Linking ≠ endorsement.
⇧ mainly macro: Personal annotations on our statement
Jeremy Corbyn however seemed to suggest that when these warnings were repeated by the Chancellor they should not be believed because he could not be trusted.
However, reading the article cited by Simon leads me to question whether Simon is correctly and fully reading Jeremy. Corbyn said:
“The biggest risk of recession in this country is from a Conservative government that is failing on the deficit and the debt and failing to rebalance the economy and failing to boost productivity.”
I take that as saying that even in the face of leaving, Osborne was deflecting from what actually matters more and that the UK could implement new economic and financial policies and programs, such as banking and monetary reforms along a much more decidedly democratic/progressive line, that would possibly counter the negatives of leaving the anti-democratic EU.
Is he sufficiently well-versed concerning modern monetary theory? No. He has made progress though, as demonstrated by openly discussing in a positive manner, monetary financing of governmental spending.
He said he would also push for the EU to meet challenges posted by migration, end pressure to privatise public services, democratise its institutions and push for other reforms “to ensure we generate prosperity across Europe to the benefit of all”.
There you see him being completely clear that he would rather stay and work to democratize the EU from within.
It seems very clear to me that democracy is the most important thing in Jeremy’s mind (rightly so).
“Democracy,” Simon. Repeat it daily three times as an antidote.
⇧ West Virginia’s Greenbrier Resort Begins Recovery from Floods, Shelters Victims
Emotionally, this is hard reading.
I read plenty of things that are hard. You’d think I’d be numb by now, but no.
Dating back to 1778, the 700-room resort with an iconic white facade has long been one of the jewels of West Virginia’s tourism industry ….
⇧ Introducing: The BiggerPockets BRRRR Calculator!
So, what goes through your mind when reading this?
Is it about how to get all the numbers to plug in? There are readily available articles on that. Plus, the article suggests the calculator will help you with it.
Is it about how accurate and thorough the results are?
What about where the numbers reside and who else has access to them? Did you not think about that?
Frankly, I doubt seriously that Brandon or Bigger Pockets would deliberately leak it or jump in front of you. Nevertheless, good risk-management dictates that you do your due diligence concerning the who, what, where, when, and why of exposing your numbers.
If you’re just toying with numbers and giving your best guess on them for a property and not entering the address, that’s one thing. If, on the other hand, you’ve done a great deal of work to gather hard numbers and you plug in the address, should you know where the data will be stored and about security and access, etc.?
Now, if you inquire of Bigger Pockets concerning this, please approach them in a professional manner.
Don’t forget all the places you may already be storing sensitive proprietary information: the cloud and on and on. You have to trust people if you’re ever going to get anywhere in our system. There is, however, zero reason not to ask intelligent risk-management questions. Anyone who is offended at being asked such questions may well be too risky to trust with your hard-won data.
If you tell Bigger Pockets that this insurance broker said all of this on the Internet, they should not be the least bit offended but rather take the golden opportunity to explain their privacy and security measures. In fact, they may already have that info on their site as part of their registration/membership process.
⇧ The Macroeconomics of Brexit: Motivated Reasoning? – The New York Times
So, here’s Paul Krugman coming out of retirement, I mean his vacation, to conjure up the uncertainty fairy.
Look, of course the doomsayers have overstated things. But there really is uncertainty in decision-makers’ minds, not all of them but certainly the majority of them.
The markets dropped hard and rebounded hard, but nothing is settled, not even close.
Pooh-poohing the behavioral psychology of all of this makes no sense to me. It would be vastly wiser and, frankly, less sloppy to focus upon what’s really wrong and to offer solutions rather than just chastise fellow technocrats without offering real solutions.
The whole issue isn’t just economics, per se. It’s political. Look at the reactions in the EU leadership. Who can predict how the Conservative and Labour parties will react?
The situation is volatile to the point where “Ricardo with a dash of new trade theory” just isn’t going to cover it.
There’s political contagion. Things aren’t headed toward settling down but the opposite, unless cooler heads are heard and followed, heads with minds on more than technocratic economics. Just look at what’s been happening concerning Turkey. That’s just one country. You can’t sort the economic from the political on that one because they are ultimately one and the same, something the economic technocrats just don’t seem to get or don’t want to.
It’s NOT the economy. It’s the ideology, stupid.
Wake up, and smell the democracy.
⇧ This private equity giant wants to give landlords millions — here’s how
Clever move by Blackstone:
However, the one risk to the market, noted Cecala, is that if this product is so successful, other lenders will come in to compete.
“The question is, will others then start pushing the envelope?”
⇧ House Republicans Unveil Tax Reform Plan
The plan represents unsound economics. It’s basically the same old tried and failed trickled-down plan.
We are facing a global slowdown that holds back the US. What we still really need is stimulative spending by the public sector.
