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[Dec 31, 2017] Is [neo]Liberalism a Dying Faith by Pat Buchanan

Highly recommended!
Nationalism really represent a growing threat to neoliberalism. It is clear the the rise of nationalism was caused by the triumph of neoliberalism all over the globe. As neoliberal ideology collapsed in 2008, thing became really interesting now. Looks like 1920th-1940th will be replayed on a new level with the USA neoliberal empire under stress from new challengers instead of British empire.
Rumor about the death of neoliberalism are slightly exaggerated ;-). This social system still has a lot of staying power. you need some external shock like the need of cheap oil (defined as sustainable price of oil over $100 per barrel) to shake it again. Of some financial crisis similar to the crisis of 2008. Currently there is still no alternative social order that can replace it. Collapse of the USSR discredited both socialism even of different flavors then was practiced in the USSR. National socialism would be a step back from neoliberalism.
Notable quotes:
"... The retreat of [neo]liberalism is very visible in Asia. All Southeast Asian states have turned their backs on liberal democracy, especially Indonesia, the Philippines and Myanmar in the last decade. This NYT article notes that liberalism has essentially died in Japan, and that all political contests are now between what the west would consider conservatives: https://www.nytimes.com/2017/10/15/opinion/liberalism-japan-election.html ..."
"... What is today called "Liberalism" and "Conservatism" both are simply corrupted labels applied to the same top-down corporate-fascistic elite rule that I think Mr. Buchanan once referred to as "two wings of the same bird of prey." ..."
"... Nobody at the top cares about 'diversity.' They care about the easy profits that come from ever cheaper labor. 'Diversity' is not suicide but rather murder: instigated by a small number of very powerful people who have decided that the long-term health of their nations and civilization is less important than short-term profits and power. ..."
"... Hillary and Obama are to the right of the President that Buchanan served in his White House. Richard Nixon was to the Left of both Hillary and Obama. I can't even imagine Hillary accepting and signing into law a 'Clean Water Act' or enacting Price Controls to fight inflation. No way. Heck would freeze over before Hillary would do something so against her Banker Backers. ..."
"... It's sure that financial (neo)liberalism was in a growth phase prior to year 2000 (under Greenspan, the "Maestro") with a general belief that the economy could be "fine tuned" with risk eliminated using sophisticated financial instruments, monetary policy etc. ..."
"... If [neo] Liberalism is a package, then two heavy financial blows that shook the whole foundation were the collapse of the dot.com bubble (2000) and the mortgage bubble (2008). ..."
"... And, other (self-serving) neoliberal stories are now seen as false. For example, that the US is an "advanced post-industrial service economy", that out-sourcing would "free up Americans for higher skilled/higher wage employment" or that "the US would always gain from tariff free trade". ..."
"... The basic divide is surely Nationalism (America First) vs. Globalism (Neo-Liberalism), as shown by the last US Presidential election. ..."
"... Neoliberalism, of which the Clintons are acolytes, supports Free Trade and Open Borders. Although it claims to support World Government, in actual fact it supports corporatism. This is explicit in the TPPA Trump vetoed. Under the corporate state, the state controls the corporations, as Don Benito did in Italy. Under corporatism, the corporations tell the state what to do, as has been the case in America since at least the Clinton Presidency. ..."
"... But I recall that Pat B also said neoconservatism was on its way out a few years after Iraq war II and yet it's stronger than ever and its adherents are firmly ensconced in the joint chiefs of staff, the pentagon, Congress and the White House. It's also spawned a close cousin in liberal interventionism. ..."
Oct 01, 2002 | www.unz.com

Asked to name the defining attributes of the America we wish to become, many liberals would answer that we must realize our manifest destiny since 1776, by becoming more equal, more diverse and more democratic -- and the model for mankind's future.

Equality, diversity, democracy -- this is the holy trinity of the post-Christian secular state at whose altars Liberal Man worships.

But the congregation worshiping these gods is shrinking. And even Europe seems to be rejecting what America has on offer.

In a retreat from diversity, Catalonia just voted to separate from Spain. The Basque and Galician peoples of Spain are following the Catalan secession crisis with great interest.

The right-wing People's Party and far-right Freedom Party just swept 60 percent of Austria's vote, delivering the nation to 31-year-old Sebastian Kurz, whose anti-immigrant platform was plagiarized from the Freedom Party. Summarized it is: Austria for the Austrians!

Lombardy, whose capital is Milan, and Veneto will vote Sunday for greater autonomy from Rome.

South Tyrol (Alto Adige), severed from Austria and ceded to Italy at Versailles, written off by Hitler to appease Mussolini after his Anschluss, is astir anew with secessionism. Even the Sicilians are talking of separation.

By Sunday, the Czech Republic may have a new leader, billionaire Andrej Babis. Writes The Washington Post, Babis "makes a sport of attacking the European Union and says NATO's mission is outdated."

Platform Promise: Keep the Muslim masses out of the motherland.

To ethnonationalists, their countrymen are not equal to all others, but superior in rights. Many may nod at Thomas Jefferson's line that "All men are created equal," but they no more practice that in their own nations than did Jefferson in his

... ... ...

European peoples and parties are today using democratic means to achieve "illiberal" ends. And it is hard to see what halts the drift away from liberal democracy toward the restrictive right. For in virtually every nation, there is a major party in opposition, or a party in power, that holds deeply nationalist views.

European elites may denounce these new parties as "illiberal" or fascist, but it is becoming apparent that it may be liberalism itself that belongs to yesterday. For more and more Europeans see the invasion of the continent along the routes whence the invaders came centuries ago, not as a manageable problem but an existential crisis.

To many Europeans, it portends an irreversible alteration in the character of the countries their grandchildren will inherit, and possibly an end to their civilization. And they are not going to be deterred from voting their fears by being called names that long ago lost their toxicity from overuse.

And as Europeans decline to celebrate the racial, ethnic, creedal and cultural diversity extolled by American elites, they also seem to reject the idea that foreigners should be treated equally in nations created for their own kind.

Europeans seem to admire more, and model their nations more, along the lines of the less diverse America of the Eisenhower era, than on the polyglot America of 2017.

And Europe seems to be moving toward immigration polices more like the McCarran-Walter Act of 1950 than the open borders bill that Sen. Edward Kennedy shepherded through the Senate in 1965.

Kennedy promised that the racial and ethnic composition of the America of the 1960s would not be overturned, and he questioned the morality and motives of any who implied that it would.

Jason Liu , October 20, 2017 at 12:02 pm GMT
Yes. Fuck yes.

Liberalism is the naivete of 18th century elites, no different than today. Modernity as you know it is unsustainable, mostly because equality isn't real, identity has value for most humans, pluralism is by definition fractious, and deep down most people wish to follow a wise strongman leader who represents their interests first and not a vague set of universalist values.

Blind devotion to liberal democracy is another one of those times when white people take an abstract concept to weird extremes. It is short-sighted and autistically narrow minded. Just because you have an oppressive king doesn't mean everyone should be equals. Just because there was slavery/genocide doesn't mean diversity is good.

The retreat of [neo]liberalism is very visible in Asia. All Southeast Asian states have turned their backs on liberal democracy, especially Indonesia, the Philippines and Myanmar in the last decade. This NYT article notes that liberalism has essentially died in Japan, and that all political contests are now between what the west would consider conservatives: https://www.nytimes.com/2017/10/15/opinion/liberalism-japan-election.html

Good riddance. The idea that egalitarianism is more advanced than hierarchy has always been false, and flies against the long arc of history. Time for nationalists around the world to smash liberal democracy and build a new modernity based on actual humanism, with respect to hierarchies and the primacy of majorities instead of guilt and pathological compassion dressed up as political ideology.

TG , October 20, 2017 at 1:10 pm GMT
"Liberalism" is not dying. "Liberalism" is dead, and has been since at least 1970.

What is today called "Liberalism" and "Conservatism" both are simply corrupted labels applied to the same top-down corporate-fascistic elite rule that I think Mr. Buchanan once referred to as "two wings of the same bird of prey."

Nobody at the top cares about 'diversity.' They care about the easy profits that come from ever cheaper labor. 'Diversity' is not suicide but rather murder: instigated by a small number of very powerful people who have decided that the long-term health of their nations and civilization is less important than short-term profits and power.

Paul's Ghost , October 20, 2017 at 6:08 pm GMT
Its been dead for nearly 20 years now. Liberalism has long been the Monty Python parrot nailed to its perch. At this point, the term is mainly kept alive in right-wing attacks by people who lack the imagination to change their habitual targets for so long.

To my eye, the last 'liberal' politician died in a susupicious plane crash in 2000 as the Bush Republicans were taking the White House by their famous 5-4 vote/coup and also needed to claim control of the Senate. So, the last authentic 'liberal' Senator, Paul Wellstone of MN was killed in a suspicious plane crash that was never properly explained.

Hillary and Obama are to the right of the President that Buchanan served in his White House. Richard Nixon was to the Left of both Hillary and Obama. I can't even imagine Hillary accepting and signing into law a 'Clean Water Act' or enacting Price Controls to fight inflation. No way. Heck would freeze over before Hillary would do something so against her Banker Backers.

And, at the root, that is the key. The 'Liberals' that the right now rails against are strongly backed and supported by the Wall Street Banks and other corporate leaders. The 'Liberals' have pushed for a government Of the Bankers, By the Bankers and For the Bankers. The 'Liberals' now are in favor of Endless Unconstitutional War around the world.

Which can only mean that the term 'Liberal' has been so completely morphed away from its original meanings to be completely worthless.

The last true Liberal in American politics was Paul Wellstone. And even by the time he died for his sins, he was calling himself a "progressive" because after the Clintons and the Gores had so distorted the term Liberal it was meaningless. Or it had come to mean a society ruled by bankers, a society at constant war and throwing money constantly at a gigantic war machine, a society of censorship where the government needed to control all music lyrics, the same corrupt government where money could by anything from a night in the Lincoln Bedroom to a Presidential Pardon or any other government favor.

Thus, 'Liberals' were a dead movement even by 2000, when the people who actually believed in the American People over the profits of bankers were calling themselves Progressives in disgust at the misuse of the term Liberal. And now, Obama and Hillary have trashed and distorted even the term Progressive into bombing the world 365 days a year and still constantly throwing money at the military machine and the problems it invents.

So, Liberalism is so long dead that if you exumed the grave you'd only find dust. And Pat must be getting senile and just throwing back out the same lines he once wrote as a speechwriter for the last Great Lefty President Richard Nixon.

Miro23 , October 20, 2017 at 6:17 pm GMT

Is Liberalism a Dying Faith?

Another question is whether this is wishful thinking from Pat or some kind of reality.

I think that he's right, that Liberalism is a dying faith, and it's interesting to check the decline.

It's sure that financial (neo)liberalism was in a growth phase prior to year 2000 (under Greenspan, the "Maestro") with a general belief that the economy could be "fine tuned" with risk eliminated using sophisticated financial instruments, monetary policy etc.

If [neo] Liberalism is a package, then two heavy financial blows that shook the whole foundation were the collapse of the dot.com bubble (2000) and the mortgage bubble (2008).

And, other (self-serving) neoliberal stories are now seen as false. For example, that the US is an "advanced post-industrial service economy", that out-sourcing would "free up Americans for higher skilled/higher wage employment" or that "the US would always gain from tariff free trade".

In fact, the borderless global "world is flat" dogma is now seen as enabling a rootless hyper-rich global elite to draw on a sea of globalized serf labour with little or no identity, while their media and SWJ activists operate a scorched earth defense against any sign of opposition.

The basic divide is surely Nationalism (America First) vs. Globalism (Neo-Liberalism), as shown by the last US Presidential election.

reiner Tor , October 20, 2017 at 6:39 pm GMT
@Randal

A useful analogy might be Viktor Orbán. He started out as a leader of a liberal party, Fidesz, but then over time started moving to the right. It is often speculated that he started it for cynical reasons, like seeing how the right was divided and that there was essentially a vacuum there for a strong conservative party, but there's little doubt he totally internalized it. There's also little doubt (and at the time he and a lot of his fellow party leaders talked about it a lot) that as he (they) started a family and having children, they started to realize how conservatism kinda made more sense than liberalism.

With Kurz, there's the possibility for this path. However, he'd need to start a family soon for that to happen. At that age Orbán was already married with children

Verymuchalive , October 20, 2017 at 10:10 pm GMT
@Paul's Ghost

Liberalism ( large L) is indeed long dead.

Neoliberalism, of which the Clintons are acolytes, supports Free Trade and Open Borders. Although it claims to support World Government, in actual fact it supports corporatism. This is explicit in the TPPA Trump vetoed. Under the corporate state, the state controls the corporations, as Don Benito did in Italy. Under corporatism, the corporations tell the state what to do, as has been the case in America since at least the Clinton Presidency.

Richard Nixon was a capitalist, not a corporatist. He was a supporter of proper competition laws, unlike any President since Clinton. Socially, he was interventionist, though this may have been to lessen criticism of his Vietnam policies. Anyway, his bussing and desegregation policies were a long-term failure.

Price Control was quickly dropped, as it was in other Western countries. Long term Price Control, as in present day Venezuela, is economically disastrous.

KenH , October 21, 2017 at 1:51 pm GMT
Let's hope liberalism is a dying faith and that is passes from the Western world. If not it will destroy the West, so if it doesn't die a natural death then we must euthanize it. For the evidence is in and it has begat feminism, anti-white racism, demographic winter, mass third world immigration and everything else that ails the West and has made it the sick and dying man of the world.

But I recall that Pat B also said neoconservatism was on its way out a few years after Iraq war II and yet it's stronger than ever and its adherents are firmly ensconced in the joint chiefs of staff, the pentagon, Congress and the White House. It's also spawned a close cousin in liberal interventionism.

What Pat refers to as "liberalism" is now left wing totalitarianism and anti-white hatred and it's fanatically trying to remain relevant by lashing out and blacklisting, deplatforming, demonetizing, and physically assaulting all of its enemies on the right who are gaining strength much to their chagrin. They resort to these methods because they can't win an honest debate and in a true free marketplace of ideas they lose.

[Dec 31, 2017] Truth-Killing as a Meta-Issue

Highly recommended!
Notable quotes:
"... What we know, first and foremost, is that it hardly matters what Trump says because what he says is as likely as not to have no relationship to the truth, no relationship to what he said last year during the campaign or even what he said last week. ..."
May 05, 2017 | nationalinterest.org
One of the best summary observations in this regard is from Washington Post columnist Steven Pearlstein , who writes on business and financial matters but whose conclusions could apply as well to Trump's handling of a wide range of foreign and domestic matters: " What we know, first and foremost, is that it hardly matters what Trump says because what he says is as likely as not to have no relationship to the truth, no relationship to what he said last year during the campaign or even what he said last week. What he says bears no relationship to any consistent political or policy ideology or world-view. What he says is also likely to bear no relationship to what his top advisers or appointees have said or believe, making them unreliable interlocutors even if they agreed among themselves, which they don't. This lack of clear policy is compounded by the fact that the president, despite his boasts to the contrary, knows very little about the topics at hand and isn't particularly interested in learning. In other words, he's still making it up as he goes along."

Many elements of dismay can follow from the fact of having this kind of president. We are apt to get a better idea of which specific things are most worthy of dismay as the rest of this presidency unfolds. I suggest, however, that a prime, overarching reason to worry is Trump's utter disregard for the truth. Not just a disregard, actually, but a determination to crush the truth and to instill falsehood in the minds of as many people as possible. The Post 's fact checker, Glenn Kessler , summarizes the situation by noting that "the pace and volume of the president's misstatements" are so great that he and other fact checkers "cannot possibly keep up."

Kessler also observes how Trump's handling of falsehoods is qualitatively as well as quantitatively different from the garden variety of lying in which many politicians indulge: "Many will drop a false claim after it has been deemed false. But Trump just repeats the claim over and over." It is a technique reminiscent of the Big Lie that totalitarian regimes have used, in which the repetition and brazenness of a lie help lead to its acceptance.

The problem is fundamental, and relates to a broad spectrum of policy issues both foreign and domestic, because truth-factual reality -- is a necessary foundation to consider and evaluate and debate policy on any subject. Crushing the truth means not just our having to endure any one misdirected policy; it means losing the ability even to address policy intelligently. To the extent that falsehood is successfully instilled in the minds of enough people, the political system loses what would otherwise be its ability to provide a check on policy that is bad policy because it is inconsistent with factual reality.

[Dec 30, 2017] The Gas Fight Between Ukraine and Russia is Finally Settled - Who Really Won

The key here is whether Russia will stop transit of gas via Ukraine or not.
Notable quotes:
"... A more far-reaching result from the Stockholm proceedings was the intention to void the traditional (Gazprom) formula for gas prices which is based on a linkage to the price of oil. Instead, the price of gas will be tied directly to the spot gas market such as the European hub. ..."
"... In traditional Gazprom contracts, the price of gas depends on the price of oil, and only up to 15% of the price is a spot gas component. For decades, this contractual linkage of the price of gas to oil was largely accepted as being open and fair. ..."
"... the Stockholm arbitration declared that Naftogaz must honor their contract, and buy from Gazprom 5 billion cubic meters of gas annually. As it turns out the "take or pay" clause remains in force, but the volume has been significantly reduced. ..."
"... The irony is that while this is a loss of face for Kiev politically, economically it benefits the Ukrainian consumer. To date, Ukraine's purchases of "reverse gas" from Europe has been far more expensive than that which was contracted reliably over the years by Gazprom. ..."
Dec 30, 2017 | russia-insider.com

After 2014, Ukraine claimed that it was being overcharged, and therefore Naftogaz refused to pay Gazprom their contracted price for gas. Instead, it paid unilaterally a different amount that it subjectively considered "fair."

Gazprom, in keeping with mutually contracted terms and conditions, could only issue an invoice for the resulting underpayment, and after Naftogaz still refused to pay (a debt of approx. $2 billion), made any further deliveries of gas contingent on prepayment.

The arbitration additionally upheld Gazprom's position and denied Naftogaz any right to a refund for gas priced between May 2011 and April 2014 or collect any of the claimed "overcharged gas" totaling approximately $14 billion for that period. In sum, the price Kiev claimed was "inflated" was judged as in Stockholm as baseless.

Therefore, the question of who is accountable and responsible for settling debt has been clarified in Stockholm. Naftogaz must pay Gazprom $2 billion plus a fine calculated at 0.03% per day for each day this debt remains unpaid. This fine has already reached $3 million since the court decision on December 22nd, and if it not paid can reach an annualized figure of $216 million and still keep growing daily.

Like any political and economic story, there is quite a bit that does not make the flashy headlines, but plays a role in contributing to the noise surrounding an issue. Naftogaz takes satisfaction in that the settlement allowed that the gas price for the second quarter of 2014 was to be reduced from $485 to $352 per 1000 cubic meters, or 27%, thereby "saving" Ukraine about $ 1.8 billion for 2014-2015. The price of $485 was in fact fixed for that one quarter, and it was higher than the market price. The reason was that the March referendum and subsequent reunification of Crimea within the Russian Federation happened then. Up until that time, Russia had given Ukraine a discount of $100 per one thousand cubic meters of gas as payment for renting the Crimean base for the Black Sea fleet. The Kharkov treaty with Ukraine which dealt with the naval base was therefore canceled, as Crimea was once again Russia. Without this discount, the price increased by that same discounted $100 in the contracted quarterly price fix.

