But the Federal Reserve needs to be broken to the will of government, and thus to democracy.

Since none of the “non-bad” or “not so bad” presidents did it, it will fall to Trump to do it. This will probably be the worst way to do something necessary, but so be it; none of the so-called “reasonable” people will do it, so it will be done by someone unreasonable (if Trump does it, this is not a fait accompli.)

Along with breaking the intelligence community (which could lead the world into an even worse situation, but a task that also falls into “needs to be done” category), Trump may well wind up being the most transformative President since Reagan, or even FDR.

This is what happens when the necessary actions which are not taken by “reasonable” people. They wind up being done by unreasonable people, and those unreasonable people may not be “unreasonable” in the way you like.

Keep an eye on this: If the Fed doesn’t blink and Trump doesn’t break them, he’s probably a one-termer.

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  1. Matt

    You’re assuming the unemployment rate is a valid # and not made-up bullshit. Which it is. So what is the actual unemployment rate ? Start there then reconsider your thinking.

  2. Ian Welsh

    Reread the article, with your eye on the 3rd paragraph’s ending parenthetical, then reconsider your comment.

    Consider following the last link, as well.

  3. pathman

    This is a nice analysis Ian. I would also add it will be critical how Trump responds to the republicans attempts to cut medicare and social security.

  4. Max

    I\’m concerened with the fact that too much tinkering with the fed will lead to America losing it\’s status as the anchor currency, and make it easier for bond vigilantes to swoop in and cause shock doctrine to happen.

    I was hoping we could get a progressive elected before America loses it\’s status as reserve

  5. Duder

    *grabs a bag of popcorn*

  6. dude

    I too am old enough to remember 5% unemployment was a scandal because 4% was already high. And when spending for a mortgage should not exceed 25% of your income–which in those days meant wages. Trump is not my first choice to do some of the things that need doing either, but it seems a lot of people were (and still are) expecting a shake-out to do more good than harm.

    For years we have been taught that the Founding Fathers were geniuses for inventing ways to make government a creature of the will of the people. For years we have been taught the wisdom of the people will reveal itself despite enduring bad political leadership. We were raised to believe that The System eventually works. But now I find it disturbing how so few of “The People” actually believe this is true, especially among those who wore the flag on their sleeves so righteously in the past. People who clamor for their supreme court appointees to be “strict Constitutionalists” should fear nothing from Trump & Company. Don’t they think the brilliance of our system and the wisdom of the commoner will prevail?

    I know you wrote the other day about the rule of law vs the rule of men. I get that. I am just struck by the irony of people fearing the rule of law–our super-superior framework of law–just can’t handle the rule of men like it was supposed to.

  7. Ian Welsh

    The rule of law I was speaking of was mostly about even application of the law “all are equal before the law”, and actually following it (so, for example, the right to trial is gone for most people.)

    Popular sovereignty means that the people elect those who make the law and make decisions within the law or to change the law.

    While the Fed is technically semi-democratic (appointed by democratically elected people, though problematically private); in practice is has repeatedly acted against elected representatives, to deliberately stymie what they do.

    And, of course, one suspects that if it were put to them clearly very few people would vote for “don’t let general wages rise faster than inflation.”

  8. Tom_b


    Your understanding of the Fed is close enough for the sake of discussion. Their immediate goal this year will be containing possible inflation. This will involve raising interest rates, which will moderate growth in general and may slow job growth. The Fed is what it is, and I’d say it stops short of being a malevolent force. Having a “Fed-like” body is needed.

    This may or not matter to Trump. His deplorables do not believe in numbers. Trump could say unemployment was 0% and they would believe him; he could say it was 80% and they would believe him.

    That said, it is hard to imagine the economy NOT tanking this year. The market has been growing without a “correction” for sometime. Corrections are a part of the cycle. And this year is a “Year of Living Dangerously”, fraught with exceptional geopolitical and economic uncertainty. I’m holding cash for the time being, until I can discern a market that might actually prosper under the Tangerine Tweeter, other than dead dinosaur industries, such as Exxon (I won’t invest in carbon extractive companies). That is my advice to others, at least through the first half of the year. Be liquid. Fluid. Flexible.