Could we have tax cuts and stimulative spending? Yes, but it would require higher deficits if we weren’t willing to finance the new spending via debt-free money (money created without issuing bonds). The Republicans don’t savvy that.
They see the hyper-inflation bogyman behind all spending. At least that’s what they want you to think.
If the spending were strictly on sustainable productivity at the proper level, there would be no hyper-inflation. You could even manage to have zero inflation with solid growth. The spending would simply have to be targeted first at raw materials to avoid source constraints that would drive up prices. It’s a mathematical/scientific question. That’s all.
Robots will be driving our cars and trucks very soon. Yes, there was a death due possibly to someone not following the manufacturers guidelines to always keep your hands on the wheel and be ready to take over (like braking when cruise control is on, which has been available for decades). Computers should be set to drive our governmental-spending and funding/money-creation calculations too. We transparently/democratically choose what we want. The computers work out the mechanical planning.
⇧ Want to Be Smart With Your Rental Property? 4 Tax Basics You Need to Know | Inc.com
Rental property may be part of your portfolio for passive income and growth of your net worth. If so, you need to be smart about the tax rules. Properly reporting rental income and expenses on your tax return is key.
Here are the basics to get you started ….
⇧ Tips For Financing An Investment Property – Cincinnati and Northern Kentucky Real Estate
If you are buying multi-family units like duplex, triplex, or four family residential buildings then the GSEs have a 25% down payment requirement. Any building more than four family (also known as units) generally do not qualify for residential mortgages and instead you will have to look into commercial loan products for financing those types of buildings.
One way around the 25% down payment requirement for 2-4 multi-family buildings is by purchasing the property as an owner who will also live in one of the units (referred to as owner occupied) while renting out the other units. So long as you plan on living in one of the units then traditional mortgage options open up to you and your down payment requirements will be lower than 25%. Keep in mind though down payments of less than 20% may require the payment of some sort of PMI or other types of mortgage insurance. Certain loans offered by FHA and VA can be used for owner occupied multi-family purchase up to 4 units and those FHA and VA mortgages can go as low as 0% down. There are still insurance requirements or funding fees for FHA and VA loans than you need to consider since they are required when you purchase any type of qualified home with them.
⇧ Today’s Renters Really Are Worse Off Than Their Parents – Real Time Economics – WSJ
Inflation-adjusted rents have risen by 64% since 1960, but real household incomes only increased by 18% during that same time period, according to an analysis of U.S. Census data ….
Remarks by George Soros
European Parliament, Brussels. 30 June, 2016.
What the EU should not do is penalize British voters while ignoring their legitimate concerns about the deficiencies of the European Union.
European leaders should recognize their own mistakes and acknowledge the democratic deficit in the current institutional arrangements. Rather than seeing Brexit as the negotiation of a divorce, they should seize it as an opportunity to fundamentally reinvent the EU so that the UK and others at risk of exit would want to join.
The Eurozone has been lagging in the global recovery because of restrictive fiscal policies; now it has to contend with an impending slowdown. The orthodoxy of German policymakers stands in the way of the only effective response: having a Eurozone budget that could adopt counter-cyclical policies.
… As I said before, it is the height of irresponsibility to allow the EU to disintegrate without utilizing all its resources. Throughout history, governments have issued bonds in response to national emergencies. When should the triple-A credit of the EU be put to use if not at a moment when the European Union is in mortal danger?
I’m glad to see George Soros use the term “democracy.” Unfortunately, he only mentioned it once. The rest of his speech/talk was dedicated to technocratic solutions with the possible exception of an EU Marshall Plan for Africa.
However, I strongly disagree with George’s negative attitude toward Russia and with George’s glossing over Ukraine’s very serious, anti-democratic tendencies and its neoliberal bent.
⇧ B.C. puts end to real estate self-regulation – The Globe and Mail
Wow? Decisive and necessary, albeit late:
B.C. Premier Christy Clark has put the province’s real-estate industry under government oversight, declaring the industry’s self-regulating body has failed to protect the public from cut-throat and illegal practices and has lost the public’s confidence in its ability to police itself.
Some economic institutions are still in the process of revising UK’s GDP forecasts, but the downtrend trend is clear. Simon Kirby, Head of Forecasting at NIESR, suggests an impact on GDP in the range of -2.2% to -6.3% in the long-run: “Heightened uncertainty and risk aversion will likely persist in the UK and Europe in the interim, and probably beyond. … It may be years before the full impact can be analyzed, but market volatility is very likely to remain high going forward and a prolonged political vacuum will only add to the uncertainty, all of which will weigh on the currency and the investment outlook.
That was before markets rebounded. However, the huge swings up and down are people panic selling and tactically selling and then buying back in low as rapidly as possible. There’s no long-term trend there. It’s just a typical short-term pattern written a bit larger than usual. If it’s confidence boosting for you, may I suggest you should be more realistic and lower your expectations?