Key is Stockholm's recognition that the Russian gas price for Ukraine in 2011-2014 was fair, which is much more important than the price fixed in that second quarter in question. It is worth noting in the next third quarter of 2014 Gazprom was prepared to provide Ukraine with a market price for gas again. However, as we all know today, since June 2014 Naftogaz has refused to buy gas from Russia for political reasons and calling it an "aggressor nation."

A more far-reaching result from the Stockholm proceedings was the intention to void the traditional (Gazprom) formula for gas prices which is based on a linkage to the price of oil. Instead, the price of gas will be tied directly to the spot gas market such as the European hub. Should this occur, then the future gas price for Ukraine will be linked to the cost of fuel in the European hub. This would be a major departure from the traditional pricing Gazprom has used for decades, and might set a precedent for other buyers of Russian gas, who might also want to change their price formulation. In traditional Gazprom contracts, the price of gas depends on the price of oil, and only up to 15% of the price is a spot gas component. For decades, this contractual linkage of the price of gas to oil was largely accepted as being open and fair.

Since 2014, Ukraine has been buying reverse gas from Europe at such European spot hub prices, and it has so far been more expensive than the traditional Gazprom contract. It is also worth noting that spot prices are far more volatile, are seasonally demand-affected, and as winter is a peak consumption season the prices can and do increase dramatically.

Why did Gazprom take their initial large claims to court knowing beforehand that it would be impossible to get the tens of billions of dollars from Naftogaz or Ukraine without ruining both through default? The first reason is that a "take or pay" clause was a key and mutually agreed covenant of the contractual relationship, not a point to be discarded unilaterally by any single party. The second reason was as a response to Naftogaz multi-billion lawsuit on the transit of gas from Russia through Ukraine to Europe. The Ukrainian side believes that Gazprom should pay them extra for not sending 110 billion cubic meters of gas through pipelines annually across Ukraine. In the transit contract, there is no obligation for any such volumes to be transited through Ukraine's pipelines.

To sum up this drama, the Stockholm arbitration declared that Naftogaz must honor their contract, and buy from Gazprom 5 billion cubic meters of gas annually. As it turns out the "take or pay" clause remains in force, but the volume has been significantly reduced. How this volume of 5 billion cubic meters was arrived at remains a mystery, but one which will surely become clear over time. The political spin, however, will be interesting to observe since Ukraine must now buy (and pay for) this Russian gas. How will Kiev explain now having to buy Russian gas when since 2014 it stridently proclaimed it shall never buy fuel from "that aggressor nation."

The irony is that while this is a loss of face for Kiev politically, economically it benefits the Ukrainian consumer. To date, Ukraine's purchases of "reverse gas" from Europe has been far more expensive than that which was contracted reliably over the years by Gazprom. Now Kiev will have to find the funds to pay for Gazprom's gas, settle their debt and ever-growing fines, plus meet the rest of their energy needs by purchasing expensive reverse gas from Europe. It will take spin that is a lot more imaginative from Kiev to package this settlement into a believable political victory, and very creative accounting to get the money to pay for it.

[Dec 30, 2017] The Gas Fight Between Ukraine and Russia is Finally Settled - Who Really Won

The key here is whether Russia will stop transit of gas via Ukraine or not. All other details are less important.
Dec 30, 2017 | russia-insider.com

After 2014, Ukraine claimed that it was being overcharged, and therefore Naftogaz refused to pay Gazprom their contracted price for gas. Instead, it paid unilaterally a different amount that it subjectively considered "fair."

Gazprom, in keeping with mutually contracted terms and conditions, could only issue an invoice for the resulting underpayment, and after Naftogaz still refused to pay (a debt of approx. $2 billion), made any further deliveries of gas contingent on prepayment.

The arbitration additionally upheld Gazprom's position and denied Naftogaz any right to a refund for gas priced between May 2011 and April 2014 or collect any of the claimed "overcharged gas" totaling approximately $14 billion for that period. In sum, the price Kiev claimed was "inflated" was judged as in Stockholm as baseless.

Therefore, the question of who is accountable and responsible for settling debt has been clarified in Stockholm. Naftogaz must pay Gazprom $2 billion plus a fine calculated at 0.03% per day for each day this debt remains unpaid. This fine has already reached $3 million since the court decision on December 22nd, and if it not paid can reach an annualized figure of $216 million and still keep growing daily.

Like any political and economic story, there is quite a bit that does not make the flashy headlines, but plays a role in contributing to the noise surrounding an issue. Naftogaz takes satisfaction in that the settlement allowed that the gas price for the second quarter of 2014 was to be reduced from $485 to $352 per 1000 cubic meters, or 27%, thereby "saving" Ukraine about $ 1.8 billion for 2014-2015. The price of $485 was in fact fixed for that one quarter, and it was higher than the market price. The reason was that the March referendum and subsequent reunification of Crimea within the Russian Federation happened then. Up until that time, Russia had given Ukraine a discount of $100 per one thousand cubic meters of gas as payment for renting the Crimean base for the Black Sea fleet. The Kharkov treaty with Ukraine which dealt with the naval base was therefore canceled, as Crimea was once again Russia. Without this discount, the price increased by that same discounted $100 in the contracted quarterly price fix.

Key is Stockholm's recognition that the Russian gas price for Ukraine in 2011-2014 was fair, which is much more important than the price fixed in that second quarter in question. It is worth noting in the next third quarter of 2014 Gazprom was prepared to provide Ukraine with a market price for gas again. However, as we all know today, since June 2014 Naftogaz has refused to buy gas from Russia for political reasons and calling it an "aggressor nation."

A more far-reaching result from the Stockholm proceedings was the intention to void the traditional (Gazprom) formula for gas prices which is based on a linkage to the price of oil. Instead, the price of gas will be tied directly to the spot gas market such as the European hub. Should this occur, then the future gas price for Ukraine will be linked to the cost of fuel in the European hub. This would be a major departure from the traditional pricing Gazprom has used for decades, and might set a precedent for other buyers of Russian gas, who might also want to change their price formulation. In traditional Gazprom contracts, the price of gas depends on the price of oil, and only up to 15% of the price is a spot gas component. For decades, this contractual linkage of the price of gas to oil was largely accepted as being open and fair.

Since 2014, Ukraine has been buying reverse gas from Europe at such European spot hub prices, and it has so far been more expensive than the traditional Gazprom contract. It is also worth noting that spot prices are far more volatile, are seasonally demand-affected, and as winter is a peak consumption season the prices can and do increase dramatically.

Why did Gazprom take their initial large claims to court knowing beforehand that it would be impossible to get the tens of billions of dollars from Naftogaz or Ukraine without ruining both through default? The first reason is that a "take or pay" clause was a key and mutually agreed covenant of the contractual relationship, not a point to be discarded unilaterally by any single party. The second reason was as a response to Naftogaz multi-billion lawsuit on the transit of gas from Russia through Ukraine to Europe. The Ukrainian side believes that Gazprom should pay them extra for not sending 110 billion cubic meters of gas through pipelines annually across Ukraine. In the transit contract, there is no obligation for any such volumes to be transited through Ukraine's pipelines.

To sum up this drama, the Stockholm arbitration declared that Naftogaz must honor their contract, and buy from Gazprom 5 billion cubic meters of gas annually. As it turns out the "take or pay" clause remains in force, but the volume has been significantly reduced. How this volume of 5 billion cubic meters was arrived at remains a mystery, but one which will surely become clear over time. The political spin, however, will be interesting to observe since Ukraine must now buy (and pay for) this Russian gas. How will Kiev explain now having to buy Russian gas when since 2014 it stridently proclaimed it shall never buy fuel from "that aggressor nation."

The irony is that while this is a loss of face for Kiev politically, economically it benefits the Ukrainian consumer. To date, Ukraine's purchases of "reverse gas" from Europe has been far more expensive than that which was contracted reliably over the years by Gazprom. Now Kiev will have to find the funds to pay for Gazprom's gas, settle their debt and ever-growing fines, plus meet the rest of their energy needs by purchasing expensive reverse gas from Europe. It will take spin that is a lot more imaginative from Kiev to package this settlement into a believable political victory, and very creative accounting to get the money to pay for it.

[Dec 29, 2017] As former CIA Director William Casey allegedly once said: "We'll know our disinformation program is complete when everything the American public believes is false."

Notable quotes:
"... Russiagate and corporate media scapegoating Putin's trolls are information operations to keep the little people misinformed. The Ukraine Putsch and the MH-17 shoot down were handled poorly by Russia. They've come back in Syria. Russian intelligence wouldn't be doing their job if they weren't surveilling the West. ..."
"... What got western oligarchs upset is the disclosure of the truth; the system is rigged. Obama voters in mid-America voted for Donald Trump. Hillary Clinton's loss triggered a witch hunt rather than addressing the root causes of her defeat. A group of oligarchs want the upstart NY casino boss gone. The only question is what will be the collateral damage from the mob war. ..."
"... As former CIA Director William Casey allegedly once said: "We'll know our disinformation program is complete when everything the American public believes is false." His error here was saying Americans were the target and not the global population as well, but at least as far as America goes I think its pretty much a thumbs up. Mission Accomplished. ..."
"... Media and social media tycoons - all could be taken down very fast if they did not toe the CIA line, though for most, it seems their work with CIA is voluntary and enthusiastic. ..."
"... I guess you don't get that rich by having ethics or scruples. ..."
Dec 29, 2017 | www.moonofalabama.org

VietnamVet , Dec 26, 2017 3:40:43 PM | 30

Russiagate and corporate media scapegoating Putin's trolls are information operations to keep the little people misinformed. The Ukraine Putsch and the MH-17 shoot down were handled poorly by Russia. They've come back in Syria. Russian intelligence wouldn't be doing their job if they weren't surveilling the West.

Victoria Nuland's EU rant was released. Vladimir Putin preferred Donald Trump over Hillary Clinton.

What got western oligarchs upset is the disclosure of the truth; the system is rigged. Obama voters in mid-America voted for Donald Trump. Hillary Clinton's loss triggered a witch hunt rather than addressing the root causes of her defeat. A group of oligarchs want the upstart NY casino boss gone. The only question is what will be the collateral damage from the mob war.

NemesisCalling , Dec 26, 2017 4:39:00 PM | 36 karlof1 , Dec 26, 2017 4:42:57 PM | 37
Name of Me | Dec 26, 2017 12:13:28 PM | 2

The US Government was controlling media well before the CIA's creation. Please take a little time to learn about George Seldes whose 1929 book You Can't Print That!: The Truth Behind the News, 1918–1928 is vastly informative with original copies easy to find under $15, or even online through this link . Indeed, numerous works of his are digitized. I.F. Stone followed in Seldes's footsteps, and the website with his collected writings is here . Perhaps one of the least known episodes of US Government media manipulation was related to the atomic bomb crimes, an event nearly 100% airbrushed from history books, and of course the ongoing attempt to cover up one of the biggest crimes of all time.

My mention of media manipulation by the US Government wouldn't be complete without including the 100% blackout that was to apply to the discussions in Philadelphia that led to the 1787 Constitution -- the document that elevated the "natural aristocracy" into the catbird seat ensuring their control of the federal government until it's overthrown via revolution.

Fortunately, Madison and others kept copious notes that were eventually published long after the fate of Commoners was sealed, so we know that Aristocracy viewed its contemporary deplorables no differently than how HRC and today's 1% view them/us.

Pft , Dec 26, 2017 7:09:07 PM | 43
Americans and much of the rest of the world are the target of an immense psyop . Propaganda techniques going back to Bernay and WWI have been expanded on and perfected. Infiltration and control is lot limited to the print media and TV news stations but also , hollywood movies/TV shows , academia (history, economics, etc) , book publishing, blogs and social media. The last few bastions of truth will be eliminated with the end of net neutrality.

As former CIA Director William Casey allegedly once said: "We'll know our disinformation program is complete when everything the American public believes is false." His error here was saying Americans were the target and not the global population as well, but at least as far as America goes I think its pretty much a thumbs up. Mission Accomplished.

Peter AU 1 , Dec 26, 2017 7:58:27 PM | 49
"We do not know what the billionaires get for their service. The CIA surely has many ways to let them gain information on their competition or to influence business regulations in foreign countries. One hand will wash the other."

Something I have often thought about. Media and social media tycoons - all could be taken down very fast if they did not toe the CIA line, though for most, it seems their work with CIA is voluntary and enthusiastic.

I guess you don't get that rich by having ethics or scruples.

[Dec 26, 2017] Angry Bear " Why Would Anybody Invest When Capacity Utilization is This Low

Images removed.
Dec 26, 2017 | angrybearblog.com

A central selling point of the tax bill is that it will encourage investment. But that assumes that high tax rates were the primary reason why business wasn't investing. Instead, the data says business investment is weak because the U.S. has a ton of spare capacity.

First, let's look total capacity utilization: It has peaked at lower levels in each of the last three expansions.

Let's break the data down into durable and non-durable CU:

Both categories of production have ample spare capacity, with non-durable production having greater capacity.

Finally, let's look at crude, intermediate and final stages of production: All three have plenty of spare capacity to bring online if needed.

So, will we see a huge wave of investment as a result of the changed tax bill? The data says no.

rjs , December 22, 2017 11:59 am

adding capacity hasn't been about need for years companies have been adding plant and equipment that they didn't need for years because of incentives included in the code, such as the investment tax credit and accelerated depreciation, so it's really hard to say when that will stop..

spencer , December 22, 2017 1:30 pm

Rather than using the Fed estimate of capacity maybe it would be better to use a trend line for capacity utilization and compare that to reported capacity utilization. I think that would give a more realistic measure of economic slack as the trend line shows a long run trend of slower capacity growth.

Lyle , December 22, 2017 11:46 pm

The main investment might be made to automate things, replacing expensive human workers with cheaper automatic workers who don't need benefits and an HR department.

[Dec 26, 2017] BotCoin: Bitcoins are pure speculative assets which enable people to gamble. by Robert Waldmann

Notable quotes:
"... They have behaved badly with an unstable value of bitcoin (huge unpredictable Bitcoin deflation damages any use of bitcoin as a means of exchange as much as huge inflation would). ..."
"... Now no one is really interested in cryptocurrency except as a way to gamble and take money from fools. But if anyone were, linking the blockchain program to prices on an exchange would make it more nearly possible to use the cryptocurrency as a means of exchange. ..."
"... The system is vulnerable to a tacit agreement to trade only on unofficial exchanges. It is necessary that the problem is also made easier if daily trading volume on the official exchange is zero. The problem is the price could shoot up on unofficial exchanges, but this would not affect the price on the official exchange if there were no transactions on the official exchange. ..."
"... The basis was and remains to remove any and all national gov'ts across he globe from any influences on values of currencies, thus pure laissez-faire in the extreme .. as you say libertarian chaos. ..."
"... There is a much more severe problem with bitcoin. As the number mined asymptotically approaches the pre-determined maximum, the cost of mining approaches infinity. As miners are the ones who validate coins, what will happen to the reliability of bitcoin when it becomes uneconomical for anyone to participate in mining? ..."
Dec 25, 2017 | angrybearblog.com

I am going to make a fool of myself by suggesting that a cryptocurrency might actually be useful. Bitcoin et al have negative social utility. They are pure speculative assets which enable people to gamble. Also bitcoin miners use as much electricity as Denmark. The problem is exactly the aspect which has made bitcoin famous and which bitcoin enthusiasts consider a strength -- the enormous increase in the dollar price of bitcoin. This increase, and the recent sharp decline, make bitcoin useless as a means of exchange. Most firms don't want to gamble.

So I (semi-seriously this time) propose botcoin which might have a more stable dollar exchange rate. The idea is to link the blockchain verification program to an official exchange.

Backing up, there are two very different sorts of web-servers related to bitcoin. One set, the bitcoin miners, implements the original idea using the Bitcoin shareware. They keep a copy of the ledger of all bitcoin transactions -- the blockchain, race to create new blocks, and evaluate new blocks and add valid new blocks to the chain. The other servers are bitcoin exchanges in which bitcoin is traded for regular currency. They are not part of the original plan in which bitcoin would be traded for goods and services and function as a means of exchange. They have behaved badly with an unstable value of bitcoin (huge unpredictable Bitcoin deflation damages any use of bitcoin as a means of exchange as much as huge inflation would).

I propose linking the blockchain program to an exchange. So there would be an official botcoin exchange (this means it isn't entirely free-entry shareware libertarian anarchism). If anyone were interested in a new cryptocurrency designed so that speculators can't become rich (and pigs fly) there would be other unofficial exchanges.

The bitcoin program regulates the frequency of creation of new blocks to roughly one every six minutes. It does this by adjusting the difficulty of the pointless arithmetic problem which must be solved to make a new valid block. The idea was to limit the total amount of bitcoin which will ever be created (to 21 million for some reason). This was supposed to make bitcoin valuable. So far it has succeeded all too well (I am confident that in the end bitcoin will have price 0).

It is possible to make the supply of botcoin flexible so the dollar price doesn't shoot up. I would aim at a price of, say, 1 botcoin = $1000. The idea is to make the pointless problem which must be solved to add a block easier if the dollar price of botcoin exceeds the target, and harder if it falls below the target. This should stabilize the price.

Now no one is really interested in cryptocurrency except as a way to gamble and take money from fools. But if anyone were, linking the blockchain program to prices on an exchange would make it more nearly possible to use the cryptocurrency as a means of exchange.

The system is vulnerable to a tacit agreement to trade only on unofficial exchanges. It is necessary that the problem is also made easier if daily trading volume on the official exchange is zero. The problem is the price could shoot up on unofficial exchanges, but this would not affect the price on the official exchange if there were no transactions on the official exchange.

Lyle , December 25, 2017 11:22 pm

Of course Goldman Sachs and its competitors are doing just this building an options and futures exchange. (it is not really that much different than any other futures and options business)

Longtooth , December 26, 2017 5:01 am

But Robert,

then the entire foundation for Bitcoin's purpose disappears entirely, so what advantage remains?

The basis was and remains to remove any and all national gov'ts across he globe from any influences on values of currencies, thus pure laissez-faire in the extreme .. as you say libertarian chaos.

By making crypto-currency values subject to national currency exchange rates they cease to have any reason to exist at all.

We / globally in fact already use crypto exchange via electronic transactions .. adding block chain to it would be a benefit but a separate cryptocurrency is a worthless redundancy if it is subject to valuation by exchange rates of national currencies.

What am I missing?.

likbez , December 26, 2017 5:27 am

Great Article !!! I wish I can write about this topic on the same level. Thank you very much. P.S. Happy New Year for everybody !

rick shapiro , December 26, 2017 10:26 am

There is a much more severe problem with bitcoin. As the number mined asymptotically approaches the pre-determined maximum, the cost of mining approaches infinity. As miners are the ones who validate coins, what will happen to the reliability of bitcoin when it becomes uneconomical for anyone to participate in mining?

