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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Karim on Jobless Claims Data and Year End Comments

Posted by WARREN MOSLER on December 30th, 2010

Agreed with Karim, the relatively modest recovery remains on track.

Left alone, I see GDP in the 3.5%-5.5% range for next year, and possibly more.

Though they didn’t add much, the latest tax adjustments did take away the down side risk of taxes going up at year end.

I do, however, see several negatives with maybe up to 25% possibilities each, meaning collectively the odds of any one of them happening are a lot higher than that.

The new Congress is serious about deficit reduction. The risk is they will be successful, and it seems they even have the votes to get a balanced budget amendment passed.

China could get it wrong in their fight against inflation and cause a pretty severe slump. In fact, I can’t recall any nation that didn’t cause a widening of their output gap in their various fights against inflation.

The ECB’s imposed austerity in return for funding at some point reverses the current modest growth of that region. Not to mention the small but real risk the ECB decides to not buy any more member nation debt in the secondary markets.

While a less important economy for the world, the UK austerity looks ill timed as well.

The Saudis could continue to hike their posted prices which could reduce US demand for domestic output. The spike to the 150 level in 08 was a significant contributor to the severity of the financial collapse that followed.

There are also several lesser factors I’ve been listing the last few weeks that could cause aggregate demand to disappoint.

On the positive side is always the possibility of a private sector credit expansion taking hold.

Traditionally that would be borrowing to spend on housing and cars.

Federal deficit spending has done its job of restoring incomes and monetary savings, and will continue to do so.

Financial burdens ratios are down, car sales are showing some modest growth, and housing looks to have at least bottomed. And both are at low enough levels where there could be a lot of growth and they’d still be very low, especially housing.

I don’t see inflation as a risk (unless crude spikes a lot higher), nor deflation (unless one of the above shocks kicks in).

And I do see the ‘because we think we could be the next Greece we’re turning ourselves into the next Japan’ theme continuing, as it seems highly unlikely to me we will get back to, say, the 4% unemployment level for a very long time, if ever, until there’s a paradigm change regarding fiscal policy.

The full employment budget deficit might be up to 4% of GDP or higher, and our current tax structure probably still delivers a cycle ending surplus at full employment.

In other words, with our current tax structure and size of govt, full employment remains unsustainable.

Lastly, my feel is that there’s about a better than even chance of an equity and commodity sell off. Stocks as well as commodities look like they are pretty much pricing in all the good economic news, some of which is bogus, like QE being inflationary, as previously discussed. There could also be dollar strength which would contribute to equity and commodity weakness. And the stock and commodity weakness would also work to bring the term structure of rates lower as well, particularly as rates seem to have gone higher recently more due to supply factors during a holiday week and maybe year end selling than anything else. The forwards ED forwards don’t look to me to be at all low with respect to mainstream expectations of future fed rate settings. And it also looks like the annual portfolio rebalancing will be that of selling stocks which went up last year and buying bonds which went down, to get all the portfolio ratios back in line with marching orders from higher ups.

HNY!!!

Karim Basta wrote:
· Another major milestone in the recovery story.
· Initial claims fall below 400k for the first time since summer 2008;dropping 34k for the week to 388k.
· Labor department states ‘no special factors’ in the data.
 

I recall a senior Fed official once telling me if he were stranded on a desert island and could only receive 1 data point to keep up with the direction of the U.S. economy that it would be initial claims. So forecasts likely being revised higher as I write this.

50 Responses to “Karim on Jobless Claims Data and Year End Comments”

  1. danw Says:

    Hi Karim. Dan Weintraub here!

    I respectfully must take issue with your BLS-reliant unemployment claims data. I need not tell you that the data does not substantively account for those whose benefits may have run out, those who have found part time or seasonal work, etc. The data are not meant to accurately reflect the state of the economy vis-a-vis jobs: they are meant to instill confidence in the system, so that those who are able might look to use (or extend) credit…and thus “grow” the economy.

    Here is my cartoon video response to a job “discussion” in which Mike Shedlock and Calculated Risk are currently engaged.

    http://www.youtube.com/watch?v=qi0X3wwuS-8

    I KNOW that Warren and I stand in different corners when it comes to the issue of credit extension and a money-as-debt global economic system. I appreciate and understand Warren’s opinion on this issue. My primary fear is that, in its current manifestation, recovery will benefit a relative few, while more and more Americans join the ranks of the terminally impoverished.