⇧ What Does A Progressive Economist Say About Brexit? (W/ Guest: Prof. Steve Keen) – YouTube
To progressives & US liberals out there who were against Brexit, try democracy rather than neoliberal technocracy.
Thom talks to Prof. Steve Keen of Kingston University, London, about why Brexit is a response to failed neoliberal policies and why that could be good for all of us.
Add your comment. Including the article/link number will help.
This would be comical were it not so sad.
The Marxism Xi supports is the anti-democratic part. The Marxism that’s anti-capitalists is something Xi doesn’t want to discuss because that would interfere with his authoritarian dictatorship.
Hey, Xi, who elected you? The Chinese People didn’t. Who gave you the right to boss all of them around? You do not govern with the consent of the People but by threatening the People with violence and death if they attempt to remove you and democratically choose real leadership that would serve the People as part of them, not lord it over them.
You’re an elitist. You do not have the Chinese People’s best interest at heart. The sooner you’re removed, the better.
People are sending their money out of China as quickly as they can. They want to move out too because of, among other things, the disgusting levels of pollution your Chinese Communist Party caused to come into existence.
You created an unsustainable bubble economy that you don’t even understand at its most fundamental level. Your debt stimulus is working less and less and less and only postponing the day of economic judgment.
You and your corrupt, selfish, deceptive system is destined to fall. The sooner that happens, the better for the Chinese People.
Democracy is what China needs, not you or your immoral party.
⇧ Anaheim’s short-term rental properties to be shut down | abc7.com
Who would police the noise issues if the ban were not put in place?
⇧ Real estate notebook: Aeon’s latest deals preserve workforce housing – StarTribune.com
Ever thought about starting a nonprofit to buy and rehab rentals? If you’re not out to become rich, you could still be paid a solid salary by your non-profit.
Aeon is one of the biggest nonprofit housing owners, developers and managers in the Twin Cities. It owns and/or manages 40 properties throughout the metro area.
⇧ This economist thinks China is headed for a 1929-style depression – MarketWatch
Andy Xie isn’t known for tepid opinions.
The provocative Xie, who was a top economist at the World Bank and Morgan Stanley, found notoriety a decade ago when he left the Wall Street bank after a controversial internal report went public. Today, he is among the loudest voices warning of an inevitable implosion in China, the world’s second-largest economy.
Xie, meanwhile, says he is doubtful of the Communist’s Party’s ability to manage and grow China’s economy — but believes that, if they become more hands-off, the country could become the world’s leading economic force. At the core of Xie’s concerns about China is the contention that the government is doing more harm than good.
“If government takes a step back instead of dominating the economy so much, China can be twice as big as the U.S. in 20 years,” he said.
That’s where he’s wrong. He’s making the capitalist error of thinking that without democracy, capitalism can take care of things. Democracy must come first. Whatever capitalism is allowed must be decided 100% by the complete democratic will of the People. It’s the only way capitalism can even be considered.
Frankly, I don’t think capitalism survives but democracy does. How long it will take is a question I can’t answer. I just believe that eventually, humanity will arrive at the democratic consensus that we take care of family members as equals and that all humans are members of that one family.
⇧ Nonresidential Construction Spending Stalls in May, Falls to Lowest Level in 2016
“… The data are consistent with the notion that economic actors have become more cautious over the past year, perhaps delaying projects. This hesitation may be due to a number of factors, including concerns regarding overbuilding and the 2016 election cycle.
“Weakness in the nation’s energy sector has certainly contributed to this state of affairs, but the lack of nonresidential construction spending growth is not fully explained by low oil and natural gas prices,” concluded Basu. “A lack of aggressive public sector spending is also contributing to the industry’s recent malaise and the outlook for 2017 and 2018 remains decidedly murky.”
⇧ U.S. top one percent of income earners hit new high in 2015 amid strong economic growth – Equitable Growth
Such growing inequality is a policy decision and really, really bad for the overall health of the economy, is not sustainable, and sets things up for major domestic disturbances, even violence. It’s needless and just plain stupid.
The latest data from the IRS suggests the 2013 reforms proved to be fleeting in terms of reducing income inequality. There was a dip in pre-tax income earned by the top one percent in 2013, yet by 2015 top incomes are once again on the rise—following a pattern of growing income inequality stretching back to the 1970s.
⇧ Finally, relief for apartment dwellers as rent hikes ease
Rent growth was positive in 49 of the nation’s 50 largest housing markets. Only Houston came in negative, owing to energy industry job losses there and excess construction. On the flip side, Sacramento, California, had the highest rent growth at just more than 10 percent annually. No. 2 was Seattle at nearly 8 percent. Phoenix, Portland, Oregon, Riverside, California, and Fort Worth, Texas, rounded out the top six.