[Dec 26, 2017] What is the GOP goal A return to the "gilded age" (or worse) by Linda Beale

Notable quotes:
"... The tone deafness of Debbie Wasserman Schultz and, much of the time, Hillary Clinton, meant that ordinary people didn't understand that Trump is merely a blowhard capitalist who doesn't care if he cheats or lies or exploits other people so long as he gets notoriety and money, while the Democrats have been the party working for a decent sustainable economy, environmental protection and preservation, protection from pollution and diseases, and working wages for ordinary folk. ..."
Dec 26, 2017 | angrybearblog.com

run75441 , December 24, 2017 3:10 pm

Linda:

I believe this to be mostly correct;

Indeed, having an able, sympathetic messenger who can translate the issues that truly matter into terms that make sense to ordinary people is something the Democratic Party lacked in the last election. The tone deafness of Debbie Wasserman Schultz and, much of the time, Hillary Clinton, meant that ordinary people didn't understand that Trump is merely a blowhard capitalist who doesn't care if he cheats or lies or exploits other people so long as he gets notoriety and money, while the Democrats have been the party working for a decent sustainable economy, environmental protection and preservation, protection from pollution and diseases, and working wages for ordinary folk.

Dems have done us a disservice in not being able to communicate in terms many people could understand, relate to, and embrace.

Lyle , December 24, 2017 6:28 pm

Yet the Gilded age was one where the average person was better off in 1900 than in 1870. It was the period of the great deflation https://en.wikipedia.org/wiki/The_Great_Deflation which meant the cost of everything was in general dropping 2% per year in the us.

A large part of this at least for folks in larger cities was the integration of the US into essentially 1 market from several markets as most larger cities had at least 2 railroad groups serving them. I recall reading that in general estate inventories in 1900 show more goods than those in 1870. Just a bit outside this time frame My grandparents bought a farm in 1910 and build a new house.

The house on the property was a 2 room house that was turned into a coal shed and wash house. The new house had 6 rooms plus a root cellar. (Still off grid of course because this was in the country) this period was one of both rapid adoption of technologies developed in the first 1/2 of the 19th century, (railroad, telegraph, steamship) and the development and implementation of new technologies (auto, telephone, electricity, etc) See Creating the 20th century by Smil for details.

Of course some folks lost because they could no longer compete with imported goods, One example I have read is that up to 1869 a lot of furniture was built in Utah because it was so hard to get stuff there, The Union Pacific solved the problem and the local furniture makers found a new line of work.
So in general life was better in the US in 1900 than 1870 and things did at least then trickle down.

This was the period of the great deflation where the cost of living was declining about 2% a year: https://en.wikipedia.org/wiki/The_Great_Deflation And this document from the department of labor from 1898 listing wages shows roughly flat wages over that time (depending on the field although some went up (locomotive engineers went up 25% in this period for example) https://fraser.stlouisfed.org/scribd/?toc_id=498267&filepath=/files/docs/publications/bls/bls_v03_0018_1898.pdf&start_page=10

So it appears that if you look at unbiased statistics of the time a rising tide back then did lift all boats, even as a few got extremely rich, and as a result inequality increased.

likbez , December 26, 2017 5:55 am

Neoliberalism actually means restoration of Gilded Age on a new level. So the return to Gilded Age commenced not now, but with the election of Reagan, or slightly earlier. Trump actually professed "bastard neoliberalism" (neoliberalism without neoliberal globalizations).

Election of Trump IMHO signified the deep crisis of neoliberalism and loss of legitimacy of neoliberal elite in the USA. That's why Trump was elected and Hillary was not.

The fact that Trump quickly betrayed all his election promises does not change this. We saw such tricks before. He just proved that he is Republican Obama. Much less slick in that, but still belonging to the same brand of "change we can believe in" snake oil salesmen.

The key problem here is that as the neoliberal elite feels less and less secure at home it tries to suppress dissent with rampant jingoism (look at Trumps National security strategy) and Russophobia:

== quote ==
"China and Russia challenge American power, influence, and interests, attempting to erode American security and prosperity. They are determined to make economies less free and less fair, to grow their militaries, and to control information and data to repress their societies and expand their influence. At the same time, the dictatorships of the Democratic People's Republic of Korea and the Islamic Republic of Iran are determined to destabilize regions, threaten Americans and our allies, and brutalize their own people."
=== end of quote ===

That's why we have the current neo-McCarthyism campaign. The goal is to both to rally the nation around the flag rather than turning against the government, and to suppress the growing dissent by conflating it with pro-Russian sentiments. Turing the majority of US public and public opinion against Russian government. Along with the attempt to swipe Hillary Clinton fiasco and the corruption of DNC (and now the corruption of FBI which suppressed "emailgate") which pushed Sanders under the bus by illegal means. .

My impression is that while there is no clear alternative to neoliberalism as a social system, the growth and success of far-right movement both in Europe and the USA means that people badly want an alternative, whatever it can be. Even if this is far right nationalism.

[Dec 25, 2017] The USA as neocons occupied country

Apr 28, 2017 | economistsview.typepad.com
XXX, April 28, 2017 at 06:29 PM
Sanjait,

"Hillary Clinton, following a long tradition of mainstream Democrats, had a grab bag of proposals that, if enacted, would collectively make a huge difference in the lives of working people. "

I think you are wrong here.

Hillary was/is a neoliberal, and as such is hostile to the interests of working people and middle class in general. Like most neoliberals she is a Machiavellian elitist. Her election promises are pure demagogy, much like Trump or Obama election promised (immortalized in the slogan "change we can believe in" which now became the synonym of election fraud)

Also she was/is hell-bent of preserving/expanding the US neoliberal empire and the wars for neoliberal dominance (in ME mainly for the benefit of Israel and Saudis). War are pretty costly ventures and they are financed at the expense of working class and lower middle class, never at the expense of "fat cats" from Wall Street.

All-in-all I think the role of POTUS is greatly "misunderestimated" in your line of thinking. As we can see differences between Trump and Hillary in foreign policy are marginal. Why are you assuming that the differences in domestic economic policies would be greater ?

In reality there are other powerful factors in play that diminish the importance of POTUS:

  1. The US Presidential Elections are no longer an instrument for change. They are completely corrupted and are mostly of "bread and circuses" type of events, where two gladiators preselected by financial elite fight for the coveted position, using all kind of dirty tricks for US public entertainment.
  2. While the appearance of democracy remains, in reality the current system represents that rule of "deep state". In the classic form of "National security state". In the National Security State, the US people no longer have the any chances to change the policies.
  3. Political emasculation of US voters has led to frustration, depression and rage. It feeds radical right movement including neo-fascists, which embrace more extreme remedies to the current problems because they correctly feel that the traditional parties no longer represent the will of the people.
  4. Insulated and partially degenerated US elite have grown more obtuse and is essentially a hostage for neocons. They chose to ignore the seething anger that lies just below the surface of brainwashed Us electorate.
  5. The "American Dream" is officially dead. People at a and below lower middle class level see little hope for themselves, their children or the country. The chasm between top 1% (or let's say top 20%) and the rest continues to fuel populist anger.
  6. While Trump proved to be "yet another turncoat" like Barak Obama (who just got his first silver coin in the form of the $400K one hour speech) Trump's election signify a broad rejection of the country's neoliberal elite, including neoliberal MSM, neocon foreign policy as well as neoliberal economic system (and first of all neoliberal globalization).
  7. The country foreign policy remains hijacked by neocons (this time in the form of fiends of Paul Wolfowitz among the military brass appointed by Trump to top positions in his administration) and that might spell major conflict or even WWIII.

The level of subservience to neocon agenda in Trump administration might well be higher then in previous administration. And "make America first" was already transformed into "full spectrum dominance" == "America uber alles". http://www.newyorker.com/culture/culture-desk/deutschland-uber-alles-and-america-first-in-song

8. We can now talk about the USA as "neocon occupied country" (NOC), because the neocons policies contradict the USA national interests and put heavy burden of taxpayers, especially in lower income categories. Due to neglect in maintaining infrastructure, in some areas the USA already looks like third word country. Still we finance Israel and several other countries to the tune of $40 billion dollars in military aid alone (that that's in case of Israel just the tip of the iceberg; real figure is probably double of that) https://fas.org/sgp/crs/mideast/RL33222.pdf

Since Bill Clinton POTUS is more or less a marionette of financial oligarchy (which Obama -- as a person without the past (or with a very fuzzy past) - symbolizes all too well).

[Dec 25, 2017] American Carnage by Brad Griffin

Notable quotes:
"... It tells me that the bottom line is that Christmas has become a harder season for White families. We are worse off because of BOTH social and economic liberalism which has only benefited an elite few. The bottom half of the White population is now in total disarray – drug addiction, demoralization, divorce, suicide, abortion, atomization, stagnant wages, declining household income and investments – and this dysfunction is creeping up the social ladder. The worst thing we can do is step on the accelerator. ..."
Dec 24, 2017 | www.unz.com

As we move into 2018, I am swinging away from the Republicans. I don't support the Paul Ryan "Better Way" agenda. I don't support neoliberal economics. I think we have been going in the wrong direction since the 1970s and don't want to continue going down this road.

  1. Opioid Deaths: As we all know, the opioid epidemic has become a national crisis and the White working class has been hit the hardest by it. It is a "sea of despair" out there.
  2. White Mortality: As the family crumbles, religion recedes in his life, and his job prospects dwindle, the middle aged White working class man is turning to drugs, alcohol and suicide: The White suicide rate has soared since 2000:
  3. Median Household Income: The average household in the United States is poorer in 2017 than it was in 1997:
  4. Real GDP: Since the late 1990s, real GDP and real median household income have parted ways:
  5. Productivity and Real Wages: Since the 1970s, the minimum wage has parted ways with productivity gains in the US economy:
  6. Stock Market: Since 2000, the stock market has soared, but 10% of Americans own 80% of stocks. The top 1% owns 38% of stocks. In 2007, 3/4th of middle class households were invested in the stock market, but now only 50% are investors. Overall, 52% of Americans now own stocks, which is down from 65%. The average American has less than $1,000 in their combined checking and savings accounts.

Do you know what this tells me?

It tells me that the bottom line is that Christmas has become a harder season for White families. We are worse off because of BOTH social and economic liberalism which has only benefited an elite few. The bottom half of the White population is now in total disarray – drug addiction, demoralization, divorce, suicide, abortion, atomization, stagnant wages, declining household income and investments – and this dysfunction is creeping up the social ladder. The worst thing we can do is step on the accelerator.

Paul Ryan and his fellow conservatives look at this and conclude we need MORE freedom. We need lower taxes, more free trade, more deregulation, weaker unions, more immigration and less social safety net spending. He wants to follow up tax reform with entitlement reform in 2018. I can't but see how this is going to make an already bad situation for the White working class even worse.

I'm not rightwing in the sense that these people are. I think their policies are harmful to the nation. I don't think they feel any sense of duty and obligation to the working class like we do. They believe in liberal abstractions and make an Ayn Rand fetish out of freedom whereas we feel a sense of solidarity with them grounded in race, ethnicity and culture which tempers class division. We recoil at the evisceration of the social fabric whereas conservatives celebrate this blind march toward plutocracy.

Do the wealthy need to own a greater share of the stock market? Do they need to own a greater share of our national wealth? Do we need to loosen up morals and the labor market? Do we need more White children growing up in financially stressed, broken homes on Christmas? Is the greatest problem facing the nation spending on anti-poverty programs? Paul Ryan and the True Cons think so.

Yeah, I don't think so. I also think it is a good thing right now that we aren't associated with the mainstream Right. In the long run, I bet this will pay off for us. I predict this platform they have been standing on for decades now, which they call the conservative base, is going to implode on them. Donald Trump was only the first sign that Atlas is about to shrug.

(Republished from Occidental Dissent by permission of author or representative)

[Dec 25, 2017] Ukraine loses gas dispute to Russia; ordered to pay $2 billion to Gazprom by by Alexander Mercouris

Notable quotes:
"... By contrast the reduction in the gas price Naftogaz refers to from $485/tcm to $352 tcm which Naftogaz makes much of in its statement appears to apply only to gas supplied to Ukraine by Gazprom in the second quarter of 2014 and still sets the price of gas supplied to Ukraine by Gazprom higher than was demanded by Ukraine during this period. ..."
"... Ukraine recently borrowed $3 billion on the international financial markets at very high interest almost certainly in order to pay the $3 billion the High Court in London has ordered it to pay Russia. Whilst the $2 billion is technically a debt owed by Naftogaz not Ukraine and its non-payment would does not place Ukraine in a state of sovereign default, Gazprom is in a position to enforce the debt against Naftogaz's assets (including gas it buys) in the European Economic Area. It is difficult to see how Naftogaz and Ukraine can avoid payment of this debt. ..."
"... Has Ukraine actually gained anything from its long running gas dispute with Russia? ..."
Dec 25, 2017 | theduran.com

On Friday 21st December 2017 the Stockholm Arbitration Court made a ruling in the legal dispute between Ukraine's state owned gas monopoly Naftogaz and Russia's largely state owned gas monopoly Gazprom.

In the hours after the decision – which like all decisions of the Stockholm Arbitration Court – is not published, Naftogaz claimed victory in a short statement. However over the course of the hours which followed Gazprom provided details of the decision which suggests that the truth is the diametric opposite.

The Duran recommends using WP Engine >>

Here is how the Financial Times reports the competing claims

Both Ukraine's Naftogaz and Russia's Gazprom both on Friday claimed victory as a Stockholm arbitration tribunal issued the final award ruling in the first of two cases in a three-year legal battle between the state-controlled energy companies, where total claims stand at some $80bn.

An emailed statement from the Ukrainian company was titled:

"Naftogaz wins the gas sales arbitration case against Gazprom on all issues in dispute."

Start your own website here >>

The Stockholm arbitration tribunal -- in its final award ruling in a dispute over gas supplies from prior years -- had, according to Naftogaz, struck down Gazprom's claim to receive $56bn for gas contracted but not supplied through controversial "take-or-pay" clauses. They were included in a supply contract Ukraine signed in 2009 after Gazprom dented supplies to the EU by cutting all flow amid a price dispute -- including transit through the country's vast pipeline systems. In a tweet Ukraine's foreign minister

Pavlo Klimkin wrote: "The victory of Naftogaz in the Stockholm arbitration: It's not a knockout, but three knockdowns with obvious advantage."

But later Gazprom countered that arbitors "acknowledged the main points of the contract were in effect and upheld the majority of Gazprom's demands for payment for gas supplies", worth over $2bn. A Naftogaz official responded that the company never refused to pay for gas supplied, but challenged price and conditions.

Given the tribunal does not make its decisions public, doubt loomed over which side was the ultimate winner. Anticipation also grew over the second and final tribunal award expected early next year over disputes both have concerning past gas transit obligations.

Friday's final Stockholm arbitration ruling follows a preliminary decision from last May after which both sides were given time to settle monetary claims outside of the tribunal but failed to reach agreement.

Here is the full Naftogaz statement:

"Today, the Tribunal at the Arbitration Institute of the Stockholm Chamber of Commerce has completely rejected Gazprom take-or-pay claims to Naftogaz amounting to USD 56 billion for 2009-2017.

Gazprom said that in a separate decision on May 31 of this year, the tribunal denied Naftogaz's application to review prices from May 2011 to April 2014, ordered it to pay $14bn for gas supplies during that period, and said that the take-or-pay conditions applied for the duration of the contract. Gazprom claimed that Naftogaz would have to pay it $2.18bn plus interest of 0.03 per cent for every day the payments were late, and then pay for 5bn cm of gas annually starting next year.

When the different sides give opposite accounts of the same decision it obviously becomes difficult to say what the real decision actually is. However Gazprom says that the court upheld (1) the main provisions of the contract; (2) the contract's take-or-pay provisions, these being a particularly contentious issue in the contract; and (3) that Naftogaz has been ordered to pay Gazprom $2 billion, presumably immediately, with interest for every day the amount is unpaid.

By contrast the reduction in the gas price Naftogaz refers to from $485/tcm to $352 tcm which Naftogaz makes much of in its statement appears to apply only to gas supplied to Ukraine by Gazprom in the second quarter of 2014 and still sets the price of gas supplied to Ukraine by Gazprom higher than was demanded by Ukraine during this period.

The key point here is that Russia agreed to reduce the price of gas supplied to Ukraine by an agreement Russia's President Putin reached with Ukraine's President Yanukovich in December 2013. After the Maidan coup the new Ukrainian government went back on the agreement causing the Russians to demand payment of the original price. However over the course of 2014, as energy prices began first to slide and then crashed, and as it became clear that Ukraine was simply not paying for its gas, Russia again reduced the price of the gas Ukraine had to pay.

What seems to have happened is that the Stockholm Arbitration Court decided to smooth out the price of gas payable by Ukraine throughout 2014, which is the sort of thing arbitration tribunals are regularly known to do, whilst leaving the essentials of the contract unchanged.

If so then this is not a victory by Ukraine but a clearcut defeat, which Naftogaz and the Ukrainian government have tried to spin into a victory by citing the reduction in the gas price in the second quarter of 2014 and the reduction in future gas import volumes, neither of which were contentious issues. By contrast it is clear that Ukraine and Naftogaz must pay the full contractual price and abide by the contract's take-or-pay provisions for the whole of the period of the contract prior to the second quarter of 2014.

What this means in terms of hard cash is that Ukraine must now pay Russia a further $2 billion on top of the $3 billion it was recently ordered to pay by the High Court in London. Just as it is holding back on paying the $3 billion it was ordered to pay by the High Court until the appeal process in London is finished, so it will try to hold off paying the $2 billion it has just been ordered to pay to Gazprom until the final decision of the Stockholm Arbitration Court (thus the brave talk of Naftogaz's claims of "up to $16 billion transit contract arbitration against Gazprom") but thereafter payment of the $2 billion will fall due. I say this because the claim Gazprom owes Naftogaz "up to" $16 billion in transit fees looks like it has been plucked out of the air.

What this means is that over the course of 2018 Ukraine will have to pay Russia $5 billion ($3 billion awarded by the High Court in London and $2 billion awarded by the Stockholm Arbitration Court). Since the $2 billion awarded by the Stockholm Arbitration Court is technically an arbitration award, Gazprom will need to convert it into a court Judgment before it can enforce it, but that is merely a formality. At that point this debt will become not merely due but legally enforceable as well.

Ukraine recently borrowed $3 billion on the international financial markets at very high interest almost certainly in order to pay the $3 billion the High Court in London has ordered it to pay Russia. Whilst the $2 billion is technically a debt owed by Naftogaz not Ukraine and its non-payment would does not place Ukraine in a state of sovereign default, Gazprom is in a position to enforce the debt against Naftogaz's assets (including gas it buys) in the European Economic Area. It is difficult to see how Naftogaz and Ukraine can avoid payment of this debt.

Has Ukraine actually gained anything from its long running gas dispute with Russia?