    Best you and you wife and kids, my old friend!!

    Dan

    Reply

    roger erickson Reply:

    Dan,
    So much doom & gloom! I think your video is expressing an innocent fraud view that is part of the problem, not part of the solution.

    What you call unending amounts of credit, others call the return-on-coordination. That return has been building on Earth for ~4 Billion years now, from the first peptides, to cell-bound assemblies, from prokaryotes to eukaryotes, from single to multi-cellular species, from invertebrates to vertebrates, from a-social to social species, from non-primates to primates, including humans, and from early humans to today’s complex economies. You really think that’s not going to continue, regardless of what YOU think? Methinks a bit more humility is called for.
    Compelling evidence is that the spiralling return-on-coordination (what physicists call reverse-entropy) is always more than able to pay for any foreseeable efforts and adjustments we may have to make. The options are endless, and the only question is how to get our current co-citizens to explore them.

    Reply

    danw Reply:

    @ Roger

    Perhaps so.

    I think, truthfully, that my primary issue with this entire “thing” is that so many people suffer in poverty. I am totally willing to admit that the MMTers may be correct—-that all of my yammering and gloom about our money-as-debt system is misplaced.

    But how do we keep more children from going hungry? How do we keep our government from pursuing further wars of aggression overseas? How do we save ourselves from the exploitations of avarice?

    Reply

    Tom Hickey Reply:

    MMT shows how a monetarily sovereign government issuing a fiat currency like the US has no “affordability” problem. It has the ability to provide funding for general welfare programs like education, healthcare, infrastructure, basic research, retirement pensions, etc. The only constraint is real resources available to purchase. The government cannot purchase resources that are not available; it can only fund them.

    The other contraint related to real resources is inflation, if the government stimulates excess effective demand relative to the ability of the economy to meet it with supply. This only comes into play as the economy approaches full employment/optimal capacity. Incentivizing productive investment increases the optimal capacity of the economy through growth in productivity from innovation.

    As long as GDP is growing faster than the deficit in a sustainable fashion and with adequate distribution of productivity gains in the economy to create effective demand commensurate with supply, no problem. The US could enjoy full employment with price stability along with a rising living standard and a high level of general welfare, aka national prosperity. If similar policies were pursued globally, then we could make the transition to globalization smoothly, matching effective demand with capacity in a sustainable fashion.

    Currently, the US is sitting in a sewer of ignorance, like a king who dreams he is a pauper living in a hovel next to the city dump. All we need to do is wake up as a nation and world.

    WARREN MOSLER Reply:

    except for the part about gdp needing to grow faster than the deficit. might be an oxymoron depending on propensities to consume.

    danw Reply:

    @ Tom & Roger…

    OK. So here is a dilemma:

    While there is admittedly ignorance with regard to the operational realities of $$$ under a fiat system, I think that the supposed analytical irrationality is, at least to some extent, driven by legitimate anger. People see a wealthy ruling class living the good life, while the ranks of the poor are increasing. Of course there are people like Tom Coburn who will exploit that anger to illegitimate ends, but that is an outcome rather than a primary cause.

    The MMT argument, even for someone like me (I am not ignorant) is difficult to embrace. My difficulty in embracing the MMT position is that I am perhaps blinded by my anger. And as such, I do not see how a solution to poverty and exploitation can be realized through the machinations of a not-particularly trustworthy ruling class…a ruling class who tweaks monetary or fiscal policy, but who do not seem to really care about what life is really like for poor people.

    The folks who read Denninger and Zerohedge and Mish for the most part reject MMT outright. They see comments like Warren’s about “…the good old days of easy access to credit…” as being beyond haughty. And, I would argue, the reason for their rejection is somewhat similar to mine: They have watched the wealthy elite grow rich beyond the wildest dreams of avarice through fraud and usury, and all kinds of mean nasty ugly exploitations. The class disparities are truly stunning.

    So…what is my point. My point is that MMT (et al) has trouble gaining traction because people like me—people who understand economics and who are capable of employing their pre frontal cortical super-structure in order to reach reasonable conclusions about stuff—cannot get past the history of exploitations (in myriad forms of course) that the wealthy have visited upon the poor.