“Because of the widening gap between market-rate rents and the amounts many households can afford at the 30-percent-of-income standard, the number of cost-burdened renters hit 21.3 million in 2014,” noted researchers at Harvard’s Joint Center for Housing Studies in a report released last week. “Even worse, 11.4 million of these households paid more than half their incomes for housing, a record high.”
Another study from the MacArthur Foundation found 4 out of 5 Americans today continue to believe that housing affordability is a problem. Less than one-third said they believe the housing crisis is over.
⇧ Connecticut AG Says 4 Insurers Agree to Financing Fix for Crumbling Concrete Foundations
Officials have traced the problem to concrete mix from a quarry in Willington that may contain high levels of pyrrhotite ….
May? I don’t understand how they can’t say for sure one way or the other.
⇧ Markets and states are complements — The Irish Economy
Hat tip to Mark Thoma for the link.
If the Tories had really wanted to maintain support for the EU, investment in public services and public housing would have been the way to do it: if these had been elastically supplied, that would have muted the impression that there was a zero-sum competition between natives and immigrants. It wouldn’t have satisfied the xenophobes, but not all anti-immigrant voters are xenophobes. But of course the Tories were never going to do that, at least not with Osborne at the helm.
⇧ Brexit and the Derivatives Time Bomb | WEB OF DEBT BLOG
All else having failed, it may be time to do what should have been done all along: convert “sovereign debt” into “sovereign money.” The “event of default” triggering a derivatives meltdown can be avoided by simply paying the debts with money issued by the government.
A government oppressed by “sovereign” debt is not really sovereign. A sovereign government has the power to issue money and need not go into debt at all. But EU member governments have lost that sovereign power. They are unable to issue their own money or borrow money issued by their own central banks. If they leave the EU, they can get that power back for future expenditures; but their existing debt is in euros, and only the ECB has the power to convert bonds into euros.
In fact that is what it does when it buys government bonds with QE. The problem with QE as currently practiced is that the bonds remain on the central bank’s books, “sterilizing” their effect on the market. The idea is to be able to sell them back into the market should inflation become a problem. But that means the bonds are still counted as debt for purposes of balancing national budgets, forcing continued austerity, cutbacks and privatization. If the bonds were bought back and voided out, national governments would be free to spend again. QE doesn’t need to be unwound by selling bonds into the market. If the money supply grows too large, money can be pulled back with taxes, interest or fees.
The invariable objection to paying off the debt with central bank-issued money is that it would lead to hyperinflation. But would it? Government bonds are already classified as “near money” — so liquid that they are readily exchangeable for cash. Turning them into cash is little different from moving money from your savings account to your checking account. One draws interest and the other doesn’t, but cashing out the savings account doesn’t make you any richer than before. It doesn’t propel you to spend more on go ods and services, driving consumer prices up.
If people and governments were incentivized to spend more, however, that would actually be a good thing.
That’s the argument I made years and years ago in an extremely long discussion in a closed LinkedIn group on Monetary and Banking Reform. Ellen was an active member of that discussion and seemed to be the only one who quite grasped what I was proposing. She was somewhat versed in Money Modern Theory, as was I.
I held with fractional-reserve banking concerning the US, while Ellen appeared to dispense with it entirely.
Later, it turned out that the distinction made by MMT concerns only whether the Fed will supply the liquidity to meet the required reserves. As for me, that made it clear that the argument was moot and that MMTers were applying overkill against the libertarians backing the Chicago Plan.
I was hated from all directions because I employed aspects of the Chicago Plan, MMT, and Ellen’s Public Banking work, albeit all with my own, what I think are, enhancements, which I spelled out but which were not warmly received, especially by the libertarians and gold bugs, because my enhancements were decidedly extremely progressive, the most I’ve ever heard of in fact. Ellen is decidedly progressive but is very diplomatic (she’s a very nice person, very polite, but strong and persistent in her convictions) and retains the ears of libertarians more than do I.
That group wasn’t hearing me and was quite hostile at times and finally turned to blocking my commentary that I simply left for greener pastures. I turned to the Modern Money Theory group, where I was met with as much or more hostility, so much so that I wasn’t really allowed to even finish fleshing out arguments. I was told that I wouldn’t be read and that others wouldn’t continue engaging in any discussions.
Oh well, life goes on and there are always new venues that open up.
Much of what I was advocating has started to seep into the mainstream. One day, I fully expect to be completely vindicated.
⇧ Global Bond Market Surges Most Since 2008 as Growth Outlook Dims – Bloomberg
… vote to leave the European Union isn’t seen having fallout as severe as the 2008 financial crisis, but you wouldn’t know it from the rush to safety in the global market for sovereign debt.
I agree that this is no Lehman moment (though it remains to be seen how the global “leadership” will handle things), but many people aren’t taking unnecessary chances.
