The pretense of economists is the field is one of science, in which there is no right or wrong, any more than there is right or wrong in physics. If you increase the money supply, you spur demand, that is simple economics. If you let go of a pencil, it drops. That is simple physics.
If you try to argue that raising an interest rate on a currency used in an integrated worldwide economy has far wider effect than a dropped pencil, which is a local matter, they will argue it is merely a matter of scale, not kind. And with computers, we can reckon at scales unimaginable heretofore.
The fellow who is credited with the founding of modern economics is Adam Smith. You have not read Adam Smith, because no one reads these founding people, like Darwin and Marx. They are generally unreadable. If you were to read Adam Smith, you would learn that he was a moral philosopher, and his great work, shortened in title to the Wealth of Nations, was really a sort of encyclopedia (a common thing to produce in those days) of all economic ideas. In it you'll find capitalism, free markets, communism, mercantilism, feudalism, if only in contrast to his obvious editorial bias (if not by the terms we use today). Karl Marx found communism in it. Each reader finds his favorite system outlined.
But what to make of a "science" in which few people agree on definitions? Within economics, there are many definitions, some actually opposite, of profit, money, corporation, the firm, labor, capital, interest and so on.
Where would physics be if physicists did not agree on the definition of thrust, lift and BTUs? They may have different theories of how flight occurs, but they agree on terminology. Not so in the "science" of economics.
Yesterday USA's top politician and its top economist had an economic discussion in which they operated in different universes, based on definitions, in which they talked past each other and the moderator kept saying in the background "I don't understand..."
Note on the subject of the discussion, Krugman states, and I quote him:
"We live in an economy where money is not just green pieces of paper with faces of dead presidents on them. Money is the result of a financial system that includes a variety of assets. We are not even quite sure where the line between money and non-money is... it's kind of a continuum."
Now you are saying, "Wait... what?! 'Non-money?' How come I've never heard of non-money? What the hell is that?"
It's a dirty little secret. The Greek debt is in non-money, but the Greeks are obliged to pay it in money. Bankers and governments oblige taxpayers, ad infinitum (ad nauseum) with bonds for stadiums and wars (Seattle is getting a 3rd and 4th major league stadium, plus a multi-billion-plus 2 lane tunnel constructed under mud flats to replace an eight lane highway. San Francisco simply eliminated the rickety Bay Freeway after the Loma Linda quake damage, with no discernable economic loss.)
Here is how it works: Seattle voters hated the idea and did not want such a tunnel. A lawyer ran for mayor, staking his liberal credentials and lawyerly integrity on "no tunnel." He won. All interested parties now know the game: As the mayor says no, economic matters are arranged so the mayor and his are now and will ever be well compensated if the tunnel gets a go-ahead. Seattle, drowning in debt and with bondholders on the hook for now FOUR new major league stadiums, is capable of having only so much more debt mulcted from the productive segment of the citizenry.
Although the mayor is "against" the tunnel he negotiates an obligation on the rest of the state taxpayers that any overruns will be at the rest of the states expense. Now, the tunnel can command debt well beyond what mere Seattle can pay. With all of this in place, a by-election brings in enough votes to "pass the tunnel" and the mayor "grows in his job" and now supports the tunnel project, based on a by-election in which a tiny minority outvoted a tinier minority. Ka-ching! Seattle still hates the idea, but too bad.
This is played out as President Obama (in his role as willing-puppet) cuts off energy resources in USA, and directs funding to the whimsical and ludicrous "renewable" sources, and funds Brazilian oil exploration, assuring when he is out of office he has access to riches beyond his wildest dreams. They are greying his hair now, as they did Bill Clinton, so he can assume the role of sage elder statesman.
If my reading is cynical, why does it happen this way in every city, at every level, every time?
All of those bond obligations are non-money. They must be paid off in money. When USA builds dams in Peru, they are credited as a debt to USA in non-money, for which Peruvians must pay off in money. Whereas the cohort of elite Peruvians who went to Harvard execute the deals, it is the common Peruvian who must pay it off. It is not possible to pay it off, ever. With so much wealth mulcted out from Peru to USA, Peru can never find the means locally to support local investment.
As a side note, in the science of economics, there is a strange term, "moral hazard." Not inconceivable in a field laid out by a moral philosopher, but a strange term for a field purporting to be science.
Therefore, the problem in the "science" of economics of no set definitions, and its attending confusion, is not an accident. It is a fundamental requirement. Hey, who cares if the city runs up debt in terms of non-money? Well, you will when you get less and less for more and more of your labor. When those non-money pensions are paid out in less and less money because the value is diverted to bond holders.
USA perfected this practice overseas and brought it home. What goes around comes around.
Iceland has said no to paying out money against non-money debts. Iceland is recovering slowly but vigorously. Greece is working on a way to pay off non-money debts with Greek workers money. Greece is up in flames. Iceland is showing the non-violent and proper response to the game.
The game is the concentration of power in the hands of a few who may oblige the many with non-money debts that must be paid in money. The cover is economics as science. But where science is ordered to knowledge and understanding, economics is an exercise in confusing people.
To understand it, you must understand the definition of money. And non-money. I suspect less than 1% of the 99% can define money properly. Krugman can, which is why he can draw the distinction he does. Ron Paul can too. But they have a radically different view of the role of the state. If the 99% understood the terms properly, we'd say no.