  9. Hugh

    Couple of thoughts:

    While Trump has made some pro-job statements about bringing back jobs to the US, even if he were able to, it would take several years for those factories to be built or rebuilt and supplied with the necessary workers and machinery. Expanding current manufacturing capacity would be faster because much of the infrastructure is already there. Restarting industries that have been decimated would be much more difficult because so much of the expertise has been lost –unless of course you want to rehire aging/retired Boomers and use them to train younger workers.

    And while Trump may be pro-job, he has been anti-higher wages in his Cabinet picks and in his opposition to unions and increasing the minimum wage. I don’t know how this would play into his collision with the Fed. I think if the Fed is serious about raising interest rates, this would put a major crimp in Trump’s public-private partnership infrastructure plans. Personally, I think these PPPs are a scam, but higher interest rates would further reduce the amount of private investment in them.

    At the same time, the Fed has significant constraints. It purposefully created a huge bubble in stocks and stocks are now at stratospheric, totally divorced from reality, levels. An aggressive Fed rates policy would blow up the bubble they created. Having inflated it, they don’t know how to deflate it, but they definitely don’t want to be tarred with the blame for it going splat. Pardon the technical jargon.

    I am not a player, but I do agree with Tom’s strategy of being liquid. Add in the standard Keynesian remark about markets being able to be irrational longer than he could stay solvent.

    I disagree that we need the Fed. My advice is to distrust words like “free” and “independent”: free markets, free trade, an independent Fed. They don’t exist. The question to ask, always, is who is running it and for whose benefit. And if you are in the bottom 80% of the population, the answer always is not yours.

  10. realitychecker

    @ dude

    Maybe the Founders, who still had the fresh experience of the revolution to inform their beliefs, overestimated the willingness of modern Americans to leave their ‘safe spaces’ and kill the people who were ruling them without their consent.

    Even geniuses can be too naive sometimes. I doubt that the Founders could ever have conceived that America would become the pussified travesty we now see.

  11. realitychecker

    Hugh and Tom_b are offering some very cogent wisdom, and should be heeded. Any good market player should be recognizing that we are witnessing a classic crescendo of market emotion right now; when the Trump rally fades, expect a major selling phase.

  12. Ian Welsh

    The market and the economy are only very loosely correlated. The market can be doing great while the economy is shit for most people. I very rarely write about the market, it doesn’t interest me much as such and means little to most people (directly, there are indirect effects, yes.)

    If the economy moves into a recession the Fed’s actions will change, and under such circumstances Trump can wait the time required to gain control normally thru retirement and replacement.

    Another recession always happens, but when isn’t always clear, especially when we’re this deep into funny money land.

  13. atcooper

    A lesson I had to learn the really hard way: smarts untempered by wisdom are very dangerous. The best that can be hoped for with smarts alone is masterbation.

    It’s telling that all the promising, and buzzed-about-tech requires huge amounts of capital outlay.

    Less sinister, and a thought that worries me, is it’s entirely possible all the low hanging fruit of science has been discovered.

    Finally, the rise of Hamilton the musical was a dire sign this election. Without Jefferson we are without the necessary defenses to make this work. It’s no help so many Democratic types dismiss Jefferson outright for having been a slaver. As though people are ever so simple.

    We’ve become too enamoured of abstractions.

  14. Tom

    Trump can fire the Fed Governors except the Chair whenever he wants. Hell simply siccing the DoJ on them will make many drop off to avoid charges. The Governors can’t do their jobs without committing three Felonies a day and if Trump wants them gone, he can have them gone.

  15. Peter

    The savants at the fed know the numbers they used in their decision are questionable at best. They also know nearly exactly how many jobs won’t be created because of their moves. Two small rate hikes might have been a useful nostrum but they are publicly planning to hit the economy with multiple hikes that will kill any modest recovery Trump’s agendas might produce. This is a power play aimed at working people and Trump, the beatings will continue until morale improves.