⇧ Transmission channels of monetary policy in the current environment
To make a very long story short, negative rates are not stupid, are causing banks to lend, and won’t crush the banks.
Mistakes in the speech:
“… establish an orderly process that governs the path towards a new post-referendum steady state ….” There’s no such thing.
“… the banking sector to act as a bridge between present and future spending decisions by intermediating between savers and borrowers ….” Credit creation is not dependent upon savers, especially in an extremely low required-reserves situation.
Transmission channels of monetary policy in the current environment
Speech by Peter Praet, Member of the Executive Board of the ECB,
at the Financial Times Festival of Finance,
London, 1 July 2016
⇧ The U.S. Now Ranks 19th in ‘Social Progress,’ With Finland and Canada Topping the List – Real Time Economics – WSJ
This is embarrassing, and it’s 100% a public-policy choice.
Across a number of such “non-economic” measures, the U.S. fares particularly poorly for a rich nation, according to the index, because of its high obesity rate, high homicide rate, high level of traffic fatalities and unequal access to higher education.
U.S. citizens “are getting a pretty raw deal when it comes to translating the country’s wealth into social progress,” said Michael Green, executive director of the Social Progress Imperative, which produces the index.
If we had a real democracy, the People could choose to be #1 and make that happen. We could not only be #1, but we could double and triple the social progress of Finland and Canada and do so relatively easily. Of course, nothing need hold other nations back either.
⇧ City hall proposal aims to clean up problem properties – News – The State Journal-Register – Springfield, IL
Persistent issues with overgrown weeds, garbage in the yard or broken gutters at properties across the city have prompted a proposed ordinance change that the Springfield City Council could vote on Tuesday. The change would allow the city to issue a fine for a minor code violation, even if the problem has been taken care of, if the property has had three or more code violations in the last two years.
⇧ Family scammed by ex-real estate agent who climbed through window to sell vacant house that wasn’t his, police say | cleveland.com
Matthew Boros, 44, of Strongsville is charged with a fifth-degree felony count of theft by deception. The former real estate agent climbed through a window of the house and posed as the owner in order to scam the family out of more than $5,000, investigators said.
Yost and Houston worked with the actual real estate company which sold them the house with a reduced down payment. They signed the deal on Wednesday.
Yes, there’s a presumption of innocence; but, if he’s found guilty, how in the world did he think he could get away with it? What was he thinking, “Please catch me and send me to jail”?
⇧ Uncertainty, the economy and policy – speech by Mark Carney, Governor of the Bank of England
So, this speech is to instill, in the elitists first and the People second, the idea that there is a steady, regulatory, capitalistic-oriented hand on the rudder of the Bank of England. It is also to provide massive forward guidance that easing will be forthcoming so that less easing will be required than would be the case without the guidance (further calming effect).
In his speech, Mark Carney stated the independence of the Bank. In answering the first question posed, he stated that the Bank, etc., is a “professional, technocratic institution.”
You’ll notice that he mentioned the general level of sophistication has gone up. Transparency expectations have gone up.
Please note that the willingness to be transparent does not extend to sharing data, upon which decisions by the Bank are made, in real time with the general public. He did not, in my view, offer any reason for not sharing that data in real time other than that he believes the People are (or should remain?) too unsophisticated to be trusted with that raw data before the Bank speaks to it publicly via a polished statement.
I believe he said “technocratic” twice and did so both times to suggest that that’s a good thing.
I do not agree with his anti-democratic approach.
Mark Carney, Governor of the Bank of England, identifies three types of uncertainty that influence economic performance: geopolitical, economic and policy uncertainty.
He describes the steps the Bank has taken to address this uncertainty, and how we can be expected to act in the weeks and months ahead.
Add your comment. Including the article/link number will help.
⇧ George Magnus: Round the world economy | FT World – YouTube
George is prone to saying positive things about China. There just haven’t been any. I think he has China wrong anyway. Otherwise, his comments seem quite reasonable.
Economist George Magnus and the FT’s Cardiff Garcia take a tour of the global economy in under five minutes.
Add your comment. Including the article/link number will help.
⇧ Macroeconomics in Germany: The forgotten lesson of Hjalmar Schacht | VOX, CEPR’s Policy Portal
A longer than usual excerpt:
Biagio Bossone and Stefano Sylos Labini:
The economics of Hjalmar Schacht: A needed re-evaluation
In 1921, in the aftermath of the Treaty of Versailles, war reparation obligations upon Germany amounted to $33 billion. Keynes (1920) strongly criticised the Treaty. It did not include any plan to revamp the economy, and the punitive attitude and economic sanctions of the major powers against Germany, as he predicted, would lead to new conflicts and instabilities, instead of seeking to secure long-lasting peace. The reparations were in fact at the origin of the cataclysmic events that followed — from Weimar hyperinflation (1921-1923) to the dramatic austerity of the Bruning government (1930-1932). The resentment that all this created in the German people manifested itself in the huge support that Hitler’s National Socialism received in the whole country (Ruffolo and Sylos Labini 2012).