Naftogaz brags that Ukraine has saved up to $75 billion because it is no longer buying gas from Russia. However this begs the question of whether the gas Ukraine is now importing from Europe really is significantly cheaper than the gas Ukraine was buying from Russia? This is debatable and with energy prices rising it is likely to become even less likely over time.

[Dec 23, 2017] Debunking Mainstream Economists on Secular Stagnation and the Loanable Funds Fallacy by Servaas Storm

Notable quotes:
"... By Servaas Storm, Senior Lecturer at Delft University of Technology, who works on macroeconomics, technological progress, income distribution & economic growth, finance, development and structural change, and climate change. Originally published at the Institute for New Economic Thinking website ..."
"... Forget the myth of a savings glut causing near-zero interest rates. We have a shortage of aggregate demand, and only public spending and raising wages will change that. ..."
"... ceteris paribus ..."
"... simultaneously ..."
"... private households ..."
"... See original post for references ..."
"... This is the night of the expanding man I take one last drag as I approach the stand I cried when I wrote this song Sue me if I play too long This brother is free I'll be what I want to be ..."
Dec 22, 2017 | www.nakedcapitalism.com

by Yves Smith Yves here. This is a terrific takedown of the loanable funds theory, on which a ton of bad policy rests.

By Servaas Storm, Senior Lecturer at Delft University of Technology, who works on macroeconomics, technological progress, income distribution & economic growth, finance, development and structural change, and climate change. Originally published at the Institute for New Economic Thinking website

Forget the myth of a savings glut causing near-zero interest rates. We have a shortage of aggregate demand, and only public spending and raising wages will change that.

Introduction

Nine years after the Great Financial Crisis, U.S. output growth has not returned to its pre-recession trend, even after interest rates hit the 'zero lower bound' (ZLB) and the unconventional monetary policy arsenal of the Federal Reserve has been all but exhausted. It is widely feared that this insipid recovery reflects a 'new normal', characterized by "secular stagnation" which set in already well before the global banking crisis of 2008 (Summers 2013, 2015).

This 'new normal' is characterized not just by this slowdown of aggregate economic growth, but also by greater income and wealth inequalities and a growing polarization of employment and earnings into high-skill, high-wage and low-skill, low-wage jobs -- at the expense of middle-class jobs (Temin 2017; Storm 2017). The slow recovery, heightened job insecurity and economic anxiety have fueled a groundswell of popular discontent with the political establishment and made voters captive to Donald Trump's siren song promising jobs and growth ( Ferguson and Page 2017 ).

What are the causes of secular stagnation? What are the solutions to revive growth and get the U.S. economy out of the doldrums?

If we go by four of the papers commissioned by the Institute for New Economic Thinking (INET) at its recent symposium to explore these questions, one headline conclusion stands out: the secular stagnation is caused by a heavy overdose of savings (relative to investment), which is caused by higher retirement savings due to declining population growth and an ageing labour force (Eggertson, Mehotra & Robbins 2017; Lu & Teulings 2017; Eggertson, Lancastre and Summers 2017), higher income inequality (Rachel & Smith 2017), and an inflow of precautionary Asian savings (Rachel & Smith 2017). All these savings end up as deposits, or 'loanable funds' (LF), in commercial banks. In earlier times, so the argument goes, banks would successfully channel these 'loanable funds' into productive firm investment -- by lowering the nominal interest rate and thus inducing additional demand for investment loans.

But this time is different: the glut in savings supply is so large that banks cannot get rid of all the loanable funds even when they offer firms free loans -- that is, even after they reduce the interest rate to zero, firms are not willing to borrow more in order to invest. The result is inadequate investment and a shortage of aggregate demand in the short run, which lead to long-term stagnation as long as the savings-investment imbalance persists. Summers (2015) regards a "chronic excess of saving over investment" as "the essence of secular stagnation". Monetary policymakers at the Federal Reserve are in a fix, because they cannot lower the interest rate further as it is stuck at the ZLB. Hence, forces of demography and ageing, higher inequality and thrifty Chinese savers are putting the U.S. economy on a slow-moving turtle -- and not much can be done, it seems, to halt the resulting secular stagnation.

This is clearly a depressing conclusion, but it is also wrong.

To see this, we have to understand why there is a misplaced focus on the market for loanable funds that ignores the role of fiscal policy that is plainly in front of us. In other words, we need to step back from the trees of dated models and see the whole forest of our economy.

The Market for Loanable Funds

In the papers mentioned, commercial banks must first mobilise savings in order to have the loanable funds (LF) to originate new (investment) loans or credit. Banks are therefore intermediaries between "savers" (those who provide the LF-supply) and "investors" (firms which demand the LF). Banks, in this narrative, do not create money themselves and hence cannot pre -finance investment by new money. They only move it between savers and investors.

We apparently live in a non-monetary (corn) economy -- one that just exchanges a real good that everybody uses, like corn. Savings (or LF-supply) are assumed to rise when the interest rate R goes up, whereas investment (or LF-demand) must decline when R increases. This is the stuff of textbooks, as is illustrated by Greg Mankiw's (1997, p. 63) explanation:

In fact, saving and investment can be interpreted in terms of supply an demand. In this case, the 'good' is loanable funds, and its 'price' is the interest rate. Saving is the supply of loans -- individuals lend their savings to investors, or they deposit their saving in a bank that makes the loan for them. Investment is the demand for loanable funds -- investors borrow from the public directly by selling bonds or indirectly by borrowing from banks. [ .] At the equilibrium interest rate, saving equals investment and the supply of loans equals the demand.

But the loanable funds market also forms the heart of complicated dynamic stochastic general equilibrium (DSGE) models, beloved by 'freshwater' and 'saltwater' economists alike (Woodford 2010), as should be clear from the commissioned INET papers as well. Figure 1 illustrates the loanable funds market in this scheme. The upward-sloping curve tells us that savings (or LF-supply) goes up as the interest rate R increases. The downward-sloping curve shows us that investment (or LF-demand) declines if the cost of capital (R) goes up. In the initial situation, the LF-market clears at a positive interest rate R0 > 0. Savings equal investment, which implies that LF-supply matches LF-demand, and in this -- happy -- equilibrium outcome, the economy can grow along some steady-state path.

To see how we can get secular stagnation in such a loanable-funds world, we introduce a shock, say, an ageing population (a demographic imbalance), a rise in (extreme) inequality, or an Asian savings glut, due to which the savings schedule shifts down. Equilibrium in the new situation should occur at R1 which is negative. But this can't happen because of the ZLB: the nominal interest cannot decline below zero. Hence R is stuck at the ZLB and savings exceed investment, or LF-supply > LF-demand. This is a disequilibrium outcome which involves an over-supply of savings (relative to investment), in turn leading to depressed growth.

Ever since Knut Wicksell's (1898) restatement of the doctrine, the loanable funds approach has exerted a surprisingly strong influence upon some of the best minds in the profession. Its appeal lies in the fact that it can be presented in digestible form in a simple diagram (as Figure 1), while its micro-economic logic matches the neoclassical belief in the 'virtue of thrift' and Max Weber's Protestant Ethic, which emphasize austerity, savings (before spending!) and delayed gratification as the path to bliss.

The problem with this model is that it is wrong (see Lindner 2015; Taylor 2016 ). Wrong in its conceptualisation of banks (which are not just intermediaries pushing around existing money, but which can create new money ex nihilo ), wrong in thinking that savings or LF-supply have anything to do with "loans" or "credit," wrong because the empirical evidence in support of a "chronic excess of savings over investment" is weak or lacking, wrong in its utter neglect of finance, financialization and financial markets, wrong in its assumption that the interest rate is some "market-clearing" price (the interest rate, as all central bankers will acknowledge, is the principal instrument of monetary policy), and wrong in the assumption that the two schedules -- the LF-supply curve and the LF-demand curve -- are independent of one another (they are not, as Keynes already pointed out).

Figure 1: The Loanable Funds Market: A Savings Glut Causing Secular Stagnation

I wish to briefly elaborate these six points. I understand that each of these criticisms is known and I entertain little hope that that any of this will make people reconsider their approach, analysis, diagnosis and conclusions. Nevertheless, it is important that these criticisms are raised and not shoveled under the carpet. The problem of secular stagnation is simply too important to be left mis-diagnosed.

First Problem: Loanable Funds Supply and Demand Are Not Independent Functions

Let me start with the point that the LF-supply and LF-demand curve are not two independent schedules. Figure 1 presents savings and investment as functions of only the interest rate R, while keeping all other variables unchanged. The problem is that the ceteris paribus assumption does not hold in this case. The reason is that savings and investment are both affected by, and at the same time determined by, changes in income and (changes in) income distribution. To see how this works, let us assume that the average propensity to save rises in response to the demographic imbalance and ageing. As a result, consumption and aggregate demand go down. Rational firms, expecting future income to decline, will postpone or cancel planned investment projects and investment declines (due to the negative income effect and for a given interest rate R0). This means that LF-demand curve in Figure 1 must shift downward in response to the increased savings. The exact point was made by Keynes (1936, p. 179):

The classical theory of the rate of interest [the loanable funds theory] seems to suppose that, if the demand curve for capital shifts or if the curve relating the rate of interest to the amounts saved out of a given income shifts or if both these curves shift, the new rate of interest will be given by the point of intersection of the new positions of the two curves. But this is a nonsense theory. For the assumption that income is constant is inconsistent with the assumption that these two curves can shift independently of one another. If either of them shift, then, in general, income will change; with the result that the whole schematism based on the assumption of a given income breaks down In truth, the classical theory has not been alive to the relevance of changes in the level of income or to the possibility of the level of income being actually a function of the rate of the investment.

Let me try to illustrate this using Figure 2. Suppose there is an exogenous (unexplained) rise in the average propensity to save. In reponse, the LF-supply curve shifts down, but because (expected) income declines, the LF-demand schedule shifts downward as well. The outcome could well be that there is no change in equilibrium savings and equilibrium investment. The only change is that the 'natural' interest is now R1 and equal to the ZLB. Figure 2 is, in fact, consistent with the empirical analysis (and their Figure of global savings and investment) of Rachel & Smith. Let me be clear: Figure 2 is not intended to suggest that the loanable funds market is useful and theoretically correct. The point I am trying to make is that income changes and autonomous demand changes are much bigger drivers of both investment and saving decisions than the interest rate. Market clearing happens here -- as Keynes was arguing -- because the level of economic activity and income adjust, not because of interest-rate adjustment.

Figure 2: The Loanable Funds Market: Shifts in Both Schedules

Second Problem: Savings Do Not Fund Investment, Credit Does

The loanable funds doctrine wrongly assumes that commercial bank lending is constrained by the prior availability of loanable funds or savings. The simple point in response is that, in real life, modern banks are not just intermediaries between 'savers' and 'investors', pushing around already-existing money, but are money creating institutions. Banks create new money ex nihilo , i.e. without prior mobilisation of savings. This is illustrated by Werner's (2014) case study of the money creation process by one individual commercial bank. What this means is that banks do pre-finance investment, as was noted by Schumpeter early on and later by Keynes (1939), Kaldor (1989), Kalecki, and numerous other economists. It is for this reason that Joseph Schumpeter (1934, p. 74) called the money-creating banker 'the ephor of the exchange economy' -- someone who by creating credit ( ex nihilo ) is pre-financing new investments and innovation and enables "the carrying out of new combinations, authorizes people, in the name of society as it were, to form them." Nicholas Kaldor (1989, p. 179) hit the nail on its head when he wrote that "[C]redit money has no 'supply function' in the production sense (since its costs of production are insignificant if not actually zero); it comes into existence as a result of bank lending and is extinguished through the repayment of bank loans. At any one time the volume of bank lending or its rate of expansion is limited only by the availability of credit-worthy borrowers." Kaldor had earlier expressed his views on the endogeneity of money in his evidence to the Radcliffe Committee on the Workings of the Monetary System, whose report (1959) was strongly influenced by Kaldor's argumentation. Or take Lord Adair Turner (2016, pp. 57) to whom the loanable-funds approach is 98% fictional, as he writes:

Read an undergraduate textbook of economics, or advanced academic papers on financial intermediation, and if they describe banks at all, it is usually as follows: "banks take deposits from households and lend money to businesses, allocating capital between alternative capital investment possibilities." But as a description of what modern banks do, this account is largely fictional, and it fails to capture their essential role and implications. [ ] Banks create credit, money, and thus purchasing power. [ ] The vast majority of what we count as "money' in modern economies is created in this fashion: in the United Kingdom 98% of money takes this form .

We therefore don't need savings to make possible investment -- or, in contrast to the Protestant Ethic, banks allow us to have 'gratification' even if we have not been 'thrifty' and austere, as long as there are slack resources in the economy.

It is by no means a secret that commercial banks create new money. As the Bank of England (2007) writes, "When bank make loans they create additional deposits for those that have borrowed" (Berry et al. 2007, p. 377). Or consider the following statement from the Deutsche Bundesbank (2009): "The commercial banks can create money themselves ." Across the board, central bank economists, including economists working at the Bank for International Settlements (Borio and Disyatat 2011), have rejected the loanable funds model as a wrong description of how the financial system actually works (see McLeay et al . 2014a, 2014b; Jakab and Kumhof 2015). And the Deutsche Bundesbank (2017) leaves no doubt as to how the banking system works and money is created in actually-existing capitalism, stating that the ability of banks to originate loans does not depend on the prior availability of saving deposits. Bank of England economists Zoltan Jakab and Michael Kumhoff (2015) reject the loanable-funds approach in favour of a model with money-creating banks. In their model (as in reality), banks pre-finance investment; investment creates incomes; people save out of their incomes; and at the end of the day, ex-post savings equal investment. This is what Jakab and Kumhoff (2015) conclude:

" . if the loan is for physical investment purposes, this new lending and money is what triggers investment and therefore, by the national accounts identity of saving and investment (for closed economies), saving. Saving is therefore a consequence, not a cause, of such lending. Saving does not finance investment, financing does. To argue otherwise confuses the respective macroeconomic roles of resources (saving) and debt-based money (financing)."

Savings are a consequence of credit-financed investment (rather than a prior condition) -- and we cannot draw a savings-investment cross as in Figure 1, as if the two curves are independent. They are not. There exists therefore no 'loanable funds market' in which scarce savings constrain (through interest rate adjustments) the demand for investment loans. Highlighting the loanable funds fallacy, Keynes wrote in "The Process of Capital Formation" (1939):

"Increased investment will always be accompanied by increased saving, but it can never be preceded by it. Dishoarding and credit expansion provides not an alternative to increased saving, but a necessary preparation for it. It is the parent, not the twin, of increased saving."

This makes it all the more remarkable that some of the authors of the commissioned conference papers continue to frame their analysis in terms of the discredited loanable funds market which wrongly assumes that savings have an existence of their own -- separate from investment, the level of economic activity and the distribution of incomes.

Third Problem: The Interest Rate Is a Monetary Policy Instrument, Not a Market-Clearing Price

In loanable funds theory, the interest rate is a market price, determined by LF-supply and LF-demand (as in Figure 1). In reality, central bankers use the interest rate as their principal policy instrument (Storm and Naastepad 2012). It takes effort and a considerable amount of sophistry to match the loanable funds theory and the usage of the interest rate as a policy instrument. However, once one acknowledges the empirical fact that commercial banks create money ex nihilo , which means money supply is endogenous, the model of an interest-rate clearing loanable funds market becomes untenable. Or as Bank of England economists Jakab and Kumhof (2015) argue:

modern central banks target interest rates, and are committed to supplying as many reserves (and cash) as banks demand at that rate, in order to safeguard financial stability. The quantity of reserves is therefore a consequence, not a cause, of lending and money creation. This view concerning central bank reserves [ ] has been repeatedly described in publications of the world's leading central banks.

What this means is that the interest rate may well be at the ZLB, but this is not caused by a savings glut in the loanable funds market, but the result of a deliberate policy decision by the Federal Reserve -- in an attempt to revive sluggish demand in a context of stagnation, subdued wage growth, weak or no inflation, substantial hidden un- and underemployment, and actual recorded unemployment being (much) higher than the NAIRU (see Storm and Naastepad 2012). Seen this way, the savings glut is the symptom (or consequence ) of an aggregate demand shortage which has its roots in the permanent suppression of wage growth (relative to labour productivity growth), the falling share of wages in income, the rising inequalities of income and wealth (Taylor 2017) as well as the financialization of corporations (Lazonick 2017) and the economy as a whole (Storm 2018). It is not the cause of the secular stagnation -- unlike in the loanable funds models.

Fourth Problem: The Manifest Absence of Finance and Financial Markets

What the various commissioned conference papers do not acknowledge is that the increase in savings (mostly due to heightened inequality and financialization) is not channeled into higher real-economy investment, but is actually channeled into more lucrative financial (derivative) markets. Big corporations like Alphabet, Facebook and Microsoft are holding enormous amounts of liquidity and IMF economists have documented the growth of global institutional cash pools, now worth $5 to 6 trillion and managed by asset or money managers in the shadow banking system (Pozsar 2011; Pozsar and Singh 2011; Pozsar 2015). Today's global economy is suffering from an unprecedented "liquidity preference" -- with the cash safely "parked" in short-term (over-collateralized lending deals in the repo-market. The liquidity is used to earn a quick buck in all kinds of OTC derivatives trading, including forex swaps, options and interest rate swaps. The global savings glut is the same thing as the global overabundance of liquidity (partying around in financial markets) and also the same thing as the global demand shortage -- that is: the lack of investment in real economic activity, R&D and innovation.

The low interest rate is important in this context, because it has dramatically lowered the opportunity cost of holding cash -- thus encouraging (financial) firms, the rentiers and the super-rich to hold on to their liquidity and make (quick and relatively safe and high) returns in financial markets and exotic financial instruments. Added to this, we have to acknowledge the fact that highly-leveraged firms are paying out most of their profits to shareholders as dividends or using it to buy back shares (Lazonick 2017). This has turned out to be damaging to real investment and innovation, and it has added further fuel to financialization (Epstein 2018; Storm 2018). If anything, firms have stopped using their savings (or retained profits) to finance their investments which are now financed by bank loans and higher leverage. If we acknowledge these roles of finance and financial markets, then we can begin to understand why investment is depressed and why there is an aggregate demand shortage. More than two decades of financial deregulation have created a rentiers' delight, a capitalism without 'compulsions' on financial investors, banks, and the property-owning class which in practice has led to 'capitalism for the 99%' and 'socialism for the 1%' (Palma 2009; Epstein 2018) For authentic Keynesians, this financialized system is the exact opposite of Keynes' advice to go for the euthanasia of the rentiers ( i.e. design policies to reduce the excess liquidity).

Fifth Problem: Confusing Savings with "Loans," or Stocks with Flows

"I have found out what economics is,' Michał Kalecki once told Joan Robinson, "it is the science of confusing stocks with flows." If anything, Kalecki's comment applies to the loanable funds model. In the loanable fund universe, as Mankiw writes and as most commissioned conference papers argue, saving equals investment and the supply of loans equals the demand at some equilibrium interest rate. But savings and investment are flow variables, whereas the supply of loans and the demand for loans are stock variables. Simply equating these flows to the corresponding stocks is not considered good practice in stock-flow-consistent macro-economic modelling. It is incongruous, because even if we assume that the interest rate does clear "the stock of loan supply" and "the stock of loan demand", there is no reason why the same interest rate would simultaneously balance savings ( i.e. the increase in loan supply) and investment ( i.e. the increase in loan demand). So what is the theoretical rationale of assuming that some interest rate is clearing the loanable funds market (which is defined in terms of flows )?