    Trump will be portrayed as a strongman or authoritarian no matter what he does in response to these attacks. It’s too bad that citizens can’t exert a little direct justice like in the old days when a rail and some tar and feathers were how these enemies of the people were marked.

  16. What Trump will – though He may not succeed – is to take some money from one group for people and handed to another group for people. he and others will take the profit for themselves, So the Federal Reserve and the fiscal policy will be happy with the compromise, but little people will not be.

    The problem is that assume there is a bipolar, when in fact it is tri-polar. and none of the wealthy parties are addressing the main problem: we need to run a new economy, and the outlines of some of this new economy are visible.

    The bottom line is Trump is not going to do anything for anyone other than him and a few of his friends, count on it. your prediction that he will do something wonderful just does not hold water. He is going to give the poor fake money and let the poor spend it, then he will boot the poor from their home. that this happened at the end of the Bush administration should be a warning to people, they should heed the warning. Otherwise, they are going to be sorry.

  17. Richard McGee

    How cognizant is Trump of the fact that delivering on his promises to working Americans is existential? You sure wouldn’t guess it from the makeup of his cabinet, a neoliberal’s austerity dream team.

    He’s got to thread the needle on a lot of actions, and none of them are optional. Besides the Fed and his own cabinet, he has the GOP Congress threatening cuts in Medicare and SS. They want to eliminate overtime pay. These would be violently contractionary on a very quick timeline. We been hovering at the edge of deflation since the last crash, and it wouldn’t take a lot to push the economy over the edge into full depression.

    Trump doesn’t have a Marinner Eccles to whisper in his ear. The closest he has is Bannon, and that’s a slender lifeline indeed.

  18. Webstir


    You said that you “won’t invest in carbon extractive companies.” Picture me giving me you a standing ovation. Seriously commendable. I guess I’m a luddite in the fact that I still prefer to invest solely in income producing property. But I have recently become interested in Al Gore’s investment firm:

    Seems like good slow growth invested responsibly. Anyone else have thoughts?

  19. With all of the crowing about jobs reports in recent months, I thought Ed Dolan’s balanced/unique take was an interesting one to chew on.

  20. Webstir


    You state “none of the wealthy parties are addressing the main problem: we need to run a new economy, and the outlines of some of this new economy are visible.”

    Could you elaborate on this new economy? Does it perchance address the economic paradox of infinite growth in a closed system posed by the 2nd law of thermodynamics?

    Have I been watching to many of Steve Keen’s videos?

    Seriously Mr. Welsh. What’s your take on an economics that begins with the laws of physics rather than the orthodox’s post hoc rationalizing, assuming reality out of existence, and treating the cost of externalities as if the didn’t exist?

  21. highrpm

    Yes, Trump is bad, etc… Trump may well wind up being the most transformative President since Reagan, or even FDR.

    so what if trump’s persona is demagogic? and bullying? as long as he gets the job done and improves living in the nation-state, and the world at large, better for more folks than less. and if his rough-edged governing style pushes his moves beyond democratic limits, is not that case dealt with by congress and impeachment?

    how demoagogic is the hollywood-state when their citizen/actors use their celebrity-conferred-authority as a bully pulpit to market personal politics? corporations should be required in their by-laws to define a market/ product-specific mission/ reason for existence and not be permitted by law to advertise politics/ nation-state values in their corporate advertising.

    how accurately does google’s “do no evil” mission statement convey the markets they play in or the products they produce? givemeabreak. the damned thing conveys values. one would expect that kind of mission statement from a religious organization.

  22. highrpm

    we’ll really only know trump’s legacy near the end of his term. so at least we as citizens should turn down level of push back and give the guy some freedom of personal style of execution.

    obama comes to mind. the country embraced him at his entrance and allow him much slack over the course of his rule. and hollywood embraced him more than criticizing him?

    and what’s obama’s legacy? how much better worse is the state of the nation-state? and the world at large for america’s foreign forays? the repub’s would have likely passed their relaxing of congressional ethics standards had not trump’s admin been taking an active interest and knew what dials to turn and buttons to push to make paul ryan and his memes retract.