    DW

    WARREN MOSLER Reply:

    true about the history of exploitation, and the forces at work in that direction.

    but in any case the govt is not running out of money, we aren’t dependent on borrowing form China, social security is not operationally broken,
    the trade deficit per se is a benefit, we don’t to saving in order to have money for investment, etc. etc.

    ;)

    Tom Hickey Reply:

    Certainly, these are pressing concerns, Dan. They are my concerns, too. Economics is about the allocation of scarce resources and in a market system rationing is by price, which means that the wealthier one is the more choices that one has and the greater share of real resources available.

    The monetary operations aspect of MMT doesn’t address the fact that the wealthy seemingly control a disproportionate share of financial and real wealth. There are two ways of looking at this. MMT’ers would say that there is enormous foregone opportunity owing to ignorance about the possibilities that being a monetarily sovereign nation with a nonconvertible floating currency makes available, and there is no lack of real resources to tap, innovation to culture through education and R&D, etc. So no “redistribution” is required, as believed by the rich who think that taxes fund government expenditure.

    However, on the other side, there is the economic fact that productive investment does fund private sector growth. Minskians (of which MMT’ers are a subset) observe that rent-seeking tends to replace productive investment and so it should be disincentivized. One effective means of doing this is taxing away economic rent — land rent, monopoly rent and financial rent — and incentivizing productive investment by reducing taxes on consumption, income and reasonable return on capital commensurate with productive contribution.

    Government also has to level the playing field to counteract influence and privilege, so that markets are not only competitive but also fair. The idea that a free market is an unsupervised one is beyond silly, unless you are a pirate.

    How to do this is fairly well understood. What is standing in the way is powerful interests with self-serving agendas, constituting piracy and parasitism. The odd thing is that these folks would also do better under good policy, so they are really taking money and resources from their own pockets. They erroneously think that the pie is of a constant size and everything depends on how it is cut. They want to make sure that they consistently get the biggest piece. But this is not a zero-sum game. The pie can become a lot bigger in quantity and juicier in quality.

    BTW, the reason that Mish, Karl, and “Tyler” reject MMT is due to their Austrian proclivities. Their approach is dogmatic, and they do not understand how the modern monetary system works or care what a correct understanding implies for macro. For their sakes, I sincerely hope that they don’t get what they wish for. It will not be what they expect.

    Neil Wilson Reply:

    It seems to me that there is more desire here to smash the rich than there is to help the poor.

    Are you sure that is anger rather than just jealousy?

    A pragmatic shift to a ‘bubble up’ economy that shifts the market power so that the poor can choose to take a job rather than being forced to take one will make the market function positively.

    roger erickson Reply:

    > But how do we keep more children from going hungry?

    DanW: That’s the question we all face. Examination of monetary operations proves beyond a doubt that it’s not for lack of options, only for lack of motivation to explore them.

    Examination of “motivation operations” proves beyond a doubt that it’s not for lack of net motivation, only for lack of efficient system-wide sharing of motivation.

    Hence, my conclusion is that the core problem we’re facing is lack of organization. Warren’s classic question is “How do you get people to explore options?” The answer is clearly not simply to demonstrate options, but to figure out a way to get an adequate proportion of a population to even listen to and attend to stagings of such demonstrations. We’re largely a victim of our population size and concentration of media operations.

    Historically, the fastest way to meet such a need is to allow enough failure. Unfortunately, our automatic stabilizers, in a sense, MAY be both threat and salvation, since they both soothe the stress of failure while preserving resources available for faster reallocation.

    My gut feeling is that the worry sensed by some of the deficit terrorists is well intended, and simply disoriented. If we could simply switch attention currently directed to budget mania to either “output-gap mania” or “gross-domestic-capability-mania”, then many minor things would fall into place.

    As it stands, a missing “GDC” metric falls back to a, less useful, issuers-currency budget – thereby perverting the underlying psychology directed to controlling risk management.

    Proposing and campaigning for a more productive guiding metric, such as GDC, might dissolve most of the irrelevant points that deficit hawks and deficit doves uselessly flutter over. Even then, however, the next stage we’re facing is still addition of effective PR and Political “operations” to the existing breakthroughs in monetary operations.

    We may be closer than we imagine. History indicates we always are.