To illustrate the difference between stocks and flows: the stock of U.S. loans equals around 350% of U.S. GDP (if one includes debts of financial firms), while gross savings amount to 17% of U.S. GDP. Lance Taylor (2016) presents the basic macroeconomic flows and stocks for the U.S. economy to show how and why loanable funds macro models do not fit the data -- by a big margin. No interest rate adjustment mechanism is strong enough to bring about this (ex-post) balance in terms of flows , because the interest rate determination is overwhelmed by changes in loan supply and demand stocks . What is more, and as stated before, we don't actually use 'savings' to fund 'investment'. Firms do not use retained profits (or corporate savings) to finance their investment, but in actual fact disgorge the cash to shareholders (Lazonick 2017). They finance their investment by bank loans (which is newly minted money). Households use their (accumulated) savings to buy bonds in the secondary market or any other existing asset. In that case, the savings do not go to funding new investment -- but are merely used to re-arrange the composition of the financial portfolio of the savers.

Final Problem: The Evidence of a Chronic Excess of Savings Over Investment is Missing

If Summers claims that there is a "chronic excess of savings over investment," what he means is that ex-ante savings are larger than ex-ante investment. This is a difficult proposition to empirically falsify, because we only have ex-post (national accounting) data on savings and investment which presume the two variables are equal. However, what we can do is consider data on (global) gross and net savings rates (as a proportion of GDP) to see if the propensity to save has increased. This is what Bofinger and Ries (2017) did and they find that global saving rates of private households have declined dramatically since the 1980s. This means, they write, that one can rule out 'excess savings' due to demographic factors (as per Eggertson, Mehotra & Robbins 2017; Eggertsson, Lancastre & Summers 2017; Rachel & Smith 2017; and Lu & Teulings 2017). While the average saving propensity of household has declined, the aggregate propensity to save has basically stayed the same during the period 1985-2014. This is shown in Figure 3 (reproduced from Bofinger and Reis 2017) which plots the ratio of global gross savings (or global gross investment) to GDP against the world real interest rate during 1985-2014. A similar figure can be found in the paper by Rachel and Smith (2017). What can be seen is that while there has been no secular rise in the average global propensity to save, there has been a secular decline in interest rates. This drop in interest rates to the ZLB is not caused by a savings glut, nor by a financing glut, but is the outcome of the deliberate decisions of central banks to lower the policy rate in the face of stagnating economies, put on a 'slow-moving turtle' by a structural lack of aggregate demand which -- as argued by Storm and Naastepad (2012) and Storm (2017) -- is largely due to misconceived macro and labour-market policies centered on suppressing wage growth, fiscal austerity, and labour market deregulation.

Saving/Investment Equilibria and World Real Interest Rate, 1985-2014 Source: Bofinger and Reis (2017), Figure 1(a).

To understand the mechanisms underlying Figure 3, let us consider Figure 4 which plots investment demand as a negative function of the interest rate. In the 'old situation', investment demand is high at a (relatively) high rate of interest (R0); this corresponds to the data points for the period 1985-1995 in Figure 3. But then misconceived macro and labour-market policies centered on suppressing wage growth, fiscal austerity, and labour market deregulation began to depress aggregate demand and investment -- and as a result, the investment demand schedule starts to shift down and to become more steeply downward-sloping at the same time. In response to the growth slowdown (and weakening inflationary pressure), central banks reduce R -- but without any success in raising the gross investment rate. This process continues until the interest rate hits the ZLB while investment has become practically interest-rate insensitive, as investment is now overwhelmingly determined by pessimistic profit expectations; this is indicated by the new investment schedule (in red). That the economy is now stuck at the ZLB is not caused by a "chronic excess of savings" but rather by a chronic shortage of aggregate demand -- a shortage created by decades of wage growth moderation, labour market flexibilization, and heightened job insecurity as well as the financialization of corporations and the economy at large (Storm 2018).

Figure 4: Secular Stagnation As a Crisis of Weak Investment Demand

Conclusions

The consensus in the literature and in the commissioned conference papers that the global decline in real interest rates is caused by a higher propensity to save, above all due to demographic reasons, is wrong in terms of underlying theory and evidence base. The decline in interest rates is the monetary policy response to stalling investment and growth, both caused by a shortage of global demand. However, the low interest rates are unable to revive growth and halt the secular stagnation, because there is little reason for firms to expand productive capacity in the face of the persistent aggregate demand shortage. Unless we revive demand, for example through debt-financed fiscal stimulus or a drastic and permanent progressive redistribution of income and wealth in favour of lower-income groups (Taylor 2017), there is no escape from secular stagnation. The narrow focus on the ZLB and powerless monetary policy within the framing of a loanable-funds financial system blocks out serious macroeconomic policy debate on how to revive aggregate demand in a sustainable manner. It will keep the U.S. economy on the slow-moving turtle -- not because policymakers cannot do anything about it, but we choose to do so. The economic, social and political damage, fully self-inflicted, is going to be of historic proportions.

It is not a secret that the loanable funds approach is fallacious (Lindner 2015; Taylor 2016; Jakab and Kumhof 2015). While academic economists continue to refine their Ptolemaic model of a loanable-funds market, central bank economists have moved on -- and are now exploring the scope of and limitations to monetary policymaking in a monetary economy. Keynes famously wrote that "Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back." In 2017, things seem to happen the other way around: academic economists who believe themselves to be free thinkers are caught in the stale theorizing of a century past. The puzzle is, as Lance Taylor (2016, p. 15) concludes "why [New Keynesian economists] revert to Wicksell on loanable funds and the natural rate while ignoring Keynes's innovations. Maybe, as [Keynes] said in the preface to the General Theory, "'The difficulty lies not in the new ideas, but in escaping from the old ones ..' (p. viii)"

Due to our inability to free ourselves from the discredited loanable funds doctrine, we have lost the forest for the trees. We cannot see that the solution to the real problem underlying secular stagnation (a structural shortage of aggregate demand) is by no means difficult: use fiscal policy -- a package of spending on infrastructure, green energy systems, public transportation and public services, and progressive income taxation -- and raise (median) wages. The stagnation will soon be over, relegating all the scholastic talk about the ZLB to the dustbin of a Christmas past.

See original post for references

gtggtg , December 22, 2017 at 10:08 am

"Forget the myth of a savings glut causing near-zero interest rates. We have a shortage of aggregate demand, and only public spending and raising wages will change that."

But isn't "a savings glut" just the same as "a shortage of aggregate demand"? Or is Keynes so out of favor that this is outre thinking?

gtggtg , December 22, 2017 at 10:10 am

I mean, I just have this image of economists going, "It's the chicken! It's the chicken, I say!" "No! It's the egg, dammit!"

MisterMr , December 22, 2017 at 11:58 am

I second this.

The point is that the "saving glut" is caused bi unequal distribution of income, so it's a good thing that the "shortage of aggregate demand" is stressed, but still it's just two names for the same thing.

In the end the "money creation" is needed because there is not a "money circulation", IMO.

jsn , December 22, 2017 at 4:45 pm

Putting money into the broadest possible distribution and circulation is the key. It could be done with existing money through taxation or with new money through the federal fiscal lever.

Given the "Tax Reform" just passed, odds on the first option look vanishingly long. The second option is what the elites do whenever they want something, normally a war or tax cut. If they want a robust economy, eventually they will pull the fiscal lever.

Feudalism, however, may look better to our depraved current elite crop than any kind of broadly robust economy.

TroyMcClure , December 22, 2017 at 11:49 am

There was a link to an article yesterday called "I write because I hate" that described how incorrect and even dangerous metaphors can be when it comes to understanding the world. Yours is a case in point.

Jamie , December 22, 2017 at 12:00 pm

But isn't "a savings glut" just the same as "a shortage of aggregate demand"

I'm not sure I entirely understand your complaint, but at a first glance a savings glut is one kind of demand shortage, but not every kind of demand shortage can reasonably be called a savings glut. In one situation you have plenty of resource but no use for it other than possible future use (savings glut -- you have everything you need so cease purchasing) and in another situation you have insufficient resource (demand shortage -- you cease purchasing because you can't afford to purchase) but no savings glut. You don't even have the resources you need for today, never mind saving for tomorrow.

artiste-de-decrottage , December 22, 2017 at 1:54 pm

Aye, that's exactly how I understand it, so it is not exactly a chicken-or-the-egg conflation to try to distinguish a savings glut from a lack of demand.

James McFadden , December 22, 2017 at 3:25 pm

You seem to have missed the point. The problem is wealth distribution. Mainstream economists don't distinguish who has the savings in their simplistic models. When the rich already have a widget in every room of their mansion, they are not going to buy more widgets no matter how low the price of widgets sink. And when the poor have no money, they will not be able to buy the widgets no matter how much they want them. Demand is not just a function of price. To increase demand, we need a more equitable form of wealth distribution.

Skip Intro , December 23, 2017 at 9:30 am

One major difference, according to the author, is that the lack of aggregate demand exists, while the savings glut does not. The fact of companies sitting on liquidity, is detached from investment, for which they borrow. That investment is lacking because they do not see good investments, because of a lack of aggregate demand. if they did invest, it would not be constrained by their 'savings'.

Larry , December 22, 2017 at 12:58 pm

"But this time is different: the glut in savings supply is so large that banks cannot get rid of all the loanable funds even when they offer firms free loans -- that is, even after they reduce the interest rate to zero, firms are not willing to borrow more in order to invest."

That needs some explanation. Banks are not offering US businesses free money (excerpt briefly during the Crash). BBB bonds yields are aprox 4.3% -- and most businesses cannot borrow at that rate (excerpt when posting collateral).

For comparison over long time horizons, the real (ex-CPI) BBB corporate bond rate is 2.5% to 3% -- in the middle of its range from 1952-1980.

https://fred.stlouisfed.org/series/BAA

John Wright , December 22, 2017 at 1:45 pm

Banks are enjoying the privilege of loaning excess deposits to a risk free client, the Federal Reserve.

https://fred.stlouisfed.org/series/EXCSRESNS

This is at 1.5% per https://www.federalreserve.gov/monetarypolicy/reqresbalances.htm as of 12-14-2017

Why should banks risk lending money to entities who might not pay it back?

Loan it to the Fed at 1.5%

Altandmain , December 22, 2017 at 1:17 pm

The real reason why the political system won't make any effort to address aggregate demand is because it would help the people.

I suspect that the elite know the truth. They just want to pretend to be ignorant to prevent the system from helping the people who need it.

Let's bring up Michal Kalecki again:
https://mronline.org/2010/05/22/political-aspects-of-full-employment/

We have considered the political reasons for the opposition to the policy of creating employment by government spending. But even if this opposition were overcome -- as it may well be under the pressure of the masses -- the maintenance of full employment would cause social and political changes which would give a new impetus to the opposition of the business leaders. Indeed, under a regime of permanent full employment, the 'sack' would cease to play its role as a 'disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow. Strikes for wage increases and improvements in conditions of work would create political tension. It is true that profits would be higher under a regime of full employment than they are on the average under laissez-faire, and even the rise in wage rates resulting from the stronger bargaining power of the workers is less likely to reduce profits than to increase prices, and thus adversely affects only the rentier interests. But 'discipline in the factories' and 'political stability' are more appreciated than profits by business leaders. Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the 'normal' capitalist system.

In other words, one potential reason for business to oppose any efforts at addressing the problem is that the people would have more bargaining power. The elite are not after absolute wealth or power, but relative power over the rest of us.

Imagine for example if the alternative was passed say some form of social democracy with full employment and MMT policy.

This would undermine in their view their ability to dominate over the rest of us. Now they may arguably be richer (ex: we might see more money for productive parts of society like say, disease research), but they are willing to give that up for dominating us. That is what we are up against.

Mike , December 23, 2017 at 10:17 am

If what you say is true (re social democracy + MMT policies), how then to consider for even one second the further existence of a business cadre dedicated to upending such an agreement? We always theorize as if an actual resistance to "our" policies will melt away with the displacement of elite political control. I remember Chile and the "strikes" called to bring down Allende.

The innocence of our imaginations is not only disturbing, but dangerous. Once power is gained and capital has been put in its place, the fight begins right there, anew. Unless we wish to fall into Stalinist methods of "resolution", consideration for alternate methods of economic control, and an anticipation of backlash, are in demand if the "people" are to prevail.

Mark Anderlik , December 23, 2017 at 10:33 am

In my experience as a union organizer and negotiator the opposition by many employers to unions is not particularily because of money, but because of power and the erosion of the employer's grip of it by the collective action of workers. Many times in my experience employers have spent a boatload more money on fighting workers and hiring union-busting attorneys than whatever wage and benefit increase is being proposed. These employers are acting from their political self-interest rather than the narrow economic self-interest that is commonly assumed.

Cat Burglar , December 23, 2017 at 3:43 pm

Great comments -- the motivation behind the ideas is a need for power and control.

You can look at the first 20 years of the Cold War as a domestic experiment in social control: incomes were allowed to rise for most people, and inequality was moderated in the interest of politically consolidating the country to support arming and fighting the war.

By the early 70s our handlers -- as shown in the Powell Memo, say -- had tired of the experiment. With more income, free time, and education, women, students, non-white people, and the newly prosperous working class were entering into contention on every terrain imaginable -- and that had to reduced to a manageable level. So they "leaned-out the mix", reduced income for most people, and bumped up the level of indebtedness and indoctrination.

Now the fuel-air mix is so lean that the engine is starting to miss (for example, the Trump election and the Sanders challenge to the Dem elite). But it looks like they have no other idea but to double-down on austerity. I guess they assume they can maintain global financial and military hegemony on the backs of a sick, unfit, indebted, and politically fractious population -- an iffy proposition. No wonder they seem desperate.

paul , December 22, 2017 at 2:03 pm

unemployment is an integral part of the 'normal' capitalist system.

That is both the long and short of it.

To engineer the scarcity of the ability to sustain is the the greatest sin

Paul Hirschman , December 22, 2017 at 2:46 pm

The Trump/Republican tax law tells us (if we needed another message) that the link between economic policy and economic theory is so weak as the bring into question the point of theorizing in the first place, apart, of course, from convincing (semi)-smart but fearful people to remain timid in the face of powerful lunacy. Government spending to replace worn out capital, to satisfy basic material needs of the population, and to underwrite investment in an environmental and educational future worth creating is, OBVIOUSLY, a no-no to Wall Street, war profiteers, and the large population of yes-men and women who promote fear among the middle class. We should spend less time contesting economic thinking that is nonsense. Instead why not spend time proposing and explaining fairly obvious fiscal strategies that will promote a better society, as well as the time that will be needed to defend these life-affirming proposals against the scholastic nonsense that our saltwater and freshwater scaredy-cat friends will put out every day to explain why what we propose will wreck Civilization. Let's go on the offense for a change.

redolent , December 22, 2017 at 8:14 pm

let's go on the offensive for a change

precisely, but for the forementioned scholastic nonsense of our salty and fresh feline friends, one would need a salient and orchestrated defense, as to why such meddling with traditional economic trajectories, will mean that: by foregoing my 'short sided 2018 increase in my personal deduction', will I actually allow myself to feel benign about the sagging state of civilization, that those 'cats of all breeds', have so eloquently perpetuated upon a 'generation of our peers'.

calling 'message central', the 'greater good awaits'. Yes

Jabawocky , December 22, 2017 at 2:50 pm

I still can't get my head around the fact that these models can persist in the economics literature whilst everyone knows they are based on flawed assumptions. In science these would quickly end up as part of some distant history. Someone would publish another model, and slowly everyone would start working with it if it had strong explanatory power. Imagine the grief that climate modellers would get if theirs models were so poorly grounded.

Left in Wisconsin , December 22, 2017 at 6:33 pm

You could almost think it was ideology trumping evidence.

Susan the other , December 22, 2017 at 2:57 pm

Thank you for this post. It was as good as Michael Hudson and all the clear thinkers you post for us. Since we got rid of Greenspan (who admitted that interest rates had no effect on the economy but still freaked out about inflaltion), Bernanke and then Yellen have had better instincts – not straightforward, but better. If central banks know the loanable funds theory to be nonsense, the battle is mostly won. MMT will be the logical next step. Public spending/infrastructure is just good grassroots policy that serve everyone. Even dithering goofballs like Larry Summers. And, as implied above, public spending takes care of the always ignored problem of private debt levels which suck productive spending and investment out of the economy, because unemployment. It's hard to believe that academics have been so wrong-headed for so long without any evidence for their claims. Steve Keen's premise, that these academics ignore both the existence of private debt and the importance of dwindling energy sources is also addressed above. Storm's point – also made by both old hands and new MMT – that there is not a problem with inflation (too much) if there are slack resources seems to have morphed into an ossified rule whereby some inflexible academics see slack resources as scarce resources. What is slack is always a political definition. What is slack today is a filthy environment; there is a great surplus of it. Enormously slack. That's the good news.

cnchal , December 22, 2017 at 3:07 pm

What are the causes of secular stagnation?

Globalization is a disaster wherever you care to look.

Big corporations like Alphabet, Facebook and Microsoft are holding enormous amounts of liquidity . . .

A better example is Apple, with it's roughly 1/4 trillion dollar cash hoard, beaten out of their Chinese work force in collusion of the Chinese elite. With wages crushed here and there, because they don't want to pay anyone anything anywhere, where will demand come from? The Chinese peasant slaving away on an Apple farm has a few square feet of living space, like a broiler chicken in a Tyson cage so where is she going to put the new furniture she can't afford?

Banks create credit, money, and thus purchasing power. [ ] The vast majority of what we count as "money' in modern economies is created in this fashion: in the United Kingdom 98% of money takes this form .

The banks are the MMT practicing intermediary between the federal government and the peasants.

Enquiring Mind , December 23, 2017 at 11:19 am

Was the Tax Cut a Hail Mary to get more aggregate demand? Perhaps the Administration is practicing anti-loanable funds on the sly.

knowbuddhau , December 22, 2017 at 3:22 pm

So much goodness, don't know where to start. It's a long post. It's my day (singular) off. I'm going long. Deacon Blues* applies.

This:

Ever since Knut Wicksell's (1898) restatement of the doctrine, the loanable funds approach has exerted a surprisingly strong influence upon some of the best minds in the profession. Its appeal lies in the fact that it can be presented in digestible form in a simple diagram (as Figure 1), while its micro-economic logic matches the neoclassical belief in the 'virtue of thrift' and Max Weber's Protestant Ethic, which emphasize austerity, savings (before spending!) and delayed gratification as the path to bliss.

Now we're talking. This puts the doctrine in the context of its parent beliefs.

The way I see it, beliefs:economics as operating system:application as mythology:religion. So shorter Storm: The LFF is a BS application for a BS OS.