  23. Webstir:

    The 2nd law does not apply to world economy:

    1. Sunlight come in (eg the world is not closed)
    2. We do not use even 1/1000 of the available energy (ie energy != money)

    please read some physics books – and stop wanking off, it is distressing.

  24. Carla

    “but the Federal Reserve needs to be broken to the will of government, and thus to democracy.”

    What democracy, Ian? There is no democracy here.

  25. atcooper

    I regret stirring the martial pot before. Usually the smugness I see other vets do that with stays my voice. We be better off as a mostly civilian military again. It’d help stave off the Rambo dreams.

  26. atcooper

    Forgive the Stallone reference. I just recently saw First Blood. Surprisingly subversive.

  27. hahahahohohoandacoupleofteeheehees

    LOLOLOL! Rick Wilson and the CIA just got epicly trolled by 4Chan! This nation is run by fucking CLOWNS.

  28. Webstir


    First: Must you be so snarky? It was an honest question. Are you on here to prove your intellectual prowess through cheeky banter, or to engage in discussion?

    Second: Yes, in fact, it is a closed system. The energy released by the sun and taken in by the earth is a closed system. There is no more. And yes, yes, I know. You will say, “But the scale of time to use all the suns energy renders the point moot.” And by admitting this, you prove my point. Point being, until we are able to entirely power our economy through renewable energy, our economics is flawed. We are betting on the come.

    Third: Even if we were able to power our entire economy on solar, your reductive argument still fails. What of other necessary resources, such as clean water? Rare earth metals? Do our current economic models even attempt to price in the externalized costs of completely running out of said resources? The civil strife that follows when markets can’t price the violence that is inherent when market pricing no longer matters, but the resources are secured by force?

    Fourth: I’m positive you must have put more thought into the matter than Keen, Jaffe, Nordhaus, Daly, Costanza and Ostrom to name a few. So, I guess I’ll just listen you alone on the subject because they’re all just wanking off … and you’re distressed.

    And btw … you never did address my original question, which I was asking in complete honesty. Could you please elaborate on the outlines of the new economy you were talking about?

    Thank you. Much appreciated.

  29. Red

    The last thing the emperor gives is to you 🙂

  30. Red

    Be strong Ian

  31. witters

    Sterling, stop it yourself and do some research. Start here:

  32. Lisa

    The unemployment rate is massively understated. Starting with Thatcher it kept being ‘redefined’ to make it lower, other countries thought this was great idea and copied it…..

    Here in Australia our ‘official’ unemployment rate is about 6%, but if you go through the ABS stats carefully it is really (at least) 12% and maybe 15%. If you add in all the those of working age who have left Australia you get close to 20%….

    One little trick they did here in Oz was to redefine many as ‘disabled’ (they are trying to reverse that as it became too expensive) … Another is that if you don’t apply for X (forgot the number might be 5 or 10) jobs ..per week … then you are not counted as unemployed.

    There are not many western countries where it is not at least 10+% and more probably 15+%.

  33. You are right. There is a big difference between cost-push inflation and monetary inflation. Interest rates are a tool for managing the latter (though they have not always been effective in doing that either (late 80’s for example)).

    Back in the 70’s we had stagflation. Now we have staggration. Managing your borders is the best way to reduce un- (and under-) employment.

  34. Hugh

    highrpm, politicians should never be given the benefit of the doubt or elbow room. They either have a plan or they don’t. They either have a schedule or they don’t. They either lay out the obstacles or they don’t. Our job is to hold them accountable, not justify them. That way leads to nuttery like eleven dimensional chess and all kinds of woudacoudashoudas.