    Tom Hickey Reply:

    Roger, I would prefer “coordination” (a concept I got from you) to “organization.” “Organization” implies institutionalization. I think that reliance on institutions is deeply implicated in the problem. On the other hand, “coordination” implies is a social response. Many liberals look to organization and institutions (government) to solve problems, whereas conservatives look to personal responsibility (individuals). Between these is what Europeans call “solidarity,” by which they mean social cooperation and coordination based on empathy and common purpose.

    So automatic stabilizers may be simultaneously a blessing and curse. They are a blessing in that they prevent human disaster and an economic meltdown — the US would be in deep depression without intervention— but economically they may be problematical by introducing dependency, and obscuring causality, and blocking needed reform. What is happening not even behind the scenes is a massive transfer of wealth/income upwards and no accountability for those responsible for the crisis. But it’s sort of OK because the victims are being (poorly) compensated. And when there is a recovery, we are just going to do this again in a few years. It’s not hard to see that there is something wrong with this picture. Finding the solution in institutions is more difficult while leaving it to the invisible hand (liquidation) is cruel.

    Is there a double bind here — damned if you do and damned if you don’t. Or catch-22.

    John Quinn has an interesting post at The Burning Platform (h/t Zero Hedge) on what’s coming up. While his view of monetary ops is off, the post is worth reading for its black humor.

    2011 – THE YEAR OF CATCH-22

    WARREN MOSLER Reply:

    it’s all in the institutional structure that markets necessarily work within

  2. pebird Says:

    Warren:

    Dont you expect some inflation in China as they move toward more internal consumption? There has to be some inefficiencies and distortions during such a transition phase? How long will it take for Chine domestic markets to mature and industry to retool?

    Happy 2011

    Reply

    Tom Hickey Reply:

    Pebird, according to China-watchers, the peg is importing inflation. The peg is exporting deflation to the US. It was great will China was growing and US inflation was under control. but now the excess is showing up, and something has to happen.

    Developing the domestic consumer economy and increasing domestic effective demand with rising wages would actually lift some of the pressure of imported inflation, which is now going chiefly into asset prices. The Chinese economy is too export-heavy for its own good.

    Reply

    WARREN MOSLER Reply:

    yes, with their ‘top down’ deficit spending that ‘hires off the top’

    see ‘full employment and price stability’ for more detail, thanks!

    Reply

  3. art Says:

    Re “The new Congress is serious about deficit reduction. The risk is they will be successful, and it seems they even have the votes to get a balanced budget amendment passed.”

    Wouldn’t this require state ratification? If so, it’s a long process, thankfully (I think — been a long time since civics class).

    Might be a good item for the upcoming MMT gathering, e.g., a strategy for educating people about the inevitable harm that a federal BBA would cause. For example, it should scare the bejeezus out of state and local politicians.

    Reply

    WARREN MOSLER Reply:

    Yes, the actual amendment will take a while for the states to ratify, but it’s by simple majority at the state level and looks like it will pass as well.

    Looks like the MMT gathering is just the two winners at this point. Looking forward to it!

    Reply

    Jim Baird Reply:

    Me, too – as we were shoveling out from under 20+ inches of snow last week, my wife and I just kept repeating, “St. Croix!” to each other…

    Reply

    beowulf Reply:

    State legislatures all vote by majority-vote rules but 3/4ths of states must approve to ratify amendment. There may be 13 or more states who balk.

    Doesn’t matter really. Balanced Budget Amendment simply states, “Total outlays for any fiscal year shall not exceed total receipts for that fiscal year…” (Sec. 1)
    http://en.wikipedia.org/wiki/Balanced_Budget_Amendment

    The phrase that pays is “coin seigniorage”. Tsy already has legal authority to cover outlays by minting and then selling jumbo denomination coins to Fed at face value instead of selling Treasuries. Once Secretary transfers proceeds from Mint Public Enterprise Fund to Tsy General Fund, total receipts would indeed equal total outlays. To quote from an FDL diary I posted earlier (name checking Warren along the way):

    “[The Mint Public Enterprise] Fund may retain receipts from the Federal Reserve System from the sale of circulating coins at face value for deposit into the Fund“. What’s more, the statute also says, “at such times as the Secretary of the Treasury determines appropriate, but not less than annually, any amount in the Fund that is determined to be in excess of the amount required by the Fund shall be transferred to the Treasury for deposit as miscellaneous receipts.“
    http://my.firedoglake.com/beowulf/2011/01/03/coin-seigniorage-and-the-irrelevance-of-the-debt-limit/

    Reply

  4. art Says:

    Non-seasonally adjusted claims aren’t nearly as inspiring. Might explain the short lived enthusiasm in the stock market this morning. Planning to put something up on our site later today. Looks like NSA print in 1Q could tell us a lot about labor market direction in 2011.