Been dawning on me lately how neoliberalism is the spawn of a degenerate parent belief system, too. I was even thinking of Weber just the other day.

By speaking in apparently objective, pragmatic, "realistic" terms, public figures are notorious for "dog-whistling" their occult beliefs in terms their congregations hear loud and clear. When Her Royal Clinton's even more notoriously damned to hell half the population as "deplorables," she tipped her hand. The obscure term, ephors, is very instructive here.

To refesh the readers memory, "Schumpeter (1934, p. 74) called the money-creating banker 'the ephor of the exchange economy' -- someone who by creating credit (ex nihilo) is pre-financing new investments and innovation and enables "the carrying out of new combinations, authorizes people, in the name of society as it were, to form them."

Not so fast, though. Who were the original ephors?

Herodotus claimed that the institution was created by Lycurgus, while Plutarch considers it a later institution. It may have arisen from the need for governors while the kings were leading armies in battle. The ephors were elected by the popular assembly, and all citizens were eligible for election. They were forbidden to be reelected. They provided a balance for the two kings, who rarely cooperated with each other. Plato called them tyrants who ran Sparta as despots, while the kings were little more than generals. Up to two ephors would accompany a king on extended military campaigns as a sign of control, and they held the authority to declare war during some periods in Spartan history.[2]

According to Plutarch,[3] every autumn, at the crypteia, the ephors would pro forma declare war on the helot population so that any Spartan citizen could kill a helot without fear of blood guilt.[4] This was done to keep the large helot population in check.

The ephors did not have to kneel down before the Kings of Sparta and were held in high esteem by the citizens, because of the importance of their powers and because of the holy role they earned throughout their functions.

Ain't that something. We don't call it "class war" for nothing. More on the crypteia:

The Crypteia or Krypteia (Greek: κρυπτεία krupteía from κρυπτός kruptós, "hidden, secret things") was an ancient Spartan state institution involving young Spartan men. Its goal and nature are still a matter of discussion and debate among historians, but some scholars (Wallon) consider the Krypteia to be a kind of secret police and state security force organized by the ruling classes of Sparta, whose purpose was to terrorize the servile helot population. Others (Köchly, Wachsmuth) believe it to be a form of military training, similar to the Athenian ephebia.

So Schumpeter's metaphor is way too apt for comfort. Gets right under my skin.

For a modern equivalent of the pro forma declaration of civil war, I'm thinking "election cycle." Hippie-punching and all that goes a long way back, eh?

Let's cut to the chase: what's all this talk of econ as religion telling us? ISTM arguing with neoliberals as they frame the debate is like arguing with theologians in their terms. My learning psych professor, Robert Bolles, regarding the dismantling of ascendant BS models, always said, you don't take down an enormous tree leaf by leaf, you go where it meets the ground. Where does neoliberalism meet the ground? And its parent belief system?

Neoliberalism is so poorly grounded, it's shorting out all over the place. This could be easier than it looks. Storm's argument is compelling (at least to this newbie). What are its other weakest links? (Not being rhetorical here. I really don't know. A little help?)

Speaking of Weber, one of the major factors in the Reformation was the utter failure of the Catholic church to be able to produce a valid calendar . The trouble is of course, in their mythos, you have to perform the proper rituals at the proper time and often in the proper place, or you will fry in hell forever and ever amen.

Obviously, then, the calculation of the equinox assumed considerable and understandable importance. If the equinox was wrong, then Easter was celebrated on the wrong day and the placement of most of the other observances -- such as the starts of Lent and Pentecost -- would also be in error.

As the Julian calendar was far from perfect, errors did indeed begin to creep into the keeping of time. Because of the inherent imprecision of the calendar, the calculated year was too long by 11 minutes and 14 seconds. The problem only grew worse with each passing year as the equinox slipped backwards one full day on the calendar every 130 years. For example, at the time of its introduction, the Julian calendar placed the equinox on March 25. By the time of the Council of Nicea in 325, the equinox had fallen back to March 21. By 1500, the equinox had shifted by 10 days.

The 10 days were of increasing importance also to navigation and agriculture, causing severe problems for sailors, merchants, and farmers whose livelihood depended upon precise measurements of time and the seasons. At the same time, throughout the Middle Ages, the use of the Julian calendar brought with it many local variations and peculiarities that are the constant source of frustration to historians. For example, many medieval ecclesiastical records, financial transactions, and the counting of dates from the feast days of saints did not adhere to the standard Julian calendar but reflected local adjustments. Not surprisingly, confusion was the result.

The Church Saves Time

[Doncha just love that succinct bit of myth-making? smh]

The Church was aware of the inaccuracy, and by the end of the 15th century there was widespread agreement among Church leaders that not celebrating Easter on the right day -- the most important and most solemn event on the calendar -- was a scandal.

A functioning mythology tells one how to be human right now. The Catholic church couldn't even tell people what date it was, putting not just ephemeral souls in peril should one die, even more of a daily dread in those days, but lives and property were increasingly at risk.

ISTM we're in an analogous situation. Our two high holies, Wall Street and Washington, DC, are increasingly irrelevant to us helots. They're of no use to us in ordering our daily lives. In fact, they've becoming openly hostile, dropping any pretense of governing for the common good, and I'm not referring only to Trump, eg, whatever happened to habeas corpus ? "If you like your health plan, you can keep it." The betrayals come fast and furious, too fast to keep up.

Others are rejecting science. A schism here, a schism there, pretty soon it all cracks up one day "outta nowhere." And I do mean "one day."

Moving right along, let's look at "the virtue of thrift."

Like the "virtues" of the LF fallacy, it arises from a parent belief system. This is from Some Call for Reclaiming the Virtue of Thrift (emphasis added).

In the formative years of United States history, prominent thinkers such as Ben Franklin promoted a "thrift ethic" that encouraged hard work, frugal spending on self and generous giving to charity, he asserted, maintaining "thrift" was simply the secular term for the religious stewardship principle . And institutions developed to support that ethic, he noted.

That's what I'm saying: secular institutions are the operationalizations, the applications, of belief systems, and further, we can study them instead of just saying "religion = bad = no further analysis required" and then dismissing it all out of hand.

As with LF-supply and LF-demand, secular and sectarian are not the independent variables they're made out to be, as argued so well by Cook & Ferguson right here on NC in The Real Economic Consequences of Martin Luther , eg, "[Henry VIII] did not abolish the papacy so much as take the pope's place." Same goes for today, IMNSHO: Our "secular" leaders are sectarian high priests in mufti.

The Baptist article also goes on to say what the flock people should do: ignore Wall St. and DC. Unsuprisingly, it's also chock full of punching downwards and victim-blaming. Payday lending and lotteries are to blame, they say. People just need to be more thrifty , which apparently means, impoverish yourself for the betterment of your betters. Or else.

When HRC damned half of us to Hell, she was dog-whistling loud and clear in a tradition going at least as far back as the wars of the ephors on the helots. When the high priests of our high holy temples of finance tell us we need more austerity, although they speak in terms apparently objective and especially dispassionate, it's nothing but the failed preachings of the failed priests of a failed church.

Looked at as comparative mythology, and speaking empirically as well (much obliged to the present author and our hosts, sincerely) neoliberalism is no way of being human.

Sure, us nerds get that. But wonky discussions don't move people. The execrable Mario Cuomo is credited with saying, "You campaign in poetry, you govern in prose," and I think it's profoundly true. Telling my friends we've debunked the Loanable Funds Fallacy will get me nowhere.

Oy vey. The immense satisfaction I had been feeling, of seeing through neoliberalism all the way to its core, sure was short lived. Now I need to know what MMT says about being human. This is what happens when you start thinking in words, you know. It never ends!

I've heard Steve Keen's writing won't be much help in popularizing MMT in time. Who's a witty MMTer? Who can express its way of being human in one-liners? Who's punchy?

(Administrivia: "Suppose there is an exogenous (unexplained) *rise* in the average propensity to save. In reponse, the LF-supply curve shifts down ." Shouldn't that be "drop"?)

* This is the night of the expanding man
I take one last drag as I approach the stand
I cried when I wrote this song
Sue me if I play too long
This brother is free
I'll be what I want to be

knowbuddhau , December 22, 2017 at 4:23 pm

Oops left out two links https://en.wikipedia.org/wiki/Ephor

knowbuddhau , December 22, 2017 at 4:23 pm

And https://en.wikipedia.org/wiki/Crypteia

susan the other , December 23, 2017 at 12:11 pm

Very interesting rant, Knowbuddhau. Imo all we have to do is get over gold. It made sense before the days of sovereign fiat that you saved your coins before you spent them. How else? But fiat is the essential spirit of money while gold was/is a craze. And the Neoliberals are unenlightened just like the Neocons against whom they pretend to react. But they are reactionaries regardless. That's their problem. All reaction, no action. When Storm refers to Kalecki above saying the original sin of economics was confusing stocks with flows, I take it to mean confusing fiat with gold in a sense. Once upon a time a store of value (a pouch full of gold coins) was the same thing as a medium of exchange. Not any more. Fiat is the only mechanism, spent in advance to promote social well being, that can create an "economy" in this world of zillions of people.

JustAnObserver , December 22, 2017 at 5:16 pm

Isn't a bit of an irony that the academic papers being debunked here were commissioned by the Institute for *New* Economic Thinking ? Sad to see its also been corrupted by the neoliberal virus (political Ebola).

ewmayer , December 22, 2017 at 8:11 pm

The author writes about the fuctional LF paradigm: "Banks, in this narrative, do not create money themselves and hence cannot pre -finance investment by new money. They only move it between savers and investors." -- Note that that narrative doesn't even make sense *within* the loanable-funds model, because with fractional reserve banking, even if banks were required to loan against pre-existing deposits, they could amplify each dollar of same into multiple units of newly-created credit money. The fact that what really happens goes even further and entirely omits the need for pre-existing funds from the banks' monetary legerdemain is the reason for my pet term for the "loans create deposits" reality: "fictional reserve banking."

Dan , December 23, 2017 at 12:40 am

Aggregate demand increases investment only to the extant that it increases profitable opportunities. If costs remain constant, then obviously an increase in demand increases profitability. But an increase in wages doesn't merely increase aggregate demand, it also increases aggregate costs because that's what a wage is to a firm. If aggregate wages were boosted by $1 trillion, consumption will be boosted by less than 100% of that (workers will save some of their increased income) while firms will have to pay the full $1 trillion in increased wages if they are to employ the workers. So how is increasing wages supposed to increase profitability and investment? It seems like it would do the opposite.

We really need to look more at profit. The aggregate profit rate is determined by the cost of the total capital employed in relation to the output. If the costs rise faster than productivity growth, then profitability falls. How do aggregate costs rise? By capital accumulation, by an increase in savings and investment. Thus, it would seem that stagnation can only be reached if too much capital has been accumulated without a corresponding increase in productivity. This hypothesis doesn't rely on the loanable funds theory (it doesn't matter whether the money exists before it is spent), but it is more similar to the savings glut explanation because it is the accumulation of capital that leads to the fall in profitability. The suppression of wages is an effect, an attempt to create profitable opportunities when there are none.

Steven Greenberg , December 23, 2017 at 11:29 am

Your model is correct when you limit yourself to the variables in your model. Real life economies are complex, dynamic interactions of many variables. At different times some variable become more important than others.

I think your variable, capital accumulation, is itself a complicated mix of many variables. Sometimes the cost of "capital accumulation" may be controlling, and sometimes not. It also depends on which variables within capital accumulation are having the most impact.

Steven Greenberg , December 23, 2017 at 10:42 am

I think one of the major problems of the theory of supply and demand is that it may be true as a static model (all other things being equal), but the economy (and life) are not static. Unless you can take dynamic effects into account, then this static or even quasi-static model will just not represent what actually happens. This is just another way of saying what this article says. Over time, the supply curve and the demand curve interact. There is hardly, if any, point in time when all other things aren't changing.

In my world of simulating the behavior of integrated circuits, the problem involves non-linear differential equations, not just non-linear algebraic equations.

Steven Greenberg , December 23, 2017 at 10:55 am

Here is another problem. " by the national accounts[,] identity of saving and investment (for closed economies),"

Accounting is also a static snapshot of a dynamic system. A bank creates a loan payable in let's say 30 years. The spending occurs immediately. In accounting terms these two items balance. However, on impact on the economy, they do not balance. Why else would capitalism have noticed the value of buy now, pay later?

Steven Greenberg , December 23, 2017 at 11:02 am

This is no longer a chicken and egg problem of which came first, the chicken or the egg. In real life, there are lots of chickens and lots of eggs. Which came first is irrelevant. Chickens create eggs and eggs create chickens.

Steven Greenberg , December 23, 2017 at 11:23 am

Models are a simplification of reality. They apply best when the things that were simplified away don't matter much. They fail when the things that were simplified away become important. So, when does the loanable funds model apply?

IMHO, the loanable funds model applies when there is a run on the bank. When the fractional reserve banking system is running smoothly, the loanable funds model is irrelevant. That's why banks have reserves and monetary systems have central reserve banks. These reserve systems let us ignore loanable funds models.

Cat Burglar , December 23, 2017 at 3:56 pm

These are great comments! You put the whole process in time.

[Dec 23, 2017] IMF demands that the price of gas be raised for Ukrainians

Dec 23, 2017 | rusnewstoday24.ru

As reported by the permanent representative of the International Monetary Fund in the Ukraine, Jost Longman, the Kiev authorities should increase Ukrainian gas tariffs to the level of import parity. Longman argues that an increase in gas prices will have a positive effect on the development of the free market and will teach the Ukrainians to use natural gas economically. "In the end, the final goal is the implementation of a free gas market. On the way to this, it is important to continue to adjust the price of gas in accordance with the price of imports", said Longman. "One price for all types of consumer also eliminates the space for corruptio," he added.

[Dec 23, 2017] Court stopped supply of gas from Slovakia to Ukraine

Dec 23, 2017 | marknesop.wordpress.com
Moscow Exile , December 21, 2017 at 8:41 pm

Court stopped supply of gas from Slovakia to Ukraine
22 Dec 2017, 00:56

On 20 Dec., a court in Slovakia stopped gas supplies to "Naftogaz of Ukraine". The decision was made pursuant to the decision of the Stockholm arbitration over a claim made by the Italian company IUGas that its Ukrainian consumer owed it money.

The total amount of the claim, including interest and penalties, is approximately $21 million. An arbitration ruling was accepted on 19 December 2012 and relates to unpaid 2007 transactions .

Under international law, if the defendant has not fulfilled the resolution of the arbitration, the plaintiff may apply to the courts of other states with a request that the ruling be executed.

"Naftogaz of Ukraine" is analyzing the situation to determine its next steps, according to the Ukrainian edition "Mirror of the Week".

For 11 months of 2017, "Naftogaz of Ukraine" had bought in Eastern Europe 20.9 billion cubic metres of gas. Most of the supplies -- more than 8 billion cubic metres -- are in Slovakia.

As written in iz.ru, arbitration is under consideration in Stockholm as regards the lawsuit made by "Gazprom" against "Naftogaz", the decision on which will be issued by the court no later than February next year. The adjusted amount of the claims made by the Russian company was more than $ 37 billion.

All this is the Aggressor State's doing!

For the sake of freedom and democracy, the Ukraine must be supported!

[Dec 23, 2017] Gazprom has responded to Naftogaz's statements about victory in court

Dec 23, 2017 | marknesop.wordpress.com

Moscow Exile , December 22, 2017 at 7:24 am

https://www.rbc.ru/rbcfreenews/5a3d01ed9a79471d28355203

Gazprom has responded to Naftogaz's statements about victory in court

The Stockholm arbitration has satisfied most of Gazprom's claims made against Naftogaz Ukraine regarding payment for supplied gas, the company has said in a statement. In Moscow. They stressed that the main demands of the Ukrainian side by the court had been rejected.

The court did not recognize the right of Naftogaz to review the price of gas, the deliveries of which were carried out from May 2011 to April 2014. Also, the Ukrainian side was denied recovery of overpayment. Gazprom noted that the court found it necessary to apply the "take or pay" principle (annual payment of a minimum amount of gas) before the expiry of the contract.

"Naftogaz" has to pay back $2 billion in arrears and interest for late payment to Gazprom. The Ukrainian side is also obliged from next year to take 5 billion cubic metres from Russia annually.

Earlier on Friday, Naftogaz said that the court had awarded the victory to the Ukrainian side. In Kiev, they stressed that Gazprom's "take-or-pay" requirements had been "completely" rejected by the court, and the gas price for the second quarter of 2014 had been lowered to $ 352 per thousand cubic metres.

The court considered contracts for the supply of gas from Russia to the Ukraine, as well as gas transit through the Ukraine. They were signed back in 2009. The Ukraine, insisted "Gazprom", did not get any gas 2012-2014, and also in individual quarters of 2015 and 2016. "Naftogaz" asked the court to review the gas prices, and that overpayment be reimbursed and that the ban on further resale of gas be cancelled.

Kremlin propaganda from a "Kremlin controlled" newspaper?

Moscow Exile , December 22, 2017 at 7:30 am Moscow Exile , December 22, 2017 at 7:35 am
Reuters reports the Ukrainian "victory", of course:

Ukraine's Naftogaz: court win over Gazprom worth over $75 bln

Moscow Exile , December 22, 2017 at 7:43 am
Reuters:

Both Ukraine and Russia claim victory in gas dispute

"Naftogaz won the gas sales arbitration case against Gazprom on all issues in dispute," Naftogaz said in an emailed statement.

It said the ruling was worth around $75 billion to Naftogaz in the long term, but did not give a breakdown on how it reached the estimate. [My stress -- ME]

Meanwhile Gazprom said the court had satisfied most of Gazprom's claims and ruled that the main terms of the contract between Naftogaz and Gazprom were valid.

Gazprom said the Stockholm court had ordered Naftogaz to pay more than $2 billion to Gazprom for gas supply arrears and that it had also ordered Naftogaz to buy 5 bcm of gas from Gazprom annually from 2018.

Estimated $75 billion in the "long term"?

Have to pay $2 billion to Gazprom in arrears now (not mention interest).

From 2018 (i.e. in just over a week's time) have to buy annually 5 bcm of gas off the "aggressor state".

Moscow Exile , December 22, 2017 at 11:23 am
Western media, e.g. Deutsche Welle, is now all singing of a Naftogaz victory.
marknesop , December 22, 2017 at 4:50 pm
Of course; that's what Klimkin told them. Why should they check? Klimkin is always reliable, and I'm sure he tweeted a press statement directly to them. Let them hold a Naftogaz victory party if that's what they feel like doing. Just don't spend Russia's money on it. Because I notice Ukraine has to pay Russia. I did not see anything in there about Russia having to pay Ukraine. And so Ukraine can have all of that kind of victories it wants.
Cortes , December 22, 2017 at 2:01 pm
Is the 5 bcm a year for the domestic market? Asking because I thought the cutoff for transit for gas to Europe was 2019.
Moscow Exile , December 22, 2017 at 2:55 pm
Ultimately, the court greatly reduced the amount of gas that Ukraine is contractually obligated to buy from Russia. From 2018, "Naftogaz" should annually take and pay for up to 5 billion cubic metres instead of the original 52 billion cubic metres in any case it means the resumption of gas purchases in Russia, which stopped in 2015, since when "Naftogaz" has been buying all its fuel through reverse flow from Europe.