As Hitler rose to power, in January 1933 the economic situation in Germany was dire. Stocks of raw materials had been depleted, factories and warehouses lay empty, and about 6.5 million people (about 25% of the domestic workforce) were unemployed and on the verge of malnutrition, while the country was crushed by debt and its foreign exchange reserves approached zero.
Yet, from 1933-1938, thanks to Schacht, the economy recovered spectacularly (Figure 1).2 Schacht’s objective to jumpstart the moribund economy required money. But money was not available, since savings were inexistent and production was so restricted that savings would not accumulate (Schacht 1967). Neither could money be printed, since lending to the government would have put the Reichsbank at risk of losing control of monetary policy.
Schacht then contrived a brilliant unconventional monetary solution. For payments, state contractors and suppliers received bills of exchange issued by a company called ‘MEFO’.3 The MEFO-bills were state guaranteed, they could circulate in the economy and could be discounted by their holders at the Reichsbank in exchange for cash.
Figure 1 GDP growth and inflation in Germany and the Netherlands, 1922-1939
Source: Mahe (2012).
Schacht believed that the duty of the central bank was to make available to the economy as much money as necessary to facilitate output production. The issuance of bills of exchange was instrumental to this end — as each bill stood against the sale of newly produced goods, and each issue of money was based on the exchange of the new goods, central bank money issuance against bills could not be inflationary. Indeed, the employees of MEFO checked that every MEFO-bill issued was tied to a quantity of newly produced goods, and only bills issued against the sales of these goods were granted. This way, the circulation of money and the circulation of goods remained in equilibrium.4
You see there real proof of what I’ve said often.
I commend these authors for braving this, as it has been wrongly taboo to discuss anything that happened in Germany at the time as being good.
Let me say that I studied Hjalmar Schacht and must warn you that there are concerted efforts out there on the Internet to discredit everything that happened in the German economy during Hjalmar Schacht’s tenure. Those efforts attempt to show how wages remained depressed and on and on and on.
But the unemployment figures really can’t be masked over. Germany was in a deep, deep depression, and once Hjalmar Schacht was done, it was an industrial powerhouse again. Unfortunately, Hjalmar Schacht was right that, that industrial capacity was being driven in the wrong direction.
So, the real lesson is that debt-free money can be used to rev up productivity and wealth and income without causing inflation if the dials are adjusted solely to that end and not for any other purpose whatsoever (save for health, safety, environmental cleanup and protection, and other things, which ought not be viewed as “political” but moral choices).
Rather than have an Adolf Hitler calling the shots on what will be funded and why, the People should make those decisions via real, that is transparent, democracy. The People will pick their technocrats. The elitists won’t. Then we’ll finally get somewhere worth going.
⇧ How a Quest by Elites Is Driving ‘Brexit’ and Trump – The New York Times
I know Neil Irwin means well by this article, but I just do not understand why people even have the mentality to sound as if they need to convince themselves that having feelings isn’t bad.
Many people in the lower economic classes aren’t opposed to efficiency, far from it. They don’t see what’s happened as efficient but ruinous not just for American’s but for the world, including China.
Neoliberal economics hasn’t been efficient, unless you define efficiency as a vacuum cleaner where the self-ordained plutocrats and corporatists suck up the fruits of other people’s labor leaving those workers with relatively less and less and less and stifling real growth and replacing it with the financialization of everything.
I call it slavery and robbery, nothing remotely efficient in the general-economic sense.
⇧ [Democracy v. Technocracy:] mainly macro: The inadequacy of left and right
… Brexit has almost nothing to do with the traditional left/right metric.
Some on the left try to argue that Brexit will be a fatal blow to a neoliberal EU. I have never been a great fan of making people’s lives worse just so that you can strike a blow at some evil empire.
This is very telling. Simon Wren-Lewis doesn’t get it.
While some on the left are gleeful that the evil that is neoliberalism (and make no mistake about it, neoliberalism is profoundly evil) has taken a serious hit, most of those leftists are far from ignorant that people are hurt to varying degrees while the neoliberal system remains the instigator, the root cause.
I hate to draw such an obvious analogy, but people’s lives were made worse in WWII in nations that struck blow after blow after blow at the fascist empire.
I personally believe that what gave rise to fascism should have been corrected beforehand. Keynes was never more right in his public life than when he rebuked those who sought and gained extremely evil, shortsighted, vengeful and punitive and unsustainable war reparations from Germany after WWI.
Simon criticizes the left that went for leave, but he offers up no democratic solutions concerning the EU, only technocratic economic ones.
Yanis Varoufakis, on the other hand, who is quite well credentialed and even prominent in macroeconomics, is giving it his all to offer economic and democratic solutions for the EU from within (without leaving).