    On a side note, the volatility in the BLS seasonal adjustment factors has gone up about 1.5 times since 1989. Just noticed today, no idea why. Structural shifts in the labor market? Behavioral shifts by BLS modelers? Other? Any thoughts?

    Reply

    Matt Franko Reply:

    Art,
    I think that was the same year (1989) that the Berlin Wall fell, ushering in the current trend towards full globalization and it’s assault on US labor. I would think that this trend would increase US labor market volitility in general, while not having a JG but rather when you have economic authorities that think it’s just fine to use unemployed human beings as a buffer stock to promote ‘price stability’.

    As for the seasonal adjustments, my observations are that many seasonal workers are brought in from abroad nowadays (not just ag, for instance a 20-something beach lifeguard in Myrtle Beach was a PE teacher/swimming coach back in Ukraine during the rest of the year, goodbye summer job for some college student), and many jobs that were not considered seasonal in the past, are being re-categorized as so now, in order for the companies to be able to get the visas for the foreign workers (for instance they just say that a year now consists of 2 six month “seasons”). These trends may be increasing volitility in the seasonal factors.

    Very interesting thanks for pointing this out. Resp,

    Reply

    WARREN MOSLER Reply:

    GDP and especially earnings are doing what’s considered reasonably well even with high unemployment, which is good for stocks

    Reply

    Matt Franko Reply:

    Art,

    This weeks adjusted at 407k (+18k), while NSA at 577k (+52k OUCH) this AM. For week ended Jan 1.
    Resp,

    Reply

  5. Zanon Says:

    Warren: a few months ago you said us equities were poised for huge take off. Change your mind?

    Reply

    Neil Wilson Reply:

    And they have risen how much since August? I’m up the thick end of 10% and I run a very conservative portfolio.

    Reply

  6. danw Says:

    More on MMT

    People are angry. There is a lot of anger-momentum. MMT is very disarming. To accept the premises of MMT means that people need to ready to give up their anger if that anger ends up being ill-directed. But people are so very VERY angry, and afraid—and particularly the anger is stoked daily in every nook and cranny of our multi-media driven world. It is quite difficult to convince people that they should “hand over” their fear and anger, and trust in something that seems so counter to everything they have come to believe.

    Reply

    beowulf Reply:

    “All your anxiety is because of your desire for harmony. Seek disharmony; then you will gain peace”. Jalal-ud-Din Rumi
    http://books.google.com/books?id=RUiUsOwZ8ScC&pg=PA100&lpg=PA100

    Happy New Year :o)

    Reply

    Tom Hickey Reply:

    “The modern era is steeped in restlessness as man is tossed between conflicting ideals. Like mounds in a sandy desert, intellectual knowledge is mounting up without provision for the expression of the heart, which is so vitally necessary to quench the need of the spirit. It is lack of this that has checkmated man’s achievements, in spite of himself and his enormous advancements in the field of science. Unhappiness and insecurity, emotional and otherwise, are the dominant notes of the age, and mankind is engulfed in wars, hate and fear.

    “Yet I say, ‘Have hope.’

    “Selfishness and lust for power tend to drag man towards brutality, which he has inherited from his evolutionary ancestry or acquired during erroneous searching through his incarnations. But there is within man the inextinguishable light of Truth, because he is essentially divine in origin and being.

    “Those who cleanse their hearts of the embittering poison of selfishness, hate and greed shall find God as their own true Self. When you find and realize God, the problem of selfishness and its numerous expressions melt away like mist before the sun. In God and as God, all life reveals itself as being really one and indivisible, and all separateness created by identification with human or sub- human forms is seen to be illusory.

    “The Truth of divine life is not a hope but a reality. It is the only reality, and all else is illusion. Have faith and you will be redeemed. Have love and you will conquer the lower and limited self of cravings that veil your own true being as God. Not through desperate self-seeking, but through constant self-giving is it possible to find the Self of all selves.”