    Lisa, the International Labour Organisation (ILO) definition of unemployment is 1) 16 or older, 2) out of work, 3) want a job, and 4) have looked for a job in the last 4 weeks. This is also the one used by the Bureau of Labor Statistics in the US. It is an active job seeker model. It does not correspond to the modern reality where in many areas there simply are no jobs and so, unsurprisingly, many give up looking for what isn’t there. These people in today’s Orwellian speak are described as having chosen or decided to leave the labor force, –like they had some option or say in the matter. I prefer a definition like without a job but would work if jobs were available. It’s actually not that much harder to calculate a number for this group. You can look back at participation rates in past expansions and introduce corrective factors, such as one for Boomer retirements. I did this once (but not lately) and found that the effect of such retirements on the participation rate was about 0.03% a month or about 1% every 3 years looking from 2011, when Boomers started turning 65, forward. For example, I used a 67% participation rate from the Clinton expansion as a base, decreased it by the number of months past January 2011 x 0.03% and then subtracted whatever the current month’s participation rate was, and then multiplied it by the civilian noninstitutional population (the potential labor force). This gave me what I used to call the BLS undercount. Add this to their unemployed and this gave a better idea of the true number of unemployed who would work if jobs were available. I sort of lost interest in this measure as I became more concerned by the crap nature of jobs being created. Being employed is no prize if you are in some deadend job with bad pay and no benefits.

  35. Hugh

    John Poynton, as the majority of illegal immigrants to the US are those who enter legally but overstay their visas, managing the borders, or building a wall is mostly pointless. It would be much more effective to simply prohibitively fine direct employers as well as those using subcontractors who hire illegal immigrants. It’s not like it’s a state secret which industries are filled with such hires, nor that the President-elect was heavily involved in two of these, construction and accommodation (hotels/resorts). The hypocrisy of our ruling classes is that while they rail against illegal immigration for the benefit of the rubes, they and the rich benefit too much from it to do anything substantive about it.

    It’s not that I don’t agree that managing immigration is one element of a jobs/wages plan. Other parts would be punishing companies which offshore jobs, a more accommodative Fed rates policy (that is one which did not try to suppress wage growth), incentives for job creating investment and punishing investment that did not create jobs, encouraging unions and movement to a living wage standard, as well as a federal jobs guarantee with meaningful work starting at a living wage, and finally manage your population so the whole process is sustainable.

  36. BlizzardOfOz


    You’ve surpassed the bounds of what science has shown (imagine my surprise on discovering that this Steve Keen is not a scientist).

    The law of entropy applies to systems of inorganic matter. Organic things (life), you may observe, are those which order and shape inorganic matter. If you exclude them from an experiment, it shouldn’t be surprising that disorder will increase. There’s no basis to claim that it will necessarily increase for the universe as a whole.

    The proper analogy to human society is as follows. Just as once life leaves a body, it begins decomposition; so once statecraft ceases to shape (or becomes no longer capable of shaping) human society, it begins to dissolve. The advent of which you might fix on the French Revolution, in which the state was conceived as somehow emerging from society’s human atoms, rather than as being responsible for a top-down ordering of them.

    Anyway the basis for our society’s revival surely is not to be found in esoteric doctrines of the academic priesthood. Religion is the only known force that can hold society together. As Ian used to say, we need a “new religion”, or (more likely from my point of view) a new commitment to the old one.

  37. atcooper

    I keep wondering what happened to the meditative forms of the west. Without it, I’d much rather Ian’s right regarding Buddhism.

  38. dude

    .”…As Ian used to say, we need a “new religion”, or (more likely from my point of view) a new commitment to the old one.”

    Ooooo, when did Ian say that?

    I must have missed that class. It does sound interesting. Really. Which post (or series)?

  39. realitychecker

    Our new religion ought to be Kill Every Proven Public Liar, Then We’ll Talk.

    How can any civilized society function when we are all marinated in deliberate lies?

    Answer: It can’t.

  40. atcooper


    This stuff is a decent start. Be sure to consider books before the internet. Lots of woo in the digital ether.