Make no mistake about this either. People’s lives are made worse by the EU status quo.
Do I really need to give a laundry list here of exactly how and why? I just mentioned Yanis. That should bring to mind Greece. What serious and honest intellectual could possibly believe that Greece’s problems stem solely from a lack of technocratic expertise being followed rather than from a serious deficiency of democracy at the EU level?
Why wouldn’t real, transparent democracy solve the youth unemployment problem in Spain faster than would a committee of New Keynesians?
I hear the correct solutions coming from certain quarters of the quite-far left, not any committee of New Keynesians.
Once again, it is difficult to see this as a left-right issue. Some have tried to explain the result as a consequence of the disenchantment that follows stagnation in wages and austerity, and I’m sure there is some truth in that. But while people have focused on the Leave vote in Labour’s heartlands, most Labour voters voted to Remain. In contrast most Conservative votersdid the opposite. I suspect they are not talked about so much because to do so takes people away from the familiar territory of inequality and class, of left and right. 
That’s entirely irrelevant to Simon’s thesis. Members of the left we’re talking about who went for leave, aren’t judging the rightness or wrongness of pushing for democracy by taking a poll. The democratic-left (is there any other kind?) is torn as to how best to go about ushering in democracy, not whether or not to do it.
Perhaps both the Corbynistas and their opposite numbers are stuck in a similar mindset that just prevents them seeing what is really going on. I have argued in the past that the election of Corbyn was not mainly the result of a ‘shift to the left’ among party members, but a rejection of a form of politics that had lost Labour two elections. That form of politics was based on a left/right frame: victory could be achieved by placing the party just to the left of the Conservatives, and thereby capturing the middle ground. It led to a disastrous drift on austerity and immigration. Yet it failed to deliver these imagined middle ground voters. The basic model was wrong, or at least hopelessly incomplete.
So yes it was the parliamentary party moving to the right rather than party members moving to the left that led to Corbyn’s victory.
One does not need to live in the UK to know very well that, as in the US, huge numbers of people have swung decidedly left. The youth who’ve done that, in the tens of millions, definitely did not make the calculation Simon suggests. They did so because they don’t believe Simon’s system is the right one. They want democracy, not technocracy for the elitists. They don’t want the system massaged so the billionaire class can stay comfortably in place being the plutocrats behind the curtain running the show and only placating the masses with a slightly higher allotment of crumbs they will allow the masses to keep rather than having them taxed away to be redistributed to that billionaire class.
But perhaps more fundamentally it was the model of how to win elections that failed, based on focus groups and triangulation. Anti-Corbynistas are convinced that party members no longer want to win elections because they voted for Corbyn. I doubt that is true for most. It only appears to be obviously true if you imagine you know the true model of how to win elections. Given past failures and policy drift, it is understandable if party members did not share that belief.
Well, how did FDR win in the US during the Great Depression? Could the left have won even more had FDR not saved “capitalism” from laissez-faire? I say the left could have accomplished vastly more had there been greater transparency.
Unfortunately, you don’t get transparency without democracy and you don’t get democracy without transparency. Considering that we have governmental capture by the plutocrats, the billionaire class, what’s it going to take? Some say revolution. Some say even violent revolution. I say revolution for sure.
I believe it can be, and should be, non-violent. That, however, will take voices such as Simon Wren-Lewis pulling for democracy rather than what he has been emphasizing. I say Simon and his ilk should join Yanis and stop pussyfooting around!
The Corbynistas in turn may be in danger of making the same mistake ….
Corbynistas? I’m sure that’s meant derogatorily.
What’s Simon’s real agenda? Is he a “Clintonista” but only when it suits him? He’s pushing very much the same false economic incrementalism that Hillary is and not the more radical democratic platform of Bernie Sanders, who is more of the leftist on some things and less on others than Jeremy Corbyn.
Sanders has been attacked because some people in China and Vietnam, etc., will have their lives made worse if the US starts making things again. Of course, Bernie wants fair trade, not free trade. Donald Trump has announced that he doesn’t care if his deals are fair but only whether they’re great, which brings up the painfully obvious. What’s an unfair but great deal? The answer is simple. It’s a one-sided win-lose deal. It’s also extremely shortsighted. Naturally, Trump didn’t really mean it that way. He just doesn’t know how to make himself clear enough to ever be pinned down, or he knows exactly what he’s doing so as to make pinning him down more difficult.
⇧ More on the Short-Run Macroeconomics of Brexit – The New York Times
Krugman’s questions are valid and his lack of “macro” handwringing likely the right position; but, far be it from me to defend New Keynesians from New Keynesians, as I don’t agree with either of them (ha!) concerning the big picture.
I’m with the democrat. It’s the ideology, stupid.