    Meher Baba
    LIFE AT ITS BEST, pp. 41-42
    Copyright 1957 Sufism Reoriented
    http://www.ambppct.org/meherbaba/BooksByMeherBaba.php

    Reply

    WARREN MOSLER Reply:

    I prefer Pirsig’s ‘Lila’

    ;)

    roger erickson Reply:

    sounds a lot like my maxim!

    “There is no point of stability in the natural world that is not a dynamic equilibrium between conflicting forces.” RGE

    “All your anxiety is because of your desire for harmony. Seek disharmony; then you will gain peace”. Jalal-ud-Din Rumi
    http://books.google.com/books?id=RUiUsOwZ8ScC&pg=PA100&lpg=PA100

    Only 800 years separates the statements, so the slightly different perspective is understandable. What’s mystifying are the population proportions sharing this insight – even after 800 years! Suggests that there has been little adaptive value in having more than a small fraction of any population share this insight – we don’t know how to wield it! There’s been no rapid selection for populations inculcated with dramatically higher proportions of this perspective.
    On the other hand, it’s intriguing to consider that there actually is a slightly higher % of populations sharing this perspective today than there were 800 years ago.

    What would we be capable of if we doubled that proportion yet again?

    Reply

    WARREN MOSLER Reply:

    true.

    need to shift from anger over the deficit being too large to anger over it being too small

    Reply

    Neil Wilson Reply:

    I’d say you need to direct the anger towards anger against unemployment and destitution.

    You’ll probably have better luck with your ‘why create unemployment with taxation and then leave those people destitute and without work. Either hire them or cut taxes so somebody else can’.

    Reply

  7. Tom Hickey Says:

    Must read at Caixin in China:

    The Arrival of a Minsky Revival
    by Andrew Sheng

    Maybe they are catching on over there.

    Reply

  8. strawberry picker Says:

    Tom Hickey, Warren and the rest please if you have time respond to my comments below:

    BY ROBERT GEHRKE
    The Salt Lake Tribune

    Published Dec 29, 2010 07:18AM
    Updated Dec 29, 2010 12:22AM
    Imagine paying your next parking ticket in gold Krugerrands or renewing your driver license using American Gold Eagles.

    A proposal in the Utah Legislature would require the state to allow just that, requiring government agencies to accept gold for transactions, and creating a parallel monetary policy for intrastate commerce tied to the price of gold.

    Under the legislation that has been drafted, Utah residents could mint their own gold or silver coins, a storehouse would be created to stockpile the precious metal and the Utah Defense Force, an arcane state militia that may be called and armed by the governor, would be responsible for securing the inventories.

    Ok that was the article, now Tom and Warren and crew, warren buffet has real silver buried in his vault under the ground, and bill gates of MSFT also owns a lot of PAAS. SO here is my questions to you smart MMT guys, what is your backup plan for FAILURE of getting the public to buy into your MMT memes? There has been legislation in many states to succeed from the union, now we have states talking about going back on a gold standard, Ron Paul (goldbug) has been appointed to head the monetary committee in congress. Also walmart and mcdonalds are starting to make movements towards serving muslim shoppers and all those guys are gold bugs by religious default. So tom hickey and warren, as the sheeple go against your MMT tide, do you have a backup plan, are any of you storing/investing in hard metals with any portion of your portfolio like bill gates and warren buffett are? Could you even honestly admit that here as it would cast even the smallest shadow of doubt on your MMT? Or are you diehard MMT’ers that will go down with the titanic in a religous blaze of passionate fury even if most other human beings wants to get back on the goldbug sillyness? (PS – I watched this twilight zone episode a long time ago called the great caper about these robbers who stole a bunch of gold then went into suspended animation pods for 100 years and woke up in the future where gold was worthless)

    PPS Also I have friends that have left the country and renounced citizenship so they don’t wind up like wesley snipes and people like that conant dude who are fleeing the USA because they don’t like welfare states.

    Tom it really seems to me that you monetarist guys are losing the hearts and minds of the common folk. I have many businessmen around me that want cash or to do barter so they can beat the government and tax man, that can be good long term.

    Reply

    Tom Hickey Reply:

    Some in the Russian military are predicting that trends indicate that the US will break up into separate countries in the near future.