Feel free to forward this by email to three of your friends.
If you try to argue that raising an interest rate on a currency used in an integrated worldwide economy has far wider effect than a dropped pencil, which is a local matter, they will argue it is merely a matter of scale, not kind. And with computers, we can reckon at scales unimaginable heretofore.
The fellow who is credited with the founding of modern economics is Adam Smith. You have not read Adam Smith, because no one reads these founding people, like Darwin and Marx. They are generally unreadable. If you were to read Adam Smith, you would learn that he was a moral philosopher, and his great work, shortened in title to the Wealth of Nations, was really a sort of encyclopedia (a common thing to produce in those days) of all economic ideas. In it you'll find capitalism, free markets, communism, mercantilism, feudalism, if only in contrast to his obvious editorial bias (if not by the terms we use today). Karl Marx found communism in it. Each reader finds his favorite system outlined.
But what to make of a "science" in which few people agree on definitions? Within economics, there are many definitions, some actually opposite, of profit, money, corporation, the firm, labor, capital, interest and so on.
Where would physics be if physicists did not agree on the definition of thrust, lift and BTUs? They may have different theories of how flight occurs, but they agree on terminology. Not so in the "science" of economics.
Yesterday USA's top politician and its top economist had an economic discussion in which they operated in different universes, based on definitions, in which they talked past each other and the moderator kept saying in the background "I don't understand..."
Note on the subject of the discussion, Krugman states, and I quote him:
"We live in an economy where money is not just green pieces of paper with faces of dead presidents on them. Money is the result of a financial system that includes a variety of assets. We are not even quite sure where the line between money and non-money is... it's kind of a continuum."
Now you are saying, "Wait... what?! 'Non-money?' How come I've never heard of non-money? What the hell is that?"
It's a dirty little secret. The Greek debt is in non-money, but the Greeks are obliged to pay it in money. Bankers and governments oblige taxpayers, ad infinitum (ad nauseum) with bonds for stadiums and wars (Seattle is getting a 3rd and 4th major league stadium, plus a multi-billion-plus 2 lane tunnel constructed under mud flats to replace an eight lane highway. San Francisco simply eliminated the rickety Bay Freeway after the Loma Linda quake damage, with no discernable economic loss.)
Here is how it works: Seattle voters hated the idea and did not want such a tunnel. A lawyer ran for mayor, staking his liberal credentials and lawyerly integrity on "no tunnel." He won. All interested parties now know the game: As the mayor says no, economic matters are arranged so the mayor and his are now and will ever be well compensated if the tunnel gets a go-ahead. Seattle, drowning in debt and with bondholders on the hook for now FOUR new major league stadiums, is capable of having only so much more debt mulcted from the productive segment of the citizenry.
Although the mayor is "against" the tunnel he negotiates an obligation on the rest of the state taxpayers that any overruns will be at the rest of the states expense. Now, the tunnel can command debt well beyond what mere Seattle can pay. With all of this in place, a by-election brings in enough votes to "pass the tunnel" and the mayor "grows in his job" and now supports the tunnel project, based on a by-election in which a tiny minority outvoted a tinier minority. Ka-ching! Seattle still hates the idea, but too bad.
This is played out as President Obama (in his role as willing-puppet) cuts off energy resources in USA, and directs funding to the whimsical and ludicrous "renewable" sources, and funds Brazilian oil exploration, assuring when he is out of office he has access to riches beyond his wildest dreams. They are greying his hair now, as they did Bill Clinton, so he can assume the role of sage elder statesman.
If my reading is cynical, why does it happen this way in every city, at every level, every time?
All of those bond obligations are non-money. They must be paid off in money. When USA builds dams in Peru, they are credited as a debt to USA in non-money, for which Peruvians must pay off in money. Whereas the cohort of elite Peruvians who went to Harvard execute the deals, it is the common Peruvian who must pay it off. It is not possible to pay it off, ever. With so much wealth mulcted out from Peru to USA, Peru can never find the means locally to support local investment.
As a side note, in the science of economics, there is a strange term, "moral hazard." Not inconceivable in a field laid out by a moral philosopher, but a strange term for a field purporting to be science.
Therefore, the problem in the "science" of economics of no set definitions, and its attending confusion, is not an accident. It is a fundamental requirement. Hey, who cares if the city runs up debt in terms of non-money? Well, you will when you get less and less for more and more of your labor. When those non-money pensions are paid out in less and less money because the value is diverted to bond holders.
USA perfected this practice overseas and brought it home. What goes around comes around.
Iceland has said no to paying out money against non-money debts. Iceland is recovering slowly but vigorously. Greece is working on a way to pay off non-money debts with Greek workers money. Greece is up in flames. Iceland is showing the non-violent and proper response to the game.
The game is the concentration of power in the hands of a few who may oblige the many with non-money debts that must be paid in money. The cover is economics as science. But where science is ordered to knowledge and understanding, economics is an exercise in confusing people.
To understand it, you must understand the definition of money. And non-money. I suspect less than 1% of the 99% can define money properly. Krugman can, which is why he can draw the distinction he does. Ron Paul can too. But they have a radically different view of the role of the state. If the 99% understood the terms properly, we'd say no.
Feel free to forward this by email to three of your friends.
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