⇧ 5 Tiny Houses We Loved This Week: From the Solar-Powered to the Father-Son Project – Curbed
Do these make good rentals? What are the zoning implications? Can zoning waivers be obtained? Should they be anchored to a foundation due to severe weather risks? Do they carry a HUD sticker so they may be more easily insured as a dwelling?
⇧ [Profoundly wrong:] The E.U. Is Democratic. It Just Doesn’t Feel That Way. – The New York Times
In democracies, when there is a contested issue, elected officials and interest groups from all sides argue it out in public view, in the media, on the floor of the legislature or both.
Even if your side loses, you have seen the process play out, and maybe even participated in it by signing a petition or attending a protest. You feel included because your representative argued for your interests. If your lawmaker didn’t do that, you can vote him or her out, but you don’t need to throw out the whole system.
Oh dear, is that ever profoundly wrong!
Amanda Taub has it right that transparency is the hallmark of democracy; but at best, she fails to understand that the People realize that behind the scenes, there is anti-democratic capture.
The whole system is inherently undemocratic by design and must be completely reformed from within or thrown out if such reform is not doable in a timely manner.
⇧ Defeat for George Osborne | Progress | News and debate from the progressive community
Now with interest rates on government bonds below one percent for the first time ever there is a strong case for bringing forward public — on transport, energy and other infrastructure investment.
When in the world are Labour members going to get it through their heads that lower interest rates have zero to do with making the decision to vastly increase public spending on infrastructure? The ability to create money without borrowing (that is at zero interest) has always been there and always will be.
⇧ Trump’s Position On Trade Often Aligns With Left-Wing Economists : NPR
Sad. No mention of democracy or fair trade.
⇧ Labor’s stimulus package got us through a crisis. Turnbull saying otherwise is silly | Greg Jericho | Business | The Guardian
… after seven years of telling everyone the stimulus measures were a waste that has left Australia “with a huge structural deficit and of course a mountain of debt”, it means should the Brexit be the nudge that breaks the fragile world economy, there appears little chance that a similar stimulus measure would be pursued.
And certainly no side wants to suggest they would engage in stimulus for fear of being seen as reckless spenders.
It’s all a bit silly and most likely quite disingenuous.
If things go bad, there is no way the RBA can cut rates by enough to really get any decent stimulus, and while we may hope for the dollar to fall (as it also did during the GFC) the problem is most other nations have weaker currencies now than they did seven years ago, so it is likely it won’t fall by enough.
And that will — as ever — leave us with fiscal stimulus.
Stable government sounds great in a sound bite but when the economy is going south, it will be targeted government spending that both sides will pursue regardless of who is in power.
And we’d all be hoping it works as well as it did in 2009.
It speaks for itself.
⇧ Brexit Triggers EU Power Struggle between Merkel and Juncker – SPIEGEL ONLINE
The economic technocrats cannot, and could not have, handled this. This is all entirely an ideological/political issue.
What primarily set it all off was reckless, sweeping deregulation in the US. Plainly and simply, that deregulation was ideology for the sake of the billionaire class.
Neoliberal trade deals were also highly responsible.
The EU’s horrendously bad design left Europe wide open. The anti-democratic founders of the EU were stupid, to put it politely.
You also see here support for my position that there is secret relief that the anti-EU Brits will be out of the way.
It’s the age-old European battle over who possesses the greatest amount of democratic legitimacy ….
⇧ LA Times – How much has Donald Trump influenced Republicans? Look at the drop in support for free trade [cached]
GOP support for free trade dropped 20 percentage points between 2009 and 2016 — from 59% of Republicans agreeing that U.S. trade agreements have been a good thing in a 2009 survey to 39% saying so this year, according to the Pew Research Center.
The biggest drop happened this year — down from 53% in 2015 — lending evidence to the theory that Trump has led on the issue.
Well, Trump tapped it. It was already there. He has pulled more people in though, increasing it.
It cannot be overemphasized that until Donald Trump is pinned down, it must be pointed out that Bernie Sanders is openly, honestly, directly, and unequivocally for fair trade. Whereas, Donald Trump has said he doesn’t care about fairness in trade but just greatness. I say unfair deals are never great.
I would assign every New Keynesian to read this article 3 times in a row and then be tested for reading comprehension on it.
The template for governing she adopted is the modus operandi of the “New Democratic Party” that Bill Clinton and she helped construct in the early 1990’s, and Barack Obama nurtured. It masquerades as the champion still of working class America, but it is in fact a centrist, even neoliberal party, awash with corporate campaign contributions, and driven by corporate interests. Rigorous scholarly research documents this, as does a voluminous popular literature.
Ms. Clinton failed to see the nascent political rebellion because she was not tuned to the deeply felt anxieties of nearly every family in the nation—i.e., all but the “One Percenters.” Comfortably within that stratum herself, she was tuned instead only to the mechanics of winning the presidency.