    Reply

    strawberry picker Reply:

    Tom you don’t answer any of the questions I asked above :(, but thank you for your time and response. Where do you live Tom? What do your communist russian friends think is the best place to live if/when it all busts up? Jimmy Rogers moved to singapore, and many tell me hong kong is freedom rock, but alaska has lots of natural resources and not too many people. All the people I know in russia/ukraine are bad drunks, so I don’t think life so good in those places if they all escape into bottle.

    Reply

    Tom Hickey Reply:

    James Lovelock is telling fertile couples to head for the Arctic. They might make it there if they get a head start.

    beowulf Reply:

    The implicit faith gold bugs put in the good sportsmanship and fair dealing of the US Government is as touching as it is hilarious.

    One Cross of Gold, Coming Up
    How the government could get even with right-wing cranks.
    http://online.wsj.com/article/SB10001424052748703837004575013373812096744.html

    U.S. Alchemists Make Gold
    Applying atomic magic to aid medicine and research, radiochemists duplicate nature’s elements and create new ones.
    http://blog.modernmechanix.com/2007/06/16/us-alchemists-make-gold/

    Reply

    Tom Hickey Reply:

    Thomas Frank hits a home run with that WSJ piece. Although if truth be told, the gold bugs are convinced that the government is suppressing the price of gold by selling into the market.

    Reply

    WARREN MOSLER Reply:

    yes, they think central bank lending of gold is a conspiracy to keep the price down, rather than a tool to make a bit of extra income.

    i suspect gold producers are behind it all?

    knapp Reply:

    Many goldbugs also believe that CPI-inflation is “suppressed” via hedonics and other statistical mischief. Almost every gold presentation I’ve seen has a slide on the “shadow stats” of John Williams showing the “real” inflation rate (hint: it’s higher) and claim that gold would be $3,000, $4,000 etc if this real number were reported.

    Mr. E Reply:

    The bond markets refute the suppressed inflation dea, don’t they?

    Nominal interest rates = real interest rates + inflation expectations

    Maybe Bondholders got hoodwinked for 3% or so a year for the last 20 years.

  9. jrbarch Says:

    Dear DanW,

    Why not center yourself on your own sense of integrity.

    Whatever moral and conceptual structures you erect on that integrity, at least you are free to build and choose.

    As somebody once said:

    “The ability to think is a gift from our maker to ourselves; what we think of, a gift from ourselves to us”.

    If it turns out to be a truth that belongs to everybody, well, this is how a grass fire burns – when it reaches the treetops it turns into a fireball.

    There is good in you and there is selfishness in you: everyday you choose, as do we all. The only energy I know of that can temper the selfishness of the human mind and illusion of the ego is the energy of the heart: without love a human being is just a dark empty unlit space.

    Death draws a line and takes away all that the mind and ego have comprised, often long before the last breath is drawn. If the heart is full, then you have that until the last moment.

    It is the battle between the mind and the heart to fill that space inside, that spills out onto the field of polity economics and everyday life. It is simple, and because there are a lot of us, it is huge. There have been billions and billions of human beings come and go on this earth, and this battle has raged in every single one. Maybe that’s a hint!!

    Cheers ….
    jrbarch

    Reply

  10. Dan w Says:

    @jr and Neil

    Agreed…to both. Much of my ‘anger’ is a front for jealousy, that blunts the dull club of failure. part of the process of accepting my situation is to bellow and belch in places like this, and be called out by folks like you.

    I have no idea what is best for the world, economically, politically, etc. My many protests, in the end, are no different than a shot of whiskey for the drunk. Just a way to avoid the sadness and frustration of being almost 50 and not having the life I had imagined.

    No big deal. Soldiering on.

    HNY to all!

    DW

    Reply

    knapp Reply:

    OK Dan, just keep posting. Always enjoy your input.

    Reply

    Tom Hickey Reply:

    Dan, while this is prompted by your post this is directed not at you specifically, but generally.

    One of the hats I wear is that of spiritual counselor. The issues that you raise are familiar to me because I encounter them widely. They are fundamentally spiritual in the broader sense of being related to life purpose. Some of the people I have dealt with that have been most successful in turning around are those that hit bottom. When they came to the end of the road they had no choice, but to take another direction. It’s never too early, and it’s never too late.

    In the Nichomachean Ethics Aristotle investigates the purpose of life, examining various proposals and showing their shortcomings. He concludes that all people seek happiness in the sense of fulfillment. His answer is that happiness is not achieved by seeking for it directly, because fulfillment is a by-product of excellence. Excellence is not a static end-state. It is the dynamic unfolding of one’s full potential as a human being, capable of realizing the infinite, and as an individual in the world, that is, as member of society.

    According to Aristotle, a student of Plato, human beings are rational animals. For the classical Greeks, “rational” had quite a different meaning than it does today, that is, post-Descartes. The rational faculty included the intellect, capable of attaining truth and apprehending unity, and the will as “rational appetite,” which is capable of attaining to goodness and beauty.

    Human being tend toward the highest quality. when they are blocked from moving this direction with sufficient speed, or they block themselves from it, they feel unhappy and frustrated. this leads to dissatisfaction and anger, which is either turned within or gets projected outside of oneself at others.

    A lot of the spiritual problems people have to do with priorities. People that are not happy generally prioritize things that are relatively trivial and either ignore, are unaware of, or reject the things that are truly significant in unfolding one’s full potential. Some cannot attain even the trivial things in life because they are hotly contested. Others prioritizing things wrongly are successful at attaining their objectives. But whether attained or not these objectives — fame, fortune, power, and pleasure — are inherently trivial because they are transitory. Being transitory, they cannot confer the abiding fulfillment which everyone seeks.

    On the other hand, some people are angry and frustrated because they have set high values that seem unattainable. No one listens to them, or powerful forces are allied against them, or they are actually suppressed or persecuted. Many of these people fail to understand that the game is about doing what one can to advance the ball down the field. Thinking that one person or one group can win the day is assuming unwarranted self-importance. Each of us is called upon to play our part as best we can. Even the great heroes carry the day only temporarily on the field of history. Life in the world itself is transitory.

    Perennial wisdom teaches that only that which is real is ultimately fulfilling, and what is real is abiding and unchanging. That lies within. It lies at one’s core and at the core of all and everything. It is what is worth finding. This is the perennial teaching.

    So while economics and politics are interesting games, and games that we are forced to play to one degree or another, they are not the highest game in town, and that is the game we want to be playing if we are aiming at abiding fulfillment while yet in the body.

    Reply

    danw Reply:

    Good stuff Tom.

    And for the sake of furthering this important topic, I’ll add a few thoughts.

    I have practiced Buddhist meditation on-and-off for 20 years. At a most basic and fundamental level, meditation forces (compels?) and individual to (literally) sit still and reflect upon his states of mind, rather than act impulsively or act as a way to cover up difficult and painful mind states/emotions.

    At my strongest and clearest moments, I am comfortable enough with who I am—with my sorrows and joys and frustrations, etc.—to sit with the experiences, accept the experiences, embrace the experiences that comprise my life. MOST of time, however (ha ha), I jump from one obsessive activity to another….mostly because it allows me NOT to sit still and be forced to face the sorrows and frustrations, yada yada yada…

    The economic crisis has let me employ indignation and adrenalin-infused anti-establishment activism, all under the banner of righteous struggle. Truth is, while I may say a few smart things from time to time, I use this indignation and activism, and blogging and those silly xtranormal videos, to avoid sitting still with my sorrows and frustrations, blah blah blah….

    So…as I said in an earlier post…I frankly have no freaking idea who and what is right in all of this stuff. I just know yelling about it keeps my life’s sadder realities at bay, for a brief moment in time.

    Back to the meditation pillow! :)

    DW

    Reply

  11. Mike Valotta Says:

    MMT is simply an explanation of how the monetary system operationally functions. That’s it. Everything else is political as Warren always states. Most of economics is theoretical, and nothing is guaranteed. There will always be tough problems and decisions to solve. If we could at the very least get everyone on board with MMT, we can then spend more time focusing on actually solving problems.

    I’m ok wit the current system. Historically speaking, it’s pretty good. Early American banking was plagued with problems and crises. Deregulation was often the problem. This is why I always mention Warren’s banking proposals for specifics. Talking about a gold standard is just ridiculous on so many levels.

    Reply

  12. Tom Hickey Says:

    Here’s a proposal that we think about the meaning of happiness as it relates to economic affairs beyond the superficial.

    The Official Pursuit of Happiness- Derek Bok

    Reply

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