  41. atcooper

    Ok, there’s answers to my own questions. Cultivation and meditative practice (I’m probably conflating things due to misunderstanding) still exist in western forms. Repetitive prayer as exists in Catholicism is a form of mantra meditation.

  42. Webstir


    Yes, I understand Keen is not a “scientist” in the strict sense of the word. My point was that he is one of a handful economists who are willing to acknowledge that mainstream economics is far from “science,” and thus, is seeking to change that fact by integrating it into his work. That, in my mind, is the type of new economic thinking that I was questioning Stirling about above, and the only road to establishing a legitimate economic theory.

  43. Webstir


    The latest issue of the Baffler has some interesting takes on truth, propaganda, and lies. Here’s one I read this morning:

    And one I’ve yet to get to:

    The former makes a strong point, in that:
    “Post-truth demands us to be better but fails to account for the structures that wear us down. Post-truth is not a call to arms, it is a disarmament, a failure to recognize and counteract the fusillade of information that truth is and always has been subjected to.”

    I admit to feeling the need to escape into cynicism because it seems so hard these days to discern the real from the false narrative. I guess that may be the burden of trying to stay informed. But bearing in mind the aforementioned quote, I guess I would have to add that our new religion should be “Kill every institution that allows the liars to disseminate the lies.” That, and “Never Trust an Ivy League’er,” because invariably, they are the ones that have their hands all over the institutions disseminate the lies.

  44. dude


    Thank you

  45. realitychecker

    @ Webstir

    So, I read both those links, despite never having heard of either author or the blog that published them.

    My takeaway: Keep it simple, stupid.

    When we agree to get involved in hyper-intellectualized discussions like those laid out in both pieces, the liars win. IMO, the liars have been winning for too long, and with too much success and too little consequence.

    Let’s deliver some harsh consequences to the worst and most obvious of these immediately, then see whether the effort yields any useful educational value to the remaining liar wannabes.

    That’s the most efficient way, and likely the most effective way, to address this massive problem that is absolutely destroying our society.

    I AM A BIG FAN OF EFFICIENT, AND ALSO A BIG FAN OF EFFECTIVE. (ha, damn caps key again, why did they put it next to the ‘a’?, but I like it so I’ll leave it lol)

    OTOH, I am very jealous of all the energy and focus that get wasted by having to wade through the hyper-intellectualized ramblings of every writer who wants to impress with his ‘genius’ by requiring the reader to wade through whatever self-impressed ramblings they can conjure up.

    Some things are simple enough to be addressed directly and simply. My not-so-humble opinion. 🙂

  46. tsisageya

    The continued collision between Trump and Goldman Sachs. For example. Which world are you living in again?

  47. tsisageya

    It could be that we don’t disagree. I’m just not sure.

  48. Webstir

    The Baffler has been around awhile, but then went under. Thomas Frank revived it in 2009, and he has since left the scene and Chris Lehman is now the Editor in Chief. If you have the time (which I rarely do) it is generally some of the most incisive long form journalism out there. And so yes, I largely agree, the first story could have been boiled down to the part I quoted. When the “intellectuals” get to showing off their chops, nothing substantive usually comes from it.

  49. Peter


    I read at wiki that homeowners extracted $5 trillion from this bubble before the collapse, they also listed the cost for Wall Street at about $5 trillion. Wall Street got loans and the fed bought up a lot of mortgage paper some worthless some not.

  50. Some Guy

    I’m coming to this late, but for the record, I agree with your take here Ian in that I have also been seeing signs since we last discussed this that the Fed is planning to confront Trump relatively directly.

    It is possible I gave them too much credit for understanding that any major increase in interest rates right now could blow up in their face in spectacular ways – this sort of thing (raising rates to get rid of a government that’s not following orders) could work in the 1990’s and earlier, but not now. I guess we’ll see how far they are willing to go.

  51. Webstir


    Well this is timely —

    “In my book The Reformation in Economics I take the position that modern economics is more similar to phrenology than it is to, say, physics. This is not at all surprising as it grew up in the same era and out of remarkably similar ideas. But what is surprising is that this is not widely noticed today. What is most tragic, however, is that there is much in economics that can and should be salvaged. While these positive aspects of economics probably do not deserve the title of ‘science’ they at least provide us with a rational toolkit that can be used to improve political and economic governance in our societies.”

    You say economy, I say phrenology, let’s call the whole thing off 😉

    Love to hear your take on this Ian.

  52. different clue


    Philip Pilkington is a hardy perennial at NaCap. He is one of their favorite sometime guest posters. I think he is mistaking the particular economics he is criticizing for economics in general. It is a confusion which mainstream official Establishment Economists work hard to foster.

    The physics-based study of economics you wish for was attempted decades ago by Noble Prize Winning nuclear chemist Frederic Soddy. He tried to imagine an economic analysis grounded in physical reality as he understood it to be. Among other things, he wrote a book called Wealth, Virtual Wealth and Debt: The Solution of the Economic Paradox. I read it years ago and feel it is worth attempting to understand. I will try reading it again at some point. The book contains a page or so of anti-semitic blather which contributes nothing useful to the book and without which the book would be just as entirely useful on its own as it still is anyway. I sometimes wonder if Soddy’s anglo-upscale lifted-pinkie antisemitism leads to Soddy getting dismissed otherwise. Here is a link to Frederick Soddy.

    I wonder if Tony Wikrent ever reads NaCap. If he does, I wonder if he would want to read this particular Pilkington post? I doubt Pilkington has ever heard of Henry Carey, nor will any of his readers if it is left up to Pilkington. I wonder if Mr. Wikrent might want to go on over there to NaCap and leave a comment describing all kinds of useful approaches to economics which NaCap’s readers deserve to know about and will never hear about from Pilkington.

    As to Stirling Newberry’s supercilious nastiness . . . . I would note that he never did respond to my question about why he said the Cambodians had a choice about whether to get bombed or not during the Nixon Administration.

  53. Webstir

    @different clue
    Thanks for the info. I’ll check it out. I’m always interested in increasing my jack of all trades master of none knowledge base.

    And, while I’m far from educated enough on the subject to be able to judge whether it’s even possible to establish an economics based in the physical sciences, I keep hammering away on the idea because I am smart enough to see the untenable conclusions one must reach if mainstream economic thought is followed to it’s logical conclusions.

    As to Sterling: It doesn’t seem to matter where you go in the blogosphere, there will always be at least one smart-ass keyboard cowboy nurturing an inferiority complex.

    Again, thanks for the link. And your civility.

  54. different clue


    If you are living in Montana semi-near Idaho, have you already heard about a kind of corn called Painted Mountain corn? If so, the rest of this comment is needless for you. If not, you might find it an interesting part of a home foodgrowing program. Here is a link to a source. There are many sources, but I offered this link because it also offers some interesting articles on some of its own clicky-words. Here is the link:

    Here is an article about the breeder who developed Painted Mountain corn and why he diddit and what he developed it to be . . . and to be for. Here is the link.

    I know this is a change of subject but your mentioning Montana and Idaho brought it to mind.

  55. Webstir

    @different clue:

    Yes, I’ve heard of them. But I’ve only heard snippets of the back-story so I’ll check it out. This is a bit more up my wife’s alley, as she’s daily becoming more “get to basics” in both food supply and preparation , for example, she has her own kombucha culture.

    Right now, we still live on a tiny section of land that unfortunately doesn’t get great sun and so truly raising our own food is still difficult. However, as Ian alluded to in his talk, we’re working hard to assemble the capital to begin buying land locally and “escaping” into a much more sustainable and autonomous lifestyle. While I certainly don’t ascribe to all of the JH Kunstler/Archdruid et al. thinking, I do agree with them in that, when sucker goes down, it’s going fast and hard. Pray for the best, plan for the worst, you know.

    What’s your experience in this realm?

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