... ... ...

[Dec 23, 2017] Russia pipeline is investment risk, EU commissioner warns

Dec 23, 2017 | marknesop.wordpress.com

et Al , December 22, 2017 at 2:06 pm

EUObserver.com: Interview: Russia pipeline is investment risk, EU commissioner warns https://euobserver.com/energy/140404

Investors should "think twice" about putting money into Nord Stream 2 due to "uncertainties" around the Russian pipeline, the EU energy commissioner told EUobserver.

"I would really think twice, or many more times, simply because there are a lot of uncertainties," Maros Sefcovic said in an interview.

"It's the decision of the project promoters if they want to proceed in this atmosphere which might lead to legal disputes down the line," he said

"Nord Stream 2 is supported by five major western European energy companies that have each committed up to almost €1 billion to the implementation of the pipeline," the consortium's Sebastian Sass said.

"It shows that there is both market demand and great confidence in Nord Stream 2," he added.

Stefan Meister, an expert at the German Council on Foreign Relations, a think tank in Berlin, also said Russia had little to worry about from the EU.

"In Germany the overall impression is, that the project will come Merkel is not against it. That means she supports it," he said.

Meister said the fact Gazprom was prepared to dig into its own pockets meant "the investment risks are limited". He added that energy companies were used to working "in an even more risky environment" in other parts of the world.

"Except the US sanctions, there are no real risks to stop the project," he said
####

Plenty more of Sefcovic blowing hot air out of every orifice at the link. Did someone slip him some cocaine instead of sugar in his coffee before the interview? All mouth and no trousers.

[Dec 23, 2017] The Saudi 'Cakewalk' Into Iran The American Conservative

Notable quotes:
"... I'd like to believe either the Repubs or Dems were the answer, except both are near unanimous in their support for the military industrial complex and its expanding wars. Note the 98-2 vote to make Russia a permanent enemy. I believe the resistors were bipartisan, lonely as they are in either party, in reality separate branches of an imperial War Party. ..."
"... Let me be the dink who reminds you: Peak Oil ..."
"... As a clever newspaper writer said about Jesse Ventura: Jesse is a lot smarter than most folks think he is, but not nearly as smart as he thinks he is. Like Jesse, Trump is smart enough to avoid unnecessary war. However, war may just become "necessary" when the heat of his Russia investigation becomes unbearable, and Trump needs the ultimate distraction. When (not if) that happens, either North Korea or Iran will be in trouble -- perhaps both. Millions will most likely die, billions of dollars will be spent, and the US will create an entirely new generation of terrorists. This will not end well. ..."
"... EngineerScotty wrote: "The foreign policy of a President Hillary Clinton wouldn't be the amateur hour that we've gotten so far with Trump" No, it would be the ruthlessly effective professionalism of the reset with Russia and the ouster of Qaddafi. /sarc She wanted and wants Assad deposed. How well would that have gone? ..."
"... "In the meantime, Frack Baby Frack! The less oil we have to import from there, Venezuela, or anyplace crazy the better." That would be sane. But the elites have decided to export it at a cut rate, to undermine Russia as the supplier in Europe, in order to foment regime change by crashing the Russian economy. Why did you think we had such low fuel prices all of a sudden? ..."
"... No, the fuel extracted from American soil does not accrue to the benefit of the American people, but to the profits and plans of elites ..."
"... That would be sane. But the elites have decided to export it at a cut rate, to undermine Russia as the supplier in Europe, in order to foment regime change by crashing the Russian economy. Why did you think we had such low fuel prices all of a sudden? ..."
"... No, the fuel extracted from American soil does not accrue to the benefit of the American people, but to the profits and plans of elites. ..."
"... Oil obtained by fracking is far more expensive to produce than oil obtained by simply drilling a well in the Arabian Desert and quickly finding a gusher. The US can meet its domestic needs, but isn't that great of a net exporter -- prices have to be sufficiently high before high-volume production becomes cost-effective. ..."
"... Noah and Engineer Scotty -- There is a reasonable compromise. Both of you are right. Trump is a disaster and we know Clinton was terrible. There is no point in arguing about whether she would be worse. I happen to think In some ways she wouldn't be as bad. She wouldn't be engaged in stupid twitter fights with dictators. But she might be better at leading us into some stupid war in Syria. Trump will stumble into some war with no support. Clinton would have had lots of support for whatever mindlessly stupid bloodbath she wanted to start. ..."
"... One of my biggest concerns about Trump's foreign policy–and a major difference from how Hillary would have governed–is his utter disdain for diplomacy. As noted, he (and Tillerson) have been busy setting the State Department ablaze, and many, many, many seasoned diplomats (career civil servants, not political appointees) have left Foggy Bottom, some of their own accord, some not. Some Trump defenders claim this is part of "draining the swamp", and many critics claim this is a purge of anyone not loyal to Trump personally–and these two claims may be opposite sides of the same coin. ..."
Dec 23, 2017 | www.theamericanconservative.com

Pavlos December 20, 2017 at 11:08 pm

Trump won't get dragged into war, although his conniving nature may try to make it look like that if it serves some ulterior motive of his. Trump will race on his own volition (not get dragged by others) to war because he's already been chomping at the bit for war as evident in how he's been baiting Iran and N. Korea alike, just as Bush baited Saddam Huessein, then bait and switched Osama Bin Laden for Saddam. So if not war with one (Iran), then with the other (N. Korea), or with both.

Why? Because like all Republican politicians, Trump's a businessman and proud of it, (Pride goeth before destruction and a haughty spirit before a fall.) And because war is good for American business, a lesson that was learned from WWII from which was created the military-industrial-complex and the Permanent War Economy under which we've lived ever since.

That bit's key to understanding the whole unwavering GOP attack on social services and desire to deregulate and privatize everything, not because of evil "socialism" as the Republican constituency is hypnotized with propaganda into believing, but because there's no money to be made in government expenditures otherwise. The whole GOP agenda has been and is about public expense for private gain. All the blather about shrinking the government is smokescreen. The real agenda is about directing all government spending towards private contractors with none wasted on things like social services, medicare, or Social Security.

Economic aspects of politics can't be ignored and separated from social aspects of politics which is how conservatism in America has helped create the current political mess, by turning a blind eye and dittohead to economic matters in order to push the chosen, preferred social agenda.

As Coolidge said, "The business of America is business." So since the US is ruled by money of markets, there can be no getting one's moral back up and all Jesus over social immorality, only to ignore the immorality of the marketplace and thereby fail to push for a moral economy along with a moral society. Such misidentification of the problem will only result in missing the mark, in inappropriate rather than on the mark effective solutions to problems.

Trump is simply a braggart who likes to exaggerate by talking in superlatives, so it's fitting that Trump ran on the GOP ticket, because he's but another child of the Father of Lies, who superlatively lies about his wealth being billions instead of millions to swell his pride in being a mammon worshipper, and going to war is and will be as it certainly has been part and parcel of such hubris.

Fran Macadam , says: December 20, 2017 at 11:22 pm
To be fair, the Saudi dictators have always been best friends with America's elites – think Bandar Bush, the grounding of all air traffic in the United States after 9/11, except the Saudi evacuation planes spiriting Saudi royals out of the country so they could not be questioned. And there is the locus of the Likud Israeli party friendship with the Saudis, and Trump is certainly nothing if not onside with his good friend, the Israeli PM.
Fran Macadam , says: December 20, 2017 at 11:40 pm
I'd like to believe either the Repubs or Dems were the answer, except both are near unanimous in their support for the military industrial complex and its expanding wars. Note the 98-2 vote to make Russia a permanent enemy. I believe the resistors were bipartisan, lonely as they are in either party, in reality separate branches of an imperial War Party.
mohammad , says: December 20, 2017 at 11:50 pm
Make no mistake: if there is going to be an attack on Iran by Americans, it is not because MbS wants it, it is because the Americans love war.

I am convinced that most (some 90%) Americans are open or closeted Neo-cons/liberal-interventionists/war-hawks. Some are shamelessly and openly so (John Bolton), but many are so without showing it or even being aware of it. The hawk in them is restlessly waiting for an opening, an excuse, to come out and proclaim what they have ever been

leonard , says: December 21, 2017 at 12:38 am
Don't worry, w Captain Marmalade at the helm, the US will mess this all up by itself just like it has again and again and again.
Kronsteen1963 , says: December 21, 2017 at 1:04 am
Bush 41 dragged us into a coalition war over Kuwait. Clinton dragged us into a coalition war in the Balkans. Bush 43 dragged us into a war in Iraq. Obama dragged us into a secret war when he destabilized Syria and Lybia, which unleashed ISIS. All for the right reasons, of course (sarcasm).

You might be right, but I fail to see how that would be different than the last 30 years.

charles cosimano , says: December 21, 2017 at 1:42 am
Finally.

It should have been done 37 years ago.

Kronsteen1963 , says: December 21, 2017 at 1:47 am
BTW, Politico has a story about how the Obama Administration shot down DEA drug trafficking investigations of Hezbollah to support the Iran nuclear deal. I would like to read your comments about it, particularly in light of the comments you made above about Trump.

https://www.politico.com/interactives/2017/obama-hezbollah-drug-trafficking-investigation/

Pro ivic , says: December 21, 2017 at 2:57 am
Parents always tell kids to choose their friends carefully. With pals like Netanyahu and the Saudi bogus "crown prince", Trump clearly didn't follow that advice.
Nelson , says: December 21, 2017 at 3:12 am
That looked like a promotional video made by defense contractors. Anyway it's crazy. If they go to war I hope we stay out of it.
ludo , says: December 21, 2017 at 3:49 am
That video looks like a Nazi's wet dream, I mean the undiluted fascistic element is overwhelming, it's like getting a peek at an alternate dimension, not even a society, of pure militaristic "hathos" festooned by a limitless cloud of lies.

The worst of humanity is engrafted in that video, by which, I mean the unalloyed lying stupidity of war: imperialist expansionism, nationalist revanchism, and plutocratic supremacism, haloed by the grey mist–the dehumanzing pixelated mist–of the most dehumanizing endeavor man can undertake, for the most dehumanizing of modern causes: fascistic capitalism, the kind that fueled WWII (In this latter case, under the guise of religious supremacism or religious survivalism, but, in any case, only an obvious guise as far as the grotesque House of Saud is characteristically concerned).

Adamant , says: December 21, 2017 at 6:03 am
Echoing Noah above, this doesn't appear to be a production of the Saudi government, but having a contingent of the Saudi population gung-ho for a Sunni/Shi'a Ragnarok is concerning in itself. Both KSA and Iran will fight each other to the last Yemeni before any direct conflict arises.

This is the scenario that should be keeping us all up at night:

http://www.telegraph.co.uk/news/2017/12/20/exclusive-us-making-plans-bloody-nose-military-attack-north/

Floridan , says: December 21, 2017 at 6:04 am
The greatest myth of warfare -- "Once our forces invade the people will rise up against their government and welcome us a liberators."
AB , says: December 21, 2017 at 6:42 am
Fran Macadam: To be fair, the Saudi dictators have always been best friends with America's elites – think Bandar Bush, the grounding of all air traffic in the United States after 9/11, except the Saudi evacuation planes spiriting Saudi royals out of the country so they could not be questioned.

It wasn't the royals -- it was the bin Laden family itself. The people who knew Osama best. I never understood why we didn't insists that, with all airplanes grounded, they had to have a US Air Force pilot -- who then would have flown them to Gitmo for a sit-down on their newly famous relative. Instead the highest levels of government -- how high did you have to go to get permission to fly? -- broke into their busy schedules to be briefed and let them go.

The whole thing still stinks. We really need to have an investigation into the role of Saudi Arabia in American foreign policy; especially the Iraq Wars.

In the meantime, Frack Baby Frack! The less oil we have to import from there, Venezuela, or anyplace crazy the better.

muad'dib , says: December 21, 2017 at 7:17 am

President Trump's new best friend, MBS, is going to get us dragged into a new war in the region. Watch.

But her E-mails Good Thing the witch from Chappaqua isn't in the White House

ROTFLMAO!!!

If the Saudis are foolish enough to try that they will get their ass so thoroughly kicked that "who were the Al Saud?" will a trivial pursuit question on par with "Who were the Romanov's?" 10 years from now, and if the US is foolish enough to let them do that, watch the Global Economy collapse as the Strait of Hormuz gets closed for a few years.

Dr Talon,
The best military in the Middle East is Hezbollah (Trained & equipped by the Iranian, blooded and forged by the Israelis) the only thing they don't have is an air force. Let them have a half way decent air wing, and they would be on par or better than the USMC.

Duke Leto,
All that beautiful hardware has to be put to good use, after all if you don't use it you can't replace it. Think of all that beautiful money to be made in hardware replacement

Noah,

Trump also declined to support Kurdish independence, which the Israeli right supports and would have undermined Iran (which has a restive Kurdish minority) and Iran ally Iraq.

Supporting the Kurds would have pissed off his best buddy Erdogan, in that Turkey has the largest Kurdish minority population of all the Middle Eastern countries (about 20% of population) and the largest military in the Middle East. Not a good idea, especially if you don't want them to become buddy buddy with their eastern neighbor.

Oh, did I mention that Saudi Arabia has a substantial Shiite minority (10 to 15% of the population) who isn't exactly thrilled to live under Wahhabi rule.

Watching the Saudis (a country that has to import plumbers from South Asia because it's below the dignity of the locals to be plumbers) getting their asses handed to them, watching the Dumpster's poll rating jump up to the 80% mark before cratering down to 15%, watching the Trump recession that would follow would almost be worth it if I didn't have to suffer the consequences of "Real American's(TM)" idiocy. It would be almost as much fun as watching Brexit.

Michelle , says: December 21, 2017 at 8:05 am
And President Ted Cruz or Clinton would be different how?

It's a pretty safe assumption that a President Clinton would work to uphold the treaty her predecessor signed with Iran. Cruz, like the rest of the GOP hawks, would probably (like Trump) be actively working to undermine it and provoke Iran. She'd want more money for social and infrastrucure spending, less for military.

Pavlos has it right. The GOP (and a lot of Democrats) think war is good for business and are happy to funnel obscene amounts of money to the military-industrial complex under the guise of "national security."

Siarlys Jenkins , says: December 21, 2017 at 9:02 am
Underestimating Iran would be a mistake. Trying this in real life would make Iran, very roughly, into "Saudi Arabia's Vietnam."

"What is the national anthem of Saudi Arabia?"
"Onward, Christian Soldiers."

Reminds me of 1975, when I said that the Cuban army marching band was going to adopt a new theme song, "We Are Marching to Pretoria."

Alex (the one that likes Ike) , says: December 21, 2017 at 9:44 am
It depends on what you imply when saying that it has lit up Arab social media, Rod. "Damn those Saudis are strong!" type of reaction means that social media are lit up. "LOL, what sorry comedian a-holes those Saudis are!" type of reaction also means that social media are lit up.
Ark712 , says: December 21, 2017 at 9:49 am
So we are going to give North Korea a "Bloody nose" and invade Iran where they will welcome us as liberators with flower petals?

Is this what it will finally take Trump supporters to realize they made a mistake, or will they once again move the goal posts?

I am sure they will say "hurr-durr Clinton voted for the war", as if Republicans were not calling anyone against it a traitor.

collin , says: December 21, 2017 at 10:09 am
I can't decide if this truly 'government' backed or some Saudia wackos let their freak loose. At least the wackos are going after Iran and not the US. It is probably really nothing than an expensive Youtube comment but it does indicate that Saudia Arabia population really desires War somewhere and somehow.

Although this is probably forgotten in 1 month, the Middle East appears to be following similar paths as Europe in the 1900 – 1914. We have lots of secret Allies and treaties with enormous tensions that is hungry for a battle.

SDS , says: December 21, 2017 at 11:15 am
"And President Ted Cruz or Clinton would be different how?" Probably not at all .. Which is what's so tragic, really .
Gunner , says: December 21, 2017 at 12:05 pm
The Saudis couldn't invade a Dunkin Doughnuts without the West helping them.
TR , says: December 21, 2017 at 12:11 pm
Paul: Keep your jokes to yourself. They're too painful.

Noah172: Astute analysis and advice.

EngineerScotty , says: December 21, 2017 at 12:58 pm
The foreign policy of a President Hillary Clinton would probably be too hawkish for my tastes–and certainly she wouldn't enjoy strong relations with Russia (given evidence, in this hypothetical, that Putin was actively interfering in the election to support her opponent)–but it wouldn't be the amateur hour that we've gotten so far with Trump. Clinton would still have a functioning diplomatic corps, instead of sacking half the State Department. She wouldn't be trading insults with foreign heads of state on Twitter. She'd likely be not trying to undermine the Iran deal. And she'd not be performing fellatio on the likes of Netanyaho, Ergodan, and MbS, as Trump has been eagerly doing.

Really. At what point does the "as bad as Trump's foreign policy has been, Clinton wudda been worse" refrain stop? Trump is already the worst foreign policy president since LBJ–he only needs a Vietnam War to his name to blow past him. And he has none of Johnson's domestic achievements.

Hound of Ulster , says: December 21, 2017 at 1:24 pm
The last time an Arab dictator tried to attack the Iranians he could only get a draw that bankrupted him and lead, by a series of second-order consequences, to his downfall.

The Iranians had just, when they were attacked by Iraq, had thier revolution and had liquidated thier officer corps. Think about that. Iranians as polity may, for the most part, dislike the rule of the clerics, but they are intensely patriotic and will fight to the last man/woman to defend the Persian homeland. Underestimate them at your peril.

George , says: December 21, 2017 at 2:03 pm
When Iran's proxies in Yemen -- the Houthis -- are launching missiles at airports and the Royal Palace, I don't think this type video is very surprising and as propaganda goes really a big deal. It is pretty low level saber rattling if it is a Saudi Government produc, or what you would see a million times over among Americans if it is the work of just a bunch of young Saudi yahoos. Oh, and MSAGA -- Make Saudi Arabia Great Again!
leonard , says: December 21, 2017 at 2:09 pm
So Charles Cosimano. I'm assuming you'll be the first to sign up?
TTT , says: December 21, 2017 at 2:17 pm
Israel has never fought side-by-side with the US in any of the wars it has sent the us to fight [and die for and pay for] at the instigation of the settlers/occupiers.

Since the U.S. has never fought any wars for Israel, that makes the score 0:0 then.

Noah172 , says: December 21, 2017 at 2:23 pm
muad'dib wrote:

But her E-mails Good Thing the witch from Chappaqua isn't in the White House

What ignorant drivel. Clinton is plenty hawkish (she cheered on Trump's April missile strike on Assad, and urged him to go much further). Moreover, as I wrote above, this video seems to be youthful fan fiction, not carrying any Saudi government imprimatur (let alone endorsement from Trump). Rod is speculating that the US will eventually join Saudi Arabia in a war against Iran, but Rod is no seer, whatever his other attributes.

Supporting the Kurds would have pissed off his best buddy Erdogan

Poppycock. Trump is hardly Erdogan's poodle. Trump gave heavy armaments to the Syrian Kurds (O had limited their support to small arms) and wants to move our embassy to Jerusalem, both decisions angering Erdogan. Erdogan would also liked to have seen Assad deposed.

Elijah , says: December 21, 2017 at 4:23 pm
I'm not going to offer an opinion on the efficacy of Saudi Arabia's army, and neither should you. Remember how everyone warned us about Iraq's Republican Guard?) Few of us know what we're talking about. On the larger point: are you all taking drugs? Some video "lights up" Arab social media and therefore Trump is taking us to war against Iran?? What?!

Let me be the dink who reminds you: Peak Oil

Merry Christmas!

FoolMeOnce , says: December 21, 2017 at 4:48 pm
We should warn the Saudis not to choose vain, arrogant, bloodthirsty plutocrats as leaders. Oh .
grumpy realist , says: December 21, 2017 at 6:09 pm
Muad'dib:

+1000

(especially the Straits of Hormuz aspect. The Iranians just have to mine it so that one or more cargo ships get holed and got to the bottom at strategic bends and nobody ain't shipping no Saudi Oil nowhere. Have fun with $300/bbl oil economies, guys China will make out like a bandit, considering it's now the world leader in solar power.

james , says: December 21, 2017 at 6:31 pm
As a clever newspaper writer said about Jesse Ventura: Jesse is a lot smarter than most folks think he is, but not nearly as smart as he thinks he is. Like Jesse, Trump is smart enough to avoid unnecessary war. However, war may just become "necessary" when the heat of his Russia investigation becomes unbearable, and Trump needs the ultimate distraction. When (not if) that happens, either North Korea or Iran will be in trouble -- perhaps both. Millions will most likely die, billions of dollars will be spent, and the US will create an entirely new generation of terrorists. This will not end well.
Noah172 , says: December 21, 2017 at 6:58 pm
EngineerScotty wrote: "The foreign policy of a President Hillary Clinton wouldn't be the amateur hour that we've gotten so far with Trump" No, it would be the ruthlessly effective professionalism of the reset with Russia and the ouster of Qaddafi. /sarc She wanted and wants Assad deposed. How well would that have gone?

She wouldn't be trading insults with foreign heads of state on Twitter

Clinton has insulted Putin any number of times on social media and in interviews. On the Colbert program just last September, she claimed that he worked against her election because of sexism, and claimed that he "manspread" during a meeting with her.

And she'd not be performing fellatio on the likes of Netanyaho, Ergodan, and MbS

Netanyahu and Erdogan do not get along, so it's pretty hard to please both of them simultaneously. Like muad'dib, Scotty has it in his head that Trump is a poodle of Erdogan, but the latter would disagree. Heavy weapons to Syrian Kurds, Jerusalem -- Erdogan is not fully pleased with Trump.

If Scotty thinks the Clintons are hostile to Saudi Arabia, he hasn't been paying attention (does he ever?).

Trump is already the worst foreign policy president since LBJ -- he only needs a Vietnam War to his name to blow past him

Other than that, Mrs. Lincoln, how was the play?

Fran Macadam , says: December 21, 2017 at 10:46 pm
"In the meantime, Frack Baby Frack! The less oil we have to import from there, Venezuela, or anyplace crazy the better." That would be sane. But the elites have decided to export it at a cut rate, to undermine Russia as the supplier in Europe, in order to foment regime change by crashing the Russian economy. Why did you think we had such low fuel prices all of a sudden?

No, the fuel extracted from American soil does not accrue to the benefit of the American people, but to the profits and plans of elites.

Alex (the one that likes Ike) , says: December 22, 2017 at 6:22 am

As a clever newspaper writer said about Jesse Ventura: Jesse is a lot smarter than most folks think he is, but not nearly as smart as he thinks he is. Like Jesse, Trump is smart enough to avoid unnecessary war. However, war may just become "necessary" when the heat of his Russia investigation becomes unbearable, and Trump needs the ultimate distraction. When (not if) that happens, either North Korea or Iran will be in trouble -- perhaps both. Millions will most likely die, billions of dollars will be spent, and the US will create an entirely new generation of terrorists. This will not end well.

Except that "heat" of his investigation is almost extinguished already.

Elijah , says: December 22, 2017 at 7:47 am
"Except that "heat" of his investigation is almost extinguished already."

Exactly.

Donald ( the left leaning one) , says: December 22, 2017 at 12:48 pm
Noah and Engineer Scotty -- There is a reasonable compromise. Both of you are right. Trump is a disaster and we know Clinton was terrible. There is no point in arguing about whether she would be worse. I happen to think In some ways she wouldn't be as bad. She wouldn't be engaged in stupid twitter fights with dictators. But she might be better at leading us into some stupid war in Syria. Trump will stumble into some war with no support. Clinton would have had lots of support for whatever mindlessly stupid bloodbath she wanted to start.
EngineerScotty , says: December 22, 2017 at 3:44 pm
That would be sane. But the elites have decided to export it at a cut rate, to undermine Russia as the supplier in Europe, in order to foment regime change by crashing the Russian economy. Why did you think we had such low fuel prices all of a sudden?

No, the fuel extracted from American soil does not accrue to the benefit of the American people, but to the profits and plans of elites.

Unless the "elites" you are talking about are the Saudis–who are well-known for flooding the market with cheap crude periodically to undercut the competition (they can still produce oil for far less than anywhere else), and have many reasons to be suspicious of Russia–this makes no sense.

Oil obtained by fracking is far more expensive to produce than oil obtained by simply drilling a well in the Arabian Desert and quickly finding a gusher. The US can meet its domestic needs, but isn't that great of a net exporter -- prices have to be sufficiently high before high-volume production becomes cost-effective.

And if you don't think that either the Saudis or the American oil industry have the ear of Trump, you're smokin' something.

The "elites" that oppose Trump have rather little political power at the present moment. Don't confuse cultural elites (who don't like the Donald one bit) with the gazillionaires who actual control the petroleum industry, and are more than happy to do business with whoever is in charge in Washington.

Trump–ignorant and fatuous and unworldly as he may be–is an "elite" by virtue of the office he holds. Do not forget that.

EngineerScotty , says: December 22, 2017 at 3:57 pm

Noah and Engineer Scotty -- There is a reasonable compromise. Both of you are right. Trump is a disaster and we know Clinton was terrible. There is no point in arguing about whether she would be worse. I happen to think In some ways she wouldn't be as bad. She wouldn't be engaged in stupid twitter fights with dictators. But she might be better at leading us into some stupid war in Syria. Trump will stumble into some war with no support. Clinton would have had lots of support for whatever mindlessly stupid bloodbath she wanted to start.

Fair enough–though I think that Hillary's foreign policy would likely be similar to that of her husband. Far from ideal, but not disastrous. Of course, Bill got to hold office in a time when the Soviet Union (and its constituent parts) was in shambles, China was still a third-world country, North Korea was no threat to anyone but South Korea, Islamic extremism was far less of a problem, and even the Israelis and Palestinians were talking, and on roughly equal terms. Now is a much more dangerous time.

One of my biggest concerns about Trump's foreign policy–and a major difference from how Hillary would have governed–is his utter disdain for diplomacy. As noted, he (and Tillerson) have been busy setting the State Department ablaze, and many, many, many seasoned diplomats (career civil servants, not political appointees) have left Foggy Bottom, some of their own accord, some not. Some Trump defenders claim this is part of "draining the swamp", and many critics claim this is a purge of anyone not loyal to Trump personally–and these two claims may be opposite sides of the same coin.

But there is something else. Trump seems to think that international diplomacy ought to be conducted like real-estate deals: Two high-rollers (CEOs or heads of state) meet on the golf course, hash out a deal, and the lawyers work out the details; and that having a large staff of people trained in understanding a potentially-hostile foreign country is simply unnecessary. In short, he acts as though he believes the entire system of international diplomatic protocol, is a racket. Perhaps he has a point here; and perhaps he does not–as the old saying goes, don't knock down a wall unless you know what loads it is bearing.

But you'll notice that neither Russia, nor China, nor Israel, nor Iran, or Germany, nor any other player on the world stage, have been engaging in similar purges of their diplomatic services.

[Dec 23, 2017] He Died for Our Debt, Not Our Sins by Michael Hudson

Notable quotes:
"... Interview with Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is J is for Junk Economics . Cross-posted from Hudson's site . ..."
"... And Forgive them their Debts: Credit and Redemption ..."
"... And Forgive them their Debts: Credit and Redemption ..."
"... the Dems are now doing the age-old distraction of diverting the discussion to sex rather than economics. I thought just the political right does that ..."
"... I am highly skeptical of the tune Amazing Grace ..."
Dec 23, 2017 | www.nakedcapitalism.com

December 23, 2017 Interview with Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is J is for Junk Economics . Cross-posted from Hudson's site .

As many people turn towards their Christian and Jewish faiths this Christmas and Hanukkah in an attempt to make sense of the year that was, at least one economist says we have been reading the bible in an anachronistic way.


In fact he has written an entire book on the topic. In And Forgive them their Debts: Credit and Redemption (available this spring on Amazon), Professor Michael Hudson makes the argument that far from being about sex, the bible is actually about economics, and debt in particular.

The Ten Commandments Were About Debt

People tend to think of the Commandment 'do not covet your neighbour's wife' in purely sexual terms but actually, the economist says it refers specifically to creditors who would force the wives and daughters of debtors into sex slavery as collateral for unpaid debt.

"This goes all the way back to Sumer in the third millennium," he said.

Similarly, the Commandment 'thou shalt not steal' refers to usury and exploitation by threat for debts owing.

But the rulers of classical antiquity who cancelled their subjects' debts tended to be overthrown with disturbing frequency – from the Greek 'tyrants' of the 7th century BC who overthrew the aristocracies of Sparta and Corinth, to Sparta's Kings Agis and Cleomenes in the 3rd century BC who sought to cancel Spartan debts, to Roman politicians advocating debt relief and land redistribution, Julius Caesar among them.

Jesus Died for Our Debt

Professor Hudson says Jesus Christ paid the ultimate price for his activism.

What Would Jesus Do?

To understand how to fix today's economy, Hudson says that the Bible's answers were practical for their time.

And Forgive them their Debts: Credit and Redemption will be available for purchase just in time for Easter on Amazon.

Patrick Donnelly , December 23, 2017 at 6:32 am

Reckless lending is a valid concept and has been put into law by Judges and almost unbelievably, lawmakers as well, in some jurisdictions.

The debt is void.

Tricking a borrower into overcommittment is worse and that is what happened in Ireland during the 80s onwards. The Prime ministers of different parties over that time had unlimited overdrafts with several banks, most notably the AIB. A conspiracy that meant only a very few were fully aware of the final result: bondholders would be reimbursed, with the scam being paid for by those who made money and also those who lost money in the asset Ponzi that was always the end.

Emigration was also the intended end, which worked quite well.

Steven , December 23, 2017 at 8:35 am

With you right up to that last sentence. Why couldn't the simple banker theft, the 'free lunch', have been "the intended end"? Critics of the status quo IMHO often attribute way too much intelligence and foresight to the powers that be. There is such a thing as intelligent self-interest (greed). Germany's Bismark and Hudson's ancient rulers understood it. The West's ruling class apparently doesn't.

AbateMagicThinking but Not money , December 23, 2017 at 9:21 am

No more IMHOs please! It starts to read like Uriah Heap. No more humility. Just state your case.

Pip Pip

flora , December 23, 2017 at 10:48 am

an aside: It's important to distinguish sentences of opinion from sentences of claimed fact, imo. ;) Opinion is just that, and can't be called out for malice or falsity. Incorrect statements of fact can be so called out. This is an important distinction in written comments. It's important for the reputation of the publication itself, and why LTEs insist on this distinction being made in the letters.

Uriah Heep's "umbleness" was a mask covering his scheming; a very different thing from making a simple written distinction between opinion and fact.

flora , December 23, 2017 at 11:09 am

adding:
There's always 'IMNSHO', but that's more typing. :)

St Jacques , December 23, 2017 at 3:33 pm

I only ever make true statements, OK !!!

Trouble is that the next day I have a headache and everything looks yellow.

Blue Pilgrim , December 23, 2017 at 9:57 am

'Lead us not into temptation' -- odious debt and liar loans, sounds like.

Robert McGregor , December 23, 2017 at 11:56 am

> "Reckless lending is a valid concept and has been put into law by Judges and almost unbelievably, lawmakers as well, in some jurisdictions.

The debt is void.

Tricking a borrower into overcommittment . . ."

Take your average 21 year-old today or 40 years ago! Put him in the US and . . .

1) Expose him through the MSM to relentless advertising and propaganda that he should spend, spend, spend!
2) Don't teach him in school about personal finance and debt.
3) Give him a credit card.

What do you expect will happen? Through trickery the bankers have rigged a very profitable system for themselves. It is not a good system where a young person has to have way-above-knowledge-and-discipline in order to protect themselves from credit racketeers. That's why there is the ancient wisdom of the "Debt Jubilee"

Kurtismayfield , December 23, 2017 at 12:32 pm

I blame credit card debt on the banks themselves.. they should know when to cut someone off, they are tracking your every move these days.

nilavar , December 23, 2017 at 1:59 pm

Right on!

if only, all the LENDERS and the Banks (Banksters!) had followed the the cardinal rules(of Finance) of FIDUCIARY DUTY & DUE DILIGENCE, we wouldn't have 2008 crisis.

Banksters were bailed out and the 'DEBT' became the new money, world wise!

Now we have 2008 x10 (Mother of all Bubbles!) crisis at our door step!

Happy Holidays!

OpenThePodBayDoorsHAL , December 23, 2017 at 3:55 pm

The article doesn't distinguish "whose debts?"

When Citi takes too much debt they get Jubilee, when John Q. Public does, they get bankruptcy.

So let's not say "we should bring back Jubliee", we already have it, to the tune of tens of trillions of dollars. Jubliee for billionaires and bankers, just not for you and me.

It's similar to the debate over "Socialism", Bernie gets trashed for even daring to mention the word. But if "socialism" is loosely defined as direct transfers of assets from the State, we have massive socialism in this country already. For Big Wall St, Big Pharma, Big Oil, Big Military, Big Incarceration, Big Surveillance. But propose it for Big Citizen and you will get shouted down and shamed as some kind of pinko.

Alopex , December 23, 2017 at 2:20 pm

At a major bank in the late 80s, I heard the Controller describe the ideal credit card customer: the one with account just below the credit limit who makes the minimum monthly payment a few days late.

Kathleen Smith , December 23, 2017 at 8:07 am

I agree with all that Michael Hudson has to say -- only problem is that the bankers have been so effective in dividing and conquering the genernal public that they can't see who the real enemy is. We have middle class people hating those that have been set up and abused by a corrupt banking establishment that many in this country actually blame the victims. Question is how is this all going to end? and what can we do to stop the world take over by a corrupt banking elite?

JEHR , December 23, 2017 at 11:57 am

I have come to believe (from my reading) that the bankers have successfully used algorithms to speed up computing in order to make a profit no matter what the markets are doing. The AI of their machines does not have an ethical basis or empathy for those who lose money. The financialization of the economy is part of the role that AI performs in the profiteering of the bankers and other financial institutions. That I suppose is the first step to using AI algorithms to achieve the goal of the banker: to always and forever make a profit. Watch AI move into other areas for the same profitable purpose.

OpenThePodBayDoorsHAL , December 23, 2017 at 3:43 pm

It's much bigger, and much worse, than you describe:
https://thebaffler.com/salvos/oculus-grift-shivani

Arizona Slim , December 23, 2017 at 8:12 am

How is this all going to end? Well, it's going to end because of people like us. We're questioning the current way of the world, and that's the first step in changing it.

nilavar , December 23, 2017 at 2:04 pm

Any DEBT which cannot be paid, will NEVER get paid (Hello Greece!) will be resolved by default and or Bankptcy as shown in history!

2008 was just a walk in the park!

Sam Adams , December 23, 2017 at 8:25 am

I love the irony: "And Forgive them their Debts: Credit and Redemption will be available for purchase just in time for Easter on Amazon."
Bravo

Carla , December 23, 2017 at 2:28 pm

If only Michael Hudson would decline to feed the Amazon beast!

Karen , December 23, 2017 at 9:09 am

What a fascinating analysis, thank you!

Henry Moon Pie , December 23, 2017 at 9:13 am

It's best to be cautious when making any kind of assertion about "the Bible says " or "Jesus believed ." The Hebrew bible is an amalgam of many different, often conflicting theological and moral points of view. The Gospels reflect that diversity of thought with some non-Semitic strains added as well.

The Ten Commandments provide a good example of this. The reason given for honoring the Sabbath in Exodus 20:

for in six days the Lord made heaven and earth, the sea, and all that is in them, and rested the seventh day

but in Deuteronomy (i.e. the "Second Law" in Deuteronomy 5), it's

You shall remember that you were a servant in the land of Egypt, and the Lord your God brought you out thence with a mighty hand and an outstretched arm

.

The Exodus version's rationale is drawn completely from awe for YHWH and his creation, but the Deuteronomist asks the Sabbath observers to think empathetically by remembering their ancestors' (mythical) enslavement.

Another example is the Deuteronomist's amendment of the law of debt slavery. The Exodus version did limit debt slavery to 7 years (Exodus 21:2), but D goes further:

And when you send a male slave[b] out from you a free person, you shall not send him out empty-handed. Provide liberally out of your flock, your threshing floor, and your wine press, thus giving to him some of the bounty with which the Lord your God has blessed you. Remember that you were a slave in the land of Egypt, and the Lord your God redeemed you; for this reason I lay this command upon you today.

Prophets like Micah and Amos took the D point of view even further, issuing prophecies of condemnation for the rich and compassion for the poor, but the compiler of Proverbs, while extolling moderation, offers a perspective respectful toward the rich and powerful as long as they behave decently.

These differences persist into the time when the Gospels were written. Luke-Acts clearly reflects the D/Prophetic strain. While Matthew's Sermon on the Mount (Matthew 5) contains only blessings, Luke 6 includes curses:

But woe to you that are rich, for you have received your consolation.

25 "Woe to you that are full now, for you shall hunger.

"Woe to you that laugh now, for you shall mourn and weep.

26 "Woe to you, when all men speak well of you, for so their fathers did to the false prophets.

Where did the historical Jesus line up in this millennia-old debate? There's not that much firm evidence either way. Dominic Crossan, relying on gospels outside the canon, tries to make a case for a revolutionary Jesus, but a strong argument can also be made that Jesus didn't care much about earthly politics and socio-economic issues because he believed the end of the world was near.

Jim Haygood , December 23, 2017 at 9:26 am

After the next recession (which I have penciled in for 2019-2020), US fiscal deficits will rise to the $1.5 to 2 trillion level and stay there. Should Trump serve two terms, federal debt will reach $30 trillion, and by then will constitute 130 to 150% of GDP.

At this point Amerisclerosis sets